As filed with the U.S. Securities and Exchange Commission on August 16, 2022.

Registration No. 333-             

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

EMULATE THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

13810 SE Eastgate Way, Suite 560

Bellevue, WA 98005

Telephone: (425) 415-3140

(Address, including zip code and telephone number, including area code, of registrant’s principal executive offices)

Chris Rivera, Chief Executive Officer

EMulate Therapeutics, Inc.

13810 SE Eastgate Way, Suite 560

Bellevue, WA 98005

Telephone: (425) 415-3140

(Name, address, including zip code and telephone number, including area code, of agent for service)

Copies of all communications, including communications sent to agent for service, should be sent to:

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☒

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

EMULATE THERAPEUTICS, INC.

[●] Shares of Common Stock

This is our initial public offering. We are offering [●] shares of our common stock, par value $0.001 per share (“Common Stock”, and each a “Share” and collectively, the “Shares”), at a public offering price of $[●] per Share.

Prior to this offering, there has been no public market for our Common Stock. We have applied to have our Common Stock listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “EMTX”.

We are an “emerging growth company” under applicable U.S. Securities and Exchange Commission (“SEC”) rules and will be subject to reduced public company reporting requirements.

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 11 of this prospectus. You should carefully consider these risk factors, as well as the information contained in this prospectus, before purchasing any of the securities offered by this prospectus.

NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

(1) We have agreed to reimburse the underwriters for certain expenses and the underwriters will receive compensation in addition to underwriting discounts and commissions. See “Underwriting” for additional disclosure regarding underwriters’ compensation and offering expenses.

We have granted a 45-day option to the representative of the underwriters to purchase up to an additional [●] Shares to cover over-allotments, if any.

For a description of the other compensation to be received by the underwriters, see “Underwriting” beginning on page 102.

The underwriters expect to deliver the securities in the offering on or about [●], 2022.

EF Hutton,

division of Benchmark Investments, LLC

The date of this prospectus is [●], 2022

TABLE OF CONTENTS

You should rely only on the information contained in this prospectus. Neither we nor the representative have authorized anyone to provide any information or to make any representations other than those contained in this prospectus we have prepared. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date. You should also read this prospectus together with the additional information described under “Where You Can Find More Information.”

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains “forward-looking statements”. Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “anticipate,” “predict,” “project,” “forecast,” “potential,” and “continue” or the negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees of future performance. While we believe these assumptions and expectations to be reasonable and made in good faith, assumed facts or bases almost always vary from the actual results, and the differences between assumed facts or expectations and actual results can be material, depending upon the circumstances. Where, in any forward-looking statement, our management expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and is believed to have a reasonable basis. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. You are cautioned to not place undue reliance on these forward-looking statements, which speak only as of their dates.

We cannot predict all the risks and uncertainties that may impact our business, financial condition or results of operations. Accordingly, the forward-looking statements in this prospectus should not be regarded as representations that the results or conditions described in such statements will occur or that our objectives and plans will be achieved. These forward-looking statements are found at various places throughout this prospectus and include information concerning possible or projected future results of our operations, including statements about potential acquisition or merger targets, strategies or plans; business strategies; prospects; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results; and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to a variety of factors and risks, including, but not limited to, those set forth under “Risk Factors” starting on page 11 of this prospectus.

Many of those risks are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Considering these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. All subsequent written and oral forward-looking statements concerning other matters addressed in this prospectus and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this prospectus.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

MARKET AND INDUSTRY DATA

This prospectus contains statistical data, estimates and forecasts that are based on independent industry publications or other publicly available information, as well as other information based on our internal sources. While we believe the industry and market data included in this prospectus are reliable and are based on reasonable assumptions, these data involve many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” included in this prospectus.

TRADEMARKS AND TRADE NAMES

We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the ^®, TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names.

GLOSSARY OF CERTAIN TERMS

As a clinical-stage therapeutic device company, describing our business involves referencing certain technical terms and acronyms. We are providing the following glossary to assist readers with certain technical terms and acronyms and to also define certain frequently used terms.

“ACA” means the Affordable Care Act, a comprehensive reform law which increases health insurance coverage for the uninsured and implements reforms to the health insurance market.

“BLE” means Bluetooth low energy.

“CBD” means cannabidiol.

“CCPA” means the California Consumer Privacy Act, a state statute intended to enhance privacy rights and consumer protection for residents of California.

“CE” means that the manufacturer or importer of a commercial product affirms the product’s conformity with European health, safety and environmental safety standards.

“Cellsana” means Cellsana Therapeutics, Inc., a Washington corporation and wholly-owned subsidiary of the Company.

“CE Certificate” means the CE mark that is placed on the backside of certain products sold in the European Economic Area and the European Union.

“cGCPs” means current Good Clinical Practices, which is an international ethical and scientific quality standard for designing, conducting, recording and reporting trials that involve the participation of human subjects.

“GH” means growth hormone, a peptide hormone that stimulates growth, cell reproduction, and cell regeneration in humans and other animals.

“CMS” means Centers for Medicare and Medicaid Services, a federal agency within the United States Department of Health and Human Services that administers the Medicare program and works in partnership with state governments to administer Medicaid, the Children’s Health Insurance Program, and health insurance portability standards.

“CNS” means Central Nervous System.

“CPRA” means the California Privacy Rights Act of 2020, is a California ballot proposition that expands California’s consumer privacy law and builds upon the California Consumer Privacy Act of 2018.

“CPT codes” means the Common Procedural Terminology codes, a medical code set that is used to report medical, surgical, and diagnostic procedures and services to entities such as physicians, health insurance companies and accreditation organizations.

“CRF” means Case Report Form, a paper or electronic questionnaire specifically used in clinical trial research.

“CRO” means Contract Research Organizations, which are life sciences companies that provide support to the pharmaceutical, biotechnology, and medical device industries in the form of research services outsourced on a contract basis.

“DHS” means designated health services.

“DME” means durable medical equipment, which are equipment and supplies ordered by a health care provider for everyday or extended use.

“DMG” means diffuse midline glioma.

“DIPG” means diffuse intrinsic pontine glioma.

“EEA” means the European Economic Area.

“EGFR” means epidermal growth factor receptor, a transmembrane protein that is a receptor for members of the epidermal growth factor family of extracellular protein ligands

“EU” means the European Union.

“FATCA” means the Foreign Account Tax Compliance Act, which requires all non-U.S. foreign financial institutions to search their records for customers with indicia of a connection to the U.S., including indications in records of birth or prior residency in the U.S., or the like, and to report the assets and identities of such persons to the U.S. Department of the Treasury.

“FDA” means the U.S. Food and Drug Administration.

“FDCA” means the Federal Food, Drug, and Cosmetic Act, a set of laws giving authority to the U.S. Food and Drug Administration to oversee the safety of food, drugs, medical devices, and cosmetics.

“FSCA” means Field Safety Corrective Actions, which is an action taken by a manufacturer to reduce a risk of death or serious deterioration in the state of health associated with the use of a medical device that is already placed on the market.

“GBM” means glioblastoma, a rare cancerous tumor that develops in the brain.

“GDPR” means General Data Protection Regulation, a regulation in EU law on data protection and privacy in the EU and the EEA.

“Hapbee” means Hapbee Technologies, Inc., a Canadian company in which we hold a 25% interest.

“HCPCS code set” means Healthcare Common Procedure Coding System, a collection of codes that represent procedures, supplies, products and services which may be provided to Medicare beneficiaries and to individuals enrolled in private health insurance programs.

“HDE” means Humanitarian Device Exemption, a regulatory pathway for products intended for diseases or conditions that affect small, rare populations.

“HIPAA” means Health Insurance Portability and Accountability Act, which is a US law designed to provide privacy standards to protect patients’ medical records and other health information provided to health plans, doctors, hospitals and other health care providers.

“IDE” means an investigational device exemption that allows the investigational device to be used in a clinical study in order to collect safety and effectiveness data.

“Indolor” means Indolor Therapeutics, Inc., a Washington corporation and wholly-owned subsidiary of the Company.

“IRB” means Institutional Review Board, which is any group that has been formally designated to review and monitor biomedical research involving human subjects.

“JOBS Act” means the Jumpstart Our Business Startups Act of 2012, as amended, which is a law intended to encourage funding of small businesses in the U.S. by easing many of the country’s securities regulations.

“MACs” means Medicare Administrative Contractors, which is a private health care insurer that has been awarded geographic jurisdiction to process Medicare Part A and Part B medical claims or Durable Medical Equipment claims for Medicare Fee-For-Service beneficiaries.

“MDD” means major depressive disorder, a common mental health disorder caused by episodes of psychological depression.

“MDR” means the medical device reporting, one of the post-market surveillance tools the FDA uses to monitor device performance, detect potential device-related safety issues, and contribute to benefit-risk assessments of these products.

“Mensana” means Mensana Therapeutics, Inc., a Washington corporation and wholly-owned subsidiary of the Company.

“MHLW” means Ministry of Health, Labour and Welfare of Japan, a cabinet level ministry of the Japanese government that provides services on health, labor and welfare.

“MOA” means mechanism of action, which refers to the specific biochemical interaction through which a drug substance produces its pharmacological effect.

“nGBM” means newly diagnosed GBM.

“Novocure” means Novocure GmbH, a medical technology manufacturer in Switzerland.

“Optune” means Novocure’s Optune GBM Trailblazer.

“PMA” means the FDA process of scientific and regulatory review to evaluate the safety and effectiveness of Class III medical devices.

“PoC” means proof of concept, which is a realization of a certain method or idea in order to demonstrate its feasibility or a demonstration in principle with the aim of verifying that some concept or theory has practical potential.

“PTSD” means post-traumatic stress disorder.

“QSR” means quality system regulations maintained by the FDA that must be followed by all medical device manufacturers who wish to sell devices in the U.S.

“RFE” means radio frequency energy.

“RCW” means the Revised Code of Washington, which is the compilation of all permanent laws currently in force in the U.S. state of Washington.

“Sayre” means Sayre Therapeutics Pvt Ltd., an Indian company.

“S.E.M.” means standard error of the mean, a measure of the dispersion of sample means around the population mean.

“TCA” means the EU-UK Trade and Cooperation Agreement, a free trade agreement signed on December 30, 2020, between the EU, the European Atomic Energy Community, and the United Kingdom, that provides for free trade in goods and limited mutual market access in services, as well as for cooperation mechanisms in a range of policy areas, transitional provisions about EU access to UK fisheries, and UK participation in some EU programs.

“Teijin Pharma” means Teijin Pharma Limited, a Japanese pharmaceutical company.

“UKCA” means UK conformity assessment.

“UKCA Marking” means a certification mark that indicates conformity with the applicable requirements for products sold within Great Britain.

“USPTO” means United States Patent and Trademark Office.

“Zoesana” means Zoesana Animal Health, Inc., a Washington corporation and wholly-owned subsidiary of the Company.

RISK FACTORS

Investing in our securities involves a high degree of risk. You should carefully consider and evaluate all of the information contained in this prospectus before you decide to purchase our Common Stock. The risks and uncertainties described in this prospectus are not the only ones we may face. Additional risks and uncertainties that we do not presently know about or that we currently believe are not material may also adversely affect our business, business prospects, results of operations or financial condition. Any of the risks and uncertainties set forth herein, could materially and adversely affect our business, results of operations and financial condition. This could cause the market price of our Common Stock to decline, perhaps significantly, and you may lose part or all of your investment.

Risks relating to our business and our products

Our business and prospects depend heavily on our current products, which have not been approved by the FDA. Even if we receive FDA approval for our products, they will remain subject to ongoing regulatory review. If we are unable to obtain regulatory approvals and commercialize our products, or are significantly delayed or limited in doing so, our business and prospects will be materially harmed.

Almost all of our revenues will, in the near term, derive from sales and royalties from sales of our therapeutic medical devices for the treatment of newly diagnosed and recurrent GBM, DMG, acute and chronic pain, mental health and CNS conditions, and Hapbee consumer use products that help with sleep, focus, and other life-improving sensations. The commercial success of our products and our ability to generate and maintain revenues from the sale of our products will depend on a number of factors, including:

In addition, the promotion of our products is limited to approved indications, which vary by geography. The labelling for our EMulate therapeutic medical device in the U.S. is limited in certain respects, which may limit the number of patients to whom it is prescribed. Similarly, the label for Hapbee consumer use products also contains certain limitations that may adversely affect adoption.

Our ability to generate future revenues will also depend on achieving regulatory approval of, and eventual commercialization of, our products for additional indications and in additional geographies, which is not guaranteed. Our near-term prospects are substantially dependent on our ability to obtain regulatory approvals on the timetable we have anticipated, and thereafter to further successfully commercialize our products for additional indications. Regulatory changes or actions in areas in which we operate or propose to operate may further affect our ability to obtain regulatory approvals on our anticipated timetable. If we are not able to receive such approvals, meet other anticipated milestones, or further commercialize our products, or are significantly delayed or limited in doing so, our business and prospects will be materially harmed and we may need to reduce expenses by delaying, reducing or curtailing the development of our products and we may need to raise additional capital to fund our operations, which we may not be able to obtain on favorable terms, if at all.

To date, we have not generated any operating profits, and due to our long-term research and development efforts, we have a history of incurring substantial operating losses.

We were founded in 2002 and have a history of incurring substantial operating losses. We anticipate continuing to incur significant costs associated with developing and commercializing our products for approved indications including signal development, device hardware and software development, product sales, marketing, manufacturing, and distribution expenses. We expect our research, development, and clinical study expenses to increase in connection with our ongoing activities and as additional indications enter clinical development and as we advance our product development. Our expenses could increase beyond expectations if, for example, we are required by the FDA, or other regulatory agencies or similar governing bodies, to change manufacturing processes for our products or to perform clinical, nonclinical or other types of studies in addition to those that we currently anticipate. Our revenues are dependent, in part, upon the size of the markets in the jurisdictions in which we receive regulatory approval, the accepted price for our products and the ability to obtain reimbursement at the accepted applicable price. If the number of addressable patients is not as significant as we or our strategic partners and licensees estimate, the indications approved by regulatory authorities are narrower than we expect or the eligible population for treatment is narrowed by competition, regulatory approvals, physician choice or treatment guidelines, we may not generate significant revenues. If we are not able to generate significant revenues, we may never be sustainably profitable. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1 to the financial statements.

Our clinical studies could be delayed or otherwise adversely affected by many factors, including difficulties in enrolling patients.

Clinical testing can be costly and take many years, and the outcome is uncertain and susceptible to varying interpretations. Moreover, success in pre-clinical and early clinical studies does not ensure that large-scale studies will be successful or predict final results. Acceptable results in early studies may not be replicable in later studies. A number of companies in therapeutics industries have suffered significant setbacks in advanced clinical studies, even after promising results in earlier studies. Negative or inconclusive results or adverse events or incidents during a clinical study could cause the clinical study to be redone or terminated. In addition, failure to appropriately construct clinical studies could result in high rates of adverse events or incidents, which could cause a clinical study to be suspended, redone or terminated. Our failure or the failure of third-party participants in our studies to comply with their obligations to follow protocols and/or legal requirements may also result in our inability to use the affected data in our submissions to regulatory authorities.

The timely completion of clinical studies depends, among other things, on our ability to enroll a sufficient number of patients who remain in the study until its conclusion. We may experience difficulties in patient enrollment in our clinical studies for a variety of reasons, including:

If we have difficulty enrolling and retaining a sufficient number or diversity of patients to conduct our clinical studies as planned, or encounter other difficulties, we may need to delay, terminate or modify ongoing or planned clinical studies, any of which would have an adverse effect on our business.

If we are unable to develop an adequate sales and marketing organization or contract with third parties to assist us, we may not be able to successfully commercialize our products for current and future indications.

To achieve commercial success for our products, we must compliantly develop and grow our sales and marketing organization and, as necessary, enter into sales and distribution relationships with third parties to market and sell our products. Developing and managing a sales and marketing organization is a difficult, expensive and time consuming process. We may not be able to successfully develop adequate sales and marketing capabilities to achieve our growth objectives. We compete with other medical device, pharmaceutical and life sciences companies to recruit, hire, train and retain the sales and marketing personnel that we anticipate we will need, and the nature of our products may make it more difficult to compete for sales and marketing personnel. In addition, because our current products require, and we anticipate our future products will require, physician training and education, our sales and marketing organization may need to grow substantially as we expand our approved indications and markets. As a consequence, our expenses associated with building up and maintaining our sales force and marketing capabilities may be disproportionate to the revenues we may be able to generate on sales of our products.

If we are unable to establish adequate sales and marketing capabilities or successful sales and distribution relationships, we may fail to realize the full revenue potential of our products for current and future indications, and we may not be able to achieve the necessary growth in a cost-effective manner or realize a positive return on our investment. In our current and future sales and distribution agreements with other companies, we generally do not and may not have control over the resources or degree of effort that any of these third parties may devote to our products, and if they fail to devote sufficient time and resources to the marketing of our products, or if their performance is substandard, our revenues may be adversely affected.

