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Item 7. Management’s Discussion and Analysis

2023-12-15 compared with 2022-12-22 · 432 added, 411 removed, 91 unchanged (90% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

should read the following discussion and analysis of financial condition and results of operations of NeuroOne together with our financial

statements and the related notes included elsewhere in this Report.

References in this discussion to “series” or “notes”

refer to all of our outstanding notes as of the relevant date of the item being discussed.

References in this discussion to “convertible

promissory notes” refer to all of our outstanding convertible promissory notes as of the relevant date of the item being discussed.

are a medical technology company focused on the development and commercialization of thin film electrode technology for continuous electroencephalogram

(cEEG) and stereoelectrocencephalography (sEEG), spinal cord stimulation, brain stimulation and ablation solutions for patients suffering

from epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological

Additionally, we are investigating the potential applications of our technology associated with artificial intelligence.

November 2019, our Evo cortical technology (“cEEG”) received 510(k) clearance from the FDA for recording, monitoring, and

stimulating brain tissue for up to 30 days, and in October 2022, we received FDA clearance for our 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.

completed feasibility bench top testing with a new design of our diagnostic and ablation depth electrode in the first calendar quarter

of 2021, and signed a contract with RBC Medical Innovations to develop hardware for the system in the third calendar quarter of 2021.

We are targeting the fourth calendar quarter of 2022 for completion of such hardware.

We also completed an animal feasibility study at

Emory University in September 2021.

Next, we plan to complete additional animal studies through the first quarter of calendar 2023, and

submit an application for FDA 510(k) clearance in the second calendar quarter of 2023.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and

analysis of financial condition and results of operations of NeuroOne together with our financial statements and the related notes included

elsewhere in this Report.

We are a medical technology

company focused on the development and commercialization of thin film electrode technology for continuous electroencephalogram (“cEEG”)

and stereoelectrocencephalography (“sEEG”), spinal cord stimulation, brain stimulation, drug delivery and ablation solutions

for patients suffering from epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries

and other related neurological disorders.

We are also developing the capability to use our sEEG electrode technology to deliver drugs

or gene therapy while being able to record brain activity before, during, and after delivery.

Additionally, we are investigating the potential

applications of our technology associated with artificial intelligence.

In November 2019, our Evo cortical electrode technology

received 510(k) clearance from the FDA for recording, monitoring, and stimulating brain tissue for up to 30 days, and in October 2022,

we received FDA clearance for our 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.

We completed feasibility bench top testing with

a new design of our diagnostic and ablation depth electrode in the first calendar quarter of 2021 and signed a contract with RBC Medical

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

We completed design verification of such hardware

early in the second calendar quarter of 2023.

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

completed additional animal studies early in the second quarter of calendar 2023 and received 510(k) clearance in December 2023 for creation

of radiofrequency lesions in nervous tissue for functional neurosurgical procedures.

Our other products are still under development.

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

We sold, on a limited application basis for design verification, sEEG depth electrode products for non-human use beginning in late fiscal

year 2021, and plan to commence commercial sales of our sEEG depth electrode products in early calendar 2023.

Our other products are

still under development.

have incurred losses since inception.

As of September 30, 2022, we had an accumulated deficit of $50.8 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.

to FDA clearance of certain of our products, our main sources of cash, cash equivalents and short-term investments were proceeds from

the issuances of notes, common stock, warrants and unsecured loans.

See “Liquidity and Capital Resources—Capital Resources”

While we have begun to generate revenue from the sale of products based on our cEEG and sEEG technology and through

milestone and other payments from our current 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 a higher level of revenue from commercial

sales, and we will need to obtain substantial additional funding in connection with our continuing operations through public

or private equity or debt financings, through collaborations or partnerships with other companies or other sources.

Medical Technologies Corporation

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 impact on our financial condition and our ability to develop and commercialize our cortical strip, grid electrode

and depth electrode technology and future products and our ability to pursue our business strategy.

See “Liquidity and Capital

Resources—Liquidity Outlook” below

Developments and Upcoming Milestones

Zimmer Milestone Payment

August 2022, we entered into an amendment to the Exclusive Development and Distribution Agreement with Zimmer that provided us with a

$3.5 million accelerated payment relating to certain milestone events.

As part of the consideration, Zimmer received a Warrant to purchase

350,000 shares of our Common Stock, with an exercise price of $3.00 per share.

Economic Conditions

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.

