Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended September 30, 2024

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

For the transition period from _______ to _______.

Commission file number: 001-41507

NEXALIN TECHNOLOGY, INC.

(Exact name of Registrant as specified in its charter)

Delaware

27-5566468

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1776 Yorktown, Suite 550

Houston, TX 77056

77056

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (832) 260-0222

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share	NXL	The Nasdaq Capital Market
Warrants, exercisable for one share of Common Stock	NXLIW	The Nasdaq Capital Market

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

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

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.

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-Accelerated Filer	☒	Smaller Reporting Company	☒
		Emerging Growth Company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐ No ☒

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 6, 2024, there were 12,861,605 shares of the Registrant’s common stock outstanding.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward- looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs.

You should read thoroughly this Quarterly Report with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by risk factors included in our Registration Statement on Form S-1 (SEC File Number 333-279684) as declared effective by the Securities and Exchange Commission (“SEC”) on June 27, 2024 and the Prospectus contained therein, which risk factors could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by applicable law.

NEXALIN TECHNOLOGY, INC. AND SUBSIDIARY

FORM 10-Q

For the Quarter Ended September 30, 2024

		Page
PART I. FINANCIAL INFORMATION

ITEM 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets at September 30, 2024 (unaudited) and December 31, 2023	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2024 and 2023	2

	Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the three and nine months ended September 30, 2024 and 2023	3

	Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2024 and 2023	4

	Notes to Unaudited Condensed Consolidated Financial Statements	5

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	33

ITEM 4.	Controls and Procedures	34

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	35

ITEM 1A.	Risk Factors	35

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

ITEM 3.	Defaults Upon Senior Securities	35

ITEM 4.	Mine Safety Disclosures	35

ITEM 5.	Other Information	35

ITEM 6.	Exhibits	36

SIGNATURES		37

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

NEXALIN TECHNOLOGY, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30, 2024			December 31, 2023
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	81,421		$	580,230
Short-term investments		4,512,197			2,368,203
Accounts receivable (Includes related party of $540 and $3,614, respectively)		15,171			9,369
Inventory		158,375			156,420
Prepaid expenses and other current assets		140,425			315,670
Total Current Assets		4,907,589			3,429,892
ROU Asset		-			496
Intangible assets, net		248,942			105,528
Equity method investment		100,651			96,000
Total Assets	$	5,257,182		$	3,631,916

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	166,542		$	159,534
Accrued expenses		132,847			261,284
Lease liability, current portion		-			4,463
Total Current Liabilities		299,389			425,281
Total Liabilities		299,389			425,281

Commitments and Contingencies (Note 7)

Stockholders’ Equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 12,861,605 shares issued and outstanding at September 30, 2024 and 7,436,852 shares issued and outstanding at December 31, 2023		12,862			7,437
Accumulated other comprehensive loss		(325	)		(405	)
Additional paid in capital		86,757,212			80,237,652
Accumulated deficit		(81,811,956	)		(77,038,049	)
Total Stockholders’ Equity		4,957,793			3,206,635
Total Liabilities and Stockholders’ Equity	$	5,257,182		$	3,631,916

The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

NEXALIN TECHNOLOGY, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenues, net (Includes related party of $868 and $0 for the three months ended and $3,102 and $10,207 for the nine months ended, respectively)	$	36,031		$	24,113		$	141,542		$	90,212
Cost of revenues		12,694			3,973			29,097			20,457
Gross profit		23,337			20,140			112,445			69,755

Operating expenses:
Professional fees		262,303			127,202			731,099			405,949
Salaries and benefits		294,175			363,330			928,072			965,988
Selling, general and administrative		1,975,376			1,945,145			3,332,524			2,769,641
Total operating expenses		2,531,854			2,435,677			4,991,695			4,141,578

Loss from operations		(2,508,517	)		(2,415,537	)		(4,879,250	)		(4,071,823	)

Other income (expense), net:
Interest income (expense), net		1,000			(5,330	)		1,370			(19,685	)
Gain on sale of short-term investments		56,250			82,943			92,915			180,593
Other income		2,851			40,735			6,407			42,875
Total other income (expense), net		60,101			118,348			100,692			203,783

Loss before equity in net earnings of affiliate		(2,448,416	)		(2,297,189	)		(4,778,558	)		(3,868,040	)
Equity in net earnings of affiliate		159			-			4,651			-
Net loss		(2,448,257	)		(2,297,189	)		(4,773,907	)		(3,868,040	)

Other comprehensive income (loss):
Unrealized gain (loss) from short-term investments		(325	)		(32,289	)		80			(35,513	)
Comprehensive loss	$	(2,448,582	)	$	(2,329,478	)	$	(4,773,827	)	$	(3,903,553	)

Net loss per share attributable to common stockholders - Basic and Diluted	$	(0.23	)	$	(0.31	)	$	(0.55	)	$	(0.53	)

Weighted Average Shares Outstanding - Basic and Diluted		10,847,476			7,415,366			8,606,357			7,330,128

The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

NEXALIN TECHNOLOGY, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)


					Accumulated
	Common Stock				Other Comprehensive			Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Gain (Loss)			Capital		Deficit			Equity
Balance as January 1, 2023		7,286,562	$	7,287	$	36,313		$	77,824,427	$	(72,389,340	)	$	5,478,687
Other comprehensive gain		-		-		4,756			-		-			4,756
Net loss		-		-		-			-		(748,414	)		(748,414	)
Balance as of March 31, 2023		7,286,562	$	7,287	$	41,069		$	77,824,427	$	(73,137,754	)	$	4,735,029
Other comprehensive loss		-		-		(7,980	)		-		-			(7,980	)
Stock compensation		-		-		-			88,388		-			88,388
Net loss		-		-		-			-		(822,437	)		(822,437	)
Balance as of June 30, 2023		7,286,562	$	7,287	$	33,089		$	77,912,815	$	(73,960,191	)	$	3,993,000
Other comprehensive loss		-		-		(32,289	)		-		-			(32,289	)
Stock compensation		150,000		150		-			1,573,020		-			1,573,170
Net loss		-		-		-			-		(2,297,189	)		(2,297,189	)
Balance as of September 30, 2023		7,436,562	$	7,437	$	800		$	79,485,835	$	(76,257,380	)	$	3,236,692

					Accumulated
	Common Stock				Other Comprehensive			Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Gain (Loss)			Capital			Deficit			Equity
Balance as of January 1, 2024		7,436,562	$	7,437	$	(405	)	$	80,237,652		$	(77,038,049	)	$	3,206,635
Other comprehensive gain		-		-		160			-			-			160
Stock compensation		-		-		-			161,349			-			161,349
Net loss		-		-		-			-			(1,041,157	)		(1,041,157	)
Balance as of March 31, 2024		7,436,562	$	7,437	$	(245	)	$	80,399,001		$	(78,079,206	)	$	2,326,987
Other comprehensive gain		-		-		245			-			-			245
Stock compensation		-		-		-			308,283			-			308,283
Shares issued		150,000		150		-			(150	)		-			-
Net loss		-		-		-			-			(1,284,493	)		(1,284,493	)
Balance as of June 30, 2024		7,586,562	$	7,587	$	-		$	80,707,134		$	(79,363,699	)	$	1,351,022
Other comprehensive loss		-		-		(325	)		-			-			(325	)
Stock compensation		2,275,043		2,275		-			1,536,894			-			1,539,169
Shares issued in offering		3,000,000		3,000		-			4,513,184			-			4,516,184
Net loss		-		-		-			-			(2,448,257	)		(2,448,257	)
Balance as of September 30, 2024		12,861,605	$	12,862	$	(325	)	$	86,757,212		$	(81,811,956	)	$	4,957,793

The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

NEXALIN TECHNOLOGY, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended September 30,
	2024			2023
Cash flows from operating activities:
Net loss	$	(4,773,907	)	$	(3,868,040	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock compensation		2,008,801			1,661,558
Depreciation		-			402
Amortization		10,666			2,105
Non-cash lease expense		496			4,208
Gain on sale of short-term investments		(92,915	)		(180,593	)
Share of net income from equity method investment		(4,651	)		-
Changes in operating assets and liabilities:
Accounts receivable		(5,262	)		(9,608	)
Accounts receivable - related party		(540	)		-
Prepaid assets		175,245			119,237
Inventory		(1,955	)		(4,249	)
Accounts payable - related party		-			(260,000	)
Accounts payable		7,008			(325,818	)
Accrued expenses		(128,437	)		67,069
Lease liability		(4,463	)		(37,625	)
Net cash used in operating activities		(2,809,914	)		(2,831,354	)

Cash flows from investing activities:
Sale of short-term investments		22,348,611			32,671,394
Purchase of short-term investments		(24,399,610	)		(29,270,926	)
Purchase of patents		(101,936	)		(96,000	)
Purchase of trademarks		(52,144	)		(74,460	)
Net cash provided by (used in) investing activities		(2,205,079	)		3,230,008

Cash flows from financing activities:
Payments on notes payable - officer		-			(200,000	)
Issuance of common stock		4,516,184			-
Net cash provided by (used in) financing activities		4,516,184			(200,000	)

Net increase (decrease) in cash and cash equivalents		(498,809	)		198,654
Cash and cash equivalents - beginning of period		580,230			162,743
Cash and cash equivalents - end of period	$	81,421		$	361,397

Non-cash investing and financing activities:
Unrealized gain (loss) on short-term investments	$	80		$	(35,513	)

The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

NEXALIN TECHNOLOGY, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — NATURE OF THE ORGANIZATION AND BUSINESS

Corporate History

Nexalin Technology, Inc. (“NV Nexalin”) was formed on October 19, 2010 as a Nevada corporation. The Company’s principal offices are located at 1776 Yorktown, Suite 550, Houston, Texas 77056.

On September 6, 2019, Neuro-Health International, Inc. (“Neuro-Health”), a Nevada corporation, a wholly owned subsidiary of NV Nexalin, was formed. Neuro-Health had no activity from December 6, 2019 (Inception) through September 30, 2024.

Our shares and warrants began trading on the Nasdaq Capital Market tier of the Nasdaq Stock Market (“Nasdaq”) on September 16, 2022, under the symbols “NXL” and “NXLIW”, respectively.

On July 1, 2024, we consummated a follow-on public offering of an aggregate of 3,000,000 shares of the Common Stock for an offering price of $1.75 per share, resulting in aggregate net proceeds of approximately $4,720,000. The Company intends to use the net proceeds of such offering primarily for general corporate purposes, which may include, but is not limited to, working capital, operating expenses, and capital expenditures.

Throughout this report, the terms “Nexalin,” “our,” “we,” “us,” and the “Company” refer to Nexalin Technology, Inc.

Business Overview

Nexalin is headquartered, and maintains its base of management and operations, in Houston, Texas. We design and develop innovative neurostimulation products to uniquely and effectively help combat the ongoing global mental health epidemic. We developed an easy-to-administer medical device — referred to as “Generation 1” or “Gen-1” — that utilizes bioelectronic medical technology to treat anxiety, insomnia, and depression, without the need for drugs or psychotherapy. Our original Gen-1 devices are cranial electrotherapy stimulation (CES) devices that emit waveform at 4 milliamps during treatment and are presently classified by the U.S. Food and Drug Administration (the “FDA”) as a Class II device.

Medical professionals in the United States have utilized the Gen-1 device to administer to patients in clinical settings. While the Gen-1 device had been cleared by the FDA to treat depression, anxiety, and insomnia, three prevalent and serious diseases, because of the FDA’s December 2019 reclassification of CES devices, the Gen-1 device was reclassified as a Class II device for the treatment of anxiety and insomnia. We are required to file a new application under Section 510(k) of the Federal Food, Drug and Cosmetic Act (“510(k) Application”) to be approved by the FDA for the sales and marketing of our devices for the treatment of anxiety and insomnia. In the FDA’s December 2019 reclassification ruling, the treatment of depression with our device will require a Class III certification and require a new PMA (premarket approval) and/or a new De Novo application to demonstrate safety and effectiveness.

While we continue providing services to medical professionals to support patients’ use of the Gen-1 devices which were in operation prior to December 2019, we are not making new sales or new marketing efforts of Gen-1 devices in the United States. We continue to derive revenue from devices which we sold or leased prior to the FDA’s December 2019 reclassification announcements. This revenue consists of monthly licensing fees and payments for the sale of electrodes and patient cables. We have suspended marketing efforts for new sales of devices related to the Gen-1 device for treatment of anxiety and insomnia in the United States until the Nexalin regulatory team decides on a new 510(k) application at 4 milliamps based on FDA comments expected to be received in late 2024. Our regulatory team continues to inform the FDA of the suspension of the marketing and sale of the Gen-1 products to new providers. We are currently analyzing whether to proceed with an amended application with the FDA for Gen-1 devices for the treatment of insomnia and anxiety.

The waveform that comprises the basis of our “Generation 2” or “Gen-2” and new “Generation 3” or “Gen-3” headset devices is in pre-submission for review by the FDA for safety evaluation and eventual marketing in the United States. Determinations of the safety and efficacy of our devices in the United States are solely within the authority of the FDA. We plan to conduct decentralized clinical trials for the Gen-3 device in the U.S. and we continue to consult with the FDA as part of the pre-submission process. If and when we obtain FDA clearance for the Gen-3 device, we intend to extend the development and commercialization of our devices for sale in the U.S. and other territories, given the potential unmet demand for the treatment of mental health conditions with our device.

We have designed and developed a new advanced waveform technology to be emitted at 15 milliamps through new and improved medical devices referred to as Gen-2 and Gen-3. Gen-2 is a clinical use device with a modern enclosure to emit the new 15 milliamp advanced waveform. Gen-3 is a new patient headset that will be prescribed by licensed medical professionals in a virtual clinic setting similar to existing tele-health platforms. The Nexalin research team believes that the new 15 milliamp Gen-2 and Gen-3 devices can penetrate deeper into the brain and stimulate associated structures of mental illness, which we believe will generate enhanced patient response without any risk or unpleasant side effects. The Nexalin regulatory team has made a strategic decision to develop strategies for pilot trials and/or pivotal trials in various mental health disease categories. In addition, a new PMA application in the United States is in strategic development for the treatment of depression utilizing both Gen-2 and Gen-3. We plan to schedule additional pilot trials and/or pivotal trials for the new Gen-3 device for anxiety and insomnia in the United States and China beginning in the fourth quarter of 2024 . Preliminary data provided by The University of California, San Diego and recent published data from Asia supports the safety of utilizing our 15 milliamp waveform technology. However, the determination of safety and efficacy of medical devices in the United States is subject to clearance by the FDA.

Currently, the waveform that comprises the basis of Gen-2 and new Gen-3 headset devices has been tested in research settings to develop safety data that has been submitted for review by the FDA for safety evaluation and eventual marketing in the United States and around the world. Determinations of the safety and efficacy of our devices in the United States are solely within the authority of the FDA.

A new pre-submission document in preparation of a new 510(k) and/or De Novo application for our Gen-3 HALO headset at 15 milliamps was filed with the FDA in January of 2023. Formal comments to our pre-submission document filing were received in March of 2023. A formal meeting to address FDA comments took place on May 9, 2023.

A second FDA pre-submission document was submitted on February 13, 2024. FDA comments to this second pre-submission document were received on April 26, 2024. A formal teleconference was held with the FDA on April 30, 2024. The Nexalin regulatory team and the FDA came to a consensus on the Anxiety and Insomnia Clinical research protocols.

