ENvue Medical, Inc.

Overview

We were organized as a Delaware corporation in October 2003. On February 14, 2025, we consummated and completed the Merger pursuant to the Merger Agreement, as further described below. Following the consummation of the Merger, NanoVibronix will conduct its operations through its two wholly-owned subsidiaries: (i) NanoVibronix Ltd., a private company incorporated under the laws of the State of Israel (“Nano OpCo”) and (ii) ENvue Medical Holdings LLC, a Delaware limited liability company (together with its respective subsidiaries, “Predecesor ENvue”). Nano OpCo focuses on non-invasive biological response-activating devices that target biofilm prevention, pain therapy, and wound healing and can be administered at home, without the assistance of medical professionals. ENvue is a medical device company engaged in the research, development, production, marketing, and sale of medical devices in the field of enteral feeding and are in the initial stage of commercializing our products. The descriptions of the two business divisions, their corresponding products, and business models are detailed below.

Reverse Stock Splits

On February 8, 2023, we effected a reverse stock split of our common stock at a ratio of 1-for-20 (the “2023 Reverse Stock Split”, and on February 13, 2025, we effected a reverse stock split of our common stock at a ratio of 1-for11 (the “2025 Reverse Stock Split” and together with the 2023 Reverse Stock Split, the Reverse Stock Splits”) pursuant a Certificate of Amendment to our Amended and Restated Certificate of Incorporation. At the effective time of the 2023 Reverse Stock Split and the 2025 Reverse Stock Split, every 20 and 11 shares, respectively, of our issued and outstanding common stock were converted automatically into one issued and outstanding share of common stock without any change in the par value per share. Any fractional share of a stockholder resulting from the Reverse Stock Splits was rounded up to the nearest whole number of shares. Proportional adjustments were made to the number of shares of our common stock issuable upon exercise or conversion of the Company’s equity awards, warrants and other convertible securities, as well as the applicable exercise or conversion price thereof. Except as otherwise indicated, all share and per-share figures in this Annual Report on Form 10-K have been adjusted to reflect the Reverse Stock Splits.

Recent Developments

2025 Reverse Stock Split

On March 13, 2025, at 4:05 p.m., Eastern Time, pursuant to a Certificate of Amendment to our Amended and Restated Certificate of Incorporation, as amended, 2025 Reverse Stock Split became effective. Our common stock began trading on Nasdaq on a split-adjusted basis on March 14, 2025. See “Reverse Stock Splits” above.

The Merger Agreement

On February 14, 2025, pursuant to the terms of that certain Agreement and Plan of Merger, dated as of February 14, 2025 (the “Merger Agreement”), by and among the Company, NVEH Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NVEH Merger Sub I, Inc. (“First Merger Sub”), NVEH Merger Sub II, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Second Merger Sub”), and Predecessor ENvue, the Company and Predecessor ENvue effected (i) a merger of First Merger Sub with and into Predecessor ENvue, with the First Merger Sub ceasing to exist and Predecessor ENvue becoming a wholly-owned subsidiary the Company and (ii) the merger of Predecessor ENvue with and into Second Merger Sub (the “Second Merger” and, together with the First Merger, the “Merger”), with Second Merger Sub being the surviving entity of the Second Merger (“Surviving Entity”). At the effective time of the Second Merger, the certificate of formation of the Surviving Entity was amended and restated to, among other things, to change the name of the Surviving Entity to “ENvue Medical Holdings LLC.” In connection with the Merger Agreement, we issued (i) 1,734,995 shares of common stock (the “Merger Shares”), which such number of shares represented no more than 19.9% (the “Exchange Cap”) of the outstanding shares of common stock as of immediately before the First Effective Time and (ii) 57,720 shares of Series X Non-Voting Convertible Preferred Stock, par value $0.001 per share (the “Series X Preferred Stock”) in excess of the Exchange Cap to the holders of Predecessor ENvue in consideration for 100% of Predecessor ENvue. Each share of Series X Preferred Stock will be convertible into 1,000 shares of our common stock, subject to and contingent upon the affirmative vote of a majority of the shares of common stock present or represented and entitled to vote at a meeting of stockholders of Company to approve, for purposes of the Nasdaq Listing Rules, the issuance of shares of our common stock to the stockholders of Predecessor ENvue upon conversion of any and all shares of Series X Preferred Stock in accordance with the terms of the Certificate of Designation for the Series X Preferred Stock.

The Merger was consummated and completed on February 14, 2025.

After giving effect to the Merger, pursuant to the terms and conditions of the Merger Agreement: (i) the holders of the outstanding equity of Predecessor ENvue immediately prior to the effective time of the First Merger (“First Effective Time”) own 19.9% of the common stock of the Company and 85.0% of the outstanding equity of the Company (assuming the Series X Preferred Stock is converting at a ratio of 1,000:1) immediately following the First Effective Time, which following stockholder approval will allow the Series X Preferred Stock to convert to common stock of the Company which may result in the holders of Predecessor ENvue to own 85% of the common stock of the Company, and (ii) the holders of our outstanding equity immediately prior to the First Effective Time own 80.1% of the common stock of the Company and 15.0% of the outstanding equity of the Company (assuming the Series X Preferred Stock is converting at a ratio of 1,000:1) immediately following the First Effective Time, which following stockholder approval which will allow the Series X Preferred Stock to convert to common stock of the Company which may result in our holders owning 15% of common stock of the Company.

Debenture Financing and Senior Convertible Debenture

On February 13, 2025, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor (the “Investor”), pursuant to which we sold in a private placement, a senior convertible debenture (the “Debenture”) due the earlier of (i) the date that is the 30-day anniversary of the effective date of stockholder approval (the “Debenture Stockholder Approval”) of the issuance of the shares of common stock upon the conversion of the debenture (the “Debenture Financing”) and (ii) the date that is nine months following the date of issuance of the Debenture (“Maturity Date”), having an aggregate principal amount of $500,000. The closing of the Debenture Financing occurred on February 14, 2025.

On March 26, 2025 we amended and restated the Debenture to increase the Principal Amount to $1,300,000 to provide for the funding by Alpha Capital Anstalt (the “Investor”) to our subsidiary ENvue Medical Holdings, Corp. (“ENvue”), a wholly owned subsidiary of the Company of (i) an aggregate of $250,000 by the Investor to ENvue on February 6, 2025, (ii) an aggregate of $250,000 by the Investor to ENvue on March 4, 2025, and (iii) and an aggregate of $300,000 by the Investor to ENvue on March 26, 2025.

On the Maturity Date, we shall pay the Investor in cash or, at the option of the Investor, in the form of conversion shares, or a combination thereof, the entire outstanding principal amount of the Debenture, together with accrued and unpaid interest thereon, the applicable exit fee and any other amounts due thereunder. Following the receipt of Debenture Stockholder Approval, the Debenture shall be convertible, in whole or in part, into shares of common stock, at the option of the Investor, at the initial conversion price of $0.8906 (the “Conversion Price”), which is subject to customary anti-dilution adjustments, and which such Conversion Price shall not be lower than the floor price of $0.97812. The Debenture bears interest at the rate of 8.0% per annum, payable on the Maturity Date.

On February 13, 2025, as amended on March 26, 2025, in connection with the Purchase Agreement and issuance of the Debenture, we entered into that certain Registration Rights Agreement (the “Registration Rights Agreement”) with the Investor. Pursuant to the Registration Rights Agreement, the Company is required to prepare and file a resale registration statement with the SEC within 30 calendar days following the closing date of the amended Debenture Financing (the “Filing Deadline”). The Company shall use its commercially reasonable efforts to cause such registration statement to be declared effective by the SEC within 60 calendar days of the Filing Deadline (or within 90 calendar days if the SEC reviews the resale registration statement).

January 2025 3(a)(9) Exchange

On January 7, 2025, we entered into a securities exchange agreement (the “Exchange Agreement”) with a certain institutional investor pursuant to which we agreed to issue an aggregate of (i) 41,498 shares of common stock (the “3(a)(9) Shares”), (ii) a warrant to purchase up to 158,562 shares of common stock (the “January 2025 Warrant”), and (iii) a pre-funded warrant to purchase up to 178,132 shares of common stock (the “January 2025 Pre-Funded Warrant”), in exchange for the A-1 Warrant held by the Holder to purchase up to 264,271 shares of common stock at an exercise price of $16.17 per share (the “Exchange”). We cancelled the A-1 Warrant reacquired in the Exchange and the A-1 Warrant will not be reissued. The January 2025 Warrant has substantially the same terms as the A-1 Warrant, except that the shares of common stock issuable upon exercise of the January 2025 Warrant are subject to stockholder approval pursuant to the applicable rules and regulations of the Nasdaq, is exercisable for a term of five and one half years from the date such stockholder approval is received and deemed effective under Delaware law, and has an exercise price of $6.8296 per share.

Subsequent to the Exchange, the holder of the January 2025 Pre-Funded Warrant exercised the January 2025 Pre-Funded Warrant in full on a cashless basis in full for an aggregate of 228,354 shares of common stock.

The issuance in the Exchange of the 3(a)(9) Shares, the January 2025 Warrant, the January 2025 Pre-Funded Warrant and the shares of common stock issuable upon the exercise thereof pursuant to the Exchange Agreement was made in reliance on an exemption from registration under Section 3(a)(9) of the Securities Act

Nano OpCo’s Business

Nano OpCo’s primary products, which are in various stages of clinical and market development, currently consist of:

Each of UroShield, PainShield, and WoundShield employs a small, disposable transducer that transmits low frequency, low intensity ultrasound acoustic waves that seek to repair and regenerate tissue, musculoskeletal and vascular structures, and decrease biofilm formation, reduce blockage, and reduce pain related to urinary catheters as well as reducing incidence of associated urinary tract infections. Through their size, effectiveness and ease of use, these products are intended to eliminate the need for technicians and medical personnel to manually administer ultrasound treatment through large transducers, thereby promoting patient independence and enabling more cost-effective home-based care.

PainShield MD is currently cleared for marketing in the United States by the FDA. In September 2020, the FDA exercised its policy of enforcement discretion (“Enforcement Discretion”) to allow distribution of the UroShield device in the U.S. during the COVID-19 pandemic. While the U.S. government has declared an end to the public health emergency and had terminated Enforcement Discretion use for many medical devices, as of the date of this filing, we have not been notified of any change in the regulatory status for the use of our UroShield device. However, we have removed the product from the US market and have ceased all sales activities. Both PainShield and UroShield have CE Mark approval in the European Union, which also permits sales in India and Ecuador, and a certificate allowing us to sell PainShield and UroShield in Israel. We have consummated sales of PainShield and UroShield in the relevant markets, and we saw sales increase in 2024. WoundShield has not generated significant revenue to date. Outside of the United States, we generally apply, through our distributor, for approval in a particular country for a particular product only when we have a distributor in place with respect to such product.

In the United States, PainShield and UroShield require a prescription from a licensed healthcare practitioner. If FDA clearance is obtained, we anticipate that WoundShield will require a prescription from a licensed healthcare practitioner in the United States. As stated previously, UroShield was approved through the FDA under Enforcement Discretion initially, for the duration of the COVID-19 pandemic and was intended to be sold directly to health care facilities and individuals. Individuals would have required a prescription, but healthcare facilities would have deployed the use of Uroshield based upon clinical need. However, in other countries in which we sell PainShield, UroShield, and WoundShield, such products are eligible for sale without a prescription.

Insurance Coverage and Reimbursement

In addition to the need to obtain regulatory approvals, we anticipate that sales volumes and prices of NanoVibronix’s UroShield and PainShield, products will depend in large part on the availability of insurance coverage and reimbursement from third party payers. Third party payers include governmental programs such as Medicare and Medicaid and the Veterans Health Care network of facidlities in the United States, private insurance plans and workers’ compensation plans. We do not currently have reimbursement codes for use of WoundShield in any of the markets in which we have regulatory authority to sell WoundShield. Of the markets in which we have regulatory authority to sell PainShield, prior to January 2020, we only had reimbursement codes in the United States (i.e., CPT codes) for clinical use only. Effective as of January 2020, the U.S. Centers for Medicare and Medicaid Services (“CMS”) approved our PainShield for reimbursement for Medicare beneficiaries on a national basis. However, PainShield was not assigned a reimbursement value from CMS. The Company was denied reimbursement in September 2022 due to a lack of “life-cycle” testing. The Company had engaged Carmel Labs in Israel to conduct this testing and submitted the results to CMS with our 2023 application on January 3, 2023. On August 21, 2023, CMS, denied reimbursement with respect to PainShield due to their request for additional longevity testing. We are currently evaluating whether to resubmit another application to CMS.

With respect to UroShield, which may be used in a clinical and home setting, we currently have reimbursement in the United Kingdom (for supplies only), and throughout the VA system. We are seeking reimbursement codes for use of our products in the markets in which we have regulatory authority, including the United States, to sell such products. Our current ongoing research and planned research may facilitate our ability to obtain reimbursement codes, but there is no guarantee that we will be successful in obtaining such codes quickly, or at all. We engaged Idonea Solutions, Inc., an FDA consultant, to assist in our efforts to obtain clearance under the FDA’s policy of Enforcement Discretion, and obtain 510(k) clearance which is still ongoing. During the past few of years the Company has entered into distribution partnerships for UroShield in the U.K., Australia, New Zealand, and Malta.

Nano OpCo’s Business Model

All of Nano OpCo’s products consist of a reusable controller device and a disposable component, which includes a transducer, and in the case of PainShield, a 30-day supply of adhering patches. The controllers have a life expectancy of three years, while the UroShield disposable transducer has a life expectancy of up to a month and must be replaced to provide the intended therapy. The components are purchased by either the distributor or end user for use in any of the intended applications. Once the controller is purchased by the end user, recurring revenue will be realized by purchases of replacement disposables to the extent that the end user continues treatment with our product.

Nano OpCo’s products are intended to be distributed directly by the us, independent distributors, and potential licensees. Distributor cost is discounted to account for their intended margins, based upon purchase volumes and/or periodic purchase commitments, with the disposable transducer sold and distributed in the same fashion. We currently have an established distributor network and are implementing certain criteria within such network to ensure the appropriate assignment of a distributor or licensee. We are in the process of adding additional distributors to our network, and continue our efforts to identify market leaders in various segments to private label both PainShield and UroShield.

We also have a direct sales component, where we sell directly to consumers, in order to satisfy customer demand generated through on-line advertising and social media. We have seen an increase in demand as a direct result of an expanded social media and on-line advertising presence.

Nano OpCo’s business plan continues to focus on these types of transactions/agreements. We continue to focus on the foundational aspects of each respective product, including the design and performance of each, the reimbursement, regulatory status, and quality control, in order to strengthen our position with prospective partners.

Ultrasound Technology and Nano OpCo’s Products

As noted above, Nano OpCo’s primary products are based on the use of low frequency ultrasound, which delivers energy through mechanical vibrations in the form of sound waves. Ultrasound has long been used in physical therapy, physical medicine, rehabilitation and sports medicine.

Our proprietary PainShield technology consists of a small, thin (1 millimeter) transducer that is capable of transmitting ultrasonic acoustic waves onto treatment surfaces with a radius of up to 10 centimeters beyond the transducer. This technology allows us to treat pain by securing our transducers to the skin with a separate adhesive patch, and portable self-adhering acoustic patch, thereby eliminating the need for technicians and medical personnel to manually administer ultrasound therapy, which should reduce the cost of therapy. Moreover, we believe that, based upon the body of evidence, the delivery of ultrasound through our portable devices may provide a competitive advantage over other existing therapies marketed for similar intended use(s) (e.g., to treat pain associated with muscle, tendon, and contractures), as our technology is positioned to directly target the affected areas of the body within the scope of the applicable FDA clearance.

While there are currently a number of products on the market that treat pain through ultrasound therapy, we believe that our products may be preferable in certain instances because they are portable, without the requirement to be plugged into an outlet and they have a frequency of 100kHz (in contrast to other devices, which have a frequency of closer to 1MHz and above), which means our products, when functioning as intended and in accordance with applicable design specifications, should not produce excessive heat that can damage tissue. Therefore, our products (i) can be self-administered by the patient without the need to be moved about the treated area by the patient or a clinician, (ii) can be applied for a significantly longer period without the risk of tissue damage and (iii) do not require the use of gel. We are also aware of one product, the SAM® Sport family of products, which received FDA approval after PainShield and has CE Mark approval, marketed by ZetrOZ, Inc., that we understand may eliminate certain of these requirements and limitations, namely the requirement to be plugged in, the need for movement around the treated area and the relatively short safe treatment period. However, we understand that this product does not generate surface acoustic waves as our products do, which means that the treatment area is generally limited to that under the transducer, that the use of transmission gel is still required, and that the transducer thickness is significantly greater than ours (approximately 1.5 cm). It is also our understanding that the FDA has issued multiple contraindications for SAM® Sport, which do not apply to the PainShield product.

There has been an article published in 2019 on SAM® Sport4 regarding clinical evidence demonstrating that ultrasound dose timing (i.e. daily treatment) and duration significantly impact benefits and treatment results. We are aware of a prospective randomized, double-blinded, placebo-controlled study on the effects of the long-duration low-intensity ultrasound treatment using SAM® Sport4 suggesting that ultrasound may be used as a conservative non-pharmaceutical and non-invasive treatment option for patients with knee osteoarthritis.

In general, ultrasound offers the benefits by increasing local blood circulation, increasing vascular wall permeability, promoting protein secretion, promoting enzymatic reactions, accelerating nitric oxide production, promoting angiogenesis (the formation of new blood vessels from pre-existing vessels) and promoting fibroblast proliferation (fibroblasts are a type of cell that play a critical role in soft tissue healing). We believe that the body of evidence, and the positive therapeutic effect that ultrasound has for various indications, potentially provides for future product development opportunities for us.

Traditional ultrasound device and our portable ultrasound patch-based device and a comparison of their energy distribution, where the X-axis represents treatment surface, and the Y-axis represents ultrasound energy penetration depth within tissue.

The PainShield Plus was introduced in March 2022. The new product design provides the same therapy as PainShield MD, but through two transducers which alternate in its duty cycle. This dual transducer design provides for a broader treatment with three hours of therapy.

In a comparison of a traditional ultrasound device and our portable ultrasound patch-based device, the bulk wave conventional ultrasound machines with handheld transducers distribute the energy deeply into the body, as shown above in diagram (A) on the left. In comparison, our device distributes the energy on the surface, as shown in diagram (B), thereby meaningfully increasing the treatment area. Our transducers may also be incorporated into treatment patches, including patches that are designed to deliver medicine and other compounds through the skin. The generation and delivery of low frequency ultrasound over a period of time to a specific area has been termed “targeted slow-release ultrasound”. We believe that this delivery method of ultrasound may be comparable to that of slow-release medication in the pharmaceutical industry. This “targeted slow-release” capability is intended to allow for more frequent targeting of the intended treatment area and thus may result in a more effective therapeutic response.

