What changed in this filing

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Item 1. Financial Statements

2022-05-12 compared with 2022-02-14 · 787 added, 780 removed, 203 unchanged (89% of the section changed)

Financial Statements

NeuroOne Medical Technologies Corporation

Condensed Balance Sheets

As of December 31,

Medical Technologies Corporation

Balance Sheets

As of March 31,

As of September 30,

17 unchanged sentences

Preferred stock, $ 0.001 par value;

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.

10,000,000 shares authorized as of March 31, 2022 and September 30, 2021;

no shares issued or outstanding as of March 31, 2022 and September 30, 2021.

Common stock, $ 0.001 par value;

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.

100,000,000 shares authorized as of March 31, 2022 and September 30, 2021;

16,191,169 and 12,010,019 shares issued and outstanding as of March 31, 2022 and September 30, 2021, respectively.

Additional paid–in capital

3 unchanged sentences

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

Total liabilities and stockholders’ equity

accompanying notes to condensed financial statements

Medical Technologies Corporation

Statements of Operations

Three Months Ended

Six Months Ended

Product revenue

Cost of product revenue

Product gross loss

Product gross profit (loss)

Collaborations revenue

6 unchanged sentences

( 2,395,691 )

( 5,869,135 )

( 4,539,092 )

Interest expense

3 unchanged sentences

( 2,393,916 )

( 5,865,542 )

( 4,353,396 )

Provision for income taxes

1 unchanged sentence

$ ( 2,393,916 )

$ ( 5,865,542 )

$ ( 4,353,396 )

Net loss per share:

2 unchanged sentences

Basic and diluted

See accompanying notes to

condensed financial statements

NeuroOne Medical Technologies Corporation

Condensed Statements of

Changes in Stockholders’ Equity

accompanying notes to condensed financial statements

Medical Technologies Corporation

Statements of Changes in Stockholders’ Equity

Stockholders’

9 unchanged sentences

( 32,838,511 )

Issuance of common stock in connection with private placement

Issuance of warrants in connection with private placement

Issuance costs in connection with private placement

( 1,198,080 )

Stock-based compensation

Exercise of warrants

Exercise of stock options

Issuance of common stock upon vesting of restricted stock units

( 2,393,916 )

Balance at March 31, 2021

$ ( 35,232,427 )

Balance at September 30, 2021

$ ( 40,827,199 )

Issuance of common stock in connection with private placement

Issuance cost in connection with private placement

Issuance of common stock in connection with public offering

Issuance cost in connection with public offering

( 1,352,280 )

6 unchanged sentences

$ ( 43,634,674 )

See accompanying notes to

condensed financial statements

NeuroOne Medical Technologies Corporation

Condensed Statements of Cash Flows

For the three months ended

Stock-based compensation

Issuance of common stock upon vesting of restricted stock units

( 3,058,067 )

Balance at March 31, 2022

$ ( 46,692,741 )

accompanying notes to condensed financial statements

Medical Technologies Corporation

Statements of Cash Flows

six months ended

Operating activities

1 unchanged sentence

$ ( 4,353,396 )

Adjustments to reconcile net loss to net cash used in operating

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

Amortization and depreciation

7 unchanged sentences

Accounts payable

Accrued expenses, deferred revenue, operating leases and other

Accrued expenses, deferred revenue, operating leases and other liabilities

Net cash used in operating activities

6 unchanged sentences

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

Proceeds from issuance of common stock in connection with public offering and private placements

Proceeds from issuance of warrants in connection with private placement

Exercise of warrants

Exercise of stock options

Issuance costs related to public offering and private placements

( 1,327,300 )

( 1,190,495 )

Net cash provided by financing activities

2 unchanged sentences

Cash at end of period

Supplemental non-cash financing and investing

transactions:

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

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.

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

Reclass of deferred offering costs to additional paid-in capital in connection with public offering

Purchased fixed assets in accounts payable and accrued expenses

accompanying notes to condensed financial statements

NeuroOne Medical Technologies Corporation

Notes 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 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.

