What changed in this filing

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Item 1. Business

2024-03-28 compared with 2023-03-09 · 206 added, 145 removed, 504 unchanged (41% of the section changed)

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Our product, known as the Portable Neuromodulation Stimulator, or PoNS®, is an innovative non-implantable medical device, inclusive of a controller and mouthpiece, which delivers mild electrical stimulation to the surface of the tongue to provide treatment of gait deficit and chronic balance deficit.

PoNS Therapy is integral to the overall PoNS solution and is the physical therapy applied by patients during use of the PoNS device.

PoNS has marketing clearance in the U.S.

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PoNS is authorized for sale in Canada for three indications:

(i) for use as a short term treatment (14 weeks) of chronic balance deficit due to mild-to-moderate traumatic brain injury, or mmTBI, and is to be used in conjunction with physical therapy, or PoNS TherapyTM;

(ii) for use as a short term treatment (14 weeks) of gait deficit due to mild and moderate symptoms from MS and it is to be used in conjunction with physical therapy;

(i) as a short term treatment (14 weeks) of chronic balance deficit due to mild-to-moderate traumatic brain injury, or mmTBI, and is to be used in conjunction with physical therapy;

(ii) as a short term treatment (14 weeks) of gait deficit due to mild and moderate symptoms from MS and it is to be used in conjunction with physical therapy;

and (iii) for use as a short term treatment (14 weeks) of gait deficit due to mild and moderate symptoms from stroke, to be used in conjunction with physical therapy.

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The controller is worn around the neck and the mouthpiece sits on the tongue during treatment.

PoNS Therapy, or the “Therapy”, utilizes the PoNS device in conjunction with supervised therapeutic exercise.

The Therapy consists of condition specific exercises for movement control, including balance and gait training and breathing and awareness training, which are tailored to focus on the individual patient’s functional deficits.

The Therapy is completed over a period of 14 weeks.

During the first 2 weeks, the Therapy is mostly administered in a rehabilitation or physical therapy clinic by a PoNS trained therapist and, to a lesser extent, performed at home.

PoNS Therapy utilizes the PoNS device in conjunction with supervised therapeutic exercise.

The PoNS Therapy consists of condition specific exercises for movement control, including balance and gait training and breathing and awareness training, which are tailored to focus on the individual patient’s functional deficits.

The PoNS Therapy is completed over a period of 14 weeks.

During the first 2 weeks, the PoNS Therapy is mostly administered in a rehabilitation or physical therapy clinic by a PoNS trained therapist and, to a lesser extent, performed at home.

The remaining 12 weeks are completed at home with weekly clinic visits to monitor rehabilitation progress, assess improvements and ensure the therapy intensity remains appropriate.

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This usage data in combination with the detail of the completed treatment assessments gives the clinician and the patient a unique and powerful method to assess treatment progress.

The patient initiates their Therapy sessions with the PoNS device initially under the supervision of the clinicians, then through regular check-ins.

The patient initiates their PoNS Therapy sessions with the PoNS device initially under the supervision of the clinicians, then through regular check-ins.

Clinical research has shown that translingual neurostimulation activates two major cranial nerves – the trigeminal nerve, and the facial nerve, which creates a flow of neural impulses that are delivered directly into the brain stem and cerebellum – the main control centers for multiple functions including sensory perception and movement.

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The National MS Society estimates that 2.9 million people live with MS globally.

and Canada have the highest rates of MS, with 309 cases per 100,000 in the U.S., and 291 cases per 100,000 in Canada, respectively.

and Canada have the highest rates of MS, with 337.9 to 362.6 cases per 100,000 in the U.S., and 291 cases per 100,000 in Canada.

Given the nature of this neurodegenerative disease, these individuals and their caretakers are active in exploring treatment options that may resolve or delay the progression of symptoms.

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A survey of 436 patients found that 45% reported a mobility disability in the first month following diagnosis, with upwards of 90% of patients reporting a mobility disability within 10 years of their diagnosis.

Additionally, 50-80% of MS patients suffer from balance and gait dysfunction and over 50% fall at least once a year.

Additionally, 50-80% of MS patients suffer from balance and gait dysfunction and over 56% fall at least once within a three-month period.

It has also been reported that unemployment rates in MS patients range from 24-80% with higher rates associated with decreased ambulation and mobility.

The Centers for Disease Control, or CDC, reports that individuals with disabilities, like MS, that result in limited mobility are at greater risk for health problems including injury, mental health and depression, overweight and obesity, pain, pressure sores or ulcers and other issues.

A 2016 economic analysis of MS found the total lifetime costs per person with MS to be $4.1 million, with average yearly healthcare costs ranging from $30 thousand to $100 thousand based on the severity of the disease.

In 2019, the total economic burden attributed to MS in the U.S was $85.4 billion and the average annual cost of living with MS was $88.5 thousand.

Since the exact cause of MS is still unknown, there is no known prevention.

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While there are several disease-modifying medications approved by the FDA to treat MS, only one drug approved by FDA and Heath Canada, Ampyra® (dalfampridine), which is indicated for the improvement of gait speed in conjunction with physical therapy in patients with MS, offers the closest, albeit limited only to speed, comparison to PoNS Therapy on improvement in gait.

Overview of mmTBI and Current Available Treatments

Overview of TBI and Current Available Treatments

There are an estimated 49.0 million people globally, with over 5.3 million in the U.S.

and 350,000 in Canada, living with balance deficit due to mmTBI.

Every year in the U.S.

and Canada, there are approximately 420,000 and 20,000 newly diagnosed mmTBIs, respectively, resulting in balance deficit.

and 760,000 in Canada, who have sustained a TBI.

Every year there are 27.2 million newly diagnosed TBIs globally, of which 2.8 million and 165,000 occur in the U.S.

and Canada, respectively.

This condition often has a significant impact on one’s quality of life, negatively affecting independence, employability, productivity, mental health and participation in the community.

Rehabilitation is often required following a mmTBI for resulting motor, cognitive and behavioral impairments.

The current standard of care to address balance issues following a mmTBI is supervised therapeutic exercise.

While supervised therapeutic exercise can help to promote balance recovery, individuals are often unable to return to their full function and are left living with a balance deficit.

Rehabilitation is often required following a TBI for resulting motor, cognitive and behavioral impairments.

Approximately 80% of individuals who sustain a TBI report balance impairment.

The current standard of care to address balance issues following a TBI is supervised therapeutic exercise.

While supervised therapeutic exercise can help to

promote balance recovery, individuals are often unable to return to their full function and are left living with a balance deficit.

Prior to the development of the PoNS device, there were no cleared treatments that were clinically indicated to treat balance deficit.

A few studies have suggested that supervised therapeutic exercise aimed at improving balance and gait

may be mildly effective for rehabilitation in the mmTBI population.

A few studies have suggested that supervised therapeutic exercise aimed at improving balance and gait may be mildly effective for rehabilitation in the mmTBI population.

Given the small number of published studies, the small number of patients enrolled in the studies of which we are aware, the varying range of interventional protocols employed in such studies and the lower levels of study design, it is difficult to draw any conclusions regarding the effectiveness and dosing parameters of using supervised therapeutic exercise alone for the treatment of balance deficit following mmTBI.

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Our goal is to establish the PoNS Therapy as the standard of care for this condition all over the world.

Overview of Stroke in Canad a

According to the Canadian Chronic Disease Surveillance System of Canada, Stroke is the third leading cause of death in Canada and the tenth largest contributor to disability-adjusted life years (the number of years lost due to ill-health, disability or early death).