Micro Vibrations Technology and Nano OpCo’s Products

In a 2007 study, increase in mean blood flow to the calf was higher in the vibration group than the placebo group. Improvements in local blood flow may be beneficial in the therapeutic alleviation of pain or other symptoms resulting from acute or chronic injuries (C. Button et al., “The effect of multidirectional mechanical vibration on peripheral circulation of humans”, University of Otago New Zealand, Clinical Physiology and functional Imaging, 2007 27, p211-216). A study on the effect of whole body vibration on lower extremity skin blood flow suggests, that short duration vibration alone significantly increases lower extremity skin blood flow, doubling skin blood flow for a minimum of 10 minutes following treatment (Lohman et al., “The effect of whole body vibration on lower extremity skin blood flow in normal subjects”, Department of Physical Therapy, Loma Linda university, USA, Med Sci Monit, 2007; 13(2) 71-76). Vibration has also been shown to stimulate angiogenesis and growth factors such as vascular endothelial growth factor (Suhr F et al., “Effects of short-term vibration and hypoxia during high intensity cycling exercise on circulating level of angiogenic regulators in humans”, J Appl Physiol, 2007, 103:474-483, Yue Z. et al., “On the cardiovascular effects of whole-body vibration I. Longitudinal effects: hydrodynamic analysis”, Studies Appl Math, 2007, 119:95-109).

Relative to soft tissue repair, it is well established that increasing blood flow to the wound and peri-wound area helps accelerate the healing of ischemic wounds. Micro-vibrations applied on the skin tissue increase local blood flow and oxygen delivery to the wound area and stimulate angiogenesis and growth factors that are helpful for the wound healing process. Vibration therapy has been found to stimulate blood flow due to mechanical stresses of endothelial cells resulting in increased production of nitric oxide and vasodilation, as well as increase soft tissue and skin circulation. (Maloney-Hinds et al., “The Role of Nitric Oxide in Skin Blood Flow Increases due to vibration in healthy adults and adults with type 2 diabetes,” School of Medicine, Loma Linda University. Ca. Diabetes Technology & Therapeutics, 2009 p. 39-43). In addition, micro vibrations induce skin surface nerve axon reflex and type IIa muscle fibers contraction rates, resulting in vasodilation (Nakagami et al., “Effect of vibration on skin blood flow in an in vivo microcirculatory model”, The University of Tokyo, Bio-Science Trends 2007; 1 (3): 161-166). Ten minutes of vibration therapy with laser doppler revealed a consistent increase in water content of the upper dermis (TJ Ryan et al., “The effect of mechanical forces (vibration or external compression) on the dermal water content of the upper dermis and epidermis, assessed by high frequency ultrasound”, Oxford Wound Healing Institute, Journal of Tissue Viability, 2001. Of import with respect to diabetic wounds, in which a prolonged inflammatory phase occurs, vibration vasodilation has generated an indirect anti-inflammatory action, mainly by suppression of nuclear factor-kβ, the key gene for inflammatory mediators (Sackner, M.A., “Nitric Oxide is released into circulation with whole-body, periodic acceleration”, Chest 2005;127;30-39).

Urinary catheter usage is associated with pain and discomfort caused by the friction between the catheter surface and the urethral tissue. Generally, this friction is treated by applying lubricating gels and low friction catheter coatings. These methods are effective for a short term during the catheter insertion as the lubricating gel is quickly absorbed into the surrounding tissue and loses its effect and the catheter coatings lose their lubricity within a few days, as the coating is covered by a thin film of mucous.

Our UroShield product provides vibrations along the surface of the urinary catheter that is in contact with urethral tissue. We believe that these vibrations create a continuous acoustic lubrication effect along the surface of the indwelling catheter that is in contact with the surrounding tissue, thus reducing catheter-tissue contact time, which may lessen trauma from urethra abrasion and adhesion. We have also shown in animals and in humans that the micro-vibration technology can reduce the level of biofilm formation on urinary catheters.

Nano OpCo’s Products

Product Design, Packaging, Identity

All of our products were redesigned in the fourth quarter of 2019, with an updated look and improved performance. These new designs were coupled with new branding, packaging, instructional manuals, and marketing materials. Beginning in the fourth quarter of 2019, our manufacturing in China, Singapore, and Israel commenced producing the redesigned products for distribution and delivered their first completed units in April 2020. We currently complete assembly in our facilities in Israel. Even though our ability to assemble our products has not been affected by the current political environment, we cannot predict if future events may cause delays. Our 2023 production run established an ample supply of devices and monthly disposable kits. The completed products can be used as a platform for either PainShield or UroShield. We do not anticipate a need to manufacture additional devices through 2024. However, due to an increased demand of disposable monthly kits, we continue to produce at a high rate to meet demand.

UroShield

UroShield is intended to prevent bacterial colonization and biofilm formation, increase antibiotic efficacy in the catheter lumen and decrease pain and discomfort associated with urinary catheter use. It is designed to be used with any type of indwelling urinary catheter regardless of the material or coating. Use of the device is contraindicated for use while there is an active UTI. We believe that UroShield may be the first medical device on the market that attempts to simultaneously address all of the aforementioned catheter-related issues. UroShield is similar in design to PainShield, in that it uses a driver unit that produces low frequency, low intensity ultrasound. The driver unit connects to a disposable transducer that is clipped onto the external portion of the catheter to deliver ultrasound therapy to all catheter surfaces as well as the tissue surrounding the catheter.

Picture of UroShield with actuator

Clinical studies of the UroShield system have supported the following advantageous effects:

UroShield has undergone a number of clinical trials. The Heidelberg 1 trial, conducted in 2005-2006, which we sponsored, was a 22-patient randomized, double blind, sham-controlled, independent trial that tested UroShield’s safety and ability to prevent biofilm in patients with an indwelling Foley catheter. The trial demonstrated that UroShield prevented biofilm in all patients with the active device as compared to biofilm being found in seven of eleven of the control patients. In addition, there was a marked decrease in pain, discomfort and spasm in the active UroShield patients, as evidenced by a statistically significant decrease in the requirement for the medications required to treat urinary catheter associated pain and discomfort (Ikinger U, “Biofilm Prevention by Surface Acoustic Nanowaves: A New Approach to Urinary Tract Infections?,” 25th World Congress of Endourology and SWL, Cancun, Mexico, October 2007).

In a subsequent physician-sponsored trial, known as Heidelberg 2, conducted in 2007, 40 patients who underwent radical prostatectomies were divided into two groups, with the active group receiving one intra-operative dose of antibiotics and UroShield and the control group receiving one intra-operative dose of antibiotics and then five subsequent doses over three days. At the end of the trial, the control group had four cases of bacteriuria, as compared to one in the active group. In a third trial, a physician-sponsored open label trial, 10 patients who received emergency placement of a urinary catheter due to acute obstruction were given a UroShield device and followed with regard to their pain, discomfort, spasm and overall well-being. Within 24 hours, all patients showed improvement and increased toleration of the catheter (Zillich S., Ikinger U, “Biofilmprävention durch akustische Nanowellen: Ein neuer Aspekt bei katheterassoziierten Harnwegsinfektionen?,” Gesellschaft für Urologie, Heilbronn, Germany, May 2008). We supplied devices for this trial, but had no further involvement with it.

In 2022, the Company submitted to The National Institute for Health and Care Excellence, for review, the findings from an independent evaluation of its UroShield device on patients who had used the device for up to two years. Clinical data from the study conducted during 2020 by Coventry University’s Assistant Professor, Ksenija Maravic da Silva, reported statistically significant outcomes for the device including a reduced number of UTIs, reduced instances of prescribed antibiotics, reduced catheter blockages, reduced need for unplanned catheter changes and reduced pain reported as a result of catheter associated complications. The study also provided important insights into the lives of those using the device, including improvement of overall well-being, relating specifically to decreased levels of worry and increased ability to socialize. In addition, patient feedback on product improvements was addressed and has been incorporated in the present commercially available device.

In September 2022, UroShield was approved for sale by the NHS internal supply organization, NHS Supply Chain.

This contract with NHS Supply Chain provides dedicated end-to-end supply chain service of our UroShield for every NHS healthcare organization. UroShield will be available to all patients who need the device with full clinical support, through the NHS supply chain. It represents a significant opportunity for us to expand distribution of UroShield as it will now be made available to all clinicians and their patients through the NHS organization’s own supply channel. NHS Supply Chain manages the sourcing, delivery and supply of healthcare products and services for NHS trusts and healthcare organizations across England and Wales. The organization processes more than eight million orders per year across 94,000 order points and 17,465 locations serving as an integral part of the national healthcare system in the U.K. We are ramping up production to meet increase in demand that we anticipate as a result of this exciting development.

The original contract, which is designed to provide new innovative products for healthcare providers, began in October 2022, and the recent extension signed in the fall of 2023, will merge with the existing Urology and Stoma framework contract in February 2024 with optional extension periods.

Under the contract, NHS Supply Chain describes UroShield as a disposable ultrasound device designed to reduce the risk of CAUTI by reducing bacterial colonization and biofilm formation on indwelling urinary catheters. This ultimately translates into improved outcomes for patients and care provides, reduces the need for antibiotics, catheter changes and washouts and incidence of hospital visits, thereby reducing nursing time, bed days and ambulance transfers.

In the fourth quarter of 2024, we announced our entry a product and market evaluation with two prominent distributors for UroShield. These distributors will cover Israel and South Africa.

Apogepha LOI and Term Sheet

We and our UK distributor are in advanced discussions with NHS to expand coverage of UroShield. In December 2023, we announced we entered into a non-binding letter of intent (the “LOI”) with Apogepha Arzneimittel GmbH (“Apogepha”) in which both parties will analyze the potential for Apogepha to distribute our UroShield product in Germany and other European markets. Pursuant to the terms of the LOI, Apogepha will commence a comprehensive market research study on how UroShield can fit into the pathway of care for patients with long term catheters. The goal of the LOI, and subsequent findings, will be for both us and Apogepha to better understand the feasibility of a distribution deal between both companies.

On October 9, 2024, we announced that we and Apogepha had entered into a non-binding term sheet for the purpose of appointment of exclusive distributorship throughout Germany. Both parties intend to enter into a biding agreement early in 2025.

A definitive and binding partnership agreement is predicated upon successfully obtaining reimbursement through the GKV-SV German Health Reimbursement Authority. The application for reimbursement has been submitted on behalf of Apogepha late in 2024.

Standalone Services Agreement with Veranex, Inc.

In March 2024, we entered into a standalone services agreement (the “Veranex Agreement”) with Veranex, Inc. (“Veranex”), to provide certain research and development services to assist with the development of our next generation of UroShield and PainShield products. The Veranex Agreement has a term of approximately 50 weeks, subject to adjustments or earlier termination thereof in accordance with the terms of the Agreement, with estimated fees and expenses of up to approximately $1.1 million subject to certain adjustments, including among other things, revising the agreement in the event of changing assumptions or facts, unforeseen development deviations, or changes in scope. We expect engineering of the new technology to eventually allow us to find a US manufacturing partner once the development process has been completed.

In December 2024, Veranex completed the first element of the “next-gen” product development process. Prototypes of both the device and transducer element were provided to our management team. It is anticipated that the completion of the process to be in the first half of 2025.

Market for UroShield

According to the Centers for Disease Control and Prevention, UTI is an infection involving any part of the urinary system, including urethra, bladder, ureters, and kidney. UTIs are the most common type of healthcare-associated infection reported to the National Healthcare Safety Network (NHSN). Among UTIs acquired in the hospital, approximately 75% are associated with a urinary catheter, which is a tube inserted into the bladder through the urethra to drain urine. Approximately 15-25% of patients who are admitted to a hospital will have an indwelling catheter at some point during their stay and 7% of nursing home residents are managed by long term catheterization. The most important risk factor for developing a catheter-acquired urinary tract infection (CAUTI) is prolonged use of the urinary catheter.

CAUTI is the most common nosocomial infection in hospitals and nursing homes, representing over 40% of all hospital-acquired infections (HAIs) and 20% of intensive care unit HAIs (Maki, P and Tambyah, D. Engineering Out the Risk for Infection with Urinary Catheters., Emerging Infectious Diseases., Vol. 7, No. 2, March-April 2001). In addition, CAUTIs are the source for approximately 20% of healthcare acquired bacteremia in acute care and 50% in long-term care facilities (Nicolle, Lindsay E. “Catheter Associated Urinary Tract Infections.” Antimicrobial Resistance and Infection Control 3 (2014)). The risk of acquiring CAUTI depends on the method and duration of catheterization and patient susceptibility. Patients requiring a urinary catheter have a daily risk of approximately five percent of developing bacteriuria and approximately 25% of patients develop nosocomial bacteriuria or candiduria over one week (Maki, P and Tambyah, D. Engineering Out the Risk for Infection with Urinary Catheters., Emerging Infectious Diseases., Vol. 7, No. 2, March-April 2001). Virtually all patients requiring indwelling urinary catheters for longer than a month become bacteriuric.

CAUTI occurs because urethral catheters inoculate organisms into the bladder and promote colonization by providing a surface for bacterial adhesion and causing mucosal irritation. The presence of a urinary catheter is the most important risk factor for bacteriuria. Once a catheter is placed, the daily incidence of bacteriuria is 3-10%. Between 10% and 30% of patients who undergo short-term catheterization (i.e., 2-4 days) develop bacteriuria and are asymptomatic. Between 90% and 100% of patients who undergo long-term catheterization develop bacteriuria. About 80% of nosocomial UTIs are related to urethral catheterization; only 5-10% are related to genitourinary manipulation. (John L. Brusch, “Catheter-Related Urinary Tract Infection”, Medscape, August 18, 2015).

The global catheter market size was valued at USD 37.3 billion in 2018 and is expected to witness a CAGR of 9.7% through 2026. Rising prevalence of chronic disorders leading to hospitalization has fueled the growth of this market. The presence of multi-national manufacturers, improving medical facilities, supportive insurance policies are also some of the key factors propelling the market growth. North America is the largest regional market due to the presence of multi-national manufacturers and sophisticated healthcare infrastructure along with high product awareness levels. Asia Pacific is projected to expand at the maximum CAGR of 10.4%, over the study period. According to a Grandview research report published 2018, there are 25 million Foley catheters sold annually in the United States and 75 million catheters sold elsewhere yielding a total global Foley catheter market of 100 million units worldwide. The cost to treat a simple CAUTI has been estimated at $13,793 per case (AHRQ), and the cost of treating bacteremia has been estimated at $8,355 (NIH) per case, yielding a total healthcare burden of $830 million per year. While there are currently both antibiotic and silver coated catheters in the market, they often sell for approximately $10 above the non-antimicrobial equivalent.

In addition, for discharges on or after October 1, 2008, Medicare stopped authorizing its payment to hospitals in which patients have developed a catheter-associated urinary tract infection that was not present on admission. This provides hospitals in the United States with a substantial financial incentive to reduce the occurrence of such infections through the use of products such as UroShield, which help prevent infections hospitals would otherwise have to treat without reimbursement. In addition, it has been noted that the Centers for Medicare & Medicaid Services may fine hospitals in the future when their patients develop CAUTI, which will likely increase the incentive of hospitals to invest in technologies that may prevent this complication (Brown J, et al. “Never Events: Not Every Hospital-Acquired Infection Is Preventable, Clinical Infectious Diseases, 2009, 49 (5)).

Competition for UroShield

Several types of products have been introduced to address the growing problem of catheter-acquired infection and biofilm formation on catheter surfaces. Manufacturers offer antibiotic-coated and antiseptic-impregnated catheters. In addition, manufacturers have produced silver-coated catheters, which have been shown in small studies to delay bacteriuria for about two to four days. However, larger studies did not corroborate this result; on the contrary, silver hydrogel was associated with overgrowth of gram positive bacteria in the urine (Riley DK, Classen DC, “A large randomized clinical trial of a silver-impregnated urinary catheter: lack of efficacy and staphylococcal superinfection,” Am. J. Med. 1995 April; 98(4):349-56).

UroShield has been designed to be added to any type of catheter, including Foley catheters and silver-coated catheters, to improve a catheter’s infection prevention performance. However, in the United States, we do not have the requisite regulatory authorization to market UroShield for such use, as we have not yet obtained FDA clearance or approval for UroShield, and the FDA’s temporary, COVID-19 related policy of Enforcement Discretion under which we had previously marketed UroShield since September 2020 expressly excludes use with a coated catheter. As of the date of this filing, we have removed the product from the US market and have ceased all sales activities. UroShield is not intended to replace any existing products or technologies, but instead is intended to assist these existing products or technologies in preventing catheter-acquired urinary injury and catheter associated complications.

UroShield received CE Mark approval in September 2007 and was also approved for sale by the Israeli Ministry of Health in 2008. We have maintained our CE mark approval until now and expect that to continue going forward. We are able to sell UroShield in India and Ecuador based on our CE Mark. UroShield was granted a Canadian medical device license in September 2016, although, due to a modification of regulatory standards in Canada, we have lost our Canadian license. We are working toward reinstatement of our Canadian license. To that extent, we passed an audit in or around October 2022.

In the European Union, UroShield has been marketed for the prevention of CAUTI and biofilm formation, decreased pain and discomfort associated with urinary catheters and increased antibiotic efficacy.

In September 2020, the FDA exercised its Enforcement Discretion to allow distribution of the UroShield device in the United States. According to the FDA, “UroShield® device could use Intended Use Code (IUC) 081.006: Enforcement discretion per final guidance, and FDA product code QMK (extracorporeal acoustic wave generating accessory to urological indwelling catheter for use during the COVID-19 pandemic)”.

Accordingly, the FDA’s Enforcement Discretion temporarily cleared the way for import of UroShield to the U.S. during the COVID-19 pandemic, immensely expanding the company’s addressable market for the device during this time period. As of the date of this report, we have not been notified of any change in our Enforcement Discretion status, however, we have removed the product from the US market and have ceased all sales activities. The device is designed to aid in the prevention of CAUTI incidence in patients requiring long-term indwelling catheterization, defined as 14 days or greater.

We believe the evidence presented to the FDA on UroShield demonstrated decreases in the risk of catheter-associated urinary tract infections and related complications in patients using UroShield who required long-term indwelling catheterization. We intend to seek long-term marketing authorization from the FDA through theDe Novo classification process for UroShield, which is a premarket pathway intended for devices that cannot pursue 510(k) clearance because there is no substantially equivalent predicate device but which the applicant believes are sufficiently low-risk that they need not undergo the rigorous premarket approval pathway to be deemed safe and effective for the applicable indications for use. We are currently seeking advice from the FDA prior to submission. We also intend to seek advice and validation of supporting studies we intend to undertake in advance of aDe Novo application.

The FDA has made it clear that we will need to generate more clinical study data in order to achieve)De Novo reclassification. Our intent is to conduct a community based PRO study (Patient Reported Outcomes) measuring the impact UroShield will have on prevention of CAUTI, prevention of blockage, and prevention of pain. We currently are in the early stages of putting together a team and plan to start this process.

Studies completed to assess the safety of UroShield for human use:

UroShield Sales and Marketing

Since the FDA exercised its Enforcement Discretion to allow the distribution of the UroShield device in the United States, we have been actively seeking partnerships for marketing our product in the United States. We believe the business opportunity for UroShield is in the hundreds of millions in U.S. dollars to the extent that UroShield obtains permanent marketing authorization from the FDA, is recognized as effective and becomes widely adopted for use on catheters, none of which can be guaranteed. To that end, we are seeking a strategic partnership with various companies which have an existing “footprint” in the urology market. Those discussions and negotiations are ongoing at this time.

We have appointed distributors for UroShield in the United Kingdom, Malta, Australia and New Zealand.

From time to time, we have had interest from strategic companies in the catheter market to partner, license or acquire the UroShield technology. These strategic partners are active in the urology market and may be interested in integrating UroShield as an accessory, into their respective range of products. Discussions with these partners are ongoing. There has also been interest from other companies with various invasive line applications.