If economic conditions decline, our future cost of equity or debt capital and access to

the capital markets could be adversely affected.

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 markets.

Additionally, our 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.

product revenue was derived from the sale of our strip and grid cortical electrodes (“Strip/Grid Products”) and electrode

cable assembly products (“Electrode Cable Assembly Products”) based on Evo cortical technology.

We anticipate that we will

generate additional revenue from the sale of products based on Evo cortical technology.

November 2019, we received FDA 510(k) clearance for our cortical strip electrode for temporary

(less than 30 days) recording, monitoring, and stimulation on the surface of the brain .

In October 2022, we received FDA 510(k)

clearance for our Evo sEEG electrode technology for temporary (less than 30 days) use with recording,

We commenced commercial

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

We sold, on a limited

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

commenced commercial sales of our sEEG depth electrode products in late calendar 2022.

Our other products are still under development.

NeuroOne Medical Technologies

We have incurred losses since inception.

As of September 30, 2023,

we had an accumulated deficit of $62.7 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

of certain of our products, our main sources of cash, cash equivalents and short-term investments were proceeds from the issuances of

notes, common stock, warrants and unsecured loans.

See “Liquidity and Capital Resources—Capital Resources” below.

we have begun to generate revenue from the sale of products based on our cEEG and sEEG technology and through milestone and other

payments from our current 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 a higher level of revenue from commercial sales, and we will

need to obtain substantial additional funding in connection with our continuing operations through public or private equity or debt financings,

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.

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

impact on our financial condition and our ability to develop and commercialize our cortical strip, grid electrode and depth electrode

technology and future products and our ability to pursue our business strategy.

See “Liquidity and Capital Resources—Liquidity

Outlook” below.

Recent Developments and Upcoming Milestones

Corporate Updates

Appointment of COO

On November 14, 2023, we announced the appointment

of Christopher R.

Volker as the Chief Operating Officer of the Company, effective on November 10, 2023.

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 have fulfilled

eight shipments of sEEG product to Zimmer Biomet in preparation for launch and completed initial training on 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 submitted a 510(k) application to the FDA for the OneRF ablation system in June 2023,

submitted responses to FDA comments on November 6, 2023 and received 510(k) clearance on December 6, 2023.

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.

NeuroOne Medical Technologies

Global Economic Conditions

Generally, worldwide economic conditions remain

uncertain, particularly due to the conflicts between Russia and Ukraine and the Middle East, 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

and worldwide, have been volatile in the past and at times have adversely affected our access to capital and increased the cost

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.

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 markets.

Additionally, our 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 conflicts in Ukraine and the Middle East, 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

Product Revenue

Our product revenue was derived from the sale

of our Strip/Grid Products, depth electrodes (“sEEG Products”) and electrode

cable assembly products (“Electrode Cable Assembly Products”) based on Evo cortical electrode technology.

We anticipate that

we will generate additional revenue from the sale of products based on Evo cortical electrode technology.

In November 2019, we received FDA 510(k) clearance

for our cortical strip electrode for temporary (less than 30 days) recording, monitoring, and stimulation on the surface of the brain.

In October 2022, we received FDA 510(k) clearance for our 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

We expect to begin generating revenue from our depth electrode technology in the first quarter of fiscal 2023.

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.

Medical Technologies Corporation

Collaborations

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

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

products (the “Electrode Cable Assembly Products”).

Additionally, we granted Zimmer the exclusive right and license to distribute

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

Cable Assembly Products, the “Products”).

The parties have agreed to collaborate with respect to development activities under

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

the terms of the Zimmer Development Agreement, we are responsible for all costs and expenses related to developing the Products, and

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

In addition to the Development Agreement,

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

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

as otherwise provided in the Zimmer Development Agreement, we are responsible for performing all development activities, including non-clinical

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

Zimmer has agreed to use commercially reasonable efforts

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

Agreement) for such Product.

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

Exclusivity Fee”) to the Company in fiscal year 2020.

In addition, on August 2, 2022, we entered into a Third Amendment to the

Zimmer Development Agreement (the “Amendment”) with Zimmer.