Overview of Stroke and Current Available Treatments

According to the World Health Organization, there are more than 101 million people across the globe who have experienced a stroke, and over 12 million new strokes occur each year.

In the U.S., approximately 650,000 people survive a new stroke each year and an estimated 7 million Americans live with ongoing complications of stroke.

The Canadian Chronic Disease Surveillance System states that stroke is the third leading cause of death in Canada and the tenth largest contributor to disability-adjusted life years (the number of years lost due to ill-health, disability or early death).

About 878,500 Canadian adults aged 20+ have experienced a stroke (2018-2019) and with the population aging, more and more Canadians are at risk.

This condition often has a significant impact on the ability on one’s functionality, negatively affecting independence, employability, productivity, mental health and participation in the community.

In addition, more than 80% of the survivors have a gait impairment.

Rehabilitation is required following a stroke for resulting motor, cognitive and behavioral impairments.

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There are two peer-reviewed published studies reporting on the results of clinical trials comparing active PoNS + PT vs a no frequency pulse sham device (placebo PoNS) + PT in subjects with mild and moderate MS:

Journal of NeuroEngineering and Rehabilitation 2014, 11:79 and Leonard et al.

Journal of Neuro Engineering and Rehabilitation 2014, 11:79 and Leonard et al.

Multiple Sclerosis Journal Experimental, Translational and Clinical January-March 2017:

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In both studies, the primary efficacy endpoint was constructed for a between-group (HFP-treated and LFP-treated cohorts) comparison based on a greater than 15-point SOT composite score improvement at endpoint.

The statistical plans also provided for a key secondary efficacy endpoint that established the treatment response (> 15 points on SOT composite score) from baseline in the pooled HFP and LFP groups at endpoint(s), should the primary measure failed to establish a significant difference between the HFP and LFP treatment groups.

The statistical

plans also provided for a key secondary efficacy endpoint that established the treatment response (> 15 points on SOT composite score) from baseline in the pooled HFP and LFP groups at endpoint(s), should the primary measure failed to establish a significant difference between the HFP and LFP treatment groups.

Summary results of the registrational study (Ptito et al.

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and Canada, evaluated 122 randomized subjects.

improvement on the SOT composite score) as compared to 63.5% in the LFP arm over a 5-week treatment period.

● The primary efficacy endpoint, although failing to demonstrate a between-group difference (p<0.081), showed a higher responder rate in the HFP arm with 71.2% of subjects experiencing a greater than 15-point improvement on the SOT composite score) as compared to 63.5% in the LFP arm over a 5-week treatment period.

● The key secondary efficacy endpoints demonstrated a statistically significant increase (p<0.0005) in SOT composite scores from baseline for the pooled arms with a mean improvement of 18.3 points at two weeks of treatment and of 24.6 points at five weeks of treatment.

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● No device-related serious adverse events were observed.

Summary of the results of the 26-week long-term treatment study (2019) study in people with mmTBI:

● The study, performed to evaluate understand the durability of response to the PoNS Therapy over a 26-week period, (14 weeks therapy followed by 12-week washout period) conducted at the Tactile Communication Neurorehabilitation Laboratory at the University of Wisconsin-Madison and sponsored by the U.S.

Summary of the results of the 26-week long-term treatment study (2019) in people with mmTBI:

● The study, performed to evaluate the durability of response to the PoNS Therapy over a 26-week period (14-week therapy followed by 12-week washout period) conducted at the Tactile Communication Neurorehabilitation Laboratory at the University of Wisconsin-Madison and sponsored by the U.S.

Army, enrolled 22 mild-to-moderate subjects with gait deficit.

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PoNS Clinical Evidence and Scientific Support in Stroke

Gait deficit treatment outcomes for PoNS-treated individuals were analyzed through a real-world evidence (RWE) retrospective analysis of clinical data from 10 clinical rehabilitation settings in Canada sites.

In a clinical study (2017) published by Dr.

Mary Galea, PoNS Therapy displayed a statistically significant effect on improving balance deficit after 2 weeks of intense physical therapy rehabilitation with PoNS, as compared to high-intensity physical therapy alone.

The study was conducted in an in-patient rehabilitation setting on 10 patients who were in the subacute stroke phase and with therapy intensity higher than in most stroke rehabilitation settings.

The following is a summary of the real-world evidence (“RWE “) database analysis of stroke patients treated with PoNS in Australia:

● The combined intervention with PoNS was significantly more effective than high intensity physiotherapy alone for the rehabilitation of balance in stroke survivors.

● After two weeks of therapy, the median score on the Mini-BEST was 22.0 in the PoNS-treated group, compared to 13 in the control group, providing a clinically significant and meaningful therapeutic outcome, especially when considering that a cut-off score of 17.5 has been shown to discriminate between fallers and non-fallers with chronic stroke (> 6 months).

Gait deficit treatment outcomes for PoNS-treated individuals were analyzed through a RWE retrospective analysis of clinical data from 10 clinical rehabilitation settings in Canada sites.

The RWE dataset consisted of 31 consecutive stroke patients that started treatment between March 2019 and November 2022.

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● There was no statistically reliable evidence that effectiveness varies by age, gender, or clinical site.

Safety and Tolerability Profile of PoNS Therapy

PoNS Therapy has an excellent high safety profile.

Overall, the therapy is safe and well tolerated.

Reported adverse events were mild and typically related to baseline comorbidities and not PoNS treatment.

Galea’s two-week randomized controlled study, no serious device-related adverse events were reported for any subject treated with PoNS.

Similarly, in the MS and TBI randomized studies, there were no serious PoNS device-related adverse events in any disease groups.

Furthermore, there were reductions from baseline in fall rate and in the Headache Disability Index (“HDI”) and improvements in sleep quality were also reported in the TBI studies.

The PoNS device has been used in clinical rehabilitation settings with over 480 patients since March 4, 2019 to treat balance and gait disorders with more than 180,000 patient sessions recorded.

An exhaustive search of the HMI complaint records for 33 patients identified with a diagnosis of stroke yields a total of 13,960 patient sessions and no serious device-related events have been recorded along with zero reportable adverse events.

Regulatory Status Worldwide

Canadian Regulatory Status:

mmTBI, MS and Stroke

On October 17, 2018, we received our Canadian marketing authorization from Health Canada allowing us to commercialize the PoNS device in Canada for use as a short-term treatment (14 weeks) of balance deficit due to mmTBI.

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Breakthrough Device Designation does not change the requirements for approval of an application for a marketing authorization.

On March 26, 2021, we received marketing authorization from the FDA of the PoNS device.

The PoNS device is indicated for use as a short-term treatment of gait deficit due to mild-to-moderate symptoms of MS and is to be used as an adjunct to a supervised therapeutic exercise program in patients 22 years of age and over by prescription only.

On March 26, 2021, we received marketing authorization from the FDA of the PoNS device for use as a short-term treatment of gait deficit due to mild-to-moderate symptoms of MS and is to be used as an adjunct to a supervised therapeutic exercise program in patients 22 years of age and over by prescription only.

On February 29, 2024, we received Healthcare Common Procedure Coding System (HCPCS) codes for the PoNS controller and for the PONS mouthpiece, which will become effective on April 1, 2024.

We will continue monitoring the development by Centers for Medicare & Medicaid Service (“CMS”) of a

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While we will continue to monitor this, we will also remain focused on building out our reimbursement strategy for both commercial and government payers.

We are still working to understand current Medicare requirements and policies for coverage, coding, and payment of durable medical equipment and assess how the PoNS device may be treated with respect to coding, coverage, and reimbursement under the Medicare program.

