Nexalin Technology, Inc.
For the period ended Jun 30, 2026. Filed Aug 12, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 12, 2026
NXL$1.47+5.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0001829126-26-004854
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-12.
0001829126-26-008709
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 64 previous paragraphs and 107 current paragraphs.
31 unchanged; 22 reworded; 51 added; 11 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 14 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (51)
Current report
The Company’s strategy is centered on an integrated technology platform consisting of three complementary components: (i) its proprietary Deep Intracranial Frequency Stimulation (DIFS™) neuromodulation technology, (ii) its HALO™ Clarity device platform, which is being evaluated for physician-supervised home use, and (iii) its Nexalin NeuroCare™ digital health platform, which supports patient engagement, remote monitoring, clinical workflow management, data collection and virtual care capabilities. Management believes integrating these technologies strengthens the Company’s clinical development programs, regulatory strategy and future commercialization efforts.
Current report
During fiscal year 2025 and the first six months of 2026, the Company continued to advance its product development and regulatory initiatives. The FDA formally accepted the Company’s Q-Submission for its Gen-2 SYNC system targeting Alzheimer’s disease and dementia, and the Company initiated its FDA-cleared clinical trial evaluating the Gen-3 HALO device for the treatment of insomnia, with patient recruitment currently underway. In addition, during the second quarter of 2026, the Company completed the acquisition of PONM, Inc., which included the acquisition of licensed software and related intellectual property that management believes will serve as the foundation for the continued development of the Company’s Nexalin NeuroCare™ platform and support future digital health initiatives.
Current report
Management’s strategic priorities include advancing the clinical development of its SYNC and HALO product candidates, pursuing FDA marketing authorization and CE marking for the SYNC, expanding the capabilities of its Nexalin NeuroCare™ platform, protecting and enhancing its intellectual property portfolio, and positioning the Company for future commercialization opportunities.
Current report
The Company continues to face significant challenges, including recurring operating losses, negative operating cash flows and substantial doubt about its ability to continue as a going concern. In addition, the Company is working to regain compliance with Nasdaq’s continued listing requirements and continues to remediate material weaknesses in its internal control over financial reporting related to segregation of duties and information technology access controls. The neurostimulation industry remains highly competitive and subject to rapid technological change, and the Company’s success will depend on, among other things, the successful execution of its clinical and regulatory strategy, the protection of its intellectual property, the continued development of its technology platform, and market acceptance of its products.
Current report
Acquisition of PONM, Inc:
Current report
During the second quarter of 2026, the Company completed the acquisition of PONM, Inc. (“PONM”) and related licensed technology from GreenLight Ventures, LLC (“GLV”)). Management believes the acquisition expands the Company’s Nexalin NeuroCare™ digital health platform, which complements its proprietary Deep Intracranial Frequency Stimulation (DIFS™) technology and HALO™ Clarity device platform. The acquired software provides remote patient monitoring, clinical workflow management, physician oversight, clinical data collection and virtual care capabilities that management believes will support the Company’s ongoing clinical development programs, including its planned FDA pivotal trial of HALO™ Clarity, regulatory strategy and future commercialization efforts.
Current report
Additional information regarding the acquisition and the related accounting treatment is included in Note 4 to the accompanying unaudited condensed consolidated financial statements.
Current report
During the second quarter of 2026, the Company initiated its FDA-cleared clinical trial evaluating the Gen-3 HALO device for the treatment of insomnia under its De Novo regulatory pathway. Patient recruitment is currently underway, and the Company continues to work with its contract research organization, to conduct and manage the study.
Current report
The Company believes this clinical trial represents an important milestone in the continued development of the Gen-3 HALO device and is intended to support future regulatory submissions to the FDA. While there can be no assurance regarding the outcome or timing of the clinical trial or any future regulatory authorization, management believes the study is an important component of the Company’s strategy to expand the potential clinical applications of its proprietary DIFS™ technology and advance the commercialization of its products.
Current report
Management continues to advance development of its integrated technology platform, including DIFS™ neuromodulation technology, the HALO™ Clarity home-use therapy platform and the Nexalin NeuroCare™ digital health platform, in support of the Company’s planned FDA pivotal trial and long-term commercialization strategy.
