UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 001-36445

NanoVibronix, Inc

(Exact name of registrant as specified in its charter)

Delaware

01-0801232

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

525 Executive Blvd., Elmsford, New York		10523
(Address of principal executive office)		(Zip Code)

Registrant’s telephone number, including area code: (914) 233-3004

(Former name, former address and

former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common stock, par value $0.001 per share		NAOV		NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares outstanding of the registrant’s Common Stock as of November 15, 2021 was 27,946,793 shares.

NanoVibronix, Inc.

Quarter Ended September 30, 2021

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months and Nine Months Ended September 30, 2021 and 2020	2

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020	3

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20

Item 4.	Controls and Procedures	20

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	21

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 3.	Defaults Upon Senior Securities	25

Item 4.	Mine Safety Disclosures	25

Item 5.	Other Information	25

Item 6.	Exhibits	25

Signatures		26

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NanoVibronix, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(Amounts in thousands except share and per share data)

	September 30, 2021			December 31, 2020
ASSETS:
Current assets:
Cash and cash equivalents	$	8,599		$	7,142
Restricted cash		-			391
Trade receivables		28			25
Other accounts receivable and prepaid expenses		597			267
Inventory		201			145
Total current assets		9,425			7,970

Non-current assets:
Fixed assets, net		6			4
Other assets		16			25
Severance pay fund		199			199
Operating lease right-of-use assets, net		20			31
Total non-current assets		241			259
Total assets	$	9,666		$	8,229

LIABILITIES AND STOCKHOLDERS’ EQUITY:

Current liabilities:
Trade payables	$	62		$	144
Other accounts payable and accrued expenses		194			488
Shares issued in excess of authorized		-			2,257
Operating lease liabilities - current		10			13
Total current liabilities		266			2,902

Non-current liabilities:
Accrued severance pay	$	243			245
Deferred licensing income		165			199
Deferred revenue		271			-
Derivative liabilities		-			2,471
Operating lease liabilities, non-current		10			18
Total liabilities		955			5,835

Commitments and contingencies (Note 9)		-			-

Stockholders’ equity:
Series C Preferred stock of $0.001 par value - Authorized: 3,000,000 shares at September 30, 2021 and December 31, 2020; Issued and outstanding: 666,667 at September 30, 2021 and December 31, 2020		1			1

Series D Preferred stock of $0.001 par value - Authorized: 506 shares at September 30, 2021 and December 31, 2020; Issued and outstanding: 153 at September 30, 2021 and December 31, 2020		-			-

Series E Preferred stock of $0.001 par value - Authorized: 1,999,494 shares at September 30, 2021 and December 31, 2020, respectively; Issued and outstanding: 0 at September 30, 2021 and 875,000 at December 31, 2020		1			1
Preferred stock, value
Common stock of $0.001 par value - Authorized: 40,000,000 shares at September 30, 2021 and 24,109,634 at December 31, 2020; Issued and outstanding: 27,178,126 and 21,246,523 shares at September 30, 2021 and December 31, 2020, respectively		27			22

Additional paid in capital		63,086			44,959
Accumulated other comprehensive income		59			66
Accumulated deficit		(54,463	)		(42,655	)
Total stockholders’ equity		8,711			2,394
Total liabilities and stockholders’ equity	$	9,666		$	8,229

The accompanying notes are an integral part of these condensed consolidated financial statements

NanoVibronix, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(Amounts in thousands except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020

Revenues	$	499		$	150		$	920		$	533
Cost of revenues		271			51			407			345
Gross profit		228			99			513			188

Operating expenses:
Research and development		50			68			178			131
Selling and marketing		245			289			852			723
General and administrative		801			546			2,656			2,513

Total operating expenses		1,096			903			3,686			3,367

Loss from operations		(868	)		(804	)		(3,173	)		(3,179	)

Interest expense		-			(123	)		-			(123	)
Financial income (expense), net		(23	)		(15	)		(29	)		(25	)
Change in fair value of derivative liabilities		(5,714	)		-			(6,956	)		-
Gain on purchase of warrants		-			-			64			-
Warrant modification expense		-			-			(1,627	)		-