We also intend to provide broad access and reimbursement for the PoNS Therapy over time through commercial insurers.

Prior to the initiation of CMS or broad commercial payer coverage, we anticipate the primary source of sales will be self-pay patients.

We expect to support the cost of the PoNS Therapy by offering a cash pay discount, collaborating with third parties to provide self-pay patients with financing options as well as working with advocacy groups and charitable organizations to help self-pay patients access our technology.

In general, we anticipate that it will take at least 24 months to obtain broad coverage and reimbursement among government and private payers.

Prior to the initiation of CMS or broad commercial payer coverage, the primary source of sales have been self-pay patients.

We expect to continue to support the cost of the PoNS Therapy by collaborating with third parties to provide self-pay patients with financing options as well as working with advocacy groups and charitable organizations to help self-pay patients access our technology.

In general, we anticipate that it will take at least 24 months to obtain broad coverage and reimbursement among government and private payers once HCPCS codes become effective.

In September 2021, we started activities to set up and implement a new study as part of a Therapeutic Experience Program, or PoNSTEP, with NYU Langone Health as our first Center of Excellence clinical site.

During 2022, we added four additional clinical sites to the program and recruitment site information can be found on clinicaltrials.gov.

Since then, we have added five additional clinical sites to the program.

Recruitment site information can be found on clinicaltrials.gov.

PoNSTEP is a Helius-sponsored, open label observations, interventional multi-center outcome research trial designed to assess adherence to on-label PoNS Therapy for improvement in gait deficits with MS in a real-world clinical setting.

The study will measure subjects’ adherence to PoNS therapy, which combines the PoNS device with physical therapy, to better understand the relationship between adherence to the treatment regimen and therapeutic functional outcome.

study measures subjects’ adherence to PoNS Therapy, which combines the PoNS device with physical therapy, to better understand the relationship between adherence to the treatment regimen and therapeutic functional outcome.

The primary endpoint of the study is maintenance of gait improvement from the end of supervised therapy (Phase 1) to the end of unsupervised therapy (Phase 2) in relation to the subject’s adherence to PoNS Therapy.

The secondary endpoints are improvement of gait and balance deficit over time, and clinical global impression of change.

The study will be conducted at eight to ten Centers of Excellence across the U.S., with an estimated average of four PoNS devices per site.

Enrollment commenced in the second half of 2022 and is expected to be completed in 2024 with targeted participation of approximately forty to fifty patients with MS.

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In August 2021, we received Breakthrough Designation for the PoNS device as a potential treatment for dynamic gait and balance deficits due to symptoms from stroke, to be used as an adjunct to a supervised therapeutic exercise program in patients 22 years of age and over.

With Breakthrough Designation received, a clinical trial of PoNS therapy in stroke patients in collaboration with Medical University of South Carolina is planned to commence in 2023 with initial patient enrollments beginning in the second half of 2023.

With Breakthrough Designation received, a clinical trial of PoNS Therapy in stroke participants in collaboration with Medical University of South Carolina commenced in 2023 with initial patient enrollments beginning in the second half of 2023.

An open label study to evaluate the therapeutic benefit of PoNS in chronic stroke subjects will start enrolling participants in the first quarter 2024 in three sites in the U.S.

and Canada as part of our registrational program for gait and balance deficit due to stroke.

Enrollment for both studies is expected to be completed by the end of 2024 with a submission to FDA targeted for mid-to-late 2025.

Regulatory Status:

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European Regulatory Status

In December 2018, we submitted an application for a CE Mark, which, if approved, would allow us to market the PoNS device in the EU.

During the second quarter of 2019, we engaged with regulators in Europe to answer questions that we received from them as part of their review of our PoNS device for CE marking.

In August 2019, we withdrew our application from the EU marketing process due to uncertainty in Europe caused by the switch from the Medical Device Directive, or MDD, to the Medical Device Regulation, or MDR, Brexit, and the withdrawal of Lloyd’s Register Quality Assurance, our notified body, from the EU notified body business.

We have engaged G-MED NA (North America) as our new ISO registrar and will reconsider submitting to the EU when conditions stabilize.

In December 2018, we submitted an application for CE certification with a notified body in the European Union (“EU”), which, if granted, would allow us to CE mark and market the PoNS device in the EU.

During the second quarter of 2019, we engaged with our notified body in Europe to answer questions that we received from them as part of the conformity assessment of our PoNS device for CE certification.

In August 2019, we withdrew our application to be CE certified due to uncertainty in Europe caused by the switch from the Medical Device Directive, or MDD, to the Medical Device Regulation, or MDR, Brexit, and the withdrawal of Lloyd’s Register Quality Assurance, our notified body, from the EU

notified body business.

We have engaged G-MED NA (North America) as our ISO registrar and will reconsider submitting to the EU when conditions stabilize.

Australian Regulatory Status

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PoNS is not intended to be used alone without an exercise program.

Exclusive Distribution Agreement

HTC Exclusive Distribution Agreement

On March 3, 2023, we entered into an Exclusive Distribution Agreement with Health Tech Connex, Inc.

(“HTC”) (“Exclusivity Agreement”), whereby, subject to certain terms and conditions, we granted to HTC the exclusive right to provide the PoNS Therapy in the Fraser Valley and Vancouver metro regions of British Columbia, where HTC has operated a PoNS authorized clinic since February 2019.

HTC is to purchase the PoNS devices for use in these regions exclusively from us and on terms no less favorable than the then-current standard terms and conditions.

This Exclusivity Agreement replaces the previous Clinical Research and Co-Promotion Agreement (“Co-Promotion Agreement”) between the parties dated October 2019.

(“HTC”) (“HTC Exclusivity Agreement”), whereby, subject to certain terms and conditions, we granted to HTC the exclusive right to provide the PoNS Therapy in the Fraser Valley and Vancouver metro regions of British Columbia, where HTC has operated a PoNS authorized clinic since February 2019.

HTC purchases the PoNS devices for use in these regions exclusively from us and on terms no less favorable than the then-current standard terms and conditions.

This HTC Exclusivity Agreement replaces the previous Clinical Research and Co-Promotion Agreement (“HTC Co-Promotion Agreement”) between the parties dated October 2019.

Product Development, Manufacturing and Logistics Services

The commercial design of the PoNS device is manufactured and assembled by Key Tronic Corporation (“Key Tronic”), our contract manufacturing partner since 2017, at its facility located in Oakdale, Minnesota.

The commercial design of the PoNS device is currently manufactured and assembled by Key Tronic Corporation (“Key Tronic”), our contract manufacturing partner since 2017, at its facility located in Oakdale, Minnesota.

Key Tronic manufactures devices for engineering and design verification testing and for our FDA submission as well as commercial devices for launch inventory.

Key Tronic has multiple locations across the U.S., Mexico and China with back-up manufacturing capabilities to help mitigate the risk of a single source provider.

We remain ultimately responsible for the compliance of our submissions and products, and activities performed on our behalf.

During the third quarter of 2023, the Company began implementing the transition of the manufacturing of PoNS device controllers and mouthpieces from Key Tronic to Minnetronix, Inc in St.

The Company expects this transition to be fully completed by mid-2024.

We remain ultimately responsible for the compliance of our submissions and products and for the activities performed on our behalf.

We place an emphasis on protecting our patented technology, trade secrets and know-how and only share confidential information on an as needed basis.

Key Tronic is registered as a medical device manufacturer in good standing with the FDA and along with Cambridge are certified in accordance with International Organization for Standardization, or ISO, 13485, a comprehensive quality management system for the design and manufacture of medical devices.