Current report
Gross margins may continue to fluctuate from period to period based on the relative mix of licensing revenue and device and equipment sales, as well as the timing and volume of customer orders.
Current report
The increase in operating expenses reflects the Company’s continued transition from product development activities to execution of its clinical and strategic initiatives, including the FDA insomnia clinical trial, the acquisition of PONM, Inc., and ongoing regulatory and commercialization efforts.
Current report
Research and development expenses increased by approximately $339,000 compared to the prior-year period. The increase was primarily attributable to approximately $353,000 of additional clinical trial expenses related to the initiation and ongoing execution of our FDA insomnia clinical trial. In addition, research and development expenses increased by approximately $93,000 due to costs incurred to manufacture HALO™ devices for use in the clinical trial.
Current report
Professional fees increased by approximately $229,000 compared to the prior-year period. The increase was primarily attributable to approximately $178,000 of higher accounting and legal fees, reflecting costs associated with the acquisition of PONM, Inc., additional SEC reporting and corporate governance activities, and other strategic initiatives. Professional fees also increased by approximately $49,000 due to higher marketing and investor relations expenses. The remaining increase of approximately $2,000 was attributable to changes in other individually immaterial expense categories.
Current report
These decreases were partially offset by an increase of approximately $82,000 in regulatory and compliance costs, primarily related to compliance audits, regulatory consulting, and activities supporting our FDA clinical and regulatory programs and CE Mark initiatives. In addition, depreciation and amortization expense increased by approximately $18,000, primarily due to the acquisition of licensed technology during the second quarter of 2026. The remaining net increase of approximately $6,000 was attributable to various individually immaterial changes in other operating expense categories.
Current report
Other income, net, for the three months ended June 30, 2026 and 2025 was approximately $8,000 and $40,000, respectively, a decrease of approximately $32,000. The decrease was primarily attributable to lower gains recognized on the sale of short-term investments during the current period. Other income, net, primarily consists of interest and dividend income, as well as gains recognized on the sale of short-term investments. We expect other income, net, to fluctuate in future periods based primarily on our cash balances, investment activity and prevailing interest rates.
Current report
Comparison of the six months ended June** **30, 2026 and 2025
Current report
Revenues
Current report
For the six months ended June 30, 2026 and 2025, we generated approximately $27,000 and $112,000 of revenue, respectively. Revenue was derived primarily from licensing and treatment fee agreements with customers and the sale of equipment and related accessories. Under our licensing arrangements, customers are generally charged a monthly licensing fee over the term of the agreement and, in certain cases, additional fees based on the number of treatments performed. We also generate revenue from the sale of equipment, replacement components, including boards, electrodes and patient cables, and related shipping charges.
Current report
The decrease in revenue for the six months ended June 30, 2026, compared to the same period in 2025, was primarily attributable to lower sales of equipment and accessories to an international customer during the current period. Revenue from equipment and accessory sales, particularly international sales, may fluctuate significantly from period to period based on the timing, size and geographic mix of customer orders.
Current report
For the six months ended June 30, 2026 and 2025, cost of revenues was approximately $5,000 and $37,000, respectively, resulting in gross profit of approximately $22,000 and $75,000, respectively. Gross margin was 81% for the six months ended June 30, 2026, compared to 67% for the same period in 2025. The increase in gross margin was primarily attributable to changes in revenue mix, as licensing revenue represented a greater proportion of total revenue during the current period and generally carries higher margins than equipment sales.
Current report
Gross margins are expected to continue to fluctuate from period to period based on the relative mix of licensing revenue and device and equipment sales, as well as the timing and volume of customer orders.
Current report
Operating Expenses
Current report
Total operating expenses for the six months ended June 30, 2026 and 2025 were approximately $4,389,000 and $3,707,000, respectively, an increase of approximately $682,000. The increase was primarily driven by higher research and development expenses associated with the initiation and execution of our FDA insomnia clinical trial, increased professional fees related to strategic and regulatory initiatives, and higher salaries and benefits, partially offset by lower selling, general and administrative expenses.