Loss before taxes on income		(6,605	)		(942	)		(11,721	)		(3,327	)

Income tax benefit / (expense)		(70	)		20			(87	)		7

Net loss	$	(6,675	)	$	(922	)	$	(11,808	)	$	(3,320	)

Basic and diluted net loss available for holders of common stock, Series C Preferred Stock and Series D Preferred Stock	$	(0.26	)	$	(0.10	)	$	(0.47	)	$	(0.43	)

Weighted average common shares outstanding:
Basic and diluted		26,096,957			9,344,254			25,014,919			7,649,242
Comprehensive loss:
Net loss available to common stockholders		(6,675	)		(922	)		(11,808	)		(3,320
Change in foreign currency translation adjustments		1			-			(7	)		-
Comprehensive loss available to common stockholders		(6,674	)		(922	)		(11,815	)		(3,320	)

The accompanying notes are an integral part of these condensed consolidated financial statements

NanoVibronix, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(Amounts in thousands except share and per share data)


	Series C Preferred Stock					Series D Preferred Stock					Series E Preferred Stock				Common Stock				Additional Paid - in			Accumulated			Total Stockholders’
	Shares			Amount		Shares			Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Equity
Balance, June 30, 2020		2,993,142		$	2		304		$	-		1,715,000		2		4,313,764	$	5	$	39,935	-	$	(40,728	)	$	(784	)
Stock-based compensation		-			-		-			-		-		-		-		-		183			-			183
Warrants issued with notes payable
Warrants issued with notes payable , shares
Issuance of common stock for services																375,000				567						567
Issuance of common stock for cash, net																6,326,217		7		4,216						4,223
Exercise of warrants
Exercise of warrants, shares
Conversion of preferred stock to common stock
Conversion of preferred stock to common stock, shares
Reclass from liability to equity
Other comprehensive loss
Exchange of Series C Preferred Stock into Common Stock		(487,890	)													487,890										-
Exchange of Series D Preferred Stock into Common Stock							(151	)								150,782										-
Exchange of Series E Preferred Stock into Common Stock		-			-		-			-		(840,000		-		840,000		-		-			-			-
Net loss		-			-		-			-		-		-		-		-		-	-		(922	)		(922	)
Balance, September 30, 2020		2,505,252		$	2		153		$	-		875,000	$	2		12,493,653	$	12	$	44,901	-	$	(41,650	)	$	3,267

	Series C Preferred Stock					Series D Preferred Stock					Series E Preferred Stock					Common Stock				Additional Paid - in			Accumulated			Total Stockholders’
	Shares			Amount		Shares			Amount		Shares			Amount		Shares		Amount		Capital			Deficit			Equity
Balance, December 31, 2019		2,993,142		$	2		304		$	-		1,825,000		$	2		4,203,764	$	5	$	39,669	-	$	(38,330	)	$	1,348
Stock-based compensation		-			-		-			-		-			-		-		-		326			-			326
Warrants issued with notes payable																	375,000				567						567
Issuance of common stock for services																	6,326,217		7		4,216						4,223
Issuance of common stock for cash, net																	-				123						123
Exchange of Series C Preferred Stock into Common Stock		(487,890	)														487,890										-
Exchange of Series D Preferred Stock into Common Stock							(151	)									150,782										-
Exchange of Series E Preferred Stock into Common Stock		-			-		-			-		(950,000	)		-		950,000		-		-			-			-
Net loss		-			-		-			-		-			-		-		-		-	-		(3,320	)		(3,320	)
Balance, September 30, 2020		2,505,252		$	2		153		$	-		875,000		$	2		12,493,653	$	12	$	44,901	-	$	(41,650	)	$	3,267