Both Minnetronix and Key Tronic are registered as medical device manufacturers in good standing with the FDA and along with Cambridge Consultants, our design services supplier, are certified in accordance with International Organization for Standardization, or ISO, 13485, a comprehensive quality management system for the design and manufacture of medical devices.

HMI maintains a compliant quality management system certified to ISO 13485:2016 and compliant with MDSAP requirements for the U.S., Canada and Australia.

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In March 2019, we commenced the commercialization of our PoNS Therapy in Canada, where PoNS became the first and only device authorized by Health Canada for the treatment of balance deficit due to mmTBI.

Throughout 2019, we made important progress in advancing and refining our commercialization strategy in Canada building access, awareness and credibility for the PoNS Therapy, including the acquisition of the Heuro Canada operating entity of HTC.

(“Heuro”) operating entity of

These efforts, which were led by our local Canadian commercial team, included the establishment of our authorized clinic network throughout Canada, launching digital marketing campaigns, and building key opinion leader and advocacy networks.

On March 18, 2020, the Company received notification that its Canadian Class II license amendment application for the treatment of gait deficit in patients with mild and moderate symptoms from MS, when used in conjunction with physical therapy, was successful and received marketing authorization for PoNS from Health Canada.

On March 9, 2023, we announced the authorization from Health Canada to market PoNS Therapy for the treatment of gait deficit due to mild and moderate symptoms from stroke.

This indication is instrumental as it is one of the most significant indications impacting balance and gait in Canada, and it provides the opportunity to extend options for coverage through government and third-party payers.

Following in-depth market analysis and field intelligence, our Canadian commercial team began an expansion plan to increase the number of authorized PoNS clinics.

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In addition to continuing to increase the number of clinic locations, we have shifted our focus to driving patient throughput to these clinics.

Sales performance in Canada throughout 2021 and into 2022 has been impacted by the COVID-19 pandemic due to space restrictions that the provincial governments have imposed as well as the risk tolerance of patients and therapists.

We continue to refine our go-to-market pricing model.

In 2020, we implemented a modified pricing approach which is focused on reducing the need for clinics and patients to pay large, upfront costs at the start of treatment.

We have also experimented with various promotional pricing programs resulting in lower unit prices for both PoNS system purchases and mouthpieces in order to increase access to the PoNS Therapy and drive market awareness which we believe resulted in an increase in the volume of units sold, beginning in the second half of 2020.

We extended the promotional pricing through the end of 2021 including any order placed and accepted, but not fulfilled before December 31, 2021.

The promotional pricing was discontinued in 2022 when new pricing was established which focuses on encouraging the clinic in proposing the PoNS therapy to their patient and established a volume discount program that provides a laddered pricing discount to clinics based upon PoNS purchases in an effort to make a difference in the outcomes to their patients and enhance their practice.

The value dossiers for mmTBI and MS that were created in mid-2020 to fully demonstrate in both scientific and financial terms, the merits of PoNS Therapy for claimants are now being utilized along with submissions from clinics on behalf of their patients.

The value dossiers for mmTBI, stroke and MS that were created in mid-2020 to fully demonstrate in both scientific and financial terms, the merits of PoNS Therapy for claimants are now being utilized along with submissions from clinics on behalf of their patients.

The dossiers are provided to our clinics across Canada to submit as part of treatment plans with reimbursement applications to the payer community.

Our reimbursement strategy for mmTBI is focused initially on the auto collision insurance and workers’ compensation, or WC, market as well as long-term disability cases.

Our reimbursement strategy for mmTBI is focused on the auto collision insurance and workers’ compensation (“WC”), market as well as long-term disability cases.

Our reimbursement strategy for MS is focused on commercial insurers/extended health benefits and charitable foundations that support these patient conditions .

Our reimbursement strategy for stroke is focused on private payers while also demonstrating to public health organizations the benefits and potential PoNS Therapy could provide within their respective networks.

As part of our overall PoNS Therapy strategy, we are also gathering comprehensive health economic assessments of treatment outcomes.

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and other markets around the world.

We believe the Canadian commercial experience will be extremely valuable to prepare us for our launches in the U.S.

and internationally.

The real-world results from the collective experience of our patients that have completed the 14-week PoNS Therapy, in Canada thus far, have been encouraging.

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The majority of patients had a mean patient adherence to treatment of over 90% and showed significant improvement in their balance and gait with a meaningful clinical difference at the end of their treatment.

Similar results were observed in the treatment of patients with symptoms from stroke.

The consistency of the patient results from our initial commercial experience supports our plans to expand access PoNS Therapy in Canada.

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Importantly, this focused strategy will also allow us to measure patient outcomes to determine if they are similar to those observed in our clinical trials.

In June 2022, we launched the Patient Therapy Access Program (“PTAP”) program, which will provide qualifying patients access to PoNS therapy at a significantly reduced price.

To qualify for the PTAP pricing, the patient must provide a letter of medical necessity and consent to the release of their medical records.

Because of the significantly reduced price, the patient must also sign a document that prohibits him/her from submitting a reimbursement claim to third-party payers.

PTAP participants are also invited to join the Company’s registry program, which is open to all MS patients regardless of their PTAP participation.

The PoNS registry is structured to collect important health information and establish the value of PoNS on key therapeutic outcomes, hence supplementing the data collected through clinical trials and real-world data.

We began processing orders under the PTAP program in June 2022, which is expected to run through June 2023.

In December 2022, we launched an e-commerce site in the US to make it easier for patients to obtain PoNS systems.

In June 2022, we launched the Patient Therapy Access Program (“PTAP”) program, which provided qualifying patients access to PoNS Therapy at a significantly reduced price.

Through the PTAP program, the Company collected important health information that helped gain insight into the value of PoNS on key therapeutic outcomes that supplemented the data collected through clinical trials and real-world data.

The PTAP was not renewed and terminated on June 30, 2023.

In December 2022, we launched an e-commerce site in the US to make it easier for patients to obtain PoNS devices, and began processing orders in January 2023.

Accessed via ponstherapy.com, the site is powered through a new partnership with UpScriptHealth, a leading telehealth company focused on making medications and devices available direct-to-consumer.

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list price for the PoNS device of $25,700, comprised of $17,800 for the controller and $7,900 for the mouthpiece.

We are pursuing commercial insurance coverage and Medicare reimbursement for PoNS within the Durable Medical Equipment, or DME, benefit category.

While there are currently no specific Healthcare Common Procedure Coding System, or HCPCS, codes to describe the PoNS device or mouthpiece, we intend to use miscellaneous codes – E1399 (Miscellaneous durable medical equipment) and A9999 (Miscellaneous DME supply or accessory, not otherwise specified) until specific HCPCS codes are created.

We initially applied for unique HCPCS codes during the third quarter of 2021.

In order to address CMS’s request for additional information to “further understand the PoNS device indication for use”, we decided to monitor real-world utilization of PoNS Therapy and collect additional clinical evidence through our ongoing PoNSTEP study and upcoming registry program.

Based on consistent reports of positive therapeutic benefits experienced by MS patients through our commercial programs, we plan to re-engage in our communication with CMS leveraging new information that can answer their questions and argue convincingly in favor of obtaining unique

HCPCS codes for PoNS.

We expect to interact again with CMS in the second half of 2023.

In general, we anticipate that it will take at least 24 months to obtain broad coverage and reimbursement among government and private payers.

We are pursuing commercial insurance coverage and Medicare reimbursement for PoNS within the Durable Medical Equipment (“DME”), benefit category.