Current report
The increase in operating expenses reflects the Company’s continued transition from product development activities to execution of its clinical and strategic initiatives, including the FDA insomnia clinical trial, the acquisition of PONM, Inc., and ongoing regulatory and commercialization efforts.
Current report
Research and development expenses increased by approximately $279,000 compared to the prior-year period. The increase was primarily attributable to approximately $374,000 of additional clinical trial expenses related to the initiation and ongoing execution of our FDA insomnia clinical trial. In addition, research and development expenses increased by approximately $233,000 due to costs incurred to manufacture HALO™ devices for use in the clinical trial.
Current report
These increases were partially offset by a decrease of approximately $280,000 in costs associated with the HALO™ development project as the program transitioned from product development to clinical production, as well as a reduction of approximately $74,000 in costs related to our UCSD clinical trial. The remaining net increase of approximately $26,000 was attributable to various individually insignificant changes in other research and development activities.
Current report
We expect research and development expenses to fluctuate in future periods based on the timing and scope of our clinical trials and continued investment in our digital health software platform.
Current report
The Company also expects to continue investing in the integration and development of its Nexalin NeuroCare™ digital health platform, which management believes complements its neuromodulation technologies and supports future commercialization efforts.
Current report
Professional fees increased by approximately $356,000 compared to the prior-year period. The increase was primarily attributable to approximately $141,000 of higher accounting and legal fees, reflecting costs associated with the acquisition of PONM, Inc., additional SEC reporting and corporate governance activities, and other strategic initiatives. Professional fees also increased by approximately $194,000 due to higher marketing and investor relations expenses supporting the Company’s strategic growth and capital markets initiatives. The remaining increase of approximately $21,000 was attributable to various individually immaterial changes in other professional fee categories.
Current report
Salaries and benefits expense increased by approximately $295,000 compared to the prior-year period. The increase was primarily attributable to additional personnel hired during the latter half of 2025, bonuses earned and accrued during the six months ended June 30, 2026, and routine increases in salaries, payroll taxes and employee benefit costs.
Current report
Selling, general and administrative expenses decreased by approximately $248,000 compared to the prior-year period. The decrease was primarily attributable to approximately $321,000 of lower stock-based compensation expense recognized during the six months ended June 30, 2026, compared to the same period in 2025. Consulting expenses also decreased by approximately $78,000, reflecting reduced international consulting activity.
Current report
These decreases were partially offset by an increase of approximately $139,000 in regulatory and compliance costs, primarily related to compliance audits, regulatory consulting, and activities supporting our FDA clinical and regulatory programs and CE Mark initiatives. In addition, depreciation and amortization expense increased by approximately $24,000, primarily due to the acquisition of licensed technology during the second quarter of 2026. The remaining net decrease of approximately $12,000 was attributable to various individually immaterial changes in other operating expense categories.
Current report
Other Income, Net
Current report
We expect other income, net, to fluctuate in future periods based primarily on our cash balances, investment activity, and prevailing interest rates.
Current report
Net Cash Provided by (used in) Investing Activities
Current report
Net cash provided by financing activities was approximately $895,000 for the six months ended June 30, 2026, compared to approximately $4,646,000 for the corresponding period in 2025. The decrease of approximately $3,751,000 was primarily attributable to the absence of a registered direct offering completed during the prior-year period, partially offset by net proceeds of approximately $895,000 received from sales of common stock under the Company’s at-the-market (“ATM”) offering program during the 2026 period.
Current report
Our primary uses of capital are, and we expect will continue to be, compensation and related employee expenses, clinical research and development activities, including our ongoing FDA-cleared insomnia clinical trial, software development associated with our Nexalin NeuroCare™ platform, manufacturing and product development activities, regulatory and quality assurance initiatives, legal and professional fees, and general corporate and administrative expenses.