	Series C Preferred Stock				Series D Preferred Stock				Series E Preferred Stock					Common Stock				Additional Paid - in		Accumulated Other Comprehensive		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares			Amount		Shares		Amount		Capital		Income		Deficit			Equity
Balance, June 30, 2021		666,667	$	1		153	$	-		875,000		$	1		24,109,634	$	24	$	51,867	$	59	$	(47,788	)	$	4,164
Stock-based compensation		-		-		-		-		-			-		-		-		35		-		-			35
Issuance of common stock for cash, net		-		-		-		-		-			-		-		3		-		-		-			3
Exercise of warrants		-		-		-		-		-			-		2,193,491		-		3,558		-		-			3,558
Conversion of preferred stock to common stock		-		-		-		-		(875,000	)		-		875,000		-		-		-		-			-
Reclass from liability to equity		-		-		-		-		-			-		-		-		7,626		-		-			7,626
Other comprehensive loss		-		-		-		-		-			-		-		-		-				-			-
Net loss		-		-		-		-		-			-		-		-		-		-		(6,675	)		(6,675	)
Balance, September 30, 2021		666,667	$	1		153	$	-		-		$	1		27,178,126	$	27	$	63,086	$	59	$	(54,463	)	$	8,711

	Series C Preferred Stock				Series D Preferred Stock				Series E Preferred Stock					Common Stock				Additional Paid - in		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares			Amount		Shares		Amount		Capital		Income			Deficit			Equity
Balance, December 31, 2020		666,667	$	1		153	$	-		875,000		$	1		21,246,523	$	22	$	44,959	$	66		$	(42,655	)	$	2,394
Stock-based compensation		-		-		-		-		-			-		-		-		114		-			-			114
Issuance of common stock for cash, net																	3										3
Exercise of warrants		-		-		-		-		-			-		5,056,603		2		7,050		-			-			7,052
Conversion of preferred stock to common stock		-		-		-		-		(875,000	)-		-		875,000		-		-		-			-			-
Reclassification from liability to equity		-		-		-		-		-			-		-		-		10,963		-			-			10,963
Other comprehensive loss		-		-		-		-		-			-		-		-		-		(7	)		-			(7	)
Net loss		-		-		-		-		-			-		-		-		-		-			(11,808	)		(11,808	)
Balance, September 30, 2021		666,667	$	1		153	$	-		-		$	1		27,178,126	$	27	$	63,086	$	59		$	(54,463	)	$	8,711

The accompanying notes are an integral part of these condensed consolidated financial statements

NanoVibronix, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Amounts in thousands except share and per share data)

	2021			2020
	Nine Months Ended September 30,
	2021			2020
Cash flows from operating activities:
Net loss	$	(11,808	)	$	(3,320	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1			2
Noncash interest expense		-			123
Stock-based compensation		114			326
Warrants received as licensing fee		-			(23	)
Warrant modification expense		1,627			-
Change in fair value of equity investment		9			(4	)
Common stock payable to consultant		-			566
Change in fair value of derivative liabilities		7,148			-
Gain on purchase of warrants		(64	)		-
Changes in operating assets and liabilities:
Trade receivable		(4	)		8
Other accounts receivable and prepaid expenses		(330	)		107
Inventory		(56	)		12
Trade payables		(82	)		(46	)
Other accounts payable and accrued expenses		(294	)		(19	)
Deferred revenue		237			215
Accrued severance pay, net		(2	)		(20	)
Net cash used in operating activities		(3,504	)		(2,073	)

Cash flows from investing activities:
Purchases of property plant and equipment		(3	)		-
Net cash used in investing activities		(3	)		-

Cash flows from financing activities:
Proceeds from issuance of notes payable		-			42
Proceeds from note issued to related party		-			200
Payments of note payable to related party		-			(200	)
Proceeds from issuance of Preferred Series E stock		-			4,223
Proceeds from exercise of warrants		4,968			-
Buy back of warrants from investors		(388	)		-
Net cash provided by financing activities		4,580			4,265

Effects of currency translation on cash and cash equivalents		(7	)		-

Net increase in cash, cash equivalents and restricted cash		1,066			2,193
Cash, cash equivalents and restricted cash at beginning of period		7,533			1,338

Cash, cash equivalents and restricted cash at end of period	$	8,599		$	3,531

Supplemental non-cash financing and investing activities:
Discount on notes payable		-			123
Issuance of common stock payable	$	-		$	566
Conversion of Series C, D, and E Preferred stock into common stock	$	-		$	1
Shares issued from exercise of warrants previously classified as derivative liability	$	2,087		$	-
Reclassification liability to equity due to increase in authorized shares	$	10,963		$	-

The accompanying notes are an integral part of these condensed consolidated financial statements

NanoVibronix, Inc.

Notes to Consolidated Financial Statements (Unaudited)

(Amounts in thousands except share and per share data)

NOTE 1 – DESCRIPTION OF BUSINESS

NanoVibronix, Inc. (the “Company”), a Delaware corporation, commenced operations on October 20, 2003 and is a medical device company focusing on noninvasive biological response-activating devices that target wound healing and pain therapy and can be administered at home, without the assistance of medical professionals.

The Company’s principal research and development activities are conducted in Israel through its wholly owned subsidiary, NanoVibronix (Israel 2003) Ltd., a company registered in Israel, which commenced operations in October 2003.

NOTE 2 – LIQUIDITY AND PLAN OF OPERATIONS

The Company’s ability to continue to operate is dependent mainly on its ability to successfully market and sell its products and the receipt of additional financing until profitability is achieved. The Company currently incurs and historically has incurred losses from operations and expects to do so in the foreseeable future. The Company has historically had recurring losses and negative cash used from operations which raised substantial doubt about the Company’s ability to continue as a going concern. During the nine months ended September 30, 2021, the Company used $3,504 of cash in operations. Although we expect to continue to incur losses and negative cash flows from operating activities, we had cash balances of $8,599 as of September 30, 2021. Because the Company has sufficient resources to fund our operation for the next twelve months from the date of this filing, the substantial doubt has been alleviated. The Company may need to continue to raise additional capital to finance its losses and negative cash flows from operations beyond the next twelve months and may continue to be dependent on additional capital raising as long as our products do not reach commercial profitability. If we are unable to increase in the number of authorized shares of our common stock, we will be unable to issue common stock or convertible instruments. As a result, the Company will be limited in its ability to raise additional capital.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for the interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. The unaudited consolidated financial statements include the accounts of all subsidiaries in which the Company holds a controlling financial interest as of the financial statement date.

The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The terms “we,” “us,” “our,” and the “Company” refer to NanoVibronix, Inc. and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

Unaudited interim financial information

In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the financial position and results of operations of the Company. These consolidated financial statements and notes thereto are unaudited and should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2020, as found in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2021.

The balance sheet for December 31, 2020 was derived from the Company’s audited financial statements for the year ended December 31, 2020. The results of operations for the periods presented are not necessarily indicative of results that could be expected for the entire fiscal year due to seasonality and other factors. Certain information and footnote disclosures normally included in the consolidated financial statements in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC for interim reporting.

Use of estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company believe that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Foreign currency translation

Non-U.S. dollar denominated transactions and balances have been re-measured to U.S. dollars. All gains and losses from re-measurement of monetary balance sheet items denominated in non-U.S. dollar currencies are reflected in the statements of operations as other comprehensive income, as appropriate. The cumulative translation gains (losses) as of the nine months ended September 30, 2021 and 2020 were ($7) and $8, respectively.

Revenue recognition

It is the Company’s policy that revenues from product sales is recognized in accordance with ASC 606 “Revenue Recognition.” Five basic steps must be followed before revenue can be recognized; (1) Identifying the contract(s) with a customer that creates enforceable rights and obligations; (2) Identifying the performance obligations in the contract, such as promising to transfer goods or services to a customer; (3) Determining the transaction price, meaning the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer; (4) Allocating the transaction price to the performance obligations in the contract, which requires the company to allocate the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or services promised in the contract; and (5) Recognizing revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service to a customer. The amount of revenue recognized is the amount allocated to the satisfied performance obligation. Adoption of ASC 606 has not changed the timing and nature of the Company’s revenue recognition and there has been no material effect on the Company’s financial statements.

SEC Form 10-Q filed by NanoVibronix, Inc.