The success of our business may be dependent on the actions of our collaborative partners.

Our global business strategy includes, in part, the consummation of collaborative arrangements with companies who will support the development and commercialization of our products and technology. For example, we have exclusively licensed or granted rights in Japan and India, see “Business—Intellectual Property.” We may also enter into clinical collaborations with third parties to test our products and technology together with other products and technologies.

When we collaborate with a third party for commercialization of a product in a particular territory, we can expect to relinquish some or all of the control over the future success of that product to the third party in that territory. In addition, our collaborative partners may have the right to terminate applicable agreements, including payment obligations, prior to or upon the expiration of the agreed-upon terms. We may not be successful in establishing or maintaining collaborative arrangements on acceptable terms or at all, collaborative partners may terminate funding before completion of projects, our products may not achieve the criteria for milestone payments, our collaborative arrangements may not result in successful product commercialization, our products may not receive acceptable pricing and we may not derive any revenue from such arrangements. Additionally, our collaborators may not perform their obligations as expected or in compliance with study protocols or applicable laws. Acts or omissions by collaborators may disqualify study data for use in regulatory submissions and/or create liability for us in the jurisdictions in which we operate. Any disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of commercialization, might cause delays or termination of the commercialization of products, might lead to additional responsibilities for us with respect to commercializing products, or might result in litigation or arbitration, any of which would be time-consuming and expensive. To the extent that we are not able to develop and maintain collaborative arrangements, we would need to devote substantial capital to undertake commercialization activities on our own in order to further expand our global reach, and we may be forced to limit the territories in which we commercialize our products.

We may not be successful in achieving market acceptance of our products by healthcare professionals, patients and/or third-party payers in the timeframes we anticipate, or at all, which could have a material adverse effect on our business, prospects, financial condition and results of operations.

We may not achieve market acceptance of our products for current or future indications within the timeframes we have anticipated, or at all, for a number of different reasons, including the following factors:

In particular, our products may not achieve market acceptance for current or future indications because of the following additional factors:

In addition, even if we are successful in achieving market acceptance of our products for GBM, DMG or other indication, we may be unsuccessful in achieving market acceptance of our products for other indications.

There may be other factors that are presently unknown to us that also may negatively impact our ability to achieve market acceptance of our products. If we do not achieve market acceptance of our products in the timeframes we anticipate, or are unable to achieve market acceptance at all, our business, prospects, financial condition and results of operations could be materially adversely affected.

Failure to secure and maintain adequate coverage and reimbursement from third-party payers could adversely affect acceptance of our products and reduce our revenues.

We expect that the vast majority of our revenues will come from third-party payers either directly to us in markets where we provide our products or plan to provide our device candidates to patients or indirectly via payments made to hospitals or other entities providing our products or which may in the future provide our device candidates to patients.

In the U.S., private payers cover the largest segment of the population, with the remainder either uninsured or covered by governmental payers. The majority of the third-party payers outside the U.S. are government agencies, government sponsored entities or other payers operating under significant regulatory requirements from national or regional governments.

Third-party payers may decline to cover and reimburse certain procedures, supplies or services. Additionally, some third-party payers may decline to cover and reimburse our products for a particular patient even if the payer has a favorable coverage policy addressing our products or previously approved reimbursement for our products. Additionally, private and government payers may consider the cost of a treatment in approving coverage or in setting reimbursement for the treatment.

Private and government payers around the world are increasingly challenging the prices charged for medical products and services. Additionally, the containment of healthcare costs has become a priority of governments around the world. Adoption of additional price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our revenues and operating results. If third-party payers do not consider our products or the combination of our products with additional treatments to be cost-justified under a required cost-testing model, they may not cover our products for their populations or, if they do, the level of reimbursement may not be sufficient to allow us to sell our products on a profitable basis.

Reimbursement for the treatment of patients with medical devices around the world is governed by complex mechanisms established on a national or sub-national level in each country. These mechanisms vary widely among countries, can be informal, somewhat unpredictable, and evolve constantly, reflecting the efforts of these countries to reduce public spending on healthcare. As a result, obtaining and maintaining reimbursement for the treatment of patients with medical devices has become more challenging globally. We cannot guarantee that the use of our products will receive reimbursement approvals and cannot guarantee that our existing reimbursement approvals will be maintained in any country.

Our failure to secure or maintain adequate coverage or reimbursement for our products by third-party payers in the U.S. or in the other jurisdictions in which we market our products could have a material adverse effect on our business, revenues and results of operations and cause our stock price to decline.

We may not be successful in securing and maintaining reimbursement codes necessary to facilitate accurate and timely billing for our products or physician services attendant to our products.

Third-party payers, healthcare systems, government agencies or other groups often issue reimbursement codes to facilitate billing for products and physician services used in the delivery of healthcare. Within the U.S., the billing codes most directly related to our products are contained in the Healthcare Common Procedure Coding System (“HCPCS code set”). The HCPCS code set contains Level I codes that describe physician services, also known as Common Procedural Terminology codes (“CPT codes”) and Level II codes that primarily describe products. CMS is responsible for issuing the HCPCS Level II codes. The American Medical Association issues HCPCS Level I codes.

No HCPCS codes or CPT codes currently exist to describe physician services related to the delivery of therapy using our products. We may not be able to secure HCPCS codes and CPT codes for physician services related to our products. Our future revenues and results may be affected by the absence of CPT codes, as physicians may be less likely to prescribe the therapy when there is no certainty that adequate reimbursement will be available for the time, effort, skill, practice expense and malpractice costs required to provide the therapy to patients.

Outside the U.S., we have not secured codes to describe our products or to document physician services related to the delivery of therapy using our products. The failure to obtain and maintain these codes could affect the future growth of our business.

There is no assurance that Medicare or the Medicare Administrative Contractors will provide coverage or adequate payment rates for our products.

We anticipate that a significant portion of patients using our products will be beneficiaries under the Medicare fee-for-service program. Failure to secure or maintain coverage or maintain adequate reimbursement from Medicare would reduce our revenues and may also affect the coverage and reimbursement decisions of other third-party payers in the U.S. and elsewhere.

Medicare may classify our EMulate therapeutic medical device as durable medical equipment (“DME”). We also expect that, for purposes of regulatory and payor (such as Medicare) approvals of GBM and DMG treatments, the Company will be viewed as a “fast follower” of Novocure’s (Nasdaq: NVCR) Optune medical device, that is, our device should (but not necessarily will) receive the same regulatory and payor treatment as Optune, which has been approved for commercialization by the FDA for GBM treatment and approved for payment coverage by U.S. government and private insurance providers. Novocure’s Optune device is not classified as DME.

Medicare has the authority to issue national coverage determinations or to defer coverage decisions to its regional Medicare Administrative Contractors (“MACs”). The fact that only two MACs administer the entire DME program may negatively affect our ability to petition individual medical policy decision-makers at the MACs for coverage. The absence of a positive coverage determination or a future restriction to existing coverage from Medicare or the DME MACs would materially affect our future revenues.

Additionally, Medicare has the authority to publish the reimbursement amounts for DME products. Medicare may in the future publish reimbursement amounts for our products that do not reflect then-current prices for our products. Medicare fee schedules are frequently referenced by private payers in the U.S. and around the world. Medicare’s publication of reimbursement amounts for our products that are below our products’ established prices could materially reduce our revenues and operating results with respect to non-Medicare payers in the U.S. and our other active markets.

Even if our products were authorized by Medicare, CMS requires prior authorization for certain DME items. Claims for such items that did not receive prior authorization before they were furnished to a beneficiary will be automatically denied. In the event Medicare adds one of our products to the list of items requiring prior authorization, our ability to bill and secure reimbursement for patients who would otherwise be covered to use our product under the Medicare fee-for-service program may be reduced.

We cannot provide any assurance that we can access transitional, expedited, or expanded Medicare coverage for our products. CMS is expected to issue rules regarding coverage of emerging technologies; however, no specific information is available about the content of the expected rules and we cannot provide any assurance that any new rules regarding emerging technologies would be applicable to our future products.

We may depend on single-source suppliers for some of our components. The loss of these suppliers could prevent or delay shipments of our products, delay our clinical studies or otherwise adversely affect our business.

In certain jurisdictions, we may source some of the components of our products from only a single vendor. If any one of these single-source suppliers were to fail to continue to provide components to us on a timely basis, or at all, our business and reputation could be harmed. Our policy is to seek and maintain second-source suppliers, but we can provide no assurance that we will secure or maintain such suppliers. We have developed or are in the process of developing and obtaining regulatory approval for second sources for components in all jurisdictions. Various steps must be taken before securing these suppliers, including qualifying these suppliers in accordance with regulatory requirements, but we may never receive such approvals. The risks associated with the failure of our suppliers to comply with strictly enforced regulatory requirements as described below are exacerbated by our dependence on single-source suppliers.

If we experience any deficiency in the quality of, delay in or loss of availability of any components supplied to us by third-party suppliers, or if we switch suppliers or components, we may face additional regulatory delays and the manufacture and delivery of our products would be interrupted for an extended period of time, which could materially adversely affect our business, prospects, financial condition and results of operations. If we are required to obtain prior regulatory approval from the FDA or regulatory authorities or similar governing bodies in other jurisdictions or to conduct a new conformity assessment procedure for our products, regulatory approval for our products may not be received on a timely basis, or at all, which would have a material adverse effect on our business, prospects, financial condition and results of operations.

Quality control problems with respect to devices and components supplied by third-party suppliers could have a material adverse effect on our reputation, our clinical studies or the commercialization of our products and, as a result, a material adverse effect on our business, prospects, financial condition and results of operations.

Our products, which are manufactured by third parties, are highly technical and are required to meet exacting specifications. Any quality control problems that we experience with respect to the devices and components supplied by third-party suppliers could have a material adverse effect on our reputation, our attempts to complete our clinical studies, our operating expenses or the commercialization of our products. The failure of our suppliers to comply with strictly enforced regulatory requirements could expose us to regulatory action, including warning letters, product recalls, suspension or termination of distribution, product seizures or civil penalties. If we experience any delay in the receipt or deficiency in the quality of products supplied to us by third-party suppliers, or if we have to switch to replacement suppliers, we may face additional regulatory delays and the manufacture and delivery of our products would be interrupted for an extended period of time, which would materially adversely affect our business, prospects, financial condition and results of operations.

Continued testing of our products may not yield successful results and could reveal currently unknown aspects or safety hazards associated with our products.

Our research and development programs are designed to test the safety and efficacy of our products through extensive pre-clinical and clinical testing. Even if our ongoing and future pre-clinical and clinical studies are completed as planned, we cannot be certain that their results will support our claims or that the FDA and other regulatory authorities will agree with our conclusions. Success in pre-clinical studies and early clinical studies does not ensure that later clinical studies will be successful, and we cannot be sure that the later studies will replicate the results of prior studies and pre-clinical studies. The clinical study process may fail to demonstrate that our device candidates are safe and effective for the proposed indicated uses, which could cause us to abandon a device candidate and may delay development of others. It is also possible that patients enrolled in clinical studies will experience adverse side effects that have not been previously observed. In addition, our pre-clinical and clinical studies for our device candidates involve a relatively small patient population and, as a result, these studies may not be indicative of future results.

We may experience numerous unforeseen events during, or as a result of, the testing process that could delay or prevent further commercialization of our products, including the following:

If unacceptable side effects arise in the development of our products for future indications, we could suspend or terminate our clinical studies or the FDA or other regulatory authorities could order us to cease clinical studies or deny approval of our device candidates for any or all targeted indications, narrow the approved indications for use or otherwise require restrictive product labeling or marketing or require further clinical studies, which may be time-consuming and expensive and may not produce results supporting FDA or other regulatory approval of our products in a specific indication. Treatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete the study or result in potential product liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff. We expect to have a need to train medical personnel using our devices for clinical studies and upon any commercialization of our products for future indications. Inadequate training in recognizing or managing the potential side effects of our products could result in patient injury or death. Any of these occurrences may harm our business, prospects and financial condition significantly.

Any delay or termination of our clinical studies will delay the filing of submissions for regulatory approvals of our products and ultimately our ability to commercialize our products and generate revenues. Furthermore, we may abandon our products for indications that we previously believed to be promising. Any of these events could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline.

As we expand, we may experience difficulties managing our growth.

Our anticipated growth will place a significant strain on our management and on our operational and financial resources and systems. We could face challenges inherent in efficiently managing a more complex business with an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs. Failure to manage our growth effectively could materially adversely affect our business. Additionally, our anticipated growth will increase the demands placed on our third-party suppliers, resulting in an increased need to carefully monitor the available supply of components and services and to scale up our quality assurance programs. There is no guarantee that our suppliers will be able to support our anticipated growth. Any failure by us to manage our growth effectively could have an adverse effect on our ability to achieve our development and commercialization goals.

Because of the specialized nature of our business, the termination of relationships with our key employees, consultants and advisors may prevent us from successfully operating our business, including developing our products, conducting clinical studies, commercializing our products and obtaining any necessary financing.

We are highly dependent on the members of our executive team, the loss of whose services may adversely impact the achievement of our objectives. While we have entered into employment agreements with each of our key executives, any of them could leave our employment at any time. We do not have “key person” insurance on any of our employees. The loss of the services of one or more of our current employees might impede the achievement of our business objectives.

The competition for qualified personnel in the medical device fields is intense, and we rely heavily on our ability to attract and retain qualified scientific, technical and managerial personnel. Our future success depends upon our ability to attract, retain and motivate highly skilled employees. In order to commercialize our products successfully, we will be required to expand our workforce, particularly in the areas of research and development and clinical studies, sales and marketing and supply chain management. These activities will require the addition of new personnel and the development of additional expertise by existing management personnel. We face intense competition for qualified individuals from numerous pharmaceutical, biopharmaceutical and biotechnology companies, as well as academic and other research institutions. We may not be able to attract and retain these individuals on acceptable terms or at all. Failure to do so could materially harm our business.

We will need substantial additional funding to support our operations and pursue our growth strategy. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

Based on our current operating plan, which is subject to change pursuant to our strategic review, we expect to devote substantial financial resources to our ongoing and planned activities. Significant financial resources will be required to conduct research and development and to potentially seek regulatory approval for our other product candidates. In addition, substantial financial resources will be required for to commercialize our products, if approved, including product manufacturing, sales, marketing and distribution for any of our product candidates for which marketing approval is obtained. Accordingly, substantial additional funding will be required to support our continuing and planned operations. If we are unable to raise or otherwise access capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.

Product liability suits, whether or not meritorious, could be brought against us due to alleged defective devices or for the misuse of our products, which could result in expensive and time-consuming litigation, payment of substantial damages and/or expenses and an increase in our insurance rates.

If our current or future devices are defectively designed or manufactured, contain defective components or are misused, or if someone claims any of the foregoing, whether or not meritorious, we may become subject to substantial and costly litigation. For example, we may be sued if our products cause or are perceived to cause injury or are found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. This may occur if our products are misused or damaged, have a sudden failure or malfunction (including with respect to safety features) or are otherwise impaired due to wear and tear. Even absent a product liability suit, malfunctions of our products or misuse by physicians or patients would need to be remedied swiftly in order to maintain continuous use and ensure efficacy of our products.

Any product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the device, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our products. Even successful defense may require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

Product liability claims could divert management’s attention from our core business, be expensive to defend and result in sizable damage awards against us. We may not have sufficient insurance coverage for all claims. Any product liability claims brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing continuing coverage, could harm our reputation in the industry and could reduce revenues. Product liability claims in excess of our insurance coverage would be paid out of cash reserves, if any, which could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline. Even if our agreements with our third-party manufacturers and suppliers entitle us to indemnification against losses, such indemnification may not be available or adequate should any claim arise.

Other future litigation and regulatory actions could have a material adverse impact on the Company.

From time to time, we may be subject to litigation and other legal and regulatory proceedings relating to our business or investigations or other actions by governmental agencies. No assurances can be given that the results of these or new matters will be favorable to us. An adverse resolution of lawsuits, arbitrations, investigations or other proceedings or actions could have a material adverse effect on our financial condition and results of operations, including as a result of non-monetary remedies. Defending ourselves in these matters may be time-consuming, expensive and disruptive to normal business operations and may result in significant expense and a diversion of management’s time and attention from the operation of our business, which could impede our ability to achieve our business objectives. Additionally, any amount that we may be required to pay to satisfy a judgment, settlement, fine or penalty may not be covered by insurance. Subject to the Washington Business Corporations Act, our articles of association permit us to indemnify any director against any liability, to purchase and maintain insurance against any liability for any director and to provide any director with funds (whether by loan or otherwise) to meet expenditures incurred or to be incurred by such director in defending any criminal, regulatory or civil proceedings or in connection with an application for relief (or to enable any such director to avoid incurring such expenditure). In addition, under our Articles of Incorporation and bylaws (the “Bylaws”) we are obligated to indemnify each of our directors and officers against certain liabilities and expenses arising from their being a director or officer to the maximum extent permitted by Washington law. In the event we are required to make such payments to our directors and officers, there can be no assurance that any of these payments will not be material.