Current report
Material Cash Requirements
Current report
Our material cash requirements as of June 30, 2026, and through the date of this Report, consist of the following: (i) direct fees of approximately $945,000 under the Scope of Work with our clinical research organization for the Pivotal Study, exclusive of reimbursable pass-through expenses, of which approximately $374,000 had been incurred through June 30, 2026, with the remainder payable as specified project milestones are achieved and reimbursable pass-through expenses are incurred; (ii) development services fees of $10,000 per month under the Collaboration Agreement with GreenLight Ventures, LLC, which has an initial term of 24 months from May 14, 2026, together with any approved excess development services and approved infrastructure support services billed at the rates set forth in that agreement; (iii) base rent under our office lease, as amended on July 28, 2026 for a term of 65 months, ranging from approximately $5,000 to $6,000 per month subject to annual increases, together with our proportionate share of operating expenses and real property taxes and subject to a five-month conditional abatement of base rent following commencement of the expansion space; and (iv) monthly consulting fees of $16,667 under our consulting agreement with U.S. Asian Consulting Group, LLC, which expires in September 2030. The semi-annual share awards valued at $100,000 under that consulting agreement, and the remaining tranches of consideration shares issuable under the Stock Purchase Agreement 90, 180 and 270 days after the closing date, are satisfied in shares of our common stock and do not represent cash requirements.
Showing the first 40 of 51 passages. Open the source sections for the rest.
Removed paragraphs (11)
Previous report
On April,17, 2026, the Company entered into a Scope of Work (the “SOW”) with Lindus Health Limited (“Lindus Health”), a clinical research organization based in the United Kingdom. The SOW is governed by a Master Services Agreement (“MSA”) previously entered into between the parties and sets forth the terms under which Lindus Health will conduct the Company’s pivotal clinical trial for its HALO Clarity device (the “Pivotal Study”).
Previous report
Under the SOW, the Company will pay Lindus Health direct fees in an aggregate amount of approximately $944,820, plus certain pass-through expenses. Payments of direct fees are structured on a milestone basis, and pass-through expenses are invoiced on a monthly basis.
Previous report
The term of the SOW continues until completion of all services described therein, unless terminated earlier in accordance with the MSA. The SOW provides that certain changes to the Pivotal Study, such as addition of new clinical sites, increases in enrolled participants, protocol amendments after study start-up, amendments to critical analyses, extension of study duration, and requests for additional platform features or integrations, will require a change order, which may result in adjustments to the scope, budget, or timeline.
Previous report
We expect gross margins to continue to be influenced by the relative proportion of licensing revenue versus device and equipment-related sales in future periods.
Previous report
Professional fees increased by approximately $127,000, primarily due to higher marketing and investor relations expenses of approximately $145,000, partially offset by a decrease in accounting and legal fees of approximately $38,000. The remaining increase relates to changes in other immaterial expense categories.
Previous report
Net cash provided by investing activities during the three months ended March 31, 2026 and 2025 was approximately $1,510,000 and $1,474,000, respectively. For the three months ended March 31, 2026 this was due to sales of short-term investments of approximately $5,590,000 offset by purchases of approximately $4,001,000 of short-term investments and the purchase of equipment, patents and trademarks of approximately $79,000. Net cash provided by investing activities during the three months ended March 31, 2025 of approximately $1,474,000 was due to sales of short-term investments of approximately $6,496,000 offset by purchases of approximately $4,999,000 of short-term investments and the purchase of patents and trademarks of approximately $24,000.
Previous report
Net cash provided by financing activities during the three months ended March 31, 2026 and 2025 was approximately $756,000 and $0, respectively, which was due to sales under our ATM program in the three months ended March 31, 2026 period. No such financing occurred during the three months ended March 31, 2025.
Previous report
Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, manufacturing development costs, legal and other regulatory expenses, and general administrative costs. Although we have produced Gen-2 devices, which are selling internationally where it is approved for certain utilizations by medical practitioners, the successful development of our future products is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the clinical development of Gen-3 and obtain regulatory approvals. We are also unable to predict when, if ever, net cash inflows from revenues will enable us to be cash flow positive. This is due to the numerous risks and uncertainties associated with developing products, including, among others, the uncertainty of:
Previous report
As of March 31, 2026, the Company had a significant accumulated deficit of approximately $94,964,000. For the three months ended March 31, 2026, the Company had a net loss from operations of approximately $2,120,000 and negative cash flows from operations of approximately $1,713,000. The Company will continue to service existing customers in the United States as well as sell devices and equipment overseas. The Company’s operating activities consume the majority of its cash resources. The Company anticipates that it will continue to incur operating losses as it executes its development plans including clinical trials through 2026 and beyond, as well as other potential strategic and business development initiatives. Management believes that additional capital may be required to fund the Company’s planned clinical and operating activities, including the pivotal insomnia study, beyond its current cash resources. In addition, the Company has had and expects to have negative cash flows from operations, at least into the near future. The Company previously funded these losses primarily through the sale of equity and utilization of our ATM program. As of March 31, 2026, the Company had cash and cash equivalents on hand of approximately $1,208,000 and short-term investments of approximately $1,501,000. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for at least twelve months after the date of this Report.