On May 31, 2023, the Company formalized an agreement related to the formation of a joint venture established to engage in the clinical development, marketing, sale and distribution of Nexilin’s second generation transcranial Alternating Current Stimulation (“tACS”) devices (“Gen-2 devices”) in China and other countries in the region. The Joint Venture is registered in Hong Kong.

Under the Joint Venture Agreement, Wider Come Limited (“Wider”), a related party, is obligated to fund all operations for the initial 12-month period of the Joint Venture, after which Nexalin and Wider plan to jointly fund the Joint Venture’s operating expenses in accordance with their pro rata ownership. The Joint Venture conducts research, development and clinical studies of our devices, which supplements similar activities being conducted by Nexalin in the United States. The Joint Venture is responsible for funding all clinical trial and development costs incurred in China. We share associated economic responsibility for these expenses under the terms of the Joint Venture Agreement. The Joint Venture may provide the financial resources for, and– together with our clinical studies conducted in the U.S. - serve as an important regulatory precursor towards the advancement of our efforts in securing 510(k) and/or De Novo clearance from the FDA for our devices.

As of the date of this Quarterly Report on Form 10-Q, we have no employees or office in China and none of our operations are conducted in China. The Joint Venture does not maintain any variable interest entity structure or operate any data center in China.

The Joint Venture is controlled by a Board of Directors in which Wider is to have sole representation but neither the Company nor Wider has exclusive decision-making ability over day-to-day or significant operational decisions. Wider and Nexalin own 52% and 48% of the Joint Venture, respectively. In accordance with ASC 323 Investments - Equity Method and Joint Ventures (“ASC 323”) and ASC 810 - Consolidations (“ASC 810”), the Company recognized $159 and $0 for the three months ended September 30, 2024 and 2023 and $4,651 and $0 for the nine months ended September 30, 2024 and 2023 of equity method investment income from the Joint Venture on a one-quarter reporting lag, on the condensed consolidated statements of operations and comprehensive loss.

The investment in the Joint Venture is accounted for using the equity method of accounting. As of September 30, 2024 and December 31, 2023 the Company had an Equity Method Investment of $100,651 and $96,000, respectively, recorded on the condensed consolidated balance sheets. The Company invested $96,000 in the joint venture in September 2023 which is recorded on the consolidated balance sheet at December 31, 2023 as an Equity Method Investment. Wider invested $104,000. In accordance with ASC 323, the Company uses the equity method of accounting for its investment in the Joint Venture, an unconsolidated entity over which it does not have a controlling interest. The equity method of accounting requires the investment to be initially recorded at cost and subsequently adjusted for the Company’s share of equity in the unconsolidated entity’s earnings or losses. The Company evaluates the carrying amount of this investment in the Joint Venture for impairment in accordance with ASC 323. If the Company determines that a loss in the value of the investment is other than temporary, the Company writes down the investment to its estimated fair value. Any such losses are recorded to equity in income of unconsolidated entities in the Company’s consolidated statements of operations and comprehensive loss. The Company has made an election to classify distributions received from the Joint Venture using the nature of the distribution approach. Distributions received are classified as cash inflows from operating activities based on the nature of the activities of the unconsolidated entity.

Continued Nasdaq Listing

Our common stock is currently listed on The Nasdaq Stock Market. In order to maintain that listing, we must satisfy minimum financial and other continued listing requirements and standards, including the Minimum Bid Price Rule and Minimum Stockholder Equity Rule (each as discussed below) and those regarding director independence and independent committee requirements, minimum stockholders’ equity, and certain corporate governance requirements. There can be no assurances that we will be able to comply with the applicable listing standards.

We are required to maintain a minimum bid price of $1.00 per share. On May 10, 2023, the Company received written notice from The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was no longer in compliance with the minimum bid price requirement for continued listing on Nasdaq, as the closing bid price for the Company’s common stock was below $1.00 per share as set forth in the Nasdaq listing rules. The Company was afforded 180 calendar days, or until November 6, 2023, to regain compliance with the Nasdaq listing rules. The Company was unable to regain compliance with the bid price requirement by November 6, 2023.

On April 23, 2024, the Company received notice from Nasdaq notifying the Company that it has regained compliance with Nasdaq’s minimum bid price requirement under Nasdaq Rule 5550(a)(2).

Under the Nasdaq listing rules, we are also required to maintain stockholders’ equity of at least $2,500,000 (the “Minimum Stockholder Equity Rule”). In our Form 10-Q for the period ending March 31, 2024, we reported stockholders’ equity of $2,326,987. On May 16, 2024, we received a letter from the Listing Qualifications Department of Nasdaq notifying the Company that its stockholders’ equity as reported in such Quarterly Report did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1) for the Nasdaq Capital Market.

Pursuant to the Notice, the Company had 45 calendar days from the date of the Notice to submit a plan to regain compliance. On July 1, 2024, the Company submitted a plan to Nasdaq. As described in the Company’s submission to Nasdaq, and as set forth in the Current Report on Form 8-K filed by the Company on July 3, 2024, the Company consummated the public offering of 3 million shares of the Company’s Common Stock for total aggregate gross proceeds of approximately $5,250,000 On July 23, 2024, the Company received written notification from the Listing Qualifications Department of Nasdaq, confirming that, based on the information contained in the Company’s Form 8-K, filed with the SEC on July 16, 2024, the Company is now in compliance with the Minimum Stockholder Equity Rule.

On September 23, 2024, we received a notice from Nasdaq notifying us that we were not in compliance with the Minimum Bid Price Rule. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we had 180 calendar days, or until March 24, 2025, to regain compliance with Nasdaq Listing Rule 5450(a)(1). To regain compliance, the closing bid price of our common stock must be at least $1.00 per share for a minimum of 10 consecutive business days. On October 31, 2024, the Company received notice from Nasdaq notifying the Company that it has regained compliance with Nasdaq’s minimum bid price requirement under Nasdaq Rule 5550(a)(2).

NOTE 2 — LIQUIDITY

The accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. At September 30, 2024, the Company had a significant accumulated deficit of approximately(81,811,956) $81.8 million. For the nine months ended September 30, 2024, the Company had a loss from operations of approximately(4,879,250) $4.9 million and negative cash flows from operations of approximately(2,809,914) $2.8 million. While the Company had a working capital surplus as of September 30, 2024 of approximately $4.6 million, the Company’s operating activities consume most of its cash resources.

The Company expects to continue to incur operating losses as it executes its development plans, as well as undertaking other potential strategic and business development initiatives through 2024 and through the twelve months from the date of this report. In addition, the Company has had and expects to have negative cash flows from operations, at least into the near future. We previously funded these losses primarily through the sale of equity. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period.

Our ability to continue as a going concern will be dependent upon our ability to execute on our business plan, including the ability to generate revenue from the joint venture and obtain U.S. approval for the sale of our devices in the United States, and, if necessary, our ability to raise additional capital. Although no assurances can be given as to our ability to deliver on our revenue plans or that unforeseen expenses may arise, management has evaluated the significance of the conditions as of September 30, 2024 and have concluded that we will not have sufficient cash and short-term investments to satisfy our anticipated cash requirements for the next twelve months from the issuance of these financial statements. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the Company’s financial position and the operating results and cash flows. Operating results for the nine months ended September 30, 2024 and 2023 are not necessarily indicative of the results that may be expected for any other subsequent interim period. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to the rules of the SEC. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2023.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of Nexalin and its wholly owned subsidiary Neuro-Health. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity-based transactions, revenue and expenses and disclosure of contingent liabilities at the date of the consolidated financial statements. The Company bases its estimates and assumptions on historical experience, known or expected trends and various other assumptions that it believes to be reasonable. As future events and their effects cannot be determined with precision, actual results could differ from these estimates, which may cause the Company’s future results to be affected.

Revenue

The Company recognizes revenue when its performance obligations with its customers have been satisfied. At contract inception, the Company determines if the contract is within the scope of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, and then evaluates the contract using the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only recognizes revenue to the extent that it is probable that a significant revenue reversal will not occur in a future period.

The Company has existing licensing and treatment fee agreements with its customers for the use of the Nexalin Device in their practices. These agreements generally have terms of one year with automatic renewal if certain requirements are met and amounts due per these agreements are billed monthly. The Company also sells products related to the provision of services. The Company sells its Devices in China to its acting distributor and sells products relating to the use of the Devices. The Company has a Royalty Agreement whereby the manufacturer of the Company’s electrodes will pay a royalty to the Company for a three-year period beginning January 1, 2022. The amount of the Royalty is equal to 20% of the amount that the manufacturer invoices to the acting distributor for the sale of the electrodes.

Revenue Streams

The Company derives revenues from our license agreements by charging a monthly licensing fee for the duration of the agreement. The Company derives revenues from equipment by selling additional individual electrodes to customers for use with the Nexalin Device. We receive revenue from the sale in China of our Devices to our distributor and from the sale of products relating to the use of those Devices. We derive revenue as a royalty fee from the China-based manufacturer for electrodes ordered in connection with our China sales.

Disaggregated Revenues

Major Revenue Streams

Revenue consists of the following by service offering:

Schedule of disaggregation of revenue
	Three Months Ended September 30,
	2024		2023
Device sales	$	-	$	-
Licensing fee		16,941		18,664
Equipment		18,802		5,179
Other		288		270
Total	$	36,031	$	24,113

	Nine Months Ended September 30,
	2024		2023
Device sales	$	55,500	$	9,600
Licensing fee		54,561		62,566
Equipment		30,423		16,679
Other		1,058		1,367
Total	$	141,542	$	90,212

Major Geographic Locations

	Three Months Ended September 30,
	2024		2023
U.S. sales	$	20,664	$	24,113
International sales		15,367		-
Total	$	36,031	$	24,113

	Nine Months Ended September 30,
	2024		2023
U.S. sales	$	65,523	$	80,005
International sales		76,019		10,207
Total	$	141,542	$	90,212

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents held at financial institutions may at times exceed insured amounts. The Company believes it mitigates such risk by investing in or through, as well as maintaining cash balances with, with major financial institutions.

Short-Term Investments

The appropriate classification of marketable securities is determined at the time of purchase and evaluated as of each reporting balance sheet date. Investments in marketable debt and equity securities classified as available-for-sale are reported at fair value. Fair value is determined using quoted market prices in active markets for identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Unrealized holding gains and losses for equity securities are recognized in earnings. Unrealized holding gains and losses for available for sale debt securities are recognized in other comprehensive income (loss.) Realized gains and losses and interest and dividends earned are included in other income (expense), net. For individual debt securities classified as available-for-sale securities, the Company determines whether a decline in fair value below the amortized cost basis has resulted from a credit loss or other factors. If the decline below amortized cost is a result of credit loss or the Company will more likely than not be required to sell the security before recovery of its amortized cost basis, the Company will recognize an impairment relating to the decline through an allowance for credit losses. There were no deemed permanent impairments for the three and nine months ended September 30, 2024 and 2023, respectively.

Patents and Trademarks

Patents and trademarks are amortized over their useful lives and are reviewed for impairment when warranted by economic conditions. Amortization expense was $10,666 and $2,105 for the nine months ended September 30, 2024 and 2023, respectively. Amortization expense was $4,211 and $753 for the three months ended September 30, 2024 and 2023, respectively.

The following table summarizes the gross carrying amount, amortization and the net carrying value at September 30, 2024 and December 31, 2023.

Schedule of patents
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
September 30, 2024
Patents	$	200,906	$	(10,680	)	$	190,226
Trademarks		62,717		(4,001	)		58,716
Total September 30, 2024	$	263,623	$	(14,681	)	$	248,942

December 31, 2023
Patents	$	98,970	$	(3,751	)	$	95,219
Trademarks		10,573		(264	)		10,309
Total December 31, 2023	$	109,543	$	(4,015	)	$	105,528

Income Taxes

The Company accounts for income taxes pursuant to the asset and liability method which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment.

The Company records valuation allowances against deferred tax assets when it is more likely than not that all or a portion of a deferred tax asset will not be realized. At September 30, 2024 and December 31, 2023, the Company had a full valuation allowance applied against its net tax assets.

Fair Value Measurements

As defined in ASC 820, Fair Value Measurements and Disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement.

	●	Level 1: Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

	●	Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

	●	Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The significant unobservable inputs used in the fair value measurement for nonrecurring fair value measurements of long-lived assets include pricing models, discounted cash flow methodologies and similar techniques.

Fair Value of Financial Instruments

The carrying value of cash, short-term investments, accounts receivable, inventory, prepaids, accounts payable and accrued expenses, and other current liabilities approximate their fair values based on the short-term maturity of these instruments. The carrying amount of the loans payable approximates the estimated fair value for this financial instrument as management believes that such debt and interest payable on the note approximates the Company’s incremental borrowing rate.

The following table summarizes the amortized cost, unrealized gain (loss) and the fair value at September 30, 2024 and December 31, 2023.


	Amortized Cost		Unrealized Gain (Loss)			Fair Value
September 30, 2024
Short-term investments	$	4,512,522	$	(325	)	$	4,512,197
Total September 30, 2024	$	4,512,522	$	(325	)	$	4,512,197

December 31, 2023
Short-term investments	$	2,368,608	$	(405	)	$	2,368,203
Total December 31, 2023	$	2,368,608	$	(405	)	$	2,368,203

The following table provides the carrying value and fair value of the Company’s financial assets measured at fair value as of September 30, 2024 and December 31, 2023.


	Carrying Value		Level 1		Level 2		Level 3
September 30, 2024
U.S. Treasury Notes	$	4,512,197	$	4,512,197	$	-	$	-

December 31, 2023
U.S. Treasury Notes	$	2,368,203	$	2,368,203	$	-	$	-

As defined in ASC 820, Fair Value Measurements and Disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement for the three months ended September 30, 2024 and 2023.

Net Loss per Common Share

The following table summarizes the securities that would be excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to the Company’s net loss position even though the exercise price could be less than the most recent fair value of the common shares:

Schedule of antidilutive shares
	Three Months Ended September 30,
	2024		2023
Warrants		2,662,250		2,662,250
Stock options		2,863,129		-
Total		5,525,379		2,662,250

	Nine Months Ended September 30,
	2024		2023
Warrants		2,662,250		2,662,250
Stock options		2,863,129		-
Total		5,525,379		2,662,250

Stock-Based Compensation

The Company applies the provisions of ASC 718, Compensation — Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the condensed consolidated statements of operations and comprehensive loss.

For stock options issued to employees and members of the board of directors for their services, the Company estimates the grant date fair value of each option using the Black-Scholes option pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. For awards subject to service-based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised.

Pursuant to ASU 2018-07 Compensation — Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting, the Company accounts for stock options and restricted shares issued to non-employees for their services in accordance with ASC 718. The Company uses valuation methods and assumptions to value the stock options that are in line with the process for valuing employee stock options noted above.

Research and Development

Research and development costs are charged to operations as incurred. For the nine months ended September 30, 2024 and 2023, the Company recorded $453,643 and $1,842,341, respectively, in selling, general and administrative expenses on the unaudited condensed consolidated statements of operations and comprehensive loss. For the three months ended September 30, 2024 and 2023, the Company recorded $178,565 and $1,638,508, respectively, in selling, general and administrative expenses on the unaudited condensed consolidated statements of operations and comprehensive loss.