Global economic, political and industry conditions constantly change and unfavorable conditions may have a material adverse effect on our business and results of operations.

We are a global company and plan to have worldwide operations. Volatile economic, political and market conditions, such as political or economic instability, civil unrest, trade sanctions, acts of terrorism in the regions or hostilities, including the recent conflict between Russia and Ukraine even though none of our current research or business is conducted in Russia or Ukraine, in locations in which we operate may have a negative impact on our operating results and our ability to achieve our business objectives. We may not have advance insight into economic and political trends that could emerge and negatively affect our business. In addition, significant or volatile changes in exchange rates between the U.S. dollar and other currencies may have a material adverse impact upon our liquidity, revenues, costs and operating results.

Additionally, natural disasters and public health emergencies, such as extreme weather events and the COVID-19 pandemic, could have a significant adverse effect on our business, including interruption of our commercial and clinical operations, supply chain disruption, endangerment of our personnel, fewer patient visits, increased patient drop-out rates, delays in recruitment of new patients, and other delays or losses of materials and results.

The COVID-19 pandemic could materially adversely impact our business.

As the COVID-19 pandemic continues around the globe, we have experienced and will likely continue to experience disruptions that could severely impact our business and clinical studies, which could include:

The global status of the COVID-19 pandemic continues to rapidly evolve. The extent to which the pandemic may impact our business and clinical studies will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing guidelines, business closures or business disruptions and the effectiveness of actions taken to contain and treat the disease. The response to the pandemic may result in permanent changes to the environment in which we operate as described above in ways we are unable to predict. The COVID-19 pandemic may also have the effect of heightening many of the other risks described herein.

We are increasingly dependent on information technology systems and are subject to privacy and security laws. Our products and our systems and infrastructure face certain risks, including from cyber security breaches and data leakage.

We increasingly rely upon technology systems and infrastructure. Our technology systems, including our products, are potentially vulnerable to breakdown or other interruption by fire, power loss, system malfunction, unauthorized access and other events. Likewise, data privacy breaches by employees and others with both permitted and unauthorized access to our products and our systems may pose a risk that protected patient information (“PI”) may be exposed to unauthorized persons or to the public, or may be permanently lost. The increasing use and evolution of technology, including cloud-based computing, creates additional opportunities for the unintentional dissemination of information, intentional destruction of confidential information stored in our systems or in non-encrypted portable media or storage devices. We could also experience a business interruption, information theft of confidential information, or reputational damage from industrial espionage attacks, malware or other cyber incidents, which may compromise our system infrastructure or lead to data leakage, either internally or at our third-party service providers or other business partners.

The size and complexity of our computer systems, and scope of our geographic reach, make us potentially vulnerable to information technology system breakdowns, internal and external malicious intrusion, cyberattacks and computer viruses. Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure or properly manage third-party contractors who perform data management services on our behalf, then a security breach could subject us to, among other things, transaction errors, business process inefficiencies, the loss of customers, damage to our reputation, business disruptions or the loss of or damage to intellectual property. Such security breaches could expose us to a risk of loss of information, litigation, penalties, remediation costs and potentially significant liability to customers, employees, business partners and regulatory authorities, including, for example, under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) in the United States and Regulation 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data under GDPR in the EU. If our data management systems (including third party data management systems) do not effectively collect, secure, store, process and report relevant data for the operation of our business, whether due to equipment malfunction or constraints, software deficiencies, or human error, our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations will be impaired. Any such impairment could materially and adversely affect our financial condition and results of operations.

While we have invested heavily in the protection of data and information technology and in related training, there can be no assurance that our efforts will prevent significant breakdowns, breaches in our systems or other cyber incidents or ensure compliance with all applicable security and privacy laws, regulations and standards, including with respect to third-party service providers that utilize sensitive personal information, including PI, on our behalf.

A security breach, whether of our products, systems or third-party hosting services we utilize, could disrupt treatments being provided by our products, disrupt access to our customers’ stored information, such as patient treatment data and health information, and could lead to the loss of, damage to or public disclosure of such data and information, including patient health information. Such an event could have serious negative consequences, including possible patient injury, regulatory action, fines, penalties and damages, reduced demand for our products, an unwillingness of customers to use our products, harm to our reputation and brand and time-consuming and expensive litigation, any of which could have a material adverse effect on our financial results. We do not currently carry insurance for cybersecurity liability, and the amount of insurance coverage we may purchase in the future may be inadequate. In the future, our insurance coverage may be expensive or not be available on acceptable terms or in sufficient amounts, if at all.

We may choose to, or may be required to, suspend, repeat or terminate our clinical studies if they are not conducted in accordance with regulatory requirements, the results are negative or inconclusive or the studies are not well designed.

Clinical studies must be conducted in accordance with the FDA’s cGCPs and the equivalent laws and regulations applicable in other jurisdictions in which the clinical studies are conducted. The clinical studies are subject to oversight by the FDA, regulatory agencies in other jurisdictions, ethics committees and institutional review boards at the medical institutions where the clinical studies are conducted. In addition, clinical studies must be conducted with device candidates produced under the FDA’s QSR and in accordance with the applicable regulatory requirements in the other jurisdictions in which the clinical studies are conducted. The conduct of clinical studies may require large numbers of test patients.

The FDA or regulatory agencies in other jurisdictions might delay or terminate our clinical studies of a device candidate for various reasons, including:

Furthermore, the process of obtaining and maintaining regulatory approvals in the U.S. and other jurisdictions is lengthy, expensive and uncertain. It can vary substantially, based on the type, complexity and novelty of the product involved. Accordingly, any of our device candidates could take a significantly longer time than we expect to, or may never, gain regulatory approval, which could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline.

Legislative and regulatory changes in the U.S. and in other countries regarding healthcare insurance and government-sponsored reimbursement programs (such as Medicare in the United States) may adversely affect our business and financial results.

We rely to a material degree on highly regulated private and government-run health insurance programs for our revenue in most of the countries in which we operate. The laws and regulations regarding health care programs, both public and private, are driven by public policy considerations that may be unrelated to the direct provision of patient care, such as lowering costs or requiring or limiting access to healthcare options. These laws and regulations are very complicated and there are many requirements we must satisfy in order for our products to become and remain eligible for reimbursement under these programs. In many cases we may have limited negotiating power when negotiating reimbursement rates for our products.

In the future, lawmakers and regulators could also pass additional healthcare laws and implement other regulatory changes at both the national and local levels. These laws and regulations could potentially affect coverage and reimbursement for our products. However, we cannot predict the ultimate content, timing or effect of any future healthcare initiatives or the impact any future legislation or regulation will have on us.

With respect to countries outside the U.S., the national competent authorities in the EU member states, the UK, Switzerland, Israel, Japan, and other jurisdictions are also increasingly active in their goal of reducing public spending on healthcare. We cannot, therefore, guarantee that the treatment of patients with our products would be reimbursed in any particular country or, if successfully included on reimbursement lists, whether we will remain on such lists.

We are subject to extensive post-marketing regulation by the FDA and comparable authorities in other jurisdictions, which could impact the sales and marketing of our products and could cause us to incur significant costs to maintain compliance. In addition, we may become subject to additional regulation in other jurisdictions as we increase our efforts to market and sell our products outside of the U.S.

We will market and sell our products subject to extensive regulation by the FDA and numerous other federal, state and governmental authorities in other jurisdictions. These regulations are broad and relate to, among other things, the conduct of pre-clinical and clinical studies, product design, development, manufacturing, labeling, testing, product storage and shipping, premarket clearance and approval, conformity assessment procedures, premarket clearance and approval of modifications introduced in marketed products, post-market surveillance and monitoring, reporting of adverse events and incidents, pricing and reimbursement, interactions with healthcare professionals, interactions with patients, information security, advertising and promotion and product sales and distribution. Although we have initially applied to the FDA for approval to market our products in the U.S. for GBM and DMG, we will require additional FDA approval to market our products for treating these and other indications. We may be required to obtain approval of a new PMA, HDE or PMA/HDE supplement application for modifications made to our products. This approval process is costly and uncertain, and it could take one to three years, or longer, from the time the application is filed with the FDA. We may make modifications in the future that we believe do not or will not require additional approvals. If the FDA disagrees, and requires new PMAs, HDEs, or PMA/HDE supplements for the modifications, we may be required to recall and to stop marketing the modified versions of our products.

In addition, before our products can be marketed in the EU, our products must obtain a CE Certificate from a notified body. New intended uses of CE marked medical devices falling outside the scope of the current CE Certificate require a completely new conformity assessment before the device can be CE marked and marketed in the EU for the new intended use. The process required to gather necessary information and draw up documentation in order to obtain CE Certification of a medical device in the EU can be expensive and lengthy and its outcome can be uncertain. We may make modifications to our products in the future that we believe do not or will not require notifications to our notified body or new conformity assessments to permit the maintenance of our current CE Certificate. If the competent authorities of the EU member states or our notified body disagree and require the conduct of a new conformity assessment, the modification of the existing CE Certificate or the issuance of a new CE Certificate, we may be required to recall or suspend the marketing of the modified versions of our products.

In Japan, new medical devices or new therapeutic uses of medical devices falling outside the scope of the existing approval by the MHLW require a new assessment and approval for each such new device or use. Accordingly, we may be required to obtain a new approval from MHLW before we launch a modified version of our products or the use of our products for additional indications. Approval time frames from the MHLW vary from simple notifications to review periods of one or more years, depending on the complexity and risk level of the device. In addition, importation into Japan of medical devices is subject to “Quality Management System (QMS) Ordinance,” which includes the equivalent of “Good Import” regulations in the U.S. As with any highly regulated market, significant changes in the regulatory environment could adversely affect our ability to commercialize our products in Japan.

In the U.S. and other jurisdictions, we also are subject to numerous post-marketing regulatory requirements, which include regulations under the QSR related to the manufacturing of our products, labeling regulations and medical device reporting regulations, which require us to report to the FDA or comparable regulatory authorities in other jurisdictions and our notified body if our products cause or contributes to a death or serious injury, or malfunction in a way that would likely cause or contribute to a death or serious injury. In addition, these regulatory requirements may in the future change in a way that adversely affects us. If we fail to comply with present or future regulatory requirements that are applicable to us, we may be subject to enforcement action by the FDA or comparable regulatory authorities in other jurisdictions and notified bodies, which may include any of the following sanctions:

The occurrence of any of these events could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline.

Over time, we expect to make modifications to our products that are designed to improve efficacy, reduce side effects, enhance the user experience or for other purposes. Modifications to our products may require approvals of new PMAs, HDEs, or PMA/HDE supplement applications, modified or new CE Certificates and analogous regulatory approvals in other jurisdictions or even require us to cease promoting or to recall the modified versions of our products until such clearances, approvals or modified or new CE Certificates are obtained, and the FDA, comparable regulatory authorities in other jurisdictions or our notified body may not agree with our conclusions regarding whether new approvals are required.

Any modification to a device approved through the PMA or HDE pathway that impacts the safety or effectiveness of the device requires submission to the FDA and FDA approval of a PMA supplement application or even a new PMA or HDE application, as the case may be. The FDA requires a company to make the determination as to whether a new PMA, HDE or PMA/HDE supplement application is to be filed, but the FDA may review the Company’s decision. From time to time, we may make changes to the devices, software, packaging, manufacturing facilities and manufacturing processes and may submit PMA/HDE supplement applications for these changes. FDA may conduct a facility inspection as part of its review and approval process. In addition, it is possible that the FDA will require a human factors (user interface) study. It is also possible that the FDA may require additional clinical data. We can provide no assurance that we will receive FDA approval for these changes on a timely basis, or at all. We also may make additional changes in the future that we may determine do not require the filing of a new PMA, HDE or PMA/HDE supplement application. The FDA may not agree with our decisions regarding whether the filing of new PMAs, HDEs or PMA/HDE supplement applications are required.

In addition, any substantial change introduced to a medical device or to the quality system certified by our notified body requires a new conformity assessment of the device and can lead to changes to the CE Certificates or the preparation of a new CE Certificate of Conformity. Substantial changes may include, among others, the introduction of a new intended use of the device, a change in its design or a change in the Company’s suppliers. Responsibility for determination that a modification constitutes a substantial change lies with the manufacturer of the medical device. We must inform the notified body that conducted the conformity assessment of the products we market or sell in the EU of any planned substantial changes to our quality system or changes to our products that could, among other things, affect compliance with the MDR or the devices’ intended use. The notified body will then assess the changes and verify whether they affect the product’s conformity with the Essential Requirements laid down in Annex I to the MDD or the conditions for the use of the device. If the assessment is favorable, the notified body will issue a new CE Certificate or an addendum to the existing CE Certificate attesting compliance with the Essential Requirements laid down in Annex I to the MDD. There is a risk that the competent authorities of the EU member states or our notified body may disagree with our assessment of the changes introduced to our products. The competent authorities of the EU member states or our notified body also may come to a different conclusion than the FDA on any given product modification.

In addition, medical devices that have obtained a CE Certification under the MDD may in principle continue to be marketed under such CE Certificate until the CE Certificate expires and at the latest until May 27, 2024, provided that the manufacturer complies with the MDR’s additional requirements related to post-marketing surveillance, market surveillance, vigilance, and registration of economic operators and of devices. However, if such medical devices undergo a significant change in their design or intended use, we would need to obtain a new CE Certificate under the MDR for these devices.

If the FDA disagrees with us and requires us to submit a new PMA, HDE, or PMA/HDE supplement application for then-existing modifications and/or the competent authorities of the EU member states or our notified body disagree with our assessment of the change introduced in a product, its design or its intended use, we may be required to cease promoting or to recall the modified product until we obtain approval and/or until a new conformity assessment has been conducted in relation to the product, as applicable. In addition, we could be subject to significant regulatory fines or other penalties. Furthermore, our products could be subject to recall if the FDA, comparable regulatory authorities in other jurisdictions, or our notified body determine, for any reason, that our products are not safe or effective or that appropriate regulatory submissions were not made. Any recall or requirement that we seek additional approvals or clearances could result in significant delays, fines, increased costs associated with modification of a product, loss of revenues and potential operating restrictions imposed by the FDA, comparable foreign regulatory authorities in other jurisdictions, or our notified body. Delays in receipt or failure to receive approvals/certification, or the failure to comply with any other existing or future regulatory requirements, could reduce our sales, profitability and future growth prospects.

In addition to FDA requirements, we will spend considerable time and money complying with other federal, state, local and foreign rules, regulations and guidance and, if we are unable to fully comply with such rules, regulations and guidance, we could face substantial penalties.

We are subject to extensive regulation by the U.S. federal government and the states and other countries in which we conduct our business. U.S. federal government healthcare laws apply when we submit a claim on behalf of a U.S. federal healthcare program beneficiary, or when a customer submits a claim for an item or service that is reimbursed under a U.S. federal government-funded healthcare program, such as Medicare or Medicaid. The laws that affect our ability to operate our business in addition to the Federal Food, Drug, and Cosmetic Act and FDA regulations include, but are not limited to, the following:

Similar laws exist in the EU, individual EU member states and other countries. These laws are complemented by EU or national professional codes of practices.

HIPAA provides data privacy and security provisions for safeguarding medical information. Additionally, states in the U.S. are enacting local privacy laws (e.g., California). In the EU, the GDPR harmonizes data privacy laws and rules on the processing of personal data, including patient and employee data, across the EU. The GDPR has a number of strict data protection and security requirements for companies processing data of EU residents, including when such data is transferred outside of the EU. Additionally, we need to comply with analogous privacy laws in other jurisdictions in which we operate, such as the Israeli Privacy Protection Law, the Asia Pacific Economic Cooperation Privacy Framework, and Japan’s Act on the Protection of Personal Information.

The laws and codes of practices applicable to us are subject to evolving interpretations. Moreover, certain U.S. federal and state laws regarding healthcare fraud and abuse and certain laws in other jurisdictions regarding interactions with healthcare professionals and patients are broad and we may be required to restrict certain of our practices to be in compliance with these laws. Healthcare fraud and abuse laws also are complex and even minor, inadvertent irregularities, or even the perception of impropriety, can potentially give rise to claims that a statute has been violated.