We initially applied for unique Healthcare Common Procedure Coding System (“HCPCS”) codes during the third quarter of 2021.

Based on consistent reports of positive therapeutic benefits experienced by MS patients through our commercial programs, we reapplied for HCPCS codes in the second quarter of 2023 leveraging new information, addressing their questions and providing further support in favor of obtaining unique HCPCS codes for PoNS.

In February 2024, CMS assigned HCPCS Level II codes A4593, “Neuromodulation stimulator system, adjunct to rehabilitation therapy regime” to describe the PoNS controller and A4594, “Neuromodulation stimulator system, adjunct to rehabilitation therapy regime, mouthpiece each” to describe the PoNS mouthpiece.

The new HCPCS codes will be effective April 1, 2024.

We expect to interact again with CMS in the second half of 2024 – to seek Medicare final payment determinations for both codes to be effective at the next scheduled date of October 1, 2024.

Concurrently, we will be approaching various third-party payers to negotiate coverage under these codes.

In general, we anticipate that it will take at least 24 months to obtain broad coverage and reimbursement among government and private payers once the HCPCS codes become effective.

Commercialization in Other Markets

We submitted an application for a CE Mark in December 2018.

In preparation for our launch in the United Kingdom, or UK, and the EU, we entered into a consulting agreement with a UK-based company with expertise in the development of new services in the healthcare industry to leverage local market insights to develop a comprehensive commercialization strategy and tactical plan for launch of the PoNS Therapy in the UK.

As previously described, in August 2019, we withdrew our application for EU market authorization and will revisit our UK and EU commercialization plans as terms of market authorization become clearer under the new regulations.

We submitted an application to be CE certified in December 2018.

In preparation for our launch in the United Kingdom (“UK”), and the EU, we entered into a consulting agreement with a UK-based company with expertise in the development of new services in the healthcare industry to leverage local market insights to develop a comprehensive commercialization strategy and tactical plan for launch of the PoNS Therapy in the UK.

As previously described, in August 2019, we withdrew our application to be EU certified and will revisit our UK and EU commercialization plans as terms of CE/UKCA certification become clearer under the new regulations.

We submitted an application to the TGA in Australia during the third quarter of 2019.

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In November 2021, we received market authorization from the TGA for the sale of PoNS as a Class IIa medical device.

In Australia, PoNS is authorized as a non-implantable neurostimulator intended for short term used by healthcare professionals as an adjunct to a therapeutic exercise program to improve balance and gait.

In Australia, PoNS is authorized as a non-implantable neurostimulator intended for short term used by

healthcare professionals as an adjunct to a therapeutic exercise program to improve balance and gait.

PoNS is not intended to be used alone without an exercise program.

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Global Economic Conditions

Generally, worldwide economic conditions remain uncertain, particularly due to the effects of the COVID-19 pandemic and increased inflation.

Generally, worldwide economic conditions remain uncertain, in part due to supply chain disruptions, labor shortages, global conflicts and increased inflation.

The general economic and capital market conditions both in the U.S.

and worldwide, have been volatile in the past and at times have adversely affected our access to capital and increased the cost of capital.

and worldwide, have been volatile in the recent years and at times have adversely affected our access to capital and have increased the cost of capital.

The capital and credit markets may not be available to support future capital raising activity on favorable terms.

If economic conditions decline, our future cost of equity or debt capital and access to the capital markets could be adversely affected.

The COVID-19 pandemic that began in late 2019 introduced significant volatility to the global economy, disrupted supply chains and had a widespread adverse effect on the financial markets.

Additionally, our operating results could be materially impacted by changes in the overall macroeconomic environment and other economic factors.

Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, the conflict in Ukraine, and steps taken by governments and central banks, particularly in response to the COVID-19 pandemic as well as other stimulus and spending programs, have led to higher inflation, which has led to an increase in costs and has caused changes in fiscal and monetary policy, including increased interest rates.

If economic conditions continue to remain volatile or decline, our future cost of equity or debt capital and access to the capital markets could be adversely affected.

Our operating results could be materially impacted by changes in the overall macroeconomic environment and other economic factors.

Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, global conflicts such as the conflicts in Ukraine and in the Middle East, and steps taken by governments and central banks as well as other stimulus and spending programs, have led to higher inflation, which has led to an increase in costs and has caused changes in fiscal and monetary policy, including increased interest rates.

Although we may take measures to mitigate these impacts, if these measures are not effective, our business, financial condition, results of operations, and liquidity could be materially adversely affected.

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In the U.S., we plan to engage with select payer segments to obtain coverage and reimbursement for the PoNS Therapy.

We intend to combine evidence from our clinical trials and real-world experience from commercial clinics in Canada to

demonstrate the value proposition of the PoNS Therapy to payers and support favorable coverage and reimbursement decisions.

CMS has indicated that it is developing a rule that would provide a pathway for expedited coverage of technologies under the Medicare program, though that rule has yet to be released.

We intend to combine evidence from our clinical trials and real-world experience from commercial clinics in Canada to demonstrate the value proposition of the PoNS Therapy to payers and support favorable coverage and reimbursement decisions.

Significant uncertainty exists regarding the coverage and reimbursement status of products approved by the FDA and other government authorities.

In the United States, sales of our products depend in significant part on the availability and adequacy of coverage and reimbursement from third party payors for our product and for services that use our products.

Third-party payors include government authorities such as Medicare and Medicaid, managed care providers, private health insurers, and other organizations.

The process for determining whether a payor will provide coverage may be separate from the process for setting the reimbursement rate that the payor will pay for the product or service.

Moreover, a payor’s decision to provide coverage does not imply that an adequate reimbursement rate will be approved.

Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.

Third-party payors are increasingly challenging the prices charged for, examining the medical necessity, safety, and efficacy of, and assessing the cost-effectiveness of medical products.

government and state legislatures have shown significant interest in implementing cost containment programs to limit the growth of government-paid health care costs, including price controls and restrictions on reimbursement.

Any such downward pressure on the

reimbursement for our products could limit our ability to realize an appropriate return on our investment in product development.

CMS has indicated that it is developing a program that would provide a pathway for expedited transitional coverage of emerging technologies under the Medicare program, though that rule has yet to be released.

While we will continue to monitor this, we will also remain focused on building out our reimbursement strategy for both commercial and government payers.

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In addition, ANR has agreed that ownership of any improvements, enhancements or derivative works of the Patent Pending Rights that are developed by HMI or ANR shall be owned by HMI, provided that if HMI decides not to patent such improvements, ANR may choose to pursue patent rights independently.

Pursuant to the Sublicense Agreement, HMI has agreed to pay ANR royalties equal to 4% of HMI’s revenues collected from the sale of devices covered by the Patent Pending Rights and services related to the therapy or use of devices covered by the Patent Pending Rights in therapy services.

Pursuant to the Sublicense Agreement, HMI has agreed to pay ANR royalties equal to 4% of HMI’s revenues collected from the sale of devices covered by the Patent Pending Rights and services related to PoNS Therapy or use of devices covered by the Patent Pending Rights in therapy services.

The Sublicense Agreement provides that the sublicense granted by ANR to HMI, if in good standing, shall not be cancelled;

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In addition to our U.S.

patents, we have been granted 21 foreign utility patents (nine in Australia, five in Russia, two in Canada, two in Israel, two in Europe (validated in France, Germany, Italy, UK and Spain) and one in Eurasia, or EA (validated in all eight Eurasian member-states), and 33 foreign design patents (three in Australia, nine in Canada, six in Russia, and fifteen registered community designs in Europe).

patents, we have been granted 22 foreign utility patents (nine in Australia, five in Russia, two in Canada, two in Israel, two in Europe (validated in France, Germany, Italy, UK and Spain), one in UK and one in Eurasia, or EA (validated in all eight Eurasian member-states), and 33 foreign design patents (three in Australia, nine in Canada, six in Russia, and fifteen registered community designs in Europe).

Further, we have 11 foreign utility patent applications that are currently pending:

three in Europe, two in each of Australia, Canada and Russia and one in each of China, Israel, and the U.K., and one design patent application that is currently pending in Canada.

three in Europe, two in each of Australia, Canada and Russia and one in each of China and Israel, and one design patent application that is currently pending in Canada.

Currently, we own rights in five trademarks:

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We are also the owner of the rights in the PoNS Therapy, Helius, Helius Medical, and Helius Medical Technologies marks.

We are the owner of the rights in PoNS, Helius and Helius Medical Technologies marks in Canada.

We have also applied for the PoNS trademark in Europe, Russia, China, Australia, New Zealand and Israel.

We have also applied for the Helius mark in the U.S., Australia and Canada, the Helius Medical mark in the U.S., and the PoNS Therapy mark in the U.S.

We are the owner of the trademark registrations for the Helius and PoNS Therapy marks in the U.S.

as well as the trademark registration for the Helius mark in Canada and the trademark registrations for the PoNS mark in Europe, Israel, and New Zealand.

We have also applied for the PoNS trademark in Russia, China and Australia along with the Helius trademark in Australia, and the Helius Medical trademark in the U.S.

Government Regulation

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Classification of a device is important because the class to which a device is assigned determines, among other things, the necessity and type of FDA review required prior to marketing the device.

Class I devices are those for which safety and effectiveness can be assured by adherence to FDA’s "general controls"

for medical devices, which include compliance with the applicable portions of the FDA’s Quality System Regulation, or QSR, facility registration and product listing, reporting of adverse medical events, and appropriate, truthful and non-misleading labeling, advertising, and promotional materials.

Class I devices are those for which safety and effectiveness can be assured by adherence to FDA’s “general controls” for medical devices, which include compliance with the applicable portions of the FDA’s Quality System Regulation, or

QSR, facility registration and product listing, reporting of adverse medical events, and appropriate, truthful and non-misleading labeling, advertising, and promotional materials.

Some Class I devices also require premarket clearance by the FDA through the 510(k) premarket notification process described below.

Class II devices are subject to FDA’s general controls, and any other "special controls"

deemed necessary by FDA to ensure the safety and effectiveness of the device, such as performance standards, product-specific guidance documents, special labeling requirements, patient registries or post-market surveillance.

Class II devices are subject to FDA’s general controls, and any other “special controls” deemed necessary by FDA to ensure the safety and effectiveness of the device, such as performance standards, product-specific guidance documents, special labeling requirements, patient registries or post-market surveillance.

Premarket review and clearance by the FDA for Class II devices is accomplished through the 510(k) premarket notification process, though certain Class II devices are exempt from this premarket review process.

When a 510(k) is required, the manufacturer must submit to the FDA a premarket notification submission demonstrating that the device is "substantially equivalent"

to a legally marketed device, which in some cases may require submission of clinical data.

When a 510(k) is required, the manufacturer must submit to the FDA a premarket notification submission demonstrating that the device is “substantially equivalent” to a legally marketed device, which in some cases may require submission of clinical data.

Unless a specific exemption applies, 510(k) premarket notification submissions are subject to user fees.

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To obtain 510(k) clearance for a medical device, an applicant must submit to the FDA a premarket notification submission demonstrating that the proposed device is “substantially equivalent” to a legally marketed device, known as a “predicate device.” A legally marketed predicate device may include a device that was legally marketed prior to May 28, 1976 for which a PMA is not required (known as a “pre-amendments device” based on the date of enactment of the Medical Device Amendments of 1976), a device that has been reclassified from Class III to Class II or Class I, or a device that was found substantially equivalent through the 510(k) process.

device does not raise new questions of safety and effectiveness and is at least as safe and effective as the predicate device.

A device is substantially equivalent if, with respect to the predicate device, it has the same intended use and has either (i) the same technological characteristics, or (ii) different technological characteristics, but the information provided in the 510(k) submission demonstrates that the device does not raise new questions of safety and effectiveness and is at least as safe and effective as the predicate device.

A showing of substantial equivalence sometimes, but not always, requires clinical data.

Before the FDA will accept a 510(k) submission for substantive review, the FDA will first assess whether the submission satisfies a minimum threshold of acceptability.

If the FDA determines that the 510(k) submission is incomplete, the FDA will issue a “Refuse to Accept” letter which generally outlines the information the FDA believes is necessary to permit a substantive review and to reach a determination regarding substantial equivalence.

Before the FDA will accept a 510(k) submission for substantive review, the FDA will first assess whether the submission satisfies a minimum threshold of acceptability through its eSTAR submission form.

If the eSTAR does not pass technical screening (i.e., an eSTAR is provided where none of the attachments to a question are relevant to the question, or if an inaccurate response is provided to any question), the submission may be put on an early Technical Screening hold for 180 days, until a complete replacement eSTAR is submitted.

An applicant must submit the requested information before the FDA will proceed with additional review of the submission.

Once the 510(k) submission is accepted for review, by regulation, the FDA has 90 days to review and issue a determination.

As a practical matter, clearance often takes longer.

As a practical matter,

clearance often takes longer.

The FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence.

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Under Class II, general controls (e.g., premarket notification) and special controls (e.g., specific performance testing) are applicable.

Obtaining FDA marketing authorization, de novo classification and clearance, or approval for medical devices is expensive and uncertain, generally takes several years, and generally requires detailed and comprehensive scientific and clinical data.

Notwithstanding the expense, these efforts may never result in FDA authorization for commercial distribution.

Even if we were to obtain regulatory authorization, it may not be for the uses we believe are important or commercially attractive, in which case we would not be permitted to market our product for those uses.

Clinical Trials

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All clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device exemption, or IDE, regulations which govern investigational device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators.

If the device presents a “significant risk,” as defined by the FDA, to human health, the FDA requires the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human clinical trials.

If the device presents a “significant risk,” as defined by the FDA, to human health, the FDA requires the device sponsor to submit an IDE application to the FDA, which must

become effective prior to commencing human clinical trials.

A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject.

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If the FDA determines that there are deficiencies or other concerns with an IDE for which it requires modification, the FDA may permit a clinical trial to proceed under a conditional approval.

If the device is considered a "non-significant risk,"

IDE submission to FDA is not required.

If the device is considered a “non-significant risk,” IDE submission to FDA is not required.

Instead, only approval from the Institutional Review Board, or IRB, overseeing the investigation at each clinical trial site is required.

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● clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices;

● medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur;

device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur;

● correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;

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It is also possible that other federal, state or foreign enforcement authorities might take action if they consider promotional or training materials to constitute promotion of an unapproved or uncleared use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement.

Healthcare providers, physicians, and third party payers play a primary role in the recommendation and use of our current products and for any future products for which payment is available under any federal health care program.

Healthcare providers, physicians, and third party payers play a primary role in the recommendation and use of our current products and will do so for any future products we commercialize.

Arrangements with third party payers, healthcare providers and physicians expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute products.

In the U.S., our activities are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the CMS, other divisions of the United States Department of Health and Human Services (e.g., the Office of Inspector General), the United States Department of Justice and individual United States Attorney offices within the Department of Justice, and state and local governments.