Previous report
The Company believes that the acquisition of the licensed technology noted in the recent developments above, together with the related collaboration arrangement, will support its long-term strategic objectives by enhancing its technology platform and enabling potential new product offerings. However, these initiatives may require additional capital resources to fully develop and commercialize, and there can be no assurance that the Company will achieve the anticipated benefits within the expected timeframes.
Previous report
Our ability to continue as a going concern will be dependent upon our ability to execute on our business plan, including the ability to generate revenue from overseas opportunities and obtain U.S. approval for the sale of our devices in the United States, and, if necessary, our ability to raise additional capital. Although no assurances can be given as to our ability to deliver on our revenue plans or that unforeseen expenses may arise, management has evaluated the significance of the conditions as of March 31, 2026 and have concluded that we will not have sufficient cash and cash equivalents and short-term investments to satisfy our anticipated cash requirements for the next twelve months from the issuance of these unaudited condensed consolidated financial statements. These plans were therefore determined not to be sufficient to overcome the presumption of substantial doubt about the Company’s ability to continue as a going concern within twelve months from the issuance of these unaudited condensed consolidated financial statements. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
Reworded paragraphs (22)
Previous wording
Nexalin Technology, Inc. is a medical device company focused on developing innovative neurostimulation products to address the global mental health epidemic. The Company generates limited domestic revenue primarily from legacy Gen-1 device licensing fees and electrode sales, as U.S. marketing of new Gen-1 devices has been paused following the FDA’s December 2019 reclassification of cranial electrotherapy stimulation devices and international sales of our Gen-2 device and supplies. During fiscal year 2025 and the first quarter of 2026, the Company advanced its next-generation product development, with the FDA formally accepting the Company’s Q-Submission for its Gen-2 SYNC system targeting Alzheimer’s disease and dementia, and clinical trials for the Gen-3 HALO device for insomnia in the United States. Management’s priorities include obtaining FDA clearance for its Gen-2 and Gen-3 devices and executing U.S. clinical trials. The Company faces significant challenges, including substantial doubt about its ability to continue as a going concern due to recurring losses and negative cash flows, a requirement to regain compliance with Nasdaq’s minimum bid price requirement, and material weaknesses in internal control over financial reporting related to segregation of duties and IT access controls. The neurostimulation industry remains competitive and subject to rapid technological change, and the Company’s success depends on its ability to obtain regulatory approvals, protect its intellectual property, and achieve market acceptance for its products.
Current wording
Nexalin Technology, Inc. is a medical device company focused on developing innovative neurostimulation products to address the global mental health epidemic. The Company generates limited revenue primarily from legacy Gen-1 device licensing fees and electrode sales in the United States, as U.S. marketing of new Gen-1 devices has been paused following the U.S. Food and Drug Administration’s (“FDA”) December 2019 reclassification of cranial electrotherapy stimulation devices. The Company has also historically generated revenue from international sales of its Gen-2 device and related supplies, although it recorded no international revenue in the three or six months ended June 20, 2026.
Previous wording
For the three months ended March 31, 2026 and 2025, we generated approximately $15,000 and $41,000, respectively, primarily derived from licensing and treatment fee agreements with our customers. Under these arrangements, we charge a monthly licensing fee for the duration of the agreement and may also collect fees based on the number of treatments performed each month. In addition, we generate revenue from equipment sales, including boards, electrodes, and patient cables used with our devices, as well as related shipping income.