Any violation of these laws could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline. Similarly, if there is a change in law, regulation or administrative or judicial interpretations, we may have to change our business practices or our existing business practices could be challenged as unlawful, which likewise could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline. Fines and penalties for violations of these laws and regulations could include severe criminal and civil penalties, including, for example, significant monetary damages, exclusion from participation in the federal healthcare programs and permanent disbarment of key employees. Any penalties, damages, fines, curtailment or restructuring of our operations would adversely affect our ability to operate our business, our prospects and our financial results. In addition, any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business and damage our reputation.

In addition, although we believe that we have the required licenses, permits and accreditation to dispense our products in the future, a regulator could find that we need to obtain additional licenses or permits. We also may be subject to mandatory reaccreditation and other requirements in order to maintain our billing privileges. Failure to satisfy those requirements could cause us to lose our privileges to bill governmental and private payers. If we are required to obtain permits or licenses that we do not already possess, we also may become subject to substantial additional regulation or incur significant expense.

To ensure compliance with Medicare, Medicaid and other regulations, federal and state governmental agencies and their agents, including DME MACs, may conduct audits of our operations to support our claims submitted for reimbursement of items furnished to beneficiaries and health care providers. Depending on the nature of the conduct found in such audits and whether the underlying conduct could be considered systemic, the resolution of these audits could adversely impact our revenue, financial condition and results of operations.

If we, our collaborative partners, our contract manufacturers or our component suppliers fail to comply with the FDA’s QSR or equivalent regulations established in other countries, the manufacturing and distribution of our products could be interrupted, and our product sales and results of operations could suffer.

We, our collaborative partners, our contract manufacturers and our component suppliers are required to comply with the FDA’s QSR and the equivalent quality system requirements imposed by the laws and regulations in other jurisdictions, which are a complex regulatory framework that covers the procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our products. We cannot assure you that our facilities or our contract manufacturers’ or component suppliers’ facilities would pass any future quality system inspection. If our or any of our contract manufacturers’ or component suppliers’ facilities fails a quality system inspection, the manufacturing or distribution of our products could be interrupted and our operations disrupted. Failure to take adequate and timely corrective action in response to an adverse quality system inspection could force a suspension or shutdown of our packaging and labeling operations or the manufacturing operations of our contract manufacturers, and lead to suspension, variation or withdrawal of our regulatory approvals or a recall of our products. If any of these events occurs, we may not be able to provide our customers with our products on a timely basis, our reputation could be harmed and we could lose customers, any or all of which could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline.

Our products may in the future be subject to recalls that could harm our reputation, business and financial results.

The FDA and similar governmental authorities in other jurisdictions have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture. In the case of the FDA, the authority to require a recall must be based on an FDA finding that there is a reasonable probability that the device would cause serious injury or death. In addition, governmental bodies in other jurisdictions have the authority to require the recall of our products in the event of material deficiencies or defects in design or manufacture. Distributors and manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government-mandated or voluntary recall by us or one of our manufacturers could occur as a result of component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. The FDA requires that certain classifications of recalls be reported to the FDA within ten working days after the recall is initiated. Requirements for the reporting of product recalls to the competent authorities are imposed in other jurisdictions in which our products are or would be marketed in the future. Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA or to the competent authorities of other countries. In the future, we may initiate voluntary recalls involving our products that we determine do not require notification of the FDA or to other equivalent non-U.S. authorities. If the FDA or the equivalent non-U.S. authorities disagree with our determinations, they could require us to report those actions as recalls. A future recall announcement could harm our reputation with customers and negatively affect our sales. In addition, the FDA and the equivalent non-U.S. authorities could take enforcement action if we fail to report the recalls when they were conducted. Recalls of our products would divert managerial and financial resources and could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline.

If our products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.

Under the FDA Medical Device Reporting regulations and the equivalent regulations applicable in other jurisdictions in which our products are or may be marketed in the future, medical device manufacturers are required to report to the FDA and to the equivalent non-U.S. authorities information that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to death or serious injury if the malfunction of the device or one of our similar devices were to recur. If we fail to report these events to the FDA or to the equivalent authorities in other jurisdictions within the required time frames, or at all, the FDA or the equivalent authorities in other jurisdictions could take enforcement action against us. Any such adverse event involving our products also could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results.

We may be subject to fines, penalties or injunctions if we are determined to be promoting the use of our products for unapproved or off-label uses.

Medical devices may be marketed only for the indications for which they are approved. Our promotional materials and training materials must comply with FDA regulations and other applicable laws and regulations governing the promotion of our products in the U.S. and other jurisdictions.

If the FDA or the competent authorities in other jurisdictions determine that our promotional materials or training constitutes promotion of an unapproved use, they could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled or warning letter, an injunction, seizure, civil fines and criminal penalties. It is also possible that authorities in other federal, state or national enforcement in other jurisdictions might take action if they consider our promotional or training materials to constitute promotion of an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. In that event, our reputation could be damaged and the commercialization of our products could be impaired.

We are affected by and subject to environmental laws and regulations that could be costly to comply with or that may result in costly liabilities.

We are subject to environmental laws and regulations, including those that impose various environmental controls on the manufacturing, transportation, storage, use and disposal of batteries and hazardous chemicals and other materials used in, and hazardous waste produced by, the manufacturing of our products. We incur and expect to continue to incur costs to comply with these environmental laws and regulations. Additional or modified environmental laws and regulations, including those relating to the manufacture, transportation, storage, use and disposal of materials used to manufacture our products or restricting disposal or transportation of batteries, may be imposed that may result in higher costs.

In addition, we cannot predict the effect that additional or modified environmental laws and regulations may have on us, our third-party suppliers of equipment and our products or our customers.

The oncology and medical device industries are characterized by patent and other intellectual property litigation and disputes, and any litigation, dispute or claim against us may cause us to incur substantial costs, could place a significant strain on our financial resources, divert the attention of management from our business, harm our reputation and require us to remove certain devices from the market.

Whether a product infringes a patent or violates other intellectual property rights involves complex legal and factual issues, the determination of which is often uncertain. Any intellectual property dispute, even a meritless or unsuccessful one, would be time consuming and expensive to defend and could result in the diversion of our management’s attention from our business and result in adverse publicity, the disruption of research and development and marketing efforts, injury to our reputation and loss of revenues. Any of these events could negatively affect our business, prospects, financial condition and results of operations.

Third parties may assert that our products, the methods employed in the use of our products or other activities infringe on their patents. Such claims may be made by competitors seeking to obtain a competitive advantage or by other parties, many of whom have significantly larger intellectual property portfolios than we have. Additionally, in recent years, individuals and groups have begun purchasing intellectual property assets for the purpose of making claims of infringement and attempting to extract settlements from companies like ours. With respect to our current products, the risk of infringement claims is exacerbated by the fact that there are numerous issued and pending patents relating to the treatment of cancer. Because patent applications can take many years to issue, and in many cases remain unpublished for many months after filing, there may be applications now pending of which we are unaware that may later result in issued patents that our products may infringe.

There could also be existing patents that one or more components of our products or other device candidates may inadvertently infringe. As the number of competitors in the market or other device candidates grows, the possibility of inadvertent patent infringement by us or a patent infringement claim against us increases. To the extent we gain greater market visibility, our risk of being subject to such claims is also likely to increase. If a third party’s patent was upheld as valid and enforceable and we were found to be infringing, we could be prevented from making, using, selling, offering to sell or importing our products or other device candidates, unless we were able to obtain a license under that patent or to redesign our systems to avoid infringement. A license may not be available at all or on terms acceptable to us, and we may not be able to redesign our products to avoid any infringement. Modification of our products or development of device candidates to avoid infringement could require us to conduct additional clinical studies and to revise our filings with the FDA and other regulatory bodies, which would be time-consuming and expensive. If we are not successful in obtaining a license or redesigning our devices, we may be unable to make, use, sell, offer to sell or import our devices and our business could suffer. We may also be required to pay substantial damages and undertake remedial activities, which could cause our business to suffer.

We may also be subject to claims alleging that we infringe or violate other intellectual property rights, such as copyrights or trademarks, may have to defend against allegations that we misappropriated trade secrets, and may face claims based on competing claims of ownership of our intellectual property. The confidentiality and assignment of inventions agreements that our employees, consultants and other third parties sign may not in all cases be enforceable or sufficient to protect our intellectual property rights. In addition, we may face claims from third parties based on competing claims to ownership of our intellectual property.

We may employ individuals who were previously employed at other medical device companies, and as such we may be subject to claims that such employees have inadvertently or otherwise used or disclosed the alleged trade secrets or other proprietary information of their former employers. Any such litigation, dispute or claim could be costly to defend and could subject us to substantial damages, injunctions or other remedies, which could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our devices.

As is the case with other medical device companies, our success is heavily dependent on our intellectual property rights, and particularly on our patent rights. Obtaining and enforcing patents in the medical device industry involves both technological and legal complexity, and is therefore costly, time consuming and inherently uncertain. In addition, the U.S. has recently enacted and is currently implementing wide-ranging patent reform legislation. Certain U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents once obtained. Depending on decisions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could further negatively impact the value of our patents, narrow the scope of available patent protection or weaken the rights of patent owners.

Future regulatory action remains uncertain.

We operate in a highly regulated and evolving environment with rigorous regulatory enforcement. Any legal or regulatory action could be time-consuming and costly. If we or the manufacturers or distributors that supply our products fail to comply with all applicable laws, standards, and regulations, action by the FDA or other regulatory agencies could result in significant restrictions, including restrictions on the marketing or use of the products we sell or the withdrawal of the products we sell from the market. Any such restrictions or withdrawals could materially affect our reputation, business and operations.

Our product candidates will remain subject to ongoing regulatory review even after they receive marketing approval, and if we fail to comply with continuing regulations, we could lose these approvals and the sale of any of our approved commercial products could be suspended.

Even as we receive regulatory approval to market a particular product candidate, the manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, and record keeping related to the product will remain subject to extensive regulatory requirements. If we fail to comply with the regulatory requirements of the FDA and other applicable domestic and foreign regulatory authorities or discover any previously unknown problems with any approved product, manufacturer, or manufacturing process, we could be subject to administrative or judicially imposed sanctions, including:

If physicians and patients do not accept our current and future products or if the market for indications for which any product candidate is approved is smaller than expected, we may be unable to generate significant revenue, if any.

Even when any of our product candidates obtain regulatory approval, they may not gain market acceptance among physicians, patients, and third-party payers. Physicians may decide not to recommend our treatments for a variety of reasons including:

If any of our product candidates is approved, but fails to achieve market acceptance or such market is smaller than anticipated, we may not be able to generate significant revenue and our business would suffer.

Intellectual property litigation and infringement claims could cause us to incur significant expenses or prevent us from selling certain of our products.

The therapeutic medical device and pharmaceutical industries are characterized by extensive intellectual property litigation and, from time to time, we may become the subject of claims of infringement or misappropriation. Regardless of outcome, such claims are expensive to defend and divert management and operating personnel from other business issues. A successful claim or claims of patent or other intellectual property infringement against us could result in payment of significant monetary damages and/or royalty payments or negatively impact our ability to sell current or future products in the affected category.

We depend extensively on our patents and proprietary technology and the patents, and we must protect those assets in order to preserve our business.

Although we expect to seek patent protection for any devices, in silico products (if any), systems, and processes we discover and/or for any specific use we discover for new or previously known compounds, devices, biologics, products, systems, or processes, any or all of these may not be subject to effective patent protection. In addition, our issued patents may be declared invalid or our competitors may find ways to avoid the claims in the patents.

Our success will depend, in part, on our ability to obtain patents, protect our trade secrets and proprietary knowledge and operate without infringing on the proprietary rights of others. We are the sole assignee of numerous granted United States patents, pending United States patent applications and international patents. The patent position of pharmaceutical and biotechnology firms like us are generally highly uncertain and involves complex legal and factual questions, resulting in both an apparent inconsistency regarding the breadth of claims allowed in United States patents and general uncertainty as to their legal interpretation and enforceability. Accordingly, patent applications assigned to us may not result in patents being issued, any issued patents assigned to us may not provide us with competitive protection or may be challenged by others, and the current or future granted patents of others may have an adverse effect on our ability to do business and achieve profitability.

Moreover, others may independently develop similar products, may duplicate our products, or may design around our patent rights. In addition, as a result of the assertion of rights by a third-party or otherwise, we may be required to obtain licenses to patents or other proprietary rights of others in or outside of the United States. Any licenses required under any such patents or proprietary rights may not be made available on terms acceptable to us, if at all. If we do not obtain such licenses, we could encounter delays in product market introductions during our attempts to design around such patents or could find that the development, manufacture or sale of products requiring such licenses is foreclosed. In addition, we could incur substantial costs in defending suits brought against us or in connection with patents to which we hold licenses or in bringing suit to protect our own patents against infringement.

Due to legal and factual uncertainties regarding the scope and protection afforded by patents and other proprietary rights, we may not have meaningful protection from competition.

Our long-term success will substantially depend upon our ability to protect our proprietary technologies from infringement, misappropriation, discovery and duplication, and avoid infringing the proprietary rights of others. Our patent rights and the patent rights of biotechnology and pharmaceutical companies in general, are highly uncertain and include complex legal and factual issues. Because of this, our pending patent applications may not be granted. These uncertainties also mean that any patents that we own or will obtain in the future could be subject to challenge, and even if not challenged, may not provide us with meaningful protection from competition. Due to our financial uncertainties, we may not possess the financial resources necessary to enforce our patents. Patents already issued to us or our pending applications may become subject to dispute, and any dispute could be resolved against us. Because a substantial number of patents have been issued in the field of cellular therapy and because patent positions can be highly uncertain and frequently involve complex legal and factual questions, the breadth of claims obtained in any application or the enforceability of our patents cannot be predicted. Consequently, we do not know whether any of our pending or future patent applications will result in the issuance of patents or, to the extent patents have been issued or will be issued, whether these patents will be subject to further proceedings limiting their scope, will provide significant proprietary protection or competitive advantage, or will be circumvented or invalidated. One of our currently issued patents has expired, and eight of them will expire in the next twelve months.

Also, because of these legal and factual uncertainties, and because pending patent applications are held in secrecy for varying periods in the United States and other countries, even after reasonable investigation, we may not know with certainty whether any products that we (or a licensee) may develop will infringe upon any patent or other intellectual property right of a third party. We believe that the patents that we own or have applied for do not infringe any third-party patents; however, we cannot know for certain whether we could successfully defend our position, if challenged. We may incur substantial costs if we are required to defend our intellectual property in patent suits brought by third parties. These legal actions could seek damages and seek to enjoin testing, manufacturing and marketing of the accused product or process. In addition to potential liability for significant damages, we could be required to obtain a license to continue to manufacture or market the accused product or process.

We may not be able to compete with treatments now being marketed and developed, or which may be developed and marketed in the future by other companies.

Our products will compete with existing and new therapies and treatments for cancer, acute and chronic pain, mental health conditions, and other indications targeted for our technology. We are aware of a number of companies currently seeking to develop alternative therapies or treatment for such diseases and conditions at least in part. Numerous pharmaceutical, biotechnology, drug delivery and medical device companies, hospitals, research organizations, individual scientists, and nonprofit organizations are engaged in the development of alternatives to our technology. Some of these companies have greater research and development capabilities, experience, manufacturing, marketing, financial, and managerial resources than we do. Collaborations or mergers between large pharmaceutical or biotechnology companies with competing treatment technologies could enhance our competitors’ financial, marketing, and other resources. Developments by other medical device companies could make our products or technologies uncompetitive or obsolete. Accordingly, our competitors may succeed in developing competing technologies, obtaining FDA approval for products or gaining market acceptance more rapidly than we can.

Due in part to our limited financial resources, we may fail to select or capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas for our product candidates, and/or we may be unable to pursue the clinical trials that we would like to pursue.

We have limited technical, managerial, and financial resources to determine the indications on which we should focus the development efforts related to our product candidates. Due to our limited available financial resources, we may have curtailed clinical development programs and activities that might otherwise have led to more rapid progress of our product candidates through the regulatory and development processes.

We may make incorrect determinations with regard to the indications and clinical trials on which to focus the available resources that we do have. Furthermore, we cannot assure you that we will be able to retain adequate staffing levels to run our operations and/or to accomplish all of the objectives that we otherwise would seek to accomplish. Our decisions to allocate our research, management, and financial resources toward particular indications or therapeutic areas for our product candidates may not lead to the development of viable commercial products and may divert resources from better opportunities. Similarly, our decisions to delay or terminate product development programs may also cause us to miss valuable opportunities.

If the third parties on which we rely for the conduct of our clinical trials and results do not perform our clinical trial activities in accordance with good clinical practices and related regulatory requirements, we may be unable to obtain regulatory approval for or commercialize our product candidates.

We use independent clinical investigators and other third-party service providers to conduct and/or oversee the clinical trials of our product candidates, and expect to continue to do so for the foreseeable future.