Recent Accounting Pronouncements

In August of 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture (“JV”) Formations: Recognition and Initial Measurement. The guidance requires newly formed JVs to apply a new basis of accounting to all of its contributed net assets, which results in the JV initially measuring its contributed net assets under ASC 805-20, Business Combinations. The new guidance would be applied prospectively and is effective for all newly formed joint venture entities with a formation date on or after January 1, 2025, with early adoption permitted. The Company is evaluating the accounting and disclosure requirements of this update and does not expect them to have a material effect on the consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The ASU is effective on a retrospective basis for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

In December of 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, establishes incremental disaggregation of income tax disclosures pertaining to the effective tax rate reconciliation and income taxes paid. This standard is effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this standard on our disclosures.

All other newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

NOTE 4 — ACCRUED EXPENSES

Accrued expenses consist of the following amounts:

Schedule of accrued expenses
	September 30, 2024		December 31, 2023
Accrued – other		43,517		21,954
Accrued settlement liabilities		89,330		89,330
Accrued bonuses		-		150,000
	$	132,847	$	261,284

NOTE 5 — RELATED PARTY TRANSACTIONS

U.S. Asian Consulting Group, LLC

On May 9, 2018, the Company entered into a five-year consulting agreement with U.S. Asian Consulting Group, LLC (“U.S. Asian”). The consulting agreement was extended for an additional period of eight years upon the closing of our initial public offering. The agreement was amended effective as of July 1, 2024 to expand the services. The two members of U.S. Asian are shareholders in the Company including Marilyn Elson who is Nexalin’s Controller.

Pursuant to the consulting agreement, U.S. Asian provides consulting services to the Company with regard to, among other things, corporate development, financing arrangements and international operations. The Company was paying U.S. Asian $10,000 per month for services rendered pursuant to the consulting agreement. The amended agreement calls for a monthly fee of $16,667, a onetime stock grant and a semi-annual share award equal to $100,000 with the issuance and delivery of shares to take place following the termination of the consulting agreement. The Company recorded consulting expenses related to the consulting agreement of $110,000 and stock compensation expense of $146,000 for the nine months ended September 30, 2024 and $90,000 of consulting expenses for the nine months ended September 30, 2023, respectively. The Company recorded $30,000 related to the consulting agreement for each of the three months ended September 30, 2024 and 2023, respectively, on the Company’s unaudited condensed consolidated statements of operations and comprehensive loss.

Leonard Osser was issued 200,000 shares of Company stock as compensation for his services on the Advisory Board. The Company recorded $144,000 and $0 of stock compensation expense for the nine months ended September 30, 2024 and September 30, 2023 respectively.

Officers

On July 1, 2023, the Company entered into a new employment agreement with Mark White to serve as Chief Executive Officer, a new services agreement with David Owens, M.D. to serve as Chief Medical Officer and a new employment agreement with Michael Nketiah to serve as Senior Vice President, Quality, Regulatory and Clinical Affairs. Each of the foregoing agreements are governed by three-year terms and provide compensation in the form of performance-and service-based stock option awards based on the closing price of the Company’s publicly traded common stock on the applicable date of grant. On July 29, 2024, Michael Nketiah submitted his resignation effective August 16, 2024.

Effective September 16, 2024, the Company entered into an agreement with Ms. Carolyn Shelton to serve as Senior Vice President, Quality, Regulatory and Clinical Affairs.

Under the terms of his employment agreement, Mr. White is entitled to (i) a sign-on/retention bonus consisting of a one-time lump-sum payment of $50,000 and a grant of nonqualified stock options to purchase 1,387,024 shares of the Company’s common stock with an exercise price of $.894 per share subject to certain time and performance-based vesting conditions.

Under the terms of his service agreement, Dr. Owens is entitled to (i) a sign-on/retention bonus consisting of a grant of nonqualified stock options to purchase 654,362 shares of the Company’s common stock with an exercise price of $.894 per share subject to certain time and performance-based vesting conditions.

Under the terms of his employment agreement Mr. Nketiah was entitled to nonqualified stock option grants to purchase 100,671 shares of the Company’s common stock with an exercise price of $.894 subject to certain time and performance-based vesting conditions.

Under the terms of her agreement Ms. Shelton is entitled to nonqualified stock option grants to purchase 90,620 shares of the Company’s common stock with an exercise price of $.6621, subject to certain time and performance-based vesting conditions. Such options were not granted as of September 30, 2024.

In addition to the retention payments, stock awards and nonqualified option grants described above, Messrs. White and Nketiah are receiving cash compensation and each of Messrs. White and Nketiah are eligible for performance-based cash bonuses. The 2023 performance-based milestones regarding Mr. White’s incentive compensation have been met for 2023, and he was awarded a cash bonus of $120,000 and 313,199 nonqualified stock options with a vesting date of July 1, 2024. The 2023 performance-based milestones regarding Mr. Nketiah’s incentive compensation have been met for 2023, and he was awarded a cash bonus of $50,000 and 33,557 nonqualified stock options with a vesting date of July 1, 2024.

The reported amounts are calculated in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 718, “Compensation — Stock Compensation (“ASC 718”). ASC 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions, such as the options issued under our 2023 Plan.

Leases

Our principal executive office is located at 1776 Yorktown, Suite 550, Houston, Texas 77056. Under ASC 842 “Leases”, we have two separate sub-leases (through IIcom Strategic Inc. controlled and owned by our Chief Executive Officer) totalling approximately 4,000 square feet of office space under operating leases. Management and supporting staff are hosted at this location. Our lease costs for each of the three months ended September 30, 2024 and 2023 were $13,500 and $13,500. Our lease costs for each of the nine months ended September 30, 2024 and 2023 were $40,500 and $40,500. The initial sub-leases expired in January of 2024. The Company has entered into a new one year sublease for 4,000 square feet of office space under an operating lease. Pursuant to the sublease, the Company pays and will pay the third party landlord (not the sub landlord) all direct and indirect rent costs under the primary lease directly for the leased premises. No additional payments are made to the Chief Executive Officer or the entity controlled by him.

NOTE 6 — STOCKHOLDERS’ EQUITY

Issuance of Common Stock

During the nine months ended September 30, 2024, the Company issued an aggregate of 5,425,043 shares of its common stock, as follows:

●

150,000 shares of common stock were issued to affiliates of Wider in satisfaction of obligations pursuant to their collaborative agreement. A charge to research and development of $750,000 was recorded in 2023 at the time the Company recognized its obligation to issue these shares.

●

3,000,000 shares of common stock were issued to investors for net proceeds of $4,516,184.

●

2,275,043 shares of common stock were issued for services in lieu of cash of which 1,232,357 were issued to outside consultants, 200,000 to a related party, 542,500 to certain employees of the Company, and 300,186 to current and former members of the Board of Directors for their services as Board Members.

During the nine months ended September 30, 2023, the Company issued 150,000 shares of its common stock to Wider pursuant to their collaborative agreement resulting in a charge to research and development of $750,000.

Options

Nexalin’s 2023 Equity Incentive Plan (the “2023 Plan”) was approved by our stockholders on November 10, 2023 and an amendment thereto, increasing the number of shares reserved for issuance under the 2023 Plan, was approved by our stockholders on August 26, 2024. The 2023 Plan provides that maximum number of shares of Common Stock available for the grant of awards thereunder shall be 6,000,000, subject to adjustment for stock dividends, stock splits or similar events. The 2023 Plan is administered by the Board of Directors, which may in turn delegate administrative authority to one or more of our executive officers. Under the terms of the 2023 Plan, the Compensation Committee may grant equity awards, including nonqualified stock options and restricted stock to employees, officers, directors, consultants, agents, advisors and independent contractors.

On July 1, 2023, the Company entered into amended employment agreements with the three executives. In addition to the cash compensation included in their employment contracts, the three executives were granted one-time bonus stock options (that were immediately vested) and performance-based stock options that would be triggered based on certain performance criteria being achieved. The amount expensed during the three months ended September 30, 2024 and 2023 in the unaudited condensed consolidated statements of operations and comprehensive loss was $0 and $0 respectively. The amount expensed during the nine months ended September 30, 2024 and 2023 in the unaudited condensed consolidated statements of operations and comprehensive loss was $88,120 and $0 respectively.

Certain employees and certain members of the Board of Directors were issued options to purchase an aggregate of 581,250 shares of common stock. The options vested immediately upon grant. The amount expensed during the three months ended September 30, 2024 and 2023 in the unaudited condensed consolidated statements of operations and comprehensive loss was $434,194 and $0 respectively. The amount expensed during the nine months ended September 30, 2024 and 2023 in the unaudited condensed consolidated statements of operations and comprehensive loss was $434,194 and $0 respectively.

The following table presents a summary of stock option award activity during the nine months ended September 30, 2024:

Schedule of stock option award activity
	Number of options		Weighted Average Exercise Price		Weighted Average Remaining Life In Years
Outstanding December 31, 2023		2,281,879	$	0.89		8.75
Issued		581,250		0.94		5.00
Exercised		-		-		-
Expired or cancelled		-		-		-
Outstanding September 30, 2024		2,863,129	$	0.90		8.27

The following table provides additional information about stock options that are outstanding and exercisable at September 30, 2024:


Exercise Price		Outstanding Number of Options		Weighted Average Remaining Life In Years		Exercisable Number of Options
$	0.89		2,281,879	$	8.75		1,152,125
$	0.94		581,250		5.00		581,250
			2,863,129	$	8.27		1,733,375

The fair value of these stock option awards is estimated as of the grant date using a Black-Scholes option pricing model and the following assumptions: A risk-free interest rate based on the U.S. Treasury yield curve at the date of grant; an expected or contractual term; and expected volatility based on an evaluation of comparable public companies’ measures of volatility. The Company does not anticipate declaring dividends on common shares now or in the near future and has therefore assumed no dividend rate. The following tables disclose the assumptions, utilized for stock options as follows:

For the 581,250 stock options granted during the nine months ended September 30, 2024, we used the following weighted average assumptions to estimate the fair value of stock options:

Schedule of assumptions
	September 30, 2024
Volatility		103.8	%
Expected dividends	$	-
Risk-free interest rate		3.66	%
Expected term (years)		5.0

For the stock options outstanding as of December 31,2023, we used the following weighted average assumptions to estimate the fair value of stock options:

	December 31, 2023
Volatility		99.0	%
Expected dividends	$	-
Risk-free interest rate		4.61	%
Expected term (years)		9.5

Warrants

The issuance of warrants to purchase shares of the Company’s common stock are summarized as follows:

Schedule of warrants
	Number of warrants		Weighted Average Exercise Price
Outstanding December 31, 2023		2,662,250	$	4.15
Issued		-		-
Exercised		-		-
Expired or cancelled		-		-
Outstanding September 30, 2024		2,662,250	$	4.15

The following table summarizes information about warrants to purchase shares of the Company’s common stock outstanding and exercisable at September 30, 2024:


Exercise Price		Outstanding Number of Warrants		Weighted Average Remaining Life In Years		Weighted Average Exercise Price		Exercisable Number of Warrants
$	4.15		2,315,000		1.00	$	4.15		2,135,000
$	4.15		347,250		1.00		4.15		347,250
			2,662,250		1.00	$	4.15		2,662,250

The compensation expense attributed to the issuance of the warrants, if required to be recognized on the nature of the transaction, was recognized as they vested/earned. These warrants are exercisable up to three years from the date of grant. All are currently exercisable.

NOTE 7 — COMMITMENTS AND CONTINGENCIES

There are no material pending legal proceedings in which the Company or any of its subsidiaries is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of its voting securities, or security holder is a party adverse to us or has a material interest adverse to the Company other than the following:

Sarah Veltz v. Nexalin Technology, Inc. et al.

Plaintiff, Sarah Veltz, filed a lawsuit in this matter on January 20, 2021 in Orange County Superior Court (Case No. 30-2021-01180164-CU-WT-CJC) (the “Complaint”) naming the Company and others as defendants. In her Complaint, Plaintiff contends that she was employed by defendants, including Nexalin, and has not been paid all wages, including overtime wages and other benefits allegedly due her. Plaintiff also contends that, during her employment, she was subjected to sexual harassment by the Company’s then Chief Executive Officer. Plaintiff seeks both compensatory and punitive damages. On March 12, 2021, the Company filed its answer to the Complaint. Although the parties are seeking mediation, the court has set a trial in this matter for June 9, 2025, with a mediation date not yet set. Management’s intent is to contest the allegations vigorously and, as of the date of this report, is unable to provide an evaluation of the potential outcome of the litigation within the probable or remote range or to provide an estimate of the amount of or a range of potential loss that might be incurred by the Company.

Employment Development Department

The Company is currently engaged in settlement discussions with the Employment Development Department (EDD) of the State of California. This matter involves issues related to our previous management’s classification of certain work provided to or on behalf of the Company’s business as contract labor instead of employee labor. The total amount involved was approximately $300,000. Management has petitioned for reassessment and believes the hired workers at issue were indeed actual contractors and not employees. We have no business in California other than one part time and one full time worker residing in California. The EDD approved a significant downward adjustment in our outstanding employment tax liability to approximately $40,000 as reflected on its Statement of Account dated November 30, 2023. We plan to further negotiate with the EDD and proceed with a settlement offer. The Company has accrued $40,000 and $40,000 on the consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively. The reduction in the amount accrued was recognized as other income on the consolidated statement of operations and comprehensive loss for the year ended December 31, 2023. The Company believes it has adequately accrued for this matter.

Demand Letter from The University of Arizona

On December 8, 2022, the Company received a demand letter from the University of Arizona seeking payment of $111,094. The Company and the University of Arizona agreed on the terms of a settlement for the amounts claimed by the University, whereby the Company paid an aggregate of approximately $69,000 (in three equal monthly payments) in full satisfaction of amounts the University claims it is owed. The settlement amount was paid in full as of December 31, 2023.

NOTE 8 — CONCENTRATION OF CREDIT RISK

Revenues

Five customers accounted for 75% of revenues for the three months ended September 30, 2024 and two customers accounted for 59% of revenues for the nine months ended September 30, 2024, as set forth below:

Concentration of credit risk
	Three Months Ended September 30, 2024			Nine Months Ended September 30, 2024
Customer A		23	%		48	%
Customer B		18	%		11	%
Customer C		13	%		-
Customer D		11	%		-
Customer E		10	%		-

Three customers accounted for 70% and 55% of revenues for the three and nine months ended September 30, 2023, respectively as set forth below:

	Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
Customer A		27	%		24	%
Customer B		23	%		18	%
Customer C		20	%		13	%

Accounts Receivable

Four customers accounted for 78% of accounts receivable at September 30, 2024, as set forth below:

Customer A	43	%
Customer B	18	%
Customer C	17	%

Five customers accounted for 97% of accounts receivable at December 31, 2023.

Customer A - related party	39	%
Customer B	21	%
Customer C	15	%
Customer D	12	%
Customer E	10	%

NOTE 9 — SUBSEQUENT EVENTS

On November 7, 2024, the Company entered into stock option agreements with two employees for services in lieu of cash, and two members of the Board of Directors for their services as Board Members, granting options to purchase an aggregate of 581,250 shares of the Company’s common stock at an exercise price of $.94 per share. Such stock options were immediately vested.

On November 7, 2024, the Company entered into a stock option agreement with Michael Nketiah with respect to his July 1, 2023 Employment Agreement. Mr. Nketiah was granted performance-based stock options to purchase 100,671 shares of common stock at an exercise price of $.894 per share.

