What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-12 compared with 2023-02-13 · 301 added, 232 removed, 294 unchanged (64% of the section changed)

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Condition and Results of Operations

The following discussion of our financial

condition and results of operations should be read in conjunction with the financial statements and notes included in Part I “Financial

Information”, Item I “Financial Statements” of this Quarterly Report on Form 10-Q (the “Report”) and the

audited financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended September 30, 2022.

The following discussion of our financial condition

and results of operations should be read in conjunction with the financial statements and notes included in Part I “Financial Information”,

Item I “Financial Statements” of this Quarterly Report on Form 10-Q (the “Report”) and the audited financial statements

and related footnotes included in our Annual Report on Form 10-K for the year ended September 30, 2022.

Forward-Looking Statements

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“project,” “potential,” “target,” “seek,” “contemplate,” “continue”

and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the

These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of

activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements.

Although we believe that we have a reasonable basis for each forward-looking statement contained in this Report, we caution you that

these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which

we cannot be certain.

and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future.

These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity,

performance or achievements to be materially different from the information expressed or implied by these forward-looking statements.

Although we believe that we have a reasonable basis for each forward-looking statement contained in this Report, we caution you that these

statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot

Forward-looking statements include statements about:

our ability to maintain regulatory clearance of our cortical strip

and grid electrode technology;

our ability to obtain and maintain regulatory clearance for our RF

ablation system;

our ability to successfully commercialize our technology in the United

our ability to maintain regulatory clearance of our cortical strip and grid electrode technology;

our ability to obtain and maintain regulatory clearance for our RF ablation system;

our ability to successfully commercialize our technology in the United States;

our ability to achieve or sustain profitability;

our ability to raise additional capital and to fund our operations;

the availability of additional capital on acceptable terms or at all

as or when needed;

the clinical utility of our cortical strip, grid and depth electrode

including technology under development;

our ability to develop additional applications of our cortical strip,

grid and depth electrode technology with the benefits we hope to offer as compared to existing technology, or at all;

the results of our development and distribution relationship with Zimmer,

we have been the victim of a cyber-related crime, and our controls

may not be successful in avoiding future cyber-related crimes;

the performance, productivity, reliability and regulatory compliance

of our third party manufacturers of our cortical strip, grid electrode and depth electrode technology;

our ability to develop future generations of our cortical strip, grid

and depth electrode technology;

the availability of additional capital on acceptable terms or at all as or when needed;

the clinical utility of our cortical strip, grid and depth electrode including technology under development;

our ability to develop additional applications of our cortical strip, grid and depth electrode technology with the benefits we hope to offer as compared to existing technology, or at all;

the results of our development and distribution relationship with Zimmer, Inc.

we have been the victim of a cyber-related crime, and our controls may not be successful in avoiding future cyber-related crimes;

the performance, productivity, reliability and regulatory compliance of our third party manufacturers of our cortical strip, grid electrode and depth electrode technology;

our ability to develop future generations of our cortical strip, grid and depth electrode technology;

our future development priorities;

the impact of the COVID-19 pandemic on our business;

our ability to obtain reimbursement coverage for our cortical strip,

grid and depth electrode technology;

our expectations about the willingness of healthcare providers to recommend

our cortical strip, grid and depth electrode technology to people with epilepsy, Parkinson’s disease, dystonia, essential tremors,

chronic pain due to failed back surgeries and other related neurological disorders;

NeuroOne Medical Technologies Corporation

our future commercialization, marketing and manufacturing capabilities

and strategy;

our ability to obtain reimbursement coverage for our cortical strip, grid and depth electrode technology;

NeuroOne Medical Technologies

our expectations about the willingness of healthcare providers to recommend our cortical strip, grid and depth electrode technology to people with epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders;

our future commercialization, marketing and manufacturing capabilities and strategy;

our ability to comply with applicable regulatory requirements;

our ability to maintain our intellectual property position;

our expectations regarding international opportunities for commercializing

our cortical strip, grid and depth electrode technology under including technology under development;

our estimates regarding the size of, and future growth in, the market

for our technology, including technology under development;

our estimates regarding our future expenses and needs for additional

our expectations regarding international opportunities for commercializing our cortical strip, grid and depth electrode technology under including technology under development;

our estimates regarding the size of, and future growth in, the market for our technology, including technology under development;

our estimates regarding our future expenses and needs for additional financing.