The FDA requires us and our clinical investigators to comply with regulations and standards, commonly referred to as good clinical practices, for conducting, recording, and reporting the results of clinical trials to assure that data and reported results are credible and accurate, and that the trial participants are adequately protected. Our reliance on third parties that we do not control does not relieve us of these responsibilities and requirements. Third parties may not complete activities on schedule or may not conduct our clinical trials in accordance with regulatory requirements or the respective trial plans and protocols. The failure of these third parties to carry out their obligations could delay or prevent the development, approval, and commercialization of our product candidates or result in enforcement action against us.

Our Company has an evolving business strategy and investors must be willing to accept a substantial degree of uncertainty.

The Company’s strategic focus is on the development of therapeutic medical devices for humans using its ulRFE^® platform technology. The Company is engaged in ongoing discussions with potential licensees, other strategic partners and institutional or private financing sources, the result of which could add to or alter its current strategic focus, cash needs or ownership structure. Investors must be willing to accept a substantial degree of uncertainty and must be willing to rely upon our Board of Directors (“Board”) and management to complete an appropriate business strategy to commercially exploit targeted business opportunities.

The industry in which our Company competes is intensely competitive, and we compete with companies with significantly greater resources.

The market for the Company’s products and services is relatively new and rapidly evolving. Accordingly, it is difficult to predict its future growth rate, if any, and its ultimate size. Moreover, the Company’s success is dependent on the popularity of its products and services within this new market, which the Company cannot predict. The Company has entered into one licensing agreement for a specific indication in the Japanese oncology market and one distribution agreement for specific indications in the Indian oncology market, but the Company may experience significantly long processes for additional licensing or for sales in order to monetize its products or services. While the Company is not aware of any businesses currently developing or using ulRFE technology similar to its technology, the broader life sciences industry is marked by intense competition, including many companies with significantly greater resources, which they could use to attempt to limit the Company’s ability to gain market share.

You should consult with a tax expert before investing in our Company.

You should consult with your own tax advisor about the tax consequences of investing in EMulate Therapeutics through the purchase of its securities.

If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.

Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act.

Although we intend to conduct our operations so that we will not be deemed an investment company, if we were to be deemed an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Our Common Stock and this Offering

There has been no public market for our Common Stock prior to this offering, and an active market in which investors can resell their shares of our Common Stock may not develop.

Prior to this Offering, there has been no public market for our Common Stock. We have applied to list our Common Stock on Nasdaq under the symbol “EMTX.” The closing of this Offering is contingent upon the successful listing of our Common Stock on the Nasdaq Capital Market. There is no guarantee that Nasdaq, or any other exchange or quotation system, will permit our Common Stock to be listed and traded.

Even if our Common Stock is approved for listing on Nasdaq, a liquid public market for our Common Stock may not develop. The initial public offering price for our Common Stock has been determined by negotiation between us and the underwriters based upon several factors, including prevailing market conditions, our historical performance, estimates of our business potential and earnings prospects, and the market valuations of similar companies. The price at which the Common Stock is traded after this Offering may decline below the initial public offering price, meaning that you may experience a decrease in the value of your Common Stock regardless of our operating performance or prospects.

The market price of our Common Stock may fluctuate, and you could lose all or part of your investment.

After this Offering, the market price for our Common Stock is likely to be volatile, in part because our shares have not been traded publicly. In addition, the market price of our Common Stock may fluctuate significantly in response to several factors, most of which we cannot control, including:

The public offering price of our Common Stock has been determined by negotiations between us and the underwriters based upon many factors and may not be indicative of prices that will prevail following the closing of this Offering. Volatility in the market price of our Common Stock may prevent investors from being able to sell their Common Stock at or above the initial public offering price. As a result, you may suffer a loss on your investment.

We may not be able to satisfy listing requirements of Nasdaq or maintain a listing of our Common Stock on Nasdaq.

If our Common Stock is listed on Nasdaq, we must meet certain financial and liquidity criteria to maintain such listing. If we violate Nasdaq’s listing requirements, or if we fail to meet any of Nasdaq’s listing standards, our Common Stock may be delisted. In addition, the Board may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our Common Stock from Nasdaq may materially impair our shareholders’ ability to buy and sell our Common Stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our Common Stock. The delisting of our Common Stock could significantly impair our ability to raise capital and the value of your investment.

We have considerable discretion as to the use of the net proceeds from this Offering and we may use these proceeds in ways with which you may not agree.

We intend to use the proceeds from this Offering for research and development, general working capital and other corporate purposes. However, we have considerable discretion in the application of the proceeds. Because of the number and variability of factors that will determine our use of our net proceeds from this Offering, their ultimate use may vary substantially from their currently intended use. You will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this Offering. The net proceeds may be used for corporate or other purposes with which you do not agree or that do not improve our profitability or increase our share price. The net proceeds from this Offering may also be placed in investments that do not produce income or that lose value. See “Use of Proceeds” below for more information.

You will experience immediate and substantial dilution as a result of this Offering.

As of December 31, 2021, our net tangible book value was approximately $[●], or approximately $[●] per share. Since the effective price per share of our Common Stock being offered in this Offering is substantially higher than the net tangible book value per share of our Common Stock, you will suffer substantial dilution with respect to the net tangible book value of the Common Stock you purchase in this Offering. Based on the assumed public offering price of $[●] per share of Common Stock being sold in this Offering, which is the midpoint of the estimated offering range set forth on the cover page of this prospectus, and our net tangible book value per share as of December 31, 2021, if you purchase shares of Common Stock in this Offering, you will suffer immediate and substantial dilution of $[●] per share (or $[●] per share if the underwriters exercise the over-allotment option in full) with respect to the net tangible book value of the Common Stock. See the section titled “Dilution” for a more detailed discussion of the dilution you will incur if you purchase securities in this Offering.

The terms of our notes, and our debt repayment obligations thereunder, may restrict our ability to obtain additional financing, and adversely affect our financial condition and cash flows from operations in the future.

Our indebtedness under the notes issued to Nancy Nordhoff, a holder of more than 5% of our Common Stock, John Kingma, our director, and Andrew Daniels, our director, and certain restrictions included within the terms of the notes, may restrict, and otherwise impair our ability to obtain additional financing in the future for general corporate purposes, including working capital, capital expenditures, potential acquisitions and strategic transactions. Our ability to meet our debt obligations will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors, many of which are outside of our control. Our future operations may not generate sufficient cash to enable us to repay our debt, including the notes. If we fail to make a payment on our debt, we could be in default on such debt. If we are at any time unable to pay our indebtedness under the notes in cash when due, we may be required to issue additional shares of common stock on unfavorable terms.

We do not expect to declare or pay dividends in the foreseeable future.

We do not expect to declare or pay dividends in the foreseeable future, as we anticipate that we will invest future earnings in the development and growth of our business. Therefore, holders of our Common Stock will not receive any return on their investment unless they sell their securities, and holders may be unable to sell their securities on favorable terms or at all.

If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our Common Stock could be negatively affected.

Any trading market for our Common Stock may be influenced in part by any research reports that securities industry analysts publish about us. We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our Common Stock could be negatively affected. In the event we are covered by analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage of us, the market price and market trading volume of our Common Stock could be negatively affected.

Future issuances of our Common Stock or securities convertible into, or exercisable or exchangeable for, our Common Stock, or the expiration of lock-up agreements that restrict the issuance of new Common Stock or the trading of outstanding Common Stock, could cause the market price of our Common Stock to decline and would result in the dilution of your holdings.

Future issuances of our Common Stock or securities convertible into, or exercisable or exchangeable for, our common stock, or the expiration of lock-up agreements that restrict the issuance of new Common Stock or the trading of outstanding Common Stock, could cause the market price of our Common Stock to decline. We cannot predict the effect, if any, of future issuances of our securities, or the future expirations of lock-up agreements, on the price of our Common Stock. In all events, future issuances of our Common Stock would result in the dilution of your holdings. In addition, the perception that new issuances of our securities could occur, or the perception that locked-up parties will sell their securities when the lock-ups expire, could adversely affect the market price of our Common Stock. In connection with this Offering, we will enter into a lock-up agreement that prevents us, subject to certain exceptions, from offering additional shares of capital stock for up to six months after the closing of this Offering, as further described in the section titled “Underwriting.” In addition to any adverse effects that may arise upon the expiration of these lock-up agreements, the lock-up provisions in these agreements may be waived, at any time and without notice. If the restrictions under the lock-up agreements are waived, our Common Stock may become available for resale, subject to applicable law, including without notice, which could reduce the market price for our Common Stock.

Future issuances of debt securities, which would rank senior to our Common Stock upon our bankruptcy or liquidation, and future issuances of preferred stock, which could rank senior to our common stock for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our Common Stock.

In the future, we may attempt to increase our capital resources by offering debt securities. Upon bankruptcy or liquidation, holders of our debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made to holders of our Common Stock. Moreover, if we issue preferred stock, the holders of such preferred stock could be entitled to preferences over holders of Common Stock in respect of the payment of dividends and the payment of liquidating distributions. Because our decision to issue debt or preferred stock in any future offering, or borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such future offerings or borrowings. Holders of our Common Stock must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our Common Stock.

We are authorized to issue “blank check” preferred stock without stockholder approval, which could adversely impact the rights of holders of our Common Stock.

Our articles of incorporation authorize us to issue up to 10,000,000 shares of preferred stock, among which 1,817,333 shares are designated as Series A preferred stock and 2,400,000 shares are designated as Series A-1 preferred stock. Any preferred stock that we issue in the future may rank ahead of our Common Stock in terms of dividend priority or liquidation premiums and may have greater voting rights than our Common Stock. In addition, such preferred stock may contain provisions allowing those shares to be converted into shares of Common Stock, which could dilute the value of Common Stock to current stockholders and could adversely affect the market price, if any, of our Common Stock. In addition, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of our Company.

If our shares of Common Stock become subject to the penny stock rules, it would become more difficult to trade our shares.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not retain a listing on Nasdaq or another national securities exchange and if the price of our Common Stock is less than $5.00, our Common Stock could be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our Common Stock, and therefore shareholders may have difficulty selling their shares.

We will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies and our shareholders could receive less information than they might expect to receive from more mature public companies.

Upon the completion of this Offering, we will be required to publicly report on an ongoing basis as an “emerging growth company” (as defined in the JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not emerging growth companies, including but not limited to:

We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We would remain an emerging growth company for up to five years, although if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an emerging growth company as of the following December 31.

Because we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, our shareholders could receive less information than they might expect to receive from more mature public companies. We cannot predict if investors will find our Common Stock less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our Common Stock.

USE OF PROCEEDS

Based upon an assumed public offering price of $[●] per Share, we estimate that we will receive net proceeds from this offering, after deducting the underwriting discounts and the estimated offering expenses payable by us, of approximately $[●] million assuming the underwriter does not exercise its over-allotment option.

We plan to use the net proceeds we receive from this Offering for the following purposes:

Use of Proceeds by Therapeutic Area:

We believe that our existing cash and cash equivalents, together with interest on cash balances, will be sufficient to fund our operating expenses and capital expenditure requirements through at least the next 12 months. The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. However, the nature, amounts and timing of our actual expenditures may vary significantly depending on numerous factors. As a result, our management has and will retain broad discretion over the allocation of the net proceeds from this offering. We may find it necessary or advisable to use the net proceeds from this offering for other purposes, and we will have broad discretion in the application of net proceeds from this offering. To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.

DIVIDEND POLICY

The Company has not declared or paid any cash dividend on its Common Stock, and it currently intends to retain future earnings, if any, to finance the expansion of its business, and the Company does not expect to pay any cash dividends in the foreseeable future. The decision whether to pay cash dividends on its Common Stock will be made by the Board, in their sole discretion, and may take into account general and economic conditions, our available cash and current and anticipated cash needs, contractual, statutory and regulatory prohibitions and other restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, and such other factors as the Board. Our future ability to pay cash dividends on our Common Stock may also be limited by the terms of any future debt securities, preferred stock or credit facility.

CAPITALIZATION

Set forth below is our cash and capitalization as of June 30, 2022:

You should read the information in the below table together with our consolidated financial statements and related notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Use of Proceeds” included elsewhere in this prospectus.

The table above is based on 15,143,315 shares of Common Stock outstanding as of June 30, 2022, and excludes, as of such date:

DILUTION

If you invest in the Company’s Shares in this offering, your ownership interest will be diluted to the extent of the difference between the offering price per share of its Common Stock and the as-adjusted net tangible book value per Share of its Common Stock immediately after the offering. Historical net tangible book value per Share represents the amount of the Company’s total tangible assets less total liabilities, divided by the number of Shares of its Common Stock outstanding.

The historical net tangible book value (deficit) of the Company’s Common Stock as of June 30, 2022, was approximately $([●] million) or $([●]) per Share based upon shares of Common Stock outstanding on such date. Historical net tangible book value (deficit) per Share represents the amount of its total tangible assets reduced by the amount of its total liabilities, divided by the total number of shares of Common Stock outstanding. The pro forma historical net tangible book value (deficit) was $([●]) per Share based upon shares of Common Stock outstanding as of June 30, 2022.

After giving effect to the Company’s sale of all of the [●] shares of Common Stock offered in this offering at a public offering price of $[●] per Share after deducting estimated underwriting discounts and commissions and the Company’s estimated offering expenses, the Company’s pro forma as adjusted net tangible book value as of June 30, 2022 would have been $[●] or $[●] per Share. This represents an immediate increase in net tangible book value of $[●] per Share to the Company’s existing stockholders, and an immediate dilution in net tangible book value of $[●] per Share to new investors. The following table illustrates this per Share dilution:

The information discussed above is illustrative only, and the dilution information following this offering will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. A $1.00 increase (decrease) in the assumed public offering price of $[●] per Share would increase (decrease) the pro forma as adjusted net tangible book value by $[●] per Share and increase the dilution to new investors by $[●] per Share and decrease the dilution to new investors by $[●] per Share, assuming the number of shares offered by the Company, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by the Company. The Company may also increase or decrease the number of shares it is offering. An increase of 100,000 Shares offered by it would increase the pro forma as adjusted net tangible book value by $[●] per Share and decrease the dilution to new investors by $[●] per share, assuming the assumed public offering price of $[●] per Share remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by the Company. Similarly, a decrease of 100,000 Shares offered by the Company would decrease the pro forma as adjusted net tangible book value by $[●] per share and increase the dilution to new investors by $[●] per Share, assuming the assumed public offering price of $[●] per Share remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by the Company.

If the underwriters’ over-allotment option to purchase additional Shares from the Company is exercised in full, and based on the assumed public offering price of $[●] per Share, the pro forma as adjusted net tangible book value per share after this offering would be $[●] per Share, the increase in as adjusted net tangible book value per Share to existing stockholders would be $[●] per Share and the dilution to new investors purchasing shares in this Offering would be $[●] per share.

The number of shares of Common Stock outstanding is based on [●] shares of Common Stock issued and outstanding as of June 30, 2022, and excludes the following:

Except as otherwise indicated herein, all information in this prospectus assumes:

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our audited financial statements and the related notes appearing at the end of this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks, uncertainties and assumptions. You should read the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

EMulate has, since its inception in 2002, invented, developed, and advanced its technology such that it will present alternative and improved methods of treatment for those suffering from serious diseases and conditions such as cancer, chronic and acute pain, and mental health maladies. Our technology is new in the medical industry. We believe the improved treatment modalities our technology provides are attractive to patients and the physicians treating them. Pharmaceutical and other entities desiring to treat underserved patient populations or improve currently available treatments for all patients will likely be interested in transacting with EMulate to make its technology available for such purposes. Our operations and expenditures have been, and will continue to be, directed to these ends.

In the therapeutic area of oncology, EMulate is pivotal trial-ready for the treatment of adult and pediatric brain cancers, and we have established a subsidiary, Cellsana Therapeutics, Inc., to provide transactional and partnering flexibility in the oncology sector. Planned-for initiatives for continuing development include pivotal trials in treating GBM and DMG/DIPG.

Our ulRFE therapeutic system has potential treatment applications in a wide range of diseases other than cancer. We are conducting pre-clinical animal studies and collecting data from limited human exposures in the therapeutic areas of acute and chronic pain management and mental health and other CNS conditions. Our subsidiaries, Indolor Therapeutics, Inc. and Mensana Therapeutics, Inc., respectively, have been established to provide transactional and partnering flexibility in those sectors. Continuing development in these areas includes confirmatory pre-clinical studies and, later, clinical trials in treating acute and chronic pain and mental health conditions.

Since our inception, we have incurred significant operating losses. Our loss from operations was $11.3 million and $10.6 million for the years ended December 31, 2021 and 2020, respectively, and $[●] for the six months ended June 30, 2022. As of June 30, 2022, we had an accumulated deficit of $[●] million. We expect to incur significant expenses and operating losses for the foreseeable future as we continue with our clinical trials and test new ways to utilize our technology to improve treatment methods.