Current wording
For the three months ended June 30, 2026 and 2025, we generated approximately $12,000 and $71,000 of revenue, respectively. Revenue was derived primarily from licensing and treatment fee agreements with customers and the sale of equipment and related accessories. Under our licensing arrangements, customers are generally charged a monthly licensing fee over the term of the agreement and, in certain cases, additional fees based on the number of treatments performed. We also generate revenue from the sale of equipment and replacement components, including boards, electrodes and patient cables, as well as related shipping charges.
Previous wording
The decrease in revenue for the three months ended March 31, 2026, compared to the same period in 2025, was primarily due to lower equipment sales to an international customer during the current period. We expect device and equipment-related revenue to continue to fluctuate period to period based on customer purchasing patterns, particularly with respect to international customers.
Current wording
The decrease in revenue for the three months ended June 30, 2026, compared to the same period in 2025, was primarily attributable to lower equipment sales to an international customer during the current period. Revenue from equipment sales, particularly international sales, may fluctuate significantly from period to period based on the timing, size and geographic mix of customer orders.
Previous wording
For the three months ended March 31, 2026 and 2025, cost of revenues was approximately $2,000 and $14,000, respectively, resulting in gross profit of approximately $13,000 and $27,000, respectively, and gross margins of 88% and 66%, respectively. The increase in gross margin was primarily attributable to changes in revenue mix, as licensing fees comprised a larger portion of total revenue in the current period and carry higher margins.
Current wording
For the three months ended June 30, 2026 and 2025, cost of revenues was approximately $3,000 and $23,000, respectively, resulting in gross profit of approximately $9,000 and $48,000, respectively. Gross margin was 75% for the three months ended June 30, 2026, compared to 68% for the same period in 2025. The increase in gross margin was primarily attributable to changes in revenue mix, as licensing revenue represented a greater proportion of total revenue during the current period and generally carries higher margins than equipment sales.
Previous wording
Total operating expenses for the three months ended March 31, 2026 and 2025 were approximately $2,133,000 and $2,039,000, respectively, an increase of approximately $94,000. The increase was primarily attributable to higher professional fees and increased salaries and benefits, partially offset by decreases in selling, general and administrative expenses and research and development costs.
Current wording
Total operating expenses for the three months ended June 30, 2026 and 2025 were approximately $2,256,000 and $1,669,000, respectively, an increase of approximately $587,000. The increase was primarily driven by higher research and development expenses associated with the initiation and execution of our FDA insomnia clinical trial, increased professional fees related to strategic and regulatory initiatives, and higher salaries and benefits, partially offset by lower selling, general and administrative expenses.
Previous wording
Research and development expenses decreased by approximately $60,000, primarily due to a reduction of approximately $209,000 in costs associated with the Halo development project, as the units have transitioned from development into production** **for an upcoming clinical trial, as well as a reduction of approximately $24,000 related to the SYNC Desktop project. These decreases were partially offset by an increase of approximately $137,000 in clinical trial expenses and approximately $36,000 in software development costs, including continued development of the app and EDC platform.
Current wording
These increases were partially offset by a decrease of approximately $70,000 in costs associated with the HALO™ development project as the program transitioned from product development to clinical production, as well as a reduction of approximately $50,000 in costs related to our UCSD clinical trial. The remaining increase of approximately $13,000 was attributable to various individually insignificant changes in other research and development activities.
Previous wording
We expect research and development expenses to fluctuate in future periods based on the timing and scope of clinical trials, as well as continued investment in software and platform development.
Current wording
We expect research and development expenses to fluctuate in future periods based on the timing and scope of clinical trials, as well as continued investment in our digital health software platform.
Previous wording
Salaries and benefits increased by approximately $163,000, primarily attributable to headcount additions in the latter half of 2025, accrued bonuses recognized in the first quarter of 2026, and routine increases in wages, payroll taxes, and employee benefits.
Current wording
Salaries and benefits expense increased by approximately $131,000 compared to the prior-year period. The increase was primarily attributable to additional personnel hired during the latter half of 2025, bonuses earned and accrued during the second quarter of 2026, and routine increases in salaries, payroll taxes and employee benefit costs.
