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Item 7. Management’s Discussion and Analysis

2024-12-17 compared with 2023-12-15 · 425 added, 311 removed, 212 unchanged (78% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and

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applications of our technology associated with artificial intelligence.

In November 2019, our Evo cortical electrode technology

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

we received FDA clearance for our Evo sEEG electrode technology for temporary (less than 30 days) use with recording, monitoring, and

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

We completed feasibility bench top testing with

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

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

We completed design verification of such hardware

early in the second calendar quarter of 2023.

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

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

of radiofrequency lesions in nervous tissue for functional neurosurgical procedures.

Our other products are still under development.

We commenced commercial

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

We sold, on a limited

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

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

Our other products are still under development.

NeuroOne Medical Technologies

We have incurred losses since inception.

As of September 30, 2023,

we had an accumulated deficit of $62.7 million, primarily as a result of expenses incurred in connection with our research and development,

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

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

We have 510(k) clearance for three of our 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.

We distribute our cEEG strip/grid electrodes,

cable assembly products and our OneRF Ablation System with Zimmer Biomet.

We have incurred losses

since inception.

As of September 30, 2024, we had an accumulated deficit of $75.0 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.

Prior to FDA clearance

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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 have begun to generate revenue from the sale of products based on our cEEG and sEEG technology, and OneRF System, 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

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Outlook” below.

Recent Developments and Upcoming Milestones

Recent Developments

Corporate Updates

Appointment of COO

On November 14, 2023, we announced the appointment

of Christopher R.

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

sEEG Commercial Launch

In May 2023, we announced the commercial launch

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

We have fulfilled

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

Zimmer Biomet sales personnel.

The first clinical case using the Evo® sEEG

electrode in robotic neurosurgery was performed by Dr.

William Bingaman at the Cleveland Clinic.

The procedure was the first to utilize

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

and performing complex yet minimally invasive neurosurgical procedures.

OneRF Ablation

During the second fiscal quarter of 2023, we successfully

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

protocols for the final OneRF ablation system.

We submitted a 510(k) application to the FDA for the OneRF ablation system in June 2023,

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

Spinal Cord Stimulation Program

During the second fiscal quarter of 2023, we completed

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

The devices are intended for the treatment

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

A percutaneous (through

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

NeuroOne Medical Technologies

OneRF Ablation System

In March 2024, we announced a limited commercial

launch of our OneRF ablation system.

In October 2024, we amended and restated our Distribution Agreement with Zimmer to provide exclusive

right and license to distribute also our OneRF Ablation System.

NeuroOne Medical Technologies Corporation

Nasdaq Notice

Since May 28, 2024, the closing price of our common

stock has been below $1.00.

On July 11, 2024, we received a letter from the Listing Qualifications Department of the Nasdaq informing

us that because the closing bid price for our common stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, the Company

was not in compliance with the Minimum Bid Price Requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq

Marketplace Rule 5550(a)(2).

In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has a period of 180 calendar days from

July 11, 2024, or until January 7, 2025, to regain compliance with the Minimum Bid Price Requirement.

If at any time before January 7,

2025, the closing bid price of the Company’s common stock closes at or above $1.00 per share for a minimum of 10 consecutive trading

days (which number days may be extended by Nasdaq), Nasdaq will provide written notification that the Company has achieved compliance

with the Minimum Bid Price Requirement, and the matter would be resolved.

The Notice also disclosed that in the event we

do not regain compliance with the Rule by January 7, 2025, we may be eligible for additional time.

To qualify for additional time, we

would be required to meet the applicable market value of publicly held shares requirement for continued listing and all other applicable

standards for initial listing on The Nasdaq Capital Market, with the exception of the bid price requirement, and would need to provide

written notice of our intention to cure the deficiency during the second compliance period.

If we meet these requirements, Nasdaq will

inform us that it has been granted an additional 180 calendar days.

However, if it appears to the Staff that we will not be able to cure

the deficiency, or if we are otherwise not eligible, Nasdaq will provide notice that our securities will be subject to delisting.

We intend to continue actively monitor the closing

bid price for our common stock between now and January 7, 2025, and will consider available options to resolve the deficiency and regain

compliance with the Minimum Bid Price Requirement.