To date, we have conducted the clinical trials set forth below:

Recently Completed, Current, Ongoing and Planned Clinical Trial

If we are able to locate a strategic partner or otherwise obtain sufficient funding, we anticipate conducting the following clinical trial:

PainShield

PainShield is an ultrasound device, consisting of a reusable driver unit and a disposable patch, which contains our proprietary therapeutic transducer. It delivers a localized ultrasound effect to treat pain and induce soft tissue healing in a targeted area, while keeping the level of ultrasound energy at a safe and consistent level of 0.4 watts. We believe that PainShield is the smallest and most portable therapeutic ultrasound device on the market and the only product in which the ultrasound transducer is integrated in a therapeutic disposable application patch.

We believe the existing ultrasound therapy devices being used for pain reduction are primarily large devices used exclusively by clinicians in medical settings. PainShield is able to deliver ultrasound therapy without being located in a health care facility or clinic because it is portable, due to it being lightweight and battery operated. Because it is patch based and easy to apply, PainShield does not require medical personnel to apply ultrasound therapy to the patient. Some patient benefits reported in prior studies included ease of application and use, relatively quick recovery time, high patient compliance, and potentially increased safety and efficacy over certain other devices that rely on higher-frequency ultrasound (Adahan M, et al, “A Sound Solution to Tendonitis: Healing Tendon Tears With a Novel Low-Intensity, Low-Frequency Surface Acoustic Ultrasound Patch,” American Academy of Physical Medicine and Rehabilitation Vol. 2, 685-687, July 2010). PainShield can be used by patients at home or work or in a clinical setting and can be used even while the patient is sleeping. Its range of applications includes acute and chronic pain reduction and anti-inflammatory treatment.

Picture of PainShield with Patch

In other countries outside the United States where the product is approved for such use, PainShield is used to treat tendon disease and trigeminal neuralgia (a chronic pain condition that affects the trigeminal or 5th cranial nerve, one of the most widely distributed nerves in the head); previously, the therapeutic options for these disorders have been very limited. In the United States, PainShield is only cleared to treat pain, muscle spasms, and joint contractures associated with or caused by various conditions or diseases. It has also been used to treat pelvic and abdominal pain. To date, to the best of our knowledge, the primary treatment options for several of these conditions are pain medication and surgery. Several additional causes of pain, and the treatment of that pain with the PainShield product, can be explored through clinical trials.

On March 1, 2023, the Company launched its month-to-month rental program for Painshield.

In March 2024, we the Veranex Agreement with Veranex to provide certain research and development services to assist with the development of our next generation of UroShield and PainShield products. See “Nano OpCo’s Products – UroShield,” above.

Market for PainShield

Pain-related complaints are one of the most common reasons patients seek treatment from physicians (Prince V, “Pain Management in Patients with Substance-Use Disorders,” Pain Management, PSAP-VII, Chronic Illnesses). According to Landro L, “New Ways to Treat Pain: Tricking the Brain, Blocking the Nerves in Patients When all Else Has Failed,” Wall Street Journal, May 11, 2010, approximately 26% of adult Americans, or approximately 76.5 million people, suffer from chronic pain. The National Center for Health Statistics has estimated that approximately 54% of the adult population experiences musculoskeletal pain. Studies have shown that low-frequency ultrasound treatment has yielded positive results for a variety of indications, including tendon injuries and short-term pain relief (Warden SJ, “A new direction for ultrasound therapy in sports medicine,” Sports Med. 2003; 33 (2):95-107), chronic low back pain (Ansari NN, Ebadi S, Talebian S, Naghdi S, Mazaheri H, Olyaei G, Jalaie SA, “Randomized, Single Blind Placebo Controlled Clinical Trial on the Effect of Continuous Ultrasound on Low Back Pain,” Electromyogr Clin Neurophysiol. 2006 Nov; 46(6):329-36) and sinusitis (Ansari NN, Naghdi S, Farhadi M, Jalaie S, “A Preliminary Study Into the Effect of Low-Intensity Pulsed Ultrasound on Chronic Maxillary and Frontal Sinusitis,” Physiother Theory Pract. 2007 Jul-Aug; 23(4):211-8). We believe that PainShield’s technology, portability and ease of use may result in it becoming an attractive product in the pain management and therapy field.

Competition for PainShield

There are numerous products and approaches currently utilized to treat chronic pain. The pharmacological approach, which may be the most common, focuses on drug-related treatments with the over-the-counter internal analgesic market estimated at $19 billion in 2019. Alternatively, there are a large number of non-pharmacological pain treatment options available, such as ultrasound, transcutaneous electrical nerve stimulation, or TENS, laser therapy and pulsed electromagnetic treatment. In addition, there are some technologies and devices in the market that utilize low frequency ultrasound or patch technology. Many patients are initially prescribed anti-pain medication; however, ongoing use of drugs may cause substantial side effects and lead to addiction. Therefore, patients and clinicians have shown increased interest in alternative pain therapy using medical devices that do not carry these side effects.

The currently available ultrasound treatments for chronic pain have generally been accepted by the medical community as standard treatment for pain management. However, the traditional ultrasound treatments, such as those manufactured or distributed by Mettler Electronics Corp, Metron USA and Zimmer MedizinSysteme, are stationary devices found only in clinics and other health care facilities that need to be administered to patients by health care professionals. We are aware of three companies that market smaller ultrasound devices capable of certain self-administered use for the treatment of pain: Koalaty Products, Inc., Sun-Rain System Corp. and PhysioTEC. These devices generally function in the same manner, at the same frequency and with the same administration and safety requirements and limitations as traditional, larger ultrasound devices. We are also aware of one product, the SAM® Sport4, which has recently received FDA approval and also has CE Mark approval, marketed by ZetrOZ, Inc., that we understand may eliminate certain of these requirements and limitations, namely the requirement to be plugged in, the need for movement around the treated area and the relatively short safe treatment period. However, we understand that this product does not generate surface acoustic waves as our products do, which means that the treatment area is generally limited to that under the transducer, that the use of transmission gel is still required, and that the transducer thickness is significantly greater than ours (approximately 1.5cm). It is also our understanding that the FDA has issued contraindications which do not apply to the PainShield product. In addition, there are other patch-based methods of pain treatment, such as TENS therapy. TENS therapy may be painful and irritating for the patient due to the muscle contractions resulting from the electrical pulses.

PainShield combines the efficacy of ultrasound treatment for pain with the ease of use and portability of a patch-based system. PainShield also may be self-administered by the patient, including while the patient is sleeping. However, if we are unable to obtain widespread insurance coverage and reimbursement for PainShield, its acceptance as a pain management treatment would likely be hindered, as patients may be reluctant to pay for the product out-of-pocket.

CMS approved PainShield for reimbursement for Medicare beneficiaries on a national basis in January 2020 although we have never received a reimbursement value. The Company was denied reimbursement in September 2022 due to a lack of “life-cycle” testing. The Company had engaged Carmel Labs in Israel to conduct this testing and submitted the results to CMS with our 2023 application on January 3, 2023. On August 21, 2023, CMS, denied reimbursement with respect to PainShield due to their request for additional longevity testing. We are currently evaluating whether to resubmit another application to CMS.

Our marketing efforts continue to expand in the direct to consumer, Veterans Health Care network, and workers’ compensation market. Relative to the VA market, we are currently represented by Applied Medical and Delta Medical. Delta Medical is a Service Disabled Veteran Organization Small Business (SDVOSB). PainShield is approaching the workers’ compensation market through various sales agents and on a direct basis. Additionally, on March 1 st, 2023, we established a rental program for direct to consumer marketing for patients without health insurance coverage.

PainShield received 510(k) clearance from the FDA in August 2008 as an ultrasonic diathermy device intended to apply ultrasonic energy to generate deep heat within body tissues for the treatment of selected medical conditions, such as relief of pain, muscle spasms, and joint contractures. PainShield received CE Mark approval in July 2008 and was also approved for sale by the Israeli Ministry of Health in 2010. We are able to sell PainShield in India and Ecuador based on our CE Mark.

In the United States, a prescription from a licensed healthcare practitioner is required for the use of PainShield.

Recently, we announced our intention to pursue marketing authorization for a non-prescription version of PainShield MD, which we refer to as PainShield Relief. The PainShield Relief is intended to be an Over-The Counter (OTC) product, not requiring a prescription from a medical professional. We believe that such reclassification, if approved by the FDA, will open up mass market opportunities which are currently not available to us due to the prescription requirement. However, there is no assurance that we will be able to remove the prescription requirement for the use of PainShield Relief or that, even if we accomplish such reclassification and the use of PainShield Relief no longer requires a prescription, PainShield Relief will be successful commercially in the mass market or we will be able to generate significant revenues from the mass market opportunities, if any.

In order to prove to the FDA that the requirement for a physician prescription is not necessary to ensure safe and effective use of the product, proof of safety and consumer “usability” needs to be established. We engaged User-View, Inc. to facilitate our Usability study and received the favorable results we expected. The product packaging and all instruction documents have been modified in an effort to meet OTC standards. We also engaged an outside laboratory to perform acoustic testing on all PainShield products. We previously anticipated submission of a 510(k) for PainShield Relief to the FDA, for OTC use as a class 1 device, in early April 2022, but do not expect such submission to take place until 2025 as we are evaluating whether any additional data or action steps are needed including potentially redesigning the product in appearance and functionality.

The PainShield Plus, is a dual applicator device, which will also be submitted for specific clearance from the FDA. Submission for PainShield Plus was made in late February 2022. We received FDA clearance in November 2023.

In the United States, PainShield falls under the diathermy classification for the treatment of pain for initial reimbursement purposes. The permitted reimbursement codes can be used in the outpatient supervised medical setting. We continue to work with the Centers for Medicare and Medicaid Services and private insurers so that reimbursement can be extended to cover the administration of PainShield outside of health care facilities and clinics. We have engaged outside legal counsel to assist with all aspects of reimbursement and FDA regulatory actions. In addition, we intend to conduct clinical trials in order to pursue FDA authorization to market PainShield for a larger range of indications. The targeted reimbursement would be based upon specific indications, where study data serves as justification for payment.

PainShield Sales and Marketing

PainShield was introduced in 2009 as a treatment for pain, such as tendonitis, sports injuries, pelvic pain, and neurologic pain, depending on the scope of the approval or clearance from each applicable jurisdiction, and we have sold over 8,000 units since its introduction. We have entered into distribution agreements in United States, Europe, Australia, and India for the distribution of PainShield. We intend to seek additional distribution opportunities in Europe, East Asia and Ecuador. In addition, we sell PainShield directly to patients through our website in jurisdictions where direct-to-consumer sale is permitted. We are continuously improving our marketing efforts in the U.S. market and throughout the world to establish licensing and private label partnerships as well.

We have identified a unique application for PainShield in applicable foreign jurisdictions where such application is authorized, which is the treatment of a severe facial nerve pain called Trigeminal Neuralgia, otherwise known as tic douloureux. The FDA lists facial application as a contraindication and has not cleared or approved PainShield for such use in the United States. We are considering pursuing FDA approval of the PainShield for Trigeminal Neuralgia, which will likely require additional data and clinical investigation to support an application for premarket approval (“PMA”) for this indication, if such PMA is required by FDA. Two studies were performed in Israel, “A Randomized Control Trial Examining the Efficacy of Low Intensity Low Frequency Surface Acoustic Wave Ultrasound in Trigeminal Neuralgia Pain”, and “A Sound Solution for Trigeminal Neuralgia”. Two trials which enrolled a total of 16 and 15 patients respectively, both conducted at the Sheba Medical Center in Israel, concluded that these studies support the hypothesis that the application of Low Intensity Low Frequency Surface Acoustic Wave Ultrasound (LILF/SAW) may be associated with a clinically significant reduction of pain severity among patients suffering from trigeminal neuralgia disease. One of the studies showed a reduction in pain among 73% of the participants. We believe this to be an ideal market to address with the PainShield. With few existing treatment alternatives, we believe the PainShield could prove to be a practical and safe alternative. A broader RCT, targeting 60 patients suffering from unilateral trigeminal neuralgia, was also completed. The article was published on January 22, 2019, in the Journal of Anesthesiology and Pain Research, under the title “The Effect of a Surface Acoustic Wave (SAW) Device on the Symptomatology of Trigeminal Neuralgia”. We cannot predict the success of any future trials, nor can we guarantee that FDA will grant approval for such use.

GlobalData’s epidemiological analysis forecasts that the total prevalent cases of trigeminal neuralgia in the seven major markets (United States, France, Germany, Italy, Spain, U.K and Japan) will grow at 15% between 2012 and 2022. According to an estimate by Ronald Brisman, M.D., in 2013 the prevalence of trigeminal neuralgia in the U.S. may have been as high as approximately 280,000 patients. With the favorable results from our current, ongoing study (explained in detail below), we continue to plan to aggressively pursue this market in the foreign jurisdictions where PainShield has been approved through direct marketing efforts and distributor relationships.

We have also identified a market for PainShield in the professional sports industry, where in some cases, reimbursement may be available from sports alumni organizations or, more likely, self-pay. In order to pursue this market, we are exhibiting at sports trainer’s meetings, pursuing alumni associations, advertising in their media, and have recently engaged a national distributor in the United States. Discussions and ongoing negotiations continue with other appropriate distributors in these various market segments.

To date, we have conducted or are in the process of conducting the clinical trials set forth below:

If we are able to obtain sufficient funding, we anticipate conducting the following clinical trials:

WoundShield

Our WoundShield product was granted the European Wound Closure Customer Value Leadership Award, Ultrasound Therapy - Wound Closure in 2014. WoundShield is intended to treat acute and chronic wounds with a disposable treatment patch that delivers localized therapeutic low frequency ultrasound. The WoundShield patch has two configurations: one that is placed adjacent to the wound and another, called the instillation patch, that is placed on the wound to enable instillation through sonophoresis, a process that increases the absorption of semisolid topical compounds, including medications, into the skin. Based on studies conducted by BIO-EC Microbiology Laboratory and Rosenblum, we believe that our WoundShield product possesses significant potential for the treatment of, among other things, diabetic foot ulcers and burns (Gasser P, Study Report delivered by BIO-EC Microbiology Laboratory, Dec 2007, which we ordered, paid for, and provided devices for; Rosenblum J, “Surface Acoustic Wave Patch Diathermy Generates Healing In Hard To Heal Wounds,” European Wound Management Association 2011, for which we supplied devices but had no further involvement).

In March 2020, we signed a license agreement with Sanuwave Health, Inc. (“Sanuwave”) for the manufacture and delivery of our WoundShield technology. Under the terms of the agreement, NanoVibronix received warrants to purchase up to 127,000 of Sanuwave stock upon signing and, will receive a $250,000 milestone payment based on FDA approval, and 10% royalty on Sanuwave’s gross revenues from sales or rentals of WoundShield. In return, Sanuwave has received the worldwide, exclusive rights to the Company’s WoundShield product and technology.

On September 12, 2024, the agreement with SanuWave was terminated, and our Sanuwave warrants were cancelled.

Picture of WoundShield Driver and Instillation Patch

WoundShield delivers surface acoustic waves to the location of the wound. Surface acoustic waves move laterally across the surface of the wound, which enables the transfer of the acoustic energy of the waves along the entire wound surface in a continuous and consistent mode, providing access to the waves’ benefits for a longer treatment period than conventional ultrasound without the need for supervision or a treatment session by a clinician.

The technology has been found to have a positive effect on the epithelialization (healing by the growth of epithelial cells) of diabetic wounds, as well as on the stimulation of the precursors of dermal and epidermal (skin) growth. As such, it is a useful adjunct to wound care by increasing dermal and epidermal growth, including glycosaminoglycans, or GAGs (which bind to extracellular proteins like collagen, fibronectin, laminin, etc. and retain considerable amounts of water, thus preserving the skin structure) as well as the amount of collagen (a protein that helps skin heal) and decreasing the number of cells in mitosis (a type of cell division) (Rosenblum J, “Surface Acoustic Wave Patch Diathermy Generates Healing In Hard To Heal Wounds,” European Wound Management Association 2011, for which we supplied devices which were precursors to WoundShield, but had no further involvement). In addition, the WoundShield instillation patch allows for administration of therapeutic agents into the wound area through a sonophoresis effect.

Many key processes in wound healing are dependent upon an adequate supply of oxygen. Diabetic foot ulcers are particularly in need of an adequate oxygen supply because the disease often results from poor perfusion (blood flow) and decreased oxygen tension. Oxygen is also important for the immune system to combat bacteria, synthesize collagen, help with fibroblast proliferation (fibroblasts are a type of cell that play a critical role in wound healing), form oxidative (taking place in the presence of oxygen) pathways for adenosine triphosphate, or ATP, formation (ATP transports chemical energy within cells for metabolism), and the nitric oxide dependent signaling pathways. It is generally believed that a lack of available oxygen is a basic contributing factor in the perpetuation of these wounds. Wound healing experts have developed a technique of perfusing ischemic wounds (which occur when blood flow is blocked) with hyper-oxygenated saline, while the wound is being treated with ultrasound, also known as sonication. This localized oxygenation therapy has many advantages over the use of hyperbaric chambers (large chambers in which the oxygen pressure is above normal), a common method for delivering oxygen to wounds, as it is more cost-effective, can be done at the patient’s bedside and can be administered more frequently. The WoundShield instillation patch was tested as a potential ultrasound technology for this localized oxygen therapy. In one study (Morykwas M, “Oxygen Therapy with Surface Acoustic Waveform Sonication,” European Wound Management Association 2011; we supplied devices for this study, but had no further involvement with it), oxygen sensors were placed in the wound bed to directly measure partial pressure of oxygen in an ischemic wound bed on a pig. The wound was perfused with hyperbaric oxygen and sonicated using the WoundShield instillation patch. With surface acoustic wave ultrasound technology, tissue oxygen levels (partial pressure of oxygen in the blood, or PaO2) were raised from a range of 20 mmHg (millimeters of mercury) to 60 mmHg in peripheral (periwound) areas, a 3 centimeter distance away from the transducer, and from 40 mmHg to greater than 100 mmHg in the central wound bed lying below the WoundShield instillation patch (see table below). The results of this study illustrated that the WoundShield instillation patch allowed oxygen to directly enter into the wound. The direct entry of the oxygen increased the amount of oxygen reaching the wound, which has been shown to advance the healing process. In addition, we believe that WoundShield’s small size, lower cost and ease of use makes localized oxygen treatment commercially viable.

In 2012, results were published of a human feasibility trial for the WoundShield instillation patch that was performed at Duke University in North Carolina. Seven patients were treated with the WoundShield instillation patch for their wounds and average tissue oxygen levels (PaO2) increased by an average of 58% over baseline (Covington S, “Ultrasound-Mediated Oxygen Delivery to Lower Extremity Wounds,” Wounds 2012; 24(8)). We supplied devices for this trial, but had no further involvement with it.

