What changed in this filing

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Item 1. Financial Statements

2023-02-13 compared with 2022-08-11 · 565 added, 827 removed, 218 unchanged (86% of the section changed)

Financial Statements

Medical Technologies Corporation

Balance Sheets

NeuroOne Medical Technologies Corporation

Condensed Balance Sheets

September 30,

Current assets:

Cash and cash equivalents

Short-term investments

Accounts receivable

2 unchanged sentences

Intangible assets, net

Right-of-use assets

Right-of-use asset

Property and equipment, net

5 unchanged sentences

Total current liabilities

Operating lease liabilities

Operating lease liability, long term

Total liabilities

2 unchanged sentences

Preferred stock, $ 0.001 par value;

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

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

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

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

Common stock, $ 0.001 par value;

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

16,194,616 and 12,010,019 shares issued and outstanding as of June 30, 2022 and September 30, 2021, respectively.

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

16,238,464 and 16,216,540 shares issued and outstanding as of December 31, 2022 and September 30, 2022, respectively.

Additional paid–in capital

4 unchanged sentences

Total liabilities and stockholders’ equity

accompanying notes to condensed financial statements

Medical Technologies Corporation

Statements of Operations

Three Months Ended

Nine Months Ended

See accompanying notes to condensed financial statements

NeuroOne Medical Technologies Corporation

Condensed Statements of Operations

For the three months ended

Product revenue

Cost of product revenue

Product gross profit (loss)

Product gross loss

Collaborations revenue

6 unchanged sentences

( 2,809,325 )

( 8,630,569 )

( 7,574,088 )

Interest expense

Net valuation change of instruments measured at fair value

Loss before income taxes

1 unchanged sentence

( 2,807,475 )

( 8,625,269 )

( 7,305,005 )

Provision for income taxes

1 unchanged sentence

$ ( 2,807,475 )

$ ( 8,625,269 )

$ ( 7,305,005 )

Net loss per share:

2 unchanged sentences

Basic and diluted

accompanying notes to condensed financial statements

Medical Technologies Corporation

Statements of Changes in Stockholders’ Equity

See accompanying notes to condensed financial statements

NeuroOne Medical Technologies Corporation

Condensed Statements of Changes in Stockholders’

Stockholders’

1 unchanged sentence

$ ( 40,827,199 )

Issuance of common stock upon conversion of convertible notes

Issuance cost settlement in connection with private placement

Stock-based compensation

Issuance of common stock upon vesting of restricted stock units

( 1,959,480 )

Balance at December 31, 2020

( 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 )

Stock-based compensation

Issuance of common stock upon vesting of restricted stock units

Exercise of stock options

Exercise of stock warrants

( 2,951,609 )

Balance at June 30, 2021

$ ( 38,184,036 )

Balance at September 30, 2021

$ ( 40,827,199 )

Issuance of common stock in connection with public offering

8 unchanged sentences

$ ( 43,634,674 )

Stock-based compensation

Issuance of common stock upon vesting of restricted stock units

( 3,058,067 )

Balance at March 31, 2022

Balance at September 30, 2022

$ ( 50,826,812 )

3 unchanged sentences

( 1,732,769 )

Balance at June 30, 2022

Balance at December 31, 2022

$ ( 52,559,581 )

accompanying notes to condensed financial statements

Medical Technologies Corporation

Statements of Cash Flows

Nine Months Ended

See accompanying notes to condensed financial statements

NeuroOne Medical Technologies Corporation

Condensed Statements of Cash Flows

For the three months ended

Operating activities

4 unchanged sentences

Stock-based compensation

Issuance costs attributed to financing activities

Revaluation of convertible notes

Amortization of discounts and premiums on short-term investments

Non-cash lease expense

Payroll protection program loan forgiveness

Change in assets and liabilities:

2 unchanged sentences

Accounts payable

Accrued expenses, deferred revenue, operating leases and other liabilities

Deferred revenue

( 1,455,188 )

Accrued expenses, operating leases and other liabilities

Net cash used in operating activities

2 unchanged sentences

Investing activities

Purchase of fixed assets

Net cash used in investing activities

Purchases of short-term investments

( 1,473,419 )

Maturities of short-term investments

Purchase of property and equipment

Net cash provided by (used in) investing activities

Financing activities

Issuance costs related to convertible notes

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

Deferred offering costs

Issuance costs related to public offering and private placements

Proceeds from issuance of common stock attributed to the public offering

Deferred issuance costs related to the at-the-market offering program and issuance costs related to the public offering

( 1,326,978 )

Net cash (used in) provided by financing activities

Net (decrease) increase in cash

( 3,492,897 )

Net cash provided by financing activities

Net increase in cash

Cash at beginning of period

1 unchanged sentence

Supplemental non-cash financing and investing transactions:

Conversion of convertible notes into equity

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

Unpaid deferred offering and issuance costs attributed to the at-the-market offering program and public offering

Modification of right-of-use asset and associated lease liability

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

accompanying notes to condensed financial statements

See 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.

