NanoVibronix, Inc., (NASDAQ: NAOV), a medical device company that produces the UroShield^®, PainShield^® and WoundShield^® Surface Acoustic Wave (SAW) Portable Ultrasonic Therapeutic Devices, today issued a letter to shareholders from its Chief Executive Officer, Brian Murphy, providing a year in review and vision for 2023.

To Our Shareholders:

NanoVibronix is committed to our strategic vision of commercializing our distinct and effective therapies, which we believe enable healthcare providers to treat patients in need, fill a void in the market and have the potential to increase value for our shareholders. We managed to shift to a more effective distributor in our key market, reintroduced PainShield Plus and added senior, experienced personnel to navigate the increased burden of regulatory requirements, despite a challenging and transitional 2022.

Our products continue to deliver the expected outcomes, and we continue to receive testimonials from patients who have been positively impacted by their use. To give you a sense of the feedback we routinely receive, here are a few examples:

Dr. Dan Beeson in Washington DC wrote; “I was treating a patient 10 months post shingles in the rib cage, and she is doing much better with the PainShield Ultrasound. Your device was a game-changer for her making more improvement getting out of pain. She still has some medication for pain, and we are going to wean her down off of that, now she has confidence that she can get better.”

In a recent product evaluation conducted by clinicians - Claire Riley, Sarah Knight, Frank Lee, Hannah Houliston and Rizwan Hamid of the London Spinal Cord Injury Centre, Royal National Orthopaedic Hospital, Stanmore, UK concluded the following:

NanoVibronix’s UroShield device showed a decrease in the number of blockages and infections and an increase in catheter satisfaction in the patients studied. In addition, evaluators concluded that the device has the potential to improve quality of life and reduce healthcare associated costs for patients with spinal cord injuries who experience recurrent blockages or infections and who have complicated catheter issues.

With all of the positive feedback we receive, it is clear that we are making a difference.

2022 Year in Review:

NanoVibronix entered 2022 on a high note, with the previous quarter’s revenue at an all-time high and two contracts with significant quantity minimums. We succeeded in shifting demand to a higher priced, higher margin device, the PainShield Plus. A subsequent regulatory request for additional information and data created a delay in our progress. We used that time to further design next generation PainShield and UroShield products, which are progressing toward development, and engaged with our third-party manufacturer to build 25,000 devices by year-end.

Sales and Distribution

We granted the exclusive right to sell the updated PainShield products to and through distributors within the durable medical equipment sector. The exclusive arrangement is contingent upon meeting annual minimum quantity purchases. After some disruption in supply, the distributors have gained strength in their respective markets.

In our Veterans’ Administration sales channel, we continue to improve penetration of our PainShield device within the VA hospitals and facilities, which we expect will lead to increased revenues in subsequent quarters. We overcame early administrative challenges that hindered orders. Our VA partner continues to add resources and has intensified its efforts to serve more patients. With broad clinician support, our products are available in more than 100 veterans’ facilities across the U.S. Our sales improvement has continued, with our highest recorded sales month in March 2023.

In the workers’ compensation market, we continue to sign additional contracts that increase access to our products and streamline the claims and reimbursement processes for providers and their patients. We are in the process of finalizing an agreement with a substantial Third Party Administrator.

We expect to bolster sales of UroShield by adding international distribution partners. We have contracted with a European-based partner that will assist us in obtaining qualified distributors and potentially, private label partners for sales of our UroShield product. The Benion Group continues to bring opportunities for partnership.

In December 2022, we signed a UroShield distribution agreement with Peak Medical, Ltd., a continence care patient focused company based in the United Kingdom. We believe its product offering and strong market position within the urology community gives us the best opportunity to penetrate this key market.

In the U.K., we are leveraging our contract with NHS Supply Chain. We continue to make progress towards communicating the need and viability of our UroShield product. The In Vivo study conducted by Southampton University in the United Kingdom, was recently completed. Interim results are pending. We anticipate two additional studies to be initiated in early 2023, one in the U.K. and one in the U.S. The market opportunities for UroShield are plentiful, and we expect contribution from this product will increase over time as we continue with our marketing initiatives and launch our ‘Gold Standard’ study with a major U.S. university.

Financial Results

2022 was a challenging year for the company as our sales to distributors in the United States were hampered by regulatory challenges that were not resolved until late in the fourth quarter. In 2022, revenue decreased by approximately $900,000 compared to the prior year primarily as a result of the delay in receiving FDA approval of our PainShield Plus product. Particularly, in the fourth quarter, prior shipments were returned to the company to ensure the products were compliant with FDA specifications. These products were subsequently updated and shipped back to customers in the first quarter of 2023.