Market for Wound-Healing Devices

The global wound care device market totaled approximately $20.8 billion in 2022 and it is expected to grow to $27.2 billion by 2027 at a CAGR of 65.4% during 2022-2027 (as reported by Markets and Markets in June 2022). According to the Global Report on Diabetes produced by the World Health Organization (“WHO”) in 2016, globally, an estimated 422 million adults were living with diabetes in 2014, compared to 108 million in 1980. According to a report entitled “Advances in Wound Closure Technology” by Frost and Sullivan (2005), foot complexities are the most frequent causes for patients with diabetes to get hospitalized, with complications usually starting with the formation of skin ulcers. In addition, according to the American Burn Association, approximately 486,000 patients received medical treatment annually for burn injuries in 2016 in the United States. There are also policy-based factors that may increase the size of the wound care market. We anticipate that reimbursement decisions with respect to hospital acquired wounds may create a large market opportunity for wound care products, including WoundShield. Furthermore, in 2009, the Centers for Medicare and Medicaid Services announced that they would stop reimbursements for treatment of certain complications that they believed were preventable with proper care. One such complication was surgical site infections after certain elective procedures, including some orthopedic surgeries and bariatric surgery. We believe that such developments incentivize medical care providers to invest in reducing the risk of infection through the use of wound care products, including WoundShield.

Competition for WoundShield

The market for advanced wound care includes a number of competitors, such as the 3M Company, Smith and Nephew plc and Convatec Inc., all of whom market wound-healing medical devices. Due to their size, in general these companies may have significant advantages over us. These competitors have their own distribution networks for their products, which gives them an advantage over us in reaching potential customers. In addition, they are vertically-integrated, which may allow them to maximize efficiencies that we cannot achieve with our third-party suppliers and distributors. Finally, because of their significantly greater resources, they could potentially choose to focus on research and development of technology similar to ours, more than we are able to. In general, we believe that these competitors have, and will continue to have, substantially greater financial, technological, research and development, regulatory and clinical, manufacturing, marketing and sales, distribution and personnel resources than we do. However, we believe that our products differentiate us from these competitors, and we will be competitive on the basis of our technology. We believe that the strength of these competitors may create an opportunity through strategic partnerships.

At present, ultrasound treatment for wounds is limited only to wound debridement (removal of damaged tissue or foreign objects from a wound) and such products are marketed by Arobella Medical, LLC, which produces the Qoustic Wound Therapy System, Misonix Inc., which produces SonicOne products, and Alliqua Biomedical, Inc., which produces the MIST Therapy System. Due to their size, in general these companies may have the same advantages over us as discussed with respect to our competitors in the paragraph above. However, these ultrasound devices are indicated for use only in medical clinics and require an operator to deliver their treatment, thus limiting their use and application. The MIST Therapy System and Quostic Therapy System are non-contact ultrasound device that delivers ultrasound through a mist that is applied directly on the wound.

We believe that these therapies are less advantageous than WoundShield because they require an operator to deliver the treatment and the removal of bandages to target the wound bed. In contrast, the WoundShield patch sits on normal skin bordering the open wound and no manipulation of the wound bandage is required. Moreover, WoundShield can be self-administered, without an operator, in both clinics and home settings. We also believe that WoundShield will prove to be an effective alternative to treating chronic wounds at a lower price than the existing products being used by medical practitioners. As such, we believe that facilities that are reimbursed based upon diagnosis-related groups will be more inclined to adopt WoundShield because it will provide the same therapeutic results at a significantly lower cost than traditional ultrasound therapies.

We are also aware of a small clinical study, for which results were reported in August 2013, in which a small ultrasound device showed positive results in the treatment of venous ulcers, a type of chronic wound. We understand that this product does not generate surface acoustic waves as our products do, which means that the treatment area is generally limited to that of the transducer’s diameter. We believe our products would have certain other advantages over this potential device, if developed, including that our products weigh less and are thinner. However, given the early stage of development of this potential device, we cannot say with certainty how our products would compare.

The most common method of oxygen administration for wound healing is hyperbaric oxygen therapy, especially to treat specific ulcerations in diabetic patients. Hyperbaric oxygen therapy has been shown to increase vascular endothelial growth factor expression, which measures the creation of new blood vessels (Fok TC, at el, “Hyperbaric oxygen results in increased vascular endothelial growth factor (VEGF) protein expression in rabbit calvarial critical-sized defects”, Schulich School of Medicine and Dentistry, University of Western Ontario, Canada). The activation of endothelial cells by VEGF sets in motion a series of steps toward the creation of new blood vessels (J Lewis et al., National Cancer Institute, Understanding Cancer and Related Topics, Understanding Angiogenesis). We believe that the WoundShield instillation patch, which can be used as an oxygen instillation system, will be complementary to, or in some cases an alternative to, the use of hyperbaric chamber therapy. This complementary treatment option will allow the treating physician greater therapeutic versatility in treating wounds. For a certain populace of patients, we believe that the WoundShield instillation patch could provide physicians with an alternative to hyperbaric oxygen therapy because it provides the same benefits as hyperbaric oxygen therapy at a lower cost to the patient. There are a number of competitors in the hyperbaric chamber therapy market, including approximately eight companies in the United States. Due to their size, in general these companies may have the same advantages over us discussed with respect to our competitors in the first paragraph of this section. However, we believe that the WoundShield instillation patch possesses certain advantages over the existing hyperbaric chamber therapy, including lower cost and greater ease of use. In addition, we believe that the WoundShield instillation patch will not necessarily compete with hyperbaric chamber therapy, but rather will often complement such therapy.

While we believe that WoundShield is well positioned to capture a share of the wound care market, WoundShield may be unable to achieve its anticipated place in the wound care market due to a number of factors, including, but not limited to, an inability to obtain the approval of the FDA , for which it is indicated and its failure to be adopted by health care practitioners and facilities or patients because of its status as a new product in a market that relies on patient-focused initiative to treat wounds.

For a general discussion of the FDA approval process with respect to our products, and regulation of our products in general, see “- Government Regulation” below.

We do not intend to seek FDA clearance in the short term.

WoundShield Sales and Marketing

WoundShield has generated minimal revenues to date. In March 2020, we signed a license agreement with Sanuwave Health, Inc. for the manufacture and delivery of our WoundShield technology. On September 12, 2024, the agreement with SanuWave was terminated, and our Sanuwave warrants were cancelled.

With respect to WoundShield, to date, we have conducted the following evaluation studies:

Third Party Reimbursement

We anticipate that sales volumes and prices of the products we commercialize will depend in large part on the availability of coverage and reimbursement from third party payers. Third party payers include governmental programs such as Medicare and Medicaid, private insurance plans and workers’ compensation plans, Veterans Health Care network, among others. These third-party payers may deny coverage and reimbursement for a product or therapy, in whole or in part, if they determine that the product or therapy was not medically appropriate or necessary. The third-party payers also may place limitations on the types of physicians or clinicians that can perform specific types of procedures. In addition, third party payers are increasingly challenging the prices charged for medical products and services. Some third -party payers must also pre-approve coverage for new or innovative devices or therapies before they will reimburse health care providers who use the products or therapies. Even though a new product may have been approved or cleared by the FDA for commercial distribution, we may find limited demand for the device until adequate reimbursement has been obtained from governmental and private third -party payers.

Over-the-counter products, such as the proposed PainShield Relief product that we are developing, if ultimately cleared for marketing by the FDA, are generally not reimbursed by any third-party payers.

In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific product lines and procedures. There can be no assurance that procedures using our products will be considered medically reasonable and necessary for a specific indication, that our products will be considered cost-effective by third party payers, that an adequate level of reimbursement will be available or that the third -party payers’ reimbursement policies will not adversely affect our ability to sell our products profitably.

In the United States, some insured individuals are receiving their medical care through managed care programs, which monitor and often require pre-approval of the services that a member will receive. Some managed care programs are paying their providers on a per capita basis, which puts the providers at financial risk for the services provided to their patients by paying these providers a predetermined payment per member per month, and consequently, may limit the willingness of these providers to use certain products, including ours.

One of the components in the reimbursement decision by most private insurers and governmental payers, including the Centers for Medicare and Medicaid Services, which administers Medicare, is the assignment of a billing code. Billing codes are used to identify the procedures performed when providers submit claims to third party payers for reimbursement for medical services. They also generally form the basis for payment amounts.

Obtaining reimbursement approval for a product from any government or other third -party payer is a time-consuming and costly process that could require us or our distributors to provide supporting scientific, clinical and cost-effectiveness data for the use of our product to each payer. Even if a code is obtained for a product, a third -party payer must still make coverage and payment determinations. When a payer determines that a product is eligible for reimbursement, the payer may impose coverage limitations that preclude payment for some uses that are approved by the FDA or other foreign regulatory authorities. We believe that the overall escalating costs of medical products and services has led to, and will continue to lead to, increased pressures on the health care industry to reduce the costs of products and services. In addition, health care reform measures, as well as legislative and regulatory initiatives at the federal and state levels, create significant additional uncertainties. There can be no assurance that third party coverage and reimbursement will be available or adequate, or that future legislation, regulation, or reimbursement policies of third -party payers will not adversely affect the demand for our products or our ability to sell these products on a profitable basis. The unavailability or inadequacy of third -party payer coverage or reimbursement would have a material adverse effect on our business, operating results and financial condition.

**UroShield.**If cleared or approved by the FDA for the U.S. market, we expect these products to be used in inpatient settings and therefore reimbursed under the Diagnosis Related Group (DRG) or per diem reimbursement system. In addition, in an outpatient or home setting, we anticipate that these products will initially be purchased privately until a reimbursement code is obtained. However, we believe that if we can empirically demonstrate UroShield’s efficacy in preventing recurrent hospitals admission in chronic Foley catheter patients and reducing overall per-patient cost, third party payers may accelerate the reimbursement approval process since the device could reduce their overall per-patient cost. We believe the natural progression of the adoption of this technology will allow for use in the home setting. We intend to pursue reimbursement in the Medicare Part B code to support the use for long term catheter use and infection prevention in the home.

**PainShield.**Effective as of January 2020, CMS approval for Medicare reimbursement was added through code K1004. The value of the reimbursement has not yet been confirmed. We continue to work toward a favorable reimbursement with outside legal counsel and reimbursement consultants. The most recent application for reimbursement from CMS/Medicare was submitted on January 3, 2023, in which CMS denied reimbursement due to their request for additional longevity testing. We are currently evaluating whether to resubmit another application to CMS.

**WoundShield.**We believe that the initial usage of these products, if approved or cleared by the FDA, will be in the hospital setting. Reimbursement in the hospital setting is typically governed by the DRG system, which is a prospective payment methodology that assigns a predetermined, fixed amount based on the patient’s diagnoses. Sanuwave Health Inc., as the licensee of this technology, is responsible to apply for such reimbursement, but has not yet done so.

New Product Under Development

In 2016, we started developing a device candidate for the facial rejuvenation market called Renooskin. Previous in vitro studies on human skin were done showing that the SAW technology provided skin rejuvenation comparable to Retinol A which is a well-accepted anti-aging cream. We have developed a head band like applicator for the PainShield SAW treatment and are in the process of arranging for a pilot trial with a cosmetic dermatologist and/or plastic surgeon. We believe that, subject to proof of efficacy of the Renooskin and receiving regulatory approval, neither of which are guaranteed, the device candidate could potentially be sold in a non-reimbursement market since cosmetic devices are private pay. We are still considering several paths towards commercialization but such actions are limited due to the lack of financial resources available to effectively market the technology.

ENvue’s Business

ENvue is a medical device company engaged in the research, development, production, marketing, and sale of medical devices in the field of enteral feeding and is in the initial stage of commercializing its products. Guided by its mission to be an innovation leader in the field of enteral feeding, ENvue is focused on improving patient outcomes across the continuum of care, encompassing the development of advanced, personalized navigation solutions, responding to the challenges of the everchanging healthcare environment, while continuously focusing on the customer. The medical device marketed and sold by ENvue is the FDA 510(k)-cleared ENvue System, which assists in the insertion of a feeding tube into the digestive system of patients requiring nutrition during hospitalization through in-body navigation (the “ENvue System”).

The most common way to provide nutrition to patients during hospitalization is through a feeding tube inserted through the nose or mouth into the stomach or small intestine (known as “enteral nutrition”). Around 43 million feeding tubes are inserted annually worldwide (Enteral feeding devices, Global forecast to 2025; Market & Markets (“Markets & Markets”)). Between 2-5% of these tubes are placed in the lungs leading to a 30% chance of a collapsed lung or possible fatality (Aguilar-Nascimento, Kudsk, JPEN J Parenter Enteral Nutr 2007; Bourgault, Margo Halm Am J Crit Care. 2009). Furthermore, between 20-50% of hospital patients (Bellanti, Francesco, et al. “Malnutrition in hospitalized old patients: screening and diagnosis, clinical outcomes, and management.” Nutrients 14.4 (2022): 910.), including those in the intensive care unit (“ICU”), are malnourished, with malnutrition having a significant impact on both clinical outcomes and healthcare systems.

Recognizing the critical need for early feeding in small bowel and lower the risk of tube misplacement, ENvue applied its expertise in electromagnetic navigation and enteral feeding to develop the ENvue System. The ENvue System, together with a dedicated feeding tube for the system, positioning sensors, and other components developed by ENvue, is designed to efficiently and safely insert the feeding tube into the patient’s digestive system for the purpose of providing nutrition. Furthermore, ENvue’s solution aims to provide faster nutrition delivery to the patient, potentially improving their condition, and facilitating the insertion of the feeding tube into the small intestine, which we believe has advantages over insertion into the stomach. ENvue believes that the ENvue System offers an efficient solution for feeding tube insertion and has the ability to transform enteral feeding tube insertion.

In February 2019, ENvue received 510(k) market clearance from U.S. Food and Drug Administration for the commercial marketing and sale of the ENvue System in the United States for use in adults (aged 22 and over)1. During the first quarter of 2020, ENvue began marketing and selling the ENvue System and its dedicated feeding tubes, and it is currently in the initial commercialization phase of these products in the U.S.

ENvue Strategy

ENVue’s mission is to be an innovation leader in the field of enteral feeding, focusing on improving patient outcomes across the continuum of care, encompassing the development of advanced, personalized navigation solutions, responding to the challenges of the everchanging healthcare environment, while continuously focusing on the customer.

ENvue’s immediate target market for the ENvue System includes hospitals in the United States, and ENvue is in the early stages of commercializing the system in this market. As of the date of this filing, ENvue has engagements with hospitals in the United States for the implementation of ENvue Systems and the supply of disposable enteral feeding tubes. As part of ENvue’s strategy to introduce and implement the ENvue System in the target market, ENvue is seeking to expand its activities in the U.S. market and focus its marketing efforts on this market, and in the future, to consider entering additional markets, subject to obtaining the necessary approvals.

1 According to FDA guidelines, an adult is defined as a person who is 22 years of age or older

In November 2021, ENvue decided to work towards expanding the use of its ENvue System for procedures involving the insertion of a Peripherally Inserted Central Catheter (PICC) into central blood vessels to verify the catheter’s correct placement in the patient’s blood vessels, instead of inserting it into the patient “blindly” and performing an X-ray to confirm the correct placement of the catheter in the blood vessels. This development was halted as part of ENvue’s efficiency and reduction measures when it was in the early stages of building a prototype. Development has been reinitiated after the purchase by Envizion Holdings Corp.

ENvue has another separate development in the field of enteral nutrition, which is a feeding tube (called NGAT) that simultaneously seals the esophagus and prevents fluid passage into the respiratory tract, designed to prevent the occurrence of gastric reflux into the esophagus (called reflux) and aspiration into the lungs. As of the date of this filing, ENvue has registered intellectual property rights concerning this product and has obtained 510(k) clearance for marketing the product in the United States. The NGAT received a CE mark for marketing the product in European Union countries, but such CE mark is no longer valid, as of February 25, 2019. ENvue is currently not marketing the product, as part of its intention to focus its marketing efforts at this stage on the ENvue System only and its implementation in the relevant target market. Therefore, at this time, there is no certainty regarding when ENvue will begin marketing the NGAT, should it choose to do so.

ENvue Products

Enteral feeding is the most common method of providing liquid nutrition and certain types of medications to critically ill patients who are hospitalized and require nutritional support, such as those on ventilators, post-surgery patients, patients with disabilities or conditions that prevent them from eating fully or partially, and premature infants (Welch, Teresa D. “Nutrition options in critical care unit patients.” Critical Care Nursing Clinics 30.1 (2018): 13-27 (“Welch 2018”); Milsom, S. A., et al. “Naso-enteric tube placement: a review of methods to confirm tip location, global applicability and requirements.” World journal of surgery 39 (2015): 2243-2252 (“Milsom 2015”); de Aguilar-Nascimento, José Eduardo, and Kenneth A. Kudsk. “Use of small-bore feeding tubes: successes and failures.” Current Opinion in Clinical Nutrition & Metabolic Care 10.3 (2007): 291-296 (“de Aguilar-Nascimento and Kudsk 2007”); Koyfman, Leonid, et al. “The Placement of Post-pyloric Feeding Tubes Using DRX-Revolution Mobile X-Ray System in an ICU. A Case Series.” The Journal of Critical Care Medicine 2.3 (2016): 131-134). The prevalence of malnutrition among critically ill patients ranges from 30% to 50%, with some patients arriving at the hospital already malnourished and others potentially developing malnutrition during hospitalization (Market & Markets; Barker, Lisa A., Belinda S. Gout, and Timothy C. Crowe. “Hospital malnutrition: prevalence, identification and impact on patients and the healthcare system.” International journal of environmental research and public health 8.2 (2011): 514-527; Wischmeyer, Paul E. “Malnutrition in the acutely ill patient: is it more than just protein and energy?” South African Journal of Clinical Nutrition 24.3 (2011): S1-S7). It should be noted that there are critically ill patients who, due to their medical condition, are unable to receive regular nutrition for many days.

Delays in providing nutrition to patients can lead to a deterioration in their condition, as early insertion of the feeding tube and timely provision of nutrition can, in most cases, reduce the severity of the illness, help preserve the integrity of the intestinal lining, reduce infections and complications, improve gastrointestinal motility, and enhance immune response (Wang, Honggang, et al. “Early enteral nutrition reduced postoperative ileus and improved the outcomes in patients with emergency intestinal surgery: results from a propensity score analysis.” Int J Clin Exp Med 10.4 (2017): 7040-7048). Moreover, early provision of nutrition may improve the patient’s condition and recovery rate, reduce possible complications, shorten the stay in intensive care, and even lower mortality rates (Welch 2018). Consequently, early provision of nutrition may also result in significant cost savings for the hospital. Therefore, in cases where regular nutrition cannot be provided to the patient and enteral feeding is required, it should be provided as soon as possible (within 24-48 hours).

Enteral nutrition is administered, among other methods, by inserting a feeding tube through the patient’s nose or mouth into the stomach or small intestine (Tatsumi, Hiroomi. “Enteral tolerance in critically ill patients.” Journal of intensive care 7.1 (2019): 30 (“Tatsumi 2019”)). Each year, approximately 43 million nasogastric feeding tubes are inserted worldwide (about 14 million of them in the United States) (Market & Markets). In general, according to FDA guidelines, a feeding tube inserted into a patient should not remain in place for more than 30 days. However, hospitals tend to remove/replace the tube more frequently (for example, in cases of tube blockage due to improperly dissolved medications or accidental disconnection of the tube by the patient).