On November 7, 2024, the Company entered into a stock option agreement with Carolyn Shelton. Ms. Shelton was granted performance-based stock options to purchase up to 90,620 shares of common stock at an exercise price of $.6621 per share that would be triggered based on certain performance criteria being achieved. Such options vest in three equal portions over the three year period beginning on the first anniversary of her employment date.

On October 28, 2024, the Board of Directors approved the issuance of an aggregate of 363,635 shares of our restricted common stock for services in lieu of cash, to outside consultants and to Wider, a related party.

Item 2. 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 financial statements and related notes appearing in this Quarterly Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Quarterly Report. Actual future results may be materially different from what we expect. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by applicable law.

The management’s discussion and analysis of our financial condition and results of operations are based upon our unaudited financial statements, which have been prepared in accordance with GAAP.

Overview

We design and develop innovative neurostimulation products to uniquely and effectively help combat the ongoing global mental health epidemic. We developed an easy-to-administer medical device — referred to as Generation 1 or Gen-1 — that utilizes bioelectronic medical technology to treat anxiety and insomnia, without the need for drugs or psychotherapy. Our original Gen-1 devices are cranial electrotherapy stimulation (CES) devices that emit waveform at 4 milliamps during treatment and are presently classified by the U.S. Food and Drug Administration (“FDA”) as a Class II device.

Medical professionals in the United States have utilized the Gen-1 device to administer to patients in clinical settings. While the Gen-1 device had been cleared by the FDA to treat depression, anxiety, and insomnia, three prevalent and serious diseases, because of the FDA’s December 2019 reclassification of CES devices, the Gen-1 device was reclassified as a Class II device for the treatment of anxiety and insomnia. We are required to file a new application under Section 510(k) of the Federal Food, Drug and Cosmetic Act (“510(k) Application”) to be approved by the FDA for the sales and marketing of our devices for the treatment of anxiety and insomnia. In the FDA’s December 2019 reclassification ruling, the treatment of depression with our device will require a Class III certification and require a new PMA (premarket approval) application to demonstrate safety and effectiveness.

While we continue providing services to medical professionals to support patients’ use of the Gen-1 devices which were in operation prior to December 2019, we are not making new sales or new marketing efforts of Gen-1 devices in the United States. We continue to derive revenue from devices which we sold or leased prior to the FDA’s December 2019 reclassification announcements. This revenue consists of monthly licensing fees and payments for the sale of electrodes and patient cables. We have suspended marketing efforts for new sales of devices related to the Gen-1 device for treatment of anxiety and insomnia in the United States until the Nexalin regulatory team decides on a new 510(k) application at 4 milliamps based on FDA comments expected to be received in 2024. Our regulatory team continues to inform the FDA of the suspension of the marketing and sale of the Gen-1 products to new providers. We are currently analyzing whether to proceed with an amended application with the FDA for Gen-1 devices for the treatment of insomnia and anxiety.

We have designed and developed a new advanced waveform technology to be emitted at 15 milliamps through new and improved medical devices referred to as “Generation 2” or “Gen-2” and “Generation 3” or “Gen-3.” Gen-2 is a clinical use device with a modern enclosure to emit the new 15 milliamp advanced waveform. Gen-3 is a new patient headset that is designed to be prescribed by licensed medical professionals in a virtual clinic setting similar to existing Tele-health platforms. The Nexalin research team believes that the new 15 milliamp Gen-2 and Gen-3 devices can penetrate deeper into the brain and stimulate associated structures of mental illness, which we believe will generate enhanced patient response without any risk or unpleasant side effects. The Nexalin regulatory team has made a strategic decision to develop strategies for pilot trials and/or pivotal trials in various mental health disease states. In addition, a new PMA application in the United States is in development for the treatment of depression utilizing both Gen-2 and Gen-3. The new Gen-3 device is also scheduled for additional pilot trials and/or pivotal trials for anxiety and insomnia in the United States and China beginning in the fourth quarter of 2024. Preliminary data provided by The University of California, San Diego and recent published data from China supports the safety of utilizing our 15 milliamp waveform technology. However, the determination of safety and efficacy of medical devices in the United States is subject to clearance by the FDA.

Additionally, a new pre-submission document in preparation of a new 510(k) and/or De Novo for our Gen-3 Halo headset at 15 milliamps was filed with the FDA in January of 2023. Formal comments to our pre-submission document filing were received in March of 2023. A formal meeting to address FDA comments took place on May 9, 2023. Minutes of the meeting with the FDA were filed with the FDA on May 16, 2023.

In part due to the increasing incidence attributed to the devastating impacts of the COVID-19 pandemic, mental health and cognitive disorders are widespread across the globe and cause substantial health, social and economic losses, and hardships accordingly. Our focus is on the continued development of our innovative bioelectronic medical technologies and rapid regulatory approval. We intend to help reverse these losses, and hardships of these losses, by safely and effectively treating various mental health disorders associated with post Covid and long Covid mental disease states.

All our products are non-invasive, safe, undetectable to the human body and can provide relief to those afflicted with mental health issues without adverse side effects. We have a proprietary design that stabilizes currents, electromagnetic fields, and various frequencies — referred to collectively as a waveform - particularly our proprietary, 15 milliamp patented waveform. Additionally, our devices generate a high frequency carrier wave for deeper penetration into the brain. It is applied to the brain with an array of electrodes on the forehead and behind each ear at the mastoid. The features of this proprietary waveform and the array of electrodes allow the application of the waveform to the entire brain rather than a small, targeted area of the brain. To ensure deeper penetration into the brain, we have created a waveform that is undetectable to the brain which allows the increase of the power from < 4 mAmps to 15 mAmps, more than a 400% increase without incurring any patient discomfort, risk, or adverse side effects. By increasing the power, our waveform can penetrate deeper into the brain and stimulate deep mid-brain structures associated with mental illness. Our research and clinical teams believe that a more powerful waveform will create a stronger response in the brain. A stronger response creates a higher level of efficacy. This entire proprietary technique allows Nexalin to provide a non-invasive and comfortable treatment that is more powerful than any stimulation device in the market. Current pilot study protocols and randomized clinical trials have been designed and submitted to the FDA to provide feedback on final reports and data sets for the purpose of safety and efficacy evaluations in the future. Determinations of the safety and efficacy of our devices are solely within the authority of the FDA.

We recognize that an additional barrier to treatment in today’s mental health treatment landscape -- beyond the concerns about safety, efficacy and side-effects that have been associated with conventional mental health treatments such as ECT (shock therapy), drugs and psychotherapy – is stigma. We have received industry reports and feedback that many patients that struggle with mood disorders have the stigma of embarrassment associated with psychiatrists and psychotherapy (e.g., counselling with a therapist). Additional stigmas and other issues are associated with the side effects of medication prescribed by psychiatrists. When we researched the current pharmaceuticals model, public information highlighted the many side effects associated with these medications. Frequently, patients would stop taking the medication because of the uncomfortable side effects. Additional public information mentions dependency and withdrawal issues associated with medication for psychiatric disorders.

To address the embarrassment stigma, we are developing a new virtual clinic that will allow the physician to diagnose a mental health issue in the privacy of a tele-psychiatry virtual platform. After diagnosis, the physician will prescribe the Nexalin Gen-3 headset to the patient for treatment. Next, the Gen-3 device will be shipped to the patient’s home. After the patient receives the device, they will pair the headset device with an app in the patient’s smart phone. The app will communicate with the Nexalin cloud servers to authorize the device for treatment according to the protocol designed by the physician. The physician will monitor treatment compliance and other health related issues in a private physician dashboard that connects through the Nexalin app and cloud servers. We believe that to preserve product safety and integrity for home use, the headset device will require physician oversight that will include a prescription for use with a monthly authorization provided by the physician after a monthly virtual visit. All appointments will be in a virtual setting to provide privacy and convenience for the physician and patient. The Nexalin virtual clinic will be provided in a proprietary virtual platform currently in the design stage.

Our China Gen-2 15 milliamp device was approved in China by the NMPA for the treatment of insomnia and depression in China. This device and all other clinical devices will include a single use electrode for long term revenue streams. The USA Gen-2 device will have a fresh and modern appearance that meets the technology standards of the digital tech world of 2024. Early adopters of the Gen-1 device will be able to access additional firmware upgrades which are planned to enhance the previously purchased devices to the new symmetric15-milliamp waveform. Our Gen-2 device will be equipped with RFID technology that exchanges electrode usage data with a reader in the main device. The purpose of RFID is to track and maintain control of the proprietary single use electrode. Our electrode chip will be programmed to exchange data with the device and allow activation for a single treatment with a new electrode only. This ensures a recurring revenue stream on the device and protects against any generic knockoffs designed to avoid treatment costs. This upgrade in technology also ensures the proprietary nature of the electrodes that support treatment outcomes are sustained.

Overall, we believe that our advanced waveform, technological upgrades and the development of a modern headset monitored with our IT management platform will position us with the opportunity to disrupt the traditional mental health treatment model. Our mission is to remove the stigma of expensive psychotherapy or pharmaceuticals with the attendant side effects and dependency issues and replace such stigma with clinically proven and cost-effective technology that is easily accessible in the privacy of the patient’s home and monitored by licensed healthcare providers.

Since our inception, we have generated significant losses; we expect to continue to incur significant expenses and increasing operating losses for at least the next two years. Our net losses may fluctuate significantly from period to period, depending on the timing of our planned clinical trials and expenditures for other research and development activities. We expect our expenses will increase substantially over time as we:

	●	continue the ongoing and planned preclinical and clinical development of our products;

	●	review and analyze the value of amending our previous 510(k) Application for anxiety and insomnia in accordance with the FDA;

	●	arrange for an outsourced sales, marketing and distribution model and scale up external manufacturing capabilities to commercialize any product candidate for which we may obtain regulatory approval and intend to commercialize;

	●	maintain, expand and protect our intellectual property portfolio;

	●	engage additional clinical, scientific, manufacturing and controls personnel;

	●	add additional information systems including personnel to support our product development;

Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company.

Recent Developments

Formalized Joint Venture; China Related Activities; Approvals in Oman and Brazil

As of the date of this Quarterly Report on Form 10-Q, (i) our operations are carried on outside of China; and (ii) the Joint Venture does not maintain any variable interest entity structure or operate any data center in China.

Under the Joint Venture Agreement, Wider is obligated to fund all operations for the initial 12-month period of the Joint Venture, after which Nexalin and Wider plan to jointly fund the Joint Venture’s operating expenses in accordance with their pro rata ownership.

The Joint Venture is controlled by a Board of Directors in which Wider is to have sole representation but neither the Company nor Wider has exclusive decision-making ability over day-to-day or significant operational decisions. Wider and Nexalin own 52% and 48% of the Joint Venture, respectively. In accordance with ASC 323 and ASC 810, the Company recognized $159 and $0 for the three months ended September 30, 2024 and 2023 and $4,651 and $0 of equity method investment income from the Joint Venture on a one-quarter reporting lag for the nine months ended September 30, 2024 and 2023, respectively, on the condensed consolidated statements of operations and comprehensive loss.

During the nine months ended September 30, 2024, the Company issued 150,000 shares of common stock to affiliates of Wider in satisfaction of obligations pursuant to their collaborative agreement. A charge to research and development was recorded in 2023 at the time the Company recognized its obligation to issue these shares.

The investment in the Joint Venture is accounted for using the equity method of accounting. As of September 30, 2024 and December 31, 2023 the Company had an Equity Method Investment of $100,651 and $96,000, respectively, recorded on the condensed consolidated balance sheets. The Company invested $96,000 in the joint venture in September 2023 and Wider invested $104,000. In accordance with ASC 323, the Company uses the equity method of accounting for its investment in the Joint Venture, an unconsolidated entity over which it does not have a controlling interest. The equity method of accounting requires the investment to be initially recorded at cost and subsequently adjusted for the Company’s share of equity in the unconsolidated entity’s earnings or losses. The Company evaluates the carrying amount of this investment in the Joint Venture for impairment in accordance with ASC 323. If the Company determines that a loss in the value of the investment is other than temporary, the Company writes down the investment to its estimated fair value. Any such losses are recorded to equity in income of unconsolidated entities in the Company’s condensed consolidated statements of operations and comprehensive loss. The Company has made an election to classify distributions received from the Joint Venture using the nature of the distribution approach. Distributions received are classified as cash inflows from operating activities based on the nature of the activities of the unconsolidated entity.

In September of 2021, the China National Medical Products Administration (the “NMPA”), the equivalent of the FDA, approved the Gen-2 device for marketing and sale in China for the treatment of insomnia and depression. These treatment indications and clearances from the NMPA have allowed Wider to market and sell the Gen-2 device in China for the treatment of insomnia and depression.

Our participation in the Joint Venture with Wider in China is subject to general, as well as industry-specific, economic, political and legal developments and risks in China. The Chinese government exercises significant control over the Chinese economy, including but not limited to controlling capital investments, allocating resources, setting monetary policy, controlling and monitoring foreign exchange rates, implementing and overseeing tax regulations, providing preferential treatment to certain industry segments or companies and issuing necessary licenses to conduct business. In addition, we could face additional risks resulting from changes in China’s data privacy and cybersecurity requirements. Accordingly, any adverse change in the Chinese economy, the Chinese legal system or Chinese governmental, economic or other policies could have a material adverse effect on our business and operations of the Joint Venture in China and our prospects generally.

We face additional risks in China due to China’s historically limited recognition and enforcement of contractual and intellectual property rights. We may experience difficulty enforcing our intellectual property rights in China. If we cannot adequately monitor the use of our technologies and devices or enforce intellectual property rights related to our devices in China or contractual restrictions relating to use of our intellectual property by Chinese companies, our revenue could be adversely affected.

The Joint Venture with Wider is subject to laws and regulations applicable to foreign investment in China. There are uncertainties regarding the interpretation and enforcement of laws, regulations and policies in China. Because many of the laws, regulations and policies applicable to our operations in China are relatively new, the interpretations of such laws, regulations and policies are not always uniform. Moreover, the interpretation of statutes and regulations may be subject to government policies reflecting domestic political agendas. Enforcement of existing laws or contracts may be uncertain. As a result of the foregoing, it may be difficult for us to obtain timely or equitable enforcement of laws ostensibly designed to protect companies like ours, which could have a material adverse effect on our business and results of operations. Our ability to monetize the Joint Venture in China may also be limited.

The Sultanate of Oman’s Ministry of Health granted conditional approval for use of our Gen-2 device on June 16, 2022, effective upon the end user of our device opening and operating a mental health care clinic being constructed in Oman. The Company’s first shipment of a device to Oman was made on January 30, 2024 and received in Oman on February 5, 2024 in connection with the opening of the end user’s clinic, rendering the approval effective. Two additional devices were shipped to Oman on February 29, 2024 and were received by the end user on March 6, 2024. Upon receipt of the two additional devices, the end user’s clinic was operational, and the use of the device to treat patients commenced pursuant to the approval.

On June 13, 2024, the “Company announced that our Gen-2 device had been granted regulatory approval by the Brazilian Health Regulatory Agency, a regulatory body of the Brazilian government responsible for approving new drugs and medical devices.

Results of Operations

Comparison of the three months ended September 30, 2024 and 2023

Our financial results for the three months ended September 30, 2024 and 2023 are summarized as follows:

	Three Months Ended September 30,
	2024			2023			Change			Change⁽¹⁾
							$			%
Revenues, net	$	36,031		$	24,113		$	11,918			49	%
Cost of revenues		12,694			3,973			8,721			220	%
Gross profit		23,337			20,140			3,197			16	%

Operating expenses:
Professional fees		262,303			127,202			135,101			106	%
Salaries and benefits		294,175			363,330			(69,155	)		(19	)%
Selling, general and administrative		1,975,376			1,945,145			30,231			2	%
Total operating expenses		2,531,854			2,435,677			96,177			4	%

Loss from operations		(2,508,517	)		(2,415,537	)		(92,980	)		4	%

Other income (expense), net:
Interest income (expense), net		1,000			(5,330	)		6,330			119	%
Gain on sale of short-term investments		56,250			82,943			(26,693	)		(32	)%
Other income		2,851			40,735			(37,884	)		(93	)%
Total other income (expense), net		60,101			118,348			(58,247	)		(49	)%

Loss before equity in net earnings of affiliate		(2,448,416	)		(2,297,189	)		(151,227	)		7	%
Equity in net earnings of affiliate		159			-			159			100	%
Net loss	$	(2,448,257	)	$	(2,297,189	)	$	(151,068	)		7	%

Other comprehensive income (loss):
Unrealized loss from short-term investments		(325	)		(32,289	)		31,964			99	%
Comprehensive loss	$	(2,448,582	)	$	(2,329,478	)	$	(119,104	)		5	%

(1)

Percentages may not foot due to rounding.

Revenues

For the three months ended September 30, 2024 and 2023, we generated $36,031 and $24,113 respectively, of revenue primarily from the sale of devices, supplies and from licensing and treatment fee agreements with our customers for which we charge a monthly licensing fee for the duration of the agreement. We also generated revenue from treatment fee agreements by collecting fees based on the number of treatments per month the customer performs. In addition, we derived revenue from equipment by selling electrodes and patient cables to customers for use with our device. The increase in revenue for the three months ended September 30 2024 compared to 2023 was primarily due to sales of supplies and parts.

Cost of Revenues and Gross Profit

For the three months ended September 30, 2024 and 2023, cost of revenues was $12,694 and $3,973, respectively, yielding a gross profit of $23,337 and $20,140, respectively, or 64.77% and 83.52%, respectively. Such decrease in gross margin was due to the lower margins on supplies and parts.

Operating Expenses

Total operating expenses for the three months ended September 30, 2024 and 2023 were $2,531,854 and $2,435,677, respectively. The increase in selling, general and administrative expenses was due primarily to an increase in shareholder related expenses of approximately $56,000, an increase in professional fees of approximately $79,000, an increase in travel of approximately $34,000, and an increase in stock compensation of approximately $1,466,000. These amounts were offset by a decrease in salaries and benefits of approximately $69,000 a decrease in research and development costs of approximately $1,452,000 and a decrease in insurance of approximately $17,000.

The increase in shareholder related expenses was due to costs associated with investor relations. The increase in professional fees is due to an increase in legal fees and an executive search professional fee of $60,000. The increase in travel is primarily due to costs associated with meetings with our joint venture partners, staff visits to our Houston office and travel related to investor relations. The increase in stock compensation is primarily related to compensating consultants with stock compensation upon shareholder approval of amending the Company Equity Plan. The decrease in salaries is primary due to a bonus recorded in 2023. The decrease in research and development costs are primarily related to costs associated with clinical trials not incurred in 2024. The decrease in insurance is due to a reduction in our insurance premiums.

Other Income (Expense), Net

Other income (expense), net for the three months ended September 30, 2024 and 2023 was $60,101 and $118,348, respectively, consisting of interest and dividend income, gain on the sale of short-term investments offset by interest expense. The decrease in other income was due to a decrease in the amount available for investment.

Comparison of the nine months ended September 30, 2024 and 2023

Our financial results for the nine months ended September 30, 2024 and 2023 are summarized as follows:

	Nine Months Ended September 30,
	2024			2023			Change			Change⁽¹⁾
							$			%
Revenues, net	$	141,542		$	90,212		$	51,330			57	%
Cost of revenues		29,097			20,457			8,640			42	%
Gross profit		112,445			69,755			42,690			61	%

Operating expenses:
Professional fees		731,099			405,949			325,150			80	%
Salaries and benefits		928,072			965,988			(37,916	)		(4	)%
Selling, general and administrative		3,332,524			2,769,641			562,883			20	%
Total operating expenses		4,991,695			4,141,578			850,117			21	%

Loss from operations		(4,879,250	)		(4,071,823	)		(807,427	)		20	%

Other income (expense), net:
Interest income (expense), net		1,370			(19,685	)		21,055			107	%
Gain on sale of short-term investments		92,915			180,593			(87,678	)		(49	)%
Other income		6,407			42,875			(36,468	)		(85	)%
Total other income (expense), net		100,692			203,783			(103,091	)		(51	)%

Loss before equity in net earnings of affiliate		(4,778,558	)		(3,868,040	)		(910,518	)		24	%
Equity in net earnings of affiliate		4,651			-			4,651			100	%
Net loss	$	(4,773,907	)	$	(3,868,040	)	$	(905,867	)		24	%

Other comprehensive income (loss):
Unrealized gain (loss) from short-term investments		80			(35,513	)		35,593			100	%
Comprehensive loss	$	(4,773,827	)	$	(3,903,553	)	$	(870,274	)		22	%

(1)

Percentages may not foot due to rounding.

Revenues

For the nine months ended September 30, 2024 and 2023, we generated $141,542 and $90,212 respectively, of revenue primarily from the sale of devices, supplies and from licensing and treatment fee agreements with our customers for which we charge a monthly licensing fee for the duration of the agreement. We also generated revenue from treatment fee agreements by collecting fees based on the number of treatments per month the customer performs. In addition, we derived revenue from equipment by selling electrodes and patient cables to customers for use with our device. The increase in revenue for the nine months ended September 30, 2024 compared to 2023 was primarily due to the sales of devices to a new overseas customer.

Cost of Revenues and Gross Profit

For the nine months ended September 30, 2024 and 2023, cost of revenues was $29,097 and $20,457, respectively, yielding a gross profit of $112,455 and $69,755, respectively, or 79.44% and 77.32%, respectively. Such increase in gross margin was primarily due to device revenue having a higher gross profit margin than that of other sources of revenue.

Operating Expenses

Total operating expenses for the nine months ended September 30, 2024 and 2023 were $4,991,695 and $4,141,578, respectively. The increase in selling, general and administrative expenses was due primarily to an increase in shareholder related expenses of approximately $271,000, an executive search professional fee of $60,000, an increase in travel of approximately $115,000, and an increase in stock compensation of approximately $1,847,000. These amounts were offset by a decrease in research and development costs of approximately $1,389,000, a decrease in taxes of approximately $21,000, and a decrease in insurance of approximately $57,000.

The increase in shareholder related expenses was due to costs associated with investor relations. The increase in stock compensation is primarily related to compensating consultants with stock compensation upon shareholder approval of amending the Company Equity Plan. The increase in travel is primarily due to costs associated with meetings with our joint venture partners, staff visits to our Houston office and travel related to investor relations. The decrease in research and development costs are primarily related to costs associated with clinical trials not incurred in 2024. The decrease in taxes is due to a reduction in our Delaware Franchise tax. The decrease in insurance is due to a reduction in our insurance premiums.

Other Income (Expense), Net

Other income (expense), net for the nine months ended September 30, 2024 and 2023 was $100,692 and $203,753, respectively, consisting of interest and dividend income, gain on the sale of short-term investments offset by interest expense. The decrease is primarily due to a decrease in gain on short term investments resulting from decreased short term investments.

Cash Flows

The following table summarizes our consolidated cash flows for the nine months ended September 30, 2024 and 2023:

	September 30, 2024			September 30, 2023
Net cash used in operating activities	$	(2,809,914	)	$	(2,831,354	)
Net cash provided by (used in) investing activities	$	(2,205,079	)	$	3,230,008
Net cash provided by (used in) financing activities	$	4,516,184		$	(200,000	)

Net Cash Used In Operating Activities

Net cash used in operating activities was $(2,809,914) for the nine months ended September 30, 2024, as compared to $(2,831,554) for the respective period in 2023, was primarily due to the net loss of $4,773,907, as well as a combined decrease in accrued expenses of approximately $196,000, offset by increases in stock compensation of approximately $347,000 and accounts payable and accounts payable-related party of approximately $593,000.

Net Cash Provided By (Used In) Investing Activities

Net cash provided by (used in) investing activities during the nine months ended September 30, 2024, and 2023 was $(2,205,079) and $3,230,008, respectively, which was due to short-term investment sales approximately $22.3 million offset by purchases of approximately $24.4 million of short-term investments for the nine months ended September 30, 2024. Compared to short-term investment sales of approximately $32.7 million offset by purchases of $29.3 million of short-term investments during the nine months ended September 30, 2023.

Net Cash Provided By (Used In) Financing Activities

Net cash provided by (used in) financing activities during the nine months ended September 30, 2024 and 2023 was $4,516,184 and $(200,000), respectively, which was due to the issuance of common stock for approximately $4.5 million from the July 1, 2024 offering. The September 30, 2023 use of cash was for a payment of note payable to an officer of the Company.

Uses and Availability of Additional Funds

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, manufacturing development costs, legal and other regulatory expenses, and general administrative costs. Although we have produced Gen-2, which is selling in China where it is approved for certain utilizations by medical practitioners, the successful development of our future products is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the clinical development of Gen-3 and obtain regulatory approvals. We are also unable to predict when, if ever, net cash inflows from revenues will enable us to be cash flow positive. This is due to the numerous risks and uncertainties associated with developing products, including, among others, the uncertainty of:

	●	successful enrolment in, and completion of clinical trials;

	●	performing preclinical studies and clinical trials in compliance with the FDA or any comparable regulatory authority requirements;

	●	the ability to outsource the manufacture of our products for development, clinical trials and/ or potential commercialization;

	●	obtaining and maintaining patent, trademark and trade secret protection for our products;

	●	scaling the commercial sales of products, if and when approved, whether alone or in collaboration with others;

	●	acceptance of existing therapies, and future therapies, if and when approved, by healthcare providers, physicians, clinicians, patients and third-party payors;

	●	competing effectively with other therapies;

	●	obtaining and maintaining healthcare coverage and adequate reimbursement;

	●	protecting our rights in our intellectual property portfolio; and

	●	maintaining a continued acceptable safety profile of our products following approval.

Liquidity and Capital Resources

As of September 30, 2024, the Company had a significant accumulated deficit of $81.8 million. For the nine months ended September 30, 2024, the Company had a loss from operations of $4.9 million and negative cash flows from operations of $2.8 million. The Company’s operating activities consume the majority of its cash resources. The Company will continue to service existing customers in the United States. The Company anticipates that it will continue to incur operating losses as it executes its development plans through 2024, as well as other potential strategic and business development initiatives. In addition, the Company has had and expects to have negative cash flows from operations, at least into the near future. The Company previously funded these losses primarily through the sale of equity. As of September 30, 2024, the Company had cash and cash equivalents on hand of approximately $4.6 million.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 3, “Summary of Significant Accounting Policies and New Accounting Standards” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of the 2023 Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since the 2023 Form 10-K.

Recent Accounting Pronouncements

All other newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

Contractual Obligations

See Note 7 – Commitments and Contingencies in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a summary of our contractual obligations.

Continued Nasdaq Listing

Minimum Bid Price Requirement

On May 10, 2023, the Company received written notice from The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was no longer in compliance with the minimum bid price requirement for continued listing on Nasdaq, as the closing bid price for the Company’s common stock was below $1.00 per share as set forth in the Nasdaq listing rules. The Company was afforded 180 calendar days, or until November 6, 2023, to regain compliance with the Nasdaq listing rules. The Company was unable to regain compliance with the bid price requirement by November 6, 2023.

The Company requested a second 180-day period in order to regain compliance with Nasdaq Rule 5550(a)(2). On January 18, 2024, the Nasdaq Hearing Panel granted the Company a temporary exception to regain compliance with the Minimum Bid Price Rule until March 27, 2024, which date was further extended by the Panel until April 25, 2024. On April 23, 2024, the Company received notice from Nasdaq notifying the Company that it has regained compliance with Nasdaq’s minimum bid price requirement under Nasdaq Rule 5550(a)(2).

Minimum Stockholder Equity Requirement

Pursuant to the Notice, the Company had 45 calendar days from the date of the Notice to submit a plan to regain compliance. On July 1, 2024, the Company submitted a plan to Nasdaq. As described in the Company’s submission to Nasdaq, and as set forth in the Current Report on Form 8-K filed by the Company on July 3, 2024, the Company consummated the public offering of 3 million shares of the Company’s Common Stock for total aggregate gross proceeds of approximately $5,250,000. On July 23, 2024, the Company received written notification from the Listing Qualifications Department of Nasdaq, confirming that, based on the information contained in the Company’s Form 8-K, filed with the SEC on July 16, 2024, the Company is now in compliance with the Minimum Stockholder Equity Rule.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not Applicable. As a smaller reporting company, we are not required to provide the information required by this Item.

Item 4. Disclosure Controls and Procedures

We have adopted and maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the SEC. Our disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, our management, including our Chief Executive Officer and our Chief Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, management identified material weaknesses in our internal control over financial reporting. The material weaknesses identified to date include: (i) lack of sufficient resources necessary to provide adequate segregation of duties related to the preparation and review of financial information used in financial reporting and review of controls over the financial reporting process, including documentation of review of reconciliations; and (ii) insufficient IT controls which are effectively designed and implemented, specifically related to user/superuser access to the Company’s financial reporting system.

As of September 30, 2024, based on evaluation of these disclosure controls and procedures, management concluded that our disclosure controls and procedures were not effective. To address our material weakness, we intend to engage an outside firm to advise on our financial reporting processes and intend to implement new financial accounting controls and processes. We intend to continue to take steps to remediate the material weakness described above through implementing enhancements and controls within our accounting systems, subject to budget limitations. We will not be able to remediate these control deficiencies until these steps have been completed and have been operating effectively for a sufficient period of time and management has concluded, through testing, that the controls are operating effectively. The redesign and implementation of improvements to our accounting and proprietary systems and controls may be costly and time consuming and the cost to remediate may impair our results of operations in the future.

In light of the conclusion that our disclosure controls and procedures were not effective at September 30, 2024, we have applied particular procedures and processes as necessary to ensure the reliability of our financial reporting with respect to this quarterly report. Accordingly, we believe, based on our knowledge that: (i) this quarterly report does not contain any untrue statement of material fact or omit a statement of material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading with respect to the period covered by this report; and (ii) the consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects our financial condition, results of operations, and cash flows as of and for the periods presented in this quarterly report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors.

While we attempt to identify, manage and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. The risk factors set forth in our Registration Statement on Form S-1 (SEC File Number 333-279684) as declared effective by the Securities and Exchange Commission on June 27, 2024 and the Prospectus contained therein describe some of the risks and uncertainties associated with our business. These risks and uncertainties have the potential to materially affect our results of operations and our financial condition.

There have been no material changes from the risk factors previously disclosed in such filings.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibits and Financial Statement Schedules.

(a)

Exhibits.

Exhibit Number		Description of Document
3.1 *		Certificate of Incorporation, as amended and as currently in effect.
3.2 *		Amended and Restated Bylaws.
4.1 *		Form of Specimen stock certificate evidencing shares of common stock.
4.2 **		Warrant Agreement between the Company and Continental Stock Transfer and Trust company as warrant agent dated as of September 16, 2022
4.3 *		Form of Warrant Certificate (filed as part of Exhibit 4.2)
10.1 ****		Joint Venture Agreement between the Company and Wider Come Limited dated as of May 31, 2023.
10.2 ****		Employment Agreement between the Company and Mark White dated as of July 1, 2023.
10.3 ****		Services Agreement between the Company and David Owens, M.D. dated as of July 1, 2023.
10.4 *		Quality Assurance Agreement between the Company and Apical Instruments dated December 31, 2020.
10.5 *		Advisor Agreement with Leonard Osser dated as of December 22,2021.
10.6 *		Advisor Agreement with Tucker Anderson dated as of December 24, 2021.
10.7 *		Advisor Agreement with Gian Domenico Trombetta dated December 24, 2021.
10.8 *		Employment Agreement between the Company and Marilyn Elson dated as of January 11, 2022
10.9 *		Amendment and Deferral Agreement dated as of March 30, 2022 to Consulting Agreement between the Company and US Asian Consulting Group LLC
10.10 ****		Employment Agreement between the Company and Michael Nketiah dated as of July 1, 2023.
10.11 *		Form of Lock-Up Agreement.
10.12 *		Consulting Agreement dated as of May 9, 2018 as amended between the Company and US Asian Consulting Group, LLC, as amended on January 2, 2019 and March 4, 2021
10.13 ***		Amended and Restated Promissory Note in favor of Mark White dated as of January 1, 2023.
10.14 *		Distribution Authorization Agreement dated as of May 1, 2019 with Wider Come Limited.
10.15 *****		Form of Lock-Up Agreement.
10.16 *****		Form of Securities Purchase Agreement.
10.17 ⸹		Placement Agency Agreement
10.18 ⸹⸹		Letter Agreement between the Company and Carolyn Shelton
31.1 ⸹⸹⸹		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1 ⸹⸹⸹		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1 *		Code of Ethics
99.2 *		Audit Committee Charter
99.3 *		Compensation Committee Charter
99.4 *		Nominating and Corporate Governance Committee Charter

*	Previously filed as an exhibit to Form S-1 as declared effective by the SEC on September 15, 2022 (SEC File Number 333-261989).
**	Previously filed as an exhibit to Form 8-K/A as filed with the SEC on September 20, 2022.
***	Previously filed as an exhibit to Form 10-Q as filed with the SEC on May 10, 2023.
****	Previously filed as an exhibit to Form 10-Q as filed with the SEC on August 10, 2023.
*****	Previously filed as an exhibit to Form S-1 as declared effective by the SEC on June 27, 2024 (SEC File Number 333-279684).
⸹	Previously filed as an exhibit to Form 8-K as filed with the SEC on July 3, 2024.
⸹⸹	Previously filed as an Exhibit to Form 8-K as filed with the SEC on September 19, 2024.
⸹⸹⸹	Filed as an exhibit to this Form 10-Q.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized on the 8th day of November, 2024.

	NEXALIN TECHNOLOGY, INC.

	By:	/s/ Mark White
		Mark White
		Chief Executive Officer
		Principal Executive Officer
		Principal Financial Officer

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

I, Mark White, certify that:

I have reviewed this quarterly report on Form 10-Q of Nexalin Technology, Inc.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) (Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313);

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2024	NEXALIN TECHNOLOGY, INC.

	By:	/s/ Mark White
		Mark White
		Chief Executive Officer,
		Principal Executive Officer Principal Financial Officer

Exhibit 32.1

CERTIFICATIONS OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of NEXALIN TECHNOLOGY, INC., that, to his or her knowledge, the Quarterly Report of Nexalin Technology, Inc. on Form 10-Q for the period ended September 30, 2024 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operation of the company.

A signed original of this written statement required by Section 906 has been provided to NEXALIN TECHNOLOGY, INC and will be retained by NEXALIN TECHNOLOGY, INC and furnished to the Securities and Exchange Commission or its staff upon request.

Date: November 8, 2024	NEXALIN TECHNOLOGY, INC.

	By:	/s/ Mark White
		Mark White
		Chief Executive Officer
		Principal Executive Officer Principal Financial Officer

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2024	Nov. 06, 2024
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2024
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-41507
Entity Registrant Name	NEXALIN TECHNOLOGY, INC.
Entity Central Index Key	0001527352
Entity Tax Identification Number	27-5566468
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	1776 Yorktown
Entity Address, Address Line Two	Suite 550
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77056
City Area Code	832
Local Phone Number	260-0222
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		12,861,605
Common stock, par value $0.001 per share
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	NXL
Security Exchange Name	NASDAQ
Warrants, exercisable for one share of Common Stock
Title of 12(b) Security	Warrants, exercisable for one share of Common Stock
Trading Symbol	NXLIW
Security Exchange Name	NASDAQ

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Current Assets:
Cash and cash equivalents	$ 81,421	$ 580,230
Short-term investments	4,512,197	2,368,203
Accounts receivable (Includes related party of $540 and $3,614, respectively)	15,171	9,369
Inventory	158,375	156,420
Prepaid expenses and other current assets	140,425	315,670
Total Current Assets	4,907,589	3,429,892
ROU Asset		496
Intangible assets, net	248,942	105,528
Equity method investment	100,651	96,000
Total Assets	5,257,182	3,631,916
Current Liabilities:
Accounts payable	166,542	159,534
Accrued expenses	132,847	261,284
Lease liability, current portion		4,463
Total Current Liabilities	299,389	425,281
Total Liabilities	299,389	425,281
Stockholders’ Equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 12,861,605 shares issued and outstanding at September 30, 2024 and 7,436,852 shares issued and outstanding at December 31, 2023	12,862	7,437
Accumulated other comprehensive loss	(325)	(405)
Additional paid in capital	86,757,212	80,237,652
Accumulated deficit	(81,811,956)	(77,038,049)
Total Stockholders’ Equity	4,957,793	3,206,635
Total Liabilities and Stockholders’ Equity	$ 5,257,182	$ 3,631,916

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Accounts receivable, related party	$ 540	$ 3,614
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	12,861,605	7,436,852
Common stock, shares outstanding	12,861,605	7,436,852

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Statement [Abstract]
Revenues, net (Includes related party of $868 and $0 for the three months ended and $3,102 and $10,207 for the nine months ended, respectively)	$ 36,031	$ 24,113	$ 141,542	$ 90,212
Cost of revenues	12,694	3,973	29,097	20,457
Gross profit	23,337	20,140	112,445	69,755
Operating expenses:
Professional fees	262,303	127,202	731,099	405,949
Salaries and benefits	294,175	363,330	928,072	965,988
Selling, general and administrative	1,975,376	1,945,145	3,332,524	2,769,641
Total operating expenses	2,531,854	2,435,677	4,991,695	4,141,578
Loss from operations	(2,508,517)	(2,415,537)	(4,879,250)	(4,071,823)
Other income (expense), net:
Interest income (expense), net	1,000	(5,330)	1,370	(19,685)
Gain on sale of short-term investments	56,250	82,943	92,915	180,593
Other income	2,851	40,735	6,407	42,875
Total other income (expense), net	60,101	118,348	100,692	203,783
Loss before equity in net earnings of affiliate	(2,448,416)	(2,297,189)	(4,778,558)	(3,868,040)
Equity in net earnings of affiliate	159		4,651
Net loss	(2,448,257)	(2,297,189)	(4,773,907)	(3,868,040)
Other comprehensive income (loss):
Unrealized gain (loss) from short-term investments	(325)	(32,289)	80	(35,513)
Comprehensive loss	$ (2,448,582)	$ (2,329,478)	$ (4,773,827)	$ (3,903,553)
Net loss per share attributable to common stockholders - Basic	$ (0.23)	$ (0.31)	$ (0.55)	$ (0.53)
Net loss per share attributable to common stockholders - Diluted	$ (0.23)	$ (0.31)	$ (0.55)	$ (0.53)
Weighted Average Shares Outstanding - Basic	10,847,476	7,415,366	8,606,357	7,330,128
Weighted Average Shares Outstanding - Diluted	10,847,476	7,415,366	8,606,357	7,330,128

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (Parenthetical) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Statement [Abstract]
Revenue from related parties	$ 868	$ 0	$ 3,102	$ 10,207

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($)	Common Stock [Member]	AOCI Attributable to Parent [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2022	$ 7,287	$ 36,313	$ 77,824,427	$ (72,389,340)	$ 5,478,687
Beginning balance, shares at Dec. 31, 2022	7,286,562
Other comprehensive loss		4,756			4,756
Net loss				(748,414)	(748,414)
Ending balance, value at Mar. 31, 2023	$ 7,287	41,069	77,824,427	(73,137,754)	4,735,029
Ending balance, shares at Mar. 31, 2023	7,286,562
Other comprehensive loss		(7,980)			(7,980)
Stock compensation			88,388		88,388
Net loss				(822,437)	(822,437)
Ending balance, value at Jun. 30, 2023	$ 7,287	33,089	77,912,815	(73,960,191)	3,993,000
Ending balance, shares at Jun. 30, 2023	7,286,562
Other comprehensive loss		(32,289)			(32,289)
Stock compensation	$ 150		1,573,020		1,573,170
Stock compensation, shares	150,000
Net loss				(2,297,189)	(2,297,189)
Ending balance, value at Sep. 30, 2023	$ 7,437	800	79,485,835	(76,257,380)	3,236,692
Ending balance, shares at Sep. 30, 2023	7,436,562
Beginning balance, value at Dec. 31, 2023	$ 7,437	(405)	80,237,652	(77,038,049)	3,206,635
Beginning balance, shares at Dec. 31, 2023	7,436,562
Other comprehensive loss		160			160
Stock compensation			161,349		161,349
Net loss				(1,041,157)	(1,041,157)
Ending balance, value at Mar. 31, 2024	$ 7,437	(245)	80,399,001	(78,079,206)	2,326,987
Ending balance, shares at Mar. 31, 2024	7,436,562
Other comprehensive loss		245			245
Stock compensation			308,283		308,283
Shares issued	$ 150		(150)
Shares issued, shares	150,000
Net loss				(1,284,493)	(1,284,493)
Ending balance, value at Jun. 30, 2024	$ 7,587		80,707,134	(79,363,699)	1,351,022
Ending balance, shares at Jun. 30, 2024	7,586,562
Other comprehensive loss		(325)			(325)
Stock compensation	$ 2,275		1,536,894		1,539,169
Stock compensation, shares	2,275,043
Shares issued in offering	$ 3,000		4,513,184		4,516,184
Shares issued in offering, shares	3,000,000
Net loss				(2,448,257)	(2,448,257)
Ending balance, value at Sep. 30, 2024	$ 12,862	$ (325)	$ 86,757,212	$ (81,811,956)	$ 4,957,793
Ending balance, shares at Sep. 30, 2024	12,861,605

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities:
Net loss	$ (4,773,907)	$ (3,868,040)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock compensation	2,008,801	1,661,558
Depreciation		402
Amortization	10,666	2,105
Non-cash lease expense	496	4,208
Gain on sale of short-term investments	(92,915)	(180,593)
Share of net income from equity method investment	(4,651)
Changes in operating assets and liabilities:
Accounts receivable	(5,262)	(9,608)
Accounts receivable - related party	(540)
Prepaid assets	175,245	119,237
Inventory	(1,955)	(4,249)
Accounts payable - related party		(260,000)
Accounts payable	7,008	(325,818)
Accrued expenses	(128,437)	67,069
Lease liability	(4,463)	(37,625)
Net cash used in operating activities	(2,809,914)	(2,831,354)
Cash flows from investing activities:
Sale of short-term investments	22,348,611	32,671,394
Purchase of short-term investments	(24,399,610)	(29,270,926)
Purchase of patents	(101,936)	(96,000)
Purchase of trademarks	(52,144)	(74,460)
Net cash provided by (used in) investing activities	(2,205,079)	3,230,008
Cash flows from financing activities:
Payments on notes payable - officer		(200,000)
Issuance of common stock	4,516,184
Net cash provided by (used in) financing activities	4,516,184	(200,000)
Net increase (decrease) in cash and cash equivalents	(498,809)	198,654
Cash and cash equivalents - beginning of period	580,230	162,743
Cash and cash equivalents - end of period	81,421	361,397
Non-cash investing and financing activities:
Unrealized gain (loss) on short-term investments	$ 80	$ (35,513)

Pay vs Performance Disclosure - USD ($)	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure [Table]
Net Income (Loss)	$ (2,448,257)	$ (2,297,189)	$ (4,773,907)	$ (3,868,040)

Insider Trading Arrangements	9 Months Ended
Insider Trading Arrangements	Sep. 30, 2024
Insider Trading Arrangements [Line Items]
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

NATURE OF THE ORGANIZATION AND BUSINESS

9 Months Ended

Sep. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF THE ORGANIZATION AND BUSINESS

NOTE 1 — NATURE OF THE ORGANIZATION AND BUSINESS

Corporate History

Nexalin Technology, Inc. (“NV Nexalin”) was formed on October 19, 2010 as a Nevada corporation. The Company’s principal offices are located at 1776 Yorktown, Suite 550, Houston, Texas 77056.

Our shares and warrants began trading on the Nasdaq Capital Market tier of the Nasdaq Stock Market (“Nasdaq”) on September 16, 2022, under the symbols “NXL” and “NXLIW”, respectively.

Throughout this report, the terms “Nexalin,” “our,” “we,” “us,” and the “Company” refer to Nexalin Technology, Inc.

Business Overview

Continued Nasdaq Listing

On April 23, 2024, the Company received notice from Nasdaq notifying the Company that it has regained compliance with Nasdaq’s minimum bid price requirement under Nasdaq Rule 5550(a)(2).

LIQUIDITY

9 Months Ended

Sep. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

LIQUIDITY

NOTE 2 — LIQUIDITY

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS

Basis of Presentation

Principles of Consolidation

Use of Estimates

Revenue

Revenue Streams

Disaggregated Revenues

Major Revenue Streams

Revenue consists of the following by service offering:

Schedule of disaggregation of revenue
	Three Months Ended September 30,
	2024		2023
Device sales	$	-	$	-
Licensing fee		16,941		18,664
Equipment		18,802		5,179
Other		288		270
Total	$	36,031	$	24,113

	Nine Months Ended September 30,
	2024		2023
Device sales	$	55,500	$	9,600
Licensing fee		54,561		62,566
Equipment		30,423		16,679
Other		1,058		1,367
Total	$	141,542	$	90,212

Major Geographic Locations

	Three Months Ended September 30,
	2024		2023
U.S. sales	$	20,664	$	24,113
International sales		15,367		-
Total	$	36,031	$	24,113

	Nine Months Ended September 30,
	2024		2023
U.S. sales	$	65,523	$	80,005
International sales		76,019		10,207
Total	$	141,542	$	90,212

Cash and Cash Equivalents

Short-Term Investments

Patents and Trademarks

The following table summarizes the gross carrying amount, amortization and the net carrying value at September 30, 2024 and December 31, 2023.

Schedule of patents
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
September 30, 2024
Patents	$	200,906	$	(10,680	)	$	190,226
Trademarks		62,717		(4,001	)		58,716
Total September 30, 2024	$	263,623	$	(14,681	)	$	248,942

December 31, 2023
Patents	$	98,970	$	(3,751	)	$	95,219
Trademarks		10,573		(264	)		10,309
Total December 31, 2023	$	109,543	$	(4,015	)	$	105,528

Income Taxes

Fair Value Measurements

	●	Level 1: Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

	●	Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

	●	Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The significant unobservable inputs used in the fair value measurement for nonrecurring fair value measurements of long-lived assets include pricing models, discounted cash flow methodologies and similar techniques.

Fair Value of Financial Instruments

The following table summarizes the amortized cost, unrealized gain (loss) and the fair value at September 30, 2024 and December 31, 2023.


	Amortized Cost		Unrealized Gain (Loss)			Fair Value
September 30, 2024
Short-term investments	$	4,512,522	$	(325	)	$	4,512,197
Total September 30, 2024	$	4,512,522	$	(325	)	$	4,512,197

December 31, 2023
Short-term investments	$	2,368,608	$	(405	)	$	2,368,203
Total December 31, 2023	$	2,368,608	$	(405	)	$	2,368,203

The following table provides the carrying value and fair value of the Company’s financial assets measured at fair value as of September 30, 2024 and December 31, 2023.


	Carrying Value		Level 1		Level 2		Level 3
September 30, 2024
U.S. Treasury Notes	$	4,512,197	$	4,512,197	$	-	$	-

December 31, 2023
U.S. Treasury Notes	$	2,368,203	$	2,368,203	$	-	$	-

Net Loss per Common Share

Schedule of antidilutive shares
	Three Months Ended September 30,
	2024		2023
Warrants		2,662,250		2,662,250
Stock options		2,863,129		-
Total		5,525,379		2,662,250

	Nine Months Ended September 30,
	2024		2023
Warrants		2,662,250		2,662,250
Stock options		2,863,129		-
Total		5,525,379		2,662,250

Stock-Based Compensation

Research and Development

Recent Accounting Pronouncements

All other newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

ACCRUED EXPENSES

9 Months Ended

Sep. 30, 2024

Payables and Accruals [Abstract]

ACCRUED EXPENSES

NOTE 4 — ACCRUED EXPENSES

Accrued expenses consist of the following amounts:

Schedule of accrued expenses
	September 30, 2024		December 31, 2023
Accrued – other		43,517		21,954
Accrued settlement liabilities		89,330		89,330
Accrued bonuses		-		150,000
	$	132,847	$	261,284

RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2024

RELATED PARTY TRANSACTIONS

NOTE 5 — RELATED PARTY TRANSACTIONS

U.S. Asian Consulting Group, LLC

Officers

Effective September 16, 2024, the Company entered into an agreement with Ms. Carolyn Shelton to serve as Senior Vice President, Quality, Regulatory and Clinical Affairs.

Leases

STOCKHOLDERS’ EQUITY

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 6 — STOCKHOLDERS’ EQUITY

Issuance of Common Stock

During the nine months ended September 30, 2024, the Company issued an aggregate of 5,425,043 shares of its common stock, as follows:

●

3,000,000 shares of common stock were issued to investors for net proceeds of $4,516,184.

●

Options

The following table presents a summary of stock option award activity during the nine months ended September 30, 2024:

Schedule of stock option award activity
	Number of options		Weighted Average Exercise Price		Weighted Average Remaining Life In Years
Outstanding December 31, 2023		2,281,879	$	0.89		8.75
Issued		581,250		0.94		5.00
Exercised		-		-		-
Expired or cancelled		-		-		-
Outstanding September 30, 2024		2,863,129	$	0.90		8.27

The following table provides additional information about stock options that are outstanding and exercisable at September 30, 2024:


Exercise Price		Outstanding Number of Options		Weighted Average Remaining Life In Years		Exercisable Number of Options
$	0.89		2,281,879	$	8.75		1,152,125
$	0.94		581,250		5.00		581,250
			2,863,129	$	8.27		1,733,375

For the 581,250 stock options granted during the nine months ended September 30, 2024, we used the following weighted average assumptions to estimate the fair value of stock options:

Schedule of assumptions
	September 30, 2024
Volatility		103.8	%
Expected dividends	$	-
Risk-free interest rate		3.66	%
Expected term (years)		5.0

For the stock options outstanding as of December 31,2023, we used the following weighted average assumptions to estimate the fair value of stock options:

	December 31, 2023
Volatility		99.0	%
Expected dividends	$	-
Risk-free interest rate		4.61	%
Expected term (years)		9.5

Warrants

The issuance of warrants to purchase shares of the Company’s common stock are summarized as follows:

Schedule of warrants
	Number of warrants		Weighted Average Exercise Price
Outstanding December 31, 2023		2,662,250	$	4.15
Issued		-		-
Exercised		-		-
Expired or cancelled		-		-
Outstanding September 30, 2024		2,662,250	$	4.15

The following table summarizes information about warrants to purchase shares of the Company’s common stock outstanding and exercisable at September 30, 2024:


Exercise Price		Outstanding Number of Warrants		Weighted Average Remaining Life In Years		Weighted Average Exercise Price		Exercisable Number of Warrants
$	4.15		2,315,000		1.00	$	4.15		2,135,000
$	4.15		347,250		1.00		4.15		347,250
			2,662,250		1.00	$	4.15		2,662,250

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 7 — COMMITMENTS AND CONTINGENCIES

Sarah Veltz v. Nexalin Technology, Inc. et al.

Employment Development Department

Demand Letter from The University of Arizona

CONCENTRATION OF CREDIT RISK

9 Months Ended

Sep. 30, 2024

Risks and Uncertainties [Abstract]

CONCENTRATION OF CREDIT RISK

NOTE 8 — CONCENTRATION OF CREDIT RISK

Revenues

Concentration of credit risk
	Three Months Ended September 30, 2024			Nine Months Ended September 30, 2024
Customer A		23	%		48	%
Customer B		18	%		11	%
Customer C		13	%		-
Customer D		11	%		-
Customer E		10	%		-

Three customers accounted for 70% and 55% of revenues for the three and nine months ended September 30, 2023, respectively as set forth below:

	Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
Customer A		27	%		24	%
Customer B		23	%		18	%
Customer C		20	%		13	%

Accounts Receivable

Four customers accounted for 78% of accounts receivable at September 30, 2024, as set forth below:

Customer A	43	%
Customer B	18	%
Customer C	17	%

Five customers accounted for 97% of accounts receivable at December 31, 2023.

Customer A - related party	39	%
Customer B	21	%
Customer C	15	%
Customer D	12	%
Customer E	10	%

SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2024

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 9 — SUBSEQUENT EVENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (Policies)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Principles of Consolidation

Principles of Consolidation

Use of Estimates

Use of Estimates

Revenue

Revenue

Revenue Streams

Disaggregated Revenues

Major Revenue Streams

Revenue consists of the following by service offering:

Schedule of disaggregation of revenue
	Three Months Ended September 30,
	2024		2023
Device sales	$	-	$	-
Licensing fee		16,941		18,664
Equipment		18,802		5,179
Other		288		270
Total	$	36,031	$	24,113

	Nine Months Ended September 30,
	2024		2023
Device sales	$	55,500	$	9,600
Licensing fee		54,561		62,566
Equipment		30,423		16,679
Other		1,058		1,367
Total	$	141,542	$	90,212

Major Geographic Locations

	Three Months Ended September 30,
	2024		2023
U.S. sales	$	20,664	$	24,113
International sales		15,367		-
Total	$	36,031	$	24,113

	Nine Months Ended September 30,
	2024		2023
U.S. sales	$	65,523	$	80,005
International sales		76,019		10,207
Total	$	141,542	$	90,212

Cash and Cash Equivalents

Cash and Cash Equivalents

Short-Term Investments

Short-Term Investments

Patents and Trademarks

Patents and Trademarks

The following table summarizes the gross carrying amount, amortization and the net carrying value at September 30, 2024 and December 31, 2023.

Schedule of patents
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
September 30, 2024
Patents	$	200,906	$	(10,680	)	$	190,226
Trademarks		62,717		(4,001	)		58,716
Total September 30, 2024	$	263,623	$	(14,681	)	$	248,942

December 31, 2023
Patents	$	98,970	$	(3,751	)	$	95,219
Trademarks		10,573		(264	)		10,309
Total December 31, 2023	$	109,543	$	(4,015	)	$	105,528

Income Taxes

Income Taxes

Fair Value Measurements

Fair Value Measurements

	●	Level 1: Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

	●	Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

	●	Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The significant unobservable inputs used in the fair value measurement for nonrecurring fair value measurements of long-lived assets include pricing models, discounted cash flow methodologies and similar techniques.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The following table summarizes the amortized cost, unrealized gain (loss) and the fair value at September 30, 2024 and December 31, 2023.


	Amortized Cost		Unrealized Gain (Loss)			Fair Value
September 30, 2024
Short-term investments	$	4,512,522	$	(325	)	$	4,512,197
Total September 30, 2024	$	4,512,522	$	(325	)	$	4,512,197

December 31, 2023
Short-term investments	$	2,368,608	$	(405	)	$	2,368,203
Total December 31, 2023	$	2,368,608	$	(405	)	$	2,368,203

The following table provides the carrying value and fair value of the Company’s financial assets measured at fair value as of September 30, 2024 and December 31, 2023.


	Carrying Value		Level 1		Level 2		Level 3
September 30, 2024
U.S. Treasury Notes	$	4,512,197	$	4,512,197	$	-	$	-

December 31, 2023
U.S. Treasury Notes	$	2,368,203	$	2,368,203	$	-	$	-

Net Loss per Common Share

Net Loss per Common Share

Schedule of antidilutive shares
	Three Months Ended September 30,
	2024		2023
Warrants		2,662,250		2,662,250
Stock options		2,863,129		-
Total		5,525,379		2,662,250

	Nine Months Ended September 30,
	2024		2023
Warrants		2,662,250		2,662,250
Stock options		2,863,129		-
Total		5,525,379		2,662,250

Stock-Based Compensation

Stock-Based Compensation

Research and Development

Research and Development

Recent Accounting Pronouncements

Recent Accounting Pronouncements

All other newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (Tables)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Schedule of disaggregation of revenue

Schedule of disaggregation of revenue
	Three Months Ended September 30,
	2024		2023
Device sales	$	-	$	-
Licensing fee		16,941		18,664
Equipment		18,802		5,179
Other		288		270
Total	$	36,031	$	24,113

	Nine Months Ended September 30,
	2024		2023
Device sales	$	55,500	$	9,600
Licensing fee		54,561		62,566
Equipment		30,423		16,679
Other		1,058		1,367
Total	$	141,542	$	90,212

Major Geographic Locations

	Three Months Ended September 30,
	2024		2023
U.S. sales	$	20,664	$	24,113
International sales		15,367		-
Total	$	36,031	$	24,113

	Nine Months Ended September 30,
	2024		2023
U.S. sales	$	65,523	$	80,005
International sales		76,019		10,207
Total	$	141,542	$	90,212

Schedule of patents

Schedule of patents
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
September 30, 2024
Patents	$	200,906	$	(10,680	)	$	190,226
Trademarks		62,717		(4,001	)		58,716
Total September 30, 2024	$	263,623	$	(14,681	)	$	248,942

December 31, 2023
Patents	$	98,970	$	(3,751	)	$	95,219
Trademarks		10,573		(264	)		10,309
Total December 31, 2023	$	109,543	$	(4,015	)	$	105,528

Schedule of unrealized loss on investments


	Amortized Cost		Unrealized Gain (Loss)			Fair Value
September 30, 2024
Short-term investments	$	4,512,522	$	(325	)	$	4,512,197
Total September 30, 2024	$	4,512,522	$	(325	)	$	4,512,197

December 31, 2023
Short-term investments	$	2,368,608	$	(405	)	$	2,368,203
Total December 31, 2023	$	2,368,608	$	(405	)	$	2,368,203

Schedule of fair value, assets measured on recurring basis


	Carrying Value		Level 1		Level 2		Level 3
September 30, 2024
U.S. Treasury Notes	$	4,512,197	$	4,512,197	$	-	$	-

December 31, 2023
U.S. Treasury Notes	$	2,368,203	$	2,368,203	$	-	$	-

Schedule of antidilutive shares

Schedule of antidilutive shares
	Three Months Ended September 30,
	2024		2023
Warrants		2,662,250		2,662,250
Stock options		2,863,129		-
Total		5,525,379		2,662,250

	Nine Months Ended September 30,
	2024		2023
Warrants		2,662,250		2,662,250
Stock options		2,863,129		-
Total		5,525,379		2,662,250

ACCRUED EXPENSES (Tables)

9 Months Ended

Sep. 30, 2024

Payables and Accruals [Abstract]

Schedule of accrued expenses

Schedule of accrued expenses
	September 30, 2024		December 31, 2023
Accrued – other		43,517		21,954
Accrued settlement liabilities		89,330		89,330
Accrued bonuses		-		150,000
	$	132,847	$	261,284

STOCKHOLDERS’ EQUITY (Tables)

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

Schedule of stock option award activity

Schedule of stock option award activity
	Number of options		Weighted Average Exercise Price		Weighted Average Remaining Life In Years
Outstanding December 31, 2023		2,281,879	$	0.89		8.75
Issued		581,250		0.94		5.00
Exercised		-		-		-
Expired or cancelled		-		-		-
Outstanding September 30, 2024		2,863,129	$	0.90		8.27

Schedule of additional information about stock options


Exercise Price		Outstanding Number of Options		Weighted Average Remaining Life In Years		Exercisable Number of Options
$	0.89		2,281,879	$	8.75		1,152,125
$	0.94		581,250		5.00		581,250
			2,863,129	$	8.27		1,733,375

Schedule of assumptions

Schedule of assumptions
	September 30, 2024
Volatility		103.8	%
Expected dividends	$	-
Risk-free interest rate		3.66	%
Expected term (years)		5.0

For the stock options outstanding as of December 31,2023, we used the following weighted average assumptions to estimate the fair value of stock options:

	December 31, 2023
Volatility		99.0	%
Expected dividends	$	-
Risk-free interest rate		4.61	%
Expected term (years)		9.5

Schedule of warrants

Schedule of warrants
	Number of warrants		Weighted Average Exercise Price
Outstanding December 31, 2023		2,662,250	$	4.15
Issued		-		-
Exercised		-		-
Expired or cancelled		-		-
Outstanding September 30, 2024		2,662,250	$	4.15

Summary information about warrants to purchase


Exercise Price		Outstanding Number of Warrants		Weighted Average Remaining Life In Years		Weighted Average Exercise Price		Exercisable Number of Warrants
$	4.15		2,315,000		1.00	$	4.15		2,135,000
$	4.15		347,250		1.00		4.15		347,250
			2,662,250		1.00	$	4.15		2,662,250

CONCENTRATION OF CREDIT RISK (Tables)

9 Months Ended

Sep. 30, 2024

Risks and Uncertainties [Abstract]

Concentration of credit risk

Concentration of credit risk
	Three Months Ended September 30, 2024			Nine Months Ended September 30, 2024
Customer A		23	%		48	%
Customer B		18	%		11	%
Customer C		13	%		-
Customer D		11	%		-
Customer E		10	%		-

Three customers accounted for 70% and 55% of revenues for the three and nine months ended September 30, 2023, respectively as set forth below:

	Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
Customer A		27	%		24	%
Customer B		23	%		18	%
Customer C		20	%		13	%

Accounts Receivable

Four customers accounted for 78% of accounts receivable at September 30, 2024, as set forth below:

Customer A	43	%
Customer B	18	%
Customer C	17	%

Five customers accounted for 97% of accounts receivable at December 31, 2023.

Customer A - related party	39	%
Customer B	21	%
Customer C	15	%
Customer D	12	%
Customer E	10	%

NATURE OF THE ORGANIZATION AND BUSINESS (Details Narrative) - USD ($)			3 Months Ended		9 Months Ended
	Jul. 03, 2024	Jul. 02, 2024	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Equity method investment income			$ 159	$ 0	$ 4,651	$ 0
Equity method investment			100,651		100,651		$ 96,000
Investment				$ 96,000		$ 96,000
Wider Come Limited [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Equity method investment			$ 104,000		$ 104,000
Wider [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Ownership percentage			52.00%		52.00%
Nexalin [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Ownership percentage			48.00%		48.00%
Common Stock [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shares issued during the period	3,000,000	3,000,000
Share price		$ 1.75
Proceeds from issuance of equity	$ 5,250,000	$ 4,720,000

LIQUIDITY (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
LIQUIDITY (Details Narrative) - USD ($)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accumulated deficit	$ (81,811,956)		$ (81,811,956)		$ (77,038,049)
Loss from operation	(2,508,517)	$ (2,415,537)	(4,879,250)	$ (4,071,823)
Cash flows from operations			(2,809,914)	$ (2,831,354)
Working capital deficit	$ 4,600,000		$ 4,600,000

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Product Information [Line Items]
Total	$ 36,031	$ 24,113	$ 141,542	$ 90,212
UNITED STATES
Product Information [Line Items]
Total	20,664	24,113	65,523	80,005
International Sales [Member]
Product Information [Line Items]
Total	15,367		76,019	10,207
Device Sales [Member]
Product Information [Line Items]
Total			55,500	9,600
Licensing Fee [Member]
Product Information [Line Items]
Total	16,941	18,664	54,561	62,566
Equipment [Member]
Product Information [Line Items]
Total	18,802	5,179	30,423	16,679
Other [Member]
Product Information [Line Items]
Total	$ 288	$ 270	$ 1,058	$ 1,367

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (Details 1) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Carrying Amount	$ 263,623	$ 109,543
Accumulated Amortization	(14,681)	(4,015)
Net Carring Value	248,942	105,528
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Carrying Amount	200,906	98,970
Accumulated Amortization	(10,680)	(3,751)
Net Carring Value	190,226	95,219
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Carrying Amount	62,717	10,573
Accumulated Amortization	(4,001)	(264)
Net Carring Value	$ 58,716	$ 10,309

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (Details 2) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Schedule of Investments [Line Items]
Amortized Cost	$ 4,512,522	$ 2,368,608
Unrealized Gain (Loss)	(325)	(405)
Fair Value	4,512,197	2,368,203
Short-Term Investments [Member]
Schedule of Investments [Line Items]
Amortized Cost	4,512,522	2,368,608
Unrealized Gain (Loss)	(325)	(405)
Fair Value	$ 4,512,197	$ 2,368,203

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (Details 3) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Platform Operator, Crypto Asset [Line Items]
Financial assets	$ 4,512,197	$ 2,368,203
Fair Value, Inputs, Level 1 [Member]
Platform Operator, Crypto Asset [Line Items]
Financial assets	4,512,197	2,368,203
Fair Value, Inputs, Level 2 [Member]
Platform Operator, Crypto Asset [Line Items]
Financial assets
Fair Value, Inputs, Level 3 [Member]
Platform Operator, Crypto Asset [Line Items]
Financial assets

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (Details 4) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	5,525,379	2,662,250	5,525,379	2,662,250
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	2,662,250	2,662,250	2,662,250	2,662,250
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	2,863,129		2,863,129

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Accounting Policies [Abstract]
Amortization expense	$ 4,211	$ 753	$ 10,666	$ 2,105
Research and development costs	$ 178,565	$ 1,638,508	$ 453,643	$ 1,842,341

ACCRUED EXPENSES (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Accrued – other	$ 43,517	$ 21,954
Accrued settlement liabilities	89,330	89,330
Accrued bonuses		150,000
Total	$ 132,847	$ 261,284

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)			3 Months Ended		9 Months Ended
	Jul. 02, 2023	May 09, 2018	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Related Party Transaction [Line Items]
Stock compensation expense					$ 2,008,801	$ 1,661,558
Shares issued for services					5,425,043
Lease payments			$ 13,500	$ 13,500	$ 40,500	40,500
2023 Plan [Member]
Related Party Transaction [Line Items]
New service agreement description	In addition to the retention payments, stock awards and nonqualified option grants described above, Messrs. White and Nketiah are receiving cash compensation and each of Messrs. White and Nketiah are eligible for performance-based cash bonuses. The 2023 performance-based milestones regarding Mr. White’s incentive compensation have been met for 2023, and he was awarded a cash bonus of $120,000 and 313,199 nonqualified stock options with a vesting date of July 1, 2024. The 2023 performance-based milestones regarding Mr. Nketiah’s incentive compensation have been met for 2023, and he was awarded a cash bonus of $50,000 and 33,557 nonqualified stock options with a vesting date of July 1, 2024.
Mr. White [Member]
Related Party Transaction [Line Items]
New service agreement description	Under the terms of his employment agreement, Mr. White is entitled to (i) a sign-on/retention bonus consisting of a one-time lump-sum payment of $50,000 and a grant of nonqualified stock options to purchase 1,387,024 shares of the Company’s common stock with an exercise price of $.894 per share subject to certain time and performance-based vesting conditions.
Dr. Owens [Member]
Related Party Transaction [Line Items]
New service agreement description	Under the terms of his service agreement, Dr. Owens is entitled to (i) a sign-on/retention bonus consisting of a grant of nonqualified stock options to purchase 654,362 shares of the Company’s common stock with an exercise price of $.894 per share subject to certain time and performance-based vesting conditions.
Mr. Nketiah [Member]
Related Party Transaction [Line Items]
New service agreement description	Under the terms of his employment agreement Mr. Nketiah was entitled to nonqualified stock option grants to purchase 100,671 shares of the Company’s common stock with an exercise price of $.894 subject to certain time and performance-based vesting conditions.
Ms. Shelton [Member]
Related Party Transaction [Line Items]
New service agreement description	Under the terms of her agreement Ms. Shelton is entitled to nonqualified stock option grants to purchase 90,620 shares of the Company’s common stock with an exercise price of $.6621, subject to certain time and performance-based vesting conditions.
U.S. Asian Consulting Group, LLC [Member]
Related Party Transaction [Line Items]
Consulting expenses			$ 30,000	$ 30,000	110,000	90,000
Stock compensation expense					146,000
U.S. Asian Consulting Group, LLC [Member] \| Leonard Osser [Member]
Related Party Transaction [Line Items]
Stock compensation expense					$ 144,000	$ 0
Shares issued for services					200,000
U.S. Asian Consulting Group, LLC [Member] \| Consulting Agreement [Member]
Related Party Transaction [Line Items]
Monthly payment		$ 10,000
U.S. Asian Consulting Group, LLC [Member] \| Amended Agreement [Member]
Related Party Transaction [Line Items]
Monthly payment		16,667
Shares issued values		$ 100,000

STOCKHOLDERS' EQUITY (Details) - $ / shares	9 Months Ended	12 Months Ended
STOCKHOLDERS' EQUITY (Details) - $ / shares	Sep. 30, 2024	Dec. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Weighted Average Remaining Life In years	8 years 3 months 7 days
Number of Options Exercised
Number of Options Outstanding, Ending Balance	2,863,129
Equity Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of Options Outstanding, Beginning Balance	2,281,879
Weighted Average Exercise Price, Options outstanding Beginning Balance	$ 0.89
Weighted Average Remaining Life In years	8 years 3 months 7 days	8 years 9 months
Number of Options Issued	581,250
Weighted Average Exercise Price, Options Issued	$ 0.94
Weighted Average Remaining Life In years Issued	5 years
Number of Options Exercised
Weighted Average Exercise Price, Options Exercised
Number of Options Expired or cancelled
Weighted Average Exercise Price, Options Expired or cancelled
Number of Options Outstanding, Ending Balance	2,863,129	2,281,879
Weighted Average Exercise Price, Options outstanding Ending Balance	$ 0.90	$ 0.89

STOCKHOLDERS' EQUITY (Details 1)	9 Months Ended
STOCKHOLDERS' EQUITY (Details 1)	Sep. 30, 2024 $ / shares shares
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Outstanding Number of Options	2,863,129
Weighted Average Remaining Life In Years	8 years 3 months 7 days
Exercisable Number of Options	1,733,375
0.89
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Price \| $ / shares	$ 0.89
Outstanding Number of Options	2,281,879
Weighted Average Remaining Life In Years	8 years 9 months
Exercisable Number of Options	1,152,125
0.94
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Price \| $ / shares	$ 0.94
Outstanding Number of Options	581,250
Weighted Average Remaining Life In Years	5 years
Exercisable Number of Options	581,250

STOCKHOLDERS' EQUITY (Details 2)	9 Months Ended	12 Months Ended
STOCKHOLDERS' EQUITY (Details 2)	Sep. 30, 2024	Dec. 31, 2023
Equity [Abstract]
Volatility	103.80%	99.00%
Expected dividends
Risk-free interest rate	3.66%	4.61%
Expected term (years)	5 years	9 years 6 months

STOCKHOLDERS' EQUITY (Details 3)	9 Months Ended
STOCKHOLDERS' EQUITY (Details 3)	Sep. 30, 2024 $ / shares shares
Equity [Abstract]
Number of Warrants Outstanding at beginning \| shares	2,662,250
Weighted Average Exercise Price, Warrants Outstanding at beginning \| $ / shares	$ 4.15
Warrants Issued \| shares
Weighted Average Exercise Price, Warrants Issued \| $ / shares
Warrants Exercised \| shares
Weighted Average Exercise Price, Warrants Exercised \| $ / shares
Warrants Expired or cancelled \| shares
Weighted Average Exercise Price, Warrants Expired or cancelled \| $ / shares
Number of Warrants Outstanding at end \| shares	2,662,250
Weighted Average Exercise Price, Warrants Outstanding at end \| $ / shares	$ 4.15

STOCKHOLDERS' EQUITY (Details 4) - $ / shares	9 Months Ended
STOCKHOLDERS' EQUITY (Details 4) - $ / shares	Sep. 30, 2024	Dec. 31, 2023
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Price	$ 4.15	$ 4.15
Outstanding Number of Warrants	2,662,250	2,662,250
Weighted Average Remaining Life In Years	1 year
Weighted Average Exercise Price	$ 4.15
Exercisable Number of Warrants	2,662,250
4.15
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Price	$ 4.15
Outstanding Number of Warrants	2,315,000
Weighted Average Remaining Life In Years	1 year
Weighted Average Exercise Price	$ 4.15
Exercisable Number of Warrants	2,135,000
4.15
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Price	$ 4.15
Outstanding Number of Warrants	347,250
Weighted Average Remaining Life In Years	1 year
Weighted Average Exercise Price	$ 4.15
Exercisable Number of Warrants	347,250

STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Issuance of Common Stock			5,425,043
Research and development charges	$ 178,565	$ 1,638,508	$ 453,643	$ 1,842,341
Share based compensation	0	0	88,120	0
Comprehensive loss	(2,448,582)	(2,329,478)	(4,773,827)	(3,903,553)
Board of Directors Chairman [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Comprehensive loss	$ 434,194	$ 0	$ 434,194	$ 0
Affiliates Of Wider [Member] \| Investors [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shhares issued				3,000,000
Shares issued price				$ 4,516,184
Affiliates Of Wider [Member] \| Liu [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Issuance of Common Stock				2,275,043
Number of stock issued				1,232,357
Affiliates Of Wider [Member] \| Collaborative Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Issuance of Common Stock			150,000
Shhares issued				150,000
Research and development charges				$ 750,000

COMMITMENTS AND CONTINGENCIES (Details Narrative)	9 Months Ended
COMMITMENTS AND CONTINGENCIES (Details Narrative)	Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Accrued expenses description	The Company has accrued $40,000 and $40,000 on the consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively. The reduction in the amount accrued was recognized as other income on the consolidated statement of operations and comprehensive loss for the year ended December 31, 2023. The Company believes it has adequately accrued for this matter.

CONCENTRATION OF CREDIT RISK (Details) - Customer Concentration Risk [Member]	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Revenue Benchmark [Member] \| Customer A [Member]
Concentration Risk [Line Items]
Revenue, percentage	23.00%	27.00%	48.00%	24.00%
Revenue Benchmark [Member] \| Customer B [Member]
Concentration Risk [Line Items]
Revenue, percentage	18.00%	23.00%	11.00%	18.00%
Revenue Benchmark [Member] \| Customer C [Member]
Concentration Risk [Line Items]
Revenue, percentage	13.00%	20.00%		13.00%
Revenue Benchmark [Member] \| Customer D [Member]
Concentration Risk [Line Items]
Revenue, percentage	11.00%
Revenue Benchmark [Member] \| Customer E [Member]
Concentration Risk [Line Items]
Revenue, percentage	10.00%
Accounts Receivable [Member] \| Customer A [Member]
Concentration Risk [Line Items]
Revenue, percentage			43.00%		39.00%
Accounts Receivable [Member] \| Customer B [Member]
Concentration Risk [Line Items]
Revenue, percentage			18.00%		21.00%
Accounts Receivable [Member] \| Customer C [Member]
Concentration Risk [Line Items]
Revenue, percentage			17.00%		15.00%
Accounts Receivable [Member] \| Customer D [Member]
Concentration Risk [Line Items]
Revenue, percentage					12.00%
Accounts Receivable [Member] \| Customer E [Member]
Concentration Risk [Line Items]
Revenue, percentage					10.00%

CONCENTRATION OF CREDIT RISK (Details Narrative) - Customer Concentration Risk [Member]	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Revenue Benchmark [Member] \| One Customers [Member]
Concentration Risk [Line Items]
Revenue, percentage	75.00%
Revenue Benchmark [Member] \| Two Customers [Member]
Concentration Risk [Line Items]
Revenue, percentage			59.00%
Revenue Benchmark [Member] \| Three Customers [Member]
Concentration Risk [Line Items]
Revenue, percentage		70.00%		55.00%
Accounts Receivable [Member] \| Four Customers [Member]
Concentration Risk [Line Items]
Revenue, percentage			78.00%
Accounts Receivable [Member] \| Five Customers [Member]
Concentration Risk [Line Items]
Revenue, percentage					97.00%

SUBSEQUENT EVENTS (Details Narrative) - $ / shares		9 Months Ended
SUBSEQUENT EVENTS (Details Narrative) - $ / shares	Nov. 07, 2024	Sep. 30, 2024
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of stock issued for services		5,425,043
Stock Option Agreements [Member] \| Board Of Director [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares purchased	581,250
Exercise price	$ 0.94
Number of stock issued for services	363,635
Stock Option Agreements [Member] \| Michael Nketiah [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares purchased	100,671
Exercise price	$ 0.894
Stock Option Agreements [Member] \| Carolyn Shelton [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares purchased	90,620
Exercise price	$ 0.6621

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