Business Overview and History Nexalin Technology, Inc. was formed on October 19, 2010 as a Nevada corporation, with its principal offices located in Houston, Texas. The company's initial focus was on the development and commercialization of its Generation 1 (Gen-1) device, a cranial electrotherapy stimulation (CES) device that emitted a 4 milliamp waveform for the treatment of anxiety, insomnia, and depression.
In September 2019, Nexalin formed a wholly owned subsidiary called Neuro-Health International, Inc., which remained inactive through September 2024. A significant regulatory change occurred in December 2019 when the FDA reclassified CES devices, requiring Nexalin to file a new 510(k) application to market the Gen-1 devices for anxiety and insomnia treatment. The treatment of depression with the Gen-1 device would require a more stringent Class III certification and a new premarket approval application.
Following this reclassification, Nexalin suspended marketing efforts for new sales of Gen-1 devices in the United States. However, the company continued to provide services to medical professionals supporting patients' use of existing Gen-1 devices that were in operation prior to December 2019. Revenue continued to be generated from existing Gen-1 device sales and leases, including monthly licensing fees and payments for electrodes and patient cables.
In September 2022, Nexalin achieved a significant milestone when its shares and warrants began trading on the Nasdaq Capital Market, providing the company with increased visibility and access to capital markets. As of now, Nexalin is analyzing whether to proceed with an amended 510(k) application with the FDA for the Gen-1 devices, while simultaneously advancing its next-generation neurostimulation technologies.
Financial Performance Nexalin's financial performance has been characterized by significant investments in research and development, as the company has focused on advancing its innovative neurostimulation technology.
Financials For the fiscal year ended December 31, 2023, the company reported total revenue of $110,750, a gross profit of $85,060, and a net loss of $4.65 million. Operating cash flow for 2023 was negative $3.84 million, with free cash flow at negative $3.94 million.
In the most recent quarter (Q3 2024), Nexalin reported revenue of $36,030 and a net loss of $2.45 million. The increase in revenue for Q3 2024 compared to Q3 2023 was primarily due to sales of supplies and parts. However, the net loss increased due to higher operating expenses, including professional fees, salaries and benefits, and selling, general and administrative costs.
For the first nine months of 2024, Nexalin reported revenues of $141,540, compared to $90,210 for the same period in 2023, representing a 57% increase year-over-year. This increase was primarily driven by sales of devices to a new overseas customer. The company's gross profit margin for the nine-month period improved to 79.44% in 2024, up from 77.32% in 2023.
Geographic Performance Nexalin primarily sells in the US market, but has been expanding its international presence. In the first 9 months of 2024, US sales were $65,520 compared to international sales of $76,020, indicating growing traction in overseas markets.
Liquidity As of September 30, 2024, Nexalin's balance sheet showed cash and cash equivalents of $81,420, with short-term investments of $4.51 million. The company's financial position is relatively strong, with a debt-to-equity ratio of 0, a current ratio of 16.39, and a quick ratio of 15.86. These metrics suggest that Nexalin has sufficient liquidity to meet its short-term obligations and fund its ongoing operations.
Despite the challenges of securing regulatory approvals and commercializing its products, Nexalin has managed to maintain a strong financial position, thanks in part to strategic fundraising and the support of its joint venture partner, Wider Come Limited, in China. The company's focus on research and development has resulted in a robust pipeline of innovative solutions, positioning Nexalin for potential growth as it continues to navigate the complex landscape of mental health treatment.
Recent Developments and Milestones Nexalin has achieved several significant milestones in recent years, underscoring the company's commitment to advancing its neurostimulation technology and expanding its global footprint.
In September 2021, the company's Gen-2 device was approved by the China National Medical Products Administration (NMPA) for the treatment of insomnia and depression, allowing Nexalin's joint venture partner, Wider Come Limited, to market and sell the device in China.
More recently, in February 2025, Nexalin announced that the University of California, San Diego (UCSD) had received Institutional Review Board (IRB) approval to commence a clinical trial evaluating the use of the company's HALO Clarity device for the treatment of mild traumatic brain injury (mTBI) and post-traumatic stress disorder (PTSD) in military personnel and civilians. This milestone follows successful pilot testing and evaluation of Nexalin's technology at UCSD.
Additionally, in October 2024, Nexalin published a landmark study in the Journal of Alzheimer's Disease, highlighting the potential of its DIFS technology to improve cognitive function and restore brain activity in patients with Alzheimer's disease. This research further solidifies Nexalin's position as a leader in the development of non-invasive neurostimulation solutions for neurological and mental health disorders.
Competitive Landscape and Growth Opportunities Nexalin operates in the rapidly growing neuromodulation market, which is projected to reach $11.0 billion by 2028, according to industry analysts. The company's DIFS technology sets it apart from traditional transcranial electrical stimulation (tES) approaches, offering a unique and potentially more effective solution for addressing deep-seated brain dysfunction.
Nexalin faces competition from established players in the neuromodulation space, such as Medtronic, Boston Scientific, and Abbott Laboratories, as well as emerging startups developing their own neurostimulation technologies. However, Nexalin's focus on developing non-invasive, customizable solutions that can target specific brain regions associated with mental health disorders positions the company for potential success in this competitive landscape.
The company's strategic partnerships, such as the joint venture in China, and its ongoing clinical trials in the United States and abroad, further underscore Nexalin's commitment to expanding its global reach and unlocking new growth opportunities. As the company continues to navigate the regulatory landscape and demonstrate the efficacy of its DIFS technology, Nexalin is poised to capitalize on the rising demand for innovative, non-pharmacological treatments for neurological and psychiatric conditions.
Risks and Challenges Nexalin faces several risks and challenges that could impact its long-term success. Chief among these is the inherent difficulty in obtaining regulatory approvals for medical devices, particularly in the United States, where the company must navigate the complex and time-consuming 510(k) clearance process. Delays or setbacks in this process could significantly hinder Nexalin's ability to commercialize its products and generate revenue.
Additionally, the company's reliance on strategic partnerships, such as the joint venture in China, exposes it to geopolitical and regulatory risks that could affect its international expansion efforts. Nexalin must also contend with the highly competitive nature of the neuromodulation market, where it must differentiate its technology and overcome the entrenchment of larger, more established players.
Finally, Nexalin's long-term success will depend on its ability to secure adequate funding to support its ongoing research and development initiatives, as well as its commercial activities. Any challenges in raising capital or generating sufficient revenue could impact the company's financial position and its ability to execute on its strategic objectives.
Conclusion Nexalin Technology is at the forefront of the mental health treatment revolution, leveraging its innovative DIFS technology to develop non-invasive neurostimulation solutions that have the potential to transform the way neurological and psychiatric disorders are addressed. With a robust pipeline of products, strategic partnerships, and a steadfast commitment to research and development, the company is well-positioned to capitalize on the growing demand for alternative, non-pharmacological treatments in the global neuromodulation market.
As Nexalin continues to navigate the regulatory landscape and execute on its strategic initiatives, investors will closely watch the company's progress in securing approvals, demonstrating the efficacy of its technology, and expanding its international presence. While challenges and risks remain, Nexalin's unwavering focus on innovation and its ability to deliver groundbreaking solutions make it a compelling investment opportunity in the rapidly evolving mental health treatment space.