Pursuant to the terms and conditions of the Amendment, Zimmer

made a $3.5 million payment to us in August 2022.

consideration of the mutual covenants and agreements contained in the Development Agreement, certain fee and milestone payment provisions

in the Development Agreement were replaced with the following below:

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

On July 20, 2020, we entered into an exclusive

development and distribution agreement (the “Zimmer Development Agreement”) with Zimmer, pursuant to which we granted Zimmer

exclusive global rights to distribute the Strip/Grid Products and electrode cable assembly products (the “Electrode Cable Assembly

Additionally, we granted Zimmer the exclusive right and license to distribute certain depth electrodes developed by

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

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

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

Under the terms of the Zimmer Development Agreement,

we are 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 Agreement, Zimmer and the Company have entered

into an MS Agreement and a Quality Agreement with respect to the manufacturing and supply of the Products.

NeuroOne Medical Technologies

Except as otherwise provided in the Zimmer Development Agreement, we

are responsible for performing all development activities, including non-clinical and clinical studies directed at obtaining regulatory

approval of each Product.

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

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

Pursuant to the Zimmer Development Agreement,

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

in fiscal year 2020.

In addition, on August 2, 2022, we entered into a Third Amendment to the Zimmer Development Agreement (the “Amendment”)

Pursuant to the terms and conditions of the Amendment, Zimmer made a $3.5 million payment to us in August 2022.

In consideration

of the mutual covenants and agreements contained in the Zimmer Development Agreement, certain 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;

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.

addition, in connection with the Amendment, we issued to 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 our Common Stock.

The 2022 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

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 (the “Zimmer Term”), 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.

license rights granted to Zimmer under the Zimmer Development Agreement shall be exclusive from the effective date of the Amendment until

the end of the Zimmer Term.

payments attributed to the Initial Exclusivity Fee, the sEEG exclusivity maintenance fee and sEEG design milestone payment are non-refundable.

Zimmer Development Agreement and Amendment were accounted for under the provisions of Accounting Standards Codification (“ASC”)

606, Revenue from Contracts with Customers (“ASC 606”).

In accordance with the provisions under ASC 606, we

identified five performance obligations under the Zimmer Development Agreement and Amendment:

(1) our obligation to grant Zimmer access

to our intellectual property;

(2) completion SEEG Product development;

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

In addition, in connection with the Amendment,

we issued to 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 our Common Stock.

The 2022 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 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 (the “Zimmer

Term”), 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

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 Zimmer Development Agreement shall be exclusive from

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

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

were accounted for under the provisions of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with

Customers (“ASC 606”).

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

the Zimmer Development Agreement and Amendment:

(1) our obligation to grant Zimmer access to our intellectual property;

(2) completion

of sEEG Product development;

(3) completion of Strip/Grid Product development;

(4) the provision

of sEEG exclusivity maintenance;

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

All performance obligations under the Zimmer

Development Agreement and Amendment, outside of the sEEG exclusivity maintenance obligation, were met as of September 30, 2022.

We recognized

revenue in the amount of $1,948,872 and $64,812 during the years ended September 30, 2022 and 2021, respectively, in connection

with the Zimmer Development Agreement and Amendment.

Medical Technologies Corporation

achievement of the level of sales required to earn royalty payments from Zimmer is uncertain.

further discussion about the determination of collaborations revenue, product revenue and cost of product revenue, see “Note 7

— Zimmer Development Agreement” included in “Item 8 — Financial Statements and Supplementary Data” in this

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 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

and Development

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.

expect our research and development expenses to significantly increase over the next several years as we develop our cortical strip,

grid electrode and depth electrode technology and conduct preclinical testing and clinical trials and will depend on the duration, costs

and timing to complete our preclinical programs and clinical trials.

expense consists of interest costs related to our convertible notes issued in 2019 (the “2019 Paulson Notes”) outstanding

during the first quarter of fiscal year 2021.

valuation change of instruments measured at fair value

net valuation change of instruments measured at fair value included the change in fair value of the 2019 Paulson Notes while they were

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.

Medical Technologies Corporation

of Operations

of the Fiscal Years Ended September 30, 2022 and 2021

following table sets forth our results of operations for the fiscal years ended September 30, 2022 and 2021.

the years ended

(4) the provision of sEEG exclusivity maintenance;

(5) sEEG design modifications as requested by Zimmer.

All performance obligations under the Zimmer Development Agreement and Amendment

were met as of December 31, 2022.

In October 2022, we received 510(k) clearance

from the FDA for our 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, we recognized

revenue in the amount of $1.5 million during the year ended September 30, 2023 related to the completion of the sEEG exclusivity maintenance

During the year ended September 30, 2022, we recognized revenue in the amount of $1.9 million related to sEEG Product development.

NeuroOne Medical Technologies

The achievement of the level of sales required

to earn royalty payments from Zimmer is uncertain.