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.

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

Food and Drug Administration (“FDA”) for its Evo cortical technology in November 2019 and in October 2022, the Company

received 510(k) from the FDA clearance for its Evo sEEG electrode technology for temporary (less than 30 days) 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.

Economic Conditions

COVID-19 pandemic that began around December 2019 introduced significant volatility to the global economy, disrupted supply chains and

had a widespread adverse effect on the financial markets.

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.

lingering impacts of COVID-19 throughout 2021 and into 2022 have impeded global supply chains and resulted in inflationary cost increases.

These broad-based inflationary impacts have increased the manufacturing costs of our products and product candidates.

We expect these

inflationary impacts to continue for the foreseeable future,

addition to the direct and indirect impacts of COVID-19, the United States and global markets are experiencing volatility and disruption

following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine.

In February 2022,

Russia launched a full-scale military invasion of Ukraine.

As a result of the conflict, the United States, United Kingdom, European Union

and other countries have levied economic sanctions and bans on Russia and Russia has responded with its own retaliatory measures.

These measures

have contributed to significant volatility and negative pressure in financial markets, and could have a lasting impact on regional and

global economies, and 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 Company is based in Eden Prairie, Minnesota.

Global Economic Conditions

Generally, worldwide economic conditions remain

uncertain, particularly due to the effects of the COVID-19 pandemic and increased inflation.

The general economic and capital market conditions

both in the U.S.

and worldwide, have been volatile in the past and at times have adversely affected the Company’s access to capital

and increased the cost of capital.

The capital and credit markets may not be available to support future capital raising activity on favorable

terms or at all.

If economic conditions continue to decline, the Company’s future cost of equity or debt capital and access to the

capital markets could be adversely affected.

The COVID-19 pandemic that began in late 2019

introduced significant volatility to the global economy, disrupted supply chains and had a widespread adverse effect on the financial

Additionally, the Company’s operating results could be materially impacted by changes in the overall macroeconomic environment

and other economic factors.

Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, the conflict

in Ukraine, and steps taken by governments and central banks, particularly in response to the COVID-19 pandemic as well as other stimulus

and spending programs, have led to higher inflation, which has led to an increase in costs and has caused changes in fiscal and monetary

policy, including increased interest rates.

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, 2022 included in the Annual Report on Form 10-K.

The condensed balance sheet at

September 30, 2022 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 Corporation

Notes to Condensed Financial Statements

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.

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, par value $ 0.001 (“common stock”) effective end-of-day March 31, 2021 (the “Reverse Stock Split”).

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 presented.

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 common stock par value and additional paid-in-capital line items contained in the financial statements were

adjusted to account for the Reverse Stock Split for all periods presented.

Lastly, the authorized shares and par value per share 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 $ 49.5 million as of

June 30, 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.

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 an accumulated deficit of $ 52.6 million as of December 31, 2022.

the Company’s revenues have not been sufficient 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

the Company’s 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, cash equivalents

and short-term investments 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.

NOTE 3 – Summary of Significant Accounting

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 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.

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

7 – Zimmer Development Agreement”.

Cash and Cash Equivalents

The Company considers all highly liquid investments

with an original contractual maturity on date of purchase of less than or equal to three months to be classified and presented as cash

equivalents on the Balance Sheets.

Cash equivalents are stated at cost, which approximates fair value.

The Company’s cash and cash

equivalents may include demand deposit accounts with large financial institutions, institutional money market funds, U.S.

Treasury securities,

and corporate notes and bonds.

The Company monitors the creditworthiness of the financial institutions, institutional money market funds,

and corporations in which the Company invests its surplus funds.

The Company has experienced no credit losses from its cash and cash equivalent

Short Term Investment

The Company invests its excess cash in United

States (“U.S.”) Treasury securities and highly rated corporate securities.

The Company intends and has the ability to hold

these investments to maturity.

Securities with original maturity dates of more than three months are reported as held-to-maturity investments

and are recorded at amortized cost, which approximates fair value due to the negligible risk of changes in value due to interest rates.