Forward-looking statements are based on management’s

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Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material.

light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation

or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all.

of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty

by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all.

These forward-looking statements speak only as

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Innovations to develop hardware for the system in the third calendar quarter of 2021.

We are targeting the first calendar quarter of

2023 for design verification of such hardware.

We are targeting early in the second calendar quarter

of 2023 for design verification of such hardware.

We also completed an animal feasibility study at Emory University in September 2021.

we plan to complete additional animal studies through the first quarter of calendar 2023 and submit an application for FDA 510(k) clearance

We plan to complete additional animal studies early in the second quarter of calendar 2023 and submit an application for FDA 510(k) clearance

in the second calendar quarter of 2023.

Our other products are still under development.

NeuroOne Medical Technologies

We commenced commercial

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Our other products are still under development.

NeuroOne Medical Technologies Corporation

We have incurred losses since inception.

December 31, 2022, we had an accumulated deficit of $52.6 million, primarily as a result of expenses incurred in connection with our

research and development, selling, general and administrative expenses associated with our operations and interest expense, fair value

adjustments and loss on extinguishments related to our debt, offset in part by collaborations and product revenues.

As of March 31, 2023, we had

an accumulated deficit of $56.1 million, primarily as a result of expenses incurred in connection with our research and development, selling,

general and administrative expenses associated with our operations and interest expense, fair value adjustments and loss on extinguishments

related to our debt, offset in part by collaborations and product revenues.

Prior to FDA clearance

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through collaborations or partnerships with other companies or other sources.

We may be unable to

raise additional funds when needed on favorable terms or at all.

We may be unable to raise

additional funds when needed on favorable terms or at all.

Our failure to raise such capital as and when needed would have a negative

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Recent Developments and Upcoming Milestones

Corporate Updates

sEEG Commercial Launch

In May 2023 we announced the commercial launch

of the Evo® sEEG electrode product line in the United States with exclusive distribution partner Zimmer Biomet.

We fulfilled five

shipments of sEEG product to Zimmer Biomet in preparation for launch, and completed initial training or the sEEG product line to Zimmer

Biomet sales personnel.

The first clinical case using the Evo® sEEG

electrode* in robotic neurosurgery was performed by Dr.

William Bingaman at the Cleveland Clinic.

The procedure was the first to utilize

NeuroOne’s Evo sEEG electrode with Zimmer Biomet’s ROSA One® Brain, a robotic platform that assists surgeons in planning

and performing complex yet minimally invasive neurosurgical procedures.

OneRF Ablation

During the second fiscal quarter of 2023, we successfully

completed summative usability testing for OneRF with 15 neurosurgeons, and completed execution of internal device verification/validation

protocols for the final OneRF Ablation System.

We intend to submit a 510(k) application to the FDA for OneRF ablation system in the second

calendar quarter of 2023.

NeuroOne Medical Technologies

Spinal Cord Stimulation Program

During the second fiscal quarter of 2023, we completed

an initial animal implant of novel thin film paddle leads for spinal cord stimulation (SCS).

The devices are intended for the treatment

of patients with chronic back pain due to multiple failed back surgery syndrome, intractable low back, and leg pain.

A percutaneous (through

a needle) delivery system for paddle leads is also under development and has been successfully bench-tested.

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 our

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 decline, our future cost of equity or debt capital and access to the capital

markets could be adversely affected.

economic conditions remain uncertain, particularly due to the conflict between Russia and Ukraine, disruptions in the banking system and

financial markets, lingering 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 our 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

If economic conditions decline, our future cost of equity or debt capital and access to the capital markets could be adversely

The COVID-19 pandemic

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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.

the conflict in Ukraine, disruptions in the banking system and financial markets, 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.

Financial Overview

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

NeuroOne Medical Technologies Corporation

Product Gross Loss

Product gross loss represents our product revenue

less our cost of product revenue.

Our cost of product revenue consists of the manufacturing and materials costs incurred by our third-party

contract manufacturer in connection with our Strip/Grid Products and outside supplier materials costs of producing the Electrode Cable

Assembly Products.

In addition, cost of product revenue includes royalty fees incurred in connection with our license agreements.

Product Gross Profit (Loss)

Product gross profit (loss) represents our product

revenue less our cost of product revenue.

Our cost of product revenue consists of the manufacturing and materials costs incurred by our

third-party contract manufacturer in connection with our Strip/Grid Products, sEEG Products and outside supplier materials costs of producing

the Electrode Cable Assembly Products.

In addition, cost of product revenue includes royalty fees incurred in connection with our license

Collaborations Revenue

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

NeuroOne Medical Technologies

Under the terms of the Zimmer Development Agreement,

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the effective date of the Amendment until the end of the Zimmer Term.

NeuroOne Medical Technologies Corporation

All payments attributed to the Initial Exclusivity

Fee, the sEEG exclusivity maintenance fee and sEEG design milestone payment are non-refundable.

All payments attributed to the Initial Exclusivity Fee, the sEEG

exclusivity maintenance fee and sEEG design milestone payment are non-refundable.

The Zimmer Development Agreement and Amendment

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Accordingly, we 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, we recognized revenue in the amount of $6,374 related to sEEG

Product development.

revenue in the amount of $1.5 million during the six months ended March 31, 2023 related to the completion of the sEEG exclusivity maintenance

During the six months ended March 31, 2022, we recognized revenue in the amount of $6,000 related to sEEG Product development.

NeuroOne Medical Technologies

The achievement of the level of sales required

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Selling, General and Administrative

Selling, general and administrative expenses

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

research and development activities.

Other significant costs include legal and litigation costs relating to corporate matters, intellectual

property costs, professional fees for consultants assisting with financial and administrative matters, and sales and marketing in connection

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

We anticipate that our selling,

general and administrative expenses will significantly increase in the future to support our continued research and development activities,

further commercialization of our cortical strip technology, our grid electrode technology, and our depth electrode technology, and the

increased costs of operating as a public company.

These increases will include increased costs related to the hiring of additional personnel

and fees for legal and professional services, as well as other public company related costs.

Selling, general and administrative expenses consist

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

and development activities.

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

costs, professional fees for consultants assisting with financial and administrative matters, and sales and marketing in connection with

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

We anticipate that our selling, general

and administrative expenses will significantly increase in the future to support our continued research and development activities, further

commercialization of our cortical strip technology, our grid electrode technology, and our depth electrode technology, and the increased

costs of operating as a public company.

These increases will include increased costs related to the hiring of additional personnel and

fees for legal and professional services, as well as other public company related costs.

Research and Development

Research and development expenses consist of

expenses incurred in performing research and development activities in developing our cortical strip, grid electrode and depth electrode

Research and development expenses include compensation and benefits for research and development employees including stock-based

compensation, overhead expenses, cost of laboratory supplies, clinical trial and related clinical manufacturing expenses, costs related

to regulatory operations, fees paid to consultants and other outside expenses.

Research and development costs are expensed as incurred

and costs incurred by third parties are expensed as the contracted work is performed.

Lastly, de minimis income from the sale of prototype

products and related materials are offset against research and development expenses.

Research and development expenses consist of expenses

incurred in performing research and development activities in developing our cortical strip, grid electrode and depth electrode technology.

Research and development expenses include compensation and benefits for research and development employees including stock-based compensation,

overhead expenses, cost of laboratory supplies, clinical trial and related clinical manufacturing expenses, costs related to regulatory

operations, fees paid to consultants and other outside expenses.

Research and development costs are expensed as incurred and costs incurred

by third parties are expensed as the contracted work is performed.

Lastly, de minimis income from the sale of prototype products and related

materials are offset against research and development expenses.

We expect our research and development expenses

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and clinical trials.

Other income primarily consists of interest income

related to our cash, cash equivalents and short-term investments and to proceeds outside of normal operating activity relating to legal

settlements and sales of non-commercial supplies.

NeuroOne Medical Technologies Corporation

Other (Expense) Income, net

Other (expense) income, net primarily consists

of interest income related to our cash, cash equivalents, investment income or loss from short-term investments and other income or expense

outside of normal operating activity relating to legal settlements, sales of non-commercial supplies and other items as applicable.

NeuroOne Medical Technologies

Results of Operations

Comparison of the Three Months Ended December 31, 2022 and 2021

Comparison of the Three Months Ended March

31, 2023 and 2022

The following table sets forth the results of

operations for the three months ended December 31, 2022 and 2021, respectively.

For the three months ended

operations for the three months ended March 31, 2023 and 2022, respectively.

Three Months Ended

Product revenue

Cost of product revenue

Product gross loss

Collaborations revenue

Product gross profit (loss)

Operating expenses:

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Loss from operations

Other (expense) income, net

Loss before income taxes

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$ (3,058,067 )

Product Revenue and Product Gross Loss

Product revenue was approximately $0.1 million

and $34,000 during the three months ended December 31, 2022 and 2021, respectively.

Product gross loss was approximately $(12,000) and

$(13,000) during the three months ended December 31, 2022 and 2021, respectively.

The product revenue consists of the sale of our strip/grid,

depth electrode and electrode cable assembly products.

Cost of product revenue consisted of the manufacturing and materials costs incurred

by our third-party contract manufacturer in connection with our strip/grid and depth electrode products, and outside supplier materials

costs in connection with the electrode cable assembly products.

In addition, cost of product revenue included royalty fees incurred of

approximately $38,000 and $26,000 in connection with our license agreements during the three months ended December 31, 2022 and 2021,

Product Revenue and Product Gross Profit (Loss)

Product revenue and product gross profit was $466,000

and $32,000, respectively, during the three months ended March 31, 2023.

Product revenue and product gross loss was $37,000 and $(36,000),

respectively, during the three months ended March 31, 2022.

The product revenue consists of the sale of our strip/grid, sEEG and electrode

cable assembly products.

Cost of product revenue consisted of the manufacturing and materials costs incurred by our third-party contract

manufacturer in connection with our strip/grid and sEEG products, and outside supplier materials costs in connection with the electrode

cable assembly products.

In addition, cost of product revenue included royalty fees incurred of approximately $38,000 and $39,000 in connection

with our license agreements during the three months ended March 31, 2023 and 2022, respectively.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were

$1.8 million during each of the three months ended March 31, 2023 and 2022.

The negligible expense increase in the current three months

was attributed to higher administrative payroll and professional service costs of approximately $0.1 million, offset by lower sales and

marketing expenses of $0.1 million.

Research and Development Expenses

Research and development expenses were $1.7 million

for the three months ended March 31, 2023, compared to $1.2 million during for the three months ended March 31, 2022.

The $0.5 million

increase period over period was attributed to supporting development activities, which primarily included salary-related expenses and

costs related to consulting services, materials and supplies associated with the development of sEEG Products and to a much lesser extent

Strip/Grid Products.

Other (Expense) Income, net

Other income during the three months ended March

31, 2023 and 2022 related to interest income on our cash, cash equivalents and short-term investments in the amount of $67,000 and $2,000,

respectively.

Other expense during the three months ended March 31, 2023 was attributed to an exploit loss of $94,000.

Other expense during

the three months ended March 31, 2022 was nil.

NeuroOne Medical Technologies

Comparison of the Six Months Ended March

31, 2023 and 2022

The following table sets forth the results of

operations for the six months ended March 31, 2023 and 2022, respectively.

Six Months Ended

Product revenue

Cost of product revenue

Product gross profit (loss)

Collaborations revenue

Operating expenses:

Selling, general and administrative

Research and development

Total operating expenses

Loss from operations

Other income, net

Loss before income taxes

Provision for income taxes

$ (5,255,597 )

$ (5,865,542 )

Product Revenue and Product Gross Profit (Loss)

Product revenue and product gross profit was $581,000

and $19,000 during the six months ended March 31, 2023, respectively.

Product revenue and product gross loss was $70,000 and $(49,000)

during the six months ended March 31, 2022, respectively.

Product revenue consisted of Strip/Grid Products, sEEG Products and Electrode

Cable Assembly Products sales.

Cost of product revenue consisted of the manufacturing and materials costs incurred by our third-party

contract manufacturer in connection with our Strip/Grid Products, sEEG Products and outside supplier materials costs in connection with

the Electrode Cable Assembly Products.

In addition, cost of product revenue included royalty fees incurred of approximately $76,000 and

$64,000 in connection with our license agreements during the six months ended March 31, 2023 and 2022, respectively.

Collaborations Revenue

Collaborations revenue was $1.5 million and $6,000

for the three months ended December 31, 2022 and 2021, respectively.

Revenue during each period was derived from the Zimmer Development

Agreement and represented the portion of the upfront initial development fee payment eligible for revenue recognition during such period.

The amount of revenue recognized in the first quarter of fiscal year 2023 related to the completion of the sEEG maintenance fee obligation

as a result of securing FDA approval.

For the comparable prior year period, the upfront fee was based on development completed in connection

with depth electrode products, and to a lesser extent, the strip/grid products.

NeuroOne Medical Technologies Corporation

Selling, general and administrative expenses

for the six months ended March 31, 2023 and 2022, respectively.

Revenue during each period was derived from the Zimmer Development Agreement

and represented the portion of the upfront initial development fee payment eligible for revenue recognition during such period.

of revenue recognized in the current six months related to the completion of the sEEG maintenance fee obligation as a result of securing

FDA approval.

For the comparable prior year period, the upfront fee was based on development completed in connection with depth electrode

products, and to a lesser extent, the strip/grid products.

Selling, General and Administrative Expenses

were $1.7 million for the three months ended December 31, 2022, compared to $1.7 million for the three months ended December 31, 2021.

The $0.1 million decrease was primarily due to a decrease in legal costs of $0.3 million and a decrease in professional services of $0.1

million, offset in part by increases in public company and other operating costs of $0.2 million and by increases in stock-based compensation

of $0.1 million.

Selling, general and administrative expenses were

$3.5 million for the six months ended March 31, 2023, compared to $3.6 million for the six months ended March 31, 2022.

The $0.1 million

decrease was primarily due to lower professional fees of $0.2 million, offset partially by higher administrative payroll costs of $0.1

million on a net basis.

NeuroOne Medical Technologies

Research and Development Expenses

Research and development expenses were $3.3 million

for the three months ended December 31, 2022, compared to $1.1 million during for the three months ended December 31, 2021.

million increase period over period was attributed to supporting development activities, which primarily included salary-related expenses

and costs related to consulting services, materials and supplies associated with the development of depth electrode products and to a

lesser extent strip/grid products.

Other income during the three months ended December

31, 2022 consisted of interest income in the amount of $52,000 attributed to our cash, cash equivalents and short term investments.

Other income during the three month period ended

December 31, 2021 consisted of $2,000 related primarily to interest income attributed to our cash deposits.

for the six months ended March 31, 2023, compared to $2.3 million for the six months ended March 31, 2022.

The $1.0 million increase period

over period was attributed to supporting development activities, which primarily included salary-related expenses and costs related to

consulting services, materials and supplies associated with the development of sEEG Products and to a much lesser extent Strip/Grid Products.

Other Income, net

Other income, net during the six months ended

March 31, 2023 consisted of $119,000 related primarily to interest income attributed to our cash, cash equivalents and short-term investments,

partially offset by an exploit loss of $94,000.

Other income, net during the six months ended

March 31, 2022 consisted of $4,000 related primarily to interest income attributed to our cash deposits.

Liquidity and Capital Resources

As of December 31, 2022, our principal source

of liquidity consisted of cash, cash equivalents and short-term investments in the aggregate of approximately $7.6 million.

began to generate revenue in fiscal year 2021 from commercial sales and through milestone and other payments under our collaboration

with Zimmer, we expect to continue to incur significant expenses and increasing operating and net losses for the foreseeable future until

and unless we generate an adequate level of revenue from commercial sales to cover expenses.

Our most significant cash requirements relate

to the funding of our ongoing product development and commercialization operations and our royalty obligations under our intellectual

property licenses with the Wisconsin Alumni Research Foundation (“WARF”) and the Mayo Foundation for Medical Education and

Research (“Mayo”).

Our additional material cash needs include commitments under operating leases and other administrative

As of March 31, 2023, our principal source of

liquidity consisted of cash, cash equivalents and short-term investments in the aggregate of approximately $4.6 million.

While we began

to generate revenue in fiscal year 2021 from commercial sales and through milestone and other payments under our collaboration with Zimmer,

we expect to continue to incur significant expenses and increasing operating and net losses for the foreseeable future until and unless

we generate an adequate level of revenue from commercial sales to cover expenses.

Our most significant cash requirements relate to the

funding of our ongoing product development and commercialization operations and our royalty obligations under our intellectual property

licenses with the Wisconsin Alumni Research Foundation (“WARF”) and the Mayo Foundation for Medical Education and Research

Our additional material cash needs include commitments under operating leases and other administrative services.

See “Funding Requirements” below for more information.

We anticipate that our expenses will increase substantially

as we develop and commercialize our cortical strip, grid electrode and depth electrode technology and pursue pre-clinical and clinical

trials, seek regulatory approvals, manufacture products, establish our own sales, marketing and distribution infrastructure to commercialize

our ablation electrode technology, hire additional staff, add operational, financial and management systems and continue to operate as

a public company.

We anticipate that our expenses will increase substantially as we develop

and commercialize our cortical strip, grid electrode and depth electrode technology and pursue pre-clinical and clinical trials, seek

regulatory approvals, manufacture products, establish our own sales, marketing and distribution infrastructure to commercialize our ablation

electrode technology, hire additional staff, add operational, financial and management systems and continue to operate as a public company.

Capital Resources

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

To date, no issuances of

securities have occurred under the ATM.

Deferred issuance costs in the amount of $0.1 million have been incurred in connection with the

Through May 8, 2023, we have

issued 1,156,384 shares of common stock under the ATM for gross proceeds in the amount of $2.1 million.

We incurred issuances costs in

connection with the ATM in the amount of $0.2 million through May 8, 2023.

NeuroOne Medical Technologies

October 2021 Underwritten Public Offering

On October 13, 2021, we entered into an underwriting

agreement relating to the issuance and sale of 3,750,000 shares of our common stock at a price to the public of $3.20 per share (the

“October 2021 Underwritten Public Offering”).

In addition, under the terms of the underwriting agreement, we 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.

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 from this offering were approximately $13.4 million prior to deducting underwriting

discounts and other offering expenses payable by us.

NeuroOne Medical Technologies Corporation

agreement relating to the issuance and sale of 3,750,000 shares of our common stock at a price to the public of $3.20 per share (the “October

2021 Underwritten Public Offering”).

In addition, under the terms of the underwriting agreement, we 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

The gross proceeds from this offering were approximately $13.4 million prior to deducting underwriting discounts and other offering

expenses payable by us.

Funding Requirements

As noted above, certain

of our cash requirements relate to the funding of our ongoing product development and commercialization operations and our milestone

and royalty obligations under our intellectual property licenses with the Wisconsin Alumni Research Foundation (“WARF”) and

the Mayo Foundation for Medical Education and Research (“Mayo”).

See “Item 1—Business—Clinical Development

and Regulatory Pathway—Clinical Experience, Future Development and Clinical Trial Plans” in our Annual Report on Form 10-K

for the year ended September 30, 2022 for a discussion of design, development, pre-clinical and clinical activities that we may conduct

in the future, including expected cash expenditures required for some of those activities, to the extent we are able to estimate such

of our cash requirements relate to the funding of our ongoing product development and commercialization operations and our milestone and

royalty obligations under our intellectual property licenses with WARF and Mayo.

See “Item 1—Business—Clinical

Development and Regulatory Pathway—Clinical Experience, Future Development and Clinical Trial Plans” in our Annual Report

on Form 10-K for the year ended September 30, 2022 for a discussion of design, development, pre-clinical and clinical activities that

we may conduct in the future, including expected cash expenditures required for some of those activities, to the extent we are able to

estimate such costs.

On January 22, 2020,

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agreed to pay WARF a royalty equal to a single-digit percentage of our product sales pursuant to the WARF License, with a minimum annual

royalty payment of $50,000 for 2020, $100,000 for 2021 and $150,000 for 2022 and each calendar year thereafter that the WARF License

is in effect.

If we or any of our sublicensees contest the validity of any licensed patent, the royalty rate will be doubled during the

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

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

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

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

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

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

Under the Amended and

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have a material adverse effect on our business and operating results.

NeuroOne Medical Technologies Corporation

At December 31, 2022, we had cash, cash equivalents

NeuroOne Medical Technologies

At March 31, 2023, we had cash, cash equivalents

and short-term investments in the aggregate of approximately $4.6 million.

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To continue to fund

operations, we will need to secure additional funding through public or private equity or debt financings, through collaborations or

partnerships with other companies or other sources.

operations, we will need to secure additional funding through public or private equity or debt financings, through collaborations or partnerships

with other companies or other sources.

We may not be able to raise additional capital on terms acceptable to us, or at all.

Any failure to raise capital when needed could compromise our ability to execute on our business plan.

If we are unable to raise additional

funds, or if our anticipated operating results are not achieved, we believe planned expenditures may need to be reduced in order to extend

the time period that existing resources can fund our operations.

to raise capital when needed could compromise our ability to execute on our business plan.

If we are unable to raise additional funds,

or if our anticipated operating results are not achieved, we believe planned expenditures may need to be reduced in order to extend the

time period that existing resources can fund our operations.

If we are unable to obtain the necessary capital, it may have a material

adverse effect on our operations and the development of our technology, or we may have to cease operations altogether.

The development and commercialization of our

cortical strip, grid electrode and depth electrode technology is subject to numerous uncertainties, and we could use our cash, cash equivalent

The development and commercialization of our cortical

strip, grid electrode and depth electrode technology is subject to numerous uncertainties, and we could use our cash, cash equivalent

and short-term investment resources sooner than we expect.

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We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

The following is a summary of cash flows for

each of the periods set forth below.

For the Three Months Ended

The following is a summary of cash flows for each

of the periods set forth below.

Six Months Ended

Net cash used in operating activities

$ (7,043,789 )

$ (5,900,727 )

Net cash provided by (used in) investing activities

Net cash (used in) provided by financing activities

Net (decrease) increase in cash

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

$ (4,558,166 )

Net cash used in operating activities

Net cash used in operating activities was $7.0

million for the three months ended December 31, 2022, which consisted of a net loss of $1.7 million partially offset by non-cash stock-based

compensation, depreciation, amortization related to intangible assets, short-term investment discount and premium amortization, and non-cash

lease expense, totaling approximately $0.3 million in the aggregate.

The net change in our net operating assets and liabilities associated

with fluctuations in our operating activities resulted in a net cash use of $2.1 million.

The net cash use stemming from the change in

operating assets and liabilities was primarily attributable to a decrease in deferred revenue in connection with the completion of the

remaining milestone performance obligation under the Zimmer Development Agreement, and to a lesser extent, to an increase in inventory

purchases and to a net decrease in the aggregate of account payable, accrued expenses, accounts receivable and prepaid expenses attributed

to the timing of payments.

million for the six months ended March 31, 2023, which consisted of a net loss of $5.3 million partially offset principally by non-cash

stock-based compensation, depreciation, amortization related to intangible assets, operating lease expense, totaling approximately $0.6

million in the aggregate.

The net change in our net operating assets and liabilities associated with fluctuations in our operating activities

resulted in a cash use of approximately $2.4 million.

The net cash use stemming from the change in operating assets and liabilities was

primarily attributable to a decrease in deferred revenue in connection with the completion of the remaining milestone performance obligation

under the Zimmer Development Agreement, and to a lesser extent, to an increase in inventory purchases, accounts receivable and prepaids,

coupled with a decrease in the aggregate of account payable and accrued expenses, attributed to the timing of payments.

NeuroOne Medical Technologies

Net cash used in operating activities was $5.9

million for the three months ended December 31, 2021, which consisted of a net loss of $2.8 million partially offset by non-cash stock-based

compensation, depreciation, amortization related to intangible assets and operating lease expense, totaling approximately $0.3 million

in the aggregate.

million for the six months ended March 31, 2022, which consisted of a net loss of $5.9 million partially offset principally by non-cash

stock-based compensation, depreciation, amortization related to intangible assets, operating lease expense, totaling approximately $0.5

million in the aggregate.

The net change in our net operating assets and liabilities associated with fluctuations in our operating activities

resulted in a cash use of $0.1 million.

The net cash use stemming from the change in operating assets and liabilities was primarily attributable

to an increase in inventory purchases, net decrease in account payable and accrued expenses attributed to the timing of payments, partially

offset by a decrease in accounts receivable in connection with the Zimmer Development Agreement.

NeuroOne Medical Technologies Corporation

resulted in a cash use of approximately $0.6 million.

The change in operating assets and liabilities was primarily attributable to a net

decrease in accrued expenses and to an increase in inventory and prepaid expenses attributed to both the timing of payments and the timing

of product sales.

Net cash provided by (used in) investing activities

Net cash provided by investing activities for

the three month ended December 31, 2022 was $15,000 and consisted of maturities of short-term investments in the amount of $1.5 million,

offset by purchases of short term investment, consisting of treasury and corporate notes, and by outlays for purchases of property and

Net cash used by investing activities consisted

of outlays for property and equipment during the three months ended December 31, 2021.

Net cash (used in) provided by financing activities

Net cash used in financing activities was $16,000

for the three months ended December 31, 2022, which consisted of deferred issuance costs in connection with the ATM.

Net cash provided by investing activities was

$1.8 million and consisted of maturities of short-term investments in the amount of $3.5 million, offset by purchases of short term investment

of $1.5 million, consisting of treasury and corporate notes.

The balance of activity during the period consisted of outlays for purchases

of property and equipment in the amount $0.2 million.

Net cash used in investing activities during the

six months ended March 31, 2022 consisted of outlays for purchases of equipment.

Net cash provided by financing activities

Net cash provided by financing activities was

$12.0 million for the three months ended December 31, 2021, which consisted of net proceeds from the October 2021 Underwritten Public

$0.6 million for the six months ended March 31, 2023, which consisted of net proceeds from the ATM of $0.7 million, offset partially by

repurchases of common stock for the payment of employee taxes in the amount of $0.1 million.

Net cash provided by financing activities was

$12.0 million for the six months ended March 31, 2022, which consisted of net proceeds from the October 2021 Underwritten Public Offering.

Critical Accounting Estimates

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These accounting principles require us to make estimates and judgments that can affect

the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue

and expense during the periods presented.

the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and

expense during the periods presented.

We believe that the estimates and judgments upon which we rely are reasonably based upon information

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The accounting policies that reflect our more significant estimates

and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results

are described in Note 3 — “Summary of Significant Accounting Policies” to our condensed financial statements included

in “Part 1, Item 1 – Financial Statements” in this Report.

and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are

described in Note 3 — “Summary of Significant Accounting Policies” to our condensed financial statements included in

“Part 1, Item 1 – Financial Statements” in this Report.

Of these policies, the following are considered

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financial statements included in “Part 1, Item 1 – Financial Statements” in this Report.

To date, we have not had,

nor expect to have in the future, significant variable consideration adjustments related to product revenue, such as chargebacks, sales

allowances and sales returns.

To date, we have not had, nor

expect to have in the future, significant variable consideration adjustments related to product revenue, such as chargebacks, sales allowances

and sales returns.

NeuroOne Medical Technologies

Stock-Based Compensation

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in this Report.

NeuroOne Medical Technologies Corporation

Recent Accounting Pronouncements

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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 2. Management’s Discussion and Analysis