Previous wording
Selling, general and administrative expenses decreased by approximately $136,000, primarily due to a decrease of approximately $158,000 in stock-based compensation recognized during the three months ended March 31, 2026 compared to the same period in the prior year. Consulting expenses also decreased by approximately $53,000, reflecting reduced international consulting activity. These decreases were partially offset by increases in regulatory and compliance costs of approximately $57,000, related to compliance audits and regulatory consulting, and an increase of approximately $18,000 in travel expenses.
Current wording
Selling, general and administrative expenses decreased by approximately $111,000 compared to the prior-year period. The decrease was primarily attributable to approximately $164,000 lower stock-based compensation expense recognized during the three months ended June 30, 2026, compared to the same period in 2025. Consulting expenses also decreased by approximately $25,000, reflecting reduced international consulting activity, and travel expenses decreased by approximately $28,000.
Previous wording
Other income, net, for the three months ended March 31, 2026 and 2025 was approximately $23,000 and $24,000, respectively, and remained consistent between periods. Other income primarily consists of interest and dividend income, as well as gains on the sale of short-term investments.
Current wording
Other income, net, for the six months ended June 30, 2026 and 2025 was approximately $31,000 and $64,000, respectively, a decrease of approximately $33,000. The decrease was primarily attributable to lower gains recognized on the sale of short-term investments during the current period. Other income, net, primarily consists of interest and dividend income, as well as gains recognized on the sale of short-term investments.
Previous wording
Current assets decreased for the three months ended March 31, primarily due to decreases in short-term investments and cash and cash equivalents resulting from cash used in operating activities, partially offset by proceeds from drawdowns under our at-the-market (“ATM”) program.
Current wording
Current assets decreased during the six months ended June 30, 2026, primarily due to decreases in short-term investments resulting from short-term investments used in operating activities, partially offset by proceeds received from sales of common stock under our at-the-market (“ATM”) program.
Previous wording
Current liabilities decreased for the three months ended March 31, 2026, primarily due to a decrease in accounts payable resulting from the timing of vendor payments.
Current wording
Current liabilities increased during the six months ended June 30, 2026, primarily due to the deferred share obligation recognized in connection with the May 14, 2026 acquisition of PONM, Inc., as well as increases in accrued expenses resulting from higher professional fees and clinical trial activities. These increases were partially offset by a decrease in accounts payable resulting from the timing of vendor payments.
Previous wording
We expect fluctuations in working capital in future periods to be driven by the timing of operating expenditures, vendor payments, and capital raising activities, including potential continued use of the ATM program.
Current wording
We expect working capital to continue to fluctuate in future periods based on the timing of operating expenditures, vendor payments, and capital-raising activities, including potential future sales under our ATM program.
Previous wording
On October 15, 2025, we entered into the Second Amendment to the Original Agreement with Maxim, under which we currently have the ability to issue and sell shares of our common stock, from time to time, through Maxim, up to an aggregate offering price of approximately $4,273,000.
Current wording
On October 15, 2025, we entered into the Second Amendment to the Original Agreement with Maxim, pursuant to which we were authorized to offer and sell shares of our common stock from time to time through Maxim for an aggregate offering amount of up to approximately $4,273,000, subject to applicable securities laws and stock exchange requirements.
Previous wording
For the three months ended March 31, 2026 we have sold 1,395,300 shares of our common stock under the ATM program for net proceeds of approximately $756,000.
Current wording
During the six months ended June 30, 2026, we sold 1,858,344 shares of our common stock under the ATM program, generating net proceeds of approximately $895,000.
Previous wording
As of March 31, 2026 we have sold a total of 2,086,707 shares of our common stock under the ATM program for gross proceeds of approximately $1,423,000.
Current wording
As of June 30, 2026, we have sold 2,549,751 shares of our common stock under the ATM program for gross proceeds of approximately $1,619,000.
Previous wording
The following table summarizes our consolidated cash flows for the three months ended March 31, 2026 and 2025:
Current wording
The following table summarizes our consolidated cash flows for the six months ended June 30, 2026 and 2025:
Previous wording
Net cash used in operating activities was approximately $1,713,000 for the three months ended March 31, 2026, as compared to approximately $1,426,000 for the respective period in 2025, an increase of approximately $287,000, which was primarily due to an increase in net loss of approximately $109,000, or approximately $262,000 adjusted for non-cash expenses. The remaining change was due to changes in operating assets and liabilities for the respective periods; a decrease in accounts payable of approximately $102,000, an increase in prepaid expenses and other current assets of approximately $90,000, decrease in inventory of approximately $47,000, a decrease in accrued expenses of approximately $5,000 and increase in accounts receivable of approximately $40,000.