All investments held as of December 31, 2022 and September 30, 2022 had contractual maturities of less than one year.

The amortized cost

and estimated fair values of the Company’s investments as of December 31, 2022 and September 30, 2022 are as follows:

December 31, 2022

treasury and corporate notes

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

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.

September 30, 2022

treasury and corporate notes

Revenue Recognition

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

– Zimmer Development Agreement.”

In determining

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

(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.

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.

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

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

of Product Revenue

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

in connection with 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

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

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

costs in connection with the electrode cable assembly products (“Electrode Cable Assembly Products”) .

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

Collaborations

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

the following steps:

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

(ii) determination of whether the promised

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

(iii) measurement of

the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance

obligations based on estimated selling prices;

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

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 Account Standards

Codification (“ASC”) Topic 606.

Performance obligations may include license rights, development services,

and services associated with regulatory submission and approval processes.

Significant management judgment is required to determine the

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

the arrangement.

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

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

Revenue is then recognized over the remaining

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

of the accounting for collaboration 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.

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.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

of intellectual property :

14 unchanged sentences

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

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

and recorded in collaborations 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

1 unchanged sentence

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).

Fair Value of Financial Instruments

The Company’s accounting for fair value

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

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

techniques used to measure fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical

assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level

3 measurements).

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

Level 1 Inputs:

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

Unadjusted 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

the full term of the asset or liability.

Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 Inputs:

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

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

of June 30, 2022 and September 30, 2021, the fair values of cash, accounts receivable, inventory, prepaid expenses, other assets, accounts

Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

As of December 31, 2022 and September 30, 2022,

the fair values of cash, cash equivalents, short-term investments, accounts receivable, inventory, prepaid and 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 three and nine months ended June 30, 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 nine months ended June 30, 2021.

There were no convertible notes outstanding during the nine months ended June 30, 2022.

Convertible notes

Balance as of beginning of period – September 30, 2020

Change in fair value including accrued interest

Conversion of convertible promissory notes to common stock

( 1,005,232 )

Balance as of end of period – June 30, 2021

There were no transfers between fair value hierarchy

levels during the three months ended December 31, 2022 and 2021.

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

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 expenses over the expected

useful life of the acquired technology.

and Equipment

4 unchanged sentences

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.

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.

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.

of Long-Lived Assets

evaluates its long-lived assets, which consist of licensed intellectual property, property and equipment and right of use assets 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.

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.

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.

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.

3 unchanged sentences

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.

strip/grid and electrode cable assembly work-in-process and finished good product.

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

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

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 .

Research and development expenses may include costs incurred in performing research

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

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

Non-refundable advance payments for goods and services that will be

used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather

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

General and Administrative

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

not directly associated with research and development activities.

Other significant costs include legal and litigation costs 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 sales of the Company’s products.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

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

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

Stock-Based Compensation

The Company accounts for stock-based compensation

in accordance with the provisions of ASC 718, Compensation — Stock Compensation (“ASC 718”).

Accordingly, compensation

costs related to equity instruments granted are recognized at the grant-date fair value.

The Company records forfeitures when they occur.

Stock-based compensation arrangements to non-employees are accounted for in accordance with the applicable provisions of ASC 718.

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

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

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 nine months ended June 30, 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 nine months ended June 30, 2022 and 2021:

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 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 both the three months ended December 31, 2022

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

Stock options

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.

NeuroOne Medical Technologies Corporation

Notes to Condensed 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.

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.

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.

Unissued vested restricted stock units

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 fiscal years beginning after December 15, 2022.

The Company does not expect that the adoption of this

ASU will have a material impact on its 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 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 June 30, 2022 and 2021, $ 37,500 and $ 25,000 in royalty fees were incurred related

to the WARF License, respectively.

During each of the nine month periods ended June 30, 2022 and 2021, $ 100,000 in royalty fees were

incurred related to the WARF License.

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

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.

Company adopted ASU 2020-06 effective October 1, 2022 and the ASU did not have a material impact to our financial statements.

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

NOTE 4 – Commitments and Contingencies

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 License”).

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.

The Company 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 the Company or any of its sublicensees contest the validity

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

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

the WARF License.

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.

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

thereunder remain.

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

During the three months ended December

31, 2022 and 2021, $ 37,500 and $ 25,000 in royalty fees were incurred related to the WARF License, respectively and

were reflected as a component of cost of product revenue.

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”).

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 June 30, 2022 and 2021, $ 962 and $ 1,203 in royalty fees were incurred related to the Mayo Agreement, respectively.

