What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-12-15 compared with 2022-12-22 · 596 added, 739 removed, 453 unchanged (75% of the section changed)

FINANCIAL STATEMENTS

AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS AND SUPPLEMENTARY

INDEX TO FINANCIAL STATEMENTS

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Notes to Financial Statements F-7

Report of Independent Registered Public Accounting

To the stockholders and the board of directors

of NeuroOne Medical Technologies Corporation:

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the board of directors of NeuroOne Medical Technologies Corporation:

Opinion on the Financial Statements

We have audited the accompanying balance sheets

of NeuroOne Medical Technologies Corporation (the "Company") as of September 30, 2022 and 2021, the related statements of operations,

changes in stockholders’ equity, and cash flows, for each of the two years in the period ended September 30, 2022, and the related

notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in

all material respects, the financial position of the Company as of September 30, 2022 and 2021, and the results of its operations and

its cash flows for each of the two years in the period ended September 30, 2022, in conformity with accounting principles generally accepted

in the United States of America.

audited the accompanying balance sheets of NeuroOne Medical Technologies Corporation (the "Company") as of September 30, 2023 and 2022,

the related statements of operations, changes in stockholders’ equity, and cash flows, for each of the two years in the period ended

September 30, 2023, and the related notes (collectively referred to as the " financial statements").

In our opinion, the financial statements

present fairly, in all material respects, the financial position of the Company as of September 30, 2023 and 2022, and the results of

the Company’s operations and cash flows for each of the two years in the period ended September 30, 2023, in conformity with accounting

principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been

prepared assuming the Company will continue as a going concern.

As discussed in Note 2 of the financial statements, the Company has recurring

losses from operations, an accumulated deficit, expects to incur losses for the foreseeable future and requires additional working capital.

These are the reasons that raise substantial doubt about their ability to continue as a going concern.

Management’s plans in regard

to these matters are also described in Note 2.

The financial statements do not contain any adjustments that might result from the outcome

of this uncertainty.

The accompanying financial statements have been prepared assuming

the Company will continue as a going concern.

As discussed in Note 2 of the financial statements, the Company had recurring losses from

operations and an accumulated deficit, expects to incur losses for the foreseeable future and requires additional working capital.

are the reasons that raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans

in regard to these matters are also described in Note 2.

The financial statements do not contain any adjustments that might result from

the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility

of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are

required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal

control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below

are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to

the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our

especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion

on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions

on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition – Milestone Payments

Critical Audit Matter Description

As described in Notes 3 and 7 to the

financial statements, the Company recognizes revenue for milestone payments received based on when the related performance obligations

have been fulfilled.

The determination of the allocation of the standalone selling price to the identified performance obligations requires

management to make significant estimates and assumptions related to the fair value of the allocation.

As disclosed by management, changes

in these assumptions could have a significant impact on allocating the fair value of the standalone selling price to the identified performance

We identified milestone payment revenue

recognition as a critical audit matter.

The related audit effort in evaluating management’s judgments in determining the allocation

of the standalone selling price between the identified performance obligations was extensive and required a high degree of auditor judgment.

How We Addressed the Matter in Our

The primary procedures we performed

to address this critical audit matter included:

● We obtained an understanding of the design and implementation of internal controls relating to the evaluation

of the assumptions and inputs used in determining the allocation of the stand along selling price to the identified performance obligations

● We evaluated management’s significant accounting policies related to milestone payments for reasonableness

● We evaluated the reasonableness of management’s estimate of allocating the standalone selling price

between the identified performance obligations

● We tested the allocation of the standalone selling price and performed the following procedures:

● Tested a sample of the underlying costs

● Tested management’s assumptions in determining how to allocate costs

● Assessed the terms in the customer agreement and evaluated the appropriateness of management’s application

of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions

● We tested the mathematical accuracy of management’s calculations of revenue and the associated timing

of revenue recognized in the financial statements.

These financial statements are the responsibility of the Company's management.

Our responsibility

is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with

the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose

of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due

to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used

and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that

our audits provide a reasonable basis for our opinion.

Critical Audit Matter

Critical audit matters are matters arising from the current

period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex

We determined that there are no critical audit matters.

/s/ Baker Tilly US, LLP

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Accounts receivable

Prepaid and other assets

Prepaid expenses

Total current assets

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Accounts payable

Accrued expenses

Accrued expenses and other liabilities

Deferred revenue

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Cost of product revenue

Product gross loss

Product gross profit (loss)

Collaborations revenue

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( 10,030,765 )

Interest expense

Net valuation change of instruments measured at fair value

Other income, net

Loss before income taxes

( 11,859,491 )

( 9,999,613 )

Provision for income taxes

$ ( 11,859,491 )

$ ( 9,999,613 )

Net loss per share:

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$ ( 40,827,199 )

Issuance of common stock and warrants under securities purchase agreement

Conversion of convertible notes into common stock

Issuance costs in connection with securities issuances

Issuance of common stock in connection with public offering

Issuance cost in connection with public offering

( 1,352,280 )

Issuance cost adjustment related to private placement

Issuance of warrants in connection with Zimmer development agreement

Stock-based compensation

Issuance of common stock for consulting services

Issuance of common stock upon vesting of restricted stock units

Exercise of stock options

Exercise of warrants

( 9,999,613 )

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Issuance of common stock in connection with public offering

Issuance cost in connection with public offering

Issuance of common stock in connection with at-the-market offering program

Issuance cost in connection with common stock issuances

( 1,071,663 )

Issuance of warrants in connection with Zimmer development agreement

Stock-based compensation

Issuance of common stock upon vesting of restricted stock units

Share repurchases for the payment of employee taxes

( 11,859,491 )

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$ ( 9,999,613 )

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

Adjustments to reconcile net loss to net cash used in operating

Amortization and depreciation

Stock-based compensation

Payroll protection program loan forgiveness

Fair value change of convertible promissory notes

Issuance costs attributed to financing activities

Loss on disposal of fixed assets

Amortization of discounts and premiums on short-term investments

Non-cash lease expense

Issuance of warrants in connection with Zimmer contract amendment

Issuance of warrants in connection with Zimmer contract

Change in assets and liabilities:

Accounts receivable

Prepaid and other assets

( 1,022,148 )