For further discussion about the determination

of collaborations revenue, product revenue and cost of product revenue, and for a discussion of milestones and royalty payments under

the Zimmer Development Agreement, see “—Liquidity and Capital Resources—Liquidity Outlook” below and see “Note

7 — Zimmer Development Agreement” included in our financial statements included in “Item 8 — Financial Statements

and Supplementary Data” in this Report.

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 increase in the future to support our continued research and development activities, further commercialization

of our cortical strip and grid 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 and 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

to significantly increase over the next several years as we develop our cortical strip and grid electrode and depth electrode technology

and conduct preclinical testing and clinical trials and will depend on the duration, costs and timing to complete our preclinical programs

and clinical trials.

Other Income, net

Other 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.

Results of Operations

Comparison of the Fiscal Years Ended September

30, 2023 and 2022

The following table sets forth our results of

operations for the fiscal years ended September 30, 2023 and 2022.

For the years ended

September 30,

Product revenue

of product revenue

Collaborations

Cost of product revenue

Product gross profit (loss)

Collaborations revenue

Operating expenses:

Selling, general and administrative

and development

operating expenses

Research and development

Total operating expenses

Loss from operations

1 unchanged sentence

(10,030,765 )

Interest expense

Net valuation change of

instruments measured at fair value

Other income, net

Loss before income taxes

(11,859,491 )

Provision for income taxes

$ (11,859,491 )

Revenue and Product Gross Loss

revenue and product gross loss were $0.2 million and $(0.1) million, respectively, during each of the years ended September 30, 2022

The product revenue consisted of the sale of Strip/Grid Products 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

Products and outside supplier materials costs in connection with the Electrode Cable Assembly Products.

In addition, cost of product

revenue included royalty fees incurred, including the royalty fees to WARF and Mayo of $0.1 million in connection with our license agreements

during each of the years ended September 31, 2022 and 2021.

Collaborations

revenue was $1.9 million and $0.1 million during the years ended September 30, 2022 and 2021, respectively.

Revenue during the periods

presented were derived from the Zimmer Development Agreement and Amendment and represented the portion of our performance obligations

that were met in connection with the upfront initial development fee and payments associated with the Amendment.

general and administrative expenses

general and administrative expenses were $7.0 million for the year ended September 30, 2022, compared to $6.3 million for the year ended

September 30, 2021.

The increase of $0.7 million was primarily due to an increase in legal and litigation settlement costs of $0.8 million,

public company costs largely in connection with the Nasdaq up-listing of $0.6 million and other operating costs on a net basis of $0.1

million, offset partially by a reduction in stock-based compensation of $0.8 million.

and development expenses

and development expenses were $4.9 million for the year ended September 30, 2022, compared to $3.9 million for the year ended September

The $1.0 million increase during fiscal 2022 over the comparable prior year period was due to an increase in supporting development

activities largely attributed to our Evo sEEG electrode technology, which primarily included salary-related expenses and other costs

of consulting services, materials and supplies.

Medical Technologies Corporation

expense for the year ended September 30, 2021 was $3,000 and consisted of issuance costs in connection with our 2019 Paulson Notes described

further below.

We did not incur any interest expense in fiscal year 2022.

valuation change of instruments measured at fair value

net valuation change of instruments measured at fair value for the year 2021 was a benefit of $(2,000) attributed to the fair value change

of Paulson Notes while they were outstanding.

We did not have any instruments measured at fair value during fiscal year 2022.

income during the year ended September 30, 2022 related to interest income on our cash, cash equivalents

and short-term investments in the amount of $31,000.

Other income during the year ended September 30, 2021 consisted principally

of proceeds received in connection with the PMT Corporation litigation in the amount of $0.2 million and from the forgiveness of the

paycheck protection program loan in the amount of $0.1 million.

and Capital Resources

of September 30, 2022, our principal source of liquidity consisted of cash, cash equivalents and short-term investments in the aggregate

of approximately $11.1 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 (“Mayo”).

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.

sources of cash, cash equivalents and short-term investments to date have been limited to collaboration and product revenues, along with

proceeds from the issuances of notes with warrants, common stock with and without warrants and unsecured loans with the terms of our

financings described below.

$ (9,999,613 )

$ (1,859,878 )

NeuroOne Medical Technologies

Product Revenue and Product Gross Profit (Loss)

Product revenue and product gross profit were

$2.0 million and $0.5 million, respectively, during the year ended September 30, 2023.