If we do not regain compliance within the allotted compliance period, including any

extensions that may be granted by Nasdaq, Nasdaq will provide notice that our common stock will be subject to delisting.

We would then

be entitled to appeal that determination to a Nasdaq hearings panel.

There can be no assurance that we will regain compliance with the

Minimum Bid Price Requirement during the 180-day compliance period, secure a second period of 180 calendar days to regain compliance,

or maintain compliance with the other Nasdaq listing requirements.

Debt Facility Agreement

On August 2, 2024, we entered into a loan and

security agreement with Growth Opportunity Funding, LLC, as the Lender, which provides for a delayed draw term loan Debt Facility in an

aggregate principal amount not to exceed $3.0 million.

We are permitted to borrow loans under the Debt Facility from time to time, for

general corporate purposes and subject to certain specified conditions, until the earliest of:

(i) November 30, 2024, (ii) the occurrence

of any monetization or change in control, or (iii) at the Lender’s option, upon the occurrence and during the continuance of an

event of default under the Debt Facility Agreement.

The Loan(s), upon issuance, will be secured by substantially all of our assets, subject

to certain exceptions set forth in the Debt Facility Agreement, and will be subject to covenants.

On November 7, 2024, we mutually agreed

with the Lender to terminate the loan facility.

On August 2, 2024, we issued 100,000 Lender Warrants

to Lender to purchase shares of the Company’s common stock at exercise price of $0.66 per share.

The warrants are immediately exercisable

and expire on August 2, 2029.

2024 Private Placement

On August 1, 2024, we entered into a Securities

Purchase Agreement which closed on August 2, 2024, with certain Purchasers, pursuant to which we, in the Private Placement, agreed to

issue and sell an aggregate of (i) 2,944,446 shares of the our common stock, and (ii) warrants to purchase an aggregate of 2,208,338 shares

of common stock at a purchase price of $0.90 per unit, consisting of one share and a PIPE warrant to purchase 0.75 shares of common stock,

resulting in total gross proceeds of approximately $2.65 million before deducting estimated expenses.

In connection with the 2024 Private

Placement, we filed a registration statement with the U.S.

Securities and Exchange Commission (“SEC”) covering the resale

of the securities issued in the 2024 Private Placement.

One of the Purchasers in the 2024 Private Placement included Paul Buckman, a director

on the Company’s Board of Directors.

NeuroOne Medical Technologies Corporation

Global Economic Conditions

Generally, worldwide economic conditions remain

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

markets, lingering effects of the COVID-19 pandemic and increased inflation.

The general economic and capital market conditions both in

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

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

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

The COVID-19 pandemic

that began in late 2019 introduced significant volatility to the global economy, disrupted supply chains and had a widespread adverse

effect on the financial markets.

Additionally, our operating results could be materially impacted by changes in the overall macroeconomic

environment and other economic factors.

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

the conflicts in Ukraine and the Middle East, disruptions in the banking system and financial markets, and steps taken by governments

and central banks, particularly in response to the COVID-19 pandemic as well as other stimulus and spending programs, have led to higher

inflation, which has led to an increase in costs and has caused changes in fiscal and monetary policy, including increased interest rates.

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, increased inflation, 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.

Financial Overview

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Our product revenue was derived from the sale

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

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

We anticipate that

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

of our Strip/Grid Products, the sEEG Products and the Electrode Cable Assembly Products based on Evo cortical electrode technology and

the OneRF Products, which are products based on our OneRF Ablation System.

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 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

Product Gross Profit (Loss)

Product gross profit (loss) represents our product

revenue less our cost of product revenue.

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

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

the Electrode Cable Assembly Products.

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

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

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.

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, OneRF 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 Revenue

On July 20, 2020, we entered into an exclusive

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

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

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

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

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

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

Under the terms of the Zimmer Development Agreement,

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

related to the commercialization of the Products.

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

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

NeuroOne Medical Technologies

Except as otherwise provided in the Zimmer Development Agreement, we

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

approval of each Product.