Prepaid expenses and other assets

Accounts payable

Accrued expenses, deferred revenue, operating lease and other liabilities

Accrued expenses, deferred revenue,

operating lease and other liabilities

( 1,225,313 )

Net cash used in operating activities

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( 1,473,419 )

( 3,469,539 )

Maturities of short-term investments

Purchase of property and equipment

Net cash used in investing activities

Proceeds from the disposal of fixed assets

Purchases of property and equipment

Net cash provided by (used in) investing

( 3,244,765 )

Financing activities

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

Proceeds from issuance of warrants in connection with private placements

Issuance costs in connection with convertible promissory notes

Issuance costs in connection with public offering and private placements

Proceeds from issuance of common stock in connection with public

offerings and at-the-market offering program

Issuance costs in connection with common stock issuances

( 1,071,663 )

( 1,327,300 )

Exercise of warrants

Exercise of stock-options

Deferred offering costs

Share repurchases for the payment of

employee taxes

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Net (decrease) increase in cash and cash equivalents

( 2,837,836 )

Cash and cash equivalents at beginning

Cash and cash equivalents at end of year

Supplemental non-cash financing and investing transactions:

Conversion of convertible promissory notes to equity

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

Operating lease right of use asset obtained in exchange for operating lease

Payroll protection program loan forgiveness

Unpaid deferred offering costs

Supplemental non-cash financing and investing

transactions:

Unpaid purchases of property and equipment

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

Modification of right-of-use asset and

associated lease liability

Reclass of deferred offering costs to

additional paid-in capital in connection with public offering

See accompanying notes to financial statements

NeuroOne Medical Technologies Corporation

NeuroOne Medical Technologies

Notes to Financial Statements

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NeuroOne Medical Technologies Corporation (the

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

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

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

back surgeries and other related neurological disorders.

“Company” or “NeuroOne”), a Delaware corporation, is a medical technology company focused on the development

and commercialization of thin film electrode for continuous electroencephalogram (“cEEG”) and stereoelectrocencephalography

(“sEEG”) recording, monitoring, ablation, drug delivery and brain stimulation solutions to diagnose and treat patients with

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

The Company received 510(k) clearance from the

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

To date, the Company has had limited commercial sales.

United States (“U.S.”) Food and Drug Administration (“FDA”) for its Evo cortical electrode technology in November

2019 and in October 2022, the Company received 510(k) clearance from the FDA for its Evo sEEG electrode technology for temporary (less

than 30 days) use with recording, monitoring, and stimulation equipment for the recording, monitoring, and stimulation of electrical signals

at the subsurface level of the brain.

The Company is based in Eden Prairie, Minnesota.

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Generally, worldwide economic conditions remain

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

uncertain, particularly due to the conflicts between Russia and Ukraine and in 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

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and increased the cost of capital.

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

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

be adversely affected.

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

favorable terms or at all.

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

access to the capital markets could be adversely affected.

The COVID-19 pandemic that began in late 2019

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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.

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.

NOTE 2 - Going Concern

The accompanying

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

The Company has incurred losses

since inception, negative cash flows from operations, and an accumulated deficit of $ 50.8 million as of September 30, 2022.

Company’s revenues have not been sufficient to cover its full operating costs, and as such, has been dependent on funding operations

through the issuance of debt and sale of equity securities.

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

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

The accompanying financial statements have been

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

The Company has incurred losses since inception, negative cash

flows from operations, and an accumulated deficit of $ 62.7 million as of September 30, 2023.

To date, the Company’s revenues have

not been sufficient to cover its full operating costs, and as such, has been dependent on funding operations through the issuance of debt

and sale of equity securities.

With the July 2023 public offering, the Company has adequate liquidity to fund its operations through March

The raising of additional funds is not solely within the control of the Company.

These factors raise substantial doubt about

its ability to continue as a going concern.

The financial statements do not include any adjustments that might result from the outcome

of this condition.

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

management believes planned expenditures may need to be reduced in order to extend the time period that existing resources can fund the

Company’s operations.

The Company intends to fund ongoing activities by utilizing its current cash, cash equivalents and short-term

investments on hand, from product and collaborations revenue and by raising additional capital through equity or debt financings.

If management

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

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

the Company’s ability to continue as a going concern.

The financial statements do not include any adjustments that might result

from the outcome of this condition.

If the Company is unable to raise additional funds, or the Company’s anticipated operating results

are not achieved, management believes planned expenditures may need to be reduced in order to extend the time period that existing resources

can fund the Company’s operations.

The Company intends to fund ongoing activities by utilizing its current cash and cash equivalents

on hand, from product and collaborations revenue and by raising additional capital through equity or debt financings.

If management is

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

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

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

NOTE 3 - Summary of Significant Accounting

NOTE 3 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been

prepared in accordance with accounting standards generally accepted in the United States of America.

prepared in accordance with accounting standards generally accepted in the United States of America (“U.S.

Management’s Use of Estimates

The preparation of financial statements in conformity

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure

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

the reporting period.

Actual results could differ from those estimates.

Segment Information

Operating segments are components of an enterprise

for which separate financial information is available and is evaluated regularly by the Company’s chief operating decision maker

for which separate financial information is available and are evaluated regularly by the Company’s chief operating decision maker

in deciding how to allocate resources and assessing performance.

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Accordingly, the Company has a single reporting segment.

On March 11, 2021, the Company’s Board of

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

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

All issued and outstanding common stock and per

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

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

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

A proportionate

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

to reflect the Reverse Stock Split.

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

rounded up to the next whole share.

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

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

Lastly, the authorized shares and par value per share

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

Management’s Use of Estimates

The preparation of financial statements in conformity

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

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

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

the reporting period.

Actual results could differ from those estimates.

Cash and Cash Equivalents

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and corporations in which the Company invests its surplus funds.

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

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

equivalent investments.

Short-Term Investments

The Company has periodically invested its excess

Treasury securities and highly rated corporate securities.

The Company has held these investments to maturity.

with original maturity dates of more than three months were reported as held-to-maturity investments and were recorded at amortized cost,

which approximated fair value due to the negligible risk of changes in value due to interest rates.

All investments held as September

30, 2022 had contractual maturities of less than one year.

There were no short-term investments outstanding as of September 30, 2023.

The amortized cost and estimated fair values of the Company’s investments as of September 30, 2022 were as follows:

September 30, 2022

treasury and corporate notes

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

Short Term Investment

The Company invests its excess cash in United

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

The Company intends and has the ability to hold these investments

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

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

All investments

held on September 30, 2022 had contractual maturities of less than one year .