Product revenue and product gross loss were $0.2

million and $0.1 million, respectively, during the year ended September 30, 2022.

The increase in gross profit during the current period

was largely due to the higher sales volume that exceeded fixed royalty and other overhead costs in the current year resulting in a positive

gross margin of 23.4% for the first time in our history.

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

Cable Assembly Products sales.

The increase in product revenue of $1.8 million year over was attributed primarily to the sale of our sEEG

Products that followed the FDA 510(k) clearance in October 2022 for our Evo sEEG electrode technology for temporary (less than 30 days)

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 $0.2 million and $0.1 million in connection with

our license agreements during the years ended September 30, 2023 and 2022, respectively.

Collaborations Revenue

Collaborations revenue was $1.5 million and $1.9

million during the years ended September 30, 2023 and 2022, respectively.

Revenue during the periods presented were derived from the Zimmer

Development Agreement and Amendment and represented the portion of our performance obligations that were met in connection with the upfront

initial development fee and payments associated with the Amendment.

Selling, general and administrative expenses

Selling, general and administrative expenses were

$6.9 million and $7.0 million for the years ended September 30, 2023 and 2022, respectively.

The negligible change period over period

was composed primarily due to an increase in payroll related costs of approximately $0.3 million offset by a reduction in professional

service and marketing related costs of $0.4 million.

Research and development expenses

Research and development expenses were $6.9 million

for the year ended September 30, 2023, compared to $4.9 million for the year ended September 30, 2022.

The $2.0 million increase during

fiscal 2023 over the comparable prior year 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 future sEEG product applications

and other products utilizing new technologies.

Other Income, net

Other income, net during the year ended September

30, 2023 related to interest income attributed to our cash, cash equivalents and short-term investments in the amount of $0.2 million,

while outstanding, which was partially offset by an exploit loss of $94,000 and a loss on disposal of equipment in the amount of $32,000.

Other income, net during the year ended September

30, 2022 consisted principally of interest income attributed to our cash, cash equivalents and short-term investments, while outstanding.

NeuroOne Medical Technologies

Liquidity and Capital Resources

As of September 30, 2023, our principal source

of liquidity consisted of cash and cash equivalents in the aggregate of approximately $5.3 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 (“Mayo”).

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.

Capital Resources

Our sources of cash, cash equivalents and short-term

investments to date have been limited to collaboration and product revenues, along with proceeds from the issuances of notes with warrants,

common stock with and without warrants and unsecured loans with the terms of our financings described below.

July 2023 Public Offering

On July 24, 2023, we entered into an underwriting

agreement with The Benchmark Company, LLC, as underwriter (“Benchmark”), relating to the issuance and sale of 5,250,000 shares

of our common stock, par value $0.001 per share, at a price to the public of $1.00 per share (the “July 2023 Public Offering”).

In addition, under the terms of the July 2023 Public Offering, we granted Benchmark an option, exercisable for 30 days, to purchase up

to an additional 787,500 shares of common stock on the same terms (“the Overallotment Option”).

The July 2023 Public Offering

closed on July 27, 2023, and we completed the sale and issuance of an aggregate of 6,037,500 shares of our common stock, including the

exercise in full of the Overallotment Option.

The net proceeds to us from the July 2023 Public

Offering were approximately $5.2 million after deducting underwriting discounts and other offering expenses payable by the Company.

intend to use the net proceeds from this offering to:

(i) support the commercial launch of the EVO sEEG electrode with Zimmer Biomet,

(ii) support the FDA submission for the OneRF ablation system, and (iii) complete the design of a novel drug delivery electrode, among

other general corporate purposes.

At-The-Market Offering

On December 21, 2022, we entered into a Capital

on Demand TM Sales Agreement (“Sales Agreement”) with JonesTrading Institutional Services LLC (“JonesTrading”)

to create an at-the-market offering program (“ATM”) under which we 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.

Through September 30, 2023, we have issued 1,439,677 shares of common stock under the ATM for gross proceeds in the amount of $2.6 million.

We incurred issuance costs in connection with the ATM in the amount of $0.2 million through September 30, 2023.

On July 24, 2023, we decreased

the amount of common stock that can be sold pursuant to the Sales Agreement, such that we were offering up to an aggregate of $2.6 million

of our common stock for sale under the Sales Agreement, including the shares of common stock previously sold.