Feeding through a tube inserted through the patient’s nose or mouth directly into the patient’s small intestine (Post-Pyloric Feeding), where nutrients are absorbed, requires more precise insertion of the tube, and offers several advantages over gastric feeding. Feeding directly into the small intestine may reduce the risk of medical complications, involve a lower risk of gastric reflux and respiratory infections and complications, provide higher caloric intake for the patient, and require a shorter stay in the intensive care unit (Welch 2018; Sajid, M. S., et al. “An integrated systematic review and meta-analysis of published randomized controlled trials evaluating nasogastric against postpyloris (nasoduodenal and nasojejunal) feeding in critically ill patients admitted in intensive care unit.” European journal of clinical nutrition 68.4 (2014): 424-432; Jiyong, Jing, et al. “Effect of gastric versus post-pyloric feeding on the incidence of pneumonia in critically ill patients: observations from traditional and Bayesian random-effects meta-analysis.” Clinical Nutrition 32.1 (2013): 8-15; Tatsumi 2019. As detailed below, the ENvue System is designed to facilitate the insertion of the feeding tube through the patient’s nasal or oral route into the stomach or directly into the small intestine with accuracy and efficiency.

Limitations of Existing Alternative Enteral Feeding Methods

To the best of ENvue’s knowledge, the most common method currently used for inserting feeding tubes through the nose or mouth is the “blind” method, i.e., without visibility inside the patient’s body to facilitate accurate navigation and placement. While for many years the “blind” insertion method was considered harmless, it has been found that this method can cause serious and even fatal complications in patients (Market & Markets). Common complications among patients with feeding tubes inserted via the “blind” method include incorrect insertion of the tube into the respiratory tract instead of the esophagus, aspiration (entry of food, saliva, or stomach acids into the respiratory tract), lung collapse, sinus injuries, nosebleeds, and more (Rassias, Athos J., Perry A. Ball, and Howard L. Corwin. “A prospective study of tracheopulmonary complications associated with the placement of narrow-bore enteral feeding tubes.” Critical Care 2 (1998): 1-4; Prabhakaran, S., et al. “Nasoenteric tube complications.” Scandinavian Journal of Surgery 101.3 (2012): 147-155 (“Prabhakaran 2012”)). According to studies, of the approximately 43 million feeding tubes inserted worldwide each year, about 1.72 million tubes are mistakenly inserted into patients’ lungs, and of these, about 40% of patients suffered from pneumothorax (air accumulation in the chest cavity, impairing the breathing process) (de Aguilar-Nascimento, Jose Eduardo, and Kenneth A. Kudsk. “Clinical costs of feeding tube placement.” Journal of Parenteral and Enteral Nutrition 31.4 (2007): 269-273 (“de Aguilar-Nascimento 2007”); Burns, Suzanne M., et al. “Detection of inadvertent airway intubation during gastric tube insertion: capnography versus a colorimetric carbon dioxide detector.” American Journal of Critical Care 15.2 (2006): 188-195). Due to the high frequency of feeding tube use, experts believe that even a relatively small percentage of cases where the feeding tube is incorrectly inserted could impact a very large number of people (Prabhakaran 2012).

Incorrect insertion of the feeding tube into the lungs can have further serious consequences for the patient, including worsening of their medical condition, which could lead to medical harm and even death, extended hospitalization, significant costs for the hospital, and legal claims (de Aguilar-Nascimento 2007; Sparks, Dorothy A., et al. “Pulmonary complications of 9931 narrow-bore nasoenteric tubes during blind placement: a critical review.” Journal of Parenteral and Enteral Nutrition 35.5 (2011): 625-629).

It should be noted that due to technical failures and the prolonged time required for blind insertion of the feeding tube, attempts to insert feeding tubes directly into the small intestine can result in delays in providing the necessary nutrition to the patient (as mentioned above, providing early nutrition to the patient may improve their condition and prevent medical complications).

Given the difficulties, risks, and possible complications associated with the blind insertion method of feeding tubes, as detailed above, the duration of insertion, and the challenge of inserting it into the small intestine using this method, there is a noticeable trend towards using alternative methods for inserting feeding tubes using technological or other means (Koopmann, Matthew C., et al. “A team-based protocol and electromagnetic technology eliminate feeding tube placement complications.” Annals of surgery 253.2 (2011): 297-302 (“Koopman 2011”)), instead of relying on the blind insertion method, as detailed below.

There are significant limitations in the existing alternative methods for inserting feeding tubes into patients and the various methods used to verify that the blindly inserted feeding tube is located in the patient’s digestive system and not in the respiratory tract, the main ones of which are detailed below.

Methods for Verifying the Placement of a Blindly Inserted Feeding Tube

Among the primary methods are measuring the distance of the tube from the insertion site, measuring the volume of aspirate, measuring the pH level of the liquid aspirated from the tube (to check acidity levels to ensure it is gastric juices), checking the carbon dioxide level of the air aspirated from the tube (to ensure the tube is not located in the lungs), and using an X-ray (fluoroscopy), with the latter generally considered more accurate than the others (de Aguilar-Nascimento and Kudsk 2007; Milsom 2015). However, these methods may not always identify errors accurately and in a timely manner, and they allow correction of incorrect insertion and placement of the tube in the digestive system only after it has already been inserted into the lung, which may have caused pneumothorax or lung perforation due to the insertion of the tube into the respiratory tract (Powers, Jan, et al. “Elimination of radiographic confirmation for small-bowel feeding tubes in critical care.” American Journal of Critical Care 22.6 (2013): 521-527.). Furthermore, the X-ray method has additional drawbacks, such as additional technical costs, prolonged time consumption, delayed patient nutrition, and radiation exposure. Additionally, the pH measurement method has various limitations, such as respiratory burden and, primarily, inaccuracies due to medication or other chemical treatment that affects the acidity level in the patient’s digestive system (Bourgault, Annette M., and Margo A. Halm. “Feeding tube placement in adults: safe verification method for blindly inserted tubes.” American Journal of Critical Care 18.1 (2009): 73-76).

The core application of ENvue’s operations is the ENvue System, which is a system for monitoring and correctly positioning feeding tubes in patients who require nutritional support during hospitalization. The system includes the main unit (the system body), disposable (consumable) ENvue Feeding Tubes designed exclusively for use with the system, sensors, and additional components developed by ENvue. These components, when used together, are intended to facilitate more efficient, faster, and safer insertion of the feeding tube into the patient’s digestive system. The system uses electromagnetic waves transmitted to the upper torso of the patient, utilizing sensors embedded in the dedicated feeding tube and sensors attached to the patient’s body during the procedure, enabling monitoring and control of the feeding tube’s insertion path in an effort to facilitate proper placement into the GI tract bypassing the airways. It should be noted that using the ENvue System will not guarantee the absence of medical errors or adverse events in connection with a feeding tube placement. For example, five serious adverse events have been reported in connection with tubes inserted in patients’ lungs or pulmonary airway using the ENvue System. After investigation and review of placement files, ENvue believes the reported serious adverse events were caused by user error.

Product Components and Features

The system components are described in greater detail below:

System Body The system body includes several components, including a screen displaying the feeding tube’s position and an electromagnetic field generator mounted on an adjustable arm. Before inserting the feeding tube and until the procedure is complete, the generator is positioned towards the patient’s chest and upper abdomen, emitting low-frequency electromagnetic waves throughout the procedure (see the illustration below). Once the feeding tube is inserted, the passive electromagnetic sensor inside the tube enters the generator’s transmission area, which detects the sensor’s movement and displays it graphically on the screen. Reference Sensor An external, reusable sensor connected to the system and attached to the patient’s body in the armpit area is used to reference the feeding tube’s position within the patient’s body at any given moment. The reference sensor allows the system to remain accurate even if the patient moves during the procedure (due to coughing, etc.). Feeding Tube (Disposable Component) The dedicated feeding tube developed by ENvue is designed specifically for use with the ENvue System and is intended for placement in the stomach or small intestine. The feeding tube is single-use and features a dual connection: one for the nutrition source and another for the ENvue System.

During the procedure, the other end of the tube is inserted through the nose into the patient’s body. A passive electromagnetic sensor embedded in the tube allows the tube’s path within the patient’s body to be tracked on the system’s screen.

As of now, ENvue’s feeding tube has been cleared in three different diameters: 8 Fr., 10 Fr., and 12 Fr.3

3 Fr. 1 = 0.3 mm.

ENvue System Usage

The ENvue System is used as follows: Throughout the feeding tube insertion procedure, the ENvue System emits electromagnetic waves toward the patient’s upper body. Using the reference sensor connected to the system, the operator marks several anatomical points on the patient’s upper body and attaches an additional location sensor to the side of the patient’s chest, allowing the system to remain accurate even when the patient moves or coughs during the procedure. The operator then inserts the dedicated feeding tube for the system through the patient’s nose or mouth into the esophagus and further into the digestive system (small intestine or stomach) while viewing the tube’s path on the system’s screen from several angles and receiving real-time alerts if the system detects the tube entering the patient’s airways, which is intended to enable the operator to immediately correct the tube’s insertion path.

To the best of ENvue’s knowledge, using the ENvue System allows the feeding tube insertion procedure to be completed within approximately 5-30 minutes on average, depending on the patient’s condition, the operator’s technical ability, and other factors. In comparison, the time required for blind insertion of a feeding tube through the nose or mouth, based on ENvue’s estimate and medical research, may take about 11-60 minutes (approximately 42 minutes on average) (Smithard, David, et al. “Electromagnetic sensor-guided enteral access systems: a literature review.” Dysphagia 30 (2015): 275-285). Additionally, research shows that the time from blind insertion of a feeding tube to the start of feeding the patient may take several hours, partly due to the need to verify the tube’s correct placement in the digestive system using X-rays (Gray, Rebecca, et al. “Bedside electromagnetic-guided feeding tube placement: an improvement over traditional placement technique?” Nutrition in Clinical Practice 22.4 (2007): 436-444).

Using alternative methods as mentioned during the use of the ENvue System is not required by the FDA and is subject to the specific hospital’s policy.

For illustration purposes, below are diagrams demonstrating the use of the ENvue System:

Transmission of electromagnetic waves by the system to the patient’s upper body throughout the procedure

Real-time visualization of the feeding tube’s insertion path within the patient’s body from multiple angles

Receiving an alert for the detection of improper insertion of the feeding tube

Marketing Strategy

The system, including the dedicated feeding tubes, is marketed to hospitals, and was designed and developed after ENvue received feedback from healthcare professionals in the United States regarding their needs, which helped tailor the system to the market.

Using the technology on which the system is based, it monitors the precise location of the feeding tube within the patient’s body, from the moment it is inserted through the patient’s nose or mouth until it reaches the stomach or small intestine, and displays its location in real-time through an imaging display of the patient’s body from several different angles on a screen. The display of the patient’s body on the screen is made possible by using a reference sensor and marking anatomical landmarks on the patient’s body at the beginning of the procedure. Additionally, ENvue was developing a feature designed to allow the ENvue System to overlay the real-time insertion of the feeding tube on an X-ray image of the patient’s body. ENvue began a clinical trial for this feature, which was voluntarily suspended in December 2022 due to lack of financing.

In cases where the system detects a deviation in the tube’s path towards the patient’s trachea, an immediate alert appears on the screen. This allows the operator to correct the feeding tube’s insertion path immediately.

As part of its operations (up until the initiation of insolvency proceedings), ENvue has marketed the ENvue System to its customers and continuously supplied them with consumable feeding tubes, which are designed for use exclusively with the system. At the beginning of 2020, ENvue began marketing the system and feeding tubes to hospitals in the United States, following the FDA clearance received in February 2019 for marketing the product in this territory for adults (aged 22 and older) only.

As part of the FDA clearance process for the system under the 510(k) pathway, ENvue was required to conduct a clinical trial in connection with the safety alert issued by the FDA regarding the use of the Cortrak*2 Enteral Access System, which is another device that, like the ENvue System, is intended to facilitate enteral feeding tube placement, but was recalled in April 2022 due to serious adverse events resulting from misplaced tubes in connection with the use of the system. During the multi-center clinical trial conducted by ENvue 4, 58 feeding tube insertions were performed on 57 patients using the system, during which no feeding tubes were ultimately placed into the patients’ lungs, and no harm was caused to the patients’ lungs during the procedures. In two cases, immediate correction of the tube insertion was performed following the system’s alert of entry into the lung. Additionally, ENvue believes the trial results indicated ease of use of the system and quick learning of how to operate it.

The unique solution developed by ENvue as part of the ENvue System is intended to address, among other things, the risks and costs associated with existing methods for inserting the feeding tube into the patient and the time required until the start of feeding due to delays caused by the need to verify the tube’s placement in the patient, as described above. Using the ENvue System, including the dedicated feeding tube developed by ENvue, it is possible to monitor the feeding tube insertion path into the patient and receive a real-time alert if the tube is inserted into the patient’s respiratory tract. ENvue believes the system design may allow for accurate, reliable, and efficient tube insertion for the patient and ease of use for the operator, which could potentially reduce the time required to insert the feeding tube and thereby reducing the time until nutrition is provided to the patient.

4 The clinical trial lasted about a year, during which ENvue was required to obtain the consent of the patients or their family members (depending on the patient’s medical condition) for participation in the trial.

Additionally, ENvue believes using the system may minimize the risk of complications resulting from improper tube insertion and the associated costs for the hospital, as well as shorten the patient’s hospitalization duration and prevent exposure to radiation from performing multiple X-ray examinations to verify the tube’s placement. Furthermore, using the system screen that displays the patient’s body dimensions, ENvue believes it is easier to properly insert the feeding tube into the patient’s small intestine on the first attempt, which, as mentioned, is preferable to gastric tube insertion.

ENvue also has another product in the field, a tube designed for enteral nutrition called the Nutriseal Nasogastric Aspiration Tube (NGAT). This tube employs a sealing technique to prevent stomach acid from refluxing into the esophagus and to prevent aspiration of stomach contents into the respiratory tract. NGAT has been cleared for marketing in the U.S. and was approved in the European Union; however, as of now, ENvue is not manufacturing or marketing it, and the EU approval is currently not valid.

NGAT is a feeding tube developed by Nutriseal Limited Partnership (the rights to which were transferred to ENvue shortly after its establishment in 2017. NGAT is intended to serve as an enteral feeding tube for patients needing nutritional support and for other uses in hospitalized patients. NGAT’s uniqueness compared to other feeding tubes lies in its sealing technique around the patient’s esophagus, which can significantly reduce the risks associated with nasoenteral feeding (feeding through a tube inserted through the nose into the stomach or small intestine), including esophageal reflux (the backflow of stomach acid up the esophagus) and aspiration (inhalation) of stomach contents and food particles that may enter the lungs and cause severe health complications, including pneumonia.

NGAT was developed and designed for use in various medical procedures, such as enteral feeding, gastric lavage, and gastric decompression, while reducing the risk of esophageal reflux or aspiration. It should be noted that NGAT, in its current version, is intended for insertion without a navigation system, but future iterations, if any, may be able to be used as a feeding tube connected to the ENvue System for navigation during the tube insertion process, subject to applicable FDA clearance(s). Additionally, ENvue has developed other NGAT-b components, for which, as of now, ENvue has not submitted applications for regulatory approval.

Product Components and Features

NGAT includes a feeding tube composed of a single central internal tube for delivering nutrients into the stomach and six internal suction tubes surrounding the central internal tube (the “internal suction tubes”). NGAT contains small openings along its length, which, after the tube is inserted into the patient’s body, are positioned along the esophagus and release low negative air pressure, creating a suction action that causes the esophageal walls to contract inward, forming a seal around the tube that prevents stomach fluids from refluxing into the esophagus and aspirating refluxed stomach fluids (the “aspiration mechanism”).

NGAT is designed with two sealed suction areas located at the end of the tube inserted into the patient’s body, where stomach fluids accumulate. The internal suction tubes are divided into two sets of three suction tubes each, with each set connected to a different suction area. The operator can regulate the suction between the two sealed suction areas using a branched valve located at the end of the tube that remains outside the patient’s body, allowing suction to be applied to one sealed suction area at a time.

NGAT can be connected to standard hospital suction equipment, and its use does not require special equipment. This connection enables the operation of the aspiration mechanism as well as performing gastric lavage procedures.

Marketing Strategy

ENvue may market NGAT in the U.S. for adult treatment only (aged 22 and above) (FDA clearance in the 510(k) pathway). NGAT also received the European Union CE Mark for marketing in EU countries, which is not valid as of February 25, 2019, and several patents related to this product have been registered.

ENvue is not manufacturing or marketing NGAT as part of its business strategy to focus its operations and marketing efforts in the coming years on the introduction and integration of the ENvue System into relevant markets. ENvue’s decision regarding the commercialization of NGAT will be reviewed regularly by management and will be determined, among other factors, by the financial resources available to ENvue, the pace of ENvue System adoption in the market, and the potential impact of various factors on ENvue’s operations (including the risk factors to which ENvue is exposed). Therefore, there is currently no certainty regarding the timing of NGAT’s commercialization by ENvue. It should be noted that NGAT can potentially be used with the ENvue System, subject to the necessary FDA clearance(s), and ENvue may consider integrating NGAT within the ENvue System’s use and submitting an updated 510(k) notification to FDA if it decides to commercially manufacture and market NGAT in the future.

ENvue Feeding Tube and System for Use in Children and Preterm Infants

This is a navigation system with dedicated feeding tubes of smaller diameters, designed for use in children and preterm infants. ENvue has completed the initial product development process and will begin preparations for conducting a clinical trial as part of the FDA approval process.

Imaging Navigation (ENvue Plus)

This development allows the integration of medical imaging (fluoroscopy, MRI, CT) into the ENvue System, enabling real-time navigation of the feeding tube based on the patient’s anatomical information. In January 2022, ENvue completed the product development process, and is planning to initiate a clinical trial to assess the ENvue System’s capability to perform internal tube navigation based on a chest X-ray image.

Peripherally Inserted Central Catheter (PICC)

This is a procedure for inserting a catheter into central blood vessels to ensure the catheter’s proper placement in the patient’s blood vessels using the electromagnetic navigation technology of the ENvue System. This development is expected to allow ENvue System users to perform PICC insertion with electromagnetic navigation on X-ray images, with real-time alerts from the ENvue System about incorrect catheter placement in the patient’s body. Inserting a catheter into central blood vessels is essential for administering medications, fluids, and nutrition and for taking continuous blood samples from hospitalized patients.

Research and Development

From its founding, ENvue has engaged in the research and development of the ENvue System it developed—a system based on electromagnetic navigation technology for inserting a feeding tube. In February 2019, ENvue received FDA clearance for the commercial marketing of the product in the U.S. for adults (aged 22 and above) only.

ENvue’s research and development activities have been focused mainly on product development and improvements and upgrades to various components that make up the ENvue System to develop and improve performance.

Below are details regarding ENvue’s products in various stages of research and development:

As part of the FDA clearance process for the system under the 510(k) pathway, ENvue was required to conduct a clinical trial following the safety alert issued by the FDA regarding the use of the Cortrak*2 Enteral Access System, which is another device that, like the ENvue System, is intended to facilitate enteral feeding tube placement, but was recalled due to serious adverse events resulting from misplaced tubes in connection with the use of the system. During the clinical trial conducted by ENvue 2, 58 feeding tube insertions were performed on 57 subjects using the system, during which no feeding tubes were ultimately placed into the patient’s lung, and no harm was caused to the patient’s lung during the procedure. In two cases, immediate correction of the tube insertion was performed following the system’s alert of entry into the airways. Additionally, ENvue believes the trial results indicated ease of use of the system and quick learning of how to operate it.

ENvue Customers

ENvue’s current and potential customers are hospitals in the U.S. As of 2023, there are approximately 5,222 hospitals in the U.S. that operate intensive care units, which constitute the majority of ENvue’s potential customers (Fast Facts on U.S. Hospitals, 2024. American Hospital Association. https://www.aha.org/statistics/fast-facts-us-hospitals). The primary users of ENvue’s products in these locations are medical staff, usually nurses and clinical dietitians. As of the date hereof, ENvue’s customers include both hospitals in the U.S. with which ENvue has signed direct sales agreements and hospitals within the hospital network with which ENvue has contracted under the agreement detailed below.

ENvue is in the stage of commercializing its products, and its sales activities in the U.S. were conducted directly with end customers. As part of ENvue’s strategy to introduce the ENvue System into the U.S. market and expand its marketing efforts, ENvue may, in the future, consider partnering with a distributor or strategic marketer, in addition to direct sales to customers in the U.S.

In March 2022, ENvue entered into an exclusive distribution agreement with an Israeli distribution company for the marketing and sale of its products to end customers in Israel.

The use of the ENvue System requires training. According to the regulatory clearance granted to the ENvue System by the FDA, users of the system are required to undergo training provided by ENvue using a training model developed by ENvue for system users. The training is usually provided in a concentrated manner to system users on behalf of the hospital, lasts approximately 5 days, and includes both theoretical and practical components regarding the system and its use.

In general, at large hospitals in the U.S., centralized procurement departments are responsible for the proposal submission process, contracting, and negotiations for the purchase of all capital equipment. These departments emphasize economical and efficient operations. Typically, a hospital procurement department consists of a procurement manager overseeing a team of senior and junior buyers. The process of purchasing medical systems usually begins with the establishment of a Value Analysis Committee in the hospital, typically composed of physicians, nurses, procurement agents, professional liability experts, supply chain management, and administrators. The committee coordinates discussions with suppliers, visits sites where the systems are operated, and consults with colleagues from other hospitals. The main factors considered by the procurement committee include (a) the hospital’s requirements based on a five-year forecast of patient needs (investment horizon may vary between hospitals); (b) life cycle cost – total ownership cost; (c) economic considerations of cost recovery (cost versus revenue); (d) performance, technical specifications, and physical data of the system; (e) workflow – capabilities, staff, and output; (f) service, spare parts, and maintenance; (g) medical staff recommendations (quality of care).

ENvue is not dependent on a single customer. The 4 customers comprise 18.6% of ENvue’s revenue.

2 The clinical trial lasted about a year, during which the Company was required to obtain the consent of the patients or their family members (depending on the patient’s medical condition) for participation in the trial.

Description of Key Terms of Engagement with End Customers

ENvue’s agreements with its customers for the supply of the single-use-only ENvizion Medical Enteral Feeding Tubes (EFTs) based on purchase orders placed by the customer according to their needs, under terms outlined below. It should be noted that ENvue’s EFT is specifically designed for use with the ENvue System. Per the FDA clearance for the ENvue System, which includes ENvue’s EFT, the system cannot be used without this tube.

Negotiations with ENvue’s customers are usually conducted by ENvue’s sales agents, following meetings with hospital procurement officials and a demonstration (Demo) of the system, as well as evaluation by the medical staff through a few procedures of feeding tube insertion in patients. Based on ENvue’s experience so far, the time from the demo to the receipt of a purchase order (PO) can take up to 6 months.

Under ENvue’s agreements with customers for the purchase of the ENvue System, ENvue commits to manufacture, assemble, and supply the system components to the customer according to schedules agreed upon by both parties for each engagement. Generally, the system is delivered to the customer within a few weeks, and the feeding tubes are supplied within approximately one week from the customer’s purchase order.

In general, the consideration paid by the customer for the purchase of the system and feeding tubes is determined through negotiation between the parties and according to ENvue’s discretion. Payment for the supply of the system and feeding tubes is typically made within 30 days of delivery, according to the specific engagement terms. It should be noted that in some cases, ENvue may provide the system to the customer in exchange for replacing a competitor’s product owned by the customer, without any financial consideration (except for the payment the customer will be required to make for the purchase of feeding tubes specifically for the system). The replaced competitor’s product is used by ENvue, among other things, for training sessions it conducts for its customers on using the ENvue System instead of the competitor’s product, as well as for ENvue’s research and development purposes.

As part of the agreement with the customer for the system supply, ENvue commits to provide the hospital staff with initial training on the system and its operation, as well as additional training on updates and developments in the product, if any, and commits to provide maintenance services for the system if necessary.

The agreement typically includes warranty periods for the system and the consumable feeding tubes, for periods defined in the agreement (generally two years for the system and 30 days for the feeding tubes), during which ENvue commits to provide repair or replacement services for defective components (defects) related to components manufactured by ENvue, within a timeframe agreed upon by the parties and according to other terms set forth in the agreement. During the warranty period, ENvue may provide the customer with any necessary software and/or hardware updates for the system, if any is needed for use of the system. In general, ENvue does not have a refund policy for its products in most agreements.

Under the agreement with the customer, it is generally agreed that under certain conditions, ENvue will be liable for damages caused to the customer due to the use of the system (whether during the warranty period or outside it), up to the amount paid by the customer for the products purchased from ENvue.

Additionally, the terms of engagement with the customer include standard cancellation clauses in appropriate circumstances (such as a material breach of the agreement, company insolvency, etc.).

As mentioned, customers who have purchased the ENvue System place ad-hoc orders with ENvue for the purchase of consumable feeding tubes, according to the engagement terms outlined above. Customers issue a purchase order to ENvue, and in response, ENvue ships the products, typically within a week. These orders are made according to the customer’s needs and generally on a monthly basis, with the consideration determined by the price of the feeding tube agreed upon by the parties within the agreement.

EnVue Sales and Marketing

Until the suspension of marketing activities, which resumed in July 2024, ENvue worked to build awareness of its products among hospitals and the U.S. medical community in several ways, the main ones being detailed below:

ENvue believes it is not dependent on any of its marketing channels.

ENvue Market Opportunity and Trends

ENvue operates in the market for enteral feeding devices for hospitalized patients needing nutritional support. The importance and use of enteral nutrition means have been increasing over the last decade, partly due to their many advantages compared to traditional nutrition methods in the market, such as parenteral nutrition (intravenous nutrition). Currently, enteral nutrition methods are widely used in many countries worldwide. As of 2023, most enteral nutrition use was in North America (32.0%), Europe (29.0%), and Asia (24.0%) (“Enteral Feeding Formulas Markt Size, Share, and Trends 2025 to 2034”; available at: https://www.precedenceresearch.com/enteral-feeding-formulas-market).

The global enteral feeding devices market size was valued at $4.3 billion in 2023 (Enteral Feeding Devices Market Trends; Grand View Research; available at: https://www.grandviewresearch.com/industry-analysis/enteral-feeding-devices-industry “Grand View Research”) (of which about $2.84 billion was in the USA) (U.S. Enteral Nutrition Products Market Size, Share & Industry Analysis; Fortune Business Insights; available at: https://www.fortunebusinessinsights.com/u-s-enteral-nutrition-products-market-110143). It is estimated that the market will grow at an annual rate (CAGR) (hereinafter: the “Growth Rate”) of approximately 5.0% (about 4.4% in the USA) from 2024 to 2030, with the total market value expected to reach approximately $5.9 billion by 2030 (Grand View Research).

Several factors may drive the growth of the enteral nutrition market from 2024 to 2030, including rising healthcare costs, the increase in preterm births, aging populations, the growing prevalence of chronic diseases such as diabetes, cancer, gastrointestinal diseases, and neurological disorders, the increasing awareness of tube feeding, and improvements in healthcare systems in developing countries, among others.

However, various factors, such as health risks, an increase in the number of malfunctions during patient feeding, and complications related to tube feeding (such as faulty connections, tube disconnections, and infections), may limit the market’s growth. Additionally, incomplete or no insurance coverage for using these means in countries where it is required (mainly developing countries), as well as a lack of skilled medical personnel, are challenges to market growth.

Furthermore, the rapid spread of the COVID-19 virus worldwide, especially the increase in morbidity in the USA, heightened the need to improve patient nutrition, leading to increased demand for nasal enteral feeding means.

In 2023, hospitals were the primary users of enteral nutrition means (approximately 58.3% of global usage) (Grand View Research). The reasons for this include the technological advancements of existing tube feeding methods, alongside the shift from intravenous nutrition to tube feeding, which supports the growing use of these means in hospitals.

The adult age group segment dominated the market with a revenue share of 91.3% in 2023 (Grand View Research). Projections indicate that in the USA, this population is expected to remain the primary group using enteral nutrition means, with an expected growth rate of approximately 6.7% from 2020 to 2025 and a market value of approximately $3.9 billion by 2025.

Among all enteral feeding methods, the market value of feeding tubes is the most dominant (approximately 45% in 2020). The use of enteral feeding tubes includes, among other things, the insertion of an enteral feeding tube through the nose or mouth, as can be done using ENvue System. It should be noted that most feeding tubes inserted through the mouth are intended for children and preterm infants. The ENvue System is only cleared for use in adults, but ENvue believes that such clearance could potentially be expanded to include children and preterm infants if ENvue is able to initiate and complete appropriately designed clinical studies that meet the endpoints necessary to demonstrate that the system and its EFTs can be safely and effectively used in children and preterm infants and obtain the requisite FDA clearance for such use.

According to studies, approximately 43 million feeding tubes are inserted annually worldwide (Markets & Markets) through the nose, primarily in North America (approximately 35%), Europe (approximately 28%), and Asia (approximately 24%), with an expected annual growth rate of approximately 5.5%, 5.9%, and 9.1%, respectively, between 2020-2025.

Public Awareness

In recent years, there has been a growing trend in public awareness in Western countries, including the USA, regarding the importance of using aids to ensure the proper insertion of feeding tubes into patients. This is mainly due to the increased awareness of the risks associated with current insertion methods, such as patient lung injury, which can lead to lung collapse and even death. ENvue estimates that this trend may increase the demand for its product in these countries due to its importance in minimizing the risks associated with feeding tube insertion.

Awareness in the Medical Community

The medical community’s awareness of performing the feeding tube insertion procedure using ENvue’s product and the medical community’s adoption of the solution offered by ENvue, instead of other methods and products in the market for performing the procedure, is significant and crucial for ENvue’s success. Therefore, ENvue works with medical professionals in the USA to raise awareness among the medical community. Additionally, ENvue works to raise awareness in this market, including through appearances at medical conferences, exhibitions, participation, and conducting clinical studies for marketing purposes, as well as using various digital means.

Another development in the general environment in which ENvue operates is the increasing use of the internet by medical professionals to obtain information on new technologies and alternatives to existing methods for performing various medical procedures. Accordingly, ENvue works to deepen public awareness and awareness among the medical community of the use of ENvue’s product as an alternative to existing methods.

Medical studies published in recent years regarding the risks associated with the use of existing methods for feeding tube insertion (mainly the “blind” insertion method), as well as future studies on the subject, if published, may increase or decrease the demand for ENvue’s product in the field in which it operates.

In this context, it should be noted that the Patient Safety Movement organization 6 published an article regarding the complications and risks associated with the insertion of feeding tubes into patients, including ways to cope, guidelines, and recommendations for implementation by hospital staff. The article emphasized the importance of proper feeding tube insertion in patients and identifying incorrect tube insertion to ensure patient safety and the quality of medical care provided in the hospital, while reducing risks and preventing preventable damage. The article outlines, among other things, guidelines, and actions to be taken by hospital medical staff to ensure proper placement of feeding tubes in the patient’s body, including the limitations and risks associated with existing methods and technologies.

ENvue estimates that there are significant entry barriers to the target market in which it operates. The main barriers to entry in ENvue’s field of activity are as follows:

https://patientsafetymovement.org/clinical/enteral-tube-safety/enteral-tube-safety-nasogastric-tube-ngt-placement-and-verification And also: https://patientsafetyj.com/index.php/patientsaf/article/view/misplaced-nasogastric-tubes/219

Competition for ENvue System

ENvue industry is competitive and has been evolving rapidly with the introduction of new products and technologies as well as the market activities of industry participants. The ENvue System is indicated for use in adults 22 and over years of age to aid qualified operators in the placement of the ENvizion Medical Enteral Feeding Tube of 8 Fr, 10 Fr, and 12 Fr into the stomach or small intestine of adult patients requiring enteral feeding. ENvue competes against other companies that have developed similar devices in the market for enteral feeding devices for hospitalized patients needing nutritional support.

In order to address the potential risks and complications associated with the “blind” insertion method of feeding tubes and the drawbacks of standard methods for verifying the placement of the feeding tube, several products have been developed over the years using technological tools to enable real-time monitoring of the feeding tube’s placement within the patient’s body. Based on ENvue’s knowledge of the current landscape, there are two technological products on the market intended for use(s) similar to that of the ENvue System: “IRIS Kangaroo Feeding Tube” (“IRIS Kangaroo”) and “Cortrak 2 Enteral Access System” device (“Cortrak”). In addition, there are companies at various stages of developing feeding tubes with different insertion methods that do not rely on intrabody navigation, and as of the date of this filing, ENvue does not consider them part of its main competitors in the field of activity.

IRIS Kangaroo is a product that uses a camera attached to the feeding tube. To the best of ENvue’s knowledge, inserting a feeding tube using this method has several limitations related to the image quality inside the patient’s body, which makes it difficult to identify the tube’s location, and the need for it to be operated by a specialist doctor in the field of gastroenterology.

The second product, Cortrak, is based on electromagnetic technology. This device displays the feeding tube insertion path in real-time and allows the operator to navigate the tube into the digestive system. Preliminary studies have shown that inserting a feeding tube in this way may reduce the need for X-rays (Hemington-Gorse, S. J., et al. “The use of the Cortrak Enteral Access System™ for post-pyloric (PP) feeding tube placement in a Burns Intensive Care Unit.” Burns 37.2 (2011): 277-280; Koopmann 2011). To the best of ENvue’s knowledge, the ENvue System is technologically distinct from the Cortrak device in several respects, including: (1) performing a registration to the patient’s body that allows for the display of the patient-specific chest contour according to individual dimensions on the system screen; (2) providing a graphical and textual alert for feeding tube entry into the patient’s airway; (3) using the patient’s anatomical landmarks for the navigation process; (4) additional sensors that enable accurate insertion of the feeding tube even if the patient moves (without the need to place a device on the patient’s body); (5) a sensor embedded within the feeding tube; (6) three simultaneous vies; and (7) responsive real time display of the tube tip pathway (40 image per second refresh rate) and more.

3 To the best of ENvue’s knowledge, Avanos Medical acquired the product in 2016.

Further, in recent years, reports have been received of incorrect insertion of feeding tubes using Cortrak device, and in January 2018, the FDA issued a Safety Alert 4 following reports of cases where feeding tubes inserted using the Cortrak device were inserted into the lungs, despite the device indicating placement in the stomach. Among these, dozens of cases of pneumothorax and deaths were reported, which may be associated with the use of the device.5 As part of the aforementioned Safety Alert, the FDA published recommendations regarding the use of the Cortrak device, including that the feeding tube placement shown by the device should not be relied upon exclusively. This Safety Alert highlights the need for improved technology to ensure the safety and effectiveness of the feeding tube insertion procedure.

It should be noted that the safety alert published by the FDA does not prohibit the sale and use of the Cortrak device. However, according to the FDA’s recommendations, the device’s marketers were required, among other things, to adapt the user training model for the device, which is under active FDA supervision, and this may affect the demand for the device and its adoption by hospitals.

Additionally, on April 7, 2022, the FDA announced that Avanos Medical issued a recall for the Cortrak device. According to the FDA’s announcement, the recall was due to Avanos Medical reporting dozens of injury cases and 23 deaths resulting from misplaced feeding tubes in patients when the Cortrak device was used to help with placement. The FDA classified the recall as Class I, the most serious type in this context, and noted that incorrect placement of nasogastric or nasoenteric tubes could lead to serious injury or death. ENvue believes that the recall may have a positive impact on ENvue’s operations since its products serve as a direct substitute for the Cortrak device.

The prices of feeding tubes inserted by the “blind” method are lower than ENvue’s feeding tubes. However, as mentioned above, their use involves additional medical risks and complications for the patient, which may impose significant costs on the hospital. Additionally, in general, the prices of the Cortrak device and the feeding tubes used with the Cortrak device are in the same range as ENvue’s ENvue System and its feeding tubes. The prices of the IRIS Kangaroo Feeding Tube are higher than ENvue’s feeding tubes.

ENvue’s Main Strategies for Dealing with Competition

EnVue has historically dealt with competition in its market by differentiating and developing the technology of its products, developing a training model for customers, investing in the deployment of a service sales network, and an effective marketing strategy. Additionally, EnVue worked to protect its intellectual property by registering its intellectual property rights in countries where it identifies potential activities, in order to maintain the competitive advantage of its products in the field of activity.

EnVue estimates that the ENvue System it developed provides it with a competitive advantage over other products available in the market, as well as the quality of the products and services it provides, and its intellectual property protected by patents. The factors strengthening ENvue’s competitive position are described in further detail below:

4 U.S. Food and Drugs Administration: https://www.fda.gov/medical-devices/letters-health-care-providers/feeding-tube-placement-systems-letter-health-care-providers

5 It should be noted that, to the best of ENvue’s knowledge, based on public sources, from 2017 to December 2020, there were reports of 122 cases of feeding tubes being inserted into the lungs using the Cortrak device, of which 12 cases resulted in death, which may be associated with its use (see: https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfMAUDE/search.CFM).

Intellectual Property

Intellectual Property Related to Nano OpCo’s Business

Stemming from a combination of patent, copyright, trademark and trade secret laws, as well as non-disclosure agreements and other contracts, our intellectual property rights represent a vital resource to the management of our company. Therefore, we are continuing our practice of investing in obtaining appropriate legal protection for our innovations whenever possible and have adopted a more fully integrative approach to the management of our intellectual property that mutually aligns with our ongoing R&D strategies, commercial opportunities based on market analyses, and longer-term business objectives.

From our patented technologies to our trademarked brands, we believe our intellectual property has substantial value and has significantly contributed to our success to date.

From our patented technologies to our trademarked brands, we believe our intellectual property has substantial value and has significantly contributed to our success to date.

We seek patent protection for our inventions not only to differentiate our products and technologies, but also to develop opportunities for licensing and securing our rights to profits therefrom. With the aim of optimizing commercial and regulatory success, our proprietary technology and innovative applications thereof are protected by a variety of patent claims. We believe that our granted patents and pending applications collectively protect our technology, both in terms of our existing products, as well as our anticipated pipeline of new offerings.

Our patent portfolio includes at least the following issued patents, as well as a number of corresponding foreign patents in relevant jurisdictions:

(1) U.S. Patent No. 7,829,029 to “Acoustic Add-On Device for Biofilm Prevention in Urinary Catheter” (expiring on August 28, 2029). Foreign counterparts include: European Patent No. 1998834 B1, and Chinese Patent No. CN 101616707 B.

(2) U.S. Patent No. 9,028,748 to “System and Method for Surface Acoustic Wave Treatment of Medical Devices” (expiring on July 11, 2030); and

(3) U.S. Patent No. 9,585,977 directed to “System and Method for Surface Acoustic Waves Treatment of Skin” (expiring on August 20, 2033). Foreign counterparts include: European Patent No. EP 1991129 B1, Chinese Patent No. CN 101431940 B, and Israeli Patent No. 193600.

These patents are directed to our proprietary surface acoustic wave (SAW) technology, including our commercialized PAINSHIELD, PAINSHIELD PLUS, WOUNDSHIELD and UROSHIELD devices. Specifically, the patents provide for methods of generating SAW on surfaces of indwelling medical devices and to topical and urological applications therefor, for alleviating pain and for wound healing, and for preventing formation of bacterial biofilms on catheters.

In addition to the above patents, our pending patent applications are representative of our ongoing efforts to broaden our portfolio as we continue to develop new applications for our ultrasound technology. Pending patent applications related to UROSHIELD devices are directed toMultiple Frequency Surface Acoustic Waves for Internal Medical Device andSystem, Device, and Method for Mitigating Bacterial Biofilms Associated with Indwelling Medical Devices, PCT application (PCT/US2024/018759). This patent application covers the next generation of UROSHIELD devices operating at multiple frequencies and devices which are compatible in portable and wireless systems.

Pending patent applications related to PAINSHIELD, PAINSHIELD PLUS, WOUNDSHIELD devices are directed toTransdermal Patch of a Portable Ultrasound-Generating System for Improved Delivery of Therapeutic Agents and Associated Methods of Treatment andPortable Ultrasound System and Methods of Treating Facial Skin by Application of Surface Acoustic Waves.

Although not yet granted, the aim of our growing number of patent applications is to secure our rights within additional industry sectors we foresee as most readily benefiting from our technology. Therefore, looking beyond just pain management and urology, our patent applications relate to,inter alia: novel transdermal patches uniquely configured to work with our ultrasound technology to additionally provide for improved absorption and transdermal delivery of therapeutic agents during treatment; cosmetic applications of our ultrasound technology to provide anti-aging benefits; and certain new or improved stand-alone therapeutic medical devices or so-called “indwelling medical devices” (e.g., catheters, intravenous (IV) needle assemblies, and percutaneous endoscopic gastronomy (PEG) tubes) that include our SAW-generating technology to provide the accompanying antimicrobial effect for preventing infections typically associated with available indwelling devices.

We intend to further grow our patent portfolio by continuing to patent new technology as it is developed, to defend intellectual property as we believe necessary by actively pursuing any infringements, to pursue commercial opportunities our patents provide for our innovations, and to continue to develop our brands and trademarks.

In addition to patent protection, we own numerous registered trademarks for our commercialized WOUNDSHIELD (in the U.S. and Canada), NanoVibronix (in the U.S. and Canada), WOUNDSHIELD (in the U.S. and Canada), PAINSHIELD (in the U.S. and Canada), and UROSHIELD (in the U.S.). Generally, the protection afforded by trademarks is perpetual, subject to paying timely renewals and continuing proper use in commerce. In addition to the above, we expect to pursue additional trademark registrations to the extent we believe they would be beneficial and cost-effective.

We regularly enter into, and rely on, confidentiality and proprietary rights agreements with our employees, consultants, contractors and business partners to protect our trade secrets, proprietary technology and other confidential information. We control the use of our proprietary technology through relevant provisions, notifications, and disclaimers provided on our website, our customer terms of use, and our vendor terms and conditions.

Intellectual Property Related to ENvue Business

In connection with the insolvency proceedings, the court has approved the proposal by Alpha Capital Anstalt (a creditor of ENvue) to purchase all ENvue’s activities and the proposal by Xperto to acquire the public shell, subject to the fulfillment of conditions precedent. Accordingly, subject to the approval of the creditors’ settlement by the court, all ENvue’s intangible assets are expected to be transferred to the ownership of Alpha Capital Anstalt. It should be noted that as part of the loan agreement between the ENvue and Alpha Capital Anstalt from September 2023, ENvue pledged all its intellectual property assets to secure its obligations towards Alpha Capital Anstalt under the loan agreement.

Below is a brief overview of the status of ENvue’s main intellectual property assets as of February 6, 2025:

ENvue regularly protects its intellectual property rights by filing patent applications in its main target market - the USA - as well as in the main potential target markets for its future activities. Generally, the lifespan of these patents, is 20 years from the earliest non-provisional patent filing date. These anticipated expiration dates are without taking into account any and all possible patent term adjustments, extensions, or abandonments, and assuming payment of all appropriate maintenance, renewal, annuity, and other governmental fees. ENvue continues to evaluate its intellectual property portfolio as patents reach end of life to determine the optimal course for continuing to protect its technology. ENvue owns all its patents. In 2022 and 2023, ENvue invested approximately $252,000 and $141,000, respectively, in patent-related matters.

Below are details about the significant registered patents and significant patent applications owned by ENvue:

As of February 6, 2024, ENvue owns the following trademarks: Envizion Medical, ENsump, ENvue, ENgat, Envizion (wordmark and logo), and ENvue’s logo in key countries, including the U.S., Europe, and China.

On January 25, 2023, a request was submitted by Hologic, Inc.10 to narrow the list of goods described under the ENVIZION MEDICAL trademark in the U.S. ENvue filed a partial voluntary surrender of its U.S. registration as to the following goods: Nasogastric aspiration tube; Medical devices, namely, nasogastric tubes with integrated camera; Medical intubation equipment; nasogastric cameras for medical purposes; Medical integrated camera for Nasogastric Aspiration Tubes; and Camera for placing a nasogastric tube in a patient’s esophagus, which was accepted by the U.S. Patent and Trademark Office.

ENvue also relies on trade secrets relating to its products and technology, including its data processing algorithms, and maintains the confidentiality of such proprietary information to protect aspects of its business that are not amenable to, or that ENvue does not consider appropriate for, patent protection. ENvue seeks to protect its trade secrets and know-how by entering into confidentiality and invention assignment agreements with employees, contractors, consultants, suppliers, customers, and other third parties, who have access to such information. These agreements generally provide that all confidential information concerning ENvue’s business or financial affairs developed or made known to the individual during the course of the individual’s relationship with ENvue are to be kept confidential and not disclosed to third parties except in specific circumstances. If any such person misappropriated ENvue’s trade secrets or other know-how or confidential information, there is no guarantee that ENvue would be able to prevail in obtaining damages or injunctive relief in a dispute regarding such misappropriation.

Despite these protections, ENvue also notes that its employees may have been previously employed at other companies in the industry, including its competitors or potential competitors. Although ENvue is not aware of any claims currently pending against it, ENvue may be subject to claims that these employees or ENvue has inadvertently or otherwise used or disclosed trade secrets or other proprietary information of the former employers of its employees. Litigation may be necessary to defend against these claims. Even if ENvue is successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. If ENvue fails in defending such claims, in addition to paying money claims, ENvue may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent ENvue’s ability to commercialize product(s), which would materially adversely affect its commercial development efforts.

As of approximately February 6, 2025, ENvue holds design patents for Sump Tube in the U.S. and Tube Assembly for Feeding and Suction in the U.S., Europe, and China.

Government Regulation

U.S. Food and Drug Administration Regulation

Each of our products must be approved, cleared by, or registered with the U.S. Food and Drug Administration (“FDA”) before they can be marketed in the United States, and they can only be marketed consistently with their respective approved or cleared indication(s) of use. Before and after approval or clearance in the United States, our products, approved or cleared products and product candidates, are subject to extensive regulation by the FDA under the Federal Food, Drug, and Cosmetic Act and/or the Public Health Service Act, as well as by other regulatory bodies. The FDA regulations govern, among other things, the development, testing, manufacturing, labelling, safety, storage, record-keeping, market clearance or approval, advertising and promotion, import and export, marketing and sales, distribution and market withdrawal and recalls of medical devices and pharmaceutical products. PainShield MD and PainShield MD Plus have each already obtained 510(k) marketing clearance by the FDA. We are in the process of conducting clinical and non-clinical testing to support a submission for FDA clearance for PainShield Relief as an over-the-counter drug.

In September 2020, the FDA exercised its Enforcement Discretion to allow distribution of the UroShield device in the United States. According to the FDA, “UroShield® device can use Intended Use Code (IUC) 081.006: Enforcement Discretion per final guidance, and FDA product code QMK (extracorporeal acoustic wave generating accessory to urological indwelling catheter for use during the COVID-19 pandemic)”.

Accordingly, the FDA’s Enforcement Discretion temporarily cleared the way for import of UroShield to the U.S. during the COVID-19 pandemic, immensely expanding the company’s addressable market for the device during this time period. As of the date of this report, we have not been notified of any change in our Enforcement Discretion status and we will continue to operate under Enforcement Discretion guidelines, or until we are notified of a change in status by a qualified regulatory body. The device is designed to aid in the prevention of CAUTI incidence in patients requiring long-term indwelling catheterization, defined as 14 days or greater.

FDA Approval or Clearance of Medical Devices

In the U.S., numerous laws and regulations govern the processes by which medical devices are developed, manufactured, brought to market and marketed. These include the Federal Food, Drug, and Cosmetic Act (“FD&C Act”) and its implementing regulations issued by FDA, among others. Unless an exemption applies, each medical device commercially distributed in the United States requires FDA clearance of a 510(k) premarket notification (“510(k) clearance”), granting of a de novo request, or approval of an application for premarket approval (“PMA”). In general, under the FD&C Act, medical devices are classified in one of three classes on the basis of the controls necessary to reasonably assure their safety and effectiveness. A medical device’s classification determines the level of FDA review and approval to which the device is subject before it can be marketed to consumers:

WoundShield, PainShield and ENvue System are classified as Class II medical devices and require U.S. Food and Drug Administration authorization prior to marketing, by means of 510(k) clearance. Due to its nature and the lack of existing predicate devices on the market, UroShield is automatically classified as a Class III device for which a PMA is required,unlessour request forDe Novoreclassification is successful, in which case, it will be classified as a Class II device and subject to the same post market framework as 510(k)-cleared devices.

To request marketing authorization by means of a 510(k) clearance, we must submit a pre-market notification demonstrating that the proposed device is substantially equivalent to a legally marketed medical device (referred to as a “predicate device”). A finding of substantial equivalence requires that the proposed new device (i), has the same intended use as a predicate device; (ii) has the same or similar technological characteristics as the predicate device; (iii) is as safe and effective as the predicate device; and (iv) does not raise different questions of safety and effectiveness than the predicate device. 510(k) submissions generally include, among other things, a description of the device and its manufacturing, device labelling, medical devices to which the device is substantially equivalent, safety and biocompatibility information and the results of performance testing. In some cases, a 510(k) submission must include data from human clinical studies. Marketing may commence only when the FDA issues a clearance letter finding substantial equivalence. The typical duration to receive 510(k) approval is approximately nine months from the date of the initial 510(k) submission, although there is no guarantee that the timing will not be longer.

The FDA may require us to perform clinical studies to show a product candidate’s safety and efficacy in addition to technological equivalence in support of our filed 510(k). No matter which regulatory pathway we may take in the future towards marketing products in the United States, we believe we will be required to provide clinical proof of device effectiveness and safety.

After a device receives 510(k) clearance, any product modification that could significantly affect the safety or effectiveness of the product, or that would constitute a significant change in intended use, requires a new 510(k) clearance or, if the device would no longer be substantially equivalent, would require a PMA. If the FDA determines that the product does not qualify for 510(k) clearance, then a company must submit and the FDA must approve a PMA before marketing can begin. An alternative to a new 510(k) submission is a “letter to File”, citing substantial equivalence to a product which has been granted 510(k) clearance.

A PMA application must provide a demonstration of safety and effectiveness, which generally requires extensive nonclinical and clinical trial data. Information about the device and its components, device design, manufacturing and labelling, among other information, must also be included in the PMA. As part of the PMA review, the FDA will inspect the manufacturer’s facilities for compliance with quality system regulation requirements, which govern testing, control, documentation and other aspects of quality assurance with respect to manufacturing. If the FDA determines the application or manufacturing facilities are not acceptable, the FDA may outline the deficiencies in the submission and often will request additional testing or information. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. During the review period, an FDA advisory committee, typically a panel of clinicians and statisticians, is likely to be convened to review the application and recommend to the FDA whether, or upon what conditions, the device should be approved. The FDA is not bound by the advisory panel decision. While the FDA often follows the panel’s recommendation, there have been instances where the FDA has not. If the FDA finds the information satisfactory, it will approve the PMA. The PMA approval can include post-approval conditions, including, among other things, restrictions on labelling, promotion, sale and distribution, or requirements to do additional clinical studies post-approval. Even after approval of a PMA, a new PMA or PMA supplement is required to authorize certain modifications to the device, its labelling or its manufacturing process. Supplements to a PMA often require the submission of the same type of information required for an original PMA, except that the supplement is generally limited to that information needed to support the proposed change from the product covered by the original PMA. The typical duration to receive PMA approval is approximately two years from the date of submission of the initial PMA application, although there is no guarantee that the timing will not be longer.

As stated above, we anticipate that we will seek FDA authorization to market our UroShield product via theDe Novo reclassification process. Medical device types that the FDA has not previously classified as Class I, II, or III are automatically classified into Class III regardless of the level of risk they ultimately pose to patients and/or users. The Food and Drug Administration Modernization Act of 1997 established a new route to market for low to moderate risk medical devices that are automatically placed into Class III due to the absence of a predicate device, called the “Request for Evaluation of Automatic Class III Designation,” or theDe Novoclassification procedure. This procedure allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its medical device into Class I or Class II based on a benefit-risk analysis demonstrating the device actually presents low or moderate risk, rather than requiring the submission and approval of a PMA application. Prior to the enactment of the Food and Drug Administration Safety and Innovation Act of 2012, or FDASIA, a medical device could only be eligible forDe Novoclassification if the manufacturer first submitted a 510(k) premarket notification and received a determination from the FDA that the device was not substantially equivalent. FDASIA streamlined theDe Novoclassification pathway by permitting manufacturers to requestDe Novoclassification directly without first submitting a 510(k) premarket notification to the FDA and receiving a not substantially equivalent determination. If the manufacturer seeks reclassification into Class II, the manufacturer must include a draft proposal for special controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. In addition, the FDA may reject the reclassification petition if it identifies a legally marketed predicate device that would be appropriate for a 510(k) or determines that the device is not low-to-moderate risk or that general controls would be inadequate to control the risks and special controls cannot be developed.De Novoreclassification requests are also subject to user fees, unless a specific exemption applies. If the device is not approved throughDe Novo review, then it must go through the standard PMA process for Class III devices.

Clinical Trials of Medical Devices

Clinical trials are almost always required to support a PMA application and are sometimes required for aDe Novo classification request or 510(k) pre-market notification. In order to conduct a clinical investigation involving human subjects for the purpose of demonstrating the safety and effectiveness of a medical device, an investigator acting on behalf of the company must, among other things, apply for and obtain IRB approval of the proposed investigation. In addition, if the clinical study involves a “significant risk” (as defined by the FDA) to human health, the company sponsoring the investigation must also submit and obtain FDA approval of an IDE. An IDE must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. The IDE must be approved in advance by the FDA for a specified number of study participants, unless the product is deemed a non-significant risk device and eligible for abbreviated IDE requirements. Generally, clinical trials for a significant risk device may begin once the IDE is approved by the FDA and the study protocol and informed consent are approved by a duly-appointed IRB at each clinical trial site.

FDA’s IDE regulations govern investigational device labelling, prohibit promotion, and specify an array of GCP requirements, which include, among other things, recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. Clinical trials must further comply with the FDA’s regulations for IRB approval and for informed consent and other human subject protections. Required records and reports are subject to inspection by the FDA. The results of clinical testing may be unfavorable or, even if the intended safety and efficacy success criteria are achieved, may not be considered sufficient for the FDA to grant approval or clearance of a product.

Post-Approval Regulation of Medical Devices

After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply. These include:

Under the FDA medical device reporting (“MDR”) regulations, medical device manufacturers are required to report to the FDA information that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to death or serious injury if the malfunction of the device or a similar device of such manufacturer were to recur. The decision to file an MDR involves a judgment by the manufacturer. If the FDA disagrees with the manufacturer’s determination, the FDA can take enforcement action.

Additionally, the FDA has the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture. The authority to require a recall must be based on an FDA finding that there is reasonable probability that the device would cause serious adverse health consequences or death. Manufacturers may, under their own initiative, recall a product if any distributed devices fail to meet established specifications, are otherwise misbranded or adulterated, or if any other material deficiency is found. The FDA requires that certain classifications of recalls be reported to the FDA within ten working days after the recall is initiated.

The failure to comply with applicable device regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions:

● warning letters, fines, injunctions, or civil penalties;

● recalls, detentions or seizures of products;

● operating restrictions;

● delays in the introduction of products into the market;

● total or partial suspension of production;

● delay or refusal of the FDA or other regulators to grant 510(k) clearance or PMA approvals of new products;

● withdrawals of marketing authorization; or

● in the most serious cases, criminal prosecution.

To ensure compliance with regulatory requirements, medical device manufacturers are subject to market surveillance and periodic, pre-scheduled and unannounced inspections by the FDA, and these inspections may include the manufacturing facilities of subcontractors and third-party component suppliers.

Good Manufacturing Practices Requirements

As noted above, manufacturers of medical devices are required to comply with the good manufacturing practices set forth in the quality system regulations promulgated under section 520 of the Food, Drug and Cosmetic Act as further set forth in the Code of Federal Regulations as 21 CFR Part 820. Current good manufacturing practices (“CGMP”) regulations require, among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation. The manufacturing facility for an approved product must meet current good manufacturing practices requirements to the satisfaction of the FDA pursuant to a pre-PMA approval inspection before the facility can be used. Manufacturers, including third party contract manufacturers, are also subject to periodic inspections by the FDA and other authorities to assess compliance with applicable regulations. Failure to comply with or to promptly comply with statutory and regulatory requirements subjects a manufacturer, and possibly us, to possible legal or regulatory action, including the seizure or recall of products, injunctions, consent decrees placing significant restrictions on or suspending manufacturing operations, and civil and criminal penalties. Adverse experiences with the product must be reported to the FDA and could result in the imposition of marketing restrictions through labelling changes or in product recall. Product approvals may be withdrawn if compliance with regulatory requirements is not maintained or if problems concerning safety or efficacy of the product occur following the approval.

International Regulation

We are subject to regulations and product registration requirements in many foreign countries in which we may sell our products, including in the areas of product standards, packaging requirements, labelling requirements, import and export restrictions and tariff regulations, duties and tax requirements. The time required to obtain clearance required by foreign countries may be longer or shorter than that required for FDA clearance, and requirements for licensing a product in a foreign country may differ significantly from UFDA requirements.

There is currently no premarket government review of medical devices in the European Economic Area (“EEA”). However, all medical devices placed on the market in the EEA must meet the relevant essential requirements laid down in Annex I of Directive 93/42/EEC concerning medical devices, or the Medical Devices Directive. The most fundamental essential requirement is that a medical device must be designed and manufactured in such a way that it will not compromise the clinical condition or safety of patients, or the safety and health of users and others. In addition, the device must achieve the performances intended by the manufacturer and be designed, manufactured, and packaged in a suitable manner. The European Commission has adopted various standards applicable to medical devices. These include standards governing common requirements, such as sterilization and safety of medical electrical equipment, and product standards for certain types of medical devices. There are also harmonized standards relating to design and manufacture. While not mandatory, compliance with these standards is viewed as the easiest way to satisfy the essential requirements as a practical matter. Compliance with a standard developed to implement an essential requirement also creates a rebuttable presumption that the device satisfies that essential requirement.

In the European Union, the European Medicines Agency and the European Union Commission determined that PainShield, UroShield, and WoundShield are to be regulated as medical device products. These products are classified as Class II devices. These devices are CE Marked and as such can be marketed and distributed within the European Economic Area. We are required to be recertified each year for CE by Intertek, which conducts an annual audit. The ENvue System received a European CE mark, indicating that ENvue affirms its product’s conformity with European health, safety and environmental protection standards, in 2021.The audit procedure, which includes on-site visits at our facility, requires us to provide Intertek with information and documentation concerning our management system and all applicable documents, policies, procedures, manuals, and other information.