The applicable laws and regulations include the federal health care programs Anti-Kickback Statute, or AKS, and the federal Civil False Claims Act.

The AKS makes it illegal for any person, including a device manufacturer (or a party acting on its behalf), to knowingly and willfully solicit, receive, offer or pay any remuneration, directly or indirectly, in cash or in kind, that is intended to induce or reward referrals, including the purchase, recommendation, or order of a particular device, for which payment

may be made under a federal healthcare program, such as Medicare or Medicaid.

Violations of this law are punishable by up to ten years in prison, criminal fines, administrative civil money penalties and exclusion from participation in federal healthcare programs.

In the United States, we are subject to various federal and state anti-fraud and abuse laws, including, without limitation, the federal health care program Anti-Kickback Statute, the federal civil False Claims Act, and the health care fraud provisions of the federal Health Insurance Portability and Accountability Act.

The Anti-Kickback Statute makes it illegal for any person, including a device manufacturer (or a party acting on its behalf), to knowingly and willfully solicit, receive, offer or pay any remuneration, directly or indirectly, in cash or in kind, that is intended to induce or reward referrals, including the purchase, lease, or order , or arranging for or recommending, any good or service, including a device, for which payment may be made under a federal healthcare program, such as Medicare or Medicaid.

The term “remuneration” expressly includes kickbacks, bribes, or rebates and also has been broadly interpreted to include anything of value.

There are a number of statutory exceptions and regulatory safe harbors protecting certain business arrangements from prosecution under the Anti-Kickback Statute, however, those exceptions and safe harbors are drawn narrowly, and there may be no available exception or safe harbor for many common business activities, such as reimbursement support programs, educational and research grants, or charitable donations.

Practices that involve remuneration to those who prescribe, purchase, or recommend medical devices, including discounts, providing items or services for free or engaging such individuals as consultants, advisors, or speakers, may be subject to scrutiny if they do not fit squarely within an exception or safe harbor and would be subject to a facts and circumstances analysis to determine compliance with the Anti-Kickback Statute.

Violations of this law are punishable by up to ten years in prison, criminal fines, administrative civil money penalties, damages, disgorgement and exclusion from participation in federal healthcare programs.

In addition, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it.

The Federal Civil False Claims Act imposes civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities (including manufacturers) for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment of government funds or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government.

Penalties for a False Claims Act violation include three times the actual damages sustained by the government, plus significant mandatory civil penalties for each separate false claim and the potential for exclusion from participation in federal healthcare programs.

Various states have adopted laws similar to the Anti-Kickback Statute, and some of these state laws may be broader in scope in that some of these state laws extend to all payors and may not contain safe harbors.

The federal civil False Claims Act imposes civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities (including manufacturers) for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment of government funds or knowingly presenting or causing to be presented a false statement or record material to payment of a false claim or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government.

Penalties for a False Claims Act

violation include three times the actual damages sustained by the government, plus significant mandatory civil penalties for each separate false claim and the potential for exclusion from participation in federal healthcare programs.

The government may deem manufacturers to have “caused” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label.

Claims which include items or services resulting from a violation of the federal AKS also are deemed false or fraudulent claims for purposes of the False Claims Act.

Our future marketing and activities relating to the reporting of wholesaler or estimated retail prices for our products and other information affecting federal, state and third-party reimbursement for our products, and the sale and marketing of our product and any future product candidates, are subject to scrutiny under this law.

Claims which include items or services resulting from a violation of the federal Anti-Kickback Statute also are deemed false or fraudulent claims for purposes of the False Claims Act.

Our marketing and activities relating to the reporting of wholesaler or estimated retail prices for our products and other information affecting federal, state and third-party reimbursement for our products, and the sale and marketing of our product and any future product candidates, are subject to scrutiny under this law.

Conduct that violates the False Claims Act also may implicate various federal criminal statutes.

Various states have adopted laws similar to the False Claims Act, and many of these state laws are broader in scope and apply to all payors, and therefore, are not limited to only those claims submitted to the federal government.

The federal Health Insurance Portability and Accountability Act (“HIPAA”) imposes criminal liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payers, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

Similar to the federal healthcare Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation.

The federal Physician Payment Sunshine Act, implemented as the Open Payments Program, requires certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare and Medicaid Services information related to payments and other transfers of value, directly or indirectly, to physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse midwives, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

The manufacturing processes associated with medical devices are required to comply with the applicable portions of the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.

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● criminal prosecution.

Healthcare Reform

In the United States, there has been significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls and restrictions on reimbursement.

Because private payers often follow Medicare and Medicaid coverage policy and payment limitations in setting their own reimbursement rates, any reduction in reimbursement that results from federal legislation or regulation may result in a similar reduction in payments from private payers.

We expect to experience pricing pressures in connection with the sale of our due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative and regulatory measures.

Such legislative changes in the United States include the Affordable Care Act (ACA), which intended to broaden access to health insurance, reduced or constrained the growth of healthcare spending, enhanced remedies against healthcare fraud and abuse, added new transparency requirements for healthcare and health insurance industries, and imposed additional health policy reforms.

We expect that additional federal, state, and foreign healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal, state, and foreign governments will pay for healthcare products and services, which could result in limited coverage and reimbursement of, reduced demand for, or additional pricing pressures on our products.

Health Canada

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European Union

We submitted an application for a CE Mark of the PoNS device with our UK based notified body in December 2018.

In August 2019, we withdrew our application from the EU marketing process due to notified body activities being delayed by Brexit and the upcoming medical devices regulation changes.

We have engaged G-MED NA as our registrar and will reconsider submitting to the EU when conditions stabilize.

The successful completion of this review would result in marketing authorization for the sale of the PoNS device in the EU, which now excludes the UK.

We submitted an application for a CE certification of the PoNS device with our UK based notified body in December 2018.

In August 2019, we withdrew our application for the CE certification conformity process procedure due to notified body activities being delayed by Brexit and the upcoming medical devices regulation changes.

We have engaged G-MED NA as our notified body and will reconsider submitting to the EU when conditions stabilize.

The successful completion of this review would result in CE certification of the PoNS device in the EU, which now excludes the UK.

Some EU member states have additional notification requirements that we expect to satisfy before we launch our PoNS Therapy in those member states.

Once the PoNS device is placed into the EU market, post market requirements apply including but not limited to:

● ensuring that the labeling promotes only approved use(s) of the device;

● ensuring that the labeling promotes only intended use(s) of the device which have been certified;

● assessment of product modifications for significant changes may require license amendments;

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federal and state health information privacy, security and data breach notification laws, which may govern the collection, use, disclosure and protection of health-related and other personal information.

The Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes privacy, security and breach reporting obligations with respect to individually identifiable health information upon “covered entities” (health plans, health care clearinghouses and certain health care providers), and their respective business associates, individuals or entities that create, received, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity.

The Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes privacy, security and breach reporting obligations with respect to individually identifiable health information upon “covered entities” (health plans, health care clearinghouses and certain health care providers), and their respective business associates, individuals or entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity.

HIPAA mandates the reporting of certain breaches of health information to the U.S.

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The FTC’s guidance for appropriately securing consumers’ personal information is similar to what is required by the HIPAA Security Rule.

With respect to privacy, the FTC also sets expectations that companies honor the privacy promises made to individuals about how the company handles consumers’ personal information;

any failure to honor promises, such as the statements made in a privacy policy or on a website, may also constitute unfair or deceptive acts or practices in violation of the FTC Act.

