NEUROONE MEDICAL TECHNOLOGIES Corp 10-Q

Item 1. Financial Statements NeuroOne Medical Technologies Corporation Condensed Balance Sheets As of December 31, September 30, 2024 2024 (Unaudited) Assets Current assets: Cash and cash equivalents $ 1,134,350 $ 1,460,042 Accounts receivable 2,368,913 176,636 Inventory 1,930,861 2,635,153 Deferred offering costs 82,962 142,633 Prepaid expenses 194,699 216,461 Total current assets 5,711,785 4,630,925 Intangible assets, net 61,683 67,262 Right-of-use asset 339,271 254,910 Property and equipment, net 381,711 416,843 Total assets $ 6,494,450 $ 5,369,940 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 744,525 $ 1,029,206 Accrued expenses and other liabilities 826,386 1,184,014 Total current liabilities 1,570,911 2,213,220 Warrant liability 1,750,870 2,140,315 Operating lease liability, long term 237,377 194,392 Total liabilities 3,559,158 4,547,927 Commitments and contingencies (Note 4) Stockholders’ equity: Preferred stock, $ 0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding. — — Common stock, $ 0.001 par value; 100,000,000 shares authorized; 30,841,830 and 30,816,499 shares issued and outstanding as of December 31, 2024 and September 30, 2024, respectively. 30,841 30,816 Additional paid–in capital 76,123,542 75,795,610 Accumulated deficit ( 73,219,091 ) ( 75,004,413 ) Total stockholders’ equity 2,935,292 822,013 Total liabilities and stockholders’ equity $ 6,494,450 $ 5,369,940 See accompanying notes to condensed financial statements 1 NeuroOne Medical Technologies Corporation Condensed Statements of Operations (unaudited) For the three months ended December 31, 2024 2023 Product revenue $ 3,274,167 $ 977,649 Cost of product revenue 1,347,278 711,335 Product gross profit 1,926,889 266,314 License revenue 3,000,000 — Operating expenses: Selling, general and administrative 2,043,454 2,173,472 Research and development 1,172,228 1,483,317 Total operating expenses 3,215,682 3,656,789 Income (loss) from operations 1,711,207 ( 3,390,475 ) Fair value change in warrant liability 389,445 — Financing cost ( 324,738 ) — Other income 9,408 45,575 Income (loss) before income taxes 1,785,322 ( 3,344,900 ) Provision for income taxes — — Net income (loss) $ 1,785,322 $ ( 3,344,900 ) Net income (loss) per share: Basic $ 0.06 $ ( 0.14 ) Diluted $ 0.06 $ ( 0.14 ) Number of shares used in per share calculations: Basic 30,837,524 23,995,610 Diluted 30,880,415 23,995,610 See accompanying notes to condensed financial statements 2 NeuroOne Medical Technologies Corporation Condensed Statements of Changes in Stockholders’ Equity (unaudited) Common Stock Additional Paid–In Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity Balance at September 30, 2023 23,928,945 $ 23,929 $ 68,911,778 $ ( 62,686,303 ) $ 6,249,404 Issuance of common stock attributed to equity financings 868,243 868 1,255,403 — 1,256,271 Issuance costs related to equity financings — — ( 37,698 ) — ( 37,698 ) Stock-based compensation — — 308,638 — 308,638 Issuance of common stock upon vesting of restricted stock units 45,078 45 ( 45 ) — — Share repurchases for the payment of employee taxes ( 11,176 ) ( 11 ) ( 13,548 ) — ( 13,559 ) Net loss — — — ( 3,344,900 ) ( 3,344,900 ) Balance at December 31, 2023 24,831,090 $ 24,831 $ 70,424,528 $ ( 66,031,203 ) $ 4,418,156 Common Stock Additional Paid–In Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity Balance at September 30, 2024 30,816,499 $ 30,816 $ 75,795,610 $ ( 75,004,413 ) $ 822,013 Stock-based compensation — — 339,224 — 339,224 Issuance of common stock upon vesting of restricted stock units 37,798 37 ( 37 ) — — Share repurchases for the payment of employee taxes ( 12,467 ) ( 12 ) ( 11,255 ) ( 11,267 ) Net income — — — 1,785,322 1,785,322 Balance at December 31, 2024 30,841,830 $ 30,841 $ 76,123,542 $ ( 73,219,091 ) $ 2,935,292 See accompanying notes to condensed financial statements 3 NeuroOne Medical Technologies Corporation Condensed Statements of Cash Flows (unaudited) For the three months ended December 31, 2024 2023 Operating activities Net income (loss) $ 1,785,322 $ ( 3,344,900 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Amortization and depreciation 65,127 58,657 Amortization of deferred offering costs 192,647 — Debt termination costs reclassed to financing activities 132,091 — Stock-based compensation 339,224 308,638 Fair value change in warrant liability ( 389,445 ) — Non-cash lease expense 27,537 28,861 Change in assets and liabilities: Accounts receivable ( 2,192,277 ) ( 543,399 ) Inventory 704,292 118,029 Prepaid expenses and other assets 21,762 3,780 Accounts payable ( 14,939 ) 79,527 Accrued expenses, operating leases and other liabilities ( 463,292 ) ( 518,584 ) Net cash provided by (used in) operating activities 208,049 ( 3,809,391 ) Investing activities Purchase of property and equipment ( 24,416 ) ( 37,131 ) Net cash used in investing activities ( 24,416 ) ( 37,131 ) Financing activities Proceeds from issuance of common stock attributed to equity financings — 1,256,271 Issuance costs attributed to common stock and warrants issued in private placements ( 185,902 ) ( 37,698 ) Financing costs in connection with debt facility ( 290,851 ) — Deferred issuance costs in connection with at-the-market offering program ( 21,305 ) — Share repurchases for the payment of employee taxes ( 11,267 ) ( 13,559 ) Net cash (used in) provided by financing activities ( 509,325 ) 1,205,014 Net decrease in cash ( 325,692 ) ( 2,641,508 ) Cash at beginning of period 1,460,042 5,322,493 Cash at end of period $ 1,134,350 $ 2,680,985 Supplemental non-cash financing and investing transactions: Unpaid deferred offering costs attributed to the at-the-market offering program $ 41,657 $ — Unpaid debt issuance costs $ 7,091 $ — Modification of right-of-use asset and associated lease liability $ 111,898 $ — See accompanying notes to condensed financial statements 4 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) NOTE 1 – Description of Business and Basis of Presentation NeuroOne Medical Technologies Corporation (the “Company” or “NeuroOne”), a Delaware corporation, is a medical technology company focused on the development and commercialization of thin film electrode for continuous electroencephalogram (“cEEG”) and stereoelectrocencephalography (“sEEG”) recording, monitoring, ablation, drug delivery and brain stimulation solutions to diagnose and treat patients with epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders. The Company received 510(k) clearance for three of its devices from the U.S. Food and Drug Administration (“FDA”), including: (i) its Evo cortical electrode technology for recording, monitoring, and stimulating brain tissue for up to 30 days, (ii) its Evo sEEG electrode technology for temporary (less than 30 days) use with recording, monitoring, and stimulation equipment for the recording, monitoring, and stimulation of electrical signals at the subsurface level of the brain, and (iii) its OneRF ablation system for creation of radiofrequency lesions in nervous tissue for functional neurosurgical procedures. The Company has a distribution agreement with Zimmer, Inc. (“Zimmer”) providing Zimmer with a license to commercialize and distribute these three products in the brain. The Company’s other products and indications are still under development. The Company is based in Eden Prairie, Minnesota. 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 the Company’s 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, the Company’s future cost of equity or debt capital and access to the capital markets could be adversely affected. The Company’s 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. Basis of presentation The accompanying unaudited condensed financial statements have been prepared by the Company, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. The condensed financial statements may not include all disclosures required by U.S. GAAP; however, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended September 30, 2024 included in the Company’s Annual Report on Form 10-K. The condensed balance sheet at September 30, 2024 was derived from the audited financial statements of the Company. In the opinion of management, all adjustments, consisting of only normal recurring adjustments that are necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, have been made. The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods. 5 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) NOTE 2 - Going Concern The accompanying condensed financial statements have been prepared on the basis that the Company will continue as a going concern. The Company has incurred losses since inception, negative cash flows from operations since inception, and an accumulated deficit of $ 73.2 million as of December 31, 2024. To date, the Company’s revenues have not been sufficient to cover its full operating costs, and as such, it has been dependent on funding operations through the issuance of debt and sale of equity securities. The Company has adequate liquidity to fund its operations through April 2025. The raising of additional funds is not solely within the control of the Company. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this condition. If the Company is unable to raise additional funds, or the Company’s anticipated operating results are not achieved, management believes planned expenditures may need to be reduced to extend the time period that existing resources can fund the Company’s operations. The Company intends to fund ongoing activities by utilizing its current cash and cash equivalents on hand, from product and license revenue and by raising additional capital through equity or debt financings. If management is unable to obtain the necessary capital, it may have a material adverse effect on the operations of the Company and the development of its technology, or the Company may have to cease operations altogether. NOTE 3 – Summary of Significant Accounting Policies Management’s Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Segment Information Operating segments are components of an enterprise for which separate financial information is available and are evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The Company’s Chief Executive Officer views the Company’s operations and manages its business in one operating segment, which is the business of development and commercialization of products related to comprehensive neuromodulation cEEG and sEEG recording, monitoring, ablation, and brain stimulation solutions. Accordingly, the Company has a single reporting segment. Cash and Cash Equivalents The Company considers all highly liquid investments with an original contractual maturity on date of purchase of less than or equal to three months to be classified and presented as cash equivalents on the balance sheets. Cash equivalents are stated at cost, which approximates fair value. The Company’s cash and cash equivalents may include demand deposit accounts with large financial institutions, institutional money market funds, U.S. Treasury securities, and corporate notes and bonds. The Company monitors the creditworthiness of the financial institutions, institutional money market funds, and corporations in which the Company invests its surplus funds. The Company has experienced no credit losses from its cash and cash equivalent investments. Revenue Recognition The Company entered into a development and distribution agreement which has current and future revenue recognition implications. See “Note 7 – Zimmer Distribution Agreement and Other Product Revenue. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. 6 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”). Performance obligations may include license rights, development services, and services associated with regulatory submission and approval processes. Significant management judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations are either completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method. Product Revenue Revenues from product sales are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. When the Company has consigned inventory at a customer, revenue is recognized at the point in time when the customer issues a purchase order to the Company and when control of the promised goods or services is transferred to the Company’s customers. At the inception of each customer contract, performance obligations are identified, and the total transaction price is allocated to the performance obligations. Cost of Product Revenue Cost of product revenue consists of the manufacturing and materials costs incurred by the Company’s third-party contract manufacturers in connection with the Company’s strip and grid cortical electrodes (the “Strip/Grid Products”), depth electrodes (“sEEG Products), OneRF product offerings (“OneRF Products”) and outside supplier materials costs in connection with the electrode cable assembly products (“Electrode Cable Assembly Products”). In addition, cost of product revenue includes royalty fees incurred in connection with the Company’s license agreements. License Revenue As part of the accounting for collaboration arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price of each performance obligation identified in the contract. The Company uses key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success. The Company allocates the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised goods or service underlying each performance obligation. Licenses of intellectual property and distribution rights: If the license to the Company’s intellectual property or distribution rights to an underlying product is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated to the license or distribution rights when the license or distribution right is transferred to the customer, and the customer can use and benefit from the license or distribution right. For licenses or distribution rights that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. Milestone payments: At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal will not occur, the value of the associated milestone (such as a regulatory submission) is included in the transaction price. Milestone payments that are not within the control of the Company, such as approvals from regulators, are not considered probable of being achieved until those approvals are received. When the Company’s assessment of probability of achievement changes and variable consideration becomes probable, any additional estimated consideration is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised goods or service underlying each performance obligation and recorded in license revenues based upon when the customer obtains control of each element. Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (a) when the related sales occur, or (b) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). 7 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) Warrant Liability The Company issued warrants in connection with its 2024 Private Placement (See Note 9– Stockholders’ Equity). The Company accounts for these warrants as a liability at fair value when warrant pricing protection provisions are not available to other common stockholders. Additionally, issuance costs associated with the warrant liability are expensed as incurred and reflected as a financing cost in the accompanying condensed statements of operations. The Company adjusts the liability for changes in fair value until the earlier of the exercise or expiration of the warrants for any period when pricing protections remain in place. Any future change in the fair value of the warrant liability is recognized in the condensed statements of operations under the fair value change in the warrant liability line item. Fair Value of Financial Instruments The Company’s accounting for fair value measurements of assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring or nonrecurring basis adheres to the Financial Accounting Standards Board (“FASB”) fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: ● Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the Company at the measurement date. ● Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. ● Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. As of December 31, 2024 and September 30, 2024, the fair values of cash, cash equivalents, accounts receivable, inventory, prepaids and deferred offering costs, accounts payable and accrued expenses and other liabilities approximated their carrying values because of the short-term nature of these assets or liabilities. The fair value of the warrant liability was based on Level 3 inputs as well as the Company’s underlying stock price and associated volatility, expected term of the warrants and market interest rates. There were no transfers between fair value hierarchy levels during the three months ended December 31, 2024 and 2023. The fair value of financial instruments measured on a recurring basis is as follows: As of December 31, 2024 Description Total Level 1 Level 2 Level 3 Liabilities: Warrant liability $ 1,750,870 $ — $ — $ 1,750,870 Total liabilities at fair value $ 1,750,870 $ — $ — $ 1,750,870 As of September 30, 2024 Description Total Level 1 Level 2 Level 3 Liabilities: Warrant liability $ 2,140,315 $ — $ — $ 2,140,315 Total liabilities at fair value $ 2,140,315 $ — $ — $ 2,140,315 The following table provides a roll-forward of the warrant liability measured at fair value on a recurring basis using unobservable level 3 inputs for the three months ended December 31, 2024. 2024 Warrant liability Balance as of beginning of period $ 2,140,315 Change in fair value of warrant liability ( 389,445 ) Balance as of end of period $ 1,750,870 8 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) Intellectual Property The Company has entered into two licensing agreements with major research institutions, which allow for access to certain patented technology and know-how. Payments under those agreements are capitalized and amortized to selling, general and administrative expense over the expected useful life of the acquired technology. Property and Equipment Property and equipment is recorded at cost and reduced by accumulated depreciation. Depreciation expense is recognized over the estimated useful lives of the assets using the straight-line method. The estimated useful life for equipment and furniture ranges from three to seven years. Tangible assets acquired for research and development activities and that have alternative use are capitalized over the useful life of the acquired asset. Estimated useful lives are periodically reviewed, and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts. Maintenance and repairs are charged directly to expense as incurred. Impairment of Long-Lived Assets The Company evaluates its long-lived assets, which consist of licensed intellectual property, property and equipment and right-of-use assets for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. The Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the asset is considered to be impaired, the amount of impairment is measured as the difference between the carrying value and the fair value of the impaired asset. Accounts Receivable and Allowances for Credit Losses The Company records a provision for credit losses, when appropriate, based on historical experience, current conditions and reasonable supportable forecasts. In estimating the allowance for credit losses, the Company considers, among other factors, the estimate of credit losses over the remaining expected life of the asset, primarily using historical experience and current economic conditions that could affect the collectability of the balances in the future. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may be in excess of the Company’s estimated allowance. The Company has not incurred any bad debt expense to date and no allowance for credit losses has been recorded during the periods presented. Inventory Inventory is stated at the lower of cost (using the first-in, first-out “FIFO” method) or net realizable value. The Company calculates inventory valuation adjustments for excess and obsolete inventory, when appropriate, based on current inventory levels, movement, expected useful lives, and estimated future demand of the products and spare parts. The Company’s inventory is currently comprised of Strip/Grid Products, sEEG Products, OneRF Products and Electrode Cable Assembly Products component, work-in-process and finished good product. The Strip/Grid Products, sEEG Products and OneRF Products are produced by a third-party contract manufacturer and the Electrode Cable Assembly Products are obtained from outside suppliers. No inventory valuation allowance was required during the periods presented. Research and Development Costs Research and development costs are charged to expense as incurred. Research and development expenses comprise of costs incurred in performing research and development activities, including 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. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather than when payment is made, in accordance with ASC 730, Research and Development . Advertising Expense Advertising expense is charged to selling, general and administrative expenses during the period that it is incurred. Total advertising expense amounted to $ 38,543 and $ 49,272 for the three months ended December 31, 2024 and 2023, respectively. 9 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) 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 sales of the Company’s products. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with the provisions of ASC 718, Compensation — Stock Compensation (“ASC 718”). Accordingly, compensation costs related to equity instruments granted are recognized at the grant-date fair value over the requisite service period. The Company records forfeitures when they occur. Stock-based compensation arrangements to non-employees are accounted for in accordance with the applicable provisions of ASC 718. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. Net income (loss) per share Basic net income (loss) per share of common stock is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income or loss per share of common stock is computed similarly to basic net income or loss per share except the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents, if dilutive. The Company’s warrants, stock options and restricted stock units, while outstanding, are considered common stock equivalents for this purpose. Diluted net income or loss per share is computed utilizing the treasury method for the warrants, stock options and restricted stock units. Incremental common stock equivalents that were antidilutive were excluded in calculating diluted net income or loss per share. For the three months ended December 31, 2023, no common stock equivalents were included in the diluted net loss per share because such inclusion would be anti-dilutive given the net loss reported for the prior year period. The following table presents the computation of weighted average common shares considered in the computation of diluted net income (loss) per share during the three months ended December 31, 2024 2023 Denominator (weighted average shares) Basic common shares outstanding 30,837,524 23,995,610 Dilutive stock options 22,320 — Dilutive warrants 20,571 — Diluted common shares outstanding 30,880,415 23,995,610 10 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) The following potential common shares were not considered in the computation of diluted net income (loss) per share as their effect would have been anti-dilutive for the three months ended December 31: 2024 2023 Warrants 7,025,304 5,143,293 Stock options 2,791,776 2,814,096 Restricted stock units 1,091,953 355,691 Recent Accounting Pronouncements In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which enhances reportable segment disclosure requirements, primarily through disclosures of significant segment expenses. This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance must be applied retrospectively to all prior periods presented. The Company adopted this guidance on October 1, 2024. The adoption of this ASU did not have a material impact on the Company’s financial statements. In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which enhances income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This guidance also includes certain other amendments to improve the effectiveness of income tax disclosures. This ASU is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years and should be applied on a prospective basis, with retrospective application permitted. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements. NOTE 4 – Commitments and Contingencies WARF License Agreement The Company has entered into an exclusive start-up company license agreement with the Wisconsin Alumni Research Foundation (“WARF”) for WARF’s neural probe array and thin film micro electrode technology. The Company entered into an Amended and Restated Exclusive Start-up Company License Agreement (the “WARF License”) with WARF on January 21, 2020, which amended and restated in full the prior license agreement between WARF and NeuroOne, LLC, a predecessor of the Company, dated October 1, 2014, as amended on February 22, 2017, March 30, 2019 and September 18, 2019. The WARF License grants to the Company an exclusive license to make, use and sell, in the United States only, products that employ certain licensed patents for a neural probe array or thin-film micro electrode array and method. The Company 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 the Company or any of its 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 the Company if not for the WARF License, the royalty rate will be tripled for the remaining term of the WARF License. WARF may terminate the WARF License on 30 days’ written notice if we default on the payments of amounts due to WARF or fail to timely submit development reports, actively pursue our development plan or breach any other covenant in the WARF License and fail to remedy such default in 90 days or in the event of certain bankruptcy events involving us. WARF may also terminate the WARF License (i) on 90 days’ notice if we had failed to have commercial sales of one or more FDA-approved products under the WARF License by June 30, 2021 or (ii) if, after royalties earned on sales begin to be paid, such earned royalties cease for more than four calendar quarters. The first commercial sale occurred on December 7, 2020, prior to the June 30, 2021 deadline. The WARF License otherwise expires by its terms on the date that no valid claims on the patents licensed thereunder remain. The Company expects the latest expiration of a licensed patent to occur in 2030. During the three months ended December 31, 2024 and 2023, $ 37,500 in royalty fees were incurred related to the WARF License during each of these periods and were reflected as a component of cost of product revenue. 11 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) Mayo Agreement The Company has an exclusive license and development agreement with the Mayo Foundation for Medical Education and Research (“Mayo”) related to certain intellectual property and development services for thin film micro electrode technology (“Mayo Agreement”). If the Company is successful in obtaining regulatory approval, the Company is to pay royalties to Mayo based on a percentage of net sales of products of the licensed technology through the term of the Mayo Agreement, set to expire May 25, 2037. During the three months ended December 31, 2024 and 2023, zero and $ 269 in royalty fees were incurred related to the Mayo Agreement, respectively, and were reflected as a component of cost of product revenue. Facility Leases Headquarters Lease On May 20, 2024, the Company amended its non-cancellable headquarters lease (the “Lease”) with certain landlords (together, the “Landlord”) pursuant to which the Company leases office space located at 7599 Anagram Drive, Eden Prairie, Minnesota (the “Premises”). The Company took possession of the Premises on November 1, 2019, with the term of the Lease ending June 30, 2028, as amended, unless terminated earlier (the “Lease Term”). The base rent for the Premises ranges from $ 6,410 per month to $ 7,107 per month by the end of the Lease Term as amended. In addition, as long as the Company is not in default under the Lease, the Company will be entitled to an abatement of its base rent for the first two months of the amended Lease Term beginning in April 2025 and for the last month of the amended Lease Term (June 2028). In addition, the Company pays its pro rata share of the Landlord’s annual operating expenses associated with the Premises. Los Gatos Lease On July 1, 2021, the Company entered into a non-cancellable facility lease (the “Los Gatos Lease”), pursuant to which the Company agreed to rent office space for its research and development operations located at 718 University Avenue, Suite #111, Los Gatos, California. The facility space under the Los Gatos Lease is approximately 1,162 square feet. The Company took possession of the office space on July 2, 2021. The initial monthly rent under the Los Gatos Lease was $ 4,241 . On November 4, 2022, the Los Gatos Lease was extended for an additional two years to December 31, 2024. The rent under the extended Los Gatos Lease ranged from $ 4,453 to $ 4,632 per month beginning on January 1, 2023. On December 17, 2024, the Los Gatos Lease was extended again for an additional two years to December 31, 2026. The rent under the newly extended Los Gatos Lease ranges from $ 4,939 to $ 5,087 per month beginning on January 1, 2025. During the three months ended December 31, 2024 and 2023, rent expense associated with the facility leases, including cancellable arrangements, amounted to $ 69,178 and $ 43,053 , respectively. Supplemental cash flow information related to the operating leases was as follows: For the three months ended December 31, 2024 2023 Cash paid for amounts included in the measurement of lease liability: Operating cash flows from operating leases $ 35,122 $ 34,070 Right-of -use assets obtained in exchange for lease obligations: Modification of right-of-use asset and associated lease liability $ 111,898 $ — 12 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) Supplemental balance sheet information related to the operating leases was as follows: As of December 31, 2024 As of September 30, 2024 Right-of-use assets $ 339,271 $ 254,910 Lease liabilities $ 341,514 $ 260,160 Weighted average remaining lease term (years) 3.0 3.6 Weighted average discount rate 7.2 % 7.4 % Maturity of the lease liabilities was as follows: Calendar Year As of December 31, 2024 2025 $ 125,359 2026 139,985 2027 81,708 2028 34,815 Total lease payments 381,867 . Less imputed interest ( 40,353 ) Total 341,514 Short-term portion (included in other liabilities) ( 104,137 ) Long-term portion $ 237,377 Other Contingencies In the ordinary course of business, from time to time, the Company may be subject to a broad range of claims and legal proceedings that relate to contractual allegations, patent infringement and other claims. The Company establishes accruals when applicable for matters and commitments which it believes losses are probable and can be reasonably estimated. To date, no loss contingency for such matters and potential commitments have been recorded. Although it is not possible to predict with certainty the outcome of these matters or potential commitments, the Company is of the opinion that the ultimate resolution of these matters and potential commitments will not have a material adverse effect on its results of operations or financial position. NOTE 5 – Supplemental Balance Sheet Information Inventory Inventory consisted of the following: As of December 31, 2024 As of September 30, 2024 Component inventory $ 915,641 $ 877,065 Work-in-process 135,254 192,360 Finished goods 879,966 1,565,728 Total $ 1,930,861 $ 2,635,153 Intangibles Intangible assets rollforward is as follows: Useful Life Net Intangibles, September 30, 2024 12 - 13 years $ 67,262 Less: amortization ( 5,579 ) Net Intangibles, December 31, 2024 $ 61,683 Amortization expense was $ 5,579 for each of the three months ended December 31, 2024 and 2023. 13 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) Property and Equipment Property and equipment held for use by category are presented in the following table: As of December 31, 2024 As of September 30, 2024 Equipment and furniture $ 1,000,719 $ 976,303 Total property and equipment 1,000,719 976,303 Less accumulated depreciation ( 619,008 ) ( 559,460 ) Property and equipment, net $ 381,711 $ 416,843 Depreciation expense was $ 59,548 and $ 53,078 for the three months ended December 31, 2024 and 2023, respectively. NOTE 6 - Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following : As of December 31, 2024 As of September 30, 2024 Accrued payroll $ 322,546 $ 950,260 Operating lease liability, short term 104,137 65,768 Royalty payments 141,459 108,036 Other 258,244 59,950 Total $ 826,386 $ 1,184,014 NOTE 7 – Zimmer Distribution Agreement and Other Product Revenue On October 25, 2024, the Company entered into the Zimmer Amended and Restated Distribution Agreement (the “Amendment”) with Zimmer pursuant to which the Company granted Zimmer the exclusive right and license to distribute its 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. The Company and Zimmer previously entered into an Exclusive Development and Distribution Agreement dated July 20, 2020, related to the SEEG and Strip/Grid Product Systems, which was subsequently amended pursuant to the terms and conditions of a letter agreement dated January 6, 2021, a Second Amendment to Exclusive Development and Distribution Agreement dated June 28, 2022, and a Third Amendment to Exclusive Development and Distribution Agreement dated August 2, 2022 (collectively, the “EDDA”).The EDDAs executed prior to the Amendment granted Zimmer exclusive global rights to distribute the Strip/Grid Products and the Electrode Cable Assembly Products. Additionally, the Company granted Zimmer the exclusive right and license to distribute certain sEEG Products developed by the Company and together with the Strip/Grid Products and Electrode Cable Assembly Products, the “Products”. In addition, under the prior EDDAs, the Company and Zimmer agreed to collaborate with respect to development activities through a joint development committee composed of an equal number of representatives of Zimmer and the Company. Under the Amendment, Zimmer paid the Company $ 3.0 million for an exclusive RF Distribution License (the “RF Distribution License” and “License”) for commercialization of its OneRF™ product. In addition, the Company is eligible to receive a future milestone payment of $ 1.0 million upon reaching a one-time sales volume threshold. The revised term under the Amendment (the “Term”) began on the effective date of the Amendment and will remain in effect until October 31, 2034. Upon the expiration of the Term, it may be renewed upon the mutual written of the parties. The Amended and Restated Exclusive Development and Distribution Agreement may be terminated before the expiration of the Term in accordance with certain terms under the Amendment. In addition, the license rights granted to Zimmer under this Amendment shall be exclusive (i) until September 30, 2032 for the SEEG Products and Strip/Grid Products; and (ii) until October 31, 2034 for the OneRF™ Product System. 14 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) License Revenue The Amendment was accounted for under the provisions of ASC 606 as a separate contract from the prior EDDAs. In accordance with the provisions under ASC 606, the Company identified the transfer of the RF Distribution License as the sole performance obligation of the RF Distribution License. The distribution rights granted to Zimmer, inclusive of the access to the underlying intellectual property for future production of the OneRF Product if required, was found to have significant standalone functionality as no additional substantive input was required by the Company on a go forward basis. Lastly, ancillary support related to the Amendment was concluded to be a perfunctory obligation and de minimis in terms of required resources. The transaction price associated with the Amendment was $ 3.0 million, which was comprised solely of the One RF Exclusivity Fee and was allocated totally to RF Distribution License performance obligation. Sales Volume Milestone and Payment The sales volume milestone associated with the Amendment was determined by sales or usage-based thresholds. The sales volume milestone was accounted for under the sales milestone recognition constraint and will be accounted for as constrained variable consideration. The Company has applied the sales volume constraint to the milestone payment and will not recognize revenue until the sales volume threshold occurs. Recognition of License Revenue The Company determined that the RF Distribution License represented functional intellectual property given Zimmer’s access to the underlying intellectual property associated with the OneRF Product. As such, the revenue related to the licenses was recognized at the point in time in which the license/know-how was delivered to Zimmer which occurred in October 2024. Revenue recognized under the Amendment during the three months ended December 31, 2024 was $ 3.0 million. Product Revenue Product revenue related to the Company’s Strip/Grid Products, sEEG Products, OneRF Products and Electrode Cable Assembly Products. Product revenue recognized during the three months ended December 31, 2024 and 2023 was $ 3,274,167 and $ 977,649 , respectively. All product revenue was comprised of OneRF Product revenue during the three months ended December 31, 2024. There was no OneRF Product revenue recognized during the prior year period presented. OneRF Products were subject to the Amendment upon its execution in October 2024. NOTE 8 – Stock-Based Compensation During the three months ended December 31, 2024 and 2023, stock-based compensation expense was included in selling, general and administrative and research and development costs as follows in the accompanying condensed statements of operations. 2024 2023 Selling, general and administrative $ 269,629 $ 243,198 Research and development 69,595 65,440 Total stock-based compensation expense $ 339,224 $ 308,638 The Company’s 2017 Equity Incentive Plan (“2017 Plan”) provides for the issuance of restricted shares and stock options to employees, directors, and consultants of the Company. 15 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) Inducement Plan In addition to the Company’s 2017 Plan, the Company adopted the NeuroOne Medical Technologies Corporation 2021 Inducement Plan (the “Inducement Plan”) on October 4, 2021, pursuant to which the Company reserved 420,350 shares of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The Inducement Plan was approved by the Company’s Board of Directors without stockholder approval in accordance with such a rule. On November 9, 2023, the Company’s Board of Directors adopted the First Amendment to the Company’s Inducement Plan, increasing the aggregate number of shares of common stock that may be issued pursuant to equity incentive awards under the Inducement Plan by 150,000 shares for a total of 570,350 shares of common stock that may be issued pursuant to equity incentive awards under the Inducement Plan. Evergreen Provision Under the 2017 Plan, the shares reserved automatically increase on January 1st of each year, for a period of not more than ten years from the date the 2017 Plan is approved by the stockholders of the Company, commencing on January 1, 2019 and ending on (and including) January 1, 2027, to an amount equal to 13 % of the fully-diluted shares outstanding as of December 31st of the preceding calendar year. Notwithstanding the foregoing, the Company’s Board of Directors may act prior to January 1st of a given year to ensure that there will be no January 1st increase in the share reserve for such year or that the increase in the share reserve for such year will be a lesser number of shares of common stock than would otherwise occur pursuant to the preceding sentence. “Fully Diluted Shares” as of a date means an amount equal to the number of shares of common stock (i) outstanding and (ii) issuable upon exercise, conversion or settlement of outstanding awards under the 2017 Plan and any other outstanding options, warrants or other securities of the Company that are (directly or indirectly) convertible or exchangeable into or exercisable for shares of common stock, in each case as of the close of business of the Company on December 31 of the preceding calendar year. On January 1, 2024, 1,051,556 shares were added to the 2017 Plan as a result of the evergreen provision. See Note 13 – Subsequent Events related to additional shares added to the 2017 Plan effective January 1, 2025. Stock Options During the three months ended December 31, 2024 and 2023, under the 2017 Plan and the Inducement Plan, the Company granted zero and 1,160,669 stock options, respectively, to its employees and consultants. Vesting generally occurs over a 48 -month period based on a time-of-service condition. The weighted-average grant date fair value of the grants issued during the three months ended December 31, 2023 was $ 1.08 per share. The total expense for the three months ended December 31, 2024 and 2023 related to stock options was $ 202,954 and $ 187,431 , respectively. The total number of stock options outstanding as of December 31, 2024 and September 30, 2024 was 2,814,096 . The weighted-average assumptions used in the Black-Scholes option-pricing model are as follows for the stock options granted during the three months ended December 31, 2023: 2023 Expected stock price volatility 112.0 % Expected life of options (years) 6.1 Expected dividend yield 0 % Risk free interest rate 4.7 % During the three months ended December 31, 2024 and 2023, 394,450 and 56,616 stock options vested, and zero and 55,000 stock options were forfeited during these periods, respectively. 16 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) Restricted Stock Units There were no restricted stock units (“RSUs”) granted during the three months ended December 31, 2024 and 2023. 37,809 and 37,679 previously granted RSUs vested during these periods, respectively. The total expense for the three months ended December 31, 2024 and 2023 related to these RSUs was $ 136,270 and $ 121,207 , respectively. No RSUs were forfeited during the three months ended December 31, 2024 and 2023. General As of December 31, 2024, 297,461 shares were available in the aggregate for future issuance under the 2017 Equity Incentive Plan and Inducement Plan. Unrecognized stock-based compensation was $ 2,034,404 as of December 31, 2024. The unrecognized share-based expense is expected to be recognized over a weighted average period of 2.6 years. NOTE 9 – Stockholders’ Equity August 2024 Private Placement On August 1, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accredited investors (the “Purchasers”), pursuant to which the Company, in a private placement (the “2024 Private Placement”), agreed to issue and sell an aggregate of (i) 2,944,446 shares of the Company’s common stock 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 expenses. Issuance costs attributed to 2024 Private Placement amounted to approximately $ 0.2 million. The 2024 Private Placement closed on August 2, 2024. 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. One of the Purchasers in the 2024 Private Placement included Paul Buckman, a director on the Company’s Board of Directors. The PIPE Warrants were accounted for and classified as liabilities on the accompanying condensed balance sheets given certain price reset provisions not used for a fair valuation under a fixed for fixed settlement scenario as required for equity balance sheet classification. A Monte Carlo simulation model was used to estimate the aggregate fair value of the PIPE Warrants. Input assumptions used were as follows on December 31, 2024 and September 30, 2024: risk-free interest rate 4.17 % and 3.53 %, respectively; expected volatility of 110.20 % and 115.7 %; respectively; expected life of 2.59 years and 2.84 years, respectively; and expected dividend yield zero percent for both dates. The underlying stock price used was the market price as quoted on Nasdaq as of December 31, 2024 and September 30, 2024. The Company recorded the fair value change of the PIPE Warrants in the amount of $ 389,445 the fair value change in warrant liability line item on the accompanying condensed statements of operations for the three months ended December 31, 2024. At-The-Market Offering On December 21, 2022, the Company entered into a Capital on Demand TM Sales Agreement (the “Sales Agreement”) with JonesTrading Institutional Services LLC (“JonesTrading”) that created an at-the-market offering program (“ATM”) under which the Company may offer and sell common stock 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, the Company decreased the amount of common stock that can be sold pursuant to the Sales Agreement, such that the Company was offering up to an aggregate of $ 2.6 million of its common stock for sale under the Sales Agreement, including the shares of common stock previously sold. Subsequently on December 1, 2023, however, the Company increased the amount of common stock that can be sold pursuant to the Sales Agreement, such that the Company was offering up to an aggregate of $ 4.8 million of its common stock for sale under the Sales Agreement, including the shares of common stock previously sold. On January 5, 2024, the Company further increased the amount of common stock that can be sold pursuant to the Sales Agreement, such that the Company was offering up to an aggregate of $ 9.3 million of its common stock for sale under the Sales Agreement, including the shares of common stock previously sold. On August 16, 2024, the Company increased the amount of common stock that can be sold pursuant to the Sales Agreement by $ 3.0 million. 17 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) During the three months ended December 31, 2023, 868,243 shares of common stock were issued under the ATM for an aggregate offering price of $ 1,256,271 . There were no shares issued out of the ATM during the three months ending December 31, 2024. Lastly, the Company incurred deferred offering costs related to the ATM during the three months ended December 31, 2024 of $ 41,657 . The total aggregate offering price and common stock issued since the inception of the ATM though December 31, 2024 was $ 7,586,562 and 5,188,590 shares, respectively. Cumulative issuance costs incurred under the ATM through December 31, 2024 was $ 554,285 of which $ 82,962 was included as a deferred cost on the condensed balance sheets as of December 31, 2024. Warrant Activity and Summary Warrants Exercise Price Per Warrant Weighted Average Exercise Price Weighted Average Term (Years) Outstanding and exercisable at September 30, 2024 7,045,875 $ 0.66 - 5.61 $ 3.81 1.98 Issued — $ — $ — — Exercised — $ — $ — — Expired — $ — $ — — Outstanding and exercisable at December 31, 2024 7,045,875 $ 0.66 - 5.61 $ 3.81 1.73 The following table summarizes information about warrants outstanding at December 31, 2024: Exercise Price Number Outstanding Weighted Average Remaining Contractual life (Years) Number Exercisable at December 31, 2024 $ 0.66 100,000 4.59 100,000 $ 1.19 2,208,338 2.59 2,208,338 $ 3.00 350,000 2.58 350,000 $ 5.25 4,166,682 1.04 4,166,682 $ 5.61 220,855 3.50 220,855 Total 7,045,875 7,045,875 NOTE 10 - Debt Financing Debt Facility Financing On August 2, 2024, the Company entered into a loan and security agreement (the “Debt Facility Agreement”) with Growth Opportunity Funding, LLC, as the lender (the “Lender”), which provided for a delayed draw term loan facility in an aggregate principal amount not to exceed $ 3.0 million (the “Debt Facility”). The Company was permitted to borrow loans under the Debt Facility from time to time (collectively, the “Loans”), 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 in the Debt Facility Agreement) 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 Company paid a termination fee of $ 125,000 to the Lender and incurred additional legal fees of $ 7,091 related to the termination. The Company also incurred non-termination Debt Facility costs of $ 192,647 during the three-months ended December 31, 2024. 18 NeuroOne Medical Technologies Corporation Notes to Condensed Financial Statements (unaudited) At closing of the Debt Facility, the Company issued to the Lender a warrant exercisable for five years for 100,000 shares of common stock at an exercise price of $ 0.66 per share, subject to adjustment (the “Closing Date Debt Facility Warrant”). The Closing Date Debt Facility Warrant was accounted for and classified as equity on the accompanying condensed balance sheets. NOTE 11 – Concentrations Revenue For the three months ended December 31, 2024, one customer accounted for 91 % of the Company’s product revenue and three customers accounted for the remaining 9 % of product revenue. For the three months ended December 31, 2023, one customer accounted for all of the Company’s product and license revenue. Supplier concentration One contract manufacturer produces all of the Company’s Strip/Grid Products and sEEG Products and another supplier was responsible for the development of the Company’s OneRF Ablation system. NOTE 12 – Income Taxes The effective tax rate for the three months ended December 31, 2024 and 2023 was zero percent. As a result of the analysis of all available evidence as of December 31, 2024 and September 30, 2024, the Company recorded a full valuation allowance on its net deferred tax assets. Consequently, the Company reported no income tax benefit during the three months ended December 31, 2024 and 2023. If the Company’s assumptions change and the Company believes that it will be able to realize these deferred tax assets, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets will be recognized as a reduction of future income tax expense. If the assumptions do not change, each period the Company could record an additional valuation allowance on any increases in the deferred tax assets. NOTE 13 – Subsequent Events 2017 Plan Evergreen Provision Effective January 1, 2025, 1,124,446 shares were added to the 2017 Plan as a result of the evergreen provision. See Note 8 – Stock-Based Compensation. 19 NeuroOne Medical Technologies Corporation Form 10-Q