On April 5, 2017, the European Parliament passed the Medical Devices Regulation (Regulation 2017/745), which repeals and replaces the EU Medical Device Directive and became effective on May 26, 2021. The Medical Devices Regulation, among other things, is intended to establish a uniform, transparent, predictable, and sustainable regulatory framework across the EEA for medical devices and ensure a high level of safety and health while supporting innovation. The new regulations, among other things:

The primary regulatory bodies and paths in Asia, Australia, and Latin America are determined by the requisite country authority. In most cases, establishment registration and device licensing are applied for at the applicable Ministry of Health through a local intermediary. The requirements placed on the manufacturer are typically the same as those contained in ISO 9001 or ISO 13485, requirements for quality management systems published by the International Organization of Standardization. In some countries outside Europe, we are or will be able to sell on the basis of our CE Mark. We have the Health for PainShield, WoundShield and UroShield, a certificate by the Israel Ministry of Health allowing us to sell PainShield, WoundShield and UroShield in Israel, a certificate allowing us to sell PainShield in Australia, and we are able to sell PainShield, WoundShield and UroShield in India and Ecuador based on our CE Mark. In addition, our distributor in Korea has applied for approval to sell PainShield and UroShield. We generally apply, through our distributor, for approval in a particular country for a particular product only when we have a distributor in place with respect to such product.

European Good Manufacturing Practices

In the European Union, the manufacture of medical devices is subject to good manufacturing practice, as set forth in the relevant laws and guidelines of the European Union and its member states. Compliance with good manufacturing practice is generally assessed by the competent regulatory authorities. Typically, quality system evaluation is performed by a notified body, which also recommends to the relevant competent authority for the European Community CE Marking of a device. The competent authority may conduct inspections of relevant facilities, and review manufacturing procedures, operating systems and personnel qualifications. In addition to obtaining approval for each product, in many cases each device manufacturing facility must be audited on a periodic basis by the notified body. Further inspections may occur over the life of the product.

U.S. Fraud and Abuse and Other Health Care Laws

In the United States, federal and state fraud and abuse laws prohibit the payment or receipt of kickbacks, bribes or other remuneration intended to induce the purchase or recommendation of health care products and services. Other provisions of federal and state laws prohibit presenting, or causing to be presented, to third party payers for reimbursement, claims that are false or fraudulent, or which are for items or services that were not provided as claimed. In addition, other health care laws and regulations may apply, such as transparency and reporting requirements, and privacy and security requirements. Violations of these laws can lead to civil and criminal penalties, including exclusion from participation in federal and state health care programs. These laws are potentially applicable to manufacturers of products regulated by the FDA as medical devices, such as us, and hospitals, physicians and other potential purchasers of such products. The health care laws that may be applicable to our business or operations include:

Health Information Privacy and Security Laws

There are numerous U.S. federal and state laws and regulations related to the privacy and security of Personally Identifiable Information (“PII”), including health information. Among others, the federal Health Insurance Portability and Accountability Act of 1996, as amended by HITECH, and their implementing regulations, which we collectively refer to as HIPAA, establish privacy and security standards that limit the use and disclosure of Protected Health Information (“PHI”) and require covered entities and business associates to implement administrative, physical, and technical safeguards to ensure the confidentiality, integrity, and availability of individually identifiable health information in electronic form, among other requirements.

Violations of HIPAA may result in civil and criminal penalties. Our hospital customers are typically covered entities under HIPAA, and we are therefore limited in the health information we may collect, receive, use, and disclose. To the extent we provide services that require the use of PHI, we may be business associates of such covered entities and directly subject to HIPAA.

State attorneys general also have the right to prosecute HIPAA violations committed against residents of their states, and HIPAA standards have been used as the basis for the duty of care in state civil suits, such as those for negligence or recklessness in misusing personal information. In addition, HIPAA mandates that HHS conduct periodic compliance audits of HIPAA covered entities and their business associates for compliance.

Many states also have laws that protect the privacy and security of sensitive and personal information, including health information. These laws may be similar to or even more protective than HIPAA and other federal privacy laws. For example, the laws of the State of California, are more restrictive than HIPAA. Where state laws are more protective than HIPAA, we must comply with the state laws we are subject to. California passed the California Consumer Privacy Act or CCPA on June 28, 2018, which went into effect January 1, 2020. On November 3, 2020, the California Privacy Rights Act of 2020 (“CPRA”), which amends the CCPA and adds new privacy protections that became effective on January 1, 2023, was enacted through a ballot initiative. Records and information we maintain on our patients may be subject to the CCPA if it is not covered by HIPAA. In certain cases, it may be necessary to modify our planned operations and procedures to comply with these more stringent state laws. Not only may some of these state laws impose fines and penalties upon violators, but also some, unlike HIPAA, may afford private rights of action to individuals who believe their personal information has been misused. In addition, state and federal privacy laws subject to frequent change.

In addition to HIPAA and state health information privacy laws, we may be subject to or restricted by other state and federal privacy laws, including laws that prohibit unfair privacy and security practices and deceptive statements about privacy and security, laws that place specific requirements on certain types of activities, such as data security and texting, and laws requiring holders of personal information to maintain safeguards and to take certain actions in response to a data breach.

Foreign data protection, privacy, and other laws and regulations are often more restrictive than those in the U.S. The E.U., for example, traditionally has imposed stricter obligations under its laws and regulations relating to privacy, data protection and consumer protection than the U.S. In May 2018, the GDPR, governing data practices and privacy in the E.U., became effective and replaced the data protection laws of the individual member states. GDPR requires companies to meet stringent requirements regarding the handling of personal data of individuals in the E.U. These more stringent requirements include expanded disclosures to inform members about how we may use their personal data, increased controls on profiling members, and increased rights for members to access, control and delete their personal data. In addition, there are mandatory data breach notification requirements. The law also includes significant penalties for non-compliance, which may result in monetary penalties of up to 20 million Euros or 4% of a company’s worldwide turnover, whichever is higher. GDPR and other similar regulations require companies to give specific types of notice and informed consent is required for the placement of a cookie or similar technologies on a user’s device for online tracking for behavioral advertising and other purposes and for direct electronic marketing, and the GDPR also imposes additional conditions in order to satisfy such consent, such as a prohibition on pre-checked consents. It remains unclear how the U.K. data protection laws or regulations will develop in the medium to longer term and how data transfer to the U.K. from the E.U. will be regulated. Outside of the E.U., there are many other countries with data protection laws, and new countries are adopting data protection legislation with increasing frequency.

Many of these laws may require consent from individuals for the use of data for various purposes, including marketing, which may reduce our ability to market our products.

There is no harmonized approach to these laws and regulations globally. Consequently, we increase our risk of non-compliance with applicable foreign data protection laws and regulations when we expand internationally. We may need to change and limit the way we use personal information in operating our business and may have difficulty maintaining a single operating model that is compliant. Compliance with such laws and regulations will result in additional costs and may necessitate changes to our business practices and divergent operating models, limit the effectiveness of our marketing activities, adversely affect our business, results of operations, and financial condition, and subject us to additional liabilities.

Manufacturing and Suppliers

Nano OpCo’s Products

In December 2018, we announced we appointed Quasar Engineering Ltd, as contract manufacturer for the PainShield, UroShield and WoundShield, as well as other devices. Following our agreement with Sanuwave, Quasar is no longer the manufacturer of the WoundShield. Quasar is a medical device manufacturer, located in China, with over 30 years of experience, serving major brands worldwide, with complex catheters, disposables, and FDA regulated assemblies. Starting in the fourth quarter of 2019, we started using Quasar to manufacture all of our newly redesigned products. Quasar temporarily shut down for sixty days in early 2020, due to the COVID-19 outbreak which led to a significant delay in the production of goods needed to fulfil our sales orders, and became fully operational in April 2020. Presently, we are not experiencing delays in the production of our products.

Quasar added a new manufacturing facility in Singapore late in the third quarter of 2022. Some of our product manufacturing moved to this plant for final production and packaging. For the year 2023, through the current date, however, all of our programming and disposable kit manufacturing are being performed in our facilities in Israel.

We order certain component parts on an as-needed basis, generally from the manufacturer that provides us with the most competitive pricing. Our most significant suppliers for these components are B Star, Inc and Plastic One. We do not have written agreements with any of these suppliers, but we believe anyone could be easily replaced if necessary.

ENvue Products

ENvue does not manufacture the products it sells. ENvue has contracted with suppliers for the supply of raw materials and various components that make up the system, as well as for the assembly of the system and the specialized feeding tubes.

We estimate that there may be a limitation on the potential annual production capacity at the supplier that assembles the ENvue System. It should be noted that the production volume during 2023 was significantly lower than this limitation, and the ENvue’s management previously estimated that it can contract with an additional manufacturer if necessary. It should also be noted that several companies with a global presence provide similar services to those of the current manufacturer, and ENvue previously estimated that, if necessary, it could replace or expand the existing assembly capabilities within 6-9 months without significant cost changes. Since the beginning of 2024, ENvue has only been purchasing spare parts and consumable feeding tubes for the systems held by its existing customers.

Additionally, there are only a few manufacturers worldwide that produce feeding tubes (made of polyurethane) used by ENvue to produce the specialized feeding tubes for the ENvue System. Accordingly, terminating the contract with the feeding tube supplier could affect the production capacity for our ENvue System for the time required to reorganize until we contract with an alternative supplier. However, we do not anticipate difficulty in replacing this supplier with another.

Customers

We currently sell our products both directly through our website and indirectly via distribution agreements, with approximately 98% of our sales coming through distributors and customers who are referred to us through sales agents, and the remaining 2% from consumers who contact us through our website. We have exclusive and non-exclusive distribution agreements for our products with medical product distributors based in the United States, in the United Kingdom and various countries throughout Europe, Australia, New Zealand, and Malta. For the year ended December 31, 2024, our largest customer was Ultra Pain Products Inc, to whom our sales of products to them comprised approximately 31% of our total revenues.

We are currently in discussions with several distribution companies with access to various markets in the United States, Europe, and Asia, as well as the Veterans Health Care network facilities. Our current agreements stipulate that distributors will be responsible for carrying out local marketing activities and sales. We are responsible for training, providing marketing guidance, marketing materials, and technical guidance. In addition, in most cases, all sales costs, including sales representatives, incentive programs, and marketing trials, will be borne by the distributor. We expect any future distribution agreements to contain substantially similar stipulations. Under our current agreements, distributors purchase our products from us at a fixed price. Our current agreements with distributors are generally for a term of approximately two to three years and automatically renew for additional annual terms unless modified by either party. We also service patients directly as a result of independent sales agents.

Our People and Human Capital Resources

Employees

Following the completion of the Merger, NanoVibronix has 15 full-time employees and ENvue has 16 full-time employees. We also regularly work with several independent consultants and other contract organizations to support our business and we regularly evaluate additional talent to help support our product manufacturing, development, financial, and other capabilities.

Diversity and Inclusion

We believe that an inclusive culture is required to understand and develop products that benefit all patients. By embracing differences, we aim to foster an environment of respect and trust in an effort to facilitate creativity, spark passion, and help us achieve better outcomes for all those who work at the Company. We are committed to creating and maintaining a workplace free from discrimination or harassment, including on the basis of any class protected by applicable law, and our recruitment, hiring, development, training, compensation, and advancement practices are based on qualifications, performance, skills, and experience without regard to gender, race, or ethnicity. Our management team and employees are expected to exhibit and promote honest, ethical, and respectful conduct in the workplace, including adhering to the standards for appropriate behavior set forth in our code of conduct.

Compensation and Benefits

We operate in a highly competitive environment for human capital, particularly as we seek to attract and retain talent with relevant experience in the medical device sector. Therefore, we strive to provide a total rewards package to our employees that is competitive with our peer companies, including competitive healthcare benefits and in certain cases, stock options. We also offer paid leave as mandated by government regulations, flexible work schedules, and other benefits as mandated by government regulations.

We also offer key employees the benefit of equity ownership in NanoVibronix through stock option grants. We believe these grants both help promote alignment between our employees and our stockholders and provide retention benefits, as the awards generally vest over a three-year period.

We do not have any employees that are represented by a labor union or that have entered into a collective bargaining agreement with the Company.

Safety and Wellness

At NanoVibronix, we believe that health matters to everyone, and the safety health, and wellness of our employees is one of our top priorities. We are committed to developing and fostering a work environment that is safe, professional, and promotes teamwork, diversity, and trust in order to afford all of our employees the opportunity to contribute to the best of their abilities.

Seasonality

The Company’s field of activity is not characterized by seasonality. It should be noted that hospitals, which are the current and potential customers of the ENvue System, tend to concentrate their purchases of medical equipment in the last quarter of the year (end of the fiscal year).

Legal Proceedings

From time to time, we may become party to legal proceedings in the ordinary course of business. Such legal proceedings may negatively impact our business and financial position, result in brand or reputational harm, and divert the attention of our management from core operations of our business.

On February 26, 2021, Protrade Systems, Inc. (“Protrade”) filed a Request for Arbitration (the “Request”) with the International Court of Arbitration (the “ICA”) of the International Chamber of Commerce alleging the Company is in breach of an Exclusive Distribution Agreement dated March 7, 2019 (the “Agreement”) between Protrade and the Company. Protrade alleges, in part, that the Company has breached the Agreement by discontinuing the manufacture of the DV0057 Painshield MD device in favor of an updated 10-100-001 Painshield MD device. Protrade claims damages estimated at $3 million. The Company vigorously defended the claims asserted by Protrade.

On March 15, 2022, the arbitrator issued a final award, which, determined that (i) the Company had the right to terminate the Exclusive Distribution Agreement; (ii) the Company did not breach the duty of good faith and fair dealing with regard to the Exclusive Distribution Agreement; and (iii) the Company did not breach any confidentiality obligations to Protrade. Nevertheless, the arbitrator determined that the Company did not comply with the obligation to supply Protrade with a year’s supply of patches, and awarded Protrade $1,500,250, which consists of $1,432,000 for “lost profits” and $68,250 as reimbursement of arbitration costs, on the grounds that the Company allegedly failed to supply Protrade with certain patches utilized by users of DV0057 Painshield MD device. The arbitrator based the decision on the testimony of Protrade’s president who asserted that a user would use in excess of 33 patches per each device. The Company believes that the number of patches per device alleged by Protrade is grossly inflated, and that these claims were not properly raised before the arbitrator. Accordingly, on April 13, 2022, the Company submitted an application for the correction of the award which the arbitrator denied on June 22, 2022.

On April 5, 2022, Protrade filed a Petition with the Supreme Court of New York Nassau County seeking to confirm the Award. On April 13, 2022, the Company submitted an application to the ICA seeking to correct an error in the award based on the evidence that the Company only sold 2-3 reusable patches per device contrary to the 33 reusable patches claimed by Protrade. The same arbitrator who issued the award, denied the application.

On July 22, 2022, the Company filed a cross-motion seeking to vacate arbitration award on the grounds that the arbitrator exceeded her authority, that the award was procured by fraud, and that the arbitrator failed to follow procedures established by New York law. In particular, the Company averred in its motion that Protrade’s witness made false statements in arbitration, and that the arbitrator resolved a claim that was never raised by Protrade and that has no factual basis.

On November 9, 2022, the Company filed a motion to re-argue and renew its cross-motion to vacate the arbitration decision based on newer information that was not available during the initial hearing. On the same day, the Company also filed a notice of appeal with the Appellate Division, Second Department. On March 21, 2023, the court denied the motion to re-argue and renew.

On July 10, 2023, the Company filed its appeal with the Appellate Division, Second Department. That appeal is now fully briefed. In February 2025, the Second Department informed counsel for the Company that the Second Department was beginning to process the appeal for calendaring.”

As of December 31, 2024, and 2023, the Company accrued the amount of the arbitration award to Protrade of approximately $2.1 million and $2.0 million, respectively, including interest which is classified in “Other accounts payable and accrued expenses”.

Initiation of Insolvency Proceedings Against Predecessor ENvue

On January 31, 2024, Predecessor ENvue submitted a request to the Tel Aviv-Yafo District Court (the “Court”) for the issuance of an order to open insolvency proceedings under the Insolvency and Economic Rehabilitation Law, 5778-2018 (the “Insolvency Law”). On March 27, 2024, the Court issued an order to open proceedings for Predecessor ENvue and its temporary operation in accordance with the provisions of Section 24 of the Insolvency Law. On May 15, 2024, the Court decided to approve the proposal of Alpha Capital Anstalt (a creditor of Predecessor ENvue) as the winning bid for the acquisition of Predecessor ENvue’s activities and assets and to approve the proposal of Experto

IFS Financial Solutions Ltd. as the winning bid for the acquisition of Predecessor ENvue’s public shell, as well as to convene creditors’ meetings to approve an economic rehabilitation plan for Predecessor ENvue.

From March 27, 2024, the powers of the Board of Directors and officers of Predecessor ENvue were suspended by the Court, and their temporary operation was transferred to Attorney Guy Gissin as Trustee. From March 28, 2024, Predecessor ENvue’s shares have been suspended from trading on the Tel Aviv Stock Exchange Ltd.

On May 16, 2024, the Court decided to approve the proposal of Alpha Capital Anstalt as the winning bid for the acquisition of Predecessor ENvue’s activities and assets and on May 15, 2024 the court decided to approve the proposal of Experto IFS Financial Solutions Ltd. as the winning bid for the acquisition of Predecessor ENvue’s public shell, as well as to convene creditors’ meetings to approve an economic rehabilitation plan for Predecessor ENvue.

On May 27, 2024, Predecessor ENvue published a proposal for an economic rehabilitation plan, and on May 30, 2024, the aforementioned creditors’ meeting was held, where the economic rehabilitation plan was approved after removing provisions related to the assignment of creditors’ claims rights to the Trustee.

On July 23, 2024, the court approved the agreement with Envizion Holdings Corp, a Delaware company (the “Purchaser”), a subsidiary of Alpha Capital Anstalt, for the sale of Predecessor ENvue’s assets and operations

During 2023, Predecessor ENvue was involved in the development of components and products to improve and upgrade the system as part of its research and development activities, in order to optimize its use, expand its advantages and capabilities, and increase the potential target market. As part of efficiency processes and cost-cutting measures in Predecessor ENvue, as of July 2023, Predecessor ENvue ceased its research and development activities. The activities were resumed following the purchase of by Envizion Holdings Corp.

In light of the insolvency proceedings concerning Predecessor ENvue, from the beginning of 2024 until the purchase by Envizion Holdings Corp., Predecessor ENvue has temporary paused its marketing activities and entering into agreements with new customers, and instead focused on maintaining its existing operations by providing support for the systems held by its existing customers, updating system versions as necessary, and supplying spare parts and consumable feeding tubes for these systems. Predecessor ENvue has since resumed all activities.

Available Information

The Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments thereto, are filed with the Securities and Exchange Commission (the “SEC”). The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and files or furnishes reports, proxy statements and other information with the SEC. Such reports and other information filed by the Company with the SEC are available free of charge on the Company’s website atwww.nanovibronix.com, as soon as reasonably practicable after we have electronically filed with, or furnished to, the SEC. The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC atwww.sec.gov. The contents of these websites are not incorporated into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.