During the nine

months ended June 30, 2022 and 2021, $ 2,798 and $ 3,894 in royalty fees were incurred related to the Mayo Agreement, respectively.

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 against Mr.

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

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 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.

unjustly enriched and engaged in unfair competition.

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

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

April 18, 2018, Mr.

Christianson, the Company and NeuroOne, Inc.

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

The motion for dismissal stated that:

the contract claims against Mr.

Christianson fail because his agreement was not supported

by consideration;

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

and unjust enrichment;

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

plaintiff cannot legally obtain a constructive trust;

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.

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.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

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

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

The Company, NeuroOne Inc and Mr.

further 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.

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.

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 Company’s abuse of process and punitive damage claims.

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.

July 26, 2022, the Special Master appointed by the district court issued an order striking PMT’s attempt to supplement its trade

secret claim by adding thirteen new trade secret claims which it never disclosed during discovery.

The Special Master found that the

attempt by PMT’s fourth set of lawyers to add claims on the eve of trial was both untimely and unfairly prejudicial to the Company.

In addition, the Special Master found the alleged trade secrets were too vague and indefinite to constitute actionable trade secrets.

was postponed from December 2021 to August 22, 2022.

The Company intends to continue to defend itself vigorously.

The outcome of any

claim against the Company by PMT was not able to be estimated 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.

During the three

months ended December 31, 2022 and 2021, $ 690 and $ 739 in royalty fees were incurred related to the Mayo Agreement, respectively, and

were reflected as a component of cost of product revenue.

Facility Leases

Headquarters Lease

On October 7, 2019, the Company entered into a

non-cancellable lease agreement (the “Lease”) with certain landlords (together, the “Landlord”) pursuant to which

the Company has agreed to lease office space located at 7599 Anagram Drive, Eden Prairie, Minnesota (the “Premises”).

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 “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 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.

The initial monthly rent under the Los Gatos Lease

was approximately $ 4,241 .

On November 4, 2022, the Los Gatos Lease was extended for an additional two years to

December 31, 2024.

The rent under the extended Los Gatos Lease ranges from $ 4,453 to $ 4,632 per month beginning on January 1, 2023.

During the three months ended December 31, 2022

and 2021, rent expense associated with the facility leases amounted to $ 42,474 and $ 43,045 , respectively.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

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.

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.

the three and nine months ended June 30, 2022, rent expense associated with the facility leases amounted to $ 42,185 and $ 128,315 , respectively.

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

respectively.

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

Nine Months Ended

Supplemental cash flow information related to

the operating leases was as follows:

For the three months ended

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

1 unchanged sentence

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

Operating leases

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

Modification of right-of-use asset and associated lease liability

Supplemental balance sheet information related

to the operating leases was as follows:

September 30,

3 unchanged sentences

Weighted average discount rate

of the lease liabilities was as follows:

Maturity of the lease liabilities was as follows:

Calendar Year

3 unchanged sentences

Long-term portion

In the ordinary course of business, from time

to time, the Company may be subject to a broad range of claims and legal proceedings that relate to contractual allegations, patent infringement

and other claims.

The Company establishes accruals when applicable for matters and commitments which it believes losses are probable and

can be reasonably estimated.

To date, no loss contingency for such matters and potential commitments have been recorded.

Although it is

not possible to predict with certainty the outcome of these matters or potential commitments, the Company is of the opinion that the ultimate

resolution of these matters and potential commitments will not have a material adverse effect on its results of operations or financial

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

5 – Supplemental Balance Sheet Information

and Other Assets

and other assets consisted of the following:

NOTE 5 – Supplemental Balance Sheet Information

Prepaid and other assets

Prepaid and other assets consisted of the following:

September 30,

Prepaid expenses

Deferred offering costs

assets rollforward is as follows:

Inventory consisted of the following:

September 30,

Work-in-process

Finished goods

Intangible assets rollforward is as follows:

Net Intangibles, September 30, 2022

12 - 13 years

Net Intangibles, June 30, 2022

expense was $ 5,578 and $ 16,736 for the three and nine months ended June 30, 2022, respectively, and $ 5,579 and $ 16,737 for the three

and nine months ended June 30, 2021, respectively.

and Equipment, Net

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

Net Intangibles, December 31, 2022

Amortization expense was $ 5,579 for each of the

three month periods ended December 31, 2022 and 2021.