The amortized cost and estimated fair values of the Company’s

investments as of September 30, 2022 are as follows:

Holding Losses

treasury and corporate notes

Revenue Recognition

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

– Zimmer Development Agreement.”

In determining

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

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

(ii) determination of whether the promised goods or services

are performance obligations, including whether they are distinct in the context of the contract;

(iii) measurement of the transaction

price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations based

on estimated selling prices;

The Company entered into a development and distribution

agreement which has current and future revenue recognition implications.

See “Note 7 – Zimmer Development Agreement.”

In determining the appropriate amount of revenue

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

(i) identification of

the promised goods or services in the contract;

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

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

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

on variable consideration;

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

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

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

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

At the inception

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

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

of Product Revenue

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

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

A performance obligation is a promise in a contract

to transfer a distinct good or service to the customer and is the unit of account in Account Standards Codification (“ASC”)

Topic 606 (“ASC 606”).

Performance obligations may include license rights, development services, and services associated

with regulatory submission and approval processes.

Significant management judgment is required to determine the level of effort required

under an arrangement and the period over which the Company expects to complete its performance obligations under the arrangement.

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

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

Revenue is then recognized over the remaining estimated

period of performance using the cumulative catch-up method.

Product Revenue

Revenues from product sales are recognized when

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

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

At the inception of each customer contract, performance

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

Cost of Product Revenue

Cost of product revenue consists of the manufacturing

and materials costs incurred by the Company’s third-party contract manufacturer in connection with the Company’s strip and

grid cortical electrodes (the “Strip/Grid Products”), depth electrodes (“sEEG Products) and outside supplier materials

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

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

Collaborations

A performance

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

Codification (“ASC”) Topic 606.

Performance obligations may include license rights, development services,

and services associated with regulatory submission and approval processes.

Significant management judgment is required to determine the

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

the arrangement.

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

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

Revenue is then recognized over the remaining

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

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

selling price of each performance obligation identified in the contract.

The Company uses key assumptions to determine the stand-alone

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

probabilities of technical and regulatory success.

The Company allocates the total transaction price to each performance obligation based

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

NeuroOne Medical Technologies

In addition, cost of

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

Collaborations Revenue

As part of the accounting for collaboration arrangements,

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

identified in the contract.

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

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

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

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

Licenses of intellectual property :

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

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

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

For licenses that are bundled with other promises, the Company

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

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

revenue from non-refundable, up-front fees.

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

the measure of performance and related revenue recognition.

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

of intellectual property :

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

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

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

For licenses that

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

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

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

The Company evaluates the measure of progress

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

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

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

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

is included in the transaction price.

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

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

When the Company’s assessment of probability of

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

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

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

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

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

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

Milestone payments :

At the inception of

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

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

If it is probable that a significant

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

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

of being achieved until those approvals are received.

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

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

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

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

For arrangements that include

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

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

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

Fair Value of Financial Instruments

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

Level 1 Inputs:

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

Level 2 Inputs:

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

Level 3 Inputs:

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

Unadjusted quoted prices in active markets for identical assets or liabilities

accessible to the Company at the measurement date.

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

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

asset or liability.

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

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

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

As of September 30, 2023 and 2022, the fair values

of cash, cash equivalents, short-term investments, accounts receivable, inventory, prepaid, other assets, accounts payable and accrued

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

The fair value of the convertible

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

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

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

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

of cash, cash equivalents, short-term investments, accounts receivable, inventory, prepaids and other assets, accounts payable and accrued

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

There were no transfers between fair value hierarchy

levels during the years ended September 30, 2023 and 2022.

There were no financial instruments measured on

a recurring basis outstanding as of September 30, 2022.

The following table provides a roll-forward of

the convertible notes measured at fair value on a recurring basis using unobservable level 3 inputs for the year ended September 30, 2021

Convertible notes

Balance as of beginning of period – September 30, 2020

Conversion of convertible promissory notes to common stock

( 1,005,232 )

Change in fair value including accrued interest

Balance as of end of period – September 30, 2021

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

and know-how.

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

life of the acquired technology.

and Equipment

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

Depreciation expense is recognized over the estimated useful

lives of the assets using the straight-line method.

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

years and three years for software.

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

use are capitalized over the useful life of the acquired asset.

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

changes are made prospectively.

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

software providers and installation costs.

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

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

Maintenance and repairs are charged directly

to expense as incurred.

of Long-Lived Assets

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

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

The Company assesses

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

expected future cash flows.

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

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

for Doubtful Accounts

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

of its accounts receivable.

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

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

Account balances

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

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

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

The Company calculates

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

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

The Company’s inventory is currently comprised of cEEG

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

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

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

NeuroOne Medical Technologies

Intellectual Property

The Company has entered into two licensing

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

Payments under those

agreements are capitalized and amortized to selling, general and administrative expense over the expected useful life of the acquired

Property and Equipment

Property and equipment is recorded at cost and

reduced by accumulated depreciation.

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

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

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

life of the acquired asset.

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

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

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

performed on the recoverability of the carrying amounts.

Maintenance and repairs are charged directly to expense as incurred.

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

and Development Costs

and development costs are charged to expense as incurred.

Research and development expenses may include costs incurred in performing research

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

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

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

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

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

General and Administrative

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

not directly associated with research and development activities.

Other significant costs include legal and litigation costs relating

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

financial matters, and beginning in the first quarter of fiscal year 2021, sales and marketing in connection with the commercial sale

of cEEG strip/grid and electrode cable assembly products.

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets,

which consist of licensed intellectual property, property and equipment and right-of-use assets for impairment whenever events or changes

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

The Company assesses the recoverability of

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

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

value and the fair value of the impaired asset.

Allowances for Doubtful Accounts

The Company records a provision for doubtful

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

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

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

Account balances are charged off

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

Actual write-offs may

be in excess of the Company’s estimated allowance.

Inventory is stated at the lower of cost (using

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

The Company calculates inventory valuation adjustments for

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

demand of the products and spare parts.

The Company’s inventory is currently comprised of Strip/Grid Products, sEEG and electrode

cable assembly work-in-process and finished good product.

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

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

No inventory valuation allowance was required

during the periods presented.

Research and Development Costs

Research and development costs are charged to

expense as incurred.

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

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

license fees, and other external costs.

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

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

made, in accordance with ASC 730, Research and Development .

Selling, General and Administrative

Selling, general and administrative expenses

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

research and development activities.

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

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

and marketing in connection with the commercial sales of the Company’s products.

Stock-Based Compensation

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Accordingly, compensation

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

The Company records forfeitures when they occur.

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

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

Deferred tax assets and liabilities are recognized for the

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

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

Deferred tax assets and liabilities are measured using

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

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

tax asset will not be realized.

Net Loss Per Share

For the Company, basic loss per share of common

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

Diluted earnings or loss per share of common stock

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

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

The Company’s convertible notes, warrants, stock

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

Diluted earnings is computed

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

Diluted earnings with respect to the convertible

notes utilize the if-converted method.

No incremental common stock equivalents were included in calculating diluted loss per share because

such inclusion would be anti-dilutive given the net loss reported for both the years ended September 30, 2022 and 2021.

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

records forfeitures when they occur.

Stock-based compensation arrangements to non-employees are accounted for in accordance with the applicable

provisions of ASC 718.

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

Income taxes are accounted for under the asset

and liability method.

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

the financial statement carrying amounts of existing assets and liabilities and their respective tax base and operating loss and tax credit

carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years

in which those temporary differences are expected to be recovered or settled.

Deferred tax assets are reduced by a valuation allowance

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

Net Loss Per Share

Basic loss per share of common stock is computed

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

Diluted earnings or loss per share of common

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

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

The Company’s warrants, stock options,

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

Diluted earnings or loss per share

of common stock is computed utilizing the treasury method for the warrants, stock options and restricted stock units.

No incremental

common stock equivalents were included in calculating diluted loss per share because such inclusion would be anti-dilutive given the

net loss reported for the years ended September 30, 2023 and 2022.

The following potential common shares were not

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Recent Accounting Pronouncements

In June 2016, the FASB issued Accounting

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

In June 2016, the FASB issued Accounting Standards

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

The ASU sets forth a “current

5 unchanged sentences

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

Recently, the FASB issued the final ASU to delay adoption

for smaller reporting companies to calendar year 2023.

The Company is currently assessing the impact of the adoption of this ASU on its

financial statements.

In December 2019, the FASB issued ASU No.

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

This ASU is intended to

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

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

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

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

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

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

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

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

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

This ASU eliminates the beneficial conversion and cash conversion

accounting models for convertible instruments.

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

are currently accounted for as derivatives because of specific settlement provisions.

In addition, this ASU modifies how particular convertible

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

The amendments in this ASU

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

periods within those fiscal years.

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

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

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

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

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

effect of the assistance on an entity’s financial statements.

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

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

This guidance will not have a material impact

to the Company’s financial statements.

The FASB issued the final ASU to delay adoption for

smaller reporting companies to fiscal years beginning after December 15, 2022.

The Company adopted the guidance on October 1, 2023.

Company does not expect that the adoption of this ASU will have a material impact on its financial statements.

In August 2020, the FASB issued ASU 2020-06 ,

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

Equity (Subtopic 815-40):

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

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

This ASU eliminates the beneficial conversion

and cash conversion accounting models for convertible instruments.

It also amends the accounting for certain contracts in an entity’s

own equity that are currently accounted for as derivatives because of specific settlement provisions.

In addition, this ASU modifies how

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

amendments in this ASU are effective for smaller reporting companies as defined by the SEC for fiscal years beginning after December 15,

2023, including interim periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after

December 15, 2020.

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

NeuroOne Medical Technologies Corporation

1 unchanged sentence

NOTE 4 - Commitments and Contingencies

License Agreement

WARF License Agreement

The Company has entered into an exclusive start-up

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

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

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

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

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

17 unchanged sentences

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

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

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

The first commercial sale occurred on December 7, 2020, prior

to the June 30, 2021 deadline.

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

thereunder remain.

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

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

The first commercial sale occurred on December 7, 2020,

prior to the June 30, 2021 deadline.

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

licensed thereunder remain.

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

During the years ended September

2022 and 2021, $ 137,500 and $ 125,000 in royalty fees were incurred related to the WARF License, respectively.

were reflected as a component of cost of product revenue.

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

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

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

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

During the years ended

September 30, 2022 and 2021, $ 4,861 and $ 3,894 in royalty fees were incurred, respectively, and were reflected as a component of cost

of product revenue.

On March 29, 2018, the Company was served with

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

Fredrickson, a former Company employee.

The complaint added the Company, NeuroOne, Inc.

Christianson to its existing lawsuit against

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

In the lawsuit, PMT claimed that Mr.

Fredrickson and

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

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

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

a covenant of good faith and fair dealing.

The litigation was settled on September 29, 2022.

The associated legal costs associated with all

of the Company’s litigation activities amounted to $ 663,629 and $ 80,356 during the years ended September 30, 2022 and 2021, respectively,

and were recorded in selling, general and administrative expenses in the accompanying statements of operations.

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

30, 2023 and 2022, $ 150,000 and $ 137,500 in royalty fees were incurred related to the WARF License, respectively, and were reflected

as a component of cost of product revenue.

Mayo Agreement

The Company has an exclusive license and development

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

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

If the Company is successful in obtaining

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

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

During the years ended September 30, 2023 and 2022, $ 7,486 and

$ 4,861 in royalty fees were incurred, respectively, and were reflected as a component of cost of product revenue.

Facility Leases

Headquarters Lease

On October 7, 2019, the Company entered into a

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

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

Minnesota (the “Premises”).

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

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

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

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

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

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

In addition, the Company will

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

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

On October 7, 2019, the Company entered into

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

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

The Company took possession of the Premises on November 1, 2019, with the term of the Lease ending 65 months after such date, unless

terminated earlier (the “Lease Term”).

The initial base rent for the Premises is $ 6,410 per month for the first 17 months,

increasing to $ 7,076 per month by the end of the Lease Term.

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

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

In addition, the Company will pay its pro rata share

of the Landlord’s annual operating expenses associated with the Premises, calculated as set forth in the Lease of which the Company

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

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

Los Gatos Lease

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

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

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

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

The term of the New Lease is eighteen months.

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

The facility space under the Los Gatos Lease is approximately

1,162 square feet.

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

initial monthly rent under the Los Gatos Lease is approximately $ 4,241 .

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

two year term.

See “Note 13 – Subsequent Events”.

San Jose Lease :

On December 30, 2020, the Company entered into

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

initial term.

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

The Company took possession

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

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

The initial monthly rent under the Los Gatos Lease

was approximately $ 4,241 .

On November 4, 2022, the Los Gatos Lease was extended for an additional two years to December 31, 2024 .

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

During the years ended September 30, 2023 and

4 unchanged sentences

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

Operating cash flows from operating leases

Operating cash flows from

operating leases

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

Operating leases

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

Supplemental balance sheet information related

to the operating lease was as follows:

Supplemental balance sheet information related to the operating lease

was as follows:

September 30,

11 unchanged sentences

Long-term portion

NOTE 5 – Supplemental Balance Sheet Information

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

NOTE 5 - Supplemental Balance Sheet

Inventory consisted of the following:

September 30,

Component inventory

Work-in-process

Finished goods

Prepaid and Other Assets

Prepaid and other assets consisted of the following:

September 30,

Prepaid expenses

Deferred offering costs

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

Intangible assets roll forward is as follows:

3 unchanged sentences

Net Intangibles, September 30, 2023

The Company anticipates amortization expense of

approximately $ 22,000 per year for fiscal year 2023 through 2027 based upon the two current license agreements.

The Company anticipates amortization expense

of approximately $ 22,000 per year for fiscal year 2024 through 2027 based upon the two current license agreements.

Property and Equipment

6 unchanged sentences

Property and equipment, net

Depreciation expense was $ 96,305 and $ 58,432 for

the years ended September 30, 2022 and 2021, respectively.

NOTE 6 - Accrued Expenses

Accrued expenses consisted of the following:

Depreciation expense was $ 176,951 and $ 96,305

for the years ended September 30, 2023 and 2022, respectively.

Equipment with a net book value of $ 39,643 was disposed by the Company

resulting in net proceeds of $ 7,500 .

NOTE 6 - Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted

of the following

September 30,

1 unchanged sentence

Operating lease liability, short term

The “other” category is primarily

comprised of board fees.

Paycheck Protection Program

The CARES Act, signed into law in March 2020,

established the Paycheck Protection Program (“PPP”).

The PPP authorizes over $600 billion in forgivable loans to small

Loan amounts may be forgiven to the extent proceeds are used to cover documented payroll, mortgage interest, rent, and utility

costs over a 24-week measurement period following loan funding.

Loans have a maturity of 2 years and an interest rate of 1%.

may be made without penalty.

In April 2020, the Company received loan funding of $83,333 under the PPP and was recorded as a long-term

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

Small Business Administration and was reflected as other income in the

accompanying statements of operations.

Interest was nominal during the year ended September 30, 2021.

NeuroOne Medical Technologies Corporation

1 unchanged sentence

NOTE 7 - Zimmer Development Agreement

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

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

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

Additionally, the Company granted

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

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

The parties have agreed to collaborate

with respect to development activities under the Development Agreement through a joint development committee composed of an equal number

of representatives of Zimmer and the Company.

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

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

In addition to the Development Agreement,

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

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

otherwise provided in the Development Agreement, the Company is responsible for performing all development activities, including non-clinical

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

Zimmer has agreed to use commercially reasonable efforts

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

for such Product.

to the 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.

2, 2022, the Company entered into a Third Amendment to Exclusive Development and Distribution Agreement (the “Amendment”)

Pursuant to the terms and conditions of the Amendment, Zimmer made a $ 3.5 million payment to the Company.

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

in the Development Agreement were replaced with the following below:

On July 20, 2020, the Company entered into an

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

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

products (the “Electrode Cable Assembly Products”).

Additionally, the Company granted Zimmer the exclusive right and license

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

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

The parties have agreed to collaborate with respect to development

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

and the Company.

Under the terms of the Development Agreement,

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

expenses related to the commercialization of the Products.

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

into a Manufacturing and Supply Agreement and a supplier quality agreement with respect to the manufacturing and supply of the Products.

Except as otherwise provided in the Development

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

at obtaining regulatory approval of each Product.

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

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

Pursuant to the Development Agreement, Zimmer

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

On August 2, 2022, the Company entered into a

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

Pursuant to the terms

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

In consideration of the mutual covenants and

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

with the following below:

● $ 1.5 million for the sEEG Exclusivity Maintenance Fee;

● $ 2.0 million for satisfaction of each of the milestone events related to the design of SEEG products set

forth in the Development Agreement even though the satisfaction was after the deadlines originally identified.

addition, in connection with the Amendment, the Company issued Zimmer a warrant to purchase common stock (the “2022 Zimmer

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

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

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

In addition, in connection with the Amendment,

the Company issued Zimmer a warrant to purchase common stock (the “2022 Zimmer Warrant”).

The 2022 Zimmer Warrant is

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

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 .

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

Input assumptions used were as follows:

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expected dividend yield of 0 %;

and the underlying fair market of the common stock.

The 2022 Zimmer Warrant was classified in stockholders’

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

The 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 “Term”), unless terminated earlier pursuant to its terms.

Either party may terminate the Development Agreement (x)

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

insolvency proceedings.

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

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

competitors of the Company.

The license rights granted to Zimmer under the Strip/Grid Distribution License and SEEG Distribution

License shall be exclusive from the Effective Date of the Amendment until the end of the Term.

and the underlying

fair market of the common stock.

The 2022 Zimmer Warrant was classified in stockholders’ equity as the number of shares were

fixed and determinable, no cash settlement was required and no other provisions precluded equity treatment.

The 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 “Term”),

unless terminated earlier pursuant to its terms.

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

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

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

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

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

the Effective Date of the Amendment until the end of the Term.

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

Development Agreement and Amendment were accounted for under the provisions of ASC 606.

In accordance with the provisions under ASC 606,

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

(1) the Company’s obligation

to grant Zimmer access to its intellectual property;

The Development Agreement and Amendment

were accounted for under the provisions of ASC 606.

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

obligations under the Development Agreement and Amendment:

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

(2) completion SEEG Product development;

(3) completion of Strip/Grid Product development;

(4) the provision of SEEG exclusivity maintenance;

(4) the provision of sEEG exclusivity

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

All performance

obligations under the Development Agreement and Amendment, outside of the SEEG exclusivity maintenance obligation, were met as of September

The aggregate

transaction price associated with the Development Agreement and Amendment was $ 5.4 million comprising the Initial Exclusivity Fee of $ 2.0

million and the $ 3.5 million payment under the Amendment, less the fair value 2022 Zimmer Warrant of $ 0.1 million.

The transaction price

was allocated between performance obligations based on their relative standalone selling prices.

The Company used a market based valuation

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

The Company 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 Development Agreement and Amendment.

All performance obligations under the Development

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

The remaining performance

obligation in deferred revenue as of September 30, 2022 attributed to sEEG exclusivity maintenance was completed in first quarter of

fiscal year 2023.

The aggregate transaction price associated with

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

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

The transaction price was allocated between performance

obligations based on their relative standalone selling prices.

The Company used a market based valuation approach and an expected cost

plus margin approach with regard to estimating the standalone selling price for the performance obligations.

The Company recognized revenue

in the amount of $ 1,455,188 and $ 1,948,872 during the years ended September 30, 2023 and 2022, respectively, in connection

with the Development Agreement and Amendment.

A reconciliation of the closing balance of deferred

revenue related to the Zimmer Development Agreement and Amendment is as follows as of September 30, 2022 and 2021:

revenue related to the Development Agreement and Amendment is as follows as of September 30, 2023 and 2022:

Deferred Revenue

Balance as of September 30, 2021

Zimmer agreement amendment related to sEEG exclusivity maintenance

Revenue recognized

( 1,948,872 )

Balance as of September 30, 2022

Zimmer agreement amendment related to SEEG exclusivity maintenance

Revenue recognized

( 1,455,188 )

Balance as of September 30, 2023

The remaining performance obligation in deferred

revenue as of September 30, 2022 attributed to sEEG exclusivity maintenance was completed in first quarter of fiscal year 2023.

The achievement

of the level of sales required to earn royalty payments under the Development Agreement from Zimmer is uncertain and was considered constrained

for revenue recognition purposes as of September 30, 2022.

Product Revenue

In December 2020, the Company commenced commercial

sales of its Strip/Grid Products and Electrode Cable Assembly Products in connection with the Development Agreement.

Product revenue recognized

during the years ended September 30, 2022 and 2021 was $ 171,169 and $ 178,146 , respectively.

Product revenue is related to its Strip/Grid

Products, sEEG Products and Electrode Cable Assembly Products.

Product revenue recognized during the years ended September 30, 2023

and 2022 was $ 1,952,441 and $ 171,169 , respectively.

Advertising Expense

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years ended September 30, 2023 and 2022, respectively.

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

NOTE 8 - Convertible Promissory Notes and Warrant

2019 Paulson Convertible Note Offering

On November 1, 2019, the Company entered into

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

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

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

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

The initial closing of the 2019 Paulson Private

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

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

The 2019 Paulson Private

Placement terminated on December 3, 2019.

On April 24, 2020, the Company and holders of

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

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

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

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

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

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

(2) the final closing a 2019 Qualified Financing;

and (3) the maturity date.

The 2019 Paulson Notes had a fixed interest rate

of 13 % per annum and required the Company to repay the principal and accrued and unpaid interest thereon on November 1, 2020 (the “Maturity

Interest on principal amounted to $ 5,701 during the year ended September 30, 2021 and was recorded under the net valuation

change of instruments measured at fair value in the accompanying statements of operations.

The 2019 Paulson Notes were not outstanding

during the year ended September 30, 2022.

The Company elected to account for the 2019 Paulson

Notes on a fair value basis under ASC 825 to comprehensively value and streamline the accounting for the embedded conversion options.

Subsequent to issuance, the fair value change of the Paulson Notes amounted to a benefit of $( 1,974 ) during the year ended September 30,

2021 and was recorded under the net valuation change of instruments measured at fair value in the accompanying statements of operations.

Each 2019 Paulson Warrant grants the holder the

option to purchase the number of shares of common stock equal to (i) 0.5 multiplied by (ii) the principal amount of such subscriber’s

2019 Paulson Notes divided by 5.61, with an exercise price per share equal to $5.61.

As of the final closing on December 3, 2019, the

Company issued 2019 Paulson Warrants exercisable for 288,305 shares of common stock in connection with all closings of the 2019 Paulson

Private Placement.

The 2019 Paulson Warrants are immediately exercisable and expire on November 1, 2022 .

The exercise price is subject

to adjustment in the event of any stock dividends or splits, reverse stock split, recapitalization, reorganization or similar transaction,

as described therein.

The 2019 Paulson warrants were deemed to be a free-standing instrument and were accounted for as equity.

the fair value of the 2019 Paulson Notes exceeded the proceeds received at issuance, there was no value attributed to the 2019 Paulson

Warrants in the financial statements.

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

Issuance costs during the year ended September

30, 2021 in connection with the 2019 Paulson Private Placement were $ 3,053 and related to legal costs.

The issuance costs were recorded

as a component of interest in the accompanying statements of operations.

During the first quarter of fiscal year 2021,

the remaining holders of the 2019 Paulson Notes elected to convert the remaining outstanding principal and accrued and unpaid interest

in the amount of $ 615,159 into 292,754 shares of common stock.

NOTE 8 - Stock-Based Compensation

During the years ended September 30, 2023 and

2021, stock-based expense related to the stock options, restricted stock units and stock awards was included in selling, general and administrative

and research and development costs as follows in the accompanying statements of operations:

2022, stock-based expense related to the stock options, restricted stock units and stock awards was included in selling, general and

administrative and research and development costs as follows in the accompanying statements of operations:

Selling, general and administrative

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Total stock-based compensation expense

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

The Company’s 2017 Equity Incentive Plan

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board of directors without stockholder approval in accordance with such rule.

On November 9, 2023, the Company’s board of directors

adopted the First Amendment to the Company’s Inducement Plan, increasing the aggregate number of shares of common stock that may

be issued pursuant to equity incentive awards under the Inducement Plan by 150,000 shares for a total of 570,350 shares of common stock

that may be issued pursuant to equity incentive awards under the Inducement Plan.

Evergreen provision

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shares outstanding as of December 31st of the preceding calendar year.

Notwithstanding the foregoing, the Board may act prior to January

1st of a given year to provide that there will be no January 1st increase in the share reserve for such year or that the increase in the

share reserve for such year will be a lesser number of shares of common stock than would otherwise occur pursuant to the preceding sentence.

“Fully Diluted Shares” as of a date means an amount equal to the number of shares of common stock (i) outstanding and (ii)

issuable upon exercise, conversion or settlement of outstanding awards under the 2017 Plan and any other outstanding options, warrants

or other securities of the Company that are (directly or indirectly) convertible or exchangeable into or exercisable for shares of common

stock, in each case as of the close of business of the Company on December 31 of the preceding calendar year.

On January 1, 2022 and 2021,

1,614,538 and 484,622 shares were added to the 2017 Plan, respectively, as a result of the evergreen provision.

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

Notwithstanding the foregoing, the Board of Directors may act prior

to January 1st of a given year to provide that there will be no January 1st increase in the share reserve for such year or that the increase

in the share reserve for such year will be a lesser number of shares of common stock than would otherwise occur pursuant to the preceding

“Fully Diluted Shares” as of a date means an amount equal to the number of shares of common stock (i) outstanding

and (ii) issuable upon exercise, conversion or settlement of outstanding awards under the 2017 Plan and any other outstanding options,

warrants or other securities of the Company that are (directly or indirectly) convertible or exchangeable into or exercisable for shares

of common stock, in each case as of the close of business of the Company on December 31 of the preceding calendar year.

On January 1,

2023 and 2022, 129,479 and 1,614,538 shares were added to the 2017 Plan, respectively, as a result of the evergreen provision.

Stock Options

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date fair value of $ 0.88 and $ 0.76 per share, respectively.

The options granted have vesting periods ranging from being immediate to four

The options granted have vesting periods ranging from being immediate to

All options expire ten years from the date of grant.

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to the stock options was $ 632,315 and $ 582,329 , respectively.

The following table summarizes the Company’s

stock option plan activity for the years ended September 30, 2022 and 2021 as follows:

The following table summarizes the Company’s stock option plan activity

for the years ended September 30, 2023 and 2022 as follows:

Outstanding at September 30,

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Vested and exercisable at September 30,

(1) The aggregate intrinsic value is calculated as the difference

between the exercise price of the underlying options and the fair value of our common stock as of September 30, 2022 and 2021 of $ 1.69

and $ 3.95 per share, respectively.

As of September 30, 2022 and 2021, 1,125,710 and 1,055,376 outstanding options, respectively, had

no intrinsic value.

The weighted-average assumptions used in the Black-Scholes

option-pricing model are as follows for the stock options granted during the years ended September 30:

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of our common stock as of September 30, 2023 and 2022 of $ 0.89 and $ 1.69 per share, respectively.

As of September 30, 2023 and 2022, 1,682,912 and 1,125,710 outstanding options, respectively, had no intrinsic value.

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

The weighted-average assumptions used in the

Black-Scholes option-pricing model are as follows for the stock options granted during the years ended September 30:

Expected stock price volatility

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2022, 337,753 and 327,615 stock options vested, respectively.

1,538 stock options were exercised

during the year ended September 30, 2021 with an intrinsic value of $ 2,648 .

No options were exercised during the year ended September

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

No options were exercised during the years ended September 30, 2023 and

Restricted Stock Units

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2022, 310,728 and 443,670 RSUs were granted to members of the Company’s board of directors and employees that vest over a period

ranging from an immediate to a two year period, with a grant date fair value of $ 1.91 and $ 7.26 per unit, respectively.

ranging from a one year to three year period, with a grant date fair value of $ 1.60 and $ 1.91 per unit, respectively.

During the years

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30, 2023 and 2022.

Other Stock-Based Awards

2022 Activity

The Company did not issue any other stock-based

awards, outside of stock options and RSUs, during the year ended September 30, 2022.

2021 Activity

In April 2021, two consulting agreements were

executed whereby a total of 62,659 shares of common stock were issued and vested as of September 30, 2022.

In July 2021, two consulting agreements were executed

whereby a total of 11,668 shares of common stock were issued and vested as of September 30, 2022.

Activity Prior to 2021

In August 2020, an additional consulting agreement

was executed whereby 40,000 shares of common stock were issued, subject to Company repurchase.

The stock award under the agreement vested

over a six-month period.

As of September 30, 2021 all of the shares vested under this agreement.

expense related to the stock awards granted under the consulting agreements referenced above amounted to zero and $ 645,910 for the years

ended September 30, 2022 and 2021, respectively, and was included in stock-based compensation expense.

The expense recognition related

to the grants was based on the fair value of the underlying common stock at the point of vesting which ranged from $ 5.22 to $ 6.62 per

As of September 30, 2023, 1,137,983 shares were

available for future issuance on a combined basis under the 2017 Plan and the Inducement Plan.

Unrecognized stock-based compensation was

$ 1.7 million as of September 30, 2022.

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

of 2.0 years.

Unrecognized stock-based compensation

was $ 1,474,119 as of September 30, 2023.

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

period of 1.8 years.

NeuroOne Medical Technologies Corporation

1 unchanged sentence

NOTE 9 - Stockholders’ Equity

July 2023 Public Offering

On July 24, 2023, the Company 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 the Company’s 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, the Company 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 the Company completed the sale and issuance of an aggregate of 6,037,500 shares

of its common stock, including the exercise in full of the Overallotment Option.

The net proceeds to the Company from the July

2023 Public Offering were approximately $ 5.2 million after deducting underwriting discounts and other offering expenses payable by the

The Company intends 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, the Company 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 the Company may offer and sell shares having an aggregate

offering price of up to $ 14.5 million.

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

As of September 30, 2023, 1,439,677 shares of common stock were issued for gross proceeds of $ 2,552,656 under the ATM, and

issuance costs in the amount of $ 234,725 have been incurred in connection with the ATM.

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 $ 2,560,000 of our common

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

2021 Public Offering

On October 13, 2021, the Company, entered

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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 base offering closed on October 15, 2021, and the

sale of 422,057 shares of common stock subject to the Underwriter’s overallotment option closed on November 15, 2021.

The gross proceeds to the Company from this offering

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the amount of approximately $ 1.4 million in the aggregate.

2021 Private Placement

On January 12, 2021, the Company entered into

a Common Stock and Warrant Purchase Agreement with certain accredited investors (the “Purchasers”), pursuant to which the

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

of Common Stock (the “2021 Warrants”) at an aggregate purchase price of $ 3.00 per share of Common Stock and corresponding

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

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

The 2021 Warrants are exercisable beginning on the date of issuance and

will expire on the fifth anniversary of such date.

This private placement closed on January 14, 2021.

Warrant Activity and Summary

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Outstanding and exercisable at September 30, 2021

$ 5.25 - 9.00

Reverse split adjustment correction

Outstanding and exercisable at September 30, 2022

$ 3.00 - 9.00

$ 5.61 - 9.00

Outstanding at September 30, 2023

$ 3.00 - 9.00

Outstanding and exercisable at September

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

The following table summarizes information about

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Number Exercisable at

September 30,

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

NOTE 10 - Concentrations

One customer accounts for all of the Company’s

product and collaborations revenue.

Supplier concentration

One contract manufacturer produces all of the

Company’s Strip/Grid Products and sEEG Products and another supplier was responsible for the development of the Company’s

OneRF Ablation system.

NOTE 11 - Income Taxes

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Accruals and other

Research and development capitalization

Research and development credit carryforwards

8 unchanged sentences

Net deferred tax assets

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

As of September 30, 2023 and 2022, the Company

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since its inception.

The Company has not yet generated revenues from sales and faces significant challenges to becoming profitable.

the net deferred tax assets have been fully offset by a valuation allowance of approximately $ 11,918,000 and $ 8,808,000 as of September

30, 2022 and 2021, respectively.

net deferred tax assets will continue to require a valuation allowance until the Company can

demonstrate their realizability through sustained profitability or another source of income.

The Company has not yet generated revenues from sales to the level of becoming profitable.

Accordingly, the net deferred

tax assets have been fully offset by a valuation allowance of approximately $ 15,428,000 and $ 11,918,000 as of September 30, 2023 and 2022,

respectively.

Net deferred tax assets will continue to require a valuation allowance until the Company can demonstrate their realizability

through sustained profitability or another source of income.

As of September 30, 2023 and 2022, the Company’s

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losses incurred after December 31, 2017 will not expire.

As of September 30, 2022 and 2021, the Company had state net operating loss carryforwards

of approximately $ 35,249,000 and $ 26,355,000 , respectively.

As of September 30, 2023 and 2022, the Company had state net operating loss

carryforwards of approximately $ 40,522,000 and $ 35,249,000 , respectively.

The Company had state research credit carryforwards of approximately

$ 598,000 and $ 441,000 as of September 30, 2023 and 2022, respectively.

The state net operating loss carryforwards will begin to expire in 2031,

if not utilized, and the state research credit carryforwards will begin to expire in 2032 if not utilized.

The state net operating loss carryforwards will begin to expire

in 2031, if not utilized, and the state research credit carryforwards will begin to expire in 2032 if not utilized.

Utilization of the net operating loss carryforwards

and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal

Revenue Code of 1986, as amended, and similar state provisions.

Generally, in addition to certain entity reorganizations, the limitation

applies when one or more “5-percent shareholders” increase their ownership, in the aggregate, by more than 50 percentage points

over a 36-month testing period or beginning the day after the most recent ownership change, if shorter.

The annual limitation may result

in the expiration of net operating losses and credits before utilization.

and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the

Internal Revenue Code of 1986, as amended, and similar state provisions.

Generally, in addition to certain entity reorganizations, the

limitation applies when one or more “5-percent shareholders” increase their ownership, in the aggregate, by more than 50

percentage points over a 36-month testing period or beginning the day after the most recent ownership change, if shorter.

limitation may result in the expiration of net operating losses and credits before utilization.

In accordance with ASC 740, Income Taxes (“ASC

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to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.

The Company believes

its income tax filing positions and deductions will be sustained upon examination, and accordingly, no reserves or related accruals for

interest and penalties have been recorded at September 30, 2022 and 2021.

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

A reconciliation

of the beginning and ending amounts of unrecognized tax positions for the years ended September 30 is as follows:

Unrecognized tax positions, beginning of year

Gross increase, current period tax positions

Unrecognized tax positions, end of year

If recognized, none of the unrecognized tax positions

would impact the Company's income tax benefit or effective tax rate as long as the Company's net deferred tax assets remain subject to

a full valuation allowance.

The Company does not expect any significant increases or decreases to the Company's unrecognized tax positions

within the next 12 months.

In accordance with this guidance, the Company

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statements of operations.

NeuroOne Medical Technologies Corporation

Notes to Financial Statements

The Company has tax filing obligations in the

1 unchanged sentence

federal, Minnesota and California.

The income tax returns since inception as a corporation in 2016 are subject

to examination by the federal and state taxing authorities.

The income tax returns since inception as a corporation in 2016 are

subject to examination by the federal and state taxing authorities.

NOTE 12 - Defined Contribution Plan

13 unchanged sentences

date of hire.

The amount of contributions made by the Company under the 401K Plan during the years ended September 30, 2022 and 2021 was

$ 30,697 and 14,803 , respectively.

The amount of contributions made by the Company under the 401K Plan during the years ended September 30, 2023 and 2022

was nil and $ 30,697 , respectively.

NOTE 13 - Subsequent Events

Los Gatos Lease

4, 2022, the term of the Los Gatos Lease was extended by two years to December 31, 2024.

The rent under the Los Gatos Lease will range

from $ 4,453 to $ 4,632 per month.

At-The-Market

21, 2022, we entered into a Capital on Demand TM Sales Agreement with JonesTrading Institutional Services LLC (JonesTrading)

to create an at-the-market offering program under which we may offer and sell shares having an aggregate offering price of up to $ 9.0

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

NeuroOne Medical Technologies Corporation

CHANGES IN AND

DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

First Amendment to 2021 Inducement Plan

On November 9, 2023, the Company’s board

of directors adopted the First Amendment to the Company’s Inducement Plan, increasing the aggregate number of shares of common stock

that may be issued pursuant to equity incentive awards under the Inducement Plan by 150,000 shares for a total of 570,350 shares.

At-The-Market Offering

On December 1, 2023, the Company increased the amount of common stock that can be sold pursuant to the Sales Agreement

with JonesTrading, such that we are offering up to an aggregate of $ 4.8 million of common stock for sale under the Sales Agreement, including

the shares of common stock previously sold.

Medical Technologies Corporation

CHANGES IN AND DISAGREEMENTS WITH

ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data