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

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

Pursuant to the Zimmer Development Agreement,

development and distribution agreement (the “Zimmer Distribution 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 Distribution Agreement.

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

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

Under the terms of the Zimmer Distribution Agreement,

we are responsible for all costs and expenses related to developing the Products (as defined therein), and Zimmer is responsible for all

costs and expenses related to the commercialization of the Products.

In addition to the Zimmer Distribution Agreement, Zimmer and the

Company have entered into a MS Agreement and a Quality Agreement with respect to the manufacturing and supply of the Products.

NeuroOne Medical Technologies Corporation

Pursuant to the Zimmer Distribution Agreement,

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

in fiscal year 2020.

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

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

In consideration

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

the Zimmer Development Agreement were replaced with the following below:

In addition, on August 2, 2022, we entered into a Third Amendment to the Zimmer Distribution 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 Distribution Agreement, certain fee

and milestone payment provisions in the Zimmer Distribution 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.

In addition, in connection with the Amendment,

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

In addition, in connection with the Zimmer Amendment,

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

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

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

The Zimmer Development Agreement will expire on

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

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

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

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

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

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

certain competitors of the Company.

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

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

All payments attributed to the Initial Exclusivity

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

The Zimmer Development Agreement and Amendment

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

The Zimmer Distribution 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 Amendment:

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

under the Zimmer Distribution Agreement and Zimmer Amendment:

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

(2) completion

of sEEG Product development;

(2) completion of sEEG Product development;

(3) completion of Strip/Grid Product development;

(4) the provision of sEEG exclusivity maintenance;

(5) sEEG design modifications as requested by Zimmer.

All performance obligations under the Zimmer Development Agreement and Amendment

were met as of December 31, 2022.

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

All performance obligations under the Zimmer Distribution Agreement and Zimmer

Amendment were met as of December 31, 2022.

In October 2022, we received 510(k) clearance

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

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

NeuroOne Medical Technologies

There was no collaboration revenue during the year ended September 30, 2024.

In October 2024, we amended and restated our development

and distribution agreement with Zimmer to grant exclusive right and license to distribute also our OneRF Ablation System for an upfront

fee of $3.0 million dollars and up to an additional $1.0 million dollars upon achievement of certain net sales milestone by Zimmer.

The Zimmer Amended and Restated Distribution Agreement

will expire on September 30, 2034 (the “Zimmer Term”), unless terminated earlier pursuant to its terms.

Either party may terminate

the Zimmer Amended and Restated Distribution 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

Amended and Restated Distribution Agreement for any reason with 90 days’ written notice, and the Company may terminate the Zimmer

Amended and Restated Distribution 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 Amended and Restated Distribution 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 achievement of the level of sales required

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

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

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

and Supplementary Data” in this Report.

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

“Note 7 — Zimmer Distribution Agreement” included in our financial statements

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

NeuroOne Medical Technologies Corporation

Selling, General and Administrative

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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.

the commercial sale of cEEG strip/grid, sEEG depth electrode, OneRF ablation system 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, ablation system and our depth electrode technology, and the increased

costs of operating as a public company.

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

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

Research and Development

Research and development expenses consist of expenses

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

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

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

operations, fees paid to consultants and other outside expenses.

Research and development costs are expensed as incurred and costs incurred

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

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

materials are offset against research and development expenses.

We expect our research and development expenses

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

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

and clinical trials.

incurred in performing research and development activities in developing our 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.

Fair Value Change in Warrant Liability

The net change in fair value line item is attributed

to the warrant liability while outstanding.

Financing Costs

Financing costs consists of the amortization of

the deferred issuance costs associated with the debt facility (as described further below) and issuance costs attributed to the warrants

issued in connection with the 2024 Private Placement (as described further below).

Other Income, net

Other income, net primarily consists of interest

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

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

income related to our cash, cash equivalents, investment income or loss from short-term investments, while outstanding, 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

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Cost of product revenue

Product gross profit (loss)

Product gross profit

Collaborations revenue

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(11,955,250 )

Fair value change in warrant liability

Financing costs

Other income, net

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(12,318,110 )

Provision for income taxes

(11,859,491 )

Provision for income taxes

$ (12,318,110 )

$ (11,859,491 )

NeuroOne Medical Technologies

Product Revenue and Product Gross Profit (Loss)

Product revenue and product gross profit were

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

Product revenue and product gross loss were $0.2

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

The increase in gross profit during the current period

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

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

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

Cable Assembly Products sales.