Current wording
Net cash used in operating activities was approximately $3,515,000 for the six months ended June 30, 2026, compared to approximately $2,343,000 for the corresponding period in 2025, representing an increase in cash used of approximately $1,171,000. The increase was primarily attributable to a higher net loss of approximately $767,000, partially offset by non-cash adjustments, which decreased by approximately $275,000 from the prior-year period, primarily due to lower stock-based compensation expense. The remaining increase in cash used was primarily due to changes in working capital, including cash used by an increase in prepaid expenses and other current assets of approximately $258,000, primarily related to advance payments for the Company’s pivotal insomnia clinical trial and other research and development activities, an increase in inventory of approximately $104,000, and a decrease in accounts payable of approximately $90,000. These uses of cash were partially offset by cash provided by an increase in accrued expenses of approximately $247,000 and a decrease in accounts receivable of approximately $76,000.
Previous wording
Net Cash Provided by Investing Activities
Current wording
Net cash provided by investing activities was approximately $2,970,000 for the six months ended June 30, 2026, compared to net cash used in investing activities of approximately $2,446,000 for the corresponding period in 2025. The change was primarily attributable to reduced purchases of short-term investments of approximately $15,102,000 compared to the prior-year period, partially offset by lower proceeds from the sale and maturity of short-term investments of approximately $9,603,000. Investing activities during the 2026 period also included purchases of equipment and continued investments in patents and trademarks in support of the Company’s intellectual property portfolio.
Previous wording
As of March 31, 2026, the Company had no material commitments or contingencies. See Note 7 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Current wording
As of June 30, 2026, the Company was party to a clinical research organization agreement with its CRO related to its ongoing FDA pivotal insomnia clinical trial. Payments under the agreement are generally based on specified project milestones, services performed, and reimbursable third-party costs. The Company recognizes the related costs as services are performed. The Company is also party to the Collaboration Agreement with GreenLight Ventures, LLC, its office lease as amended on July 28, 2026, and its consulting agreement with U.S. Asian Consulting Group, LLC. See “Material Cash Requirements” above and Notes 4, 9 and 10 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
We are required to maintain a minimum bid price of $1.00 per share. On January 21, 2026, the Company received a deficiency letter (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, based upon the closing bid price of the Company’s common stock, for the last 30 consecutive business days, the Company is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Requirement”).
Current wording
We are required to maintain a minimum bid price of $1.00 per share. On January 21, 2026, the Company received a deficiency letter (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, based upon the closing bid price of the Company’s common stock, par value $0.001 per share, for the last 30 consecutive business days, the Company was not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Requirement”).
Previous wording
The Notice has no immediate effect on the continued listing status of the Company’s common stock on The Nasdaq Capital Market, and, therefore, the Company’s listing remains fully effective. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company is provided a compliance period of 180 calendar days from the date of the Notice, or until July 20, 2026, to regain compliance with the Minimum Bid Requirement. To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days prior to July 20, 2026. If the Company is not in compliance with the Minimum Bid Requirement by July 20, 2026, the Company may be afforded a second 180 calendar day compliance period. To qualify for this additional compliance period, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price requirement. The Company continues to evaluate all options to regain compliance with the Minimum Bid Requirement.
Current wording
The Notice had no immediate effect on the continued listing of the Company’s common stock on The Nasdaq Capital Market. Under Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided a 180-calendar day compliance period, which expired on July 20, 2026, to regain compliance with the minimum bid price requirement.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Our financial results for the six months ended June 30, 2026 and 2025 are summarized as follows:
Current report — wording carried from elsewhere
Cost of Revenues and Gross Profit
Current report — wording carried from elsewhere
Subsequent to June 30, 2026, we have sold 32,696 shares of our common stock under the ATM program for gross proceeds of approximately $15,000.