On December 1, 2023, we

increased the amount of common stock that can be sold pursuant to the Sales Agreement, such that we are offering up to an aggregate of

$4.8 million of our common stock for sale under the Sales Agreement, including the shares of common stock previously sold.

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”).

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.

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 from this offering were approximately

$13.4 million prior to deducting underwriting discounts and other offering expenses payable by us.

NeuroOne Medical Technologies Corporation

2021 Private Placement

On January 12, 2021, we entered into a purchase

agreement with certain accredited investors, pursuant to which the Company, in a private placement (the “2021 Private Placement”),

agreed to issue and sell an aggregate of 4,166,682 shares of the common stock of the Company, and warrants to purchase an aggregate of

4,166,682 shares of common stock (the “2021 Warrants”) at an aggregate purchase price of $3.00 per share of common stock and

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

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

The 2021 Warrants became immediately exercisable beginning

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

Prior to expiration, subject to the terms and conditions

set forth in the 2021 Warrants, the holders of such 2021 Warrants may exercise the 2021 Warrants for shares of common stock by providing

notice to the Company and paying the exercise price per share for each share so exercised or by utilizing the “cashless exercise”

feature contained in each 2021 Warrant.

The 2021 Private Placement closed on January 14, 2021.

Common Stock Offerings

On July 24, 2020, we

entered into a securities purchase agreement (“2020 Purchase Agreement”) with an accredited investor pursuant to which we,

in a private placement, issued and sold 25,000 shares of the Company’s common stock for gross proceeds in the amount of $135,000.

Under the 2020 Purchase Agreement, we agreed to use the net proceeds from the private placement for funding operations or working capital

and general corporate purposes.

We granted the investor indemnification rights with respect to representations, warranties and agreements

under the 2020 Purchase Agreement.

On October 23, 2019,

the Company entered into securities purchase agreements with certain accredited investors, pursuant to which the Company, in a private

placement, issued and sold 47,223 shares of the Company’s common stock to the accredited investors at a price of $5.40 per share,

for gross proceeds amounting to $0.3 million before deducting offering expenses.

2020 Paulson Convertible

On April 30, 2020, the

Company entered into a subscription agreement with certain accredited investors, pursuant to which the Company, in a private placement

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

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

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

Between April 30, 2020

and June 30, 2020, the Company issued 2020 Paulson Notes in an aggregate principal amount of $5.1 million to the Subscribers.

closing under the 2020 Paulson Private Placement occurred on June 30, 2020.

In July 2020, all remaining 2020 Paulson Notes outstanding

were automatically converted into common stock following the announcement of a Strategic Transaction (as defined in the 2020 Paulson Notes)

with Zimmer, Inc.

Refer to “Liquidity and Capital Resources—Historical Capital Resources” in our Annual Report on Form

10-K for the year ended September 30, 2021 for additional information related to the 2020 Paulson Convertible Notes.

2019 Paulson Convertible

On November 1, 2019,

the Company entered into a subscription agreement with certain accredited investors, pursuant to which the Company, in a private placement

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

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

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

NeuroOne Medical Technologies Corporation

The initial closing of

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

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

placement terminated on December 3, 2019.

Between April 24, 2020 and December 15, 2020, all of the holders elected to convert outstanding

principal and accrued and unpaid interest of 2019 Paulson Notes in the amount of $3,453,883 into shares of common stock.

Refer to “—Liquidity

and Capital Resources—Historical Capital Resources” in our Annual Report on Form 10-K for the year ended September 30, 2021

for additional information related to the 2019 Paulson Convertible Notes.

Paycheck Protection

In connection with the

CARES Act, the Company received loan funding of approximately $83,000 under the Paycheck Protection Program (“PPP”), which

was forgiven by the U.S.

Small Business Administration on June 9, 2021.

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

1 unchanged sentence

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 the Report 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, we entered into an Amended

and Restated License Agreement (the “WARF License”) with WARF, which amended and restated in full our prior license agreement

with WARF, dated October 1, 2014 (the “Original WARF License”).

Under the WARF License, we have agreed to pay WARF a royalty

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

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

If we or any of

our sublicensees contest the validity of any licensed patent, the royalty rate will be doubled during the pendency of such contest and,

if the contested patent is found to be valid and would be infringed by us if not for the WARF License, the royalty rate will be tripled

for the remaining term of the WARF License.

Under the Amended and Restated License and Development

Agreement with Mayo (the “Mayo Development Agreement”), we have agreed to pay Mayo a royalty equal to a single-digit percentage

of our product sales pursuant to the Mayo Development Agreement.

See “Note 4 – Commitments and Contingencies” included

in our financial statements included in “Item 8 — Financial Statements and Supplementary Data” in this Report for more

information about the WARF License and the Mayo Development Agreement.

Our other cash requirements within the next twelve

months include accounts payable, accrued expenses, purchase commitments and other current liabilities.

Our other cash requirements greater

than twelve months from various contractual obligations and commitments include operating leases and contracted services.

Refer to “Note

4 – Commitments and Contingencies” included in our financial statements included in “Item 8 — Financial Statements

and Supplementary Data” in this Report for further detail of our lease obligations and the timing of expected future payments.

services include agreements with third-party service providers for clinica l research, product development,

manufacturing, supplies, payroll services, equipment maintenance services, and audits for periods up to fiscal 2024.

We expect to satisfy our short-term and long-term

obligations through cash on hand and, until we generate an adequate level of revenue from commercial sales to cover expenses, if ever,

from future equity and debt financings.

our intellectual property licenses with WARF and Mayo.

1—Business—Clinical Development and Regulatory Pathway—Clinical Experience, Future Development and Clinical Trial Plans”

in this Report 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 21, 2020,

we entered into an Amended and Restated License Agreement (the “WARF License”) with WARF, which amended and restated in full

our prior license agreement with WARF, dated October 1, 2014 (the “Original WARF License”).

Under the WARF License, 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

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

Restated License and Development Agreement with Mayo (the “Mayo Development Agreement”), we have agreed to pay Mayo a royalty

equal to a single-digit percentage of our product sales pursuant to the Mayo Development Agreement.

Refer to “Note 4 – Commitments

and Contingencies” included in our financial statements included in “Item 8 — Financial Statements and Supplementary

Data” in this Report for more information about the WARF License and the Mayo Development Agreement.

Our other cash requirements

within the next twelve months include accounts payable, accrued expenses, purchase commitments and other current liabilities.

cash requirements greater than twelve months from various contractual obligations and commitments include operating leases and contracted

Refer to “Note 4 – Commitments and Contingencies” included in our financial statements included in “Item

8 — Financial Statements and Supplementary Data” in this Report for further detail of our lease obligations and the timing

of expected future payments.

Contracted services include agreements with third-party service providers for clinical research, product

development, manufacturing, supplies, payroll services, equipment maintenance services, and audits for periods up to fiscal year 2025.

We expect to satisfy

our short-term and long-term obligations through cash on hand and, until we generate an adequate level of revenue from commercial sales

to cover expenses, if ever, from future equity and debt financings.

Liquidity Outlook

3 unchanged sentences

Even though we have received regulatory clearance

to expand the use of our Evo sEEG Electrode technology for up to 30 days, we don’t anticipate that commercial sales of the sEEG

Electrode will begin until early 2023.

Zimmer has exclusive global rights to distribute our strip and grid cortical electrodes, depth

electrodes and electrode cable assembly products.

Zimmer’s failure to timely develop or commercialize these products would have

a material adverse effect on our business and operating results.

NeuroOne Medical Technologies Corporation

At September 30, 2022, we had cash, cash equivalents

and short-term investments in the aggregate of approximately $11.1 million.

Management has noted the existence of substantial doubt about

our ability to continue as a going concern.

Additionally, our independent registered public accounting firm included an explanatory paragraph

in the report on our financial statements as of and for the years ended September 30, 2022 and 2021, respectively, noting the existence

of substantial doubt about our ability to continue as a going concern.

Our existing cash, cash equivalents and short-term investments

may not be sufficient to fund our operating expenses through at least twelve months from the date of this filing.

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.

to expand the use of our Evo sEEG electrode technology for up to 30 days, commercial sales of the sEEG electrodes are expected to take

some time to be a significant source of liquidity.

Zimmer has exclusive global rights to distribute our strip and grid cortical electrodes,

depth electrodes and electrode cable assembly products.

Zimmer’s failure to timely develop or commercialize these products would

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

NeuroOne Medical Technologies

At September 30, 2023, we had cash and cash equivalents

in the aggregate of approximately $5.3 million.

Management has noted the existence of substantial doubt about our ability to continue

as a going concern.

Additionally, our independent registered public accounting firm included an explanatory paragraph in the report on

our financial statements as of and for the years ended September 30, 2023 and 2022, respectively, noting the existence of substantial

doubt about our ability to continue as a going concern.

Our existing cash and cash equivalents may not be sufficient to fund our operating

expenses through at least twelve months from the date of this filing.

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.

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

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.

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

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

and short-term investment resources sooner than we expect.

Additionally, the process of developing medical devices is costly, and the

timing of progress in pre-clinical tests and clinical trials is uncertain.

Our ability to successfully transition to profitability will

be dependent upon achieving further regulatory approvals and achieving a level of product sales adequate to support our cost structure.

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

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

resources sooner than we expect.

Additionally, the process of developing medical devices is costly, and the timing of progress in pre-clinical

tests and clinical trials is uncertain.

Our ability to successfully transition to profitability will be dependent upon achieving further

regulatory approvals and achieving a level of product sales adequate to support our cost structure.

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

5 unchanged sentences

$ (7,519,534 )

Net cash used in investing activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Net increase in cash

Net (decrease) increase in cash

$ (2,837,836 )

Net cash used in operating activities

Net cash used in operating activities was $12.9

million for the year ended September 30, 2023, which consisted of a net loss of $11.9 million partially offset by non-cash stock-based

compensation, depreciation, amortization related to intangible assets and short term investment premiums and discounts, operating lease

expense and loss on disposal of fixed assets, totaling approximately $1.4 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 both a decrease in deferred

revenue in connection with the completion of the remaining milestone performance obligation under the Zimmer Development Agreement and

to an increase in inventory purchases, attributed to the timing of payments.

Partially offsetting the net cash operating use during the

period was a decrease in our accounts receivable, prepaid expenses and by an increase in our accrued expenses, on a net basis, resulting

from timing of payments and fluctuations in our operations.

Net cash used in operating activities was $7.5

million for the year ended September 30, 2022, which consisted of a net loss of $10.0 million partially offset primarily by stock-based

5 unchanged sentences

increase in accounts payable, accrued expenses and deferred revenue, offset partially by increases in inventory purchases and prepaid

Net cash used in operating activities was $8.6

million for the year ended September 30, 2021, which consisted of a net loss of $9.9 million partially offset primarily by stock-based

compensation, depreciation, amortization related to intangible assets, revaluation of convertible notes, non-cash lease expense and Paycheck

Protection Program loan forgiveness, totaling approximately $1.9 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 $0.5 million.

on year change in operating assets and liabilities was primarily attributable to a net decrease in accounts payable and accrued expenses,

and by an increases in inventory purchases, accounts receivable and prepaid expenses.

NeuroOne Medical Technologies Corporation

Net cash used in investing activities

NeuroOne Medical Technologies

Net cash provided by (used in) investing activities

Net cash provided by investing activities was

$2.6 million for the year ended September 30, 2023 and consisted of maturities of short-term investments in the amount of $4.5 million,

offset by purchases of short term investments 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 $0.4 million offset slightly by net proceeds associated

with the disposal of equipment.

Net cash used by investing activities for the

2 unchanged sentences

maturities of short-term investments in the amount of $0.5 million.

Net cash used by investing activities for the

year ended September 30, 2021 was $0.1 million and consisted of outlays for research and development equipment.

Net cash provided by financing activities

Net cash provided by financing activities was

$7.4 million for the year ended September 30, 2023, which consisted of net proceeds from the July 2023 Public Offering of $5.2 million

and from the ATM of $2.3 million, offset partially by repurchases of common stock for the payment of employee taxes in the amount of $0.1

provided by financing activities was $12.0 million for the year ended September 30, 2022, which consisted of net proceeds from the October

2021 Underwritten Public Offering.

Net cash provided by financing activities was

$11.5 million for the year ended September 30, 2021, which consisted primarily of net proceeds received upon the issuance of the 2021

Private Placement in the amount of $11.3 million in the aggregate.

There were also exercises of stock options and warrants during the

year ended September 30, 2021 resulting in additional cash proceeds of $0.3 million, offset in part by deferred offering costs of $49,000.

Critical Accounting Policies and Significant

13 unchanged sentences

8 — Financial Statements and Supplementary Data” in this Report.

NeuroOne Medical Technologies

Of these policies, the following are considered

10 unchanged sentences

8 — Financial Statements and Supplementary Data” in this Report.

NeuroOne Medical Technologies Corporation

Income Tax Assets

13 unchanged sentences

the impact of certain recent accounting pronouncements on our financial statements.

QUANTITATIVE AND

QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

Not applicable.

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-K

Item 7. Management’s Discussion and Analysis