Property and Equipment

Property and equipment held for use by category

are presented in the following table:

September 30,

3 unchanged sentences

Property and equipment, net

expense was $ 25,928 and $ 68,462 for the three months and nine months ended June 30, 2022, respectively, and $ 14,776 and $ 41,648 for the

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

6 - Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following at

June 30, 2022 and September 30, 2021:

Depreciation expense was $ 30,310 and $ 19,582 for

the three month periods ended December 31, 2022 and 2021, respectively.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

NOTE 6 – Accrued Expenses

Accrued expenses consisted of the following:

September 30,

2 unchanged sentences

Royalty Payments

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

7 – Zimmer Development Agreement

July 20, 2020, the Company entered into an exclusive development and distribution agreement (as amended from time to time, the “Zimmer

NOTE 7 – Zimmer Development Agreement

20, 2020, the Company entered into an exclusive development and distribution agreement (as amended from time to time, the “Zimmer

Development Agreement”) with Zimmer, Inc.

3 unchanged sentences

(“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 Zimmer Development Agreement through a joint

development committee composed of an equal number of representatives of Zimmer and the Company.

the terms of the Zimmer 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.

The parties have agreed to collaborate with respect to development activities under the Zimmer Development Agreement through a joint development

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

terms of the Zimmer 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 Zimmer Development

1 unchanged sentence

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

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

otherwise provided in the Zimmer 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.

3 unchanged sentences

to the Zimmer 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 Zimmer 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 Zimmer Development Agreement) by April 30, 2021 -

Zimmer timely delivers a Design Modification Notice to the Company under the Zimmer 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 Zimmer 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 Zimmer Development Agreement shall not be deemed to be met if FDA Approval for the SEEG Products is not received

prior to the applicable deadline.

Fee”) to the Company in fiscal year 2020.

2, 2022, the Company entered into a Third Amendment to the Zimmer Development Agreement with Zimmer.

Pursuant to the terms and conditions

of the Third Amendment, Zimmer made a $ 3.5 million payment to the Company.

In consideration of the mutual covenants and agreements

contained in the Zimmer Development Agreement, the fee and milestone payment provisions in the Zimmer Development Agreement were replaced

with the following below:

● $ 1.5 million for the sEEG Exclusivity Maintenance Fee;

● $ 2.0 million for satisfaction of each of the milestone events related to the design of sEEG products set forth in the Development Agreement even though the satisfaction was after the deadlines originally identified.

in connection with the Third Amendment, the Company issued Zimmer a warrant to purchase common stock (the “2022 Zimmer Warrant”).

The 2022 Zimmer Warrant is exercisable for up to an aggregate of 350,000 shares of the Company’s common stock.

Zimmer Warrant has an exercise price of $ 3.00 per share, will be exercisable commencing six months from the issuance date, and will

expire on August 2, 2027.

The fair value of the 2022 Zimmer Warrant of $ 0.1 million was based on the Black-Scholes pricing model.

assumptions used were as follows:

a risk-free interest rate of 2.9 %;

expected volatility of 53.5 %;

expected life of 5 years;

dividend yield of 0 %;

and the underlying fair market of the common stock.

The 2022 Zimmer Warrant was classified in stockholders’

equity as the number of shares were fixed and determinable, no cash settlement was required and no other provisions precluded equity treatment.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

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 .

Product Availability Date for the SEEG Products has not yet occurred.

Notwithstanding any other provision of the Zimmer 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.

Zimmer 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 Zimmer 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 Zimmer Development Agreement if Zimmer acquires or directly or indirectly owns a controlling

interest in certain competitors of the Company.

inception of the Zimmer Development Agreement through June 30, 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 property;

(2) complete SEEG Product development;

and (3) complete Strip/Grid Product development.

Accordingly, the Company recognized revenue in

the amount of zero and $ 17,451 during the three month periods ended June 30, 2022 and 2021, respectively, and $ 6,374 and $ 59,838 during

the nine month periods ended June 30, 2022 and 2021, respectively, in connection with the Initial Exclusivity Fee payment.

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 nine months

ended as of June 30, 2022 and 2021:

The Zimmer Development Agreement will expire on

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

earlier pursuant to its terms.

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

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

The license rights granted to Zimmer under the Strip/Grid Distribution License and sEEG Distribution License shall be exclusive from the

effective date of the Third Amendment until the end of the term.

The Zimmer Development Agreement and Third Amendment

were accounted for under the provisions of ASC 606.

In accordance with the provisions under ASC 606, the Company identified five performance

obligations under the Zimmer Development Agreement and Third Amendment:

(1) the Company’s obligation to grant Zimmer access to its

intellectual property;

(2) completion of sEEG Product development;

(3) completion of Strip/Grid Product development;

(4) the provision

of sEEG exclusivity maintenance;

and (5) completion of sEEG design modifications as requested by Zimmer.

All performance obligations under

the Zimmer Development Agreement and Third Amendment were met as of December 31, 2022.

The aggregate transaction price associated with

the Zimmer Development Agreement and Third Amendment was $ 5.4 million comprising the Initial Exclusivity Fee of $ 2.0 million and the $ 3.5

million payment under the Third Amendment, less the fair value of the 2022 Zimmer Warrant of $ 0.1 million.

The transaction price was allocated

between performance obligations based on their relative standalone selling prices.

The Company used a market based valuation approach

and an expected cost plus margin approach with regard to estimating the standalone selling price for the performance obligations.

In October 2022, the Company received 510(k) clearance

from the FDA for its Evo sEEG electrode technology for temporary (less than 30 days) use with recording, monitoring, and stimulation equipment

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

Accordingly, the Company recognized

revenue in the amount of $ 1,455,188 during the three months ended December 31, 2022 related to the completion of the sEEG exclusivity

maintenance milestone.

During the three months ended December 31, 2021, the Company recognized revenue in the amount of $ 6,374 related

to sEEG Product development.

A reconciliation of the closing balance of deferred

revenue related to the Zimmer Development Agreement and Third Amendment is as follows during the three months ended as of December 31,

2022 and 2021:

Deferred Revenue

1 unchanged sentence

Revenue recognized

Balance as of end of period – June 30

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

remaining performance obligations reflected in deferred revenue as of June 30, 2022 are expected to be completed in the last quarter

of fiscal year 2022.

On August 2, 2022, the Company and Zimmer entered into the Third Amendment

to the Zimmer Development Agreement.

See “Note 14 – Subsequent Events”.

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

Product revenue recognized during the

three and nine month periods ended June 30, 2022 was $ 32,049 and $ 102,381 , respectively.

Product revenue recognized during the three

and nine month periods ended June 30, 2021 was $ 40,096 and $ 129,810 , respectively.

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

Total advertising expense amounted

to $ 43,479 and $ 218,011 for the three and nine month periods ended June 30, 2022, respectively.

Total advertising expense amounted to

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

8 - Convertible Promissory Notes and Warrant Agreements

Paulson Convertible Note Offering

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

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

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

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

common stock.

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

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

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

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

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

Revised Optional

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

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

2019 Paulson Notes) would have equalled:

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

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

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

Revise the Registration

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

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

to such date;

(2) the final closing a 2019 Qualified Financing;

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

rights agreement with the applicable subscriber containing customary and usual terms pursuant to which the Company shall agree to

prepare and file with the SEC a registration statement on or prior to the 90th calendar day following the registration date, covering

the resale of any common stock received on conversion of such 2019 Paulson Notes, and shares of common stock underlying the Warrants.

( 1,455,188 )

Balance as of end of period – December 31

Product Revenue

Product revenue recognized during the three month

periods ended December 31, 2022 and 2021 was $ 114,579 and $ 33,748 , respectively, related to the Company’s 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 $ 53,026 and $ 61,335 for the

three month periods ended December 31, 2022 and 2021, respectively.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

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

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

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

period ended June 30, 2021 and 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 nine month period ended June 30, 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 nine months ended June 30, 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.

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

to legal costs.

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 nine month periods ended June 30, 2022 and 2021, stock-based compensation expense related to stock-based awards was included

in selling, general and administrative expenses and research and development costs as follows in the accompanying condensed statements

of operations.

Three Months Ended

Nine Months Ended

Selling, general and administrative

NOTE 8 – Stock-Based Compensation

During the three month periods ended December

31, 2022 and 2021, stock-based compensation expense was included in general and administrative and research and development costs as

follows in the accompanying condensed statements of operations.

General and administrative

Research and development

Total stock-based compensation expense

the three month periods ended June 30, 2022 and 2021, under the 2017 Equity Incentive Plan (the “2017 Plan”), the Company

granted 88,690 and 81,446 stock options, respectively, to its officers and employees.

During the nine month periods ended June 30, 2022

and 2021, the Company granted 150,690 and 703,117 , respectively, to its officers, employees and consultants.

Stock Options

During the three month periods ended December

31, 2022 and 2021, under the 2017 Equity Incentive Plan (the “2017 Plan”) and the 2021 Inducement Plan (the “Inducement

Plan”), the Company granted 73,731 and 2,000 stock options, respectively, to its 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 June 30,

2022 and 2021 was $ 0.57 and $ 3.65 per share, respectively.

