What changed in this filing

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Item 1. Financial Statements

2022-02-14 compared with 2021-08-13 · 897 added, 1107 removed, 86 unchanged (96% of the section changed)

Financial Statements

Medical Technologies Corporation

Balance Sheets

September 30,

Current assets:

and other assets

NeuroOne Medical Technologies Corporation

Condensed Balance Sheets

As of December 31,

As of September 30,

Current assets:

and equipment, net

Liabilities and Stockholders’

promissory notes (Note 8)

Accounts receivable

Prepaid and other assets

Total current assets

Intangible assets, net

Right-of-use assets

Property and equipment, net

Liabilities and Stockholders’ Equity

Current liabilities:

lease liability

and contingencies (Note 4)

Stockholders’

Accounts payable

Accrued expenses

Deferred revenue

Total current liabilities

Operating lease liabilities

Total liabilities

Commitments and contingencies (Note 4)

Stockholders’ equity:

Preferred stock, $ 0.001 par value;

10,000,000 shares authorized as of June 30, 2021 and September 30, 2020;

no shares issued or outstanding as of June 30, 2021 and September 30, 2020.

10,000,000 shares authorized as of December 31, 2021 and September 30, 2021;

no shares issued or outstanding as of December 31, 2021 and September 30, 2021.

Common stock, $ 0.001 par value;

100,000,000 shares authorized as of June 30, 2021 and September 30, 2020;

11,981,380 and 7,393,637 shares issued and outstanding as of June 30, 2021 and September 30, 2020, respectively.

paid–in capital

100,000,000 shares authorized as of December 31, 2021 and September 30, 2021;

16,187,722 and 12,010,019 shares issued and outstanding as of December 31, 2021 and September 30, 2021, respectively.

Additional paid–in capital

Accumulated deficit

( 43,634,674 )

( 40,827,199 )

stockholders’ equity

liabilities and stockholders’ equity

accompanying notes to condensed financial statements

Medical Technologies Corporation

Statements of Operations

Three Months Ended

Nine Months Ended

Total stockholders’ equity

Total liabilities and stockholders’

See accompanying notes to

condensed financial statements

NeuroOne Medical Technologies Corporation

Condensed Statements of

For the three months ended

Product revenue

Cost of product revenue

Product gross loss

Collaborations revenue

Operating expenses:

General and administrative

and development

Selling, general and administrative

Research and development

Total operating expenses

2 unchanged sentences

( 2,143,401 )

( 7,574,088 )

( 4,784,836 )

Interest expense

( 4,749,263 )

( 7,446,770 )

Net valuation change of instruments measured

at fair value

Loss on note extinguishment

( 2,017,847 )

Net valuation change of instruments measured at fair value

Loss before income taxes

1 unchanged sentence

( 1,959,480 )

( 7,305,005 )

( 13,073,768 )

Provision for income

$ ( 2,951,609 )

$ ( 7,091,060 )

Provision for income taxes

$ ( 2,807,475 )

1 unchanged sentence

Net loss per share:

Basic and diluted

Number of shares used in per share calculations:

accompanying notes to condensed financial statements

Medical Technologies Corporation

Statements of Changes in Stockholders’ Equity (Deficit)

Basic and diluted

See accompanying notes to

condensed financial statements

NeuroOne Medical Technologies Corporation

Condensed Statements of

Changes in Stockholders’ Equity

Stockholders’

September 30, 2019

$ ( 17,238,871 )

$ ( 1,237,578 )

of common stock under securities purchase agreement

of warrants in connection with convertible notes offering

of common stock for consulting services

of common stock upon vesting of restricted stock units

( 4,637,066 )

Balance at December 31, 2019

( 21,875,937 )

( 4,612,332 )

of convertible notes into common stock

Exercise of stock options

of common stock for consulting services

of common stock upon vesting of restricted stock units

( 1,345,642 )

Balance at March 31, 2020

( 23,221,579 )

( 5,185,183 )

of convertible notes into common stock

of broker warrants in connection with convertible notes offering

costs in connection with conversion of convertible notes into common stock

of common stock for consulting services

of common stock upon vesting of restricted stock units

Exercise of stock options

( 7,091,060 )

at June 30, 2020

$ ( 30,312,639 )

$ ( 3,926,782 )

Balance at September 30, 2020

$ ( 30,879,031 )

of common stock upon conversion of convertible notes

cost settlement in connection with private placement

of common stock upon vesting of restricted stock units

Issuance of common stock upon conversion of convertible notes

Issuance cost settlement in connection with private placement

Stock-based compensation

Issuance of common stock upon vesting of restricted stock units

( 1,959,480 )

2 unchanged sentences

$ ( 32,838,511 )

of common stock in connection with private placement

of warrants stock in connection with private placement

costs in connection with private placement

( 1,198,080 )

Exercise of warrants

Exercise of stock options

of common stock upon vesting of restricted stock units

Balance at September 30, 2021

$ ( 40,827,199 )

Issuance of common stock in connection with private placement

Issuance cost in connection with private placement

( 1,352,280 )

Balance at March 31, 2021

( 1,352,280 )

of common stock upon vesting of restricted stock units

Exercise of stock options

Exercise of stock warrants

Stock-based compensation

Issuance of common stock upon vesting of restricted stock units

( 2,807,475 )

at June 30, 2021

Balance at December 31, 2021

$ ( 43,634,674 )

accompanying notes to condensed financial statements

Medical Technologies Corporation

Statements of Cash Flows

the nine months ended

See accompanying notes to

condensed financial statements

NeuroOne Medical Technologies Corporation

Condensed Statements of Cash Flows

For the three months ended

Operating activities

1 unchanged sentence

$ ( 1,959,480 )

to reconcile net loss to net cash used in operating activities:

and depreciation

interest on convertible notes

costs attributed to financing activities

value change of convertible notes

( 1,175,685 )

on note extinguishment

lease expense

protection program loan forgiveness

in assets and liabilities:

and other assets

expenses, deferred revenue, operating lease and other liabilities

cash used in operating activities

( 6,573,520 )

Adjustments to reconcile net loss to net cash used in operating

Amortization and depreciation

Stock-based compensation

Issuance costs attributed to financing activities

Revaluation of convertible notes

Non-cash lease expense

Change in assets and liabilities:

Accounts receivable

Prepaid and other assets

Accounts payable

Accrued expenses, deferred revenue, operating leases and other

Net cash used in operating activities

( 2,679,136 )

of fixed assets

cash used in investing activities

from issuance of convertible promissory notes

costs related to convertible notes

( 1,904,232 )

from issuance of common stock in connection with private placements

from issuance of warrants in connection with private placement

Exercise of warrants

Exercise of stock options

from paycheck protection program

costs related to private placements

Investing activities

Purchase of fixed assets

Net cash used in investing activities

Financing activities

Issuance costs related to convertible notes

Proceeds from issuance of common stock in connection with common

stock offering

Proceeds from advance related to future financing

Issuance costs related to common stock offering

( 1,326,978 )

offering costs

cash provided by financing activities

at beginning of period

at end of period

non-cash financing and investing transactions:

of convertible notes into equity

issuance costs and non-cash adjustments attributed to convertible notes and private placement

warrants issued in connection with convertible notes

lease right of use asset obtained in exchange for operating lease

accompanying notes to condensed financial statements

Medical Technologies Corporation

Net cash provided by financing activities

Net increase in cash

Cash at beginning of period

Cash at end of period

Supplemental non-cash financing and investing

transactions:

Conversion of convertible notes into equity

Unpaid issuance costs attributed to convertible notes and common

stock offering

Reclass of deferred offering costs to additional paid-in capital

in connection with common stock offering

See accompanying notes to

condensed financial statements

NeuroOne Medical Technologies

to Condensed Financial Statements

1 – Description of Business and Basis of Presentation

Medical Technologies Corporation (the “Company” or “NeuroOne”), a Delaware Corporation, is an early-stage medical

technology company developing comprehensive neuromodulation cEEG and sEEG monitoring, ablation, and brain stimulation solutions to diagnose

and treat patients with epilepsy, Parkinson’s disease, essential tremors, and other brain related disorders.

date, the Company has had limited commercial sales.

The Company is currently raising capital to fund the development of its proprietary

The Company received 510(k) clearance from the FDA to market the initial cEEG product and submitted an application for 510(k)

clearance for a second product in May 2021.

Company’s common stock commenced trading on The Nasdaq Capital Market on May 26, 2021 under the ticker symbol “NMTC.”

Previously, the Company’s common stock was traded on the OTC Markets quotation system on the OTCQB.

Company is based in Eden Prairie, Minnesota.

March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a global pandemic.

As a result of the COVID-19 pandemic, the Company has experienced, and will likely continue to experience, delays and disruptions in

its pre-clinical and clinical trials, as well as interruptions in its manufacturing, supply chain, shipping, and research and development

For example, one of our key manufacturing partners and one of the Company’s suppliers have had staffing issues due

to COVID-19, leading to delays in the Company’s development builds and delays in shipping product.

Additionally, the Company’s

own staff has been impacted by infections and mandatory quarantines.

The Company’s plans for further testing or clinical trials

may be further impacted by the continuing effects of COVID-19.

The global outbreak of COVID-19 continues to rapidly evolve.

2020, given the impact of COVID-19 on the Company and in connection with the enactment of the CARES Act, the Company applied for and

received loan funding of $ 83,333 under the Paycheck Protection Program (“PPP”), which was forgiven by the U.S.

Small Business

Administration in June 2021.

extent to which the COVID-19 pandemic may impact the Company’s business and pre-clinical and clinical trials will depend on future

developments, which are highly uncertain and cannot be predicted with confidence, such as the effect of the pandemic on its suppliers

and distributors and the global supply chain, the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions

and social distancing in the U.S.

and other countries, business closures or business disruptions and the effectiveness of actions taken

NOTE 1 – Description of Business and

Basis of Presentation

NeuroOne Medical Technologies Corporation (the

“Company” or “NeuroOne”), a Delaware corporation, is an early-stage medical technology company developing comprehensive

neuromodulation electroencephalogram (cEEG) and stereoelectrocencephalography (sEEG) recording, monitoring, ablation, and brain stimulation

solutions to diagnose and treat patients with epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed

back surgeries and other related neurological disorders.

The Company received 510(k) clearance from the

U.S Food and Drug Administration (“FDA”) for its Evo cortical technology in November 2019, and in September 2021 received

510(k) clearance from the FDA for its Evo sEEG electrode technology for temporary (less than 24 hours) use with recording, monitoring,

and stimulation equipment for the recording, monitoring, and stimulation of electrical signals at the subsurface level of the brain.

To date, the Company has had limited commercial sales.

The Company is based in Eden Prairie, Minnesota.

On March 11, 2020, the World Health Organization

declared the outbreak of a novel coronavirus (“COVID-19”) as a global pandemic.

As a result of the COVID-19 pandemic, the

Company has experienced, and will likely continue to experience, delays and disruptions in its pre-clinical and clinical trials, as well

as interruptions in its manufacturing, supply chain, shipping, and research and development operations.

The development of the Company’s

technology was delayed in the first quarter due to interruptions in global manufacturing and shipping as a result of the COVID-19 pandemic.

Additionally, the Company’s own staff has been impacted by infections and mandatory quarantines.

Testing and clinical trials, manufacturing,

component supply, shipping and research and development operations may be further impacted by the continuing effects of COVID-19.

The extent to which the COVID-19 pandemic and

macroeconomic conditions may further impact the Company’s business will depend on future developments, which are highly uncertain

and cannot be predicted with confidence, such as global supply chain disruptions, the duration of the pandemic and the impact of variants,

travel restrictions and social distancing in the U.S.

and other countries, business closures or business disruptions and the effectiveness

of actions taken in the U.S.

and other countries to contain and treat the disease.

The COVID-19 pandemic may also impact the Company’s business

because of employee illness, school closures, and other community response measures.

the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it

may have a material adverse effect on the Company’s results of future operations, financial position, and liquidity for the remainder

of fiscal year 2021 and beyond.

of presentation

accompanying unaudited condensed financial statements have been prepared by the Company, pursuant to the rules and regulations of the

Securities and Exchange Commission (the “SEC”).

Certain information and footnote disclosures normally included in financial

statements prepared in accordance with U.S.

generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to

such rules and regulations.

The condensed financial statements may not include all disclosures required by U.S.

however, the Company

believes that the disclosures are adequate to make the information presented not misleading.

These unaudited condensed financial statements

should be read in conjunction with the audited financial statements and the notes thereto for the year ended September 30, 2020 included

in the Annual Report on Form 10-K.

The condensed balance sheet at September 30, 2020 was derived from the audited financial statements

of the Company.

Medical Technologies Corporation

to Condensed Financial Statements

December 2019, the Company merged its wholly owned subsidiary, NeuroOne Inc., into NeuroOne Medical Technologies Corporation.

of the Company’s wholly owned subsidiary did not have a financial impact to the periods presented.

Upon close of the merger, the

Company did not have any remaining entities that required consolidation for financial statement reporting purposes.

the opinion of management, all adjustments, consisting of only normal recurring adjustments that are necessary to present fairly the

financial position, results of operations, and cash flows for the interim periods, have been made.

The results of operations for the

interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Reclassifications

amounts presented in the prior year period have been reclassified to conform to current period financial statement presentation.

change in accounts payable and accrued expenses reported in the statements of cash flows during the comparable prior year period was

reclassified into two separate line item categories and the non-cash portion of the lease liability line item was reclassified to the

change in accrued expenses, deferred revenue, operating lease and other liabilities line item.

March 11, 2021, the Company’s Board of Directors (the “Board”) approved a one-for-three reverse stock split of the

Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”).

issued and outstanding common stock and per share amounts contained in the financial statements have been retroactively adjusted to reflect

this Reverse Stock Split for all periods presented.

In addition, a proportionate adjustment was made to the per share exercise price

and the number of shares issuable upon the exercise of all outstanding stock options, restricted stock units and warrants to purchase

shares of common stock.

A proportionate adjustment was also made to the number of shares reserved for issuance pursuant to the Company’s

equity incentive compensation plans to reflect the Reverse Stock Split.

Any fraction of a share of common stock that was created as a

result of the Reverse Stock Split was rounded up to the next whole share.

The authorized shares and par value of the common stock and

preferred stock were not adjusted as a result of the Reverse Stock Split.

2 – Going Concern

accompanying condensed financial statements have been prepared on the basis that the Company will continue as a going concern.

has incurred losses since inception, negative cash flows from operations, and an accumulated deficit of $ 38.2 million as of June 30,

The Company has not established a source of revenues to cover its full operating costs, and as such, has been dependent on funding

operations through the issuance of debt and sale of equity securities.

The Company does not have adequate liquidity to fund its operations

without raising additional funds.

These factors raise substantial doubt about its ability to continue as a going concern.

The financial

statements do not include any adjustments that might result from the outcome of this condition.

While the Company’s future operating

activities under the distribution and development agreement with Zimmer, Inc.

coupled with its plans to raise capital or issue debt financing

may provide additional liquidity in the future, these actions are not solely within the control of the Company.

If the Company is unable

to raise additional funds, or the Company’s anticipated operating results are not achieved, management believes planned expenditures

may need to be reduced in order to extend the time period that existing resources can fund the Company’s operations.

If management

is unable to obtain the necessary capital, it may have a material adverse effect on the operations of the Company and the development

of its technology, or the Company may have to cease operations altogether.

3 – Summary of Significant Accounting Policies

Use of Estimates

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities, primarily in connection with

the convertible promissory notes while outstanding, and disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting period.

Although the Company cannot estimate the length

or gravity of the impact of the COVID-19 outbreak at this time, the continuing impact of the pandemic may have a material adverse effect

on the Company’s results of future operations, financial position, and liquidity for the duration of fiscal year 2022 and beyond.

Basis of presentation

The accompanying unaudited condensed financial

statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.

generally accepted

accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations.

The condensed financial statements

may not include all disclosures required by U.S.

however, the Company believes that the disclosures are adequate to make the information

presented not misleading.

These unaudited condensed financial statements should be read in conjunction with the audited financial statements

and the notes thereto for the year ended September 30, 2021 included in the Annual Report on Form 10-K.

The condensed balance sheet at

September 30, 2021 was derived from the audited financial statements of the Company.

In the opinion of management, all adjustments,

consisting of only normal recurring adjustments that are necessary to present fairly the financial position, results of operations, and

cash flows for the interim periods, have been made.

The results of operations for the interim periods are not necessarily indicative

of the operating results for the full fiscal year or any future periods.

NeuroOne Medical Technologies

Notes to Condensed Financial

Statements, continued

NOTE 2 – Going Concern

The accompanying condensed financial statements

have been prepared on the basis that the Company will continue as a going concern.

The Company has incurred losses since inception, negative

cash flows from operations, and had an accumulated deficit of $ 43.6 million as of December 31, 2021.

The Company has not established

a source of revenues to cover its full operating costs, and as such, has been dependent on funding operations through the issuance of

debt and sale of equity securities.

The Company does not have adequate liquidity to fund its operations without raising additional funds

and such actions are not solely within the control of the Company.

These factors raise substantial doubt about its ability to continue

as a going concern.

The financial statements do not include any adjustments that might result from the outcome of this condition.

the Company is unable to raise additional funds, or the Company’s anticipated operating results are not achieved, management believes

planned expenditures may need to be reduced in order to extend the time period that existing resources can fund the Company’s operations.

The Company intends to fund ongoing activities by utilizing its current cash on hand, from product and collaborations revenue and by

raising additional capital through equity or debt financings.

If management is unable to obtain the necessary capital, it may have a

material adverse effect on the operations of the Company and the development of its technology, or the Company may have to cease operations

NOTE 3 - Summary of Significant Accounting

Reverse Stock Split

On March 11, 2021, the Company’s Board

of Directors (the “Board”) approved a one-for-three reverse stock split of the Company’s issued and outstanding shares

of common stock (the “Reverse Stock Split”) effective end-of-day March 31, 2021.

All issued and outstanding common stock and per

share amounts contained in the financial statements have been retroactively adjusted to reflect this Reverse Stock Split for all periods

In addition, a proportionate adjustment was made to the per share exercise price and the number of shares issuable upon the

exercise of all outstanding stock options, restricted stock units and warrants to purchase shares of common stock.

A proportionate adjustment

was also made to the number of shares reserved for issuance pursuant to the Company’s equity incentive compensation plans to reflect

the Reverse Stock Split.

Any fraction of a share of common stock that was created as a result of the Reverse Stock Split was rounded

up to the next whole share.

The authorized shares and par value of the common stock and preferred stock were not adjusted as a result

of the Reverse Stock Split.

Management’s Use of Estimates

The preparation of financial statements in conformity

with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities, primarily in connection with the convertible promissory notes when outstanding,

and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and

expenses during the reporting period.

Actual results could differ from those estimates.

Medical Technologies Corporation

to Condensed Financial Statements

Company entered into a development and distribution agreement which has current and future revenue recognition implications.

7 – Zimmer Development Agreement.

from product sales are recognized when control of the promised goods or services is transferred to the Company’s customers, in

an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

At the inception

of each contract, performance obligations are identified and the total transaction price is allocated to the performance obligations.

The Company commenced commercial sales of cEEG strip/grid and electrode cable assembly products in the first quarter of fiscal year 2021.

of Product Revenue

of product revenue consists of the manufacturing and materials costs incurred by the Company’s third-party contract manufacturer

in connection with NeuroOne’s strip and grid cortical electrodes (the “Strip/Grid Products”) and outside supplier materials

costs in connection with the Electrode Cable Assembly Products.

In addition, cost of product revenue includes royalty fees incurred in

connection with the Company’s license agreements.

Collaborations

determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs

the following steps:

(i) identification of the promised goods or services in the contract;

(ii) determination of whether the promised

goods or services are performance obligations including whether they are distinct in the context of the contract;

(iii) measurement of

the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance

obligations based on estimated selling prices;

Revenue Recognition

The Company entered into a development and distribution

agreement which has current and future revenue recognition implications.

See “Note 7 – Zimmer Development Agreement”.

Product Revenue

Revenues from product sales are recognized when

control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration

the Company expects to be entitled to in exchange for those goods or services.

At the inception of each contract, performance obligations

are identified and the total transaction price is allocated to the performance obligations.

The Company commenced commercial sales of

cEEG strip/grid and electrode cable assembly products beginning in the first quarter of fiscal year 2021.

The Company sold, on a limited

application basis for design verification, sEEG depth electrode products for non-human use in late fiscal year 2021 and the first quarter

of fiscal year 2022.

Cost of Product

Cost of product revenue consists of the manufacturing

and materials costs incurred by the Company’s third-party contract manufacturer in connection with cEEG strip/grid and sEEG depth

electrode products, and outside supplier materials costs in connection with the electrode cable assembly products.

In addition, cost

of product revenue includes royalty fees incurred in connection with the Company’s license agreements.

Collaborations Revenue

In determining the appropriate amount of revenue

to be recognized as it fulfills its obligations under its agreements, the Company performs the following steps:

(i) identification of

the promised goods or services in the contract;

(ii) determination of whether the promised goods or services are performance obligations

including whether they are distinct in the context of the contract;

(iii) measurement of the transaction price, including the constraint

on variable consideration;

(iv) allocation of the transaction price to the performance obligations based on estimated selling prices;

and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in

Account Standards Codification (“ASC”) Topic 606.

Performance obligations may include license rights, development services,

and services associated with regulatory submission and approval processes.

Significant management judgment is required to determine the

level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under

the arrangement.

If the Company cannot reasonably estimate when its performance obligations are either completed or become inconsequential,

then revenue recognition is deferred until the Company can reasonably make such estimates.

Revenue is then recognized over the remaining

estimated period of performance using the cumulative catch-up method.

part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the stand-alone

selling price of each performance obligation identified in the contract.

The Company uses key assumptions to determine the stand-alone

selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates

and probabilities of technical and regulatory success.

The Company allocates the total transaction price to each performance obligation

based on the estimated relative standalone selling prices of the promised goods or service underlying each performance obligation.

of intellectual property :

If the license to the Company’s intellectual property is determined to be distinct from the other

performance obligations identified in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated to

the license when the license is transferred to the customer, and the customer can use and benefit from the license.

For licenses that

are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine

whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of

measuring progress for purposes of recognizing revenue from non-refundable, up-front fees.

The Company evaluates the measure of progress

each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Medical Technologies Corporation

to Condensed Financial Statements

At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are

considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the value of the associated milestone (such as a regulatory submission)

is included in the transaction price.

Milestone payments that are not within the control of the Company, such as approvals from regulators,

are not considered probable of being achieved until those approvals are received.

When the Company’s assessment of probability

of achievement changes and variable consideration becomes probable, any additional estimated consideration is allocated to each performance

obligation based on the estimated relative standalone selling prices of the promised goods or service underlying each performance obligation

and recorded in license, collaboration, and other revenues based upon when the customer obtains control of each element.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed

to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (a) when the related sales occur,

or (b) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Value of Financial Instruments

Company’s accounting for fair value measurements of assets and liabilities that are recognized or disclosed at fair value in the

financial statements on a recurring or nonrecurring basis adheres to the Financial Accounting Standards Board (“FASB”) fair

value hierarchy that prioritizes the inputs to valuation techniques 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 measurements) and the lowest priority to measurements

involving significant unobservable inputs (Level 3 measurements).

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements, continued

A performance obligation is a promise in a contract

to transfer a distinct good or service to the customer and is the unit of account in ASC Topic 606.

Performance obligations may include

license rights, development services, and services associated with regulatory submission and approval processes.

Significant management

judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects to

complete its performance obligations under the arrangement.

If the Company cannot reasonably estimate when its performance obligations

are either completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates.

Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method.

As part of the accounting for these arrangements,

the Company must develop assumptions that require judgment to determine the stand-alone selling price of each performance obligation

identified in the contract.

The Company uses key assumptions to determine the stand-alone selling price, which may include forecasted

revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory

The Company allocates the total transaction price to each performance obligation based on the estimated relative standalone

selling prices of the promised goods or service underlying each performance obligation.

Licenses of intellectual property :

the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified

in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated to the license when the license is transferred

to the customer, and the customer can use and benefit from the license.

For licenses that are bundled with other promises, the Company

utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation

is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing

revenue from non-refundable, up-front fees.

The Company evaluates the measure of progress each reporting period and, if necessary, adjusts

the measure of performance and related revenue recognition.

Milestone payments :

At the inception of

each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being achieved

and estimates the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant

revenue reversal would not occur, the value of the associated milestone (such as a regulatory submission) is included in the transaction

Milestone payments that are not within the control of the Company, such as approvals from regulators, are not considered probable

of being achieved until those approvals are received.

When the Company’s assessment of probability of achievement changes and variable

consideration becomes probable, any additional estimated consideration is allocated to each performance obligation based on the estimated

relative standalone selling prices of the promised goods or service underlying each performance obligation and recorded in license, collaboration,

and other revenues based upon when the customer obtains control of each element.

For arrangements that include

sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item

to which the royalties relate, the Company recognizes revenue at the later of (a) when the related sales occur, or (b) when the performance

obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Fair Value of Financial Instruments

The Company’s accounting for fair value

measurements of assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring or nonrecurring

basis adheres to the Financial Accounting Standards Board (“FASB”) fair value hierarchy that prioritizes the inputs to valuation

techniques 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 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level

3 measurements).

The three levels of the fair value hierarchy are as follows:

Unadjusted quoted prices in active markets for identical assets or liabilities

accessible to the Company at the measurement date.

Other than quoted prices included in Level 1 inputs that are observable for the

asset or liability, either directly or indirectly, for substantially the full term of the

asset or liability.

Unobservable inputs for the asset or liability used to measure fair value to the

extent that observable inputs are not available, thereby allowing for situations in which

there is little, if any, market activity for the asset or liability at the measurement date.

of June 30, 2021 and September 30, 2020, the fair values of cash, prepaid expenses, other assets, accounts payable and accrued expenses

approximated their carrying values because of the short-term nature of these assets or liabilities.

The fair value of the convertible

notes while outstanding were based on both the fair value of our common stock, discount associated with the embedded redemption features,

and cash flow models discounted at current implied market rates evidenced in recent arms-length transactions representing expected returns

by market participants for similar instruments and are based on Level 3 inputs.

Medical Technologies Corporation

to Condensed Financial Statements

were no transfers between fair value hierarchy levels during the three and nine months ended June 30, 2021 and 2020.

fair value of financial instruments measured on a recurring basis is as follows:

of June 30, 2021

liabilities at fair value

of September 30, 2020

liabilities at fair value

following table provides a roll-forward of the convertible notes at fair value on a recurring basis using unobservable level 3 inputs

for the nine months ended June 30 as follows:

Convertible notes

of beginning of period – September 30, 2020

in fair value including accrued interest

of convertible promissory notes to common stock

( 1,005,232 )

as of end of period – June 30, 2021

Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the Company at the measurement

Level 2 Inputs:

quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially

the full term of the asset or liability.

Level 3 Inputs:

inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing

for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

As of December 31, 2021 and September 30, 2021,

the fair values of cash, accounts receivable, inventory, prepaid expenses, other assets, accounts payable and accrued expenses approximated

their carrying values because of the short-term nature of these assets or liabilities.

The fair value of the convertible notes while

outstanding were based on both the fair value of our common stock, discount associated with the embedded redemption features, and cash

flow models discounted at current implied market rates evidenced in recent arms-length transactions representing expected returns by

market participants for similar instruments and are based on Level 3 inputs.

There were no transfers between fair value hierarchy

levels during the three months ended December 31, 2021 and 2020.

The following table provides a roll-forward of

the convertible notes at fair value on a recurring basis using unobservable level 3 inputs for the three months ended December 31, 2020.

There were no convertible notes outstanding during the three months ended December 31, 2021.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements, continued

Convertible notes

Balance as of beginning

of period – September 30, 2019

value attributed to convertible promissory notes upon issuance

value attributed to note extinguishment

of convertible promissory notes to common stock

( 8,088,951 )

in fair value including accrued interest

Balance as of beginning of period – September 30, 2020

Change in fair value including accrued interest

Conversion of convertible promissory notes to common stock

( 1,005,232 )

as of end of period –June 30, 2020

Company has entered into two licensing agreements with major research institutions, which allow for access to certain patented technology

and know-how.

