Nexalin Technology (NXL) risk factors, FY2025 10-K

Risks Related to Our Financial Position and Capital Needs

1. 01We have incurred significant losses since our inception. We expect to incur losses over the next several years and may never achieve or maintain profitability54% rewritten
2. 02We have devoted a substantial portion of our financial resources and efforts to research and development, including preclinical studies and clinical trials. We are still in the early stages of development of our products
3. 03We may not be able to continue as a going concern if we do not execute our business plan or obtain additional financing in the future if necessary
4. 04Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability
5. 05We will require additional funding to meet our financial needs and to pursue our business objectives. If we are unable to raise capital when needed, we could be forced to delay, reduce or altogether cease our product development programs or commercialization efforts
6. 06Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or products

Risks Related to the Development of Our Products and Preclinical Program

1. 07If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our products, which would harm our business
2. 08Our products and product candidates may be subject to reclassification by the FDA, and a change in the classification may have an adverse impact on our revenues or our abilities to obtain necessary regulatory approvals
3. 09Success in preclinical studies or clinical trials may not be indicative of results in future clinical trials
4. 10If we experience delays or difficulties in the enrolment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented

Risks Related to Our Dependence on Third Parties

1. 11We rely on third parties to conduct clinical trials for our products, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials or failing to comply with applicable regulatory requirements
2. 12We rely on a collaboration with a third party for the quality assurance of our products, and we may seek additional collaborations in the future. If those collaborations are not successful, we may not be able to capitalize on the market potential of these products

Risks Related to the Commercialization of Our Products

1. 13Even if any of our products receives marketing approval, it may fail to achieve the degree of market acceptance by healthcare providers, physicians, clinicians, patients, third-party payors and others in the medical community necessary for commercial success
2. 14We may eventually compete for product sales with other companies, many of which will have greater resources or capabilities than we have or may succeed in developing better products or in developing products more quickly than we do, and we may not compete successfully with them
3. 15Coverage and adequate reimbursement may not be available for our current or future products, which could make it difficult for us to sell profitably, if approved
4. 16Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop

Risks Related to Our Business and Managing Our Growth

1. 17Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel
2. 18We expect to expand our development and regulatory capabilities and potentially implement sales, marketing and distribution capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations20% rewritten
3. 19Significant disruptions of our information technology systems or data security incidents could result in significant financial, legal, regulatory, business and reputational harm to us
4. 20If we engage in future acquisitions or strategic collaborations, this may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities and subject us to other risks
5. 21We are subject to the risks of conducting business internationally

Risks Related to Doing Business in China

1. 22The medical industry in China is highly regulated and such regulations are subject to change which may affect approval and commercialization of our products
2. 23There may be difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us based on foreign laws
3. 24The PRC’s economic, political and social conditions, as well as governmental policies, could affect the business environment and financial markets in China, and our ability to operate our business, maintain our liquidity and keep our access to capital
4. 25The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value44% rewritten
5. 26The approval of the China Securities Regulatory Commission, and other compliance procedures may be required in connection with any offering we may make and, if required, we cannot predict whether we will be able to obtain such approval68% rewritten
6. 27We may be subject to anti-monopoly concerns as a result of our doing business in China
7. 28Changes in U.S. and international trade policies, particularly with respect to China, may adversely impact our business and operating results45% rewritten

Risks Related to Our Intellectual Property

1. 29We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time-consuming and unsuccessful
2. 30Our commercial success depends, in part, on our ability to develop, manufacture, market and sell our products and use our proprietary technologies without infringing the intellectual property and other proprietary rights of third parties
3. 31If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed
4. 32We may not be able to protect our intellectual property rights throughout the world

Risks Related to Regulatory Approval of Our Products and Other Legal Compliance Matters

1. 33If we experience delays in obtaining approval or if we fail to obtain approval of our products, the commercial prospects for our products may be harmed and our ability to generate revenues will be impaired
2. 34Failure to obtain marketing approval in foreign jurisdictions would prevent our products from being marketed in these territories. Any approval we are granted for our products in the United States would not assure approval of our products in foreign jurisdictions
3. 35The U.S. FDA, Chinese National Medical Products Administration and other comparable foreign regulatory authorities may not accept data from trials conducted in locations outside of their jurisdiction
4. 36Even if we obtain marketing approvals for our products, the terms of approvals and ongoing regulation of our products may limit how we manufacture and market our products and compliance with such requirements may involve substantial resources, which could materially impair our ability to generate revenue
5. 37Our employees, independent contractors, principal investigators, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements
6. 38Recently enacted and future legislation may increase the difficulty and cost for us and our collaborators to obtain marketing approval of and commercialize our products and affect the prices we may obtain

Risks Related to Ownership of Our Common Stock and Our Status as a Public Company

1. 39The trading price of our common stock has been and is likely to be volatile and to fluctuate substantially, which could result in substantial losses for purchasers of our common stock62% rewritten
2. 40If we are not able to comply with the applicable continued listing requirements or standards of The Nasdaq Stock Market LLC, Nasdaq could delist our common stock, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions80% rewritten
3. 41If equity research analysts do not publish research or reports, or publish unfavorable research or reports about us, our business or our market, our stock price and trading volume could decline
4. 42We do not intend to pay cash dividends on our common stock in the foreseeable future
5. 43Concentration of ownership of our common stock among our existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions and matters submitted to stockholders for approval
6. 44Provisions in our corporate charter documents and under Delaware law could make an acquisition of our Company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management
7. 45Our Amended and Restated Certificate of Incorporation further provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act and the Exchange Act33% rewritten
8. 46We are an “emerging growth company” and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors
9. 47We have identified material weaknesses in our internal controls over financial reporting, which could impair our ability to produce accurate financial statements on a timely basis81% rewritten