In addition, gross margins were negatively impacted by the extra costs incurred with updating our PainShield Plus products, as well as general inflationary factors that caused a number of our suppliers to increase costs of parts used in our manufacturing process.

We invested approximately $2.4 million in inventory in 2022 to support anticipated sales and mitigate supply chain risk. The company had $2.7 million in cash as of December 31, 2022. If sales do not accelerate in 2023 as we expect they will, it is likely that we will need to raise additional capital.

Accomplishments and Advances in 2022:

• Negotiating terms and budget for a UroShield Gold Standard study with a major U.S. university
• Received approval from the U.K.’s National Health System’s (NHS) internal supply organization, NHS Supply Chain, to sell UroShield through a new contract, effective October 1, 2022
• Completed an In Vivo study at Southampton University, which revealed its positive impact on the microbiom
• Expanded our patent portfolio
• Completed a life expectancy test for PainShield
• Executed a reverse stock split and secured Nasdaq listing
• Increased penetration in VA facilities

A look ahead:

We remain focused on driving profitable growth by expanding and increasing our distribution and licensing channels, nurturing relationships with new and existing accounts and engaging consumers through a variety of creative mediums. Today, we have initial distribution agreements in place, a solid manufacturing partner and the necessary working capital to meet existing and anticipated demand.

We continue to negotiate with sector specific private label agreements. This strategy is intended to develop a long lasting, profitable, forecastable revenue. The COVID-19 pandemic interrupted our momentum, but we believe that we are on track to aggressively push these discussions forward.

In the near-term, we are primarily focused on achieving the following milestones:

• Securing U.S. distribution for UroShield for VA and commercial patients
• Identifying and initiating a U.S. contract manufacturer to increase capacity with a parallel source to finished product
• Capitalizing on the new NHS supply contract through our UK distributor
• Doubling sales to the VA in Q2 2023

We are determined to improve shareholder value through our commercialization efforts and management practices. With relevant technologies which are now more cost efficient, clinically effective and aesthetically up to date, our future is bright. Thank you for your support through a difficult year. We look forward to a promising 2023.

Kind regards,

Brian Murphy

Chief Executive Officer

About NanoVibronix, Inc.

NanoVibronix, Inc. (NASDAQ: NAOV) is a medical device company headquartered in Elmsford, New York, with research and development in Nesher, Israel, focused on developing medical devices utilizing its patented low intensity surface acoustic wave (SAW) technology. The proprietary technology allows for the creation of low-frequency ultrasound waves that can be utilized for a variety of medical applications, including for disruption of biofilms and bacterial colonization, as well as for pain relief. The devices can be administered at home without the assistance of medical professionals. The Company’s primary products include PainShield^®, UroShield^® and WoundShield^®, all of which are portable devices suitable for administration at home without assistance of medical professionals. Additional information about NanoVibronix is available at: www.nanovibronix.com.

Forward-looking Statements

This press release contains “forward-looking statements.” Such statements may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control, and cannot be predicted or quantified; consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with: (i) the geographic, social and economic impact of COVID-19 on the Company’s ability to conduct its business and raise capital in the future when needed, (ii) market acceptance of our existing and new products or lengthy product delays in key markets; (iii) negative or unreliable clinical trial results; (iv) inability to secure regulatory approvals for the sale of our products; (v) intense competition in the medical device industry from much larger, multinational companies; (vi) product liability claims; (vii) product malfunctions; (viii) our limited manufacturing capabilities and reliance on subcontractor assistance; (ix) insufficient or inadequate reimbursements by governmental and/or other third party payers for our products; (x) our ability to successfully obtain and maintain intellectual property protection covering our products; (xi) legislative or regulatory reform impacting the healthcare system in the U.S. or in foreign jurisdictions; (xii) our reliance on single suppliers for certain product components; (xiii) the need to raise additional capital to meet our future business requirements and obligations, given the fact that such capital may not be available, or may be costly, dilutive or difficult to obtain; (xiv) our conducting business in foreign jurisdictions exposing us to additional challenges, such as, e.g., foreign currency exchange rate fluctuations, logistical and communications challenges, the burden and cost of compliance with foreign laws, and political and/or economic instabilities in specific jurisdictions; and (xv) market and other conditions. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission (SEC), including the Company’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC’s web site at: http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events, or otherwise, except as required by law.

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