As funding and resources allow, we will also continue our investigations into the therapeutic areas of animal health and ag-bio. We have proof of concept validation in each of those areas.

As we have done with Hapbee Technologies, Inc., we will look for opportunities to commercialize our technology in the non-medical space. Hapbee Technologies is already at the commercialization/revenue stage, and we believe we are capable of producing the same results with other companies.

With this offering, we are seeking sufficient capital to enable us to continue the technology and business expansion already well underway. We believe proceeds from this offering will be sufficient to fund our business plan for at least the next 12 months.

Factors Affecting our Business and Results of Operations

Our planned operating expenses consist of research, development, pre-clinical studies, clinical trials and general and administrative expenses. Personnel costs are a significant component for each category of operating expenses and consist of wages, benefits and bonuses. Personnel costs also include share-based compensation. We expect personnel costs to continue to increase as we hire new employees to continue to grow our business.

Our operations, research, development, pre-clinical and clinical trial activity is focused on advancing our technology through the pivotal trial stage for multiple tumor types, for pain management treatments, and for mental health treatment. Our activity will also focus on improving the delivery systems of our devices. Research, development, pre-clinical and clinical trials costs, including direct and allocated expenses, are expensed as incurred and consist primarily of the following: personnel costs (including share-based compensation) for those employees involved in our research, development, pre-clinical studies, clinical trials, regulatory and medical affairs activities; costs to conduct research, development, pre-clinical studies and clinical trial activity through agreements with contract research organizations and other third parties; facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment and laboratory and other supplies; manufacturing expenses associated with our medical device systems; and professional fees related to regulatory approvals.

General and administrative expenses consist primarily of personnel costs, professional fees and facilities costs. General and administrative personnel costs (including share-based compensation) include our executive, finance, human resources and legal functions. Our professional fees consist primarily of accounting, legal and other consulting costs. We expect that general and administrative expenses will increase in absolute dollars to support our growth. In addition, following the consummation of this offering, we expect to incur significant additional legal and accounting costs related to compliance with SEC rules and regulations, including the additional costs of achieving and maintaining compliance with Section 404 of the Sarbanes-Oxley Act and compliance with Nasdaq rules, as well as additional insurance, investor relations and other costs associated with being a public company.

Our investment in Hapbee is valued each reporting period based on Hapbee’s stock price with the gain/(loss) flowing through non-operating income. While the fluctuation in the stock price does not impact our operating results, these changes do have a negative impact on our net income and earnings per share. For the years ended December 31, 2021 and 2020, and the six months ended June 30, 2022, Hapbee stock fluctuations impacted net income $(8,089), $8,527 and $(4,810), respectively. Also, for the years ended December 31, 2021 and 2020, and the six months ended June 30, 2022, Hapbee stock fluctuations impacted earnings per share $(0.55), $0.62 and $(0.32), respectively. In this regard, the stock price (expressed in Canadian dollars) has decreased from CAD$0.53 on December 31, 2020, to CAD$0.085 as of August 4, 2022.

Results of Operations for the Six Months Ended June 30, 2022 and June 30, 2021

Revenues

Royalty revenue increased approximately $24,000, or 15.8%, from $152,000 for the six months ended June 30, 2021, to $176,000 for the six months ended June 30, 2022. The increase is attributable to increased sales of the Hapbee product and in subscriptions for the use of the products. These sales and subscription revenues are the basis for the royalty calculation. We believe royalty revenue will continue to increase as sales of Hapbee product and in subscriptions for the use of the products increase.

We had no license revenue in the six months ended June 30, 2022, and license revenue was approximately $10,000 for the six months ended June 30, 2021. We expect license revenue to increase as we enter into new licenses for our ulRFE signal technology.

Costs and Expenses

Research and development costs decreased approximately $0.2 million, or 57.0%, from approximately $0.3 million for the six months ended June 30, 2021, to approximately $0.1 million for the six months ended June 30, 2022, mainly because of an overall reduction in headcount and efficiencies gained through the use of contract research organizations. We expect research and development costs to increase as we grow, primarily due to efforts expended to accumulate necessary scientific data regarding the use of our technology by EMulate and our various business subsidiaries.

General and administrative costs increased approximately $4.8 million, or 176%, from approximately $2.8 million for the six months ended June 30, 2021, to approximately $7.6 million for the six months ended June 30, 2022. The increase is due to is $0.4 million of warrant inducement expense and $6.0 million of additional stock compensation expense related issuance of additional options during 2022. This increase was partially offset by significantly higher compensation expenses in 2021 of approximately $1.0 million due mainly to decreases in executive salary of approximately $0.3 million, investor relations salary of approximately $0.2 million, legal salary of approximately $0.3 million, and general compensation of approximately $0.2 million in the six months ended June 30, 2022.

Other Income (Expense)

Unrealized gain (loss) on investment relate to our minority investment in Hapbee. For the six months ended June 30, 2022, we had a loss on investment of approximately $4.8 million attributable to a decline in the market value of Hapbee.

We recorded interest expense of approximately $1.4 million for the six months ended June 30, 2022, which was a difference of $0.4 million, or 36.2%, from interest expense of approximately $1.0 million for the six months ended June 30, 2021. The change is due to issuances of convertible and non-convertible notes.

Results of Operations for the Years Ended December 31, 2021 and December 31, 2020

Revenues

Royalty revenue is derived from royalty payments made to us by Hapbee pursuant to license agreements under which Hapbee licenses from us certain of our ulRFE signals for use in their products. Royalty revenue increased approximately $108 thousand, or 95.6%, from $113 thousand for the year ended December 31, 2020, to $221 thousand for the year ended December 31, 2021. The increase can be explained by the increase in sales of Hapbee product and in subscriptions for the use of the products, the proceeds of which are the basis for the royalty calculation. We believe royalty revenue will continue to increase as sales of Hapbee product and in subscriptions for the use of the products increase.

Non-royalty license revenue is derived from upfront fees paid by Hapbee under their license agreements with us. Non-royalty license revenue was approximately $20 thousand for the year ended December 31, 2021, and we had no license revenue for the year ended December 31, 2020. We expect non-royalty license revenue to increase as new licenses for our ulRFE signal technology are entered into.

Costs and Expenses

Research and development costs consist of costs incurred for performing preclinical research and proof of concept research in the use and application of our ulRFE technology. Research and development costs decreased approximately $0.5 million, or 25.6%, from approximately $2.1 million for the year ended December 31, 2020, to approximately $1.5 million for the year ended December 31, 2021, mainly because of an overall reduction in headcount and efficiencies gained through the use of contract research organizations. We expect research and development costs to increase as we grow, primarily due to efforts expended to accumulate necessary scientific data regarding the use of our technology by EMulate and our various business subsidiaries.

General and administrative costs increased approximately $1.3 million, or 15.5%, from approximately $8.7 million for the year ended December 31, 2020, to approximately $10.0 million for the year ended December 31, 2021. The increase is due to $831 thousand of warrant inducement expense, an increase of $1.8 million in stock-based compensation due to significant options issued and vested during 2021. These increases were offset by decreases of approximately $0.2 million for business development compensation, $0.4 million for R&D compensation, $0.1 million for health insurance, $0.4 million for consultants expense, and $0.2 million rent expense.

Other Income (Expense)

Unrealized gain (loss) on investment relate to our minority investment in Hapbee. For the year ended December 31, 2021, we had a loss on investment of approximately $8.1 million attributable to the overall decrease in Hapbee’s stock price. By comparison, for the year ended December 31, 2020, we had a gain on investment of approximately $14.8 million attributable to the overall increase in Hapbee’s stock price. The change is primarily due to the change in the market value of Hapbee.

We recorded interest expense of approximately $3.0 million for the year ended December 31, 2021, which was a difference of $1.5 million, or 96.8%, from interest expense of approximately $1.5 million for the year ended December 31, 2020. The change is due to increased issuances of convertible and non-convertible notes.

We recorded other income, related to the gain forgiveness of SBA PPP loan originated in 2021, of approximately $0.3 million for the year ended December 31, 2021, and we had no other income for the year ended December 31, 2020.

Liquidity and Capital Resources

Our principal liquidity requirements are for research and development, working capital and capital expenditures. We fund our liquidity requirements primarily through cash on hand, cash flows from equity funding, borrowings. licensing fees and royalty receipts. As of June 30, 2022, we had cash on hand of $15,000.

Funding for our business activities will be needed in the near-term, and the Company is in the process of seeking institutional investors and other private parties, including existing investors, to provide such funding. EF Hutton, division of Benchmark Investments, LLC, representative of the underwriters in this offering, is actively seeking debt financing partners, with a targeted capital raise in the $5,000,000 range, as well as equity funding in the $15,000,000 range. Amounts raised from all these sources will be used for general corporate purposes and working capital and to work towards achieving our nearer-term business milestones. The Company has issued promissory notes payable to lenders which are due on demand. We have not received any demands as of the date of this prospectus and we expect lenders to agree to extend payment deadlines to a date subsequent to the date of the closing of this Offering. Refer to risk factor entitled “The terms of our notes, and our debt repayment obligations thereunder, may restrict our ability to obtain additional financing, and adversely affect our financial condition and cash flows from operations in the future.” We believe a raise of $12,000,000 will be sufficient to fund our operation for at least the next 12 months. We have no definitive agreements or term sheets for any debt or equity financing at this time, and the timing and success of any additional financing is uncertain and not assured.

Additionally, we will have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company. Our management will have to spend additional time on policies and procedures to make sure it is compliant with various regulatory requirements, especially that of Section 404 of the Sarbanes-Oxley Act. This additional corporate governance time required of management could limit the amount of time our management has to implement our business plan and may delay our anticipated growth plans. We anticipate over the next 12 months the cost of being a reporting public company will be approximately $[1.0] million.

The following table summarizes our cash flows from operating, investing, and financing activities:

Operating Activities – Cash used in operating activities primarily consisted of unrealized gain (loss) on investment, stock-based compensation and deferred compensation and post-employment benefits.

Investing Activities – Net cash used in investing activities for 2022 were attributable to [●].

Financing Activities – Net cash provided by financing activities primarily consisted of proceeds from the issuance of convertible notes in the aggregate principal amount of approximately $800 thousand and notes payable in the aggregate principal amount of $500 thousand for the six months ended June 30, 2022 and approximately $1.2 million from convertible notes and $300 thousand from a Small Business Administration loan for the six months ended June 30, 2021.

The following table summarizes our cash flows from operating, investing, and financing activities:

Operating Activities – Cash used in operating activities primarily consisted of unrealized gain (loss) on investment, stock-based compensation and deferred compensation and post-employment benefits.

Financing Activities – Net cash provided by in financing activities primarily consisted of proceeds from the issuance of convertible notes in the aggregate principal amount of approximately $1.8 million for the year ended December 31, 2021 and approximately $2.0 million for the year ended December 31, 2020. For the year ended December 31, 2021, we also received approximately $1.7 million from the exercise of Common Stock purchase warrants.

Critical Accounting Policies

We prepare our financial statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the financial reporting period. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We consider the policies discussed below to be critical to an understanding of our financial statements.

The SEC defines critical accounting policies as those that are, in management’s view, most important to the portrayal of our financial condition and results of operations and those that require significant judgments and estimates.

The accounting principles we utilized in preparing our consolidated financial statements conform in all material respects to U.S GAAP.

Recent Accounting Pronouncements

There are no recently issued accounting pronouncements that we have not yet adopted that we believe are applicable or would have a material impact on our financial statements. For more information regarding recent accounting pronouncements, refer to Note 2(n) to our audited financial statements contained elsewhere in this prospectus.

Quantitative and Qualitative Disclosures About Market Risk.

We have not utilized any derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contracts or interest rate swaps and futures. We believe that adequate controls are in place to monitor any hedging activities. We do not intend to hedge any existing or future borrowings and, consequently, we do not expect to be affected by changes in market interest rates. We do not currently have any sales or own assets and operate facilities in countries outside the United States and, consequently, we are not affected by foreign currency fluctuations or exchange rate changes. Overall, we believe that our exposure to interest rate risk and foreign currency exchange rate changes is not material to our financial condition or results of operations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

BUSINESS

Overview

We are on a mission to advance the development and adoption of medical, health, and environmental applications of our low-to-ultra-low radio frequency energy technology that are determined by the FDA (or other applicable regulators) to be non-toxic, non-invasive, non-ionizing, safe and effective. We have invented and patented what we believe to be a groundbreaking technology that utilizes radio frequency energy (RFE) precisely targeted at the low and ultra-low ends of the RFE spectrum (ulRFE^®) to specifically regulate signaling and metabolic pathways on the molecular and genetic levels – without chemicals, radiation or drugs – delivered via a simple-to-use non-invasive therapeutic system. For example, using our proprietary technology, we derived a ulRFE signal from the well understood chemotherapy paclitaxel, which is known to have a particular effect on tumor cells by interrupting or significantly slowing the normal metabolic activity of cell division. Therapeutic data from our clinical trials suggest that our ulRFE signal produced substantially similar molecular effects as the paclitaxel drug at the cellular level. We have confirmed this metabolic effect in pre-clinical polymerization studies, showing that the paclitaxel-derived ulRFE signal alone (and without the concomitant use of any other chemical or drug, and without the use of any other treatment intervention such as radiation), in the same or similar way to the paclitaxel drug, acts upon tubulin (the protein component of microtubules within the cancer cell) simultaneously promoting the assembly and disassembly of microtubules to form stable, non-functioning microtubules, which in turn inhibits the mitotic activity of the cell, decreasing the cell’s disassembly function and in some cases leading to the death of the cancer cell (apoptosis). The shortening and lengthening of microtubules (termed dynamic instability) is necessary for their function as a transportation highway for the cell. Chromosomes, for example, rely upon this property of microtubules during mitosis, according to Drugbank Online.

The EMulate Therapeutics ulRFE^® therapeutic system is a non-invasive therapeutic medical device. It is the first of many product expressions of the Company’s underlying ulRFE platform technology. The EMulate Therapeutics therapeutic medical device has potential treatment applications in a wide range of diseases, including cancer, acute and chronic pain management, mental health conditions, among others. The EMulate Therapeutics therapeutic medical device is being evaluated for the treatment of glioblastoma multiforme (GBM) brain tumors and diffuse midline glioma (DMG)/diffuse intrinsic pontine glioma (DIPG) brain tumors in human clinical trials.

We believe our guiding principles contribute to success:

Our corporate structure as of the date of this prospectus consists of our parent company with four presently non-operating subsidiaries.

In 2019, EMulate created Hapbee, a Canadian company that is publicly listed on the Toronto Stock Exchange under the symbol “HAPB” since October 2020 to utilize its ulRFE technology for the consumer wellness industry. EMulate now owns approximately 25% of Hapbee and is Hapbee’s largest shareholder. Hapbee has licensed certain recorded ulRFE signals from EMulate for use in its non-regulated, consumer-focused business.

Mensana Therapeutics, Inc., a Washington corporation established in November 2021, is a wholly-owned subsidiary of the Company, which will use our ulRFE^® technology to develop and provide, subject to FDA approval, safe and effective therapies to those suffering from a variety of mental health conditions.

Indolor Therapeutics, Inc., a Washington corporation established in November 2021, is a wholly-owned subsidiary of the Company, which will use our ulRFE technology to develop and provide, subject to FDA approval, safe and effective therapies to those suffering from serious acute and chronic pain conditions.

Cellsana Therapeutics, Inc., a Washington corporation established in February 2022, is a wholly-owned subsidiary of the Company, which will use our ulRFE technology to develop and provide, subject to FDA approval, safe and effective therapies to those suffering from cancer.

Zoesana Animal Health, Inc., a Washington corporation established in June 2022, is a wholly-owned subsidiary of the Company, which will use our ulRFE technology to develop and provide, subject to applicable regulatory approvals, safe and effective treatments to companion animals suffering from cancer and other serious diseases or conditions.

Our Corporate History

We are a Washington corporation incorporated on February 7, 2002. In June 2003, we amended the Articles of Incorporation of WavBank, Inc. to reflect the issuance of Series A Preferred Stock. In February 2006, we amended the Articles of Incorporation of WavBank, Inc. to change the Company’s name to Nativis, Inc. In February 2012, we amended the Articles of Incorporation of Nativis, Inc. to reflect the issuance of Series A-1 Preferred Stock. In February 2013 and June 2014, we amended the Articles of Incorporation of Nativis, Inc. to reflect the issuance of additional shares of Series A-1 Preferred Stock. In February 2019, we amended the Articles of Incorporation of Nativis, Inc. to change our name to EMulate Therapeutics, Inc.

Industry Overview

EMulate Therapeutics is developing treatments for multiple disease areas that affect human health. The Company expects to participate and compete at this time specifically in the oncology treatment industry, the pain management industry, and the mental health treatment industry.