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

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

Testing and clinical trials, manufacturing, component supply, shipping and research and development operations may

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

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.

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.

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.

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 GAAP;

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.

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 Corporation

Notes to Condensed Financial Statements

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,

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 and/or vesting 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 had an accumulated deficit of $ 46.7 million as of

March 31, 2022.

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.

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.

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 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 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.

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;

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 beginning in the first quarter of fiscal

The Company sold, on a limited application basis for design verification, sEEG depth electrode products for non-human use

beginning in late fiscal year 2021.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

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 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

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;

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

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.

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.

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).

Notes to Condensed Financial Statements

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).

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

Level 1 Inputs:

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

Level 2 Inputs:

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

3 unchanged sentences

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

of March 31, 2022 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.

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.

were no transfers between fair value hierarchy levels during the six months ended March 31, 2022 and 2021.

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

for the six months ended March 31, 2021.

There were no convertible notes outstanding during the six months ended March 31, 2022.

Convertible notes

3 unchanged sentences

( 1,005,232 )

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.

Balance as of end of period – March 31, 2021

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.

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:

Notes to Condensed Financial Statements

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.

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, 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.

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 Accounting Standards Codification (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 sales and marketing in connection with the commercial sale of cEEG strip/grid, sEEG depth electrode and electrode cable assembly

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

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.

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

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

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 and six months ended March 31, 2022 and 2021.

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 six months ended March 31, 2022 and 2021:

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.

Restricted stock units

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.

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 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.

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.

Notes to Condensed Financial Statements

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

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.

In November 2021, the FASB issued ASU 2021-10, Government

Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance, to increase the transparency of government

assistance including the disclosure of the types of assistance, an entity’s accounting for the assistance, and the effect of the

assistance on an entity’s financial statements.

The amendments in this ASU are effective for all entities within their scope for

financial statements issued for annual periods beginning after December 15, 2021.

The Company does not expect that this guidance will

have a material impact to our 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.

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.

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.

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 March 31, 2022 and 2021, $ 37,500 and $ 25,000 in royalty fees were incurred related

to the WARF License, respectively.

During the six months ended March 31, 2022 and 2021, $ 62,500 and $ 75,000 in royalty fees were incurred

related to the WARF License, respectively.

The royalty fees were reflected as a component of cost of product revenue.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

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 March 31, 2022 and 2021, $ 1,097 and $ 547 in royalty fees were incurred related to the Mayo Agreement, respectively.

six months ended March 31, 2022 and 2021, $ 1,836 and $ 2,691 in royalty fees were incurred related to the Mayo Agreement, respectively.

The royalty fees were reflected as a component of cost of product revenue.

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

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

Christianson to its existing lawsuit against Mr.

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

In the lawsuit, PMT claims that Mr.

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 lawsuit, PMT claims that Mr.

Fredrickson and Mr.

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

Fredrickson’s

noncompete agreement as Exhibit A.

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 theft.

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

were unjustly enriched and engaged in

unfair competition.

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.

On 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.

April 18, 2018, Mr.

Christianson, the Company and NeuroOne, Inc.

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

1 unchanged sentence

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

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;

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.

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 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.

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 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.

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.

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.

The Company, NeuroOne Inc and Mr.

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.

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.

Following 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.

Notes to Condensed Financial Statements

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.

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 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.

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.

On April 29, 2022, the district court issued an order ruling on several

motions brought by the parties to exclude evidence from the trial, granting many of the Company’s requests to exclude certain evidence,

and denying PMT’s exclusion requests.

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 statements.

October 7, 2019, the Company entered into a non-cancellable lease agreement (the “Minnesota 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 Minnesota 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 Minnesota Lease, the Company shall be entitled to an abatement

of its base rent for the first 5 months.

The Company will also pay its pro rata share of the Landlord’s annual operating expenses

associated with the premises, calculated as set forth in the Minnesota Lease of which the Company is entitled to an abatement of these

operating expense for the first 3 months.

July 1, 2021, the Company entered into a non-cancellable facility lease (the “Los Gatos 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 Los Gatos Lease is eighteen months.

The facility space under the Los Gatos 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 initial monthly rent under the Los Gatos Lease is approximately

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 Los Gatos 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

the three and six months ended March 31, 2022, rent expense associated with the facility leases amounted to $ 43,085 and $ 86,130 , respectively.

During the three and six months ended March 31, 2021, rent expense associated with the facility leases amounted to $ 31,800 and $ 61,261 ,

respectively.

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

six months ended

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

3 unchanged sentences

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements, continued

Supplemental balance sheet information related

to the operating leases was as follows:

Notes to Condensed Financial Statements

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

September 30,

3 unchanged sentences

Weighted average discount rate

Maturity of the lease liabilities was as follows:

of the lease liabilities was as follows:

Calendar Year

Total lease payments

2 unchanged sentences

Long-term portion

NOTE 5 – Supplemental Balance Sheet

Prepaid and Other Assets

Prepaid and other assets consisted of the following:

5 – Supplemental Balance Sheet Information

and Other Assets

and other assets consisted of the following:

March 31, 2022

September 30, 2021

1 unchanged sentence

Deferred offering costs

Intangible assets rollforward is as follows:

assets rollforward is as follows:

Net Intangibles, September 30, 2021

12 - 13 years

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

Property and equipment held for use by category

are presented in the following table:

Net Intangibles, March 31, 2022

expense was $ 5,579 and $ 11,158 for the three and six months ended March 31, 2022, respectively, and $ 5,579 and $ 11,158 for the three

and six months ended March 31, 2021, respectively.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

and Equipment, Net

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

March 31, 2022

September 30,

3 unchanged sentences

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:

expense was $ 22,952 and $ 42,534 for the three months and six months ended March 31, 2022, respectively, and $ 13,715 and $ 26,872 for the

three and six months ended March 31, 2021, respectively.

6 - Accrued Expenses and Other Liabilities

expenses consisted of the following at March 31, 2022 and September 30, 2021:

September 30,

2 unchanged sentences

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

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

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.

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 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.

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.

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;

● if the Product Availability Date for the SEEG Products occurs after June 30, 2021, but on or before September 30, 2021, then $ 3,000,000 , plus if Zimmer timely issues a Design A-9 Modification Notice, any Interim Fee Bonus earned pursuant to Section 6.1(c)(iv);

● if the Product Availability Date for the SEEG Products occurs after September 30, 2021, but on or before December 31, 2021, then $ 2,500,000 ;

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

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;

Notes to Condensed Financial Statements

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

Fee”) to the Company.

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:

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

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

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:

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

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

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:

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;

the Product Availability Date for the SEEG Products occurs after June 30, 2021, but on or before September 30, 2021, then $ 3,000,000 ,

plus if Zimmer timely issues a Design A-9 Modification Notice, any Interim Fee Bonus earned pursuant to Section 6.1(c)(iv);

the Product Availability Date for the SEEG Products occurs after September 30, 2021, but on or before December 31, 2021, then $ 2,500,000 ;

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

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.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

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 March 31, 2022, 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

(2) complete SEEG Product development;

and (3) complete Strip/Grid Product development.

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:

Accordingly, the Company recognized

revenue in the amount of zero and $ 20,113 during the three month periods ended March 31, 2022 and 2021, respectively, and $ 6,374 and

$ 42,387 during the six month periods ending March 31, 2022 and 2021, 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.

reconciliation of the closing balance of deferred revenue related to the Zimmer Development Agreement is as follows during the six months

ended as of March 31, 2022 and 2021:

Deferred Revenue

1 unchanged sentence

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

Balance as of end of period – March 31

remaining performance obligations reflected in deferred revenue as of March 31, 2022 are expected to be completed in the second half

of fiscal year 2022.

revenue related to its Strip/Grid Products, SEEG Products and Electrode Cable Assembly Products.

Product revenue recognized during the

three and six month periods ended March 31, 2022 was $ 36,584 and $ 70,332 , respectively.

Product revenue recognized during the three and

six month periods ended March 31, 2021 was $ 18,240 and $ 89,714 , respectively.

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

Total advertising expense amounted

to $ 113,197 and $ 174,532 for the three and six month periods ended March 31, 2022, respectively.

Total advertising expense amounted to

$ 113,140 and $ 142,147 for the three and six month periods ended March 31, 2021, respectively.

8 - Convertible Promissory Notes and Warrant Agreements

Paulson Convertible Note Offering

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.

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:

Notes to Condensed Financial Statements

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

equalling the principal amount.

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

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

4 unchanged sentences

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:

2019 Paulson Notes) would have equalled:

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

10 unchanged sentences

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.

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.

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.

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 six month

period ended March 31, 2021 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 six month period ended March 31, 2022.

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 six months ended March 31, 2021 and was recorded under the net valuation change of instruments measured at fair

value in the condensed statements of operations.

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.

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.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

costs during the six month period ended March 31, 2021 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.

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.

9 – Stock-Based Compensation

the three and six month periods ended March 31, 2022 and 2021, stock-based compensation 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.

Three Months Ended

Six Months Ended

General and administrative

1 unchanged sentence

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.

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

the three month periods ended March 31, 2022 and 2021, under the 2017 Equity Incentive Plan (the “2017 Plan”), the Company

granted 60,000 and 580,002 stock options, respectively, to its officers and employees.

During the six month periods ended March 31, 2022

and 2021, the Company granted 62,000 and 621,671 , respectively, to its officers, employees and consultants.

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 a certain milestone is met.

The grant date fair value of the grants issued during the three month periods ended March

31, 2022 and 2021 was $ 1.00 and $ 3.02 per share, respectively.

The grant date fair value of the grants issued during the six month periods

ended March 31, 2022 and 2021 was $ 1.03 and $ 2.92 per share, respectively.

total expense for the three months ended March 31, 2022 and 2021 related to stock options was $ 145,421 and $ 217,466 , respectively.

total expense for the six months ended March 31, 2022 and 2021 related to stock options was $ 307,782 and $ 317,612 , respectively.

total number of stock options outstanding as of March 31, 2022 and September 30, 2021 was 1,162,059 and 1,122,560 , respectively.

weighted-average assumptions used in the Black-Scholes option-pricing model are as follows for the stock options granted during the three

and six month period ended March 31, 2022 and 2021:

Three Months Ended

Six Months Ended

Expected stock price volatility

2 unchanged sentences

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.

the three month periods ended March 31, 2022 and 2021, 182,217 and 34,752 stock options vested, respectively, and 9,167 and 10,146 stock

options were forfeited during these periods, respectively.

During the six month periods ended March 31, 2022 and 2021, 201,060 and 106,527

stock options vested, respectively and 22,501 and 10,146 stock options were forfeited during these periods, respectively.

three and six months ended March 31, 2021, 758 stock options were exercised with an intrinsic value of $ 955 .

No options were exercised

during the three and six months ended March 31, 2022.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

the three and six months ended March 31, 2022, the Company granted an aggregate of 355,950 restricted stock units (“RSUs”)

to certain officers and employees under the 2017 Plan.

The weighted average grant date fair value of the RSU granted during the three

and six months ended March 31, 2022 was $ 2.10 per unit.

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.

No RSUs were granted during the three and six month periods ended March

the three months ended March 31, 2022 and 2021, 3,444 and 7,992 RSUs vested, respectively, and no RSUs were forfeited during these periods.

During the six months ended March 31, 2022 and 2021, 9,088 and 16,376 RSUs vested, respectively, and no RSUs were forfeited during these

The total expense for the three months ended March 31, 2022 and 2021 related to these RSUs was $ 87,295 and $ 40,493 , respectively.

The total expense for the six months ended March 31, 2022 and 2021 related to these RSUs was $ 128,006 and $ 83,576 , respectively.

Stock-Based Awards

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 March 31, 2021, 40,000 shares were vested under this agreement

of which 13,334 and 33,334 shares vested during the three and six month periods ended March 31, 2021, respectively.

Compensation expense

related to the stock award granted under this consulting agreement amounted to $68,400 and $171,000 for the three and six months ended

March 31, 2021, respectively, and was included in the total stock-based compensation expense.

other stock-based awards were issued during the three and six month periods ended March 31, 2022 and no expense associated with stock

awards was recorded during the three and six months ended March 31, 2022.

October 4, 2021, the Company adopted the NeuroOne Medical Technologies Corporation 2021 Inducement Plan (the “Inducement 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 Inducement Plan was approved by the Company’s

Board of Directors without stockholder approval in accordance with such rule.

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.

Effective January 1, 2022, 1,614,538 shares were added to the 2017 Plan as a result of the evergreen

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

of March 31, 2022, 1,880,777 shares were available in the aggregate for future issuance under the 2017 Plan and Inducement Plan.

were available for future issuance under the 2016 Equity Incentive Plan.

Unrecognized stock-based compensation was $ 2,035,046 as of March

The unrecognized share-based expense is expected to be recognized over a weighted average period of 2.6 years.

10 – Concentrations

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.

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.

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 March 31, 2022, the Company had no 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 and SEEG Products.

11 – Income Taxes

effective tax rate for the three and six months ended March 31, 2022 and 2021 was zero percent.

As a result of the analysis of all available

evidence as of March 31, 2022 and September 30, 2021, the Company recorded a full valuation allowance on its net deferred

Consequently, the Company reported no income tax benefit during the three and six months ended March

31, 2022 and 2021.

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

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.

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.

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.

Notes to Condensed Financial Statements

Private Placement

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

January 12, 2021, the Company entered into a Common Stock and Warrant Purchase Agreement with certain accredited investors (the “Purchasers”),

pursuant to which the Company agreed to issue and sell an aggregate of 4,166,682 shares 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

4 unchanged sentences

The 2021 Private Placement closed on January 14, 2021.

Warrant Activity and Summary

The following table summarizes warrant activity

during the three month period ended December 31, 2021:

Activity and Summary

following table summarizes warrant activity during the six month period ended March 31, 2022:

Outstanding and exercisable at September 30, 2021

1 unchanged sentence

Forfeited/Expired

Outstanding and exercisable at December 31, 2021

Outstanding and exercisable at March 31, 2022

$ 5.25 -$ 9.00

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.

13 – Deferred Contribution Plan

Company has a 401(k) defined contribution plan (the “401K Plan”) for all employees over age 21.

Employees can defer up to

100 % of their compensation through payroll withholdings into the 401K Plan subject to federal law limits.

The Company may match 100 %

of deferrals up to 3 % of one’s contributions.

The Company’s matching contributions to employee deferrals are discretionary.

The Company may also make discretionary profit sharing contributions under the 401K Plan in the future, but it has not done so through

March 31, 2022.

contributions and any employer matching contributions made to satisfy certain non-discrimination tests required by the Internal Revenue

Code are 100 % vested upon contribution.

Discretionary employer matches to employee deferrals vest over a six year period beginning on

the second anniversary of an employee’s date of hire.

Discretionary profit sharing contributions vest over a five year period beginning

on the first anniversary of an employee’s date of hire.

The amount of matching contributions to the 401K Plan to satisfy certain

non-discrimination tests was $ 30,697 and $ 14,803 during the three and six month periods ending March 31, 2022 and 2021, respectively.

14 – Subsequent Events

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