Payments under those agreements are capitalized and amortized to general and administrative expense over the expected useful

life of the acquired technology.

and Equipment

and equipment is recorded at cost and reduced by accumulated depreciation.

Depreciation expense is recognized over the estimated useful

lives of the assets using the straight-line method.

The estimated useful life for equipment and furniture ranges from three to seven

years and three years for software.

Tangible assets acquired for research and development activities and that have alternative use are

capitalized over the useful life of the acquired asset.

Estimated useful lives are periodically reviewed, and, when appropriate, changes

are made prospectively.

Software purchased for internal use consists primarily of amounts paid for perpetual licenses to third-party

software providers and installation costs.

When certain events or changes in operating conditions occur, asset lives may be adjusted

and an impairment assessment may be performed on the recoverability of the carrying amounts.

Maintenance and repairs are charged directly

to expense as incurred.

Medical Technologies Corporation

to Condensed Financial Statements

for Doubtful Accounts

Company records a provision for doubtful accounts, when appropriate, based on historical experience and a detailed assessment of the

collectability of its accounts receivable.

In estimating the allowance for doubtful accounts, the Company considers, among other factors,

the aging of the accounts receivable, its historical write-offs, the credit worthiness of each customer, and general economic conditions.

Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be

Actual write-offs may be in excess of the Company’s estimated allowance.

are stated at the lower of cost (using the first-in, first-out “FIFO” method) or net realizable value.

The Company calculates

inventory valuation adjustments for excess and obsolete inventory, when appropriate, based on current inventory levels, movement, expected

useful lives, and estimated future demand of the products and spare parts.

The Company’s inventory is currently comprised of cEEG

strip/grid and electrode cable assembly finished good product.

The Strip/Grid Products are produced by a third-party contract manufacturer

and the Electrode Cable Assembly Products are obtained from outside suppliers.

of Long-Lived Assets

Company evaluates its long-lived assets, which consist of licensed intellectual property and property and equipment for impairment whenever

events or changes in circumstances indicate that the carrying value of these assets may not be recoverable.

The Company assesses the

recoverability of long-lived assets by determining whether or not the carrying value of such assets will be recovered through undiscounted

expected future cash flows.

If the asset is considered to be impaired, the amount of any impairment is measured as the difference between

the carrying value and the fair value of the impaired asset.

and Development Costs

and development costs are charged to expense as incurred.

Research and development expenses may include costs incurred in performing

research and development activities, including clinical trial costs, manufacturing costs for both clinical and pre-clinical materials

as well as other contracted services, license fees, and other external costs.

Non-refundable advance payments for goods and services

that will be used in future research and development activities are expensed when the activity is performed or when the goods have been

received, rather than when payment is made, in accordance with ASC 730, Research and Development .

General and Administrative

general and administrative expenses consist primarily of personnel-related costs including stock-based compensation for personnel in

functions not directly associated with research and development activities.

Other significant costs include legal fees relating to corporate

matters, intellectual property costs, professional fees for consultants assisting with regulatory, clinical, product development, financial

matters, and beginning in the first quarter of fiscal year 2021, sales and marketing in connection with the commercial sale of cEEG strip/grid

and electrode cable assembly products.

the Company, income taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are recognized

for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities

and their respective tax base and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using

enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered

Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred

tax asset will not be realized.

Medical Technologies Corporation

to Condensed Financial Statements

Loss Per Share

the Company, basic loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common

stock outstanding during the period.

earnings or loss per share of common stock is computed similarly to basic earnings or loss per share except the weighted average shares

outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents, if dilutive.

The Company’s

convertible promissory notes, warrants, stock options and restricted stock units while outstanding are considered common stock equivalents

for this purpose.

Diluted earnings is computed utilizing the treasury method for the warrants, stock options and restricted stock units.

Diluted earnings with respect to the convertible promissory notes utilize the if-converted method.

No incremental common stock equivalents

were included in calculating diluted loss per share because such inclusion would be anti-dilutive given the net loss reported for the

three and nine months ended June 30, 2021 and 2020.

following potential common shares were not considered in the computation of diluted net loss per share as their effect would have been

anti-dilutive for the three and nine months ended June 30, 2021 and 2020:

Accounting Pronouncements

June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, “ Financial Instruments – Credit Losses” .

The ASU sets forth a “current expected credit loss” (“CECL”) model which requires the Company to measure all

expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable

supportable forecasts.

This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial

assets measured at amortized cost and applies to some off-balance sheet credit exposures.

This ASU is effective for fiscal years beginning

after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted.

Recently, the FASB issued

the final ASU to delay adoption for smaller reporting companies to calendar year 2023.

The Company is currently assessing the impact

of the adoption of this ASU on its financial statements.

August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements

for Fair Value Measurement (ASU 2018-13) .

The new guidance modifies the disclosure requirements in Topic 820 as follows:

the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy;

the policy for timing of transfers between levels;

and the valuation processes for Level

3 fair value measurements.

● Modifications:

for investments in certain entities that calculate net asset value, an entity is required

to disclose the timing of liquidation of an investee’s assets and the date when restrictions

from redemption might lapse only if the investee has communicated the timing to the entity

or announced the timing publicly;

and the amendments clarify that the measurement uncertainty

disclosure is to communicate information about the uncertainty in measurement as of the reporting

the changes in unrealized gains and losses for the period included in other comprehensive

income for recurring Level 3 fair value measurements held at the end of the reporting period;

and the range and weighted average of significant unobservable inputs used to develop Level

3 fair value measurements.

Medical Technologies Corporation

to Condensed Financial Statements

guidance is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15,

The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used

to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should all be applied prospectively

for only the most recent interim or annual period presented in the initial year of adoption.

All other amendments should be applied retrospectively

to all periods presented upon their effective date.

Early adoption is permitted.

An entity is permitted to early adopt any removed or

modified disclosures upon issuance of ASU 2018-13 and delay adoption of the additional disclosures until their effective date.

adopted the new guidance on October 1, 2020 and it did not have a material impact on its financial statements.

December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740) which amends the existing guidance relating to the accounting

for income taxes.

This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles

of accounting for income taxes and to improve the consistent application of GAAP for other areas of accounting for income taxes by clarifying

and amending existing guidance.

The ASU is effective for fiscal years beginning after December 15, 2020.

The Company does not expect

that the adoption of this new guidance will have a material impact on the Company’s financial statements and plans to adopt this

guidance on a prospective basis for the provisions applicable to the Company.

August 2020, FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts

in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,

which, among other things, provides guidance on how to account for contracts on an entity’s own equity.

This ASU eliminates the

beneficial conversion and cash conversion accounting models for convertible instruments.

It also amends the accounting for certain contracts

in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions.

this ASU modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted

earnings per share computation.

The amendments in this ASU are effective for smaller reporting companies as defined by the SEC for fiscal

years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted, but no earlier

than fiscal years beginning after December 15, 2020.

The Company is currently evaluating the impact of ASU 2020-06 on its financial statements.

4 – Commitments and Contingencies

License Agreement

Company has entered into an exclusive start-up company license agreement with the Wisconsin Alumni Research Foundation (“WARF”)

for WARF’s neural probe array and thin film micro electrode technology (the “WARF Agreement”).

The Company entered

into an Amended and Restated Exclusive Start-up Company License Agreement (the “WARF License”) with WARF on January 21, 2020,

which amended and restated in full the prior license agreement between WARF and NeuroOne, LLC, a predecessor of the Company, dated October

1, 2014, as amended on February 22, 2017, March 30, 2019 and September 18, 2019.

WARF License grants to the Company an exclusive license to make, use and sell, in the United States only, products that employ certain

licensed patents for a neural probe array or thin-film micro electrode array and method.

The Company has agreed to pay WARF a royalty

equal to a single-digit percentage of its product sales pursuant to the WARF License, with a minimum annual royalty payment of $ 50,000

for 2020, $ 100,000 for 2021 and $ 150,000 for 2022 and each calendar year thereafter that the WARF License is in effect.

The minimum annual

royalty payment for calendar year 2020 in the amount of $ 50,000 was paid by the Company as of June 30, 2021 and was reflected as a component

of cost of product revenue for the nine month period ended June 30, 2021.

In addition, $ 50,000 of the minimum annual royalty payment

for calendar year 2021 was accrued for as of June 30, 2021 and was reflected as a component of cost of product revenue.

The cost of product

revenue attributed to the WARF License amounted to $ 25,000 and $ 100,000 for the three and nine month periods ended June 30, 2021, respectively.

If the Company or any of its sublicensees contest the validity of any licensed patent, the royalty rate will be doubled during the pendency

of such contest and, if the contested patent is found to be valid and would be infringed by the Company if not for the WARF License,

the royalty rate will be tripled for the remaining term of the WARF License.

Medical Technologies Corporation

to Condensed Financial Statements

may terminate the WARF License if the Company defaults on the payments of amounts due to WARF or fails to timely submit development reports,

or breaches any other covenant in the WARF License and fails to remedy such default in ninety (90) days or in the event of certain bankruptcy

events involving the Company.

WARF may also terminate the WARF License on ninety (90) days’ notice if the Company fails to have

commercial sales of one or more FDA-approved products under the WARF License by June 30, 2021.

The WARF License otherwise expires by

its terms (i) on the date that no valid claims on the patents licensed thereunder remain or (ii) upon the cessation for more than four

(4) calendar quarters of the payment, once begun, of earned royalties under certain sections of the WARF License.

The Company expects

the latest expiration of a licensed patent to occur in 2030.

The first commercial sale occurred in December 2020, prior to the June 30,

2021 deadline.

Company has an exclusive license and development agreement with the Mayo Foundation for Medical Education and Research (“Mayo”)

related to certain intellectual property and development services for thin film micro electrode technology (“Mayo Agreement”).

If the Company is successful in obtaining regulatory approval, the Company is to pay royalties to Mayo based on a percentage of net sales

of products of the licensed technology through the term of the Mayo Agreement, set to expire May 25, 2037 .

As of June 30, 2021, $ 3,894

in royalty fees were incurred given the commencement of commercial sales and were reflected as a component of cost of product revenue

in the amount of $ 1,203 and $ 3,894 during the three and nine month periods ended June 30, 2021, respectively.

time to time, the Company is subject to litigation and claims arising in the ordinary course of business.

In May 2017, NeuroOne received

a letter from PMT Corporation (“PMT”), the former employer of Mark Christianson and Wade Fredrickson.

PMT claimed that these

officers had breached their restrictive covenant obligations with PMT by virtue of their work for NeuroOne and such officer’s prior

work during employment with the prior employer, that these officers had breached their confidentiality and non-disclosure obligations

to PMT and federal and state law by misappropriating confidential and trade secret information, and that the Company is responsible for

tortious interference with contracts.

The letter, which purported to attach a noncompete agreement signed by Mr.

Fredrickson, demanded

Fredrickson (who resigned from the Company in June 2017), Mr.

Christianson and NeuroOne cease and desist all competitive activities,

Fredrickson step down from his position and that Mr.

Christianson and NeuroOne provide the former employer access to NeuroOne’s

systems to demonstrate that it is not using trade secrets or proprietary information nor competing with the former employer.

March 29, 2018, the Company was served with a complaint filed by PMT adding the Company, NeuroOne and Mr.

Christianson to its existing

lawsuit against Mr.

Balance as of end of period – December 31, 2020

Intellectual Property

The Company has entered into two licensing agreements

with major research institutions, which allow for access to certain patented technology and know-how.

Payments under those agreements

are capitalized and amortized to general and administrative expense over the expected useful life of the acquired technology.

Property and Equipment

Property and equipment is recorded at cost and

reduced by accumulated depreciation.

Depreciation expense is recognized over the estimated useful lives of the assets using the straight-line

The estimated useful life for equipment and furniture ranges from three to seven years and three years for software.

assets acquired for research and development activities and that have alternative use are capitalized over the useful life of the acquired

Estimated useful lives are periodically reviewed, and, when appropriate, changes are made prospectively.

Software purchased for

internal use consists primarily of amounts paid for perpetual licenses to third-party software providers and installation costs.

certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on

the recoverability of the carrying amounts.

Maintenance and repairs are charged directly to expense as incurred.

Allowances for Doubtful Accounts

The Company records a provision for doubtful

accounts, when appropriate, based on historical experience and a detailed assessment of the collectability of its accounts receivable.

In estimating the allowance for doubtful accounts, the Company considers, among other factors, the aging of the accounts receivable,

its historical write-offs, the credit worthiness of each customer, and general economic conditions.

Account balances are charged off

against the allowance when the Company believes that it is probable that the receivable will not be recovered.

Actual write-offs may

be in excess of the Company’s estimated allowance.

Inventories are stated at the lower of cost (using

the first-in, first-out “FIFO” method) or net realizable value.

The Company calculates inventory valuation adjustments for

excess and obsolete inventory, when appropriate, based on current inventory levels, movement, expected useful lives, and estimated future

demand of the products and spare parts.

The Company’s inventory is currently comprised of cEEG strip/grid, sEEG depth electrode

and electrode cable assembly finished good products and related component parts.

The strip/ grid and depth electrode products are produced

by a third-party contract manufacturer and the electrode cable assembly products are obtained from outside suppliers.

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets,

which consist of licensed intellectual property and property and equipment for impairment whenever events or changes in circumstances

indicate that the carrying value of these assets may not be recoverable.

The Company assesses the recoverability of long-lived assets

by determining whether or not the carrying value of such assets will be recovered through undiscounted expected future cash flows.

the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the

fair value of the impaired asset.

Research and Development Costs

Research and development costs are charged to

expense as incurred.

Research and development expenses may include costs incurred in performing research and development activities,

including clinical trial costs, manufacturing costs for both clinical and pre-clinical materials as well as other contracted services,

license fees, and other external costs.

Non-refundable advance payments for goods and services that will be used in future research and

development activities are expensed when the activity is performed or when the goods have been received, rather than when payment is

made, in accordance with Accounting Standards Codification (ASC) 730, Research and Development .

Selling, General and Administrative

Selling, general and administrative expenses

consist primarily of personnel-related costs including stock-based compensation for personnel in functions not directly associated with

research and development activities.

Other significant costs include legal fees relating to corporate matters, intellectual property

costs, professional fees for consultants assisting with regulatory, clinical, product development, financial matters and sales and marketing

in connection with the commercial sale of cEEG strip/grid, sEEG depth electrode and electrode cable assembly products.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements, continued

For the Company, income taxes are accounted for

under the asset and liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable

to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base and

operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply

to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Deferred tax assets are

reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

Net Loss Per Share

For the Company, basic loss per share of common

stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.

Diluted earnings or loss per share of common

stock is computed similarly to basic earnings or loss per share except the weighted average shares outstanding are increased to include

additional shares from the assumed exercise of any common stock equivalents, if dilutive.

The Company’s warrants, stock options

and restricted stock units while outstanding are considered common stock equivalents for this purpose.

Diluted earnings is computed utilizing

the treasury method for the warrants, stock options and restricted stock units.

No incremental common stock equivalents were included

in calculating diluted loss per share because such inclusion would be anti-dilutive given the net loss reported for the three months

ended December 31, 2021 and 2020.

The following potential common shares were not

considered in the computation of diluted net loss per share as their effect would have been anti-dilutive for the three months ended

December 31, 2021 and 2020:

Stock options

Restricted stock units and awards

Recent Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards

Update (“ASU”) 2016-13, “ Financial Instruments – Credit Losses” .

The ASU sets forth a “current

expected credit loss” (“CECL”) model which requires the Company to measure all expected credit losses for financial

instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.

replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized

cost and applies to some off-balance sheet credit exposures.

This ASU is effective for fiscal years beginning after December 15, 2019,

including interim periods within those fiscal years, with early adoption permitted.

Recently, the FASB issued the final ASU to delay

adoption for smaller reporting companies to calendar year 2023.

The Company is currently assessing the impact of the adoption of this

ASU on its financial statements.

In December 2019, the FASB issued ASU No.

Income Taxes (Topic 740) which amends the existing guidance relating to the accounting for income taxes.

This ASU is intended to simplify

the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve

the consistent application of GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance.

is effective for fiscal years beginning after December 15, 2020.

The Company adopted the new guidance on October 1, 2021 and the adoption

of this new guidance did not have a material impact on the Company’s financial statements.

In August 2020, FASB issued ASU 2020-06, Debt—Debt

with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which, among other things, provides guidance

on how to account for contracts on an entity’s own equity.

This ASU eliminates the beneficial conversion and cash conversion accounting

models for convertible instruments.

It also amends the accounting for certain contracts in an entity’s own equity that are currently

accounted for as derivatives because of specific settlement provisions.

In addition, this ASU modifies how particular convertible instruments

and certain contracts that may be settled in cash or shares impact the diluted EPS computation.

The amendments in this ASU are effective

for smaller reporting companies as defined by the SEC for fiscal years beginning after December 15, 2023, including interim periods within

those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.

The Company is currently

evaluating the impact of ASU 2020-06 on its financial statements.

NOTE 4 - Commitments and Contingencies

WARF License Agreement

The Company has entered into an exclusive start-up

company license agreement with the Wisconsin Alumni Research Foundation (“WARF”) for WARF’s neural probe array and

thin film micro electrode technology (the “WARF Agreement”).

The Company entered into an Amended and Restated Exclusive Start-up

Company License Agreement (the “WARF License”) with WARF on January 21, 2020, which amended and restated in full the prior

license agreement between WARF and NeuroOne, LLC, a predecessor of the Company, dated October 1, 2014, as amended on February 22, 2017,

March 30, 2019 and September 18, 2019.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements, continued

The WARF License grants to the Company an exclusive

license to make, use and sell, in the United States only, products that employ certain licensed patents for a neural probe array

or thin-film micro electrode array and method.

We have agreed to pay WARF a royalty equal to a single-digit percentage of our product

sales pursuant to the WARF License, with a minimum annual royalty payment of $ 50,000 for 2020, $ 100,000 for 2021 and $ 150,000 for

2022 and each calendar year thereafter that the WARF License is in effect.

If we or any of our sublicensees contest the validity of any

licensed patent, the royalty rate will be doubled during the pendency of such contest and, if the contested patent is found to be valid

and would be infringed by us if not for the WARF License, the royalty rate will be tripled for the remaining term of the WARF License.

WARF may terminate the WARF License on 30 days’

written notice if we default on the payments of amounts due to WARF or fail to timely submit development reports, actively pursue our

development plan or breach any other covenant in the WARF License and fail to remedy such default in 90 days or in the event of certain

bankruptcy events involving us.

WARF may also terminate the WARF License (i) on 90 days’ notice if we had failed to have commercial

sales of one or more FDA-approved products under the WARF License by June 30, 2021 or (ii) if, after royalties earned on sales begin

to be paid, such earned royalties cease for more than four calendar quarters.

The first commercial sale occurred on December 7, 2020,

prior to the June 30, 2021 deadline.

The WARF License otherwise expires by its terms on the date that no valid claims on the patents

licensed thereunder remain.

We expect the latest expiration of a licensed patent to occur in 2030.

During the three months ended December

31, 2021 and 2020, $ 25,000 and $ 50,000 in royalty fees were incurred related to the WARF License, respectively, and were reflected as

a component of cost of product revenue.

Mayo Agreement

The Company has an exclusive license and development

agreement with the Mayo Foundation for Medical Education and Research (“Mayo”) related to certain intellectual property and

development services for thin film micro electrode technology (“Mayo Agreement”).

If the Company is successful in obtaining

regulatory approval, the Company is to pay royalties to Mayo based on a percentage of net sales of products of the licensed technology

through the term of the Mayo Agreement, set to expire May 25, 2037.

During the three months ended December 31, 2021 and 2020, $ 739

and $ 2,144 in royalty fees were incurred related to the Mayo Agreement, respectively, and were reflected as a component of cost of product

PMT Litigation

From time to time, the Company is subject to

litigation and claims in the ordinary course of business.

On March 29, 2018, the Company was served with

a complaint filed by PMT Corporation (“PMT”), the former employer of Mark Christianson, a current Company employee, and Wade

Fredrickson, a now former Company employee.

The complaint added the Company, NeuroOne, Inc.

Christianson to its existing lawsuit

Fredrickson in the Fourth Judicial District Court of the State of Minnesota.

The complaint purported to attach Mr.

Fredrickson’s noncompete agreement as Exhibit A.

In the lawsuit, PMT claims that Mr.

Fredrickson and Mr.

Christianson breached

their non-competition, non-solicitation and non-disclosure obligations, breached their fiduciary duty obligations, were unjustly enriched,

engaged in unfair competition, engaged in a civil conspiracy, tortiously interfered with PMT’s contracts and prospective economic

advantage, and breached a covenant of good faith and fair dealing.

Fredrickson, PMT also alleges that he intentionally or

negligently spoliated evidence, made negligent or fraudulent misrepresentations, misappropriated trade secrets in violation of Minnesota

law, and committed the tort of conversion and statutory civil theft.

Against the Company and NeuroOne, PMT alleges that the Company and

NeuroOne were unjustly enriched and engaged in unfair competition.

PMT asked the Court to impose a constructive trust over the shares

Christianson, by virtue of their work for the Company and their prior work during employment with PMT, breached their non-competition,

non-solicitation and non-disclosure obligations, breached their fiduciary duty obligations, were unjustly enriched, engaged in unfair

competition, engaged in a civil conspiracy, tortiously interfered with PMT’s contracts and prospective economic advantage, and

breached a covenant of good faith and fair dealing.

The complaint purported to attach Mr.

Fredrickson’s noncompete agreement as

Fredrickson, PMT also alleged that he intentionally or negligently spoliated evidence, made negligent or fraudulent

misrepresentations, misappropriated trade secrets in violation of Minnesota law, and committed the tort of conversion and statutory civil

Against the Company and NeuroOne, Inc., PMT alleged that the Company and NeuroOne, Inc.

were unjustly enriched and engaged in

unfair competition.

PMT asked the Court to impose a constructive trust over the shares held by Mr.

Fredrickson and Mr.

Christianson and to award compensatory damages, equitable relief, punitive damages, attorneys’

fees, costs and interest.

April 18, 2018, Mr.

Christianson, the Company and NeuroOne, Inc.

Christianson and

to award compensatory damages, equitable relief, punitive damages, attorneys’ fees, costs and interest.

On April 18, 2018, Mr.

Christianson, the Company

and NeuroOne, Inc.

filed a motion for dismissal, which was heard by the Court on October 11, 2018.

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the contract claims against Mr.

Christianson fail because his agreement was not supported

by consideration;

the Minnesota Uniform Trade Secrets Act preempts plaintiff’s claims for unfair competition, civil conspiracy

and unjust enrichment;

plaintiff fails to state a claim regarding alleged breach of the duties of loyalty and good faith/fair dealing;

plaintiff cannot legally obtain a constructive trust;

Christianson fail because his agreement was not supported by consideration;

the Minnesota Uniform Trade

Secrets Act preempts plaintiff’s claims for unfair competition, civil conspiracy and unjust enrichment;

plaintiff fails to state

a claim regarding alleged breach of the duties of loyalty and good faith/fair dealing;

plaintiff cannot legally obtain a constructive

plaintiff has insufficiently pled its tortious interference claims;

and Plaintiff

has not stated a claim for unfair competition.

On January 7, 2019, the judge granted the motion for dismissal with respect to PMT’s

claim for breach of the duty of good faith and fair dealing, and denied the motion for dismissal with respect to the other claims presented.

Medical Technologies Corporation

to Condensed Financial Statements

April 2019, PMT served the Company, NeuroOne, Inc and Christianson with a proposed Second Amended Complaint, which included new claims

against the Company and NeuroOne, Inc for tortious interference with contract and tortious interference with prospective business advantage

and punitive damages against the Company, NeuroOne Inc.

and Plaintiff has not stated a claim for unfair competition.

On January 7, 2019, the judge granted the motion for dismissal with respect to PMT’s claim for breach of the duty of good faith

and fair dealing, and denied the motion for dismissal with respect to the other claims presented.

In April 2019, PMT served the Company, NeuroOne,

and Christianson with a proposed Second Amended Complaint, which included new claims against the Company and NeuroOne, Inc for tortious

interference with contract and tortious interference with prospective business advantage and punitive damages against the Company, NeuroOne

and Christianson.

On June 28, 2019, the Company presented evidence indicating

that PMT had participated in a fraud on the Court and sought an Order that PMT had waived the attorney client privilege.

July 16, 2019, the defendants served PMT with a joint notice of motion for sanctions seeking a variety of sanctions for litigation misconduct

including, but not limited to, dismissal of the case and an award of attorneys’ fees.

On June 28, 2019, the Company presented evidence indicating that PMT had participated in a fraud on the Court

and sought an Order that PMT had waived the attorney client privilege.

On July 16, 2019, the defendants served PMT with

a joint notice of motion for sanctions seeking a variety of sanctions for litigation misconduct including, but not limited to, dismissal

of the case and an award of attorneys’ fees.

The Company, NeuroOne Inc and Mr.

further intend to move for summary judgment on all remaining claims asserted against them as well as for leave to assert counterclaims

against PMT for abuse of process.

August 30, 2019, the Hennepin County District Court heard dispositive motions in this case.

The district court judge indicated some claims

would likely be tried to a jury and encouraged the parties to settle.

September 12, 2019, the district court heard NeuroOne’s motion for sanctions against PMT.

The district court held the sanctions

hearing on December 17, 2019 and December 18, 2019 and indicated that a ruling would be made in approximately 90 days.

April 29, 2020, the district court granted the Company’s motion for sanctions.

Additionally, the district court granted the Company’s

motion for summary judgment in part with respect to the counts for Christianson’s breach of non-confidentiality agreement, and

denied the Company’s motion for summary judgment on all other counts.

August 24, 2020, defendants moved the Court to amend their counterclaims for abuse of process against PMT to add a claim for punitive

damages with respect to its conduct pertaining to the Fredrickson noncompete.

On October 12, 2020 the Court awarded NeuroOne $ 185,000

in Rule 11 sanctions and Fredrickson $ 145,000 in Rule 11 sanctions with respect to PMT’s misconduct relating to the Fredrickson

PMT and its former litigation counsel, Barnes &Thornburg, were jointly and severally liable for these awards, which were

paid on December 11, 2020 and have been recognized in other income in the condensed statement of operations.

The Court granted NeuroOne’s

motion to amend to permit its assertion of the right to assert a punitive damages claim against PMT associated with fighting the allegations

relating to the Fredrickson noncompete.

May 27, 2021 PMT moved for summary judgment on defendants’ claims for abuse of process and punitive damages, and on August 5, 2021,

the district court granted PMT’s motion to dismiss the abuse of process and punitive damage claims asserted by the defendants.

has been set for December 2021, but this may be delayed or impacted by the COVID-19 pandemic.

The Company intends to continue to defend

itself vigorously and to continue to aggressively prosecute its affirmative counterclaim against PMT.

The outcome of any claim against

the Company by PMT was not estimable as of the issuance of these financial statements.

October 7, 2019, the Company entered into a non-cancellable lease agreement (the “Lease”) with Biynah Cleveland, LLC, BIP

Cleveland, LLC, and Edenvale Investors (together, the “Landlord”) pursuant to which the Company has agreed to lease office

space located at 7599 Anagram Drive, Eden Prairie, Minnesota (the “Premises”).

The Company took possession of the Premises

on November 1, 2019, with the term of the Lease ending 65 months after such date, unless terminated earlier (the “Term”).

The initial base rent for the Premises is $6,410 per month for the first 17 months, increasing to $7,076 per month by the end of the

In addition, as long as the Company is not in default under the Lease, the Company shall be entitled to an abatement of its base

rent for the first 5 months.

In addition, the Company will pay its pro rata share of the Landlord’s annual operating expenses associated

with the premises, calculated as set forth in the Lease of which the Company is entitled to an abatement of these operating expense for

the first 3 months.

Medical Technologies Corporation

to Condensed Financial Statements

the three and nine months ended June 30, 2021, rent expense associated with the facility leases amounted to $ 31,485 and $ 92,746 , respectively.

During the three and nine months ended June 30, 2020, rent expense associated with the facility leases amounted to $ 25,861 and $ 73,727 ,

respectively.

cash flow information related to the operating lease was as follows:

the nine months ended

Christianson further moved for summary judgment

on all remaining claims asserted against them as well as for leave to assert counterclaims against PMT for abuse of process.

hearings on the dispositive motions and defendants’ sanctions motion, the district court granted the Company’s motion for

sanctions on April 29, 2020.

Additionally, the district court granted the Company’s motion for summary judgment in part with respect

to the counts for Christianson’s breach of non-confidentiality agreement, and denied the Company’s motion for summary judgment

on all other counts.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements, continued

On August 24, 2020, defendants moved the Court

to amend their counterclaims for abuse of process against PMT to add a claim for punitive damages with respect to its conduct pertaining

to the Fredrickson noncompete.

On October 12, 2020 the Court awarded NeuroOne, Inc.

$ 185,000 in Rule 11 sanctions and Fredrickson

$ 145,000 in Rule 11 sanctions with respect to PMT’s misconduct relating to the Fredrickson noncompete.

PMT and its former

litigation counsel, Barnes & Thornburg, were jointly and severally liable for these awards, which were paid on December 11, 2020

and have been recognized in other income in the statements of operations.

The Court granted NeuroOne, Inc.’s motion to amend to

permit its assertion of the right to assert a punitive damages claim against PMT associated with fighting the allegations relating to

the Fredrickson noncompete.

On May 27, 2021 PMT moved for summary judgment

on defendants’ claims for abuse of process and punitive damages, and on August 5, 2021, the district court granted PMT’s

motion to dismiss the abuse of process and punitive damage claims.

Trial has been postponed from December 2021 to

August of 2022.

The Company intends to continue to defend itself vigorously and to continue to aggressively prosecute its affirmative

counterclaim against PMT.

The outcome of any claim against the Company by PMT was not estimable as of the issuance of these financial

Facility Lease

Headquarters Lease

On October 7, 2019, the Company entered into

a non-cancellable lease agreement (the “Lease”) with Biynah Cleveland, LLC, BIP Cleveland, LLC, and Edenvale Investors (together,

the “Landlord”) pursuant to which the Company has agreed to lease office space located at 7599 Anagram Drive, Eden Prairie,

Minnesota (the “Premises”).

The Company took possession of the Premises on November 1, 2019, with the term of the Lease ending

65 months after such date, unless terminated earlier (the “Term”).

The initial base rent for the Premises is $6,410 per month

for the first 17 months, increasing to $7,076 per month by the end of the Term.

In addition, as long as the Company is not in default

under the Lease, the Company shall be entitled to an abatement of its base rent for the first 5 months.

In addition, the Company will

pay its pro rata share of the Landlord’s annual operating expenses associated with the premises, calculated as set forth in the

Lease of which the Company is entitled to an abatement of these operating expense for the first 3 months.

Los Gatos Lease

On July 1, 2021, the Company entered into a non-cancellable

facility lease (the “New Lease”), pursuant to which the Company agreed to rent office space for its research and development

operations located at 718 University Avenue, Suite #111, Los Gatos, California.

The term of the New Lease is eighteen months.

space under the New Lease is approximately 1,162 square feet.

The Company took possession of the office space on July 2, 2021.

monthly rent under the New Lease is approximately $ 4,241 .

San Jose Lease :

On December 30, 2020, the Company entered into

a non-cancellable lease agreement for short term office space in San Jose, California (the “San Jose Lease”) for a three

month initial term.

After March 31, 2021, the San Jose Lease was cancellable upon a 30-day notice to the landlord.

The Company took possession

of the office space on January 1, 2021 and the San Jose Lease was terminated upon the commencement of the New Lease discussed above.

The base rent under the San Jose Lease was $ 504 per month.

During the three months ended December 31, 2021

and 2020, rent expense associated with the facility leases amounted to $ 43,045 and $ 29,461 , respectively.

Supplemental cash flow information related to

the operating leases was as follows:

For the three months ended

Cash paid for amounts included in the measurement of lease liability:

cash flows from operating leases

assets obtained in exchange for lease obligations:

balance sheet information related to the operating lease was as follows:

September 30,

average remaining lease term (years)

average discount rate

of the lease liability was as follows:

from July 1, 2021 to September 30, 2021)

lease payments

imputed interest

December 30, 2020, the Company entered into a non-cancellable lease agreement for short term office space in San Jose, California (the

“San Jose Lease”) for a three month initial term.

After March 31, 2021, the San Jose Lease is cancellable upon a 30-day notice

to the landlord.

The Company took possession of the office space on January 1, 2021.

The base rent under the San Jose Lease is $ 504 per

Medical Technologies Corporation

to Condensed Financial Statements

5 – Prepaid and Other Assets, Intangibles and Property and Equipment

and Other Assets

and other assets consisted of the following at June 30, 2021 and September 30, 2020:

Operating cash flows from operating leases

Right-of -use assets obtained in exchange for lease obligations:

Operating leases

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements, continued

Supplemental balance sheet information related

to the operating leases was as follows:

September 30,

offering costs

assets rollforward is as follows:

Net Intangibles,

Right-of-use assets

Lease liabilities

Weighted average remaining lease term (years)

Weighted average discount rate

Maturity of the lease liabilities was as follows:

Total lease payments

Less imputed interest

Short-term portion

Long-term portion

NOTE 5 – Supplemental Balance Sheet

Prepaid and Other Assets

Prepaid and other assets consisted of the following:

September 30,

Prepaid expenses

Deferred offering costs

Intangible assets rollforward is as follows:

Net Intangibles, September 30, 2021

12 - 13 years

Intangibles, June 30, 2021

expense was $ 5,579 and $ 16,737 for the three and nine months ended June 30, 2021 and 2020, respectively.

and Equipment

and equipment held for use by category are presented in the following table:

September 30,

and furniture

Net Intangibles, December 31, 2021

Amortization expense was $ 5,579 for each of the

three month periods ended December 31, 2021 and 2020.

Property and Equipment

Less accumulated

and equipment, net

expense was $ 14,776 and $ 41,648 for the three months and nine months ended June 30, 2021, respectively, $ 7,298 and $ 17,105 during the

three and nine months ended June 30, 2020, respectively.

6 – Accrued Expenses and Other Liabilities

expenses consisted of the following at June 30, 2021 and September 30, 2020:

Property and equipment held for use by category

are presented in the following table:

September 30,

lease liability, short term

issuance costs

“other” category is primarily comprised of board fees.

Medical Technologies Corporation

to Condensed Financial Statements

Protection Program

CARES Act, signed into law in March 2020, established the Paycheck Protection Program (“PPP”).

The PPP authorizes over $600

billion in forgivable loans to small businesses.

Loan amounts may be forgiven to the extent proceeds are used to cover documented payroll,

mortgage interest, rent, and utility costs over a 24-week measurement period following loan funding.

Loans have a maturity of 2 years

and an interest rate of 1%.

Prepayments may be made without penalty.

In April 2020, the Company received loan funding of $83,333 under

the PPP and was recorded as a long-term liability.

The PPP loan was forgiven on June 9, 2021 by the U.S.

Small Business Administration

and was reflected as other income in the accompanying condensed statements of operations.

Interest was nominal during the three and nine

months ended June 30, 2021.

7 – Zimmer Development Agreement

July 20, 2020, the Company entered into an exclusive development and distribution agreement (the “Development Agreement”)

with Zimmer, Inc.

(“Zimmer”), pursuant to which the Company granted Zimmer exclusive global rights to distribute the Strip/Grid

Products and electrode cable assembly products (the “Electrode Cable Assembly Products”).

Additionally, the Company granted

Zimmer the exclusive right and license to distribute certain depth electrodes developed by the Company (“SEEG Products”,

and together with the Strip/Grid Products and Electrode Cable Assembly Products, the “Products”).

The parties have agreed

to collaborate with respect to development activities under the Development Agreement through a joint development committee composed

of an equal number of representatives of Zimmer and the Company.

the terms of the Development Agreement, the Company will be responsible for all costs and expenses related to developing the Products,

and Zimmer will be responsible for all costs and expenses related to the commercialization of the Products.

In addition to the Development

Agreement, Zimmer and the Company have entered into a Manufacturing and Supply Agreement (the “MS Agreement”) and a supplier

quality agreement (the “Quality Agreement”) with respect to the manufacturing and supply of the Products.

as otherwise provided in the Development Agreement, the Company will be responsible for performing all development activities, including

non-clinical and clinical studies directed at obtaining regulatory approval of each Product.

Zimmer has agreed to use commercially reasonable

efforts to promote, market and sell each Product following the “Product Availability Date” (as defined in the Development

Agreement) for such Product.

to the Development Agreement, Zimmer made an upfront initial exclusivity fee payment of $ 2.0 million (the “Initial Exclusivity

Fee”) to the Company.

In addition, the Company is to receive the following fee payments (the “Interim Fee Bonus”) upon

reaching certain milestones:

Except where Zimmer timely delivers a Design Modification Notice pursuant to Section 1.2, if one or more of the events set forth

below occurs on or before the deadline indicated for such event and the Product Availability Date (as defined in the Development Agreement)

for the SEEG Products occurs on or before June 30, 2021, then the Company shall receive the additional amount indicated for such event

as part of the SEEG Exclusivity Maintenance Fee:

● Design freeze for the SEEG Products by November 30, 2020 - $ 500,000

Equipment and furniture

Total property and equipment

Less accumulated depreciation

Property and equipment, net

Depreciation expense was $ 19,582 and $ 13,157

for the three month periods ended December 31, 2021 and 2020, respectively.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements, continued

NOTE 6 - Accrued Expenses and Other Liabilities

Accrued expenses consisted of the following at

December 31, 2021 and September 30, 2021:

September 30,

Accrued payroll

Operating lease liability, short term

Royalty Payments

The “other” category is primarily

comprised of board fees.

NOTE 7 – Zimmer Development Agreement

On July 20, 2020, the Company entered into an

exclusive development and distribution agreement (the “Development Agreement”) with Zimmer, Inc.

pursuant to which the Company granted Zimmer exclusive global rights to distribute the Strip/Grid Products and electrode cable assembly

products (the “Electrode Cable Assembly Products”).

Additionally, the Company granted Zimmer the exclusive right and license

to distribute certain depth electrodes developed by the Company (“SEEG Products”, and together with the Strip/Grid Products

and Electrode Cable Assembly Products, the “Products”).

The parties have agreed to collaborate with respect to development

activities under the Development Agreement through a joint development committee composed of an equal number of representatives of Zimmer

and the Company.

Under the terms of the Development Agreement,

the Company is responsible for all costs and expenses related to developing the Products, and Zimmer is responsible for all costs and

expenses related to the commercialization of the Products.

In addition to the Development Agreement, Zimmer and the Company have entered

into a Manufacturing and Supply Agreement (the “MS Agreement”) and a supplier quality agreement (the “Quality Agreement”)

with respect to the manufacturing and supply of the Products.

Except as otherwise provided in the Development

Agreement, the Company is responsible for performing all development activities, including non-clinical and clinical studies directed

at obtaining regulatory approval of each Product.

Zimmer has agreed to use commercially reasonable efforts to promote, market and sell

each Product following the “Product Availability Date” (as defined in the Development Agreement) for such Product.

Pursuant to the Development Agreement, Zimmer

made an upfront initial exclusivity fee payment of $ 2.0 million (the “Initial Exclusivity Fee”) to the Company.

Except where Zimmer timely delivers a Design

Modification Notice pursuant to Section 1.2, if one or more of the events set forth below occurs on or before the deadline indicated

for such event and the Product Availability Date (as defined in the Development Agreement) for the SEEG Products occurs on or before

June 30, 2021, then the Company shall receive the additional amount indicated for such event as part of the SEEG Exclusivity Maintenance

● Design freeze for the SEEG Products by December 15, 2020 - $ 500,000

● Acceptance of all Deliverables for SEEG Products under the Development Plan (as defined in the Development Agreement) by April 30, 2021 - $ 500,000

Medical Technologies Corporation

to Condensed Financial Statements

Notwithstanding Scenario 1 above, if Zimmer timely delivers a Design Modification Notice to the Company pursuant to Section 1.2,

and one or more of the events set forth below occurs on or before the deadline indicated for such event and the Product Availability

Date for the SEEG Products occurs on or before June 30, 2021 as determined by Zimmer, then the Company shall receive the additional amount

indicated for such event as part of the SEEG Exclusivity Maintenance Fee:

If Zimmer timely delivers a Design Modification

Notice to the Company under the Development Agreement, and one or more of the events set forth below occurs on or before the deadline

indicated for such event and the Product Availability Date for the SEEG Products occurs on or before June 30, 2021, then the Company

shall receive the additional amount indicated for such event as part of the SEEG Exclusivity Maintenance Fee:

● Acceptance of all Deliverables for SEEG Products under the Development Plan other than the Modified Connector by April 30, 2021 - $ 500,000

● Acceptance of all Deliverables for SEEG Products under the Development Plan, including the Modified Connector by September 30, 2021 - $ 500,000

purposes of the Development Agreement, each of the foregoing events shall have occurred only if the Company has demonstrated the achievement

of the event to Zimmer’s reasonable satisfaction.

Notwithstanding the foregoing, the events in Sections 6.1(c)(ii), (iii) and (iv)

of the Development Agreement shall not be deemed to be met if FDA Approval for the SEEG Products is not received prior to the applicable

addition to the Initial Exclusivity Fee and Interim Fee Bonus, in order to maintain the exclusivity of the SEEG Distribution License,

Zimmer must pay the SEEG Exclusivity Maintenance Fee to the Company, on or prior to the SEEG Exclusivity Confirmation Date, in immediately

available funds as follows:

For purposes of the Development Agreement, each

of the foregoing events shall have occurred only if the Company has demonstrated the achievement of the event to Zimmer’s reasonable

satisfaction.

Notwithstanding the foregoing, the events in Sections 6.1(c)(ii), (iii) and (iv) of the Development Agreement shall not

be deemed to be met if FDA Approval for the SEEG Products is not received prior to the applicable deadline.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements, continued

In order to maintain the exclusivity of the SEEG

Distribution License, Zimmer must pay the SEEG Exclusivity Maintenance Fee to the Company, on or prior to the SEEG Exclusivity Confirmation

Date, in immediately available funds as follows:

● if the Product Availability Date for the SEEG Products occurs on or before June 30, 2021, then $ 3,000,000 , plus the amount of any Interim Fee Bonuses earned pursuant to Section 6.1(c), including any such Interim Fee Bonus earned after June 30, 2021 pursuant to Section 6.1(c)(iv) following the delivery of a Design Modification Notice;

2 unchanged sentences

● if the Product Availability Date for the SEEG Products occurs after December 31, 2021, then $ 1,500,000 .

Notwithstanding

any other provision of the Development Agreement, if the Product Availability Date for the SEEG Products has not occurred on or before

June 30, 2022, Zimmer shall have the right to terminate the SEEG Distribution License by delivering written notice to the Company to

that effect and, upon delivery of such notice, Zimmer shall be relieved of all of its obligations hereunder with respect to SEEG Products,

including any obligation to pay the SEEG Exclusivity Maintenance Fee or to purchase, market, distribute or sell any SEEG Products.

Initial Exclusivity Fee and the SEEG Exclusivity Maintenance Fee (including any Interim Fee Bonus(es)), once paid, are non-refundable.

Development Agreement will expire on the tenth anniversary of the date of the first commercial sale of the last of the Products to achieve

a first commercial sale, unless terminated earlier pursuant to its terms.

Either party may terminate the Development Agreement (x) with

written notice for the other party’s material breach following a cure period or (y) if the other party becomes subject to certain

insolvency proceedings.

In addition, Zimmer may terminate the Development Agreement for any reason with 90 days’ written notice,

and the Company may terminate the Development Agreement if Zimmer acquires or directly or indirectly owns a controlling interest in certain

competitors of the Company.

inception of the Zimmer Development Agreement through June 30, 2021, the Company had identified three performance obligations under the

Zimmer Development Agreement and consisted of the following:

The Product Availability Date for the SEEG Products

has not yet occurred.

Notwithstanding any other provision of the Development Agreement, if the Product Availability Date for the SEEG

Products has not occurred on or before June 30, 2022, Zimmer shall have the right to terminate the SEEG Distribution License by delivering

written notice to the Company to that effect and, upon delivery of such notice, Zimmer shall be relieved of all of its obligations hereunder

with respect to SEEG Products, including any obligation to pay the SEEG Exclusivity Maintenance Fee or to purchase, market, distribute

or sell any SEEG Products.

The Initial Exclusivity Fee and the SEEG Exclusivity Maintenance Fee (including any Interim Fee Bonus(es)),

once paid, are non-refundable.

The Development Agreement will expire on the

tenth anniversary of the date of the first commercial sale of the last of the Products to achieve a first commercial sale, unless terminated

earlier pursuant to its terms.

Either party may terminate the Development Agreement (x) with written notice for the other party’s

material breach following a cure period or (y) if the other party becomes subject to certain insolvency proceedings.

In addition, Zimmer

may terminate the Development Agreement for any reason with 90 days’ written notice, and the Company may terminate the Development

Agreement if Zimmer acquires or directly or indirectly owns a controlling interest in certain competitors of the Company.

At inception of the Zimmer Development Agreement

through December 31, 2021, the Company had identified three performance obligations under the Zimmer Development Agreement and consisted

of the following:

(1) the Company obligation to grant Zimmer access to its intellectual property;

1 unchanged sentence

and (3) complete Strip/Grid Product development.

Accordingly, the Company recognized revenue in

the amount of $ 17,451 and $ 59,838 for the three month and nine month periods ended June 30, 2021 related to the development of the Products

completed during the period in connection with the Initial Exclusivity Fee payment.

The Zimmer Development Agreement was accounted for

under the provisions of ASC 606, Revenue from Contracts with Customers.

Medical Technologies Corporation

to Condensed Financial Statements

reconciliation of the closing balance of deferred revenue related to the Zimmer Development Agreement is as follows as of June 30, 2021:

Accordingly, the Company recognized revenue in the amount of $ 6,374 and $ 22,274 related

to the development of the Products completed during the three month periods ended December 31, 2021 and 2020, respectively, in connection

with the Initial Exclusivity Fee payment.

The Zimmer Development Agreement was accounted for under the provisions of ASC 606, Revenue

from Contracts with Customers.

A reconciliation of the closing balance of deferred

revenue related to the Zimmer Development Agreement is as follows during the three months ended as of December 31, 2021 and 2020:

Deferred Revenue

of beginning of period – September 30, 2020

as of end of period – June 30, 2021

remaining performance obligations reflected in deferred revenue as of June 30, 2021 are expected to be completed in the fourth quarter

of fiscal year 2021.

December 2020, the Company commenced commercial sales of its Strip/Grid Products and Electrode Cable Assembly Products in connection

with the Development Agreement.

Product revenue recognized during the three and nine month periods ended June 30, 2021 was $ 40,096 and

$ 129,810 , respectively.

expense is charged to selling, general and administrative expenses during the period that it is incurred.

Total advertising expense amounted

to $ 79,261 and $ 221,408 for the three and nine month periods ended June 30, 2021, respectively.

Advertising expense during the prior

year period was negligible.

8 – Convertible Promissory Notes and Warrant Agreements

September 30,

convertible notes, principal

value adjustments

Balance as of beginning of period – September 30

Revenue recognized

Balance as of end of period – December 31

The remaining performance obligations reflected

in deferred revenue as of December 31, 2021 are expected to be completed in the first half of fiscal year 2022.

Product Revenue

Product revenue recognized during the three month

periods ended December 31, 2021 and 2020 was $ 33,748 and $ 71,474 , respectively, related to its Strip/Grid Products, SEEG Products and

Electrode Cable Assembly Products.

Advertising Expense

Advertising expense is charged to selling, general

and administrative expenses during the period that it is incurred.

Total advertising expense amounted to $ 61,335 and $ 29,007 for the

three month periods ended December 31, 2021 and 2020, respectively.

NOTE 8 - Convertible Promissory Notes and

Warrant Agreements

2019 Paulson Convertible Note Offering

November 1, 2019, the Company entered into a subscription agreement with certain accredited investors, pursuant to which the Company,

in a private placement (the “2019 Paulson Private Placement”), agreed to issue and sell to the investors 13 % convertible

promissory notes (each, a “2019 Paulson Note” and collectively, the “2019 Paulson Notes”) and warrants (each,

a “2019 Paulson Warrant” and collectively, the “2019 Paulson Warrants”) to purchase shares of the Company’s

common stock.

initial closing of the 2019 Paulson Private Placement was consummated on November 1, 2019, and, on that date and through December 3,

2019, the Company issued the 2019 Paulson Notes in an aggregate principal amount of $ 3,234,800 to the subscribers for gross proceeds

equaling the principal amount.

The 2019 Paulson Private Placement terminated on December 3, 2019.

Medical Technologies Corporation

to Condensed Financial Statements

2019 Paulson Notes had a fixed interest rate of 13 % per annum and required the Company to repay the principal and accrued and unpaid

interest thereon on November 1, 2020 (the “Maturity Date”).

Interest on principal amounted to $ 5,701 during the nine month

period ended June 30, 2021, and $ 41,494 and $ 195,638 during the three and nine month periods ended June 30, 2020, respectively, and was

recorded under the net valuation change of instruments measured at fair value in the condensed statements of operations.

The subscriber,

prior to the Second 2019 Paulson Notes Amendment, had the option to convert the outstanding principal and accrued and unpaid interest

of such subscriber’s 2019 Paulson Note (the “Outstanding Balance”) into common stock in an amount equal to the Outstanding

Balance divided by the ten day volume weighted average closing price of the common stock prior to conversion.

In addition, both before

and after the Second 2019 Paulson Note Amendment, if the Company raised more than $ 3,000,000 in an equity financing (the “Qualified

Financing”) before the Maturity Date, each subscriber had the option to convert the Outstanding Balance into the securities issued

by the Company in such Qualified Financing in an amount equal to (i) the Outstanding Balance divided by (ii) the lower of 0.6 multiplied

by (A) the actual per share price of securities issued by the Company in the Qualified Financing or (B) the ten day volume weighted average

closing price of the common stock prior to the first closing of a Qualified Financing.

If a change of control transaction had occurred

prior to a Qualified Financing or the Maturity Date, the 2019 Paulson Notes would have become payable on demand as of the closing date

of such transaction.

Change of control meant a merger or consolidation with another entity in which the Company’s stockholders

did not own more than 50 % of the outstanding voting power of the surviving entity or the disposition of all or substantially all of the

Company’s assets.

Company elected to account for the 2019 Paulson Notes on a fair value basis under ASC 825 to comprehensively value and streamline the

accounting for the embedded conversion options.

The fair value of the 2019 Paulson Notes was significantly higher than the proceeds received

as of each of the respective issuance dates given the significant redemption discount associated with the Qualified Financing provision.

The excess of fair value over proceeds at issuance amounted to $ 1,831,940 and was recorded to interest expense in the condensed statements

of operations during the nine months ended June 30, 2020.

Subsequent to issuance, the fair value change of the Paulson Notes amounted

to a benefit of $( 1,974 ) during the nine months ended June 30, 2021, and amounted to a benefit of $( 1,344,852 ) and $( 1,250,994 ) during

the three and nine month periods ended June 30, 2020, respectively, and was recorded under the net valuation change of instruments measured

at fair value in the condensed statements of operations.

2019 Paulson Warrant granted the holder the option to purchase the number of shares of common stock equal to (i) 0.5 multiplied by (ii)

the principal amount of such subscriber’s 2019 Paulson Notes divided by 5.61, with an exercise price per share equal to $5.61.

As of the final closing on December 3, 2019, the Company issued 2019 Paulson Warrants exercisable for 288,305 shares of common stock

in connection with all closings of the 2019 Paulson Private Placement.

The 2019 Paulson Warrants are immediately exercisable and expire

on November 1, 2022 .

The exercise price is subject to adjustment in the event of any stock dividends or splits, reverse stock split,

recapitalization, reorganization or similar transaction, as described therein.

The 2019 Paulson warrants were deemed to be a free-standing

instrument and were accounted for as equity.

Given that the fair value of the 2019 Paulson Notes exceeded the proceeds received at issuance,

there was no value attributed to the 2019 Paulson Warrants in the condensed financial statements.

costs during the nine month period ended June 30, 2021 in connection with the 2019 Paulson Private Placement were $ 3,053 and related

to legal costs.

Issuance costs incurred during the nine months ended June 30, 2020 were $ 865,567 .

During the first quarter of 2020, Paulson Investment

Company (“Paulson”) received a cash commission equal to 12% of the gross proceeds from the sale of the 2019 Paulson Notes

which amounted to $388,176, and 10-year warrants to purchase an amount of common stock equal to 86,498 shares of common stock at an exercise

price equal to $5.61 per share (the “Broker Warrants”) at a fair value $419,635.

Lastly, issuance costs included legal and

third party fees in the amount of $57,756.

The issuance costs were recorded as a component of interest in the accompanying statements

of operations.

Medical Technologies Corporation

to Condensed Financial Statements

April 24, 2020, the Company and holders of a majority in aggregate principal amount of the 2019 Paulson Notes entered into an amendment

to the 2019 Paulson Notes (the “Second 2019 Paulson Notes Amendment”) to, among other things:

Extended the Maturity Date – The Second 2019 Paulson Notes Amendment extended the maturity date of the 2019 Paulson Notes from May 1, 2020 to November 1, 2020 (in either case, unless a change of control transaction happens prior to such date);

Revised Optional Conversion Terms – The Second 2019 Paulson Notes Amendment provided that the amount of shares to be received upon the subscriber’s optional conversion of the 2019 Paulson Notes prior to a 2019 Qualified Financing (as defined in the 2019 Paulson Notes) would have equaled:

(1) the Outstanding Balance as defined below of such subscriber’s 2019 Paulson Note elected by the subscriber to be converted divided by (2) an amount equal to 0.6 multiplied by the volume weighted average price of the common stock for the ten (10) trading days immediately preceding the date of conversion;

Revise the Registration Date – The Second 2019 Paulson Notes Amendment provided that promptly following the earlier of (1) May 1, 2020, if the applicable subscriber converted all or a majority of the Outstanding Balance of such subscriber’s 2019 Paulson Note prior to such date;

(2) the final closing of a 2019 Qualified Financing;

and (3) the maturity date, the Company will enter into a registration rights agreement with the applicable subscriber containing customary and usual terms pursuant to which the Company shall agree to prepare and file with the SEC a registration statement on or prior to the 90th calendar day following the registration date, covering the resale of any common stock received on conversion of such 2019 Paulson Notes, and shares of common stock underlying the Warrants.

Second 2019 Paulson Notes Amendment was accounted for as a note extinguishment for accounting purposes given the substantive change in

the optional redemption feature’s conversion formula.

The fair value change in the 2019 Paulson Notes associated with the extinguishment

was recorded as a loss on notes extinguishment in the accompanying condensed statements of operations in the amount of $ 2,017,847 during

the three and nine month periods ended June 30, 2020.

Lastly, in connection with the Second 2019 Paulson Notes Amendment, legal costs

in the amount of $ 1,943 were incurred and recorded as a component of interest in the accompanying condensed statements of operations.

the first quarter of fiscal year 2021, the remaining holders of the 2019 Paulson Notes elected to convert the remaining outstanding principal

and accrued and unpaid interest in the amount of $615,159 into 292,754 shares of common stock.

2020 Convertible Note Financing

April 30, 2020, the Company entered into a subscription agreement with certain accredited investors, pursuant to which the Company, in

a private placement (the “2020 Paulson Private Placement”), agreed to issue and sell to the investors 13% convertible promissory

notes (each, a “2020 Paulson Note” and collectively, the “2020 Paulson Notes”) and warrants (each, a “2020

Paulson Warrant” and collectively, the “2020 Paulson Warrants”) to purchase shares of the Company’s common stock.

May 1, 2020 and June 30, 2020, the Company issued 2020 Paulson Notes in an aggregate principal amount of $ 5,122,700 to the Subscribers.

The 2020 Paulson Private Placement was terminated on June 30, 2020.

2020 Paulson Notes bear interest at a fixed rate of 13 % per annum and require the Company to repay the principal and accrued and unpaid

interest thereon on the earlier of December 31, 2020 or a change of control transaction.

Interest on principal amounted to $ 60,050 during

the three and nine month periods ended June 30, 2020 and was recorded under the net valuation change of instruments measured at fair

value in the condensed statements of operations.

the Company had raised more than $5,000,000 in an equity financing before the maturity date (the “2020 Qualified Financing”),

without any action on the part of the Subscribers, all of the outstanding principal and accrued and unpaid interest of the Notes (the

“Outstanding Balance”) would have been converted into that number of shares of the securities issued by the Company in the

closing on the date a 2020 Qualified Financing occurred equal to:

(i) the Outstanding Balance divided by (ii) the lower of 0.6 multiplied

by (A) the actual per share price of the securities issued by the Company in the closing on the date a 2020 Qualified Financing occurred

and (B) the volume weighted average price of the common stock for ten (10) trading days immediately preceding the 2020 Qualified Financing.

Medical Technologies Corporation

to Condensed Financial Statements

the Company had announced a transaction between the Company and any other company (or an affiliate of any such company) that was included

in the S&P 500 Health Care Index as published from time to time by S&P Dow Jones Indices LLC that included an investment or upfront

payments resulting in gross proceeds to the Company of at least $ 2,000,000 upon the execution of such transaction or definitive agreement,

and provides for terms of collaboration, manufacturing, distribution, licensing or supply of the Company’s products (a “Strategic

Transaction”) before the maturity date, without any action on the part of the subscribers, the Outstanding Balance would be converted

into that number of shares of common stock equal to:

(i) the Outstanding Balance divided by (ii) the lower of 0.6 multiplied by (A) the

VWAP of the common stock for the ten (10) trading days immediately preceding the first announcement of the Strategic Transaction or (B)

closing price of the common stock on the day preceding the first announcement by the Company of a Strategic Transaction.

any time, at the sole election of the holder of such 2020 Paulson Note, all or a portion of the Outstanding Balance could have been converted

into that number of shares of common stock equal to:

(i) the Outstanding Balance elected by the holder to be converted divided by (ii)

an amount equal to 0.6 multiplied by the volume weighted average price of the common stock for the ten (10) trading days immediately

preceding the date of conversion.

a change of control transaction had occurred prior to the conversion of the 2020 Paulson Notes or the maturity date, the 2020 Paulson

Notes would have become payable on demand as of the closing date of such transaction.

Change of control meant a merger or consolidation

with another entity in which the Company’s stockholders did not own more than 50% of the outstanding voting power of the surviving

entity or the disposition of all or substantially all of the Company’s assets.

Company elected to account for the 2020 Paulson Notes on a fair value basis under ASC 825 to

comprehensively value and streamline the accounting for the embedded conversion options .

The fair value of the 2020 Paulson Notes

was significantly higher than the proceeds received as of each of the respective issuance dates given the significant redemption discount

associated with the redemption provisions.

The excess of fair value over proceeds at issuance amounted to $ 3,784,918 and was recorded

to interest expense in the condensed statements of operations during the three and nine month periods ended June 30, 2020.

to issuance, the fair value change of the 2020 Paulson Notes amounted to an increase of $ 75,309 during the three and nine month periods

ended June 30, 2020 and was recorded under the net valuation change of instruments measured at fair value in the condensed statements

of operations.

2020 Paulson Warrant grants the holder the option to purchase the number of shares of common stock equal to (i) 0.5 multiplied by (ii)

the principal amount of such subscriber’s 2020 Paulson Notes divided by 5.61, with an exercise price per share equal to $ 5.61 .

The 2020 Paulson Warrants are immediately exercisable and expire on April 30, 2023.

The exercise price is subject to adjustment in the

event of any stock dividends or splits, reverse stock split, recapitalization, reorganization or similar transaction.

The Company issued

2020 Paulson Warrants exercisable for 456,564 shares of common stock in connection with all closings of the 2020 Paulson Private Placement

through June 30, 2020.

On November 1, 2019, the Company entered into

a subscription agreement with certain accredited investors, pursuant to which the Company, in a private placement (the “2019 Paulson

Private Placement”), agreed to issue and sell to the investors 13 % convertible promissory notes (each, a “2019 Paulson Note”

and collectively, the “2019 Paulson Notes”) and warrants (each, a “2019 Paulson Warrant” and collectively, the

“2019 Paulson Warrants”) to purchase shares of the Company’s common stock.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements, continued

The initial closing of the 2019 Paulson Private

Placement was consummated on November 1, 2019, and, on that date and through December 3, 2019, the Company issued the 2019 Paulson Notes

in an aggregate principal amount of $ 3,234,800 to the subscribers for gross proceeds equaling the principal amount.

The 2019 Paulson

Private Placement terminated on December 3, 2019.

On April 24, 2020, the Company and holders of

a majority in aggregate principal amount of the 2019 Paulson Notes entered into an amendment to the 2019 Paulson Notes (the “Second

2019 Paulson Notes Amendment”) to, among other things:

Extended the Maturity

Date – The Second 2019 Paulson Notes Amendment extended the maturity date of the 2019 Paulson Notes from May

1, 2020 to November 1, 2020 (in either case, unless a change of control transaction happens prior to such date);

Revised Optional

Conversion Terms – The Second 2019 Paulson Notes Amendment provided that the amount of shares to be received

upon the a subscriber’s optional conversion of the 2019 Paulson Notes prior to a 2019 Qualified Financing (as defined in the

2019 Paulson Notes) would have equaled:

(1) the Outstanding Balance as defined below of such subscriber’s 2019 Paulson Note

elected by the subscriber to be converted divided by (2) an amount equal to 0.6 multiplied by the volume weighted average price of

the common stock for the ten (10) trading days immediately preceding the date of conversion;

Revise the Registration

Date – The Second 2019 Paulson Notes Amendment provided that promptly following the earlier of (1) May 1, 2020, if

the applicable subscriber converted all or a majority of the Outstanding Balance of such subscriber’s 2019 Paulson Note prior

to such date;

(2) the final closing a 2019 Qualified Financing;

and (3) the maturity date, the Company will enter into a registration

rights agreement with the applicable subscriber containing customary and usual terms pursuant to which the Company shall agree to

prepare and file with the SEC a registration statement on or prior to the 90th calendar day following the registration date, covering

the resale of any common stock received on conversion of such 2019 Paulson Notes, and shares of common stock underlying the Warrants.

The 2019 Paulson Notes had a fixed interest rate

of 13 % per annum and required the Company to repay the principal and accrued and unpaid interest thereon on November 1, 2020 (the “Maturity

Interest on principal amounted to $ 5,701 during the three month periods ended December 31, 2020 and was recorded under

the net valuation change of instruments measured at fair value in the condensed statements of operations.

The 2019 Paulson Notes were

not outstanding during the three month period ended December 31, 2021.

The Company elected to account for the 2019 Paulson

Notes on a fair value basis under ASC 825 to comprehensively value and streamline the accounting for the embedded conversion options.

Subsequent to issuance, the fair value change of the Paulson Notes amounted to a benefit of $( 1,974 ) during the three months ended December

31, 2020 and was recorded under the net valuation change of instruments measured at fair value in the condensed statements of operations.

Each 2019 Paulson Warrant grants the holder the

option to purchase the number of shares of common stock equal to (i) 0.5 multiplied by (ii) the principal amount of such subscriber’s

2019 Paulson Notes divided by 5.61, with an exercise price per share equal to $5.61.

As of the final closing on December 3, 2019, the

Company issued 2019 Paulson Warrants exercisable for 288,305 shares of common stock in connection with all closings of the 2019 Paulson

Private Placement.

The 2019 Paulson Warrants are immediately exercisable and expire on November 1, 2022 .

The exercise price is subject

to adjustment in the event of any stock dividends or splits, reverse stock split, recapitalization, reorganization or similar transaction,

as described therein.

The 2019 Paulson warrants were deemed to be a free-standing instrument and were accounted for as equity.

1 unchanged sentence

Warrants in the condensed financial statements.

connection with the 2020 Paulson Private Placement, Paulson received a cash commission equal to 12 % of the gross proceeds from

the sale of the 2020 Paulson Notes and received 7 -year warrants to purchase an amount of common stock equal to 136,971 (“Broker

The Broker Warrants have an exercise price equal to $ 5.61 per share.

The issuance costs incurred during the three and

nine months ended June 30, 2020 in connection with the 2020 Paulson Private Placement were $ 962,402 .

Issuance costs included cash commissions

equal to $ 633,725 and legal and third party fees in the amount of $ 51,640 .

In addition, issuance costs included the value of the Broker

Warrants in the amount of $ 277,037 .

The issuance costs were recorded as a component of interest in the accompanying condensed statements

of operations.

Medical Technologies Corporation

to Condensed Financial Statements

May 4, 2020 and June 30, 2020, certain Subscribers elected to convert $1,870,352 of the outstanding principal and interest of such Subscribers’

2020 Paulson Notes into 678,122 shares of common stock (41,305 shares of common stock were not formally issued until July 2020).

2020, the balance of the 2020 Paulson Notes were converted into common stock upon the announcement of the Zimmer Development Agreement

that qualified as a Strategic Transaction.

9 – Stock-Based Compensation

the three and nine month periods ended June 30, 2021 and 2020, stock-based expense related to stock-based awards was included in general

and administrative and research and development costs as follows in the accompanying condensed statements of operations.

and administrative

and development

stock-based compensation

the three month periods ended June 30, 2021 and 2020, under the 2017 Equity Incentive Plan (the “2017 Plan”), the Company

granted 81,446 and 48,061 stock options, respectively, to its employees, consultants and scientific advisory board members.

nine month periods ended June 30, 2021 and 2020, the Company granted 703,117 and 321,397 , respectively, to its employees, consultants

and scientific advisory board members.

Vesting generally occurs over an immediate to 48 month period based on a time of service condition

although vesting acceleration is provided under one grant in the event that certain milestones are met.

The grant date fair value of

the grants issued during the three month periods ended June 30, 2021 and 2020 was $ 3.65 and $ 2.19 per share, respectively.

date fair value of the grants issued during the nine month periods ended June 30, 2021 and 2020 was $ 3.01 and $ 3.03 per share, respectively.

total expense for the three months ended June 30, 2021 and 2020 related to stock options was $ 500,149 and $ 103,998 , respectively.

total expense for the nine months ended June 30, 2021 and 2020 related to stock options was $ 817,761 and $ 630,887 , respectively.

total number of stock options outstanding as of June 30, 2021 and September 30, 2020 was 1,162,838 and 479,509 , respectively.

weighted-average assumptions used in the Black-Scholes option-pricing model are as follows for the stock options granted during the three

and nine month periods ended June 30, 2021 and 2020:

stock price volatility

life of options (years)

dividend yield

free interest rate

the three month periods ended June 30, 2021 and 2020, 162,266 and 17,501 stock options vested, respectively and 21,437 and 9,061 stock

options were forfeited during these periods, respectively.

During the nine month periods ended June 30, 2021 and 2020, 268,793 and 158,399

stock options vested, respectively and 31,583 and 98,331 stock options were forfeited during these periods, respectively.

three and nine month periods ended June 30, 2021, 780 and 1,538 stock options were exercised, respectively, and the intrinsic value of

options exercised during these periods was $ 1,693 and $ 2,648 , respectively.

During the three and nine month periods ended June 30, 2020,

11,340 and 25,515 stock options were exercised, respectively, and the intrinsic value of options exercised during these periods was $ 46,437

Issuance costs during the three month period

ended December 31, 2020 in connection with the 2019 Paulson Private Placement were $ 3,053 and related to legal costs.

The issuance costs

were recorded as a component of interest in the accompanying condensed statements of operations.

During the first quarter of fiscal year 2021,

the remaining holders of the 2019 Paulson Notes elected to convert the remaining outstanding principal and accrued and unpaid interest

in the amount of $ 615,159 into 292,754 shares of common stock.

NOTE 9 – Stock-Based Compensation

During the three month periods ended December

31, 2021 and 2020, stock-based compensation expense was included in general and administrative and research and development costs as

follows in the accompanying condensed statements of operations.

General and administrative

Research and development

Total stock-based compensation expense

Stock Options

During the three month period ended December

31, 2021 and 2020, under the 2017 Equity Incentive Plan (the “2017 Plan”), the Company granted 2,000 and 41,669 stock options,

respectively, to its employees and consultants.

Vesting generally occurs over an immediate to 48 month period based on a time of service

The grant date fair value of the grants issued during the three month periods ended December 31, 2021 and 2020 was $ 1.72 and

$ 1.60 per share, respectively.

The total expense for the three months ended December 31, 2021 and 2020 related to stock options was $ 162,361

and $ 100,147 , respectively.

Medical Technologies Corporation

to Condensed Financial Statements

the three and nine month periods ended June 30, 2021, 13,776 restricted stock units (“RSUs”) were granted During the three

and nine months ended June 30, 2020, 22,371 and 78,323 RSUs were granted.

During the three months ended June 30, 2021 and 2020, 7,077

and 6,990 RSUs vested, respectively, and no RSUs were forfeited during these periods.

During the nine months ended June 30, 2021 and

2020, 23,453 and 51,417 RSUs vested, respectively, and zero and 2,335 RSUs were forfeited during these periods.

The total expense for

the three months ended June 30, 2021 and 2020 related to these RSUs was $ 39,702 and $ 38,535 , respectively.

The total expense for the

nine months ended June 30, 2021 and 2020 related to these RSUs was $ 123,278 and $ 352,929 , respectively.

Stock-Based Awards

April 2021, two consulting agreements were executed whereby a total of 62,659 shares of common stock were subject to issuance of which

51,330 shares of common stock were issued as of June 30, 2021.

Compensation expense related to the stock awards granted under these consulting

agreements amounted to $ 339,001 for the three and nine months ended June 30, 2021 and were included in the total stock-based compensation

August 2020, an additional consulting agreement was executed whereby 40,000 shares of common stock were issued, subject to Company repurchase.

The stock award under the agreement vests over a six-month period.

As of June 30, 2021, 40,000 shares were vested under this agreement

of which 33,334 shares vested during the nine months ended June 30, 2021.

Compensation expense related to the stock award granted under

this consulting agreement amounted to $ 171,000 for the nine months ended June 30, 2021 and was included in the total stock-based compensation

October 2019, two consulting agreements were executed whereby up to 38,334 shares of common stock were issued as of June 30, 2020 of

which 34,167 shares of common stock were vested as of June 30, 2020 under these agreements.

On April 22, 2020, the Company entered into

an amendment (the “Amendment”) to one of the consulting agreements.

Pursuant to the Amendment, the Company issued an additional

11,667 shares in exchange for consulting services of which 4,667 shares of common stock were vested as of June 30, 2020 under the Amendment.

Vesting was based on a time-based vesting condition ranging over a three to nine month period commencing upon the execution of the consulting

February 2020, an additional consulting agreement was executed whereby up to 30,000 shares of common stock were issuable of which 25,500

shares of common stock were issued and vested as of June 30, 2020 under this agreement.

On May 21, 2020, 22,195 shares of common stock

were issued as compensation to a former 2019 Paulson Note holder related to a prior 2019 Paulson Note conversion and release of liability.

expense related to the stock awards granted under the consulting agreements and to the former 2019 Paulson Note holder referenced above

amounted to $ 241,150 and $ 519,325 for the three and nine month periods ended June 30, 2020, respectively, and was included in the total

stock-based expense.

The expense was based on the fair value of the underlying common stock at the point of vesting which ranged from

$ 4.53 to $ 7.95 per share.

Plan Evergreen Provision

the 2017 Plan, the shares reserved automatically increase on January 1st of each year, for a period of not more than ten years from the

date the 2017 Plan is approved by the stockholders of the Company, commencing on January 1, 2019 and ending on (and including) January

1, 2027, to an amount equal to 13% of the fully-diluted shares outstanding as of December 31st of the preceding calendar year.

Notwithstanding

the foregoing, the Board may act prior to January 1st of a given year to provide that there will be no January 1st increase in the share

reserve for such year or that the increase in the share reserve for such year will be a lesser number of shares of common stock than

would otherwise occur pursuant to the preceding sentence.

“Fully Diluted Shares” as of a date means an amount equal to the

number of shares of common stock (i) outstanding and (ii) issuable upon exercise, conversion or settlement of outstanding awards under

the 2017 Plan and any other outstanding options, warrants or other securities of the Company that are (directly or indirectly) convertible

or exchangeable into or exercisable for shares of common stock, in each case as of the close of business of the Company on December 31

of the preceding calendar year.

On January 1, 2021, 484,623 shares were added to the 2017 Plan as a result of the evergreen provision.

of June 30, 2021, 361,099 shares were available for future issuance on a combined basis under the 2016 Equity Incentive Plan and 2017

Unrecognized stock-based compensation was $ 1,953,964 as of June 30, 2021.

The unrecognized share-based expense is expected to be

recognized over a weighted average period of 3.0 years.

Medical Technologies Corporation

to Condensed Financial Statements

10 – Concentrations

instruments that potentially subject the Company to a concentration of credit risk consist of cash.

The Company’s cash is held

by one financial institution in the United States.

The total number of stock options outstanding as of December 31, 2021 and September 30, 2021 was 1,111,226

and 1,122,560 , respectively.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements, continued

The weighted-average assumptions used in the

Black-Scholes option-pricing model are as follows for the stock options granted during the three month period ended December 31, 2021

Expected stock price volatility

Expected life of options (years)

Expected dividend yield

Risk free interest rate

During the three month periods ended December

31, 2021 and 2020, 18,843 and 71,774 stock options vested, and 13,334 and zero stock options were forfeited during these periods, respectively.

Restricted Stock Units

There were no restricted stock units (“RSUs”)

granted during the three months ended December 31, 2021 and 2020, 5,644 and 8,384 RSUs vested during these periods, respectively.

total expense for the three months ended December 31, 2021 and 2020 related to these RSUs was $ 40,711 and $ 43,082 , respectively.

were forfeited during the three month periods ended December 31, 2021 and 2020.

Other Stock-Based Awards

In August 2020, an additional consulting agreement

was executed whereby 40,000 shares of common stock were issued, subject to Company repurchase.

The stock award under the agreement vested

over a six-month period.

As of December 31, 2020, 26,667 shares were vested under this agreement of which 20,000 shares vested during

the first quarter of fiscal year 2021.

Compensation expense related to the stock awards granted under this consulting agreement amounted

to $102,600 for the three month ended December 31, 2020 and was included in the total stock-based expense.

No stock-based awards were issued during the

first quarter of fiscal year 2022 and no expense associated with stock awards was recorded during the three months ended December 31,

Inducement Plan

On October 4, 2021, the Company adopted the NeuroOne

Medical Technologies Corporation 2021 Inducement Plan (the “Plan”), pursuant to which the Company reserved 420,350 shares

of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the

Company, as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4)

of the Nasdaq Listing Rules.

The Plan was approved by the Company’s Board of Directors without stockholder approval in accordance

with such rule.

As of December 31, 2021, 673,022 shares were

available in the aggregate for future issuance under the 2017 Equity Incentive Plan and Inducement Plan.

No shares were available for

future issuance under the 2016 Equity Incentive Plan.

Unrecognized stock-based compensation was $ 1,473,086 as of December 31, 2021.

unrecognized share-based expense is expected to be recognized over a weighted average period of 2.7 years.

NOTE 10 – Concentrations

Financial instruments that potentially subject

the Company to a concentration of credit risk consist of cash.

The Company’s cash is held by a network of financial institutions

in the United States.

Amounts on deposit may at times exceed federally insured limits.

The Company has not

experienced any losses on its deposits since inception, and management believes that minimal credit risk exists with respect to these

financial institutions.

As of June 30, 2021, the Company had $ 8.5 million of deposits in excess of federally insured amounts.

customer accounts for all of the Company’s product and collaborations revenue.

concentration

contract manufacturer produces all of the Company’s Strip/Grid Products.

11 – Income Taxes

effective tax rate for the three and nine months ended June 30, 2021 and 2020 was zero percent.

As a result of the analysis of all available

evidence as of June 30, 2021 and September 30, 2020, the Company recorded a full valuation allowance on its net deferred

Consequently, the Company reported no income tax benefit during the three and nine months ended June

30, 2021 and 2020.

If the Company’s assumptions change and the Company believes that it will be able to realize these deferred

tax assets, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets will be recognized as a reduction

of future income tax expense.

If the assumptions do not change, each period the Company could record an additional valuation allowance

on any increases in the deferred tax assets.

12 – Stockholders’ Equity

Shelf Registration

June 4, 2021, NeuroOne filed a Form S-3 shelf registration statement under the Securities Act, which was declared effective by the SEC

on June 14, 2021 (the “2021 Shelf”) under which the Company may offer and sell, from time to time in its sole discretion,

securities having an aggregate offering price of up to $ 150 million.

Deferred offering costs in connection with the 2021 Shelf amounted

to $ 24,179 and are reflected in the prepaid and other assets line item in the accompanying condensed balance sheets.

Medical Technologies Corporation

to Condensed Financial Statements

The Company has not experienced any losses on

its deposits since inception, and management believes that minimal credit risk exists with respect to these financial institutions.

of December 31, 2021, the Company had no deposits in excess of federally insured amounts.

One customer accounts for all of the Company’s product and collaborations

Supplier concentration

One contract manufacturer produces all of the Company’s Strip/Grid

Products and SEEG Products.

NOTE 11 – Income Taxes

The effective tax rate for the three months ended

December 31, 2021 and 2020 was zero percent.

As a result of the analysis of all available evidence as of December 31, 2021 and September

30, 2021, the Company recorded a full valuation allowance on its net deferred tax assets.

Consequently, the Company reported no income

tax benefit during the three months ended December 31, 2021 and 2020.

If the Company’s assumptions change and the Company

believes that it will be able to realize these deferred tax assets, the tax benefits relating to any reversal of the valuation allowance

on deferred tax assets will be recognized as a reduction of future income tax expense.

If the assumptions do not change, each

period the Company could record an additional valuation allowance on any increases in the deferred tax assets.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements, continued

NOTE 12 – Stockholders’ Equity

Public Offering

On October 13, 2021, the Company, entered

into an Underwriting Agreement (the “Underwriting Agreement”) with Craig-Hallum Capital Group LLC, as underwriter (the “Underwriter”),

relating to the issuance and sale of 3,750,000 shares of the Company’s common stock at a price to the public of $ 3.20 per share.

In addition, under the terms of the Underwriting Agreement, the Company granted the Underwriter an option, exercisable for 30 days, to

purchase up to an additional 562,500 shares of common stock on the same terms.

The base offering closed on October 15, 2021, and the

sale of 422,057 shares of common stock subject to the Underwriter’s overallotment option closed on November 15, 2021.

The gross proceeds to the Company from this offering

were approximately $ 13.4 million prior to deducting underwriting discounts and other offering expenses payable by the Company in

the amount of approximately $ 1.4 million in the aggregate.

2021 Private Placement

January 12, 2021, the Company entered into a Common Stock and Warrant Purchase Agreement with certain accredited investors, pursuant

to which the Company, in the 2021 Private Placement, agreed to issue and sell an aggregate of 4,166,682 shares of the common stock of

the Company and warrants to purchase an aggregate of 4,166,682 shares of common stock (the “2021 Warrants”) at an aggregate

purchase price of $ 3.00 per share of common stock and corresponding warrant, resulting in total gross proceeds of $ 12.5 million before

deducting placement agent fees and estimated offering expenses.

On January 12, 2021, the Company entered into

a Common Stock and Warrant Purchase Agreement (the “2021 Purchase Agreement”) with certain accredited investors (the “Purchasers”),

pursuant to which the Company, in the 2021 Private Placement, agreed to issue and sell an aggregate of 4,166,682 shares (the “Shares”)

of the common stock of the Company, par value $ 0.001 per share (the “Common Stock”), and warrants to purchase an aggregate

of 4,166,682 shares of Common Stock (the “2021 Warrants”) at an aggregate purchase price of $ 3.00 per share of Common Stock

and corresponding warrant, resulting in total gross proceeds of $ 12.5 million before deducting placement agent fees and estimated offering

The 2021 Warrants have an initial exercise price of $ 5.25 per share.

The 2021 Warrants are immediately exercisable and will expire on the fifth anniversary of issuance.

Prior to expiration, subject to the

terms and conditions set forth in the 2021 Warrants, the holders of such 2021 Warrants may exercise the 2021 Warrants for shares of common

stock by providing notice to the Company and paying the exercise price per share for each share so exercised or by utilizing the “cashless

exercise” feature contained in each 2021 Warrant.

The fair value of the 2021 Warrants was $ 7.3 million and was based on the Black-Scholes

pricing model.

Input assumptions used were as follows:

a risk-free interest rate of 0.5 %;

expected volatility of 56.0 %;

expected life

expected dividend yield of 0 %;

and the underlying traded stock price.

$ 3.7 million of the total proceeds was allocated

to the 2021 Warrants based on the relative fair value allocation method, which has been reflected in stockholders’ equity.

2021 Warrants were classified in stockholders’ equity as the number of shares were fixed and determinable, and no other provisions

precluded equity treatment.

The 2021 Warrants are exercisable beginning on the date

of issuance and will expire on the fifth anniversary of such date.

The 2021 Private Placement closed on January 14, 2021.

Common Stock Offering

October 23, 2019, the Company entered into Securities Purchase Agreements with certain accredited investors, pursuant to which the Company,

in a private placement, has issued and sold 47,223 shares of the Company’s common stock to the accredited investors at a price

of $ 5.40 per share, for gross proceeds amounting to $ 255,000 .

The Company filed a registration statement with the SEC covering the resale

of the shares of common stock sold in the private placement on August 11, 2020.

Activity and Summary

following table summarizes warrant activity during the nine month period ended June 30, 2021:

and exercisable at September 30, 2020

$ 5.40 - 9.00

Warrant Activity and Summary

The following table summarizes warrant activity

during the three month period ended December 31, 2021:

Outstanding and exercisable at September 30, 2021

$ 5.25 - $ 9.00

and exercisable at June 30, 2021

Forfeited/Expired

Outstanding and exercisable at December 31, 2021

$ 5.25 -$ 9.00

– Subsequent Events

July 1, 2021, the Company entered into a non-cancellable facility lease (the “New Lease”), pursuant to which the Company

agreed to rent office space for its research and development operations located at 718 University Avenue, Suite #111, Los Gatos, California.

The term of the New Lease is eighteen months.

The facility space under the New Lease is approximately 1,162 square feet.

took possession of the office space on July 2, 2021.

The initial monthly rent under the New Lease is approximately $ 4,241 .

Medical Technologies Corporation

NOTE 13 – Subsequent Events

2017 Plan Evergreen Provision

Under the 2017 Plan, the shares reserved automatically

increase on January 1st of each year, for a period of not more than ten years from the date the 2017 Plan is approved by the stockholders

of the Company, commencing on January 1, 2019 and ending on (and including) January 1, 2027, to an amount equal to 13 % of the fully-diluted

shares outstanding as of December 31st of the preceding calendar year.

Notwithstanding the foregoing, the Board may act prior to January

1st of a given year to provide that there will be no January 1st increase in the share reserve for such year or that the increase in

the share reserve for such year will be a lesser number of shares of common stock than would otherwise occur pursuant to the preceding

“Fully Diluted Shares” as of a date means an amount equal to the number of shares of common stock (i) outstanding

and (ii) issuable upon exercise, conversion or settlement of outstanding awards under the 2017 Plan and any other outstanding options,

warrants or other securities of the Company that are (directly or indirectly) convertible or exchangeable into or exercisable for shares

of common stock, in each case as of the close of business of the Company on December 31 of the preceding calendar year.

Effective January

1, 2022, 1,614,538 shares were added to the 2017 Plan as a result of the evergreen provision.

Stock-Based Awards

On February 3, 2022, the Company granted an aggregate

of 355,950 RSUs to certain officers and employees under the 2017 Plan.

The RSUs vest over a three year period with 50 percent vesting

on the first anniversary of the grant date and the remaining RSUs vesting in equal monthly installments on the last day of each month

over 24 months, subject to the recipient’s continued service on such dates.

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