The FTC has the power to enforce promises as it interprets them, and events that we cannot fully control, such as data breaches, may be result in FTC enforcement.

Enforcement by the FTC under the FTC Act can result in civil penalties or enforcement actions.

In addition, certain state laws govern the privacy and security of health information in certain circumstances, some of which may be more stringent, broader in scope or offer greater individual rights with respect to PHI, than HIPAA, and many of which differ from each other, thus complicating compliance efforts.

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.

For example, California enacted the California Consumer Privacy Act, or the CCPA, on June 28, 2018, which took effect on January 1, 2020.

The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.

The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.

Additionally, many of the more ambiguous provisions of the CCPA have yet to be fully interpreted and applied, and numerous amendments have been proposed and are working their way through legislature.

Consequently, the CCPA currently presents many compliance questions that remain unresolved.

The CCPA may increase our compliance costs and potential liability.

In addition to the CCPA, numerous other states’ legislatures are considering similar laws that will require ongoing compliance efforts and investment.

In the European Union, as of May 25, 2018, Regulation 2016/676, known as the General Data Protection Regulation, or GDPR, replaced the Data Protection Directive with respect to the processing of personal data in the European Union.

The GDPR imposes many requirements for controllers and processors of personal data, including, for example, higher standards for obtaining consent from individuals to process their personal data, more robust disclosures to individuals and a strengthened individual data rights regime, shortened timelines for data breach notifications, limitations on retention and secondary use of information, increased requirements pertaining to health data and pseudonymized (i.e., key-coded) data and additional obligations when we contract third-party processors in connection with the processing of the personal data.

For example, California enacted the California Consumer Privacy Act, as amended by the California Privacy Rights Act (“CCPA”) which gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.

The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that is expected to increase data breach litigation.

The amendments introduced by the CPRA went effect on January 1, 2023, and new implementing regulations continue to be introduced by the California Privacy Protection Agency, a dedicated California privacy regulator.

Failure to comply with the CCPA may result in, among other things, significant civil penalties and injunctive relief, or statutory or actual damages.

In addition to the CCPA, numerous other states’ legislatures are

considering similar laws that will require ongoing compliance efforts and investment.

For example, Virginia, Colorado, Utah, Indiana, Iowa, Tennessee, Montana, Texas, and Connecticut have enacted privacy laws similar to the CCPA that impose new obligations or limitations in areas affecting our business and we continue to assess the impact of these state legislation, on our business as additional information and guidance becomes available.

In the European Union, the General Data Protection Regulation, including as implemented in the UK (collectively “GDPR”), imposes many requirements for controllers and processors of personal data, including, for example, higher standards for obtaining consent from individuals to process their personal data, more robust disclosures to individuals and a strengthened individual data rights regime, shortened timelines for data breach notifications, limitations on retention and secondary use of information, increased requirements pertaining to health data and pseudonymized (i.e., key-coded) data and additional obligations when we contract third-party processors in connection with the processing of the personal data.

The GDPR allows EU member states to make additional laws and regulations further limiting the processing of genetic, biometric or health data.

Failure to comply with the requirements of GDPR and the applicable national data protection laws of the EU member states may result in fines of up to €20 million or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties.

Failure to comply with the requirements of GDPR and the applicable national data protection laws of the EU member states may result in fines for the most serious breaches of up to €20 million or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties.

With regard to transfer of personal data, the GDPR restricts the ability of companies to transfer personal data from the EU to the U.S.

and other countries, which may adversely affect our ability to transfer personal data or otherwise may cause us to incur significant compliance costs for implementing lawful transfer mechanisms, conducting data transfer impact assessments, and implementing additional measures where necessary to ensure that personal data transferred are adequately protected in a manner essentially equivalent to the EU.

The GDPR provides different transfer mechanisms we can use to lawfully transfer personal data from the EU to countries outside the EU.

An example is relying on adequacy decisions of the European Commission, such as the EU-U.S.

Data Privacy Framework.

In July 2023, the European Commission adopted its adequacy decision for the EU-U.S.

Data Privacy Framework.

The adequacy decision concludes that the U.S.

ensures an adequate level of protection (compared to that of the EU) for personal data transferred from the EU to U.S.

companies participating in the EU-U.S.

Data Privacy Framework.

The adequacy decisions of the European Commission are subject to periodic reviews and may be amended or withdrawn.

Another example of a lawful transfer mechanism is using the EU Standard Contractual Clauses as approved by the European Commission in June 2021.

In order to use the EU Standard Contractual Clauses mechanism, the exporter and the importer must ensure that the importer may guarantee a level of personal data protection in the importing country’s level of protection must be adequate that is essentially equivalent to that of the EEA.

Compliance with EU data transfer obligations involves conducting transfer impact assessments, which includes documenting detailed analyses of data access and protection laws in the countries in which data importers are located, which can be costly and time-consuming.

Data importers must also expend resources in analyzing their ability to comply with transfer obligations, including implementing new safeguards and controls to further protect personal data.

A lack of valid transfer mechanisms for GDPR-covered data could increase exposure to enforcement actions and may affect our business operations and require commercial cost (including potentially limiting our ability to collaborate/work with certain third parties and/or requiring an increase in our data processing capabilities in the EU/UK).

Further, the European/UK data protection laws (including laws on data transfers) may also be updated/revised, accompanied by new guidance and/or judicial/regulatory interpretations, which could entail further impacts on our compliance efforts and increased cost.

Additionally, other countries outside of Europe/UK have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of delivering our services and operating our business.

The type of challenges we face in Europe/UK will likely also arise in other jurisdictions that adopt laws similar in construction to the GDPR or regulatory frameworks of equivalent complexity.

Our Corporate History Highlights

3 unchanged sentences

(formerly known as 0922327 B.C.

Ltd.) and 0995162 B.C.

Ltd.) and 0995162

to reorganize the business structure of such three entities in such a manner which would allow Boomerang Oil, Inc.

4 unchanged sentences

HMI is our operating subsidiary in the United States.

On October 30, 2019, we acquired Heuro Canada, Inc.

(“Heuro”), a company incorporated under the federal laws of Canada.

On October 30, 2019, we acquired Heuro, a company incorporated under the federal laws of Canada.

Heuro is an indirect wholly owned subsidiary of HMC, a company incorporated under the federal laws of Canada.

2 unchanged sentences

Our principal executive offices are located at 642 Newtown Yardley Road, Suite 100, Newtown, PA 18940 and our telephone number is 215-944-6100.

We maintain a corporate website at www.heliusmedical.com.

We maintain a corporate webs ite at www.helius medical.com.

We make available free of charge through our Internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports, as soon as its reasonably practicable after we electronically file such material with, or furnish such material to the SEC.

6 unchanged sentences

Our senior management team has an average of over 25 years of experience in the health sciences industry with recognized leadership expertise in their functional areas.

As of December 31, 2022, we had 26 full-time employees, of which 24 are located in the United States and two are located in Canada.

As of December 31, 2023, we had 22 full-time employees, of which 20 are located in the United States and 2 are located in Canada.

None of our employees were covered by collective bargaining agreements.

2 unchanged sentences

Hiring, developing, and retaining high-performing employees is important to our operations and we are focused on creating experiences that foster growth, performance and retention.

Retaining and acquiring the right talent in this competitive environment, particularly at speed and scale, will continue to be a priority as we have obtained FDA de novo classification and clearance of the PoNS device.

Retaining and acquiring the right talent in this competitive environment, particularly at speed and scale, will continue to be a priority.

Our workforce reflects talent from diverse perspectives.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business