What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-07 · 326 added, 302 removed, 395 unchanged (61% of the section changed)

1 unchanged sentence

Condensed Balance Sheets

September 30, 2024

December 31, 2023

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Shareholders' equity:

Series B Preferred stock - $ 0.001

par value, 3,000 authorized and 2,314

shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Common stock - $ 0.001 par value, 100,000,000 authorized and 2,794,196 and 854,162 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Series B Preferred stock - $ 0.001 par value, 2,314 and 0 shares issued and

outstanding as of September 30, 2024 and December 31, 2023, respectively

Common stock - $ 0.001 par value, 100,000,000 authorized and 5,673,675 and 854,162 shares issued and

outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

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Total liabilities and shareholders' equity

The accompanying notes are an integral part of these

unaudited condensed financial statements.

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Condensed Statements of Operations

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating expenses:

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Interest expense

( 1,133,398 )

Change in fair value of warrants

Total other expense

( 1,133,398 )

Loss before income taxes

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Basic and diluted

The accompanying notes are an integral part of these

unaudited condensed financial statements.

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Condensed Statements of Changes in Stockholders’

for the Three and Six Months Ended June 30, 2024

for the Three and Nine Months Ended September

30, 2024 and 2023

Series B Preferred Stock

Paid-In-Capital

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( 85,054,083 )

Issuance of common shares, net of costs

Issuance of restricted stock units

Capitalized dividends

Offering costs

Share-based compensation

( 1,949,428 )

Balance, September 30, 2024

$ ( 87,106,163 )

Series B Preferred Stock

Paid-In-Capital

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Share-based compensation

Reclassification of share-based compensation liability

Revaluation of share-based compensation liability

( 2,322,862 )

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( 76,214,008 )

The accompanying notes are an integral part of these

unaudited condensed financial statements.

Share-based compensation

Revaluation of share-based compensation

( 2,116,482 )

Balance, September 30, 2023

$ ( 78,330,490 )

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Condensed Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

1 unchanged sentence

$ ( 6,594,656 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating

Finance charge associated with debt issuance cost

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Change in fair value of warrants

Amortization of right of use asset

Amortization of ROU asset

Change in assets and liabilities:

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Cash flows from financing activities:

Offering costs

Offering costs in connection with the issuance of preferred shares

Net settlement of share-based compensation liability

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Net cash provided by financing activities

Net increase in cash

Net decrease in cash

Cash, beginning of year

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Supplemental disclosures of non-cash activity:

Reclassification of deferred offering cost

Reclassification of deferred offering costs

Capitalized dividends

Original issue discount and issuance of warrants on related party debt

Issuance of warrants in connection with related party debt

Issuance of warrants in connection with related party notes

Right of use asset and assumption of operating lease liability

The accompanying notes are an integral part of these

unaudited condensed financial statements.

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Notes to Condensed Financial Statements (Unaudited)

Note 1 – Description of Business, Basis of Presentation and

Summary of Significant Accounting Policies

Note 1 – Description of Business, Basis of Presentation

and Summary of Significant Accounting Policies

Description of Business

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Basis of Presentation

The accompanying financial statements have been prepared

in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

The accompanying financial statements have been

prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Interim Financial Information

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a result, every twenty-five (25) issued shares of common stock were automatically combined into one share of common stock.

Shares of the Company’s common stock were assigned

a new CUSIP number (05072K 206) and began trading on a split-adjusted basis on February 27, 2024.

Shares of the Company’s common stock were

assigned a new CUSIP number (05072K 206) and began trading on a split-adjusted basis on February 27, 2024.

The reverse stock split did not change the authorized

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Actual results could differ from those estimates.

The condensed financial statements include some amounts

that are based on management’s best estimates and judgments.

The most significant estimates relate to valuation of capital stock,

warrants and options to purchase shares of the Company’s common stock, and the estimated recoverability and amortization period

for capitalized software development costs.

These estimates may be adjusted as more current information becomes available, and any adjustment

could be significant.

The condensed financial statements include some

amounts that are based on management’s best estimates and judgments.

The most significant estimates relate to valuation of capital

stock, warrants and options to purchase shares of the Company’s common stock, and the estimated recoverability and amortization

period for capitalized software development costs.

These estimates may be adjusted as more current information becomes available, and

any adjustment could be significant.

Risks and Uncertainties

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Emerging Growth Company Status

The Company is an emerging growth company, as defined

in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

Under the JOBS Act, emerging growth companies can delay

adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply

to private companies.

The Company is an emerging growth company, as

defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

Under the JOBS Act, emerging growth companies

can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards

apply to private companies.

The Company has elected to use this extended transition period to comply with certain new or revised accounting

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The Company had cash and cash equivalents of $ 3,773,827

as of June 30, 2024.

as of September 30, 2024.

The Company will need additional funding to complete the development of the full product line and scale products

with a demonstrated market fit.

The Company raised an additional $ 7.1 million during 2024 and paid down $ 2.75 million in Secured Bridge Notes.

Management has plans to secure such additional funding.

If the Company is unable to raise capital when needed or on acceptable terms,

the Company will be forced to delay, reduce, or eliminate technology development and commercialization efforts.