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

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

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

with our Strip/Grid Products, sEEG Products and outside supplier materials costs in connection with the Electrode Cable Assembly Products.

In addition, cost of product revenue included royalty fees incurred of approximately $0.2 million and $0.1 million in connection with

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

NeuroOne Medical Technologies Corporation

Product Revenue and Product Gross Profit

Product revenue was $3.5 million during the year

ended September 30, 2024 with a gross profit and gross profit percentage of $1.1 million and 31.3%, respectively.

Product revenue was

$2.0 million during the year ended September 30, 2023 with a gross profit and gross profit percentage of $0.5 million and 23.4%, respectively.

The increase in gross profit percentage during the current period was largely due to the higher sales volume that exceeded fixed royalty

and overhead period costs and due to slightly lower overall material supply costs.

Product revenue consisted of Strip/Grid Products, sEEG

Products, OneRF 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 OneRF 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 $157,000 in connection with our license agreements during each of the years ended September 30,

2024 and 2023.

Collaborations Revenue

Collaborations revenue was $1.5 million and $1.9

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

Revenue during the periods presented were derived from the Zimmer

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

initial development fee and payments associated with the Amendment.

There was no collaborations revenue during the

year ended September 30, 2024.

Collaborations revenue was approximately $1.5 million during the year ended September 30, 2023.

during the prior year period was derived from the Zimmer Distribution Agreement in connection with the completion of the sEEG maintenance

fee obligation as a result of securing FDA approval.

Selling, General and Administrative Expenses

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$7.9 million and $6.9 million for the years ended September 30, 2024 and 2023, respectively.

The negligible change period over period

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

service and marketing related costs of $0.4 million.

The $1.0 increase period over period was

primarily due to an increase in payroll related costs of approximately $0.4 million, stock-based compensation of $0.2 million, professional

and board fees of $0.3 million and marketing and sales costs of $0.2 million, offset slightly by a reduction in general operating costs

of $0.1 million on a net basis.

Research and Development Expenses

Research and development expenses were $6.9 million

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

The $2.0 million increase during

fiscal 2023 over the comparable prior year period was attributed to supporting development activities, which primarily included salary-related

expenses and costs related to consulting services, materials and supplies associated with the development of future sEEG product applications

and other products utilizing new technologies.

Research and development expenses were approximately

$5.1 million for the year ended September 30, 2024, compared to $6.9 million for the year ended September 30, 2023.

The $1.9 million decrease

period over period was attributed to the net reduction in development activities associated with our sEEG Products, Strip/Grid Products

and OneRF Products given the commercialization of these products.

Activity associated with new technology development partially offset

the overall net decrease in research and development costs during the current period.

Development activities primarily included salary-related

expenses and costs related to consulting services, materials and supplies.

Fair Value Change in Warrant Liability

The net change in fair value of the warrant liability

during the year ended September 30, 2024 was $0.3 million.

The change was due primarily to fluctuations in our common stock fair value.

There were no warrants outstanding during the year ended September 30, 2023 that were measured on a fair value basis.

Financing Costs

Financing costs during the year ended September

30, 2024 consisted of the amortization of the deferred issuance costs associated with the debt facility (described further below) in the

amount of $0.1 million and issuance costs attributed to the warrants issued in connection with the 2024 Private Placement (described further

below) in the amount of $0.1 million.

We did not incur any financing costs during the year ended September 30, 2023.

NeuroOne Medical Technologies Corporation

Other Income, net

Other income, net during the year ended September

30, 2024 consisted principally of interest income attributed to our cash and cash equivalents.

Other income, net during the year ended September

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

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

Other income, net during the year ended September

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

NeuroOne Medical Technologies

Liquidity and Capital Resources

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

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

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

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

See “Funding Requirements”

below for more information.

We anticipate that our expenses will increase substantially as we develop and commercialize our cortical strip,

grid electrode and depth electrode technology and pursue pre-clinical and clinical trials, seek regulatory approvals, manufacture products,

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

product development and commercialization operations.

Our additional material cash needs include commitments under operating leases, royalty

obligations under our intellectual property licenses with the Wisconsin Alumni Research Foundation and the Mayo Foundation for Medical

Education and Research as well as other administrative services.

See “Funding Requirements” below for more information.

anticipate that our expenses will increase substantially as we continue to develop and commercialize our electrode technology and pursue

pre-clinical and clinical trials, seek regulatory approvals, manufacture products, market and distribute our OneRF Products, hire additional

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

On August 2, 2024, we closed the

2024 Private Placement, a private placement of shares of common stock and warrants for total gross proceeds of approximately $2.65 million,

and entered into the Debt Facility, a delayed draw term debt facility in an aggregate principal amount not to exceed $3.0 million.

Capital Resources

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

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

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

August 2024 Private Placement

On August 1, 2024,

we entered into a Securities Purchase Agreement with certain Purchasers, pursuant to which we, in a private placement,

agreed to issue and sell an aggregate of (i) 2,944,446 shares of our Company’s common stock (the “Shares”), par value

$0.001 per share and (ii) warrants to purchase an aggregate of 2,208,333 shares of common stock (the “PIPE Warrants”)

at a purchase price of $0.90 per unit, consisting of one share and a PIPE Warrant to purchase 0.75 shares of common stock, resulting

in total gross proceeds of approximately $2.65 million before deducting estimated expenses.

The 2024 Private Placement closed on

August 2, 2024.

Issuance costs attributed to the 2024 Private Placement amounted to $0.2 million.

The PIPE Warrants are

exercisable beginning on the date of issuance, have an exercise price of $1.19 per share, subject to adjustment, and will expire on the

third anniversary of the date of issuance .

connection with the 2024 Private Placement, we agreed to file a registration statement with the SEC covering the resale of the Shares

and the shares of common stock issuable upon exercise of the PIPE Warrants which became effective on September 13, 2024.

NeuroOne Medical Technologies Corporation

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.

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 our common stock previously

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 our 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 September 30, 2024, we have issued 5,188,590 shares of common stock under

the ATM for gross proceeds in the amount of $7.6 million.

We incurred issuance costs in connection with the ATM in the amount of $0.5

million through September 30, 2024 of which $41,000 was reflected as a deferred cost on our balance sheet.

On August 16, 2024, we increased

the amount of common stock that can be sold pursuant to the Sales Agreement by $3.0 million.

Debt Facility Financing

On August 2, 2024, we entered into the Debt Facility

Agreement with Growth Opportunity Funding, LLC, as the Lender, which provided for a delayed draw term loan facility in an aggregate principal

amount not to exceed $3.0 million.

We were permitted to borrow loans under the Debt Facility Agreement from time to time, for general

corporate purposes and subject to certain specified conditions, until the earliest of:

(i) November 30, 2024, (ii) the occurrence of any

Monetization Event (as defined below) or Change of Control (as defined in the Debt Facility Agreement), or (iii) at the Lender’s

option, upon the occurrence and during the continuance of an event of default under the Debt Facility Agreement.

On November 7, 2024,

the Company terminated the Debt Facility Agreement and no amounts were drawn under the Debt Facility Agreement.

The Loans would have matured on February 2,

2026 if issued.

The rate of interest on any outstanding principal amount would have been 10% per annum, payable monthly in arrears and

at the maturity date.

As of the closing date of the Debt Facility Agreement, no amounts were drawn by the Company thereunder.

costs incurred in connection with the Debt Facility Agreement amounted to $0.3 million inclusive of the standby fee of $0.1 million to

2, 2024, we issued to the Lender a warrant exercisable for five years for 100,000 shares of our common stock at an exercise price

of $0.66 per share, subject to adjustment (the “Closing Date Debt Facility Warrant”).

At the time of any borrowing of Loans,

we would have been required to issue to the Lender additional warrants exercisable for five years for 50,000 shares of common stock (for

each $500,000 of Loans borrowed) at the same per share exercise price as the Closing Date Debt Facility Warrant (the “Additional

Debt Facility Warrants”, and together with the Closing Date Debt Facility Warrant, the “Debt Facility Warrants”).

We were permitted to

voluntarily prepay the outstanding Loans at any time, without premium or penalty, upon five business days’ prior written notice

to the Lender.

We were required to prepay outstanding Loans upon the occurrence of (i) any Change of Control or (ii) certain other events

as more fully described in the Debt Facility Agreement, but in any event including any capital raise or other transaction pursuant to

which we received cumulative cash proceeds in excess of $5.0 million in the aggregate (each such event in this prong (ii), a “Monetization

Our obligations under the Debt Facility Agreement were secured by a first-priority security interest in substantially all

assets of the Company, subject to certain exceptions set forth in the Debt Facility Agreement.

The Debt Facility Agreement

included other customary representations and warranties, conditions, affirmative and negative covenants, and events of default.

NeuroOne Medical Technologies Corporation

July 2023 Public Offering

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

intend to use the net proceeds from this offering to:

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

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

other general corporate purposes.

At-The-Market Offering

On December 21, 2022, we entered into a Capital

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

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

price of up to $14.5 million.

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

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

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

On July 24, 2023, we decreased

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

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

On December 1, 2023, we

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

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

NeuroOne Medical Technologies

October 2021 Underwritten Public Offering

On October 13, 2021, we entered into an underwriting

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

2021 Underwritten Public Offering”).

In addition, under the terms of the underwriting agreement, we granted the underwriter an option,

exercisable for 30 days, to purchase up to an additional 562,500 shares of common stock on the same terms.

The base offering closed on

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

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

expenses payable by us.

Funding Requirements

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our intellectual property licenses with WARF and Mayo.

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

in this Report for a discussion of design, development, pre-clinical and clinical activities that we may conduct in the future, including

expected cash expenditures required for some of those activities, to the extent we are able to estimate such costs.

See “Item 1—Business—Clinical

Development and Regulatory Pathway—Clinical Experience, Future Development and Clinical Trial Plans” of this Report for a

discussion of design, development, pre-clinical and clinical activities that we may conduct in the future, including expected cash expenditures

required for some of those activities, to the extent we are able to estimate such costs.

On January 21, 2020,

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

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

Under the WARF License, we have

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

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

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

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

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

Under the Amended and

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

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

Refer to “Note 4 – Commitments

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

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

our 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

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

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

Statements and Supplementary Data” in this Report.

for more information about the WARF License

and the Mayo Development Agreement.

Our other cash requirements

1 unchanged sentence

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

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

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

of expected future payments.

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

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

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

statements included in “Item 8 — Financial Statements and Supplementary Data” in this Report for further detail

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

Contracted services include agreements with third-party service providers

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

periods up to fiscal year 2028.

We expect to satisfy

1 unchanged sentence

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

NeuroOne Medical Technologies Corporation

Liquidity Outlook

For a discussion of potential fee payments under

the Zimmer Development Agreement, see “Note 7 — Zimmer Development Agreement” included in our financial statements included

in “Item 8 — Financial Statements and Supplementary Data” 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.

NeuroOne Medical Technologies

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

in the aggregate of approximately $5.3 million.

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

as a going concern.

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

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

the Zimmer Distribution Agreement, see “Note 7 — Zimmer Distribution Agreement and Other Product Revenue” included in

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

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 and OneRF Products 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.

October 2024, we entered into an Amended and Restated Distribution Agreement with Zimmer to provide Zimmer with the exclusive right and

license to distribute also our OneRF Ablation System for an upfront payment of $3.0 million, with eligibility for an additional $1.0 million

payment from Zimmer upon achievement of certain specified net sales milestones.

As of September 30, 2024, we had cash and cash

equivalents in the aggregate of approximately $1.5 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, 2024 and 2023, respectively, noting the existence of substantial

doubt about our ability to continue as a going concern.

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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.

strip, grid electrode, depth electrode, ablation system technology and future products and technology is subject to numerous uncertainties,

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

Additionally, the process of developing medical devices

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

Our ability to successfully transition to

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

our cost structure.

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

The following is a summary of cash flows for each

5 unchanged sentences

$ (12,886,874 )

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Net cash provided by financing activities

Net (decrease) increase in cash

Net decrease in cash and cash equivalents

$ (3,862,451 )

$ (2,837,836 )

NeuroOne Medical Technologies Corporation

Net cash used in operating activities

1 unchanged sentence

million for the year ended September 30, 2024, which consisted of a net loss of $12.3 million partially offset by non-cash stock-based

compensation, depreciation, amortization related to intangible assets and deferred financing costs, operating lease expense, fair value

change in warrant liability and the proceeds from the issuance of warrants in connection with the 2024 Private Placement totaling approximately

$2.3 million in the aggregate.

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

activities resulted in a cash use of approximately $1.0 million.

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

was primarily attributable to an increase in inventory purchases and to an increases in our accounts receivable attributed largely to

the timing of customer payments.

Partially offsetting the net cash operating use during the period was an increase in our accounts payable

and accrued expenses coupled with a decrease in prepaid expenses resulting from timing of payments and fluctuations in our operations.

Net cash used in operating activities was $12.9

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

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

3 unchanged sentences

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

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

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

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

2 unchanged sentences

from timing of payments and fluctuations in our operations.

Net cash used in operating activities was $7.5

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

compensation, depreciation, amortization related to intangible assets and to short-term investment discounts and premiums, non-cash lease

expense and non-cash consideration associated with the Zimmer Development Agreement, totaling approximately $1.3 million in the aggregate.

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

source of approximately $1.2 million.

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

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

NeuroOne Medical Technologies

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Net cash used in investing activities was $0.1

million for the year ended September 30, 2024 and consisted of outlays for purchases of property and equipment.

Net cash provided by investing activities was

4 unchanged sentences

with the disposal of equipment.

Net cash used by investing activities for the

year ended September 30, 2022 was $3.2 million and consisted of purchases of short-term investments consisting of treasury and corporate

notes of approximately $3.5 million and outlays for purchases of property and equipment of $0.3 million which were partially offset by

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

Net cash provided by financing activities

Net cash provided by financing activities was

$7.3 million for the year ended September 30, 2024, which consisted of net proceeds from the ATM of $4.8 million and net proceeds from

the 2024 Private Placement of $2.6 million, offset partially by repurchases of common stock for the payment of employee taxes in the amount

of $81,000 and debt facility issuance costs of approximately $75,000.

Net cash provided by financing activities was

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

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

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

2021 Underwritten Public Offering.

Critical Accounting Policies and Significant

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

NeuroOne Medical Technologies

Of these policies, the following are considered

critical to an understanding of our financial statements included in “Item 8 — Financial Statements and Supplementary Data”

in this Report that require the application of the most subjective and the most complex judgments:

NeuroOne Medical Technologies Corporation

policies, the following are considered critical to an understanding of our financial statements included in “Item 8 — Financial

Statements and Supplementary Data” in this Report that 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 “Item

8 — Financial Statements and Supplementary Data” 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.

revenue, product revenue and cost of product revenue, see “Note 7 — Zimmer Amended and Restated Distribution Agreement and

Other Product Revenue” included in “Item 8 — Financial Statements and Supplementary Data” in this Report.

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.

Stock-based Compensation

2 unchanged sentences

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

Fair Value of Warrant

We issued warrants in connection with our August

2024 Private Placement.

The warrants were classified as a liability on our balance sheet and were recorded at fair value as certain provisions

precluded equity accounting treatment for these instruments.

We will continue to adjust the liabilities for changes in fair value until

the earlier of the exercise, expiration, or until such time that cash settlement or indexation provisions are no longer in effect for

the warrants.

For discussions about the application of fair value associated with the warrants, see “Note 9 – Stockholders’

Equity” included in “Item 8 — Financial Statements and Supplementary Data” in this Report.

Income Tax Assets

13 unchanged sentences

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

Not applicable.

NeuroOne Medical Technologies Corporation

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

What changed 10-K

Item 7. Management’s Discussion and Analysis