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

ended June 30, 2022 and 2021 was $ 0.76 and $ 3.01 per share, respectively.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

total expense for the three months ended June 30, 2022 and 2021 related to stock options was $ 137,109 and $ 500,149 , respectively.

total expense for the nine months ended June 30, 2022 and 2021 related to stock options was $ 444,891 and $ 817,761 , respectively.

total number of stock options outstanding as of June 30, 2022 and September 30, 2021 was 1,245,582 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 nine month period ended June 30, 2022 and 2021:

Three Months Ended

Nine Months Ended

over an immediate to 48 month period based on a time of service condition.

The weighted-average grant date fair value of the grants issued

during the three month periods ended December 31, 2022 and 2021 was $ 0.66 and $ 1.72 per share, respectively.

The total expense for the

three months ended December 31, 2022 and 2021 related to stock options was $ 181,744 and $ 162,361 , respectively.

The total number of stock

options outstanding as of December 31, 2022 and September 30, 2022 was 1,313,646 and 1,239,915 , respectively.

The weighted-average assumptions used in

the Black-Scholes option-pricing model are as follows for the stock options granted during the three month periods ended December 31,

2022 and 2021:

Expected stock price volatility

2 unchanged sentences

Risk free interest rate

the three month periods ended June 30, 2022 and 2021, 64,841 and 162,266 stock options vested, respectively, and 5,167 and 21,437 stock

options were forfeited during these periods, respectively.

During the nine month periods ended June 30, 2022 and 2021, 265,901 and 268,793

stock options vested, respectively and 27,668 and 31,583 stock options were forfeited during these periods, respectively.

three and nine months ended June 30, 2021, 780 and 1,538 stock options were exercised, respectively, with an intrinsic value of $ 1,693

and $ 2,648 , respectively.

No options were exercised during the three and nine months ended June 30, 2022.

During the three and nine months ended June 30, 2022, the Company granted

an aggregate of 87,720 and 443,670 restricted stock units (“RSUs”) to certain directors, officers and employees under the

The weighted average grant date fair value of the RSUs granted during the three and nine months ended June 30, 2022 was $ 1.14

and $ 1.91 per unit, respectively.

The RSUs vest over a one to three year period with some of the RSUs vesting ratably on a monthly and

others vesting at 50 percent on the first anniversary of the grant date with 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.

During the three

and nine month periods ended June 30, 2021, 13,776 RSUs were granted to directors at a weighted average grant date fair value of $ 7.26 .

the three months ended June 30, 2022 and 2021, 9,606 and 7,077 RSUs vested, respectively, and no RSUs were forfeited during these periods.

During the nine months ended June 30, 2022 and 2021, 18,694 and 23,453 RSUs vested, respectively, and no RSUs were forfeited during these

The total expense for the three months ended June 30, 2022 and 2021 related to these RSUs was $ 118,439 and $ 39,702 , respectively.

The total expense for the nine months ended June 30, 2022 and 2021 related to these RSUs was $ 246,445 and $ 123,278 , respectively.

Stock-Based Awards

April 2021, two consulting agreements were executed whereby a total of 62,659 shares

of common stock were subject to issuance of which 51,330 shares of common stock were issued as of June 30, 2021.

expense related to the stock awards granted under these consulting agreements amounted to $339,001 for the three and nine months

ended June 30, 2021 and were included in the total stock-based compensation expense.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

August 2020, an additional consulting agreement was executed whereby 40,000 shares of common stock were issued, subject to

Company repurchase.

The stock award under the agreement vests over a six-month period.

As of June 30, 2021, 40,000 shares were

vested under this agreement of which 33,334 shares vested during the nine months ended June 30, 2021.

Compensation expense

related to the stock award granted under this consulting agreement amounted to $171,000 for the nine months ended June 30, 2021

and was included in the total stock-based compensation expense.

other stock-based awards were issued during the three and nine month periods ended June 30, 2022 and no expense associated with stock

awards was recorded during the three and nine months ended June 30, 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

of June 30, 2022, 1,709,534 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 $ 1,927,956 as of June

The unrecognized share-based expense is expected to be recognized over a weighted average period of 2.2 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.

has not experienced any losses on its deposits since inception, and management believes that minimal credit risk exists with respect

to these financial institutions.

As of June 30, 2022, the Company had no deposits in excess of federally insured amounts.

During the three month periods ended December

31, 2022 and 2021, 127,446 and 18,843 stock options vested, and zero and 13,334 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, 2022 and 2021.

Additionally, 21,930 and 5,644 RSUs vested during these periods, respectively.

The total expense for the three months ended December 31, 2022 and 2021 related to these RSUs was $ 118,437 and $ 40,711 , respectively.

No RSUs were forfeited during the three month periods ended December 31, 2022 and 2021.

As of December 31, 2022, 1,630,141 shares were

available in the aggregate for future issuance under the 2017 Equity Incentive Plan and Inducement Plan.

Unrecognized stock-based compensation

was $ 1,422,392 as of December 31, 2022.

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

of 1.8 years.

NOTE 9 – Concentrations

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.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

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 nine months ended June 30, 2022 and 2021 was zero percent.

As a result of the analysis of all available

evidence as of June 30, 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 nine months ended June

30, 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

NOTE 10 – Income Taxes

The effective tax rate for the three months ended

December 31, 2022 and 2021 was zero percent.

As a result of the analysis of all available evidence as of December 31, 2022 and September

30, 2022, 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, 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.

NOTE 11 – Stockholders’ Equity

At-The-Market Offering

On December 21, 2022, the Company entered into

a Capital on Demand TM Sales Agreement with JonesTrading Institutional Services LLC (“JonesTrading”) to create an

at-the-market offering program (“ATM”) under which the Company may offer and sell shares having an aggregate offering price

of up to $ 14.5 million.

JonesTrading is entitled to a commission at a fixed commission rate equal to up to 3 % of the gross proceeds.

of December 31, 2022, no issuances of securities have occurred in connection with the ATM, and deferred issuance costs in the amount of

$ 103,787 have been incurred in connection with the ATM.

Public Offering

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.

Private Placement

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

and corresponding warrant, resulting in total gross proceeds of $ 12.5 million before deducting placement agent fees and estimated offering

The 2021 Warrants have an initial exercise price of $ 5.25 per share.

The 2021 Warrants are exercisable beginning on the date

of issuance and will expire on the fifth anniversary of such date.

This private placement closed on January 14, 2021.

NeuroOne Medical Technologies Corporation

Notes to Condensed Financial Statements

Activity and Summary

following table summarizes warrant activity during the nine month period ended June 30, 2022:

Weighted Average

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.

Warrant Activity and Summary

There was no warrant activity during the three

months ended December 31, 2022.

The following table summarizes information about

warrants outstanding at December 31, 2022:

Exercise Price

Number Outstanding

Weighted Average

Price Per Warrant

Outstanding and exercisable at September 30, 2021

$ 5.25 - $ 9.00

Forfeited/Expired

Outstanding and exercisable at June 30, 2022

$ 5.25 -$ 9.00

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

June 30, 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 nine 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 nine month periods ended June 30, 2022 and 2021, respectively.

14 – Subsequent Events

Third Amendment to Exclusive Development

and Distribution Agreement with Zimmer, Inc.

On August 2, 2022, the Company entered into a

Third Amendment to Exclusive Development and Distribution Agreement (the “Zimmer Amendment” ) with Zimmer.

to the terms and conditions of the Zimmer Amendment, Zimmer agreed to make a $ 3,500,000 payment to the Company within 10 business days

of the execution of the Zimmer Amendment.

On August 2, 2022, in connection with the Zimmer

Amendment, the Company issued Zimmer a Warrant to Purchase Common Stock (the “2022 Zimmer Warrant” ).

The 2022 Zimmer Warrant will be exercisable for

up to an aggregate of 350,000 shares of the Company’s common stock.

The 2022 Zimmer Warrant will have an exercise price of $ 3.00

per share, will be exercisable commencing six months from the issuance date, and will expire on August 2, 2027 .

Subject to limited exceptions,

Zimmer will not have the right to exercise any portion of the 2022 Zimmer Warrant if Zimmer, together with its affiliates, would beneficially

own in excess of 4.99 % of the number of shares of the Common Stock outstanding immediately after giving effect to such exercise provided,

however, that upon prior notice to the Company, the holder may increase or decrease the Beneficial Ownership Limitation, provided further

that in no event shall the Beneficial Ownership Limitation exceed 19.99 % and any increase in the beneficial ownership limitation will

not be effective until 61 days following notice to the Company.

Number Exercisable at

NeuroOne Medical Technologies

Notes to Condensed Financial Statements

NOTE 12 – 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, 2023, 129,479 shares were added to the 2017 Plan as a result of the evergreen provision.

NeuroOne Medical Technologies Corporation

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