The Company raised an additional $ 10.4 million during 2024 and paid down $ 2.75 million in Secured Bridge

Notes and will only be sufficient to fund our current operating plans into the first quarter of 2025.

Management has plans to secure such

additional funding.

If the Company is unable to raise capital when needed or on acceptable terms, the Company will be forced to delay,

reduce, or eliminate technology development and commercialization efforts.

As a result of the Company’s recurring losses

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For the foreseeable future, the Company will incur significant operating expenses, capital expenditures

and working capital funding that will deplete cash on hand during the fourth quarter of 2024.

and working capital funding that will deplete cash on hand during the first quarter of 2025.

Cash and Cash Equivalents

The Company had cash on hand of $ 3,770,855 and

as of June 30, 2024 and December 31, 2023, respectively.

$ 801,448 as of September 30, 2024 and December 31, 2023, respectively.

The Company considers all highly liquid instruments

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The Company had cash equivalents of $ 2,972 and $ 3,108

as of June 30, 2024 and December 31, 2023, respectively.

The Company maintains cash deposits at several financial

institutions, which are insured by the Federal Deposit Insurance Corporation up to $250,000.

The Company’s cash balance may at times

exceed these limits.

As of June 30, 2024, the Company had approximately $ 1.6 million in excess of federally insured limits.

As of December

31, 2023, the Company had approximately $ 0.6 million in excess of federally insured limits.

The Company continually monitors its positions

with, and the credit quality of, the financial institutions with which it invests.

as of September 30, 2024 and December 31, 2023, respectively.

The Company maintains cash deposits at several

financial institutions, which are insured by the Federal Deposit Insurance Corporation up to $250,000.

The Company’s cash balance

may at times exceed these limits.

As of September 30, 2024, the Company had approximately $ 3.5 million in excess of federally insured

As of December 31, 2023, the Company had approximately $ 0.6 million in excess of federally insured limits.

The Company continually

monitors its positions with, and the credit quality of, the financial institutions with which it invests.

Software Development Costs

The Company accounts for costs incurred in the development

of computer software as software research and development costs until the preliminary project stage is completed, management has committed

to funding the project, and completion and use of the software for its intended purpose is probable.

The Company ceases capitalization of development costs

once the software has been substantially completed and is available for its intended use.

Software development costs are amortized over

a useful life estimated by the Company’s management of three years.

The Company accounts for costs incurred in the

development of computer software as software research and development costs until the preliminary project stage is completed, management

has committed to funding the project, and completion and use of the software for its intended purpose is probable.

The Company ceases capitalization of development

costs once the software has been substantially completed and is available for its intended use.

Software development costs are amortized

over a useful life estimated by the Company’s management of three years.

Costs associated with significant upgrades and enhancements

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determined to be in excess of anticipated future net revenues are considered impaired and expensed during the period of such determination.

The Company determined that no such impairments were required during the three and six months ended June 30, 2024 and 2023.

Software development

costs of $ 255,214 and $ 258,929 were capitalized for the three months ended June 30, 2024 and 2023, respectively.

Software development

costs of $ 528,602 and $ 529,503 were capitalized for the six months ended June 30, 2024 and 2023, respectively.

Amortization of capitalized

software development costs was $ 486,764 and $ 436,425 for the three months ended June 30, 2024, and 2023, respectively and $ 963,682 and

$ 872,850 for the six months ended June 30, 2024 and 2023, respectively, and is included in depreciation and amortization expense in the

Company’s condensed statement of operations.

The Company determined that no such impairments were required during the three and nine months ended September 30, 2024 and 2023.

development costs of $ 258,734 and $ 213,705 were capitalized for the three months ended September 30, 2024 and 2023, respectively.

development costs of $ 787,336 and $ 743,208 were capitalized for the nine months ended September 30, 2024 and 2023, respectively.

of capitalized software development costs was $ 492,872 and $ 458,973 for the three months ended September 30, 2024, and 2023, respectively

and $ 1,456,554 and $ 1,331,823 for the nine months ended September 30, 2024 and 2023, respectively, and is included in depreciation and

amortization expense in the Company’s condensed statement of operations.

Revenue Recognition

Revenue will be measured according to Accounting Standards

Codification (“ASC”) 606, Revenue – Revenue from Contracts with Customers, and will be recognized based on consideration

specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties.

will recognize revenue when a performance obligation is satisfied by transferring control over a service or product to a customer.

Company will report revenues net of any tax assessed by a governmental authority that is both imposed on, and concurrent with, a specific

Revenue will be measured according to Accounting

Standards Codification (“ASC”) 606, Revenue – Revenue from Contracts with Customers, and will be recognized based on

consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties.

The Company will recognize revenue when a performance obligation is satisfied by transferring control over a service or product to a customer.

The Company will report revenues net of any tax assessed by a governmental authority that is both imposed on, and concurrent with, a specific

revenue-producing transaction between a seller and a customer in the condensed statements of operations.

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There is no revenue recognized for unpaid trial subscriptions.

Customers may pay for the services in advance of the

performance obligation and therefore these prepayments would be recorded as deferred revenue.

Customers may pay for the services in advance

of the performance obligation and therefore these prepayments would be recorded as deferred revenue.

The deferred revenue will be recognized

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fair value of the awards on the date of grant in accordance with ASC 718.

Compensation expense for all share-based awards is

based on the estimated grant-date fair value and recognized in earnings over the requisite service period (generally the vesting period).

Compensation expense for all share-based awards

is based on the estimated grant-date fair value and recognized in earnings over the requisite service period (generally the vesting period).

The Company records share-based compensation expense related to non-employees over the related service periods.

Certain share-based compensation awards include a

net-share settlement feature that provides the grantee an option to withhold shares to satisfy tax withholding requirements and are classified

as a share-based compensation liability.

Cash paid to satisfy tax withholdings is classified as financing activities in the condensed

statements of cash flows.

Certain share-based compensation awards include

a net-share settlement feature that provides the grantee an option to withhold shares to satisfy tax withholding requirements and are

classified as a share-based compensation liability.

Cash paid to satisfy tax withholdings is classified as financing activities in the

condensed statements of cash flows.

account for warrants as equity-classified instruments, based on an assessment of the warrant’s specific terms and applicable authoritative

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date while the warrants are outstanding.

In connection

with the amendment to the Secured Bridge Notes (see Note 4), the Company converted $ 911,384 ,

connection with the amendment to the Secured Bridge Notes (see Note 4), the Company converted $ 911,384 ,

consisting of accrued interest and the original issue discount on the Bridge Notes, into equity securities.

As a result of the conversion,

the Company recognized a change in the fair value of warrants in the amount of $ 632,388

during the three and six months ended June 30, 2024.

As a result of the

conversion, the Company recognized a change in the fair value of warrants in the amount of $ 0 and $ 632,388

during the three and nine months ended September 30, 2024.

Reclassifications

Certain prior period amounts

have been reclassified to conform to the current period presentation.

The reclassifications did not have an impact on net loss as previously

Note 2 – Property & Equipment, Intangible

Assets, and Software Development Costs

Property and equipment and software development costs

consisted of the following as of:

Certain prior period amounts have been reclassified

to conform to the current period presentation.

The reclassifications did not have an impact on net loss as previously reported.

Note 2 – Property & Equipment,

Intangible Assets, and Software Development Costs

Property and equipment and software development

costs consisted of the following as of:

Schedule of property and equipment and software development costs

September 30,

Computers and equipment

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Total software development costs, net

The Company recognized depreciation

expense of $ 6,284

and $ 6,193 for

the three months ended June 30, 2024 and 2023, respectively related to property and equipment, amortization expense of $ 334 and

for the three months ended June 30, 2024 and 2023, respectively related to intangible assets, and amortization expense of $ 486,764

and $ 436,425

for the three months ended June 30, 2024 and 2023, respectively related to software development costs.

The Company recognized

depreciation expense of $ 12,778

and $ 12,803 for

the six months ended June 30, 2024 and 2023, respectively related to property and equipment, amortization expense of $ 668

the six months ended June 30, 2024 and 2023, respectively related to intangible assets, and amortization expense of $ 963,682

and $ 872,850

for the six months ended June 30, 2024 and 2023, respectively related to software development costs.

The Company recognized depreciation expense of

$ 3,291 and $ 6,193 for the three months ended September 30, 2024 and 2023, respectively related to property and equipment, amortization

expense of $ 202 and $ 0 for the three months ended September 30, 2024 and 2023, respectively related to intangible assets, and amortization

expense of $ 492,872 and $ 458,973 for the three months ended September 30, 2024 and 2023, respectively related to software development

The Company recognized depreciation expense of $ 16,069 and $ 18,997 for the nine months ended September 30, 2024 and 2023, respectively

related to property and equipment, amortization expense of $ 465 and $ 0 for the nine months ended September 30, 2024 and 2023, respectively

related to intangible assets, and amortization expense of $ 1,456,554 and $ 1,331,823 for the nine months ended September 30, 2024 and 2023,

respectively related to software development costs.

Note 3 – Accounts Payable and Accrued

Accounts payable and accrued liabilities consist of

the following:

Accounts payable and accrued liabilities consist

of the following:

Schedule of accounts payable and accrued liabilities

September 30,

Accounts payable and accrued liabilities

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Total accounts payable and accrued liabilities

Note 4 – Notes Payable to Related Party,

net of debt issuance costs

During November 2022, the

Company entered into a Secured Bridge Note (the “Prior Note”) financing with an accredited investor and existing shareholder

Note 4 – Notes Payable to Related

Party, net of debt issuance costs

During November 2022,

the Company entered into a Secured Bridge Note (the “Prior Note”) financing with an accredited investor and existing shareholder

of the Company.

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will issue additional warrants, and the interest rate on the Note will increase to 20%.

In connection with the Prior

Note financing, the Company issued 12,000 common stock warrants with a five-year term at an exercise price of $ 52.50 per share.

time of issuance, the common stock warrants were valued at $ 361,878 and recorded as a debt discount to the Prior Note.

The issued common

stock warrants were classified as equity as they were indexed to the Company’s shares in accordance with ASC 815-40.

During April 2023, the Company

entered into an additional Secured Bridge Note (the “New Note”) financing with the same accredited investor and significant

In connection with the

Prior Note financing, the Company issued 12,000 common stock warrants with a five-year term at an exercise price of $ 52.50 per share.

At the time of issuance, the common stock warrants were valued at $ 361,878 and recorded as a debt discount to the Prior Note.

common stock warrants were classified as equity as they were indexed to the Company’s shares in accordance with ASC 815-40.

During April 2023, the

Company entered into an additional Secured Bridge Note (the “New Note”) financing with the same accredited investor and significant

existing shareholder.

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separately, in accordance with the guidance outlined in ASC 815-40, as it was considered indexed to the Company’s shares.

In connection with the New

Note financing, the Company issued 26,000 common stock warrants with a five-year term at an exercise price of $ 52.50 per share, from which

13,000 common stock warrants were exercisable immediately and were exercisable in the event that the loan term is extended.

of issuance, the common stock warrants were valued at $ 252,940 , which was recorded as an additional debt discount to the New Note.

issued common stock warrants were classified as equity as they were indexed to the Company’s shares in accordance with ASC 815-40.

During April 2023, the Company

also modified the terms of the Prior Note and cancelled the original 12,000 common stock warrants issued with the Prior Note.

recognized the modification in accordance with ASC 815-40-35, which resulted in the recognition of debt discount in the amount of $ 35,981 .

In lieu of the cancelled common stock warrants, the Company issued 24,000 new common stock warrants with a five-year term at an exercise

price of $ 52.50 per share.

From the newly issued 24,000 new common stock warrants, 12,000 common stock warrants were fully vested and

immediately exercisable, while the remaining 12,000 common stock warrants remained unvested.

The issued common stock warrants were classified

as equity as they were indexed to the Company’s shares in accordance with ASC 815-40.

In connection with the

New Note financing, the Company issued 26,000 common stock warrants with a five-year term at an exercise price of $ 52.50 per share, from

which 13,000 common stock warrants were exercisable immediately and were exercisable in the event that the loan term is extended.

time of issuance, the common stock warrants were valued at $ 252,940 , which was recorded as an additional debt discount to the New Note.

The issued common stock warrants were classified as equity as they were indexed to the Company’s shares in accordance with ASC 815-40.

During April 2023, the

Company also modified the terms of the Prior Note and cancelled the original 12,000 common stock warrants issued with the Prior Note.

The Company recognized the modification in accordance with ASC 815-40-35, which resulted in the recognition of debt discount in the amount

of $ 35,981 .

In lieu of the cancelled common stock warrants, the Company issued 24,000 new common stock warrants with a five-year term

at an exercise price of $ 52.50 per share.

From the newly issued 24,000 new common stock warrants, 12,000 common stock warrants were fully

vested and immediately exercisable, while the remaining 12,000 common stock warrants remained unvested.

The issued common stock warrants

were classified as equity as they were indexed to the Company’s shares in accordance with ASC 815-40.

In May of 2023, the Company

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warrants became vested and exercisable.

On July 31, 2023, the Company

extended the maturity date of the New Note to November 30, 2023.

In connection with such extension, 13,000 outstanding unvested common

stock warrants became vested and exercisable.

On July 31, 2023, the

Company extended the maturity date of the New Note to November 30, 2023.

In connection with such extension, 13,000 outstanding unvested

common stock warrants became vested and exercisable.

There was no change in the application of the accounting under ASC 815-40.

As of June 30, 2024 and December 31, 2023, the balance

of the Prior Note, net of debt issuance costs, was $ 0 and $ 2,200,000 , respectively.

Interest expense related to the Prior Note, including

interest incurred, amortization of the debt discount, and the warrant amortization for the three months ended June 30, 2024 and 2023 was

$ 11,000 and $ 261,861 , respectively.

Interest expense related to the Prior Note, including interest incurred, amortization of the debt

discount, and the warrant amortization for the six months ended June 30, 2024 and 2023 was $ 121,000 and $ 261,861 , respectively.

June 30, 2024 and December 31, 2023, the balance of the New Note issued in April 2023, net of debt issuance costs, was $ 0 and $ 825,000

As of September 30, 2024 and December 31, 2023,

the balance of the Prior Note, net of debt issuance costs, was $ 0 and $ 2,200,000 , respectively.

Interest expense related to the Prior

Note, including interest incurred, amortization of the debt discount, and the warrant amortization for the three months ended September

30, 2024 and 2023 was $ 0 and $ 157,298 , respectively.

Interest expense related to the Prior Note, including interest incurred, amortization

of the debt discount, and the warrant amortization for the nine months ended September 30, 2024 and 2023 was $ 121,000 and $ 762,112 , respectively.

As of September 30, 2024 and December 31, 2023, the balance of the New Note issued in April 2023, net of debt issuance costs, was $ 0 and

$ 825,000 respectively.

Interest expense related to the New Note, including interest incurred, amortization of the debt discount, and the warrant

amortization for the three months ended June 30, 2024 and 2023 was $ 4,068 and $ 273,204 .

Interest expense related to the New Note, including

interest incurred, amortization of the debt discount, and the warrant amortization for the six months ended June 30, 2024 and 2023 was

$ 45,205 and $ 273,204 .

On April 9, 2024, the Company

and the investor entered into an Amendment and Waiver Agreement relating to the Bridge Notes.

The Company agreed to pay

$ 2.75 million in cash to the Investor in repayment of the principal of the Bridge Notes (exclusive of the $ 275,000 of original issue discount

on the Bridge Notes) shortly after the closing by the Company of one or more equity financings with total gross proceeds to the Company

of not less than $ 6,000,000 .

On April 26, 2024, the Company

repaid $ 2.75 million of principal on its Secured Bridge Notes.

Interest expense related to the New Note, including interest incurred, amortization of the debt discount, and the

warrant amortization for the three months ended September 30, 2024 and 2023 was $ 0 and $ 401,441 .

Interest expense related to the New Note,

including interest incurred, amortization of the debt discount, and the warrant amortization for the nine months ended September 30, 2024

and 2023 was $ 45,205 and 401,441 .

On April 9, 2024, the

Company and the investor entered into an Amendment and Waiver Agreement relating to the Bridge Notes.

The Company agreed to

pay $ 2.75 million in cash to the Investor in repayment of the principal of the Bridge Notes (exclusive of the $ 275,000 of original issue

discount on the Bridge Notes) shortly after the closing by the Company of one or more equity financings with total gross proceeds to the

Company of not less than $ 6,000,000 .

On April 26, 2024, the

Company repaid $ 2.75 million of principal on its Secured Bridge Notes.

Effective April 9, 2024,

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Securities”).

The Rollover Securities consist

of (i) 463,337 prefunded common stock warrants with a per share exercise price of $ 0.001 per share (the “Prefunded Warrants”)

The Rollover Securities

consist of (i) 463,337 prefunded common stock warrants with a per share exercise price of $ 0.001 per share (the “Prefunded Warrants”)

and (ii) 463,337 non-prefunded warrants (the “Non-Prefunded Warrants”) with a per share exercise price equal to $ 1.967 .

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for the Company’s common stock was $ 1.966 .

The number of Prefunded Warrants

was determined by dividing the Rollover Amount by $1.967.

The number of Non-Prefunded Warrants is equal to the number of Prefunded Warrants

The number of Prefunded

Warrants was determined by dividing the Rollover Amount by $1.967.

The number of Non-Prefunded Warrants is equal to the number of Prefunded

Warrants (i.e.

100% warrant coverage).

The Non-Prefunded Warrants have a price adjustment provision which will adjust the exercise price downward

in the event that the Company issues equity securities in the future at an effective per share price below the then current exercise price.

In order to assure compliance with applicable Nasdaq rules, the Non-Prefunded Warrants shall not be exercisable for six months following

The Non-Prefunded Warrants have a price adjustment provision which will adjust the exercise price

downward in the event that the Company issues equity securities in the future at an effective per share price below the then current exercise

In order to assure compliance with applicable Nasdaq rules, the Non-Prefunded Warrants shall not be exercisable for six months

following the date of issue.

The Company issued to

the Investor 50,000 new common stock warrants with a five-year term as a loan extension fee (“Fee Warrants”).

price of these additional Fee Warrants is $ 1.967 .

The Fee Warrants have a price adjustment provision which will adjust the exercise price

downward in the event that the Company issues equity securities in the future at an effective per share price below the then current exercise

In order to assure compliance with applicable Nasdaq rules, the Fee Warrants shall not be exercisable for six months following

the date of issue.

The Company issued

to the Investor 50,000

new common stock warrants with a five-year term as a loan extension fee (“Fee Warrants”).

The exercise price of these

additional Fee Warrants is $ 1.967 .

The Fee Warrants have a price adjustment provision which will adjust the exercise price downward in the event that the Company issues

equity securities in the future at an effective per share price below the then current exercise price.

In order to assure compliance

with applicable Nasdaq rules, the Fee Warrants shall not be exercisable for six months following the date of issue.

The Non-Prefunded Warrants and Fee Warrants had a total valuation of

$ 811,402 and the Prefunded Warrants had a valuation of $ 732,370 .

As a result, the Company recorded $ 911,384 as a non-cash charge in connection

with the issuance of warrants related to the Secured Bridge Notes and a change in the fair value of warrants of $ 632,388 , which is included

in other expense in the accompanying statements of operations.

All Warrants were classified as equity as they were indexed to the Company’s

shares in accordance with ASC 815-40.

The Company agreed to adjust

the exercise price of the Investor’s Existing Warrants from $ 15.25 (after adjustment for the recent reverse stock) to $ 1.967 per

The Investor will not be

able to receive shares upon exercise of any of the foregoing securities, unless prior stockholder approval is obtained, if (i) the number

of shares to be issued would exceed 20% of the Company’s outstanding number of shares at a discount to the applicable Nasdaq Minimum

Price or (ii) the number of shares to be issued would result in in a Change of Control within the meaning of Nasdaq Rule 5635(b).

The Non-Prefunded Warrants

and Fee Warrants had a total valuation of $ 811,402 and the Prefunded Warrants had a valuation of $ 732,370 .

As a result, the Company recorded

$ 911,384 as a non-cash charge in connection with the issuance of warrants related to the Secured Bridge Notes and a change in the fair

value of warrants of $ 632,388 , which is included in other expense in the accompanying statements of operations.

All Warrants were classified

as equity as they were indexed to the Company’s shares in accordance with ASC 815-40.

The Company agreed to

adjust the exercise price of the Investor’s Existing Warrants from $ 15.25 (after adjustment for the recent reverse stock) to $ 1.967

The Investor will not

be able to receive shares upon exercise of any of the foregoing securities, unless prior stockholder approval is obtained, if (i) the

number of shares to be issued would exceed 20% of the Company’s outstanding number of shares at a discount to the applicable Nasdaq

Minimum Price or (ii) the number of shares to be issued would result in in a Change of Control within the meaning of Nasdaq Rule 5635(b).

Note 5 – Commitments and Contingencies

Operating Lease

On March 25, 2024, the Company entered into a new

37-month operating lease commencing on April 1, 2024 with two separate two year renewal options.

The monthly base rent for months two

through 14 is $2,456, increasing to $3,070 for months 15 through 26, and ending at $3,684 for months 27 through 37.

Rent expense, as part

of general and administrative expenses in the condensed statement of operations, was $ 8,960 and $ 13,760 for the three and six months ended

June 30, 2024, respectively, which consisted of the new lease and a temporary month-to-month lease the Company entered into until a long-term

space was identified.

Rent expense was $ 25,385 and $ 37,438 for the three and six months ended June 30, 2023, respectively, under the former

lease that terminated in December 2023.

In the normal course of business, the Company is party

to litigation from time to time.

The Company maintains insurance to cover certain actions and believes that resolution of such litigation

will not have a material adverse effect on the Company.

There are no active litigations as of the date the financial statements were issued.

However, a pre-IPO investor has contacted the Company claiming damages caused by alleged acts and

omissions arising from a private financing by the Company.

On March 25, 2024, the Company entered into a

new 37-month operating lease commencing on April 1, 2024 with two separate two year renewal options.

The monthly base rent for months

two through 14 is $2,456, increasing to $3,070 for months 15 through 26, and ending at $3,684 for months 27 through 37.

Rent expense,

as part of general and administrative expenses in the condensed statement of operations, was $ 8,960 and $ 22,721 for the three and nine

months ended September 30, 2024, respectively, which consisted of the new lease and a temporary month-to-month lease the Company entered

into until a long-term space was identified.

Rent expense was $ 12,053 and $ 49,491 for the three and nine months ended September 30, 2023,

respectively, under the former lease that terminated in December 2023.

In the normal course of business, the Company

is party to litigation from time to time.

The Company maintains insurance to cover certain actions and believes that resolution of such

litigation will not have a material adverse effect on the Company.

There are no active litigations as of the date the financial statements

However, a pre-IPO investor has contacted the Company claiming damages caused by alleged

acts and omissions arising from a private financing by the Company.

No complaint has been filed by the investor.

The alleged damages asserted by

the investor are less than approximately $300,000.

The outcome of the complaint was neither probable or estimable as of the date the financial

statements were issued, therefore, no accrual has been made.

The alleged damages asserted

by the investor are less than approximately $300,000.

The outcome of the complaint was neither probable or estimable as of the date the

financial statements were issued, therefore, no accrual has been made.

NASDAQ Deficiencies

The Nasdaq listing rules

require listed securities to maintain a minimum bid price of $1.00 per share.

As previously reported in the Current Report on Form 8-K

filed on November 28, 2023, the Company received a written notice from Nasdaq indicating that it was not in compliance with the $ 1.00

minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing.

As a result, the Nasdaq staff determined

to delist the Company’s Common Stock from Nasdaq, unless the Company timely requests an appeal of the Staff’s determination

to a Hearings Panel (the “Panel”), pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series.

with the Panel occurred on January 18, 2024.

On November 21, 2023, the

Company received a written notice from Nasdaq indicating that it was not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires

companies listed on The Nasdaq Capital Market to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing

(the “Stockholders’ Equity Requirement”).

In the Company’s quarterly report on Form 10-Q for the period ended

September 30, 2023, the Company reported stockholders’ equity of $ 2,415,012 , and, as a result, did not satisfy Listing Rule 5550(b)(1).

On November 21, 2023,

the Company received a written notice from Nasdaq indicating that it was not in compliance with Nasdaq Listing Rule 5550(b)(1), which

requires companies listed on The Nasdaq Capital Market to maintain a minimum of $2,500,000 in stockholders’ equity for continued

listing (the “Stockholders’ Equity Requirement”).

In the Company’s quarterly report on Form 10-Q for the period

ended September 30, 2023, the Company reported stockholders’ equity of $ 2,415,012 , and, as a result, did not satisfy Listing Rule

Nasdaq’s November written notice had no immediate impact on the listing of our common stock.

The hearing with the Panel occurred

on January 18, 2024, and addressed all outstanding listing compliance matters, including compliance with the Stockholders’ Equity

Notice as well as compliance with the Bid Price Requirement.

On January 30, 2024, the

Panel granted the Company’s request for an exception to Nasdaq’s listing rules until April 22, 2024, to demonstrate compliance

The hearing with the Panel

occurred on January 18, 2024, and addressed all outstanding listing compliance matters, including compliance with the Stockholders’

Equity Notice as well as compliance with the Bid Price Requirement.

On January 30, 2024,

the Panel granted the Company’s request for an exception to Nasdaq’s listing rules until April 22, 2024, to demonstrate compliance

with all applicable continued listing requirements for the Nasdaq Capital Market.

On March 20, 2024, the Company

received a letter from Nasdaq stating it had regained compliance with the minimum bid requirement.

The Panel reminded the Company that

although it regained compliance with the minimum bid requirement, it is also required to regain compliance with the equity requirement.

Therefore, this matter will remain open until the Company demonstrates compliance with all requirements.

On April 16, 2024, the Company

received a letter from Nasdaq granting an exception to the Exchange’s listing rules until May 20, 2024, to demonstrate compliance

On April 16, 2024, the

Company received a letter from Nasdaq granting an exception to the Exchange’s listing rules until May 20, 2024, to demonstrate compliance

with Listing Rule 5550(b)(1) (the “Equity Rule”).

On May 24, 2024, the Company received a letter from

Nasdaq indicating that the Company has regained compliance with the equity requirement in Listing rule 5550(b) (1) (the Equity Rule”.)

On May 24, 2024, the Company received a letter

from Nasdaq indicating that the Company has regained compliance with the equity requirement in Listing rule 5550(b) (1) (the Equity Rule”.)

The Company will be subject to a Mandatory Panel Monitor for a period of one year from the date of the letter in accordance with application

of Listing Rule 5815(d)(4)(B).

The Nasdaq listing rules

require listed securities to maintain a minimum bid price of $1.00 per share.

On October 16, 2024, the Company received a written notice

from Nasdaq indicating that it was not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2)

for continued listing.

The Bid Price Notice does not result in the immediate delisting of the Company’s common stock from the Nasdaq

Capital Market.

The Bid Price Notice indicated that the Company has 180 calendar days (or until April 14, 2025) in which to regain compliance.

The Company’s receipt

2 unchanged sentences

Stock Options

The following table presents the activity for stock

options outstanding:

The following table presents the activity for

stock options outstanding:

Schedule of activity for stock

3 unchanged sentences

Forfeited/canceled

Outstanding – June 30, 2024

Outstanding – September 30, 2024

Weighted Average Exercise Price

1 unchanged sentence

Forfeited/canceled

Outstanding – June 30, 2023

The following table presents the composition of options

outstanding and exercisable:

Outstanding – September 30, 2023

The following table presents the composition of

options outstanding and exercisable:

Schedule of options outstanding and exercisable

2 unchanged sentences

Exercise Prices

Total – June 30, 2024

Total – September 30, 2024

Price and Life reflect the weighted average exercise price and weighted average remaining contractual life, respectively.

1 unchanged sentence

Restricted Stock Units

The following table presents the activity for restricted

stock units outstanding:

The following table presents the activity for

restricted stock units outstanding:

Schedule of activity for restricted

stock units outstanding

Restricted Stock Units

Weighted Average Grant Date Fair Value

Average Grant Date

Outstanding - December 31, 2023

1 unchanged sentence

Vested/issued

Outstanding – June 30, 2024

Restricted Stock Units

Weighted Average Grant Date Fair Value

Outstanding – September 30, 2024

Average Grant Date

Outstanding - December 31, 2022

1 unchanged sentence

Vested/issued

Outstanding – June 30, 2023

The Company recognized share-based compensation expense

related to stock options and restricted stock units of $ 132,488 and $ 224,856 for the three months ended June 30, 2024 and 2023, respectively,

and $ 305,777 and $ 582,536 for the six months ended June 30, 2024 and 2023, respectively.

The remaining unvested share-based compensation

expense of $ 414,721 is expected to be recognized over the next 42 months.

Outstanding – September 30, 2023

The Company recognized share-based compensation

expense related to stock options and restricted stock units of $ 119,416 and $ 217,141 for the three months ended September 30, 2024

and 2023, respectively, and $ 425,193 and $ 799,677 for the nine months ended September 30, 2024 and 2023, respectively.

The remaining unvested

share-based compensation expense of $ 295,304 is expected to be recognized over the next 39 months.

Note 7 – Equity Financings

Equity Line Sales of Common

On November 14, 2022, the

Company entered into a Common Stock Purchase Agreement (the “White Lion Purchase Agreement”) with White Lion Capital, LLC,

a Nevada limited liability company (“White Lion”) for an equity line facility.

In April and June 2023, the

Company closed on three sales of Common Stock under the White Lion Purchase Agreement.

As a result, the Company issued an aggregate of

2,361,514 common shares and received aggregate proceeds of approximately $ 1.3 million.

Any proceeds that the Company

receives under the White Lion Purchase Agreement are expected to be used for working capital and general corporate purposes.

The White Lion Purchase Agreement prohibits the Company

from issuing and selling any shares of common stock to White Lion to the extent such shares, when aggregated with all other shares of

our common stock then beneficially owned by White Lion, would cause White Lion’s beneficial ownership of common stock to exceed

Equity Line Sales

of Common Stock

On November 14, 2022,

the Company entered into a Common Stock Purchase Agreement (the “White Lion Purchase Agreement”) with White Lion Capital,

LLC, a Nevada limited liability company (“White Lion”) for an equity line facility.

In April and June 2023,

the Company closed on three sales of Common Stock under the White Lion Purchase Agreement.

As a result, the Company issued an aggregate

of 2,361,514 common shares and received aggregate proceeds of approximately $ 1.3 million.

Any proceeds that the

Company receives under the White Lion Purchase Agreement are expected to be used for working capital and general corporate purposes.

The White Lion Purchase Agreement prohibits the

Company from issuing and selling any shares of common stock to White Lion to the extent such shares, when aggregated with all other shares

of our common stock then beneficially owned by White Lion, would cause White Lion’s beneficial ownership of common stock to exceed

9.99% (the “Beneficial Ownership Cap”).

1 unchanged sentence

to the equity line of credit as deferred offering costs in accordance with the guidance in ASC 835-30-S45.

Replacement Equity Line

with White Lion

Replacement Equity

Line with White Lion

6, 2023, the Company entered into a new Common Stock Purchase Agreement and a related registration rights agreement with White Lion.

4 unchanged sentences

Common Stock Purchase Agreement, the parties agreed to terminate the previous Common Stock Purchase Agreement with White Lion.

During the six months ended

June 30, 2024, the Company closed on several sales of Common Stock under the White Lion Purchase Agreement.

As a result, the Company issued

an aggregate of 1,940,000 common shares and received aggregate proceeds of approximately $ 4.9 million.

During the nine months

ended September 30, 2024, the Company closed on several sales of Common Stock under the White Lion Purchase Agreement.

As a result, the

Company issued an aggregate of 4,815,263 common shares and received aggregate proceeds of approximately $ 8.2 million.

$2.3 Million Convertible

Preferred Stock and Warrants Financing

On April 23, 2024, the Company

entered into a securities purchase agreement with accredited investors for a convertible preferred stock and warrants financing.

received $ 2,314,000 of gross proceeds in connection with the closing of this financing.

On April 23, 2024, the

Company entered into a securities purchase agreement with accredited investors for a convertible preferred stock and warrants financing.

The Company received $ 2,314,000 of gross proceeds in connection with the closing of this financing.

At the closing, the Company

5 unchanged sentences

shares of Common Stock with a five-year term and an initial exercise price of $ 1.851 per share.

The proceeds of this financing,

together with other available cash resources, were used to repay outstanding debt and for general corporate purposes.

The proceeds of this

financing, together with other available cash resources, were used to repay outstanding debt and for general corporate purposes.

Holders of the Series

B Preferred Stock will be entitled to dividends in the amount of 10% per annum, payable quarterly.

The Company has the option to pay dividends

on the Series B Preferred Stock in additional shares of Common Stock.

The Company also has the option to cumulate or “capitalize”

the dividends, in which case the accrued dividend amount shall be added to the stated value of each share of Series B Preferred Stock.

As of September 30, 2024, the Company has elected to capitalize all dividends declared.

The following table presents

4 unchanged sentences

Forfeited/cancelled/restored

Outstanding – June 30, 2024

8 – Leases under ASC 842

The Company leases certain office space under operating

leases for use in operations.

Outstanding – September 30, 2024

Note 8 – Leases under ASC 842

The Company leases certain office space under

operating leases for use in operations.

The Company recognizes operating lease expense on a straight-line basis over the lease term.

7 unchanged sentences

rate used in the present value calculation represents the incremental borrowing rate determined using information available at the commencement

For the three and six months ended June 30, 2024, the Company recorded operating lease expense of $ 8,960 and $ 8,960 , respectively,

For the three and nine months ended September 30, 2024, the Company recorded operating lease expense of $ 8,960 and $ 17,921 , respectively,

which is included in general and administrative expenses in the Company’s accompanying condensed statements of operations.

June 30, 2024, weighted-average remaining lease term and discount rate were as follows:

September 30, 2024, weighted-average remaining lease term and discount rate were as follows:

Schedule of weighted-average remaining lease term and discount rate

June 30, 2024

September 30, 2024

Weighted-average remaining lease term

1 unchanged sentence

The following is a maturity analysis of the annual

undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of June 30, 2024:

undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of September 30, 2024:

Schedule of annual undiscounted cash flows of leases

1 unchanged sentence

Less imputed interest

Note 9 – Subsequent Events

Management evaluated subsequent events and transactions that occurred after

the balance sheet date, up to the date that the financial statements were issued.

Based upon this review, other than as set forth below,

management did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

Note 9 – Subsequent

Management evaluated subsequent events and transactions

that occurred after the balance sheet date, up to the date that the financial statements were issued.

Based upon this review, other than

as set forth below, management did not identify any subsequent events that would have required adjustment or disclosure in the financial

The Nasdaq listing rules

require listed securities to maintain a minimum bid price of $1.00 per share.

On October 16, 2024, the Company received a written notice

from Nasdaq indicating that it was not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2)

for continued listing.

The Bid Price Notice does not result in the immediate delisting of the Company’s common stock from the Nasdaq

Capital Market.

The Bid Price Notice indicated that the Company has 180 calendar days (or until April 14, 2025) in which to regain compliance.

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

What changed 10-Q

Item 1. Financial Statements