Oncology

Competition in GBM

The Optune product of Novocure GmbH is the only medical device and therapy on the market today that is comparable to EMulate’s ulRFE therapeutic device for treating GBM brain cancer in terms of effect, that is, limiting cancer cell division. However, Optune uses a markedly different technology: it works by applying a voltage gradient across two electrodes and altering the polarity of the electrodes at a fixed frequency. The Optune device generates heat along with electrical energy. Use of the Optune device requires shaving the head, applying adhesive electrodes to the scalp (which must be frequently re-positioned), carrying a 2.7-pound battery pack, and changing the battery every eight hours. A backpack, housing the battery, is required to be worn continuously while upright. In contrast, EMulate’s therapeutic device limits cancer cell division through the use of specific low and ultra-low radiofrequency energy signals that emulate the therapeutic effects and method of action of proven drugs (the paclitaxel chemotherapy for GBM treatment); our device has no thermal (heating) or ionizing effects; it is extremely lightweight (3-ounce battery/controller), is portable without a backpack, has a 12 to 16 hour battery life, and can be used without shaving the head.

Competition in DMG/DIPG

We have no known competitors in treating DMG/DIPG brain cancer since treatments available in the market are not effective.

We may also compete with other medical device products that have come to market or may come to the oncology market in the future, though we are unaware of any such competitors at this time. To our knowledge, the FDA has not approved or cleared any product that uses the same mechanism of action as our cancer-treating device.

Mental Health

Mental Health issues are significantly on the rise. There are high failure rates in treating patients for PTSD, ADHD, anxiety and depression. CNS Spectrums and suicide rates are unacceptably high. Patients experience better outcomes in treatments combining psychiatric therapy with psychedelic drugs.

The market for drugs treating mental health conditions is included in the market for CNS drugs. The global CNS drugs market is expected to grow from $123.4 billion in 2019 to reach $160.4 billion in 2023. The global CNS therapeutic market is expected to reach $128.9 billion by 2025.

Competition in Mental Health

EMulate’s technology presents competitive benefits for the treatment of mental health conditions:

Pain Management

Competition in Pain Management

We know of one FDA-approved medical device that competes with ours in the pain management sector, but its application is very limited and it does not use, or provide the benefits of, our ulRFE technology. IB-Stim (formerly Neuro-Stim) is a percutaneous nerve stimulator intended for use as an adjunct in the treatment of a single abdominal pain indication in adolescent patients with irritable bowel syndrome (IBS). It does not claim to treat multiple pain pathways, as the EMulate product is intended to do. Unlike the IB-Stim device, which for use must penetrate the skin, EMulate’s therapeutic device is completely non-invasive (as well as being non-thermal, non-sterile, and non-ionizing).

NeoRhythm markets a pulsed electromagnetic field device claiming to entrain the brain into five different brainwave states – which they call gamma, beta, alpha, theta, delta – one of which states is purported to stimulate areas that produce pain reducing hormones such as endorphins and serotonin. NeoRhythm does not claim to directly affect cellular activity in the same or similar way to proven drugs and biologics, as the EMulate product is designed to do.

There are also certain transcutaneous electrical nerve stimulation (TENS) products, which are not FDA-approved, being used for pain mitigation in arthritis and other autoimmune cases. Unlike the EMulate device, these products must penetrate the skin. One such device is marketed by Neurosoft. None of the TENS manufacturers claims that the product emulates the method of action of approved drugs, as EMulate’s device is designed to do.

In addition, Hapbee’s consumer products face direct and indirect competition from a variety of players including firms engaged in the wearables industry such as Oura Ring, Halo Neurosciences, Muse, NeoRhythm and Calm, as well as software applications that claim to produce benefits like those of wellness products. The table is a comparison of Hapbee and its competitors.

Our Competitive Strengths

We believe that the following competitive strengths will enable us to compete effectively:

Moreover, when it comes to the use of our technology for treating GBM, our therapeutic medical device has strong market advantages when compared to Optune. As illustrated in the graphic above, it features:

Our Growth Strategies

Pipeline and Key Target Market

EMulate Therapeutics’ ulRFE technology has demonstrated potential application(s) in multiple indications including oncology, pain management, mental health, animal health, ag-biotechnology and consumer markets. The company is at varying stages of development with glioblastoma and diffuse midline glioma ready for initiation of pivotal (phase III) human trials. EMulate has established other companies to develop the markets for our technology.

EMulate formed our wholly-owned subsidiary Cellsana to develop the use of our technology in the oncology market. Cellsana is ready to proceed with a DMG/DIPG pivotal trial and a GBM pivotal trial. EMulate has partnered with companies in Japan (Teijin Pharma) and India (Sayre) to market, sell and distribute devices following regulatory clearance.

EMulate has also formed our wholly-owned subsidiaries Indolor and Mensana to develop the use of our technology in the pain relief and mental health markets, respectively. Initial animal safety and efficacy studies have demonstrated promising effects, and both companies are ready to proceed to human clinical trials to confirm safety and efficacy.

EMulate has also formed our wholly-owned subsidiary, Zoesana, to develop the use of our technology in the animal health markets, focusing primarily on treatment of cancer and pain conditions. Initial animal safety and efficacy studies have demonstrated promising effects, and Zoesana is ready to perform further studies to confirm safety and efficacy in treating various indications.

Hapbee is a company established by EMulate, to deliver and commercialize a licensed subset of our signal catalog to users in the non-medical consumer space. EMulate receives license fees and royalties from the sale of devices and subscriptions to the Hapbee services.

The effectiveness of EMulate’s ulRFE signal technology has been demonstrated in two other sectors to date: animal health and agriculture. Business opportunities are or will be available in these and other market areas.

Technology

RFE Technology

Radiofrequency energy (RFE) is an oscillating form of magnetic or electromagnetic radiation that transfers energy by radio waves. Oscillating magnetic fields can impact cellular dynamics through the forcing of ions. The literature establishes that low and ultra-low RFE fields (0 Hz to 30 kHz) (Figure 1) are bioactive, exerting their effects by forced-vibration of all the free ions on the cell surface. A magnetic field can alter the behavior of a cell membrane channel and affect calcium movement into the cell, which may influence the cell’s physiology. Oscillating magnetic fields could also change the binding properties of specific proteins, and alter nitric oxide and reactive oxygen species, which are critical regulators of essential physiological pathways, resulting in specific phenotypic changes.

Our patented RFE technology is targeted at the low and ultra-low ends of the RFE spectrum (ulRFE^®) – 0 Hz to 22 kHz. Numerous pre-clinical and human studies consistently demonstrate the ability to emulate the biological activity (with specificity) of a broad range of molecules such as drugs, siRNA molecules as well as hormones.

Figure 1. Radio Frequency Energy (RFE): Electrostatic potential of molecules in motion. The EMulate platform uses ulRFE of the low and ultra-low wavelength ranges (less than 22 kHz) of the spectrum to emit signals that emulate phenotypic changes produced by proven drugs. 

EMulate has developed the technology to measure and record the electromagnetic emission of molecules that are suspended in a liquid solvent, such as water. This proprietary RFE-based platform can emulate the therapeutic effect of drugs. EMulate’s technology is broadly divided into two sectors: 1) signal acquisition and 2) signal delivery. The Molecular Interrogation and Data Systems (MIDS; see Diagram of MIDS) is a shielded environment that blocks the external electromagnetic (EM) spectrum from 0 kHz (DC) to 300 MHz wavelengths, reducing the external environmental electromagnetic power by -80 to -120 dB (frequency dependent power reduction). Molecular signals are obtained from solvated molecules using a direct-current Superconducting Quantum Interference Device (SQUID), originally developed by the U.S. military, coupled to a second derivative gradiometer operating in this highly shielded electromagnetic environment. The SQUID technology measures the electrostatic potential of solvated molecules and is applicable to most non-covalent proven drugs, including e.g. siRNA molecules, to downregulate target proteins, and endogenous chemicals, such as hormones. The signals are recorded, analyzed, and digitized for testing in pre-clinical studies. Transduction of precise ulRFE profiles into biological systems have been shown to produce precise biological responses. Thus, transduction of these signals, when emitted via our proprietary controller and head coil system, is hypothesized to interact with charges on proteins and induce selective electron movement and charge transfer, or charge redistribution in a defined bioactive target, resulting in altered cell dynamics that produce relevant phenotypic changes and therapeutic effects.

The recording process is as follows:

Diagram of MIDS

Concept to the Clinic

The process from signal molecule identification to validated pre-clinical safety and efficacy readout (using contract research organizations for testing) takes six to twelve months and costs $250,000 to $500,000.

Disruptive Platform Technology

Our disruptive platform technology captures the electromagnetic capability of molecules to affect biological systems as illustrated below.

The highlights of our disruptive platform technology include the following:

Products

EMulate Therapeutics Medical Device

The EMulate Therapeutics ulRFE^® therapeutic system is a non-invasive therapeutic medical device. It is the first of many product expressions of the company’s underlying ulRFE platform technology. There is no work required to complete the device, which has been used in GBM clinical trials since 2018 and in and DMG compassionate use studies since 2018. Showing promise in pre-clinical studies and clinical trials, the EMulate Therapeutics therapeutic system has potential treatment applications in a wide range of diseases, including cancer, acute and chronic (inflammatory) pain, CNS and mental health conditions, among others. EMulate may modify the configuration of the antenna portion of its therapeutic medical device for treatment application at the part of the body at which the indication (cancer, pain) mainly presents, but no changes will be necessary to parts of the device associated with the transmission of ulRFE to the antenna portion.

The EMulate therapeutic medical device is already being evaluated for the treatment of glioblastoma multiforme (GBM) brain tumors and diffuse midline glioma (DMG)/diffuse intrinsic pontine glioma (DIPG) brain tumors in human clinical trials.

The EMulate therapeutic medical device is ready for pivotal trial for DMG and GBM. In addition, we are preparing for human clinical trials in acute and chronic pain and multiple mental health indications. Evaluation of our medical device in treating other serious disease indications are planned to follow.

Validated data from pre-clinical animal models and first in human exposures support a safety profile and potential efficacy in the following:

EMulate’s products for pain management will target the treatment of “pain pathways” broadly categorized in the industry as follows: acute, chronic, neuropathic, inflammatory and visceral. These five broad categories can overlap with one another, as part of a disease or injury progression.

Traditional pain management focuses on the use of non-steroidal anti-inflammatory drugs (NSAIDs) that target the COX1/2 enzymes to regulate prostaglandin production for inflammatory pain (late acute and chronic).

Cannabidiol (CBD) and its derivatives work across a broad range of pain sensation as modulators of pain. In specific cases, CBD has shown excellent efficacy as an anti-nausea medication. Although nausea is not strictly a pain indication, nausea is adjacent and correlated to pain. CBD has been shown to modulate pain sensation across all five pain categories.

Visceral pain is mostly associated with post-surgical, renal, cardiac, bone breaks/injuries, hepatic and bowel injuries or diseases, that are due to different etiologies. Opioids are frontline pain control medications, usually coupled with NSAIDs, to reduce or modulate severe pain.

Neuropathic pain is associated with nerve injury, stemming from diabetes, nerve crush/pinch and neurodegenerative conditions. Neuropathic pain is a chronic condition that produces variable intensities of pain.

EMulate’s therapeutic device’s safety and effectiveness tests have been performed on animal models and have demonstrated that the technology can emulate the effects of the conventional drug treatments for each of the pain pathways described above. Subject to receiving requisite regulatory approvals, we intend to use the specific ulRFE signals produced by our device to treat patients suffering from these pain conditions.

Hapbee Consumer Use Products

Hapbee developed a new form factor utilizing Bluetooth low energy (BLE) to connect to your phone and our proprietary ulRFE technology to deliver both individual signals and signal blends. Signals and blends are derived from compounds that help with sleep, focus, and other wellness sensations. This product can be worn on either the consumer’s head, around the neck or placed under the consumer’s pillow for sleep. It costs $399 per unit and a recurring subscription cost of $19 per month for all-access membership. Hapbee’s mattress topper and face mask products are in beta testing and targeted to launch in late 2022.

Hapbee Wearable Wellness Product

A working prototype of the Hapbee Wearable Wellness Product was completed in September 2019.

The Hapbee Wearable Wellness Product weighs 4.5 ounces and comes with a micro USB-C charging and holding cradle that allows the headband to stand upright as it charges. It is designed to have eight hours of battery life for each charge. The lightweight and low-profile design of the Hapbee Wearable Wellness Product allows users to wear the product comfortably on their heads, over the brim of a hat, or discreetly around their collars under their shirts.

The Hapbee Wearable Wellness Product allows wearers to choose how they feel by producing a variety of sensations by “playing” signals emitting precise electromagnetic fields. The sensations fall under several broad categories such as: Happy, Alert, Relax, Calm, Sleepy, and Focus. The product connects to and is controlled by the customizable Hapbee App that is available for both iOS and Android compatible smartphones.

All of the Hapbee’s signals have been tested and confirmed to fall below the applicable International Commission on Non-Ionizing Radiation Protection’s safe exposure guidelines for low-frequency magnetic fields.

Bennett M. (Mike) Butters is a co-founder of EMulate and is the principal inventor of its technology. Mr. Butters performed the measurement of the magnetic field of the Hapbee Wearable Wellness Products.

Unique features of the Hapbee Wearable Wellness Product include:

Hapbee App

The Hapbee App currently has over 2051 unique builds and updates and has been launched commercially.

The signals themselves, which are played on the Hapbee Wearable Wellness Products, are security protected using encryption standards such as AES 128-bit song encryption keys, 128-bit device communication encryption keys and 2048 key length using RSA and ECDSA encryption providers on Hapbee’s server resources. Signals, which are sometimes metaphorically referred to as “songs” because of the large volume of electromagnetic data points of molecules recorded when ulRFE signals are created and because they are transmitted from a WAV file as is often used for digital music recordings, are transferred from EMulate via Secure HTTPS to our secure server hosted by Microsoft Azure to distribute to users via the Hapbee App and transferred to each product using a secure device key determined by the manufacturer (over the Bluetooth LE frequency).

Hapbee has also developed a protective song encryption tool for enhanced software security. Hapbee will be able to encrypt songs using the specifications of our product, and there is no reliance on a third-party vendor to create updates, nor are there security violations inside the encryption tool that would compromise the product. The utility for song encryption uses Microsoft.NET Framework and Windows Desktop Platform to ensure the highest security. Subscriber data, which includes basic contact information, is encrypted and saved on Hapbee’s secure server.

In addition to platform security protection though encryption protocols, which protect the loading and playing of the signals through the Hapbee App onto the Hapbee Wearable Wellness Products, the product is also sealed through sonic welding, and if broken open or tampered with, the product and embedded signals are rendered useless.

The Hapbee App will allow Hapbee to collect trends on user habits including time of day plays, duration, and other demographics. The Hapbee App will also give Hapbee the opportunity to cobrand and release new signals with other companies for products such as VR, float pod, pillow and mattress companies.

The Hapbee App stores all available predictable electromagnetic signals on a “playlist” that can be accessed via a monthly subscription which is priced according to the features included. Currently, signals can be added, updated and removed on the fly, and the app can specify suggested play time on a per signal basis. The Hapbee App launched with six signals that fall in the broad categories: Happy, Alert, Calm, Relax, Sleepy, Focus, and two more signal categories have since been added. As of October 26, 2020, there were seven signals available related to performance, sleep, and memory function, for use single form or in combination blends available on the Hapbee App Hapbee is evaluating additional signals to potentially license from EMulate.

Hapbee’s Revenue Potential for EMulate

Hapbee has two primary sources of revenue: sale of Hapbee Wearable Wellness Products and subscriptions to use all of the signals in the Hapbee App. Hapbee sells its Hapbee Wearable Wellness Products both on its website and through third party resellers. The price on the website is $399.

Each customer gets a free trial period in the Hapbee App for unlimited use of certain signals, and then they pay a $19/month subscription fee for unlimited use of all signals. If customers do not wish to continue paying for the monthly membership, they are still allowed to use one signal a month unlimited, and the monthly free signal will rotate. Hapbee currently has 277 subscribers.

On October 26, 2020, April 21, 2021 and July 29, 2021, we entered into four Exclusive License Agreements, as amended (the “Exclusive License Agreements”) with Hapbee to grant Hapbee certain exclusive, royalty-bearing rights and licenses to develop, use, import, and commercialize products using patents, know-how, and other intellectual property relating to our proprietary ulRFE technology (the “Authorized Products”). The Authorized Products are for recreational and/or non-medical use in humans. We also granted Hapbee a non-exclusive, royalty-free license under EMulate’s Trademarks related to the Authorized Products, including ulRFE^®.

Under the Exclusive License Agreements, Hapbee granted us a royalty-free, fully-paid, perpetual, irrevocable, non-exclusive license, with the right to grant sublicenses, to and under all Hapbee’s know-how, all patents that claim inventions that relate to the Authorized Products, and Hapbee’s interests in the patents claiming inventions discovered, conceived or reduced to practice jointly by or on behalf Hapbee, on the one hand, and by or on behalf of EMulate, on the other hand (“Joint Inventions”), and know-how included in Joint Inventions.

Pursuant to the Exclusive License Agreements, Hapbee is solely responsible for commercializing the Authorized Products and should use commercially reasonable efforts to achieve the first commercial sale within six months after the effective date of the Exclusive License Agreements, and such six-month period may be extended by written consent.

In consideration for the licenses and rights granted to Hapbee, Hapbee agreed to pay us, within 10 days following the effective date of each Exclusive License Agreements, a payment in the amount of $10,000.

In further consideration for the licenses and rights granted to Hapbee, Hapbee agreed to pay us, on a calendar quarter basis, royalties on the quarterly net income from sales, lease, or rental of the Authorized Products worldwide multiplied by the percentage royalty rate equal to 20%, and use of Authorized Products worldwide multiplied by the percentage royalty rate equal to 20%; provided, that the percentage royalty rate on the first $10 million of net income form use of Authorized Products will be equal to 25%.

The terms of the Exclusive License Agreements are 20 years from the effective date of each Exclusive License Agreement. The Exclusive License Agreements may be terminated by mutual written agreements or material breach.

Pre-clinical Data

Targeting Immuno-oncology targets (CTLA-4 and PD-1) Proof of Concept studies conducted at the University of California at San Diego from December 2013 to May 2014 looked at the effects of tumor growth on a GBM model in mice (U-87 MG), and at targeting tumor growth via the downregulating of the CTLA-4 and PD1 (A2 signal, right graph) immune checkpoint inhibitor genes using the recordings of siRNA targeting the murine versions of the human genes played sequentially while exposing mice to the A2 magnetic field against a murine GL261 tumor cell line. Tumor growth in both models was reduced to a statistically significant degree when compared to the control mice (exposed to a white noise signal). The immuno-oncology proof of concept study synopses are as follows:

Targeting EGFR

In-Vitro Results (Swedish Neuroscience Institute)

The specificity of the biologic activity produced by ulRFE was demonstrated in experiments conducted by independent labs (Charles Cobbs, Swedish Neuroscience Institute; J Neurooncol (2017) 133:257–264, DOI 10.1007/s11060-017-2440-x) targeting the epidermal growth factor receptor EGFR on glioblastoma cell line U-87 MG. A recording of a small interfering RNA (siRNA) targeting human EGFR was tested in vitro at 48 and 72 hours. EGFR inhibition by specific ulRFE reduced the level of EGFR protein by 27% and 73%, respectively. These data indicate that certain ulRFE can inhibit gene expression at the transcriptional and protein levels, similar to what is observed with physical small interfering RNA (siRNA) inhibition. Specific EGFR knockdown effect was detected in U-87 MG cells treated with ulRFE using an 80 gene PCR-based array.

In-Vivo Results (University of California at San Francisco)

The results demonstrated that the technology is flexible enough to record very different molecules to target specific pathways and the data is in preparation for publication. As a result, median survival was increased in the epidermal growth factor receptor (EGFR) RFE group, and histology showed significant reduction in EGFR expression.

Small inhibitor RNA (siRNA) ulRFE directed against epidermal growth factor receptor (EGFR) in a xenograft model of a human glioblastoma cell line (U-87 MG).

A study by the laboratory of Dr. Todd Mockler at the Donald Danforth Plant Science Center using ulRFE derived from siRNA against MAA7 (tryptophan synthase beta) showed a decrease in mRNA levels for MAA7 in, clearly demonstrating an effect in MAA7, as well as in the genes regulated by MAA7 expression (a gene ontology expression map). In cells exposed to the ulRFE, an increase in cell growth was observed as compared to no ulRFE.

GBM – Human Clinical Trials

The table below shows historical data based on FDA meta-analysis and current Optune labeling.

The following table shows the EMulate therapeutic device’s clinical effect in recurrent GBM.

GBM clinical trials were conducted, without any participation by or advice from us, at the trial sites by the investigators identified below. Our NAT-101 GBM trial, first and second cohorts, enrolled the first patient on February 11, 2015, and completed the last patient visit on January 31, 2018. Patients were eligible to participate in the study if they had a histologically-confirmed diagnosis of GBM, had prior radiotherapy and temozolomide chemotherapy, had progressive disease with at least one measurable lesion on MRI or CT, were at least 18 years of age, had a KPS score ≥ 60, had adequate organ and marrow function, and provided signed, informed consent. Patients with recurrent GBM were treated with Voyager as monotherapy or in combination with standard-of-care chemotherapy or immunotherapy at the Investigator’s discretion.  Treatment with the investigational device was administered continuously (i.e., 24/7) until unequivocal disease progression, occurrence of a device-related clinically significant adverse event, unacceptable adverse reactions, or withdrawal of informed consent.  At the discretion of the Investigator, patients could remain on treatment post-progression, and to date, in most cases patients experiencing progression have remained on treatment. Patient visits occurred at least every 8 weeks during the first 6 months and every 4 months thereafter.  Routine hematology and chemistry assessments, physical exam (including vital signs and neurological exam), and MRI were performed at baseline and at each visit.  Seventy-five patients were enrolled and treated in the study.  Safety was assessed by incidence of adverse events associated with the therapeutic device, as well as trends in clinical laboratory parameters, vital signs, and physical exams.  Patients were followed until death. There were no clinically significant changes on physical exams (including changes in vital signs and neurological exams) or in laboratory findings, and no device-related serious adverse events were reported.  Clinical utility was assessed via standard calculation of overall survival and progression-free survival.  The data suggest a clinically meaningful benefit in overall survival and progression-free survival as compared to historical control data.

The clinical trial results indicated that

Mental Health

Pre-clinical, observational tests also indicate a potential for use of ulRFE^® in a therapeutic setting. The results in human observation tests are as follows:

Our next steps will be to design clinical trials to be initiated in 2022 and multiple sites have been identified for phase 1 to 2 in the CNS space.

Pain Management

Pre-clinical data confirm activity in validated pain management models. ANS Biotech, a pre-clinical CRO known for its expertise in validated pain animal models, conducted an independent study using ten validated animal pain models to assess the effects of eight different EMulate ulRFE signals in comparison to known “gold standard” pain drugs. ANS’s final report provides detailed data on all animal data in pain study completed June 2021 that shows the following:

The internal reference drugs are morphine, (-) U-50/488H, duloxetine and indomethacin. All three drugs are internal reference drugs against which the relative effect of new therapies are measured.

The above-mentioned study results were further confirmed by ANS’ assays as indicated in the chart below (N=10 rats per exposure group). In the assays, five different pain models: Carrageenan: Inflammatory pain model, Oxaliplatin: Neuropathic pain model, TNBS: Visceral pain model, Acetic acid: Acute pain model, and Bennett paw pressure: Surgical pain model were assessed, three of which were significant. Six ulRFE signals were tested in the assays, including fentanyl, hydromorphone, CBD, dexamethasone, indomethacin and naproxen. All assays were assessed with N=10 per signal group, which means technicians were blinded to the type of signal used, error bars are standard error of the mean (S.E.M.) and were powered for statistical analysis.

The following human feasibility data further support the effectiveness of EMulate’s pain relief technology.

EMulate is currently working with key opinion leaders to design clinical trials, selecting indications and endpoints.

Companion Animals – Oncology

ulRFE has been tested in over 300 dogs (pets) with naturally occurring malignancies by Dr. Greg Ogilvie (Angel Care Cancer Center, southern California; data on file). Interim review of the first 200 pets observed partial responses and complete responses in over 20 different solid, non-brain tumor types. No clinically important or significant toxicities (Grade 3 or 4) were observed.

Canine open label trial results for using our ulRFE^® on companion animals’ oncology are as follows:

Bio-Agriculture

Experiments in the agricultural/botanical sector were done in collaboration with the Donald Danforth Plant Sciences Center, assessing the gene-regulating ability of a plant growth hormone (agrin), the effects of a recorded signal of agrin and the outcomes of a siRNA against a highly conserved chlorophyl gene. A gene ontology screen, comparing physically treated plant and untreated plant to ulRFE-treated plants, demonstrated that the overlap in gene expression and gene suppression reached a statistically significant level (P < 0.0001) in overlap for both the agrin signal and the siRNA signal directed against a chlorophyl plant gene (data on file).

Wellness Wearables

Initial rodent studies conducted at Crown Bio, an independent contract research organization (CRO) for Hapbee, demonstrated behavioral changes in mice that were exposed to oscillating magnetic fields derived from chemistries intended to either stimulate or suppress moods and sensations (e.g., caffeine, nicotine, melatonin, CBD, THC and alcohol). Under controlled and blinded conditions, independent evaluators noted the mice reacting to the specific ulRFE in a manner consistent with reactions expected from using the compound from which the ulRFE was derived (Figure 4).

These ulRFE signals are now part of the Hapbee catalog of products that are in the non- medical, commercial market space (Hapbee.com), which launched its first product to customers in late 2020.

Marketing

The Company’s platform technology provides us with multiple marketing opportunities. We can ascertain the market-readiness of any particular molecular signal within six to twelve months following molecule identification, all at a relatively low cost. These advantages make a technology licensing model possible for us and attractive to prospective licensees. The licensee is able to receive an early readout of a drug-candidate’s effectiveness by using the signal of the drug, produced by our medical device, in pre-clinical models. Moreover, the licensee can use a drug signal to determine at the pre-clinical stage whether additional investment in pre-clinical and clinical trials is warranted.

Under this model, EMulate would develop a molecular signal, often at the request of a drug company, evaluate the signal preliminarily for safety and effectiveness, usually in animal models, then license the drug signal to the interested drug company. The prospective licensee would pay the Company for such evaluation, and licenses would produce revenues for EMulate in the form of up-front fees, milestone fees, and continuing royalties. Before a drug signal licensee will be able to commercialize a treatment using the ulRFE derived from the specified drug, the licensee will need to have the EMulate ulRFE^® therapeutic system delivering the specified drug signal evaluated by the FDA, at the licensee’s expense but with our assistance (paid for by the licensee), probably as a Class III medical device requiring approval of a PMA. The amount of fees and royalties we receive from any prospective licensee will depend in part on how far along in the FDA evaluation process the specified drug signal and delivery device are at the time of licensing: the amount of effort and money we expend in developing, testing, and advancing the regulatory process for a particular ulRFE system prior to licensing will be proportionately reflected in the amount of fees and royalties we would expect to receive from the licensee.

EMulate’s strategy for marketing treatments for rare indications is different. DMG/DIPG, for which we are currently seeking FDA authorization for treatment, is such a rare disease indication – about 150 to 300 new cases are diagnosed per year in the U.S. Rare disease indications are often underserved or not served at all by the medical industry because the cost for developing treatments, as compared with the revenues that could be earned from relatively few cases, is viewed as prohibitive. EMulate’s low costs to develop ulRFE signal treatments avoid such a financial result. EMulate’s business plans would include marketing ulRFE treatments for rare diseases by ourselves to doctors and patients in the United States; the relatively small sales and marketing force needed to do so makes this a viable option. Outside the United States, we would contract for the distribution of therapeutic signal products with a company or agency in the non-U.S. jurisdiction, which would be more familiar and capable of efficiently complying with local regulation. We have used this model as a basis for entering into an agreement with Sayre in India for the distribution of devices to treat GBM and DMG/DIPG.

Customers

We do not have any customers that provide 10% or more of consolidated revenues.

Licensing Strategies

Regional Strategic Partners

We have third-party validation from regional strategic partners for treatment of brain cancer. Teijin Pharma, a large Japanese pharmaceutical company, has licensed from EMulate the rights to use our ulRFE technology for treating GBM patients in the territory of Japan. Sayre Therapeutics Pvt Ltd (Sayre Pharma), an Indian company, has received distribution rights from EMulate for using our ulRFE technology for treating GBM patients and DMG patients in the 29 States and Union Territories of India.

Vertical Market Subsidiaries

Our affiliates and subsidiaries, Mensana, Indolor, Cellsana and Zoesana, together with our licensee, Hapbee, provide us with investors, strategic targeted investment, and partnering opportunities.

Our Opportunity

Multiple studies in a variety of systems confirm that magnetic fields can alter biological function. Therapeutically useful devices are or have been used presently in clinical practice, both in human and veterinary medicine. Treatment for bone growth, wound healing, arthritis pain and depression are among the clinical uses. Research aims to understand better how these magnetic fields produce their effects to further enable new and exciting therapeutic options for many diseases.

In multiple pre-clinical animal and agriculture models and in-human clinical studies, EMulate Therapeutics has observed that specific ulRFE demonstrates a measurable, objective and specific biological change. The magnetic fields generated by the EMulate ulRFE point to the flexibility and specificity of the technology. Feasibility (phase I/II) clinical trials in GBM and a compassionate use clinical trial in DMG have produced promising safety data and preliminary and encouraging effectiveness data in overall survival. Pre-clinical in vitro assays have demonstrated the ability to selectively reduce mRNA and protein expression in cell-culture for EGFR and in immuno- oncology targets. ulRFE derived from known pain inhibiting compounds have resulted in measurable reduction in pain scales in validated and objective pain models. Encouraging pre-clinical results in mental health models suggest that specific ulRFE may be able to help treat patients suffering from anxiety, depression, PTSD and other mental health conditions.

EMulate’s technology has a broad range of applications in multiple areas of human and animal health conditions and may offer significant benefits over current treatments for many patients.

Oncology Opportunity

We have comprehensive, integrated pre-clinical and clinical proof of concept (PoC), including the paclitaxel signal, which is active in human GBM, DMG and 20+ canine tumor types, and additional targets with published activity: Epidermal Growth Factor Receptor (EGFR) pre-clinical; immuno-oncology (CTLA4 + PD-1 protein targets); GBM – pre-clinical and Phase I data published.

In addition, our strategic partners have validated the opportunity. Teijin Pharma has licensed rights to commercialize GBM in Japan and Sayre Pharma has distribution rights for GBM and DMG treatments in India.

Our oncology strategy includes the following:

DMG Market

We estimate that DMG will provide an over $150 million annual revenue opportunity to us. DMG is a WHO grade IV tumor, which is usually diagnosed in patients under 18 years-old. It is an aggressive and lethal brain tumor in young children, adolescents and young adults, and has 1,821 annual incidence. Median survival in DMG cases is six to twelve months.

We are in discussion with Pacific Pediatric Neuro-Oncology Consortium (PNOC) to conduct a clinical trial for regulatory approval. This clinical trial will be a 30 to 40 patient trial to show at least a three-month improvement in the overall survival primary endpoint (approximately nine to twelve months follow-up on trial). We anticipate initiation of the DMG pivotal trial in the second half of 2022, with interim data expected in the second half of 2023. The trial will be single-arm and without a control group because there are no alternative treatments and median overall survival of DMG patients is poor, usually less than one year. Study results will be compared to historical survival data. No BSC is identified for DMG, though treating physicians may determine that resection or radiation is indicated for individual patients prior to treatment with our therapeutic device. The safety profile of ulRFE brain cancer signals is currently benign in both children and adults treated, approximately 150 human patients. The Company also received a strong commitment from the FDA based on multiple Humanitarian Device Exemption (HDE) meetings and communications.

Below is a summary of results in treating DMG compassionate use patients.

Early clinical responses for DMG treatment were encouraging, compared with the median survival rate of six to nine months, and no serious adverse events were reported, with only two patients reporting mild to moderate possibly device-related adverse events, one patient reporting nausea, fatigue, and excessive sleepiness and one patient reporting vomiting.

Mental Health Market Opportunity

There is a high unmet need in the current mental health market. Mental health issues are significantly on the rise with high failure rate in ADHD, anxiety, and depression drug treatments. There are too few psychiatrists/psychotherapists to handle the increased load and the suicide rate is unacceptably high. The use of psychedelics has produced better outcomes than standard of care in ADHD, anxiety, and depression; however, therapy involves the use of controlled substances, supervision by psychiatrists increases costs, lacks composition of matter intellectual property protection for ketamine, MDMA, and psilocybin, and many patients are uncomfortable with psychedelics.

Our ulRFE^® technology, on the other hand, has many benefits compared to psychedelic drugs. It has shorter duration of action than psychedelics, could be instantly “turned off” if the patient is in distress, it wears off quickly, and no controlled substances are involved. In addition, doctors can prescribe our ulRFE^® technology so that psychotherapists can administer it independently without psychiatrist supervision. Strong IP protection of our ulRFE technology provides an extended window for high-margin business.

Pain Management Market Opportunity

There are three different business models for pain relief: