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Item 2. Management’s Discussion and Analysis

2024-05-14 compared with 2024-02-13 · 575 added, 497 removed, 38 unchanged (97% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

following discussion of our financial condition and results of operations should be read in conjunction with the financial statements

and notes included in Part I “Financial Information”, Item I “Financial Statements” of this Quarterly Report

on Form 10-Q (the “Report”) and the audited financial statements and related footnotes included in our Annual Report on Form

10-K for the year ended September 30, 2023.

Forward-Looking

Report contains forward-looking statements that involve substantial risks and uncertainties.

In some cases, you can identify forward-looking

statements by the words “may,” “might,” “will,” “could,” “would,” “should,”

“expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,”

“estimate,” “predict,” “project,” “potential,” “target,” “seek,”

“contemplate,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology

intended to identify statements about the future.

These statements involve known and unknown risks, uncertainties and other factors that

may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed

or implied by these forward-looking statements.

Although we believe that we have a reasonable basis for each forward-looking statement

contained in this Report, we caution you that these statements are based on a combination of facts and factors currently known by us

and our expectations of the future, about which we cannot be certain.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

The following discussion of our financial condition

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

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

and related footnotes included in our Annual Report on Form 10-K for the year ended September 30, 2023.

Forward-Looking Statements

This Report contains forward-looking statements

that involve substantial risks and uncertainties.

In some cases, you can identify forward-looking statements by the words “may,”

“might,” “will,” “could,” “would,” “should,” “expect,” “intend,”

“plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,”

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

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

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

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

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

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

Forward-looking statements include statements about:

our ability to maintain

regulatory clearance of our cortical strip and grid electrode technology, and our RF ablation system;

our ability to successfully

commercialize our technology in the United States;

our ability to achieve

or sustain profitability;

our ability to raise additional

capital and to fund our operations;

the availability of additional

capital on acceptable terms or at all as or when needed;

the clinical utility of

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

regulatory clearance of our cortical strip and grid electrode technology, our sEEG electrode technology, and our RF ablation

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

our ability to achieve or sustain profitability;

our ability to raise additional capital and to fund our operations and ability to continue as a going concern;

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

the clinical utility of our cortical strip, grid and depth electrodes, RF ablation system, and technology under development;

our ability to develop

additional applications of our cortical strip, grid and depth electrode technology with the benefits we hope to offer as compared

to existing technology, or at all;

the results of our development

and distribution relationship with Zimmer, Inc.

we have been the victim

of a cyber-related crime, and our controls may not be successful in avoiding future cyber-related crimes;

the performance, productivity,

reliability and regulatory compliance of our third party manufacturers of our cortical strip, grid electrode and depth electrode

additional applications of our cortical strip, grid and depth electrode and RF ablation technology with the benefits we hope to

offer as compared to existing technology, or at all;

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

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

the performance,

productivity, reliability and regulatory compliance of our third-party manufacturers of our cortical strip, electrode and depth

electrode and RF ablation technology;

our ability to develop

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

our future development

our ability to obtain reimbursement

coverage for our cortical strip, grid and depth electrode technology;

Medical Technologies Corporation

our expectations about

the willingness of healthcare providers to recommend our cortical strip, grid and depth electrode technology to people with epilepsy,

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

our future commercialization,

marketing and manufacturing capabilities and strategy;

our ability to comply with

applicable regulatory requirements;

our ability to maintain

our intellectual property position;

future generations of our cortical strip, grid and depth electrode and RF ablation technology;

our future development priorities;

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

NeuroOne Medical Technologies

our expectations about the

willingness of healthcare providers to recommend our cortical strip, grid and depth electrode and RF ablation technology to people

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

neurological disorders;

our future commercialization, marketing and manufacturing capabilities and strategy;

our ability to comply with applicable regulatory requirements;

our ability to maintain our intellectual property position;

our expectations regarding

international opportunities for commercializing our cortical strip, grid and depth electrode technology under including technology

under development;

our estimates regarding

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

our estimates regarding

our future expenses and needs for additional financing.

Forward-looking

statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry

in which we operate, and management’s beliefs and assumptions are not guarantees of future performance or development and involve

known and unknown risks, uncertainties and other factors that are in some cases beyond our control.

You should refer to the “Risk

Factors” section of our Annual Report on Form 10-K for a discussion of important factors that may cause our actual results to differ

materially from those expressed or implied by our forward-looking statements.

As a result of these factors, we cannot assure you that

the forward-looking statements in this Report will prove to be accurate.

Furthermore, if our forward-looking statements prove to be inaccurate,

the inaccuracy may be material.

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

these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified

time frame, or at all.

forward-looking statements speak only as of the date of this Report.

Except as required by law, we assume no obligation to update or

revise these forward-looking statements for any reason, even if new information becomes available in the future.

You should, however,

review the factors and risks and other information we describe in the reports we will file from time to time with the Securities and

Exchange Commission (the “SEC”) after the date of this Report.

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

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

and ablation solutions for patients suffering from epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due

to failed back surgeries and other related neurological disorders.

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

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

Additionally, we are investigating

the potential applications of our technology associated with artificial intelligence.

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

brain tissue for up to 30 days, and in October 2022, we received FDA clearance for our Evo sEEG electrode technology for temporary (less

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

signals at the subsurface level of the brain.

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

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

We completed design verification of such hardware early in the second calendar quarter of 2023.

We also completed an animal feasibility

study at Emory University in September 2021.

We completed additional animal studies early in the second quarter of calendar 2023 and

received 510(k) clearance in December 2023 for creation of radiofrequency lesions in nervous tissue for functional neurosurgical procedures.

international opportunities for commercializing our cortical strip, grid and depth electrode and RF ablation technology under

including technology under development;

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

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

Forward-looking statements are based on management’s

current expectations, estimates, forecasts and projections about our business and the industry in which we operate, and management’s

beliefs and assumptions are not guarantees of future performance or development and involve known and unknown risks, uncertainties and

other factors that are in some cases beyond our control.

You should refer to the “Risk Factors” section of our Annual Report

on Form 10-K for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied

by our forward-looking statements.

As a result of these factors, we cannot assure you that the forward-looking statements in this Report

will prove to be accurate.

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

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

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

These forward-looking statements speak only as

of the date of this Report.

Except as required by law, we assume no obligation to update or revise these forward-looking statements for

any reason, even if new information becomes available in the future.

You should, however, review the factors and risks and other information

we describe in the reports we will file from time to time with the Securities and Exchange Commission (the “SEC”) after the

date of this Report.

We are a medical technology

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

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

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

and other related neurological disorders.

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

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

Additionally, we are investigating the potential

applications of our technology associated with artificial intelligence.

NeuroOne has received 510(k) clearance for

three of its devices from the FDA, including:

(i) our Evo cortical electrode technology for recording, monitoring, and stimulating

brain tissue for up to 30 days, (ii) 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, and (iii) our OneRF ablation system for creation of radiofrequency lesions in nervous tissue for functional

neurosurgical procedures.

Our other products are still under development.

Medical Technologies Corporation

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

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

year 2021, and we commenced commercial sales of our sEEG depth electrode products in late calendar 2022.

have incurred losses since inception.

As of December 31, 2023, we had an accumulated deficit of $66.0 million, primarily as a result

of expenses incurred in connection with our research and development, selling, general and administrative expenses associated with our

operations and interest expense, fair value adjustments and loss on extinguishments related to our debt, offset in part by collaborations

and product revenues.

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

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

See “Liquidity and Capital Resources—Capital Resources”

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

milestone and other payments from our current collaboration with Zimmer, we expect to continue to incur significant expenses and

increasing operating and net losses for the foreseeable future until and unless we generate a higher level of revenue from commercial

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

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

may be unable to raise additional funds when needed on favorable terms or at all.

Our failure to raise such capital as and when needed

would have a negative impact on our financial condition and our ability to develop and commercialize our cortical strip, grid electrode

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

See “Liquidity and Capital

Resources—Liquidity Outlook” below.

Developments and Upcoming Milestones

November 14, 2023, we announced the appointment of Christopher R.

Volker as the Chief Operating Officer of the Company, effective on

November 10, 2023.

Commercial Launch

May 2023, we announced the commercial launch of the Evo® sEEG electrode product line in the United States with exclusive distribution

partner Zimmer Biomet.

The Company has ramped up production to support the expanding commercial launch.

first clinical case using the Evo® sEEG electrode in robotic neurosurgery was performed by Dr.

William Bingaman at the Cleveland

The procedure was the first to utilize NeuroOne’s Evo sEEG electrode with Zimmer Biomet’s ROSA One® Brain, a

robotic platform that assists surgeons in planning and performing complex yet minimally invasive neurosurgical procedures.

We submitted a 510(k) application to the FDA for the OneRF ablation

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

is building inventory to support the commercial launch of the OneRF ablation system, which is expected in the second calendar quarter

Cord Stimulation Program

the second fiscal quarter of 2023, we completed an initial animal implant of novel thin film paddle leads for spinal cord stimulation

The devices are intended for the treatment of patients with chronic back pain due to multiple failed back surgery syndrome, intractable

low back, and leg pain.

A percutaneous (through a needle) delivery system for paddle leads is also under development and has been successfully

bench-tested.

Medical Technologies Corporation

Economic Conditions

worldwide economic conditions remain uncertain, particularly due to the conflicts between Russia and Ukraine and in the Middle East,

disruptions in the banking system and financial markets, and increased inflation.

The general economic and capital market conditions

both in the U.S.

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

the cost of capital.

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

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

be adversely affected.

operating results could be materially impacted by changes in the overall macroeconomic environment and other economic factors.

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, 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.

Our product revenue was derived from the

sale of our Strip/Grid Products, sEEG Products and electrode cable assembly products (“Electrode Cable Assembly

Products”) based on Evo cortical electrode technology.

We anticipate that we will generate additional revenue from the sale of

products based on Evo cortical electrode technology and our OneRF ablation system.

November 2019, we received FDA 510(k) clearance for our cortical strip electrode for temporary (less than 30 days) recording, monitoring,

and stimulation on the surface of the brain.

In October 2022, we received FDA 510(k) clearance for our Evo sEEG electrode technology

for temporary (less than 30 days) use with recording, monitoring, and stimulation equipment for the recording, monitoring, and stimulation

of electrical signals at the subsurface level of the brain.

Gross Profit (Loss)

gross profit (loss) represents our product revenue less our cost of product revenue.

Our cost of product revenue consists of the manufacturing

and materials costs incurred by our third-party contract manufacturer in connection with our Strip/Grid Products, sEEG Products and outside

supplier materials costs of producing the Electrode Cable Assembly Products.

In addition, cost of product revenue includes royalty fees

incurred in connection with our license agreements.

Collaborations

On July 20, 2020, we entered into an exclusive development and distribution

agreement (the “Zimmer Development Agreement”) with Zimmer, pursuant to which we granted Zimmer exclusive global rights to

distribute the Strip/Grid Products and electrode cable assembly products (the “Electrode Cable Assembly Products”).

Additionally,

we granted Zimmer the exclusive right and license to distribute certain sEEG Products developed by the Company .

The parties agreed to

collaborate with respect to development activities under the Zimmer Development Agreement through a joint development committee composed

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

Medical Technologies Corporation

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

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

In addition to the Zimmer Development

Agreement, Zimmer and the Company have entered into a Manufacturing and Supply Agreement and a Supplier Quality Agreement with respect

to the manufacturing and supply of the Products.

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

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

Zimmer has agreed to use commercially reasonable efforts

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

Agreement) for such Product.

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

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

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

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

Pursuant to the terms and conditions of the Zimmer

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

In consideration of the mutual covenants and agreements contained

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

the following below:

$1.5 million for the sEEG

exclusivity maintenance fee;

$2.0 million for satisfaction

of each of the milestone events related to the design of sEEG Products set forth in the Zimmer Development Agreement, even though

the satisfaction was after the deadlines originally identified.

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

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

on August 2, 2027.

Zimmer Development Agreement will expire on the tenth anniversary of the date of the first commercial sale of the last Products to achieve

a first commercial sale (the “Zimmer Term”), unless terminated earlier pursuant to its terms.

Either party may terminate

the Zimmer Development Agreement (x) with written notice for the other party’s material breach following a cure period or (y) if

the other party becomes subject to certain insolvency proceedings.

In addition, Zimmer may terminate the Zimmer Development Agreement

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

or directly or indirectly owns a controlling interest in certain competitors of the Company.

The license rights granted to Zimmer under

the Zimmer Development Agreement shall be exclusive from the effective date of the Zimmer Amendment until the end of the Zimmer Term.

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

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

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

In accordance with the provisions under ASC 606,

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

(1) our obligation to grant Zimmer

access to our intellectual property;

NeuroOne Medical Technologies

We commenced commercial sales of cEEG strip/grid and electrode cable

assembly products beginning in the first quarter of fiscal year 2021.

We sold, on a limited application basis for design verification,

sEEG depth electrode products for non-human use beginning in late fiscal year 2021, and we commenced commercial sales of our sEEG depth

electrode products in late calendar 2022.

We initiated a limited commercial launch of our OneRF ablation system in March 2024.

We have incurred losses

since inception.

As of March 31, 2024, we had an accumulated deficit of $68.9 million, primarily as a result of expenses incurred in connection

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

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

Prior to FDA clearance

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

notes, common stock, warrants and unsecured loans.

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

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

payments from our current collaboration with Zimmer, we expect to continue to incur significant expenses and increasing operating

and net losses for the foreseeable future until and unless we generate a higher level of revenue from commercial sales, and we will

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

through collaborations or partnerships with other companies or other sources.

We may be unable to raise

additional funds when needed on favorable terms or at all.

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

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

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

See “Liquidity and Capital Resources—Liquidity

Outlook” below.

Recent Developments

Corporate Updates

OneRF Ablation Limited Commercial Launch

In March 2024, we announced a limited commercial

launch of our OneRF ablation system.

We do not have a distribution partner for the OneRF ablation system at this time, and are continuing

to pursue potential strategic partnerships for this product.

Global Economic Conditions

Generally, worldwide economic conditions remain

uncertain, particularly due to the conflicts between Russia and Ukraine and in the Middle East, disruptions in the banking system and

financial markets, and increased inflation.

The general economic and capital market conditions both in the U.S.

and worldwide, have been

volatile in the past and at times have adversely affected our access to capital and increased the cost of capital.

The capital and credit

markets may not be available to support future capital raising activity on favorable terms or at all.

If economic conditions continue

to decline, our future cost of equity or debt capital and access to the capital markets could be adversely affected.

Our operating results could be materially impacted

by changes in the overall macroeconomic environment and other economic factors.

Changes in economic conditions, supply chain constraints,

logistics challenges, labor shortages, the conflicts in Ukraine and the Middle East, disruptions in the banking system and financial markets,

and steps taken by governments and central banks, 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.

NeuroOne Medical Technologies

Financial Overview

Product Revenue

Our product revenue was derived from the sale

of our Strip/Grid Products, sEEG Products and electrode cable assembly products (“Electrode Cable Assembly Products”) based

on Evo cortical electrode technology.

We anticipate that we will generate additional revenue from the sale of products based on Evo cortical

electrode technology and our OneRF ablation system.

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

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

In October 2022, we received FDA 510(k) clearance for our Evo sEEG electrode technology for temporary (less than 30 days) use with recording,

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

In December 2023, we received FDA 510(k) clearance for our OneRF ablation system for creation of radiofrequency lesions

in nervous tissue for functional neurosurgical procedure.

Product Gross Profit

Product gross profit represents our product revenue

less our cost of product revenue.

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

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

Electrode Cable Assembly Products.

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

Collaborations Revenue

On July 20, 2020, we entered into an exclusive

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

exclusive global rights to distribute the Strip/Grid Products and Electrode Cable Assembly Products.

Additionally, we granted Zimmer the

exclusive right and license to distribute certain sEEG Products developed by the Company.

The OneRF ablation system is not covered by

the Zimmer Development Agreement.

The parties agreed to collaborate with respect to development activities under the Zimmer Development

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

Under the terms of the Zimmer Development Agreement, we are responsible

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

of the Products.

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

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

regulatory approval of each Product.

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

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

Pursuant to the Zimmer Development Agreement,

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

in fiscal year 2020.

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

Amendment”) with Zimmer.

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

us in August 2022.

In consideration of the mutual covenants and agreements contained in the Zimmer Development Agreement, certain fee

and milestone payment provisions in the Zimmer Development Agreement were replaced with the following below:

$1.5 million for the sEEG exclusivity maintenance fee;

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

NeuroOne Medical Technologies

In addition, in connection with the Zimmer Amendment,

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

The 2022 Zimmer Warrant is exercisable

for up to an aggregate of 350,000 shares of our Common Stock.

The 2022 Zimmer Warrant has an exercise price of $3.00 per

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

The Zimmer Development Agreement will expire on

the tenth anniversary of the date of the first commercial sale of the last Products to achieve a first commercial sale (the “Zimmer

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

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

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

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

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

certain competitors of the Company.

The license rights granted to Zimmer under the Zimmer Development Agreement shall be exclusive from

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

All payments attributed to the Initial Exclusivity

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

The Zimmer Development Agreement and Zimmer Amendment

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

Customers (“ASC 606”) .

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

under the Zimmer Development Agreement and Zimmer Amendment:

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

completion of sEEG Product development;

2 unchanged sentences

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

All performance obligations

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

Medical Technologies Corporation

October 2022, we received 510(k) clearance from the FDA for our Evo sEEG electrode technology for temporary (less than 30 days) use with

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

level of the brain.

Accordingly, we recognized revenue in the amount of $1.5 million during the three months ended December 31, 2022

related to the completion of the sEEG exclusivity maintenance milestone.

There was no collaboration revenue during the three months ended

December 31, 2023.

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

further discussion about the determination of collaborations revenue, product revenue and cost of product revenue, and for a discussion

of milestones and royalty payments under the Zimmer Development Agreement, see “—Liquidity and Capital Resources—Liquidity

Outlook” below and see “Note 7 — Zimmer Development Agreement” included

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

General and Administrative

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

functions not directly associated with research and development activities.

Other significant costs include legal and litigation costs

relating to corporate matters, intellectual property costs, professional fees for consultants assisting with financial and administrative

matters, and sales and marketing in connection with the commercial sale of cEEG strip/grid, sEEG depth electrode and electrode cable

assembly products.

We anticipate that our selling, general and administrative expenses will increase in the future to support our continued

research and development activities, further commercialization of our cortical strip and grid technology, and our depth electrode technology,

and the increased costs of operating as a public company.

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

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

and Development

and development expenses consist of expenses incurred in performing research and development activities in developing our cortical strip

and grid electrode and depth electrode technology.

Research and development expenses include compensation and benefits for research and

development employees including stock-based compensation, overhead expenses, cost of laboratory supplies, clinical trial and related

clinical manufacturing expenses, costs related to regulatory operations, fees paid to consultants and other outside expenses.

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

Lastly, de minimis income from the sale of prototype products and related materials are offset against research and development expenses.

expect our research and development expenses to increase over the next several years as we develop additional applications for our electrode

technology and conduct preclinical testing and clinical trials

income, net primarily consists of interest income related to our cash, cash equivalents, investment income or loss from short-term investments

and other income or expense outside of normal operating activity relating to legal settlements, sales of non-commercial supplies and

other items as applicable.

Medical Technologies Corporation

of Operations

of the Three Months Ended December 31, 2023 and 2022

following table sets forth the results of operations for the three months ended December 31, 2023 and 2022, respectively.

the three months ended

All performance obligations under the Zimmer Development Agreement and Zimmer

Amendment were met as of December 31, 2022.

In October 2022, we received 510(k) clearance

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

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

Accordingly, we recognized

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

There was no collaboration revenue during the six months ended March 31, 2024.

The achievement of the level of sales required

to earn royalty payments from Zimmer is uncertain.

For further discussion about the determination

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

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

“Note 7 — Zimmer Development Agreement” included in our condensed financial statements included in “Part 1, Item

1 – Financial Statements” in this Report.

Selling, General and Administrative

Selling, general and administrative expenses consist

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

and development activities.

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

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

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

We anticipate that our selling, general

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

of our cortical strip and grid technology, and our depth electrode technology, and the increased costs of operating as a public company.

These increases will include increased costs related to the hiring of additional personnel and fees for legal and professional services,

as well as other public company related costs.

NeuroOne Medical Technologies

Research and Development

Research and development expenses consist of expenses

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

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

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

operations, fees paid to consultants and other outside expenses.

Research and development costs are expensed as incurred and costs incurred

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

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

materials are offset against research and development expenses.

We expect our research and development expenses

to increase over the next several years as we develop additional applications for our electrode technology and conduct preclinical testing

and clinical trials.

Other Income (Expense), net

Other income (expense), net primarily consists

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

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

Results of Operations

Comparison of the Three Months Ended March

31, 2024 and 2023

The following table sets forth the results of

operations for the three months ended March 31, 2024 and 2023, respectively.

Three Months Ended

Product revenue

1 unchanged sentence

Product gross profit

Collaborations revenue

Operating expenses:

3 unchanged sentences

Loss from operations

Other income (expense), net

Loss before income taxes

Provision for income

Provision for income taxes

$ (2,855,090 )

$ (3,522,828 )

Product Revenue and Product Gross Profit

Product revenue and product gross profit was $1.4

million and $0.4 million, respectively, during the three months ended March 31, 2024.

Product revenue and product gross profit was $0.5

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

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

sEEG and electrode cable assembly products.

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

third-party contract manufacturer in connection with our strip/grid and sEEG products, and outside supplier materials costs in connection

with the electrode cable assembly products.

In addition, cost of product revenue included royalty fees incurred of approximately $42,000

and $38,000 in connection with our license agreements during the three months ended March 31, 2024 and 2023, respectively.

NeuroOne Medical Technologies

Selling, General and Administrative Expenses

Selling, general and administrative expenses

were $2.0 and $1.8 million during the three months ended March 31, 2024 and 2023, respectively.

The $0.2 million expense increase in

the current quarter over the comparable prior year quarter was attributed to higher administrative payroll of $0.2 million and stock-based

compensation of $0.1 million, partially offset by lower professional services and marketing expenses of $0.1 million.

Selling, general

and administrative expenses included $0.3 million and $0.2 million of stock-based compensation during the three months ended March 31,

2024 and 2023, respectively.

Research and Development Expenses

Research and development expenses were $1.3 million

for the three months ended March 31, 2024, compared to $1.7 million during for the three months ended March 31, 2023.

The $0.4 million

decrease in the current period over the prior year period was attributed largely to the timing and overall lower OneRF Product development

activities in the current quarter when compared to the comparable prior year quarter.

Research and development expenses primarily included

salary-related expenses and costs related to consulting services, materials and supplies associated with the development of sEEG Products

and to a much lesser extent Strip/Grid Products.

Research and development expenses included $76,000 and $38,000 of stock-based compensation

during the three months ended March 31, 2024 and 2023, respectively.

Other Income (expense), net

Other income during the three months ended March

31, 2024 and 2023 related to interest income on our cash, cash equivalents and short-term investments in the amount of $31,000 and $67,000,

respectively.

Other expense during the three months ended March

31, 2023 was attributed to an exploit loss of $94,000.

There were no other expenses during the three months ended March 31, 2024.

Comparison of the Six Months Ended March 31,

2024 and 2023

The following table sets forth the results of

operations for the six months ended March 31, 2024 and 2023, respectively.

Six Months Ended

Product revenue

Cost of product revenue

Product gross profit

Collaborations revenue

Operating expenses:

Selling, general and administrative

Research and development

Total operating expenses

Loss from operations

Other income, net

Loss before income taxes

Provision for income taxes

$ (6,199,990 )

Revenue and Product Gross Profit (Loss)

Product revenue was approximately $1.0 million and $0.1 million during

the three months ended December 31, 2023 and 2022, respectively.

Product gross profit (loss) was approximately $0.3 million with a gross

margin of 27.2% during the three months ended December 31, 2023 as compared to a gross loss of $(12,000) during the three months ended

December 31, 2022.

The product revenue consists of the sale of our strip/grid, depth electrode and electrode cable assembly products.

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

with our strip/grid and depth electrode products, and outside supplier materials costs in connection with the electrode cable assembly

In addition, cost of product revenue included royalty fees incurred of approximately $38,000 in connection with our license

agreements during each of the three months ended December 31, 2023 and 2022, respectively.

Collaborations

Collaborations revenue was $1.5 million for the three months ended

December 31, 2022.

Revenue during the period was derived from the Zimmer Development Agreement and Zimmer Amendment and represented the

portion of the milestone earned upon the completion of the sEEG maintenance fee obligation .

No collaborations revenue was derived from the Zimmer Development Agreement and Zimmer Amendment during the three months ended in the

current quarter.

general and administrative expenses

general and administrative expenses were $2.2 million for the three months ended December 31, 2023, compared to $1.7 million for the

three months ended December 31, 2022.

The $0.5 million increase was primarily due to an increase in payroll related expenses of $0.2

million, legal costs of $0.2 million and public company costs of $0.2 million, offset in part by decreases in other operating costs of

$0.1 million.

Selling, general and administrative expenses included stock-based compensation of $243,000 and $255,000 during the three

months ended December 31, 2023 and 2022, respectively.

Medical Technologies Corporation

and development expenses

Research and development expenses were $1.5 million for the three months

ended December 31, 2023, compared to $1.6 million during for the three months ended December 31, 2022.

$ (5,255,597 )

NeuroOne Medical Technologies

Product Revenue and Product Gross Profit

Product revenue and product gross profit was $2.4

million and $0.7 million during the six months ended March 31, 2024, respectively.

Product revenue and product gross profit was $0.6 million

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

Product revenue consisted of Strip/Grid Products, sEEG Products

and Electrode Cable Assembly Products sales.

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

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

with the Electrode Cable Assembly Products.

In addition, cost of product revenue included royalty fees incurred of approximately $79,000

and $76,000 in connection with our license agreements during the six months ended March 31, 2024 and 2023, respectively.

Collaborations Revenue

Collaborations revenue was zero and $1.5 million

for the six months ended March 31, 2024 and 2023, respectively.

Revenue was derived from the Zimmer Development Agreement and represented

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

The amount of revenue

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

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

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

Selling, General and Administrative Expenses

Selling, general and administrative expenses were

$4.2 million for the six months ended March 31, 2024, compared to $3.5 million for the six months ended March 31, 2023.

The $0.7 million

increase in the current six month period compared to the comparable prior year period was primarily due to higher administrative payroll

of $0.3 million, professional fees of $0.3 million, mainly in connection with legal services, and other general operating expenses of

$0.1 million on a net basis.

Selling, general and administrative expenses included $0.5 million of stock-based compensation during each

of the six months ended March 31, 2024 and 2023.

Research and Development Expenses

Research and development expenses were $2.8 million

for the six months ended March 31, 2024, compared to $3.3 million for the six months ended March 31, 2023.

The $0.5 million decrease period

over period was attributed largely to the timing of development of activities, which primarily included salary-related expenses and costs

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

strip/grid products, offset in part by an increase in quality control activities.

Research and development expenses included stock-based

compensation of $65,000 and $45,000 during the three months ended December 31, 2023 and 2022, respectively.

income during the three months ended December 31, 2023 consisted of interest income in the amount of $46,000 attributed to our cash and

cash equivalents.

income during the three months ended December 31, 2022 consisted of interest income in the amount of $52,000 attributed to our cash,

cash equivalents and short term investments.

and Capital Resources

of December 31, 2023, our principal source of liquidity consisted of cash and cash equivalents in the aggregate of approximately $2.7

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

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

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

Our most significant cash requirements

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

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

Research (“Mayo”).

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

See “Funding Requirements” below for more information.

We anticipate that our expenses will increase substantially

as we develop and commercialize our electrode technology and pursue pre-clinical and clinical trials, seek regulatory approvals, manufacture

products, establish our own sales, marketing and distribution infrastructure to commercialize our ablation electrode technology, hire

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

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

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

more recent financings described below.

At-The-Market

December 21, 2022, we entered into a Capital on Demand TM Sales Agreement (“Sales Agreement”) with JonesTrading

Institutional Services LLC (“JonesTrading”) to create an at-the-market offering program (“ATM”) under which we

may offer and sell shares having an aggregate offering price of up to $14.5 million.

JonesTrading is entitled to a commission at a fixed

commission rate of up to 3% of the gross proceeds.

On July 24, 2023, we decreased the amount of common stock that can be sold pursuant

to the Sales Agreement, such that we were offering up to an aggregate of $2.6 million of our common stock for sale under the Sales Agreement,

including the shares of common stock previously sold.

Subsequently on December 1, 2023, however, we increased the amount of common stock

that can be sold pursuant to the Sales Agreement, such that we were offering up to an aggregate of $4.8 million of our common stock for

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

January 5, 2024, we further increased the amount of common stock that can be sold pursuant to the Sales Agreement, such that we are offering

over period was attributed to the timing and an overall reduction in supporting OneRF development activities during the current six month

period when compared to the comparable prior year period.

Research and development primarily included salary-related expenses and costs

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

Research and development expenses included $142,000 and $83,000 of stock-based compensation during the six months ended March

31, 2024 and 2023, respectively,

Other Income, net

Other income, net during the six months ended

March 31, 2024 consisted of $77,000 related to interest income attributed to our cash and cash equivalents.

Other income, net during the six months ended

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

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

NeuroOne Medical Technologies

Liquidity and Capital Resources

As of March 31, 2024, our principal source of

liquidity consisted of cash and cash equivalents in the aggregate of approximately $2.4 million.

While we began to generate revenue in

fiscal year 2021 from commercial sales and through milestone and other payments under our collaboration with Zimmer, we expect to continue

to incur significant expenses and increasing operating and net losses for the foreseeable future until and unless we generate an adequate

level of revenue from commercial sales to cover expenses.

Our most significant cash requirements relate to the funding of our ongoing

product development and commercialization operations and our royalty obligations under our intellectual property licenses with the Wisconsin

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

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

See “Funding Requirements”

below for more information.

We anticipate that our expenses will increase substantially as we develop and commercialize our electrode

technology and pursue pre-clinical and clinical trials, seek regulatory approvals, manufacture products, establish our own sales, marketing

and distribution infrastructure to commercialize our ablation electrode technology, hire additional staff, add operational, financial

and management systems and continue to operate as a public company.

Capital Resources

Our sources of cash, cash equivalents and short-term

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

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

At-The-Market Offering

On December 21, 2022, we entered into a Capital

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

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

price of up to $14.5 million.

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

On July 24, 2023, we decreased the amount of common stock that can be sold pursuant to the Sales Agreement, such that we were offering

up to an aggregate of $2.6 million of our common stock for sale under the Sales Agreement, including the shares of common stock previously

Through December 31, 2023, we have issued 2,307,920 shares of common

stock under the ATM for gross proceeds in the amount of $3.8 million.

We incurred issuance costs in connection with the ATM in the amount

of $0.3 million through December 31, 2023.

During January 2024, we issued an additional 1,080,314 shares of common stock for net proceeds

in the amount of $1.5 million in connection with the Sales Agreement.

Medical Technologies Corporation

2023 Public Offering

July 24, 2023, we entered into an underwriting agreement with The Benchmark Company, LLC, as underwriter (“Benchmark”), relating

to the issuance and sale of 5,250,000 shares of our common stock, par value $0.001 per share, at a price to the public of $1.00 per share

Subsequently on December 1, 2023, however, we increased the amount of common stock that can be sold pursuant to the Sales Agreement,

such that we were offering up to an aggregate of $4.8 million of our common stock for sale under the Sales Agreement, including the shares

of common stock previously sold.

On January 5, 2024, we further increased the amount of common stock that can be sold pursuant to

the Sales Agreement, such that we are offering up to an aggregate of $9.3 million of our common stock for sale under the Sales Agreement,

including the shares of common stock previously sold.

Through March 31, 2024, we have issued 3,769,273

shares of common stock under the ATM for gross proceeds in the amount of $5.9 million.

We incurred issuance costs in connection with the

ATM in the amount of $0.4 million through March 31, 2024.

Between April 1 and May 10, 2024, we issued an additional 1,093,135 shares of

common stock for net proceeds in the amount of $1.3 million in connection with the Sales Agreement.

NeuroOne Medical Technologies

July 2023 Public Offering

On July 24, 2023, we entered into an underwriting

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

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

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

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

The July 2023 Public Offering

In addition, under the terms of the July 2023 Public Offering, we granted Benchmark an

option, exercisable for 30 days, to purchase up to an additional 787,500 shares of common stock on the same terms (“the Overallotment

The July 2023 Public Offering closed on July 27, 2023, and we completed the sale and issuance of an aggregate of 6,037,500

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

net proceeds to us from the July 2023 Public Offering were approximately $5.2 million after deducting underwriting discounts and other

offering expenses payable by the Company.

noted above, certain of our cash requirements relate to the funding of our ongoing product development and commercialization operations

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

“Item 1—Business—Clinical Development and Regulatory Pathway—Clinical Experience, Future Development and Clinical

Trial Plans” in our Annual Report on Form 10-K for the year ended September 30, 2023 for a discussion of design, development, pre-clinical

and clinical activities that we may conduct in the future, including expected cash expenditures required for some of those activities,

to the extent we are able to estimate such costs.

January 21, 2020, we entered into an Amended and Restated License Agreement (the “WARF License”) with WARF, which amended

and restated in full our prior license agreement with WARF, dated October 1, 2014.

Under the WARF License, we have agreed to pay WARF

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

of $50,000 for 2020, $100,000 for 2021 and $150,000 for 2022 and each calendar year thereafter that the WARF License is in effect.

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

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

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

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

exercise in full of the Overallotment Option.

The net proceeds to us from the July 2023 Public

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

Funding Requirements

As noted above, certain of our cash requirements

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

our intellectual property licenses with WARF and Mayo.

See “Item 1—Business—Clinical

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

on Form 10-K for the year ended September 30, 2023 for a discussion of design, development, pre-clinical and clinical activities that

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

estimate such costs.

On January 21, 2020,

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

our prior license agreement with WARF, dated October 1, 2014.

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

single-digit percentage of our product sales pursuant to the WARF License, with a minimum annual royalty payment of $50,000 for 2020,

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

If we or any of our sublicensees

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

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

term of the WARF License.

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

2 unchanged sentences

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

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

Our other cash requirements greater than twelve months from various contractual obligations and commitments include operating

leases and contracted services.

Refer to “Note 4 – Commitments and Contingencies”

included in our condensed financial statements included in “Part 1, Item 1 – Financial Statements” in this Report for

further detail of our lease obligations and the timing of expected future payments.

Contracted services include agreements with

third-party service providers for clinical research, product development, manufacturing, supplies, payroll services, equipment maintenance

services, and audits for periods up to fiscal year 2025.

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

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

Medical Technologies Corporation

a discussion of potential fee payments under the Zimmer Development Agreement, see “Note

7 — Zimmer Development Agreement” included in our condensed financial statements included in “Part 1, Item 1 –

Financial Statements” in this Report.

Even though we have received regulatory clearance to expand the use of our Evo sEEG

electrode technology for up to 30 days, commercial sales of the sEEG electrodes are expected to take some time to be a significant source

of liquidity.

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

cable assembly products.

Zimmer’s failure to timely develop or commercialize these products would have a material adverse effect

on our business and operating results.

December 31, 2023, we had cash and cash equivalents in the aggregate of approximately $2.7 million.

Management has noted the existence

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

Additionally, our independent registered public accounting firm

included an explanatory paragraph in the report on our financial statements as of and for the years ended September 30, 2023 and 2022,

respectively, noting the existence of substantial doubt about our ability to continue as a going concern.

Our existing cash and cash

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

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

or partnerships with other companies or other sources.

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

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

If we are unable to raise

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

order to extend the time period that existing resources can fund our operations.

If we are unable to obtain the necessary capital, it

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

development and commercialization of our cortical strip, grid electrode and depth electrode technology is subject to numerous uncertainties,

and we could use our cash and cash equivalent resources sooner than we expect.

Additionally, the process of developing medical devices

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

Our ability to successfully transition

to profitability will be dependent upon achieving further regulatory approvals and achieving a level of product sales adequate to support

our cost structure.

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

following is a summary of cash flows for each of the periods set forth below.

For the Three Months Ended

Our other cash requirements

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

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

Refer to “Note 4 – Commitments and Contingencies” included in our condensed

financial statements included in “Part 1, Item 1 – Financial Statements” in this Report for further detail of our lease

obligations and the timing of expected future payments.

Contracted services include agreements with third-party service providers

for clinical research, product development, manufacturing, supplies, payroll services, equipment maintenance services, and audits for

periods up to fiscal year 2025.

We expect to satisfy

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

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

NeuroOne Medical Technologies

Liquidity Outlook

For a discussion of potential fee payments under

the Zimmer Development Agreement, see “Note 7 — Zimmer Development Agreement”

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

Even though we have received regulatory clearance to expand the use of our Evo sEEG electrode technology for up to 30 days, commercial

sales of the sEEG electrodes are expected to take some time to be a significant source of liquidity.

Zimmer has exclusive global rights

to distribute our strip and grid cortical electrodes, depth electrodes and electrode cable assembly products.

Zimmer’s failure to

timely develop or commercialize these products would have a material adverse effect on our business and operating results.

At March 31, 2024, we had cash and cash equivalents

in the aggregate of approximately $2.4 million.

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

as a going concern.

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

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

doubt about our ability to continue as a going concern.

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

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

To continue to fund operations, we will need to secure additional

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

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

Any failure to raise capital when needed could compromise

our ability to execute on our business plan.

If we are unable to raise additional funds, or if our anticipated operating results are not

achieved, we believe planned expenditures may need to be reduced in order to extend the time period that existing resources can fund our

If we are unable to obtain the necessary capital, it may have a material adverse effect on our operations and the development

of our technology, or we may have to cease operations altogether.

The development and commercialization of our cortical

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

resources sooner than we expect.

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

tests and clinical trials is uncertain.

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

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

We cannot assure you that we will

ever be profitable or generate positive cash flow from operating activities.

The following is a summary of cash flows for each

of the periods set forth below.

Six Months Ended

Net cash used in operating activities

2 unchanged sentences

Net cash (used in) provided by investing activities

Net cash provided by

(used in) financing activities

Net decrease in cash

Net cash provided by financing activities

Net decrease in cash and cash equivalents

$ (2,887,838 )

$ (4,558,166 )

Medical Technologies Corporation

cash used in operating activities

cash used in operating activities was $3.8 million for the three months ended December 31, 2023, which consisted of a net loss of $3.3

million partially offset by non-cash stock-based compensation, depreciation, amortization related to intangible assets and non-cash lease

expense, totaling approximately $0.4 million in the aggregate.

The net change in our net operating assets and liabilities associated

with fluctuations in our operating activities resulted in a net cash use of $0.9 million.

The net cash use stemming from the change in

operating assets and liabilities was primarily attributable to an increase in accounts receivable connection with the Zimmer Development

Agreement and to a decrease in accrued expenses, offset in part by decreases in prepaid expenses and inventory on hand attributed to

the timing of payments and purchases.

cash used in operating activities was $3.5 million for the three months ended December 31, 2022, which consisted of a net loss of $1.7

million partially offset by non-cash stock-based compensation, depreciation, amortization related to intangible assets, short-term investment

discount and premium amortization, and non-cash lease expense, totaling approximately $0.3 million in the aggregate.

The net change in

our net operating assets and liabilities associated with fluctuations in our operating activities resulted in a net cash use of $2.1

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

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

Zimmer Amendment, and to a lesser extent, due to an increase in inventory purchases and accounts receivable and a net decrease in the

aggregate of account payable, accrued expenses, prepaid expense attributed to the timing of payments.

cash (used in) provided by investing activities

cash used by investing activities for the three month ended December 31, 2023 was $37,000 and consisted of outlays for purchases of property

and equipment.

cash provided by investing activities for the three month ended December 31, 2022 was $15,000 and consisted of maturities of short-term

investments in the amount of $1.5 million, offset by purchases of short term investments, consisting of treasury and corporate notes,

and by outlays for purchases of property and equipment.

cash provided by (used in) financing activities

Net cash provided by financing activities was $1.2 million for the

three months ended December 31, 2023, which consisted of net proceeds in connection with the ATM, offset in a small part by common stock

repurchases for the payment of withholding taxes.

cash used in financing activities was $16,000 for the three months ended December 31, 2022, which consisted of deferred issuance costs

in connection with the ATM.

Accounting Estimates

financial statements are prepared in accordance with U.S.

Net cash used in operating activities

Net cash used in operating activities was $6.0

million for the six months ended March 31, 2024, which consisted of a net loss of $6.2 million partially offset principally by non-cash

stock-based compensation, depreciation, amortization related to intangible assets, operating lease expense, totaling approximately $0.8

million in the aggregate.

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

resulted in a cash use of approximately $0.6 million.

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

primarily attributable to both an increase in our accounts receivable and prepaid expense as well as attributed to a net decrease in our

accrued expenses and other liabilities.

Partially offsetting the net cash used for the period was the reduction in inventory purchases

and increase in our account payable attributed to the timing of payments.

NeuroOne Medical Technologies

Net cash used in operating activities was $7.0

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

stock-based compensation, depreciation, amortization related to intangible assets and to our short-term investments, operating lease expense,

totaling approximately $0.6 million in the aggregate.

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

in our operating activities resulted in a cash use of approximately $2.4 million.

The net cash use stemming from the change in operating

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

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

accounts receivable and prepaids, coupled with a decrease in the aggregate of account payable and accrued expenses, attributed to the

timing of payments.

Net cash (used in) provided by investing activities

Net cash used in investing activities was $ 68,000

for the six months ended March 31, 2024 and consisted of outlays for purchases of property and equipment.

Net cash provided by investing activities was

$1.8 million for the six months ended March 31, 2023 and consisted of maturities of short-term investments in the amount of $3.5 million,

offset by purchases of short term investment of $1.5 million, consisting of treasury and corporate notes.

The balance of activity during

the period consisted of outlays for purchases of property and equipment in the amount $0.2 million.

Net cash provided by financing activities

Net cash provided by financing activities was

$3.2 million for the six months ended March 31, 2024, which consisted of net proceeds from the ATM of $3.2 million, offset partially by

repurchases of common stock for the payment of employee taxes in the amount of $25,000.

Net cash provided by financing activities was

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

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

Critical Accounting Estimates

Our financial statements are prepared in accordance

generally accepted accounting principles.

These accounting principles require

us to make estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements

as well as the reported amounts of revenue and expense during the periods presented.

We believe that the estimates and judgments upon

which we rely are reasonably based upon information available to us at the time that we make these estimates and judgments.

To the extent

that there are material differences between these estimates and actual results, our financial results will be affected.

The accounting

policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding

and evaluating our reported financial results are described in Note 3 — “Summary of Significant Accounting Policies”

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

Medical Technologies Corporation

these policies, the following are considered critical to an understanding of our condensed financial statements included in “Part

1, Item 1 – Financial Statements” in this Report as they require the application of the most subjective and the most complex

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

Zimmer Development Agreement” included in our condensed financial statements included in “Part 1, Item 1 – Financial

Statements” in this Report.

To date, we have not had, nor expect to have in the future, significant variable consideration adjustments

related to product revenue, such as chargebacks, sales allowances and sales returns.

discussions about the application of grant date fair value associated with our stock-based compensation, see “Note 8 — Stock-Based

Compensation” included in our condensed financial statements included in “Part 1, Item 1 – Financial Statements”

in this Report.

Tax Assets and Liabilities

tax assets and liabilities include income tax valuation allowances.

For additional information, see “Note 10 — Income

Taxes” included in our condensed financial statements included in “Part 1, Item 1 – Financial Statements” in

this Report and “Note 11 – Income Taxes” in Part II, Item 8 “Financial Statements” of our Annual Report

on Form 10-K for the year ended September 30, 2023.

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

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

expense during the periods presented.

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

available to us at the time that we make these estimates and judgments.

To the extent that there are material differences between these

estimates and actual results, our financial results will be affected.

The accounting policies that reflect our more significant estimates

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

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

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

Of these policies, the following are considered critical to an understanding

of our condensed financial statements included in “Part 1, Item 1 – Financial Statements” in this Report as they require

the application of the most subjective and the most complex judgments:

For discussion about the determination of collaborations

revenue, product revenue and cost of product revenue, see “Note 7 — Zimmer Development Agreement” included in our condensed

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

To date, we have not had, nor

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

and sales returns.

NeuroOne Medical Technologies

Stock-based Compensation

For discussions about the application of grant

date fair value associated with our stock-based compensation, see “Note 8 — Stock-Based Compensation” included in our

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

Income Tax Assets and Liabilities

Income tax assets and liabilities include income

tax valuation allowances.

For additional information, see “Note 10 — Income Taxes” included in our condensed financial

statements included in “Part 1, Item 1 – Financial Statements” in this Report and “Note 11 – Income Taxes”

in Part II, Item 8 “Financial Statements” of our Annual Report on Form 10-K for the year ended September 30, 2023.

Contingencies

are subject to numerous contingencies arising in the ordinary course of business, including legal contingencies.

For additional information,

see “Note 4 — Commitments and Contingencies” included in our condensed financial statements included in “Part

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

Accounting Pronouncements

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

1, Item 1 – Financial Statements” in this Report for a discussion of recently issued accounting pronouncements.

We are subject to numerous contingencies arising

in the ordinary course of business, including legal contingencies.

For additional information, see “Note 4 — Commitments

and Contingencies” included in our condensed financial statements included in “Part 1, Item 1 – Financial Statements”

in this Report.

Recent Accounting Pronouncements

Refer to “Note 3— Summary of

Significant Accounting Policies” to our condensed financial statements included in “Part 1, Item 1 – Financial Statements”

in this Report for a discussion of recently issued accounting pronouncements.

Quantitative and Qualitative Disclosures About Market Risk

applicable for smaller reporting companies.

Not applicable for smaller reporting companies.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis