What changed in this filing

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Item 1. Financial Statements

2024-05-20 compared with 2023-11-20 · 482 added, 988 removed, 471 unchanged (76% of the section changed)

FINANCIAL STATEMENTS

Balance Sheet

September 30,

Balance Sheets

and cash equivalents

receivable, net

and other current assets

current assets

Cash and cash equivalents

Accounts receivable, net

Prepaids and other current assets

Total current assets

Property and Equipment, at cost:

Less - accumulated depreciation

Property and equipment, net

Other Assets:

Deferred offering costs

Operating lease right of use asset

Intangible assets, net

and Equipment, at cost:

- accumulated depreciation

and equipment, net

lease right of use asset, net

portion of operating lease payable

payable - convertible notes, net of unamortized financing fees $ 235,281

as of March 31, 2024 and December 31, 2023, respectively

Share liability

current liabilities

Accounts payable

Accrued expenses

Notes payable

Current portion of operating lease payable

Notes payable - related party

Notes payable

Notes payable - convertible notes, net of unamortized discount of $ 0 and $ 3,327,213 as of September 30, 2023 and December 31, 2022

Customer deposits

Share liabilities

Derivative liabilities

Warrant liabilities

Total current liabilities

lease payable, net of current portion

non-current liabilities

Operating lease payable, net of current portion

Note payable, net of current portion

Total non-current liabilities

Total liabilities

Commitments and contingencies (see note 14)

Stockholders’ Equity (Deficit)

and contingencies (see note 12)

Stockholders’ Deficit

Convertible Series A Preferred stock, $ 0.001 par value;

1,000,000 shares authorized;

0 issued and outstanding as of September 30, 2023 and 506,637 as of December 31, 2022

0 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Convertible Series Seed Preferred stock, $ 0.001 par value;

120,000 shares authorized;

0 issued and outstanding as of September, 2023 and 115,477 as of December 31, 2022

Preferred Stock, value

Common stock, $ 0.001 par value;

100,000,000 shares authorized;

5,149,340 issued and outstanding as of September, 2023 and 1,963,322 as of December 31, 2022

Additional paid in capital

Accumulated deficit

( 43,244,806 )

Total stockholders’ equity (deficit)

( 1,061,087 )

Total Liabilities and Stockholders’ Equity (Deficit)

accompanying notes are an integral part of these unaudited condensed financial statements.

Statements of Operations (Unaudited)

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Cost of Goods Sold

Selling Expenses

Research and Development

General and Administrative

Operating Loss

( 3,022,339 )

( 1,203,124 )

( 5,041,290 )

( 2,386,012 )

Other Income (Expense):

Financing charges

( 1,473,892 )

Interest expense

Interest income

Change in fair value of warrant liability

Change in fair value of derivative liability

Amortization of debt discount and issuance cost

( 1,331,030 )

( 4,881,622 )

Extinguishment of debt liabilities

( 1,058,062 )

Other expense

Total other income (expense), net

( 1,882,017 )

( 4,272,088 )

( 2,380,421 )

$ ( 4,904,356 )

$ ( 2,079,682 )

$ ( 9,313,378 )

$ ( 4,766,433 )

Per-share Data

Basic and diluted loss per share

Weighted Average Shares Outstanding

Basic and diluted

accompanying notes are an integral part of these unaudited condensed financial statements.

of Stockholders’ Deficit

the Three and Nine Months Ended September 30, 2022

Convertible Series A Preferred Stock

Convertible Series Seed Preferred Stock

Additional Paid In

Stockholder’s Equity

Balances, January 1, 2022

$ ( 29,151,367 )

$ ( 825,660 )

Stock based compensation

( 1,170,221 )

Balances, March 31, 2022

$ ( 30,321,588 )

$ ( 1,983,887 )

Stock based compensation

Common stock issued upon signing of notes payable

( 1,516,530 )

Balances, June 30, 2022

$ ( 31,838,118 )

$ ( 3,487,242 )

Stock based compensation

Common stock issued upon signing of notes payable

( 2,079,682 )

0 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

stock, $ 0.001 par

100,000,000 shares

6,594,897 and

6,508,897 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

paid in capital

( 50,678,762 )

Balances, September 30, 2022

( 48,558,111 )

Stockholders’ Deficit

( 3,184,454 )

the Three and Nine Months Ended September 30, 2023

Convertible Series A Preferred Stock

Convertible Series Seed Preferred Stock

Additional Paid In

Stockholder’s Equity

Balance, January 1, 2023

( 1,403,241 )

Liabilities and Stockholders’ Deficit

to condensed financial statements are an integral part of these statements.

Statements of Operations (Unaudited)

the Three Months Ended March 31,

of Goods Sold

and Development

and Administrative

( 1,832,120 )

Income (Expense):

in fair value of warrant liability

in fair value of derivative liability

of debt discount and issuance cost

( 2,662,655 )

Extinguishment

of debt liabilities

other income (expense), net

( 1,277,136 )

Balance, March 31, 2023

$ ( 2,120,651 )

$ ( 2,173,410 )

and diluted loss per share

Average Shares Outstanding

to condensed financial statements are an integral part of these statements.

Statements of Stockholders’ Deficit (Unaudited)

Preferred Stock

Stockholders’

as of January 1, 2023

$ ( 33,931,428 )

$ ( 5,573,613 )

Balances, June 30, 2023

( 2,173,410 )

as of March 31, 2023

$ ( 36,104,838 )

$ ( 7,747,023 )

Common stock issued upon initial public offering, net

Common stock issued upon preferred stock conversion

Common stock issued upon debt conversion

Common stock issued from agreements

as of January 1, 2024

$ ( 48,558,111 )

$ ( 1,403,241 )

Balances, September 30, 2023

Additional paid in capital from warrants issued under consulting agreement

Additional paid in capital from warrants issued as debt discount

from agreements

( 2,120,651 )

as of March 31, 2024

$ ( 50,678,762 )

$ ( 3,184,454 )

accompanying notes are an integral part of these unaudited condensed financial statements.

Statement of Cash Flows (Unaudited)

For the Nine Months Ended September 30,

Cash Flows from Operating Activities

to condensed financial statements are an integral part of these statements.

Statements of Cash Flows (Unaudited)

the Three Months Ended March 31,

Flows from Operating Activities

$ ( 2,120,651 )

$ ( 2,173,410 )

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

Amortization of debt discount and issuance cost

Depreciation and amortization

Provisions for losses on accounts receivable

Non-cash lease expense

Non-cash interest expense

to reconcile net loss to net cash

used by operating activities:

of debt discount and issuance cost

and amortization

for losses on accounts receivable

lease expense

Stock-based compensation

Extinguishment of derivative liability

Issuance of common stock for non-cash consideration

Finance charges

Change in fair value of debt liabilities

Change in fair value of warrant liabilities

Changes in operating assets and liabilities:

Accounts receivable

Prepaids and other current assets

Accounts payable

( 1,025,467 )

Accrued expenses

Customer deposits

Operating lease liability

Net cash used by operating activities

( 4,064,419 )

Extinguishment

of derivative liability

( 1,129,498 )

Cash Flows from Investing Activities

Additions to property and equipment

Additions to intangible assets

Net cash used by investing activities

Cash Flows from Financing Activities

Proceeds from issuance of common stock, net of issuance costs

Offering costs in advance of sale of common stock

of common stock for non-cash consideration

Issuance of warrants for non-cash consideration

in fair value of derivative liabilities

in fair value of warrant liabilities

in operating assets and liabilities:

and other current assets

lease liability

cash used by operating activities

( 1,332,160 )

Principal payments on notes payable

Flows from Investing Activities

to property and equipment

cash used by investing activities

Flows from Financing Activities

costs in advance of sale of common stock

from exercised warrants

payments on notes payable

( 2,695,344 )

Proceeds from notes payable

Proceeds from convertible notes, net of fees

Net cash provided (used) by financing activities

Net Increase (decrease) in Cash and Cash Equivalents

Cash and Cash Equivalents at Beginning of Period

Cash and Cash Equivalents at End of Period

Supplemental Disclosure of Non-cash Cash Activities

Cash paid for interest

Cash paid for income taxes

Supplemental Schedule of Non-cash Investing and Financing Activities

Fair value of warrant liabilities of warrants from convertible notes

Fair value of derivative liabilities of conversion feature from convertible notes

Relative fair value of shares issued with convertible notes

Deferred offering costs in accounts payable

accompanying notes are an integral part of these unaudited condensed financial statements.

from notes payable

from convertible notes, net of fees

cash provided by financing activities

Increase (Decrease) in Cash and Cash Equivalents

and Cash Equivalents at Beginning of Period

and Cash Equivalents at End of Period

Disclosure of Non-Cash Cash Activities

paid for interest

paid for income taxes

Schedule of Non-Cash Investing and Financing Activities

Recognition of right of use asset

Common stock issued for consulting services

value of warrant liabilities from convertible notes

value of derivative liabilities of conversion feature from convertible notes

Fair value of warrants from debt discount

in convertible notes classified of additional paid in capital

to condensed financial statements are an integral part of these statements.

Basis of Presentation, Organization and Other Matters

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authorized shares were increased, and a par value established.

September 7, 2021, the Company’s board of directors authorized a 4-for-1 stock split .

They also increased the number of authorized

common stock shares from 2,700,000 to 10,800,000 .

Furthermore, on September 9, 2021, the board authorized an increase of authorized shares

of common stock from 10,800,000 to 13,400,000 in anticipation of a capital offering.

Furthermore, on January 10, 2023, the Company’s

board of directors authorized a 1-for-2 reverse stock split .

All per share information has been adjusted for this reverse stock split.

January 10, 2023, the Company’s board of directors authorized a 1-for-2 reverse stock split.

All per share information has been

adjusted for this reverse stock split.

The reverse split became effective on January 12, 2023.

All share and per share amounts for the common stock have been retroactively

restated to give effect to the splits.

All share and per share amounts for the

common stock have been retroactively restated to give effect to the splits.

part of the conversion to a Delaware corporation, the total number of shares of all classes of stock which the Corporation shall have

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All share amounts have been retroactively restated to give effect to these changes.

August 11, 2023, the Company consummated the IPO, conducted on a firm commitment basis, pursuant to which it sold 1,098,667 shares of

its common stock at a price of $ 6.00 per share, resulting in gross proceeds to the Company of approximately $ 6.6 million.

to the Company, after deducting underwriting discounts and commissions and offering expenses paid by the Company, were approximately

$ 5.5 million.

All shares sold in our IPO were registered pursuant to a registration statement on Form S-1 (File No.

333- 269179), as

amended, declared effective by the SEC on August 8, 2023.

August 9, 2023, the Company consummated an initial public offering, conducted on a firm commitment basis, pursuant to which it sold 1,098,667

shares of its common stock at a price of $ 6.00 per share, resulting in gross proceeds to the Company of $ 6,592,002 .

Net proceeds to the

Company, after deducting underwriting discounts and commissions, 2022 deferred offering costs totaling $ 736,736 and offering expenses

paid by the Company, were $ 4,110,721 .

All shares sold in our IPO were registered pursuant to a registration statement on Form S-1 (File

333- 269179), as amended, declared effective by the SEC on August 9, 2023.

Alexander Capital L.P.

(“Alexander”) acted as sole book-running

manager for the offering and Spartan Capital Securities, LLC acted as co-manager for the offering.

The underwriters did not exercise

their option to purchase up to an additional 164,801 shares of common stock.

The Company paid the underwriters an underwriting discount

of seven percent ( 7 %) of the amount raised in the offering.

In addition, we also paid the underwriters a non-accountable expense allowance

in the amount of 1 % (such 8 % in commissions and fees amounted to a total of $ 527 thousand) at closing, as well as $ 175 thousand for the

(“Alexander”) acted

as sole book-running manager for the offering and Spartan Capital Securities, LLC acted as co-manager for the offering.

The underwriters

did not exercise their option to purchase up to an additional 164,801 shares of common stock.

The Company paid the underwriters an underwriting

discount of seven percent ( 7 %) of the amount raised in the offering.

In addition, we also paid the underwriters a non-accountable expense

allowance in the amount of 1 % (such 8 % in commissions and fees amounted to a total of $ 527,000 ) at closing, as well as $ 175,000 for the

reimbursement of certain of the underwriters’ expenses.

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sold or distributed but reserved only for research purposes.

Summary of Significant Accounting Policies

summary of significant accounting policies of Neuraxis, Inc.

is presented to assist in understanding the Company’s financial statements.

The financial statements and notes are representations of the Company’s management, who are responsible for their integrity and

These accounting policies conform to U.S.

generally accepted accounting principles and have been consistently applied in

the preparation of the financial statements.

the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America

(“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.

of Presentation

Company’s condensed financial statements have been prepared in accordance with accounting principles generally accepted in the

United States of America (“U.S.

Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States

of America (“U.S.

GAAP”) and following the requirements of the U.S.

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These interim financial statements have been prepared on the same basis as the Company’s

annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments,

which are necessary for a fair statement of the Company’s financial information.

These interim results are not necessarily indicative

of the results to be expected for the year ending December 31, 2023, or any other interim period or for any other future year.

unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and the

notes thereto for the year ended December 31, 2022.

annual financial statements and, in the opinion of management, reflect all adjustments which are necessary for a fair presentation of

the Company’s financial information.

These unaudited interim results are not necessarily indicative of the results to be expected

for the year ending December 31, 2024, or any other interim period or for any other future year.

These unaudited financial statements

should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December

Summary of Significant Accounting Policies

of Estimates and Critical Accounting Estimates and Assumptions

preparation of financial statements in conformity with U.S.

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) requires management to make estimates and assumptions that affect the

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are adjusted accordingly.

The Company uses estimates in accounting for, among other items, revenue recognition, allowance for doubtful

accounts, stock-based compensation, income tax provisions, excess and obsolete inventory reserve, and impairment of intellectual property.

The Company uses estimates in accounting for, among other items, revenue recognition, allowance for credit

losses, stock-based compensation, income tax provisions, excess and obsolete inventory reserve, and impairment of property and equipment,

and intellectual property.

Actual results could differ from those estimates.

and Cash Equivalents

Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

did not hold any cash equivalents as of September 30, 2023 and December 31, 2022.

Accounts Receivable

accounts receivable are stated at the amount management expects to collect from balances outstanding at year-end.

Management considers

the following factors when determining the collectability of specific customer accounts:

customer creditworthiness, past transaction

history with the customer, current economic industry trends, and changes in customer payment terms.

Based on management’s assessment

of the credit history with customers having outstanding balances and current relationships with them, it has concluded that realization

losses on balances outstanding at year-end will be immaterial.

Interest is not charged on past due customer accounts.

for Credit Losses

accounts receivable are stated net of an allowance for credit losses.

We estimate allowance for credit losses by evaluating specific

accounts where information indicates our customers may have an inability to meet financial obligations, such as customer payment history,

credit worthiness and receivable amounts outstanding for an extended period beyond contractual terms.

We use assumptions and judgment,

based on the best available facts and circumstances, to record an allowance to reduce the receivable to the amount expected to be collected.

The allowance for doubtful accounts was $ 24,895 and $ 31,275 at September 30, 2023 and December 31, 2022, respectively.

The Company recorded

credit losses for the three and nine months ended September 30, 2023 of $ 9,996 and $ 13,923 , respectively, and for the three and nine

months ended September 30, 2022 of $ 13,216 and $ 42,795 , respectively.

deposits consists of billings, payments, and returned devices from clients in advance of revenue recognition.

The Company will recognize

the customer deposits over the next year.

As of September 30, 2023, and December 31, 2022, the Company had customer deposits of $ 68,972

and $ 59,174 , respectively.

are valued at the lower of cost or net realizable value.

Cost is determined using the weighted average method.

The inventory is comprised

of finished medical devices on hand.

Certain components within the devices have an expiration date that are removed from current inventory

and expensed at the date of expiration.

There was no expired inventory for the three and nine months ended September 30, 2023 and September

Offering Costs

offering costs consist of costs incurred in connection with the preparation of an initial public offering.

These costs, together with

the underwriting discounts and commissions, will be charged to additional paid in capital upon completion of the proposed public offering.

As of September 30, 2023, and December 31, 2022, the Company had deferred offering costs of $ 0 and $ 736,736 , respectively.

and Equipment

and equipment are recorded at cost less accumulated depreciation.

Depreciation is computed using the straight-line method over the estimated

useful lives of the assets.

is calculated using the following estimated useful lives:

of Estimated Useful Lives

Classification

and Equipment

expense was $ 7,609 and $ 22,426 during the three and nine months ended September 30, 2023, respectively, and was $ 7,868 and $ 23,592 during

the three and nine months ended September 30, 2022, respectively.

and Development

for research and development are expensed as incurred.

Research and development expenses consist primarily of clinical research studies,

and new product development.

assets consist of patents and a trademark.

Patents are stated at their historical cost and amortized on a straight-line basis over their

expected useful lives.

Capitalized patent costs, net of accumulated amortization, includes legal costs incurred for patent applications.

In accordance with ASC 350, once a patent is granted, we amortize the capitalized patent costs over the remaining life of the patent

using the straight-line method.

If the patent is not granted, we write-off any capitalized patent costs at that time.

Company entered into an agreement for a trademark related to the Company’s name on July 11, 2022.

The agreement called for an

initial payment of $ 10,000

upon execution of the agreement.

A second and final payment of $ 40,000

was contingent upon the completion of the Company’s planned initial public offering.

The second payment has been accrued and

is recorded in accounts payable and intangible assets on the balance sheet.

The trademark does not have a determinate life and therefore the cost is not being

Company entered into an option agreement on April 12, 2023 to enter into a royalty-bearing licensing agreement to bring the optionor’s

invention to commercialization.

The agreement required an initial payment of $ 1,000 upon execution of the agreement.

The agreement does

not have a determinate life and therefore the cost is not being amortized.

review intangible assets for impairment annually or when events or circumstances indicate that their carrying amount may not be recoverable.

During the three and nine months ended September 30, 2023 and 2022, the Company recorded no impairment charges for intangible assets.

expense was $ 2,621 and $ 7,864 during the three and nine months ended September 30, 2023, respectively, and was $ 485 and $ 1,455 during

the three and nine months ended September 30, 2022, respectively.

Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in

the Company’s financial statements and tax returns.

Deferred tax assets and liabilities are determined based upon the differences

between the financial statement carrying amounts, and the tax bases of existing assets and liabilities for the loss and credit carryforwards

using enacted tax rates expected to be in effect in the year in which the differences are expected to reverse.

Deferred tax assets are

reduced by a valuation allowance if it is more likely than not that these assets may not be realized.

The Company determines whether

a tax position will be sustained upon examination.

If it is not more likely than not that a position will be sustained, none of the benefit

attributable to the position is recognized.

The tax benefit to be recognized for any tax position that meets the more likely than not

recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency.

The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for income taxes.

on the results of management’s evaluation, adoption of the rules did not have a material effect on the Company’s financial

Further, no interest or penalties have been accrued or charged to expense as of September 30, 2023 and 2022 and for the nine

months then ended.

Company’s income tax returns are subject to examination by the taxing authorities until the expiration of the related statutes

of limitations on those tax returns.

In general, the federal and state income tax return have a three-year statute of limitations.

of September 30, 2023, the following tax years are subject to examination:

Years for Filed Returns

costs are expensed as incurred and amounted to $ 21,730 and $ 54,716 for the three and nine months ended September 30, 2023, respectively,

and $ 3,300 and $ 14,900 for the three and nine months ended September 30, 2022, respectively.

Company accounts for derivative financial instruments as either equity or liabilities in accordance with ASC Topic 815, Derivatives

and Hedging , or ASC 815, based on the characteristics and provisions of each instrument.

Embedded derivatives are required to be

bifurcated from the host instruments and recorded at fair value if the derivatives are not clearly and closely related to the host instruments

on the date of issuance.

Derivative instrument liabilities are classified in the balance sheets as current or non-current based on whether

or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

evaluates all of the Company’s financial instruments, including issued Warrants to purchase its Class A common stock, to determine

if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15.

classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed

at the end of each reporting period.

Company utilizes a Monte Carlo simulation model for warrants that have an option to convert at a variable number of shares to compute

the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date.

The inputs utilized

in the application of the Monte Carlo model included a starting stock price, an expected remaining term of each warrant as of the valuation

date, estimated volatility, drift, and a risk-free rate.

The Company records the change in the fair value of the derivative as other

income or expense in the statements of operations.

Value Measurements

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The three levels of the fair value hierarchy under ASC 820 are described

1 – Quoted prices (unadjusted) for identical unrestricted assets or liabilities in active markets that the reporting entity

has the ability to access as of the measurement date.

1 – Quoted prices (unadjusted) for identical unrestricted assets or liabilities in active markets that the reporting entity has

the ability to access as of the measurement date.

2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities:

quoted prices in markets that are not active;

or financial instruments for which all significant inputs are observable or can be

corroborated by observable market date, either directly or indirectly.

3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the

assets or liabilities.

These unobservable inputs reflect that reporting entity’s own assumptions about assumptions that market

participants would use in pricing the asset or liability.

Level 3 assets and liabilities include financial instruments whose value

is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the

determination of fair value require significant management judgment or estimation.

prices in markets that are not active;

or financial instruments for which all significant inputs are observable or can be corroborated

by observable market date, either directly or indirectly.

3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets

or liabilities.

These unobservable inputs reflect that reporting entity’s own assumptions about assumptions that market participants

would use in pricing the asset or liability.

Level 3 assets and liabilities include financial instruments whose value is determined using

pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair

value require significant management judgment or estimation.

Company’s Level 1 assets/liabilities include cash, accounts receivable, accounts payable, prepaids, and other current assets.

believes the estimated fair value of these accounts on September 30, 2023 approximate their carrying value as reflected in the balance

sheets due to the short-term nature of these instruments or the use of market interest rates for debt instruments.

believes the estimated fair value of these accounts on March 31, 2024 approximate their carrying value as reflected in the balance sheets

due to the short-term nature of these instruments or the use of market interest rates for debt instruments.

Company’s Level 3 assets/liabilities include derivative and warrant liabilities.

2 unchanged sentences

The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.

Unobservable inputs used in the models are significant to the fair values of the assets and liabilities.

following tables provides a summary of the relevant assets and liabilities that are measured at fair value on recurring basis:

Value Measurements as of

of Fair Value On a Recurring Basis Assets and Liability

Warrant liabilities

Derivative liabilities

Total Liabilities

Value Measurements as of

Warrant liabilities

Derivative liabilities

Total Liabilities

following table shows the valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on

recurring basis as of September 30, 2023 and December 31, 2022:

of Unobservable Inputs for Level 3 Assets and Liabilities

As of Fair Value

September 30 2023

December 31 2022

Warrant liabilities

Monte Carlo model

Project simulated cash flows

Derivative liabilities

Monte Carlo model

Project simulated cash flows

were no transfers between any of the levels during the three and nine months ended September 30, 2023 and year ended December 31, 2022.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company’s assets and liabilities

are also subject to nonrecurring fair value measurements.

Generally, assets are recorded at fair value on a nonrecurring basis as a result

of impairment charges.

The valuation techniques involve management’s estimates and judgment based on unobservable inputs.

The fair value estimates may

not be indicative of the amounts that would be realized in a market exchange.

Additionally, there may be inherent uncertainties or changes

in the underlying assumptions used, which could significantly affect the current or future fair value estimates.

Unobservable inputs

used in the models are significant to the fair values of the assets and liabilities.

were no transfers between any of the levels during the periods ended March 31, 2024 and December 31, 2023.

In addition to assets and

liabilities that are recorded at fair value on a recurring basis, the Company’s assets and liabilities are also subject to nonrecurring

fair value measurements.

As of March 31, 2024 and December 31, 2023, the Company had no assets that were measured on a nonrecurring basis.

and Diluted Net Income (Loss) per Share

1 unchanged sentence

number of shares of common stock outstanding during the period.

Basic weighted average shares for the quarter ended September 30, 2023

includes 40,000 vested warrants to purchase common shares.

As the shares underlying these warrants can be purchased for little to no

consideration ($ 0.01 per share exercise price), they are included in the computation of basic earnings per share.

Diluted EPS is computed

by dividing net income (loss) by the weighted average of all potentially dilutive shares of common stock that were outstanding during

the periods presented.

Preferred stock dividends (not declared or paid) were $ 0 and $ 2,190,102 as of September 30, 2023 and December

31, 2022, respectively.

Diluted EPS is computed by dividing net income (loss) by the weighted

average of all potentially dilutive shares of common stock that were outstanding during the periods presented.

As of March 31, 2024 and

December 31, 2023, there were no preferred stock dividends declared or paid.

net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common

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In periods when losses are reported, which

is the case for September 30, 2023 and 2022 presented in these financial statements, the weighted-average number of common shares outstanding

is the case for March 31, 2024 and 2023 presented in these financial statements, the weighted-average number of common shares outstanding

excludes common stock equivalents because their inclusion would be anti-dilutive.

Company had the following potentially dilutive common stock equivalents at September 30, 2023 and 2022:

of Dilutive Common Stock Equivalents

Convertible Series A Preferred Stock

Convertible Series Seed Preferred Stock

Pre-Funded Warrants for Convertible Series A

Preferred Stock

following table shows the calculation of the basic and diluted net loss per share and the effect of preferred stock dividends.

of Basic and Diluted Net Loss Per Share

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

$ ( 4,904,356 )

( 2,079,682 )

$ ( 9,313,378 )

( 4,766,433 )

Preferred stock dividends

Net income (loss) available to common stockholders

( 4,904,356 )

( 2,272,476 )

( 9,313,378 )

( 5,338,531 )

Weighted-average shares of common stock outstanding - basic

Basic and diluted net loss per share

Company accounts for all stock-based payments and awards under the fair value-based method.

The Company recognizes its stock-based compensation

expense using the straight-line method.

Compensation cost is not adjusted for estimated forfeitures, but instead is adjusted upon an

actual forfeiture of a stock option.

Company accounts for the granting of stock options to employees and non-employees using the fair value method whereby all awards are

measured at fair value on the date of the grant.

The fair value of all employee stock options is expensed over the requisite service

period with a corresponding increase to additional paid-in capital.

Upon exercise of stock options, the consideration paid by the option

holder is recorded in additional paid-in capital, while the par value of the shares received is reclassified from additional paid in

capital to common stock.

payments to non-employees are measured based on the fair value of the equity instrument issued.

Compensation expense for non-employee

stock awards is recognized over the requisite service period following the measurement of the fair value on the grant date.

Company uses the Black-Scholes option-pricing model to calculate the fair value of stock options.

The use of the Black-Scholes option-pricing

model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common

stock consistent with the expected term of the option, risk-free interest rates, the value of the common stock and expected dividend

yield of the common stock.

Changes in these assumptions can materially affect the fair value estimate.

Company had the following potentially dilutive common stock equivalents at March 31, 2024 and 2023:

Schedule of Dilutive Common Stock Equivalents

Series A Preferred Stock

Series Seed Preferred Stock

Warrants for Convertible Series A Preferred

specializes in the development, production, and sale of medical neuromodulation devices to healthcare providers primarily located

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revenue when (or as) the entity satisfies a performance obligation.

Company applies the five-step model to contracts when it determines that it is probable it will collect substantially all of the consideration

Company applies the five-step model to contracts when it determines that it is probable it will collect substantially all the consideration

it is entitled to in exchange for the goods or services it transfers to the customer.

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that collection of the amount due is assured.

following table disaggregates the Company’s revenue based on the customer’s location by state for the three months ended

September 30:

of Disaggregation of Revenue

All other states

following table disaggregates the Company’s revenue based on the customer’s location by state for the nine months ended September

All other states

following economic factors affect the nature, amount, timing, and uncertainty of the Company’s revenue and cash flows as indicated:

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in duration).

opening and closing balances of trade receivables, contract assets, and contract liabilities from contracts with customers are as follows:

of Trade Receivables Contract Assets and Contract Liabilities

Trade Receivables

Contract Assets

Contract Liabilities

Balance 1/1/2022

Balance 12/31/22 and 1/1/2023

Balance 9/30/2023

Performance Obligations with Customers:

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in transit transfer to the customer when shipped and the customer bears the associated risks (e.g., loss, damage, delay).

In some cases,

a customer will take delivery directly from the Company’s inventory (i.e., consigned inventory), at which point ownership and the

associated risks pass to the customer at that time.

and handling costs are recorded as general and administrative expenses in the Statement of Operations.

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a provision for this liability.

most cases, goods that customers purchase from the Company are covered by manufacturers’ warranties.

The Company does not sell

warranties separately.

manufacturer guarantees the product for the period up to the expiration date printed on the device’s label or twelve months from

the date of purchase, whichever comes first.

The guarantee applies to flaws of material and workmanship.

The Company’s warranties

provide customers with assurance that purchased devices comply with published specifications, inspection standards, and workmanship.

At the time revenue is recognized, the Company estimates the cost of expected future warranty claims but does not exclude any amounts

from revenue.

The Company maintains appropriate accounts to reflect the effects of expected future warranty claims on the Company’s

financial position and periodically adjusts those accounts to reflect its actual warranty claim experience.

Historically, warranty claims

have been immaterial, and the Company currently does not provide a provision for this liability.

Company typically satisfies its performance obligations for goods at a point in time.

In most cases, goods are shipped by common carrier

to customers under “FOB Shipping Point” terms.

As such, customers typically obtain control of the goods upon shipment.

Company’s management exercises judgment in determining when performance obligations for goods have been satisfied.

In making such

judgments, management typically relies on shipping information obtained from common carriers to evaluate when the customer has obtained

control of the goods.

Company’s contracts with customers typically do not involve variable consideration.

The information that the Company uses to determine

the transaction price for a contract is similar to the information that the Company’s management uses in establishing the prices

of goods to be sold.

January 1, 2021, the Company adopted Accounting Standards Updated (“ASU”) No.

2016-02, Leases (Topic 842) (“ASU

2016-02” or “ASC 842”), using the full retrospective method, the cumulative effect of the accounting change is recognized

as an adjustment to the opening balance of retained earnings in the first comparative period presented.

At the inception of an arrangement,

the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement.

Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and current and non-current lease

liabilities, as applicable.

lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over

the expected remaining lease term.

Certain adjustments to the right-of-use asset may be required for items such as incentives received.

The interest rate implicit in lease contracts is typically not readily determinable.

As a result, the Company utilizes its incremental

borrowing rate to discount lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis

the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.

Prospectively, the Company

will adjust the right-of-use assets for straight-line rent expense, or any incentives received and remeasure the lease liability at the

net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date.

has elected not to recognize leases with an original term of one year or less on the balance sheet.

The Company typically only includes

an initial lease term in its assessment of a lease arrangement.

Options to renew a lease are not included in the Company’s assessment

unless there is reasonable certainty that the Company will renew.

made by the Company at the commencement date are re-evaluated upon occurrence of certain events, including a lease modification.

modification results in a separate contract when the modification grants the lessee an additional right of use not included in the original

lease and when lease payments increase commensurate with the standalone price for the additional right of use.

When a lease modification

results in a separate contract, it is accounted for in the same manner as a new lease.

may elect not to separate lease and non-lease components.

The Company has elected to account for lease and non-lease components together

as a single lease component for all underlying assets and allocate all the contract consideration to the lease component only.

of Long-Lived Assets

assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may

not be recoverable.

If events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable,

we compare the carrying amount of the asset group to future undiscounted net cash flows, excluding interest costs, expected to be generated

by the asset group and their ultimate disposition.

If the sum of the undiscounted cash flows is less than the carrying value, the impairment

to be recognized is measured by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group.

Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell.

Concentrations

of Credit Risk

Company’s business activity consists of the sale of medical neuromodulation devices to doctors, clinics, and hospitals across the

consist of unsecured amounts due from customers.

As of September 30, 2023, accounts receivable from two customers with balances due in

excess of 10 % of total accounts receivable were approximately 15 %, and 14 %, respectively.

As of December 31, 2022, accounts receivable

from three customers with balances due in excess of 10 % of total accounts receivable was 23 %, 15 %, and 12 %, respectively.

table below sets forth the Company’s customers that accounted for greater than 10 % of its revenues for the three months ended September

30, 2023 and 2022, respectively.

of Customers Accounted Revenues

table below sets forth the Company’s customers that accounted for greater than 10 % of its revenues for the nine months ended September

30, 2023 and 2022, respectively.

time to time, the Company’s bank balances may exceed the FDIC limit of $ 250,000 ;

however, management does not feel that this has

a material impact on the financial condition.

At September 30, 2023 and December 31, 2022, the Company’s uninsured cash balances

totaled $ 261,239 , and $ 0 , respectively.

have incurred losses since inception and have funded our operations primarily with a combination of sales, debt, and the sale of capital

As of September 30, 2023, we had a stockholders’ deficit of approximately $ 1.1 million.

At September 30, 2023, we had short-term

outstanding borrowings of approximately $ 194 thousand.

As of September 30, 2023, we had cash of approximately $ 761 thousand and a working

capital deficit of approximately $ 1.3 million.

August 11, 2023, the Company consummated its initial public offering (the “IPO”), conducted on a firm commitment basis, pursuant

to which it sold 1,098,667 shares of its common stock at a price of $ 6.00 per share, resulting in gross proceeds to the Company of approximately

$ 6.6 million.

Net proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses paid by the Company,

were approximately $ 6.1 million.

All shares sold in our IPO were registered pursuant to a registration statement on Form S-1 (File No.

As of March 31, 2024, we had a stockholders’ deficit of $ 3,184,454

and short-term outstanding borrowings of $ 1,396,175 .

As of March 31, 2024, we had cash of $ 81,752 and

a working capital deficit of $ 3,407,877 .

August 9, 2023, the Company consummated its initial public offering, conducted on a firm commitment basis, pursuant to which it sold

1,098,667 shares of its common stock at a price of $ 6.00 per share, resulting in gross proceeds to the Company of $ 6,592,002 .

to the Company, after deducting underwriting discounts and commissions, 2022 deferred offering costs totaling $ 736,736 and offering expenses

paid by the Company, were $ 4,110,721 .

All shares sold in our IPO were registered pursuant to a registration statement on Form S-1 (File

333- 269179), as amended, declared effective by the SEC on August 9, 2023.

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for the offering and Spartan Capital Securities, LLC acted as co-manager for the offering.

underwriters did not exercise their option to purchase up to an additional 164,801 shares

of common stock.

See Note 18 Subsequent Events.

The underwriters did not exercise their option

to purchase up to an additional 164,801 shares of common stock.

future capital requirements will depend upon many factors, including progress with developing, manufacturing, and marketing our technologies,

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The primary activity that will drive all customers and revenues is the adoption of insurance coverage by commercial

insurance carriers nationally, so this is a top priority of the Company.

insurance carriers nationally, which is a top priority of the Company.

These activities, including our planned research and development

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we believe that our existing cash at the time of this filing will only be sufficient to meet our anticipated operating needs through

the first quarter of 2024.

the end of 2024.

evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going

10 unchanged sentences

Neither future cash generated from operating activities, nor management’s contingency plans

to mitigate the risk and extend cash resources through the evaluation period, are considered probable, substantial doubt is deemed to

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

As we continue to incur losses, our transition to profitability

is dependent upon achieving a level of revenues adequate to support its cost structure.

We may never achieve profitability, and unless

and until doing so, we intend to fund future operations through additional dilutive or nondilutive financing.

There can be no assurances,

however, that additional funding will be available on terms acceptable to us, if at all.

to mitigate the risk and extend cash resources through the evaluation period, are considered probable.

As a result, substantial doubt

is deemed to exist about the Company’s ability to continue as a going concern.

As we continue to incur losses, our transition to

profitability is dependent upon achieving a level of revenues adequate to support its cost structure.

We may never achieve profitability,

and unless and until doing so, we intend to fund future operations through additional dilutive or nondilutive financing.

no assurances, however, that additional funding will be available on terms acceptable to us, if at all.

financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the

1 unchanged sentence

Issued Accounting Pronouncements

June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial

Instruments, which requires measurement and recognition of expected credit losses for financial assets held and requires enhanced disclosures

regarding significant estimates and judgments used in estimating credit losses.

In November 2019, the FASB issued ASU 2019-10, Financial

Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842):

Effective Dates, which amends

the effective date of ASU 2016-13.

Public business entities meeting the definition of an SEC filer, excluding entities eligible to be

a Smaller Reporting Company (“SRC”) as defined by the SEC, are required to adopt the standard for fiscal years beginning

after December 15, 2019, including interim periods within those fiscal years.

All other entities are required to adopt the standard for

fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The Company meets the definition

of an SRC and therefore the standard was effective at the beginning of 2023.

The adoption of this guidance did not have a material impact

on the Company’s financial statements.

December 2023, the FASB issued ASU 2023-19, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires the enhancement

of income tax disclosures to provide better insight into how an entity’s operations and related tax risks, planning and opportunities

affect its tax rate and prospects for future cash flows.

The enhanced disclosures require (i) specific categories in a tabular rate reconciliation

including both amounts and percentages and (ii) additional information for reconciling items and income tax paid that meet a quantitative

Public business entities are required to adopt the standard for annual periods beginning after December 15, 2024.

entities are required to adopt the standard for annual periods beginning after December 15, 2025.

The adoption of the standard is not

expected to have a material impact on the Company’s financial statements.

Related Party Transactions

4 unchanged sentences

Since repayment is not assured, the Company provided an allowance for the entire balance of principal and interest as of December 31,

The current allowance is $ 1,141,441 as of September 30, 2023.

The current allowance is $ 1,166,069 as of March 31, 2024.

The current loan balances are as follows:

of Related Party Transactions

Schedule of Related Party Transactions

March 31, 2024

for Collection Risk

( 1,012,800 )

December 31, 2023

for Collection Risk

( 1,012,800 )

Company has loans payable to shareholders related to funding needs for operations.

The current loan details for all related party loans

are as follows:

of Related Party Loans payable to shareholder

Company’s Chief Financial Officer, John Seale, CPA.CITP, is contracted for services through RBSK Partners PC (RBSK).

is RBSK’s managing partner and majority shareholder.

RBSK is engaged by the Company to provide accounting and tax services on a

continuous basis.

Fees paid to RBSK for services were $ 304,158 and $ 78,593 for the nine months ended September 30, 2023 and 2022, respectively.

The Company owed RBSK for open invoices of $ 29,831 and $ 68,142 that are included in accounts payable as of September 30, 2023 and December

Bradley Mitch Watkins, Director, provided certain sales, marketing and commercialization consulting services to the Company prior to

his appointment to the Board of Directors.

For the three months ended March 31, 2024 and 2023, the Company paid Mr.

Watkins $ 0 and $ 564 ,

respectively, for these services.

No amounts were owed to Mr.

Watkins as of March 31, 2024 and December 31, 2023, respectively, for these services.

Company’s former Chief Financial Officer is contracted for services through a third-party public accounting firm.

He is the firm’s

managing partner and majority shareholder.

The firm is engaged by the Company to provide accounting and tax services on a continuous

Fees paid for services were $ 62,987 and $ 17,551 for the three months ended March 31, 2024 and 2023, respectively.

owed RBSK for open invoices of $ 68,899 and $ 84,279 that are included in accounts payable as of March 31, 2024 and December 31, 2023,

respectively.

Property and Equipment

and equipment, net consists of the following:

of Property And Equipment

and equipment

property and equipment

accumulated depreciation

and equipment, net

expense was $ 7,609 and $ 7,868 for the three months ended September 30, 2023 and September 30, 2022, respectively, and was $ 22,426 and

$ 23,592 for the nine months ended September 30, 2023 and September 30, 2022, respectively.

Intangible Assets

assets, net consists of the following:

of Intangible Assets

Implementation

intangible assets

accumulated amortization

expense was $ 2,621

and $ 485 for the three months ended September 30, 2023 and September 30, 2022, respectively, and was $ 7,864

for the nine months ended September 30, 2023 and September 30, 2022, respectively.

Accrued Expenses

expenses consisted of the following:

of Accrued Expenses

party interest

accrued expenses

Notes Payable

February 15, 2023, The Company signed a promissory note with Exchange Listing, LLC in the amount of $ 52,600 .

The note carries an interest

The interest shall accrue on the outstanding balance until the date of repayment and shall be payable at the time and place

and in the manner provided in this promissory note.

The Note shall be paid on the earlier of (i) three months from the date hereof or

the Company receiving a financing in the minimum of $ 3,000,000 .

On August 14, 2023, The Company used proceeds from the initial public

offering to pay the promissory note back in full, including interest in the amount of $ 52,858 .

Company borrowed $ 250,000 on December 16, 2021, from Channel Partners Capital.

The note calls for 65 weekly payments of $ 4,923.08 with

the final payment scheduled for March 16, 2023 .

The note’s interest rate computes to a nominal rate of 40.856 %.

The principal outstanding

at December 31, 2021 was $ 244,048 .

The Company borrowed $ 122,000 on September 16, 2022 to bring the principal balance back to $ 250,000 .

The principal outstanding at December 31, 2022 was $ 202,834 .

The Company borrowed $ 107,231 on May 24, 2023 to bring the principal balance

back to $ 250,000 .

The terms of the note are the same as the previous note with the final payment scheduled for August 22, 2024.

The principal

outstanding at September 30, 2023 was $ 194,248 .

The Company believes that the advancement of additional funds is a minor modification

to the terms of the existing loan since the difference in present value of the cash flows under the terms of the new loan is less than

10% of the present value of the remaining cash flows under the terms of the original loan.

As a result, the modification was accounted

for as a modification of debt.

lender was granted and assigned a continuing security interest in all the Company’s personal property assets including, but not

limited to, business equipment, inventory, accounts, accounts receivable, intellectual property, chattel paper, instruments, deposit

accounts, commercial tort claims, contract rights, licenses, claims, and general intangibles.

future minimum principal payments to be paid in 2023 and 2024 are $ 46,187 and $ 148,062 , respectively.

March to July of 2023 the Company conducted multiple closings of a private placement offering to accredited investors for aggregate gross

principal of $ 6,066,667 or net proceeds of $ 4,995,750 .

notes consisted of (a) a Convertible Promissory Note that accrues interest at 12 % that can be paid in cash or PIK.

The notes automatically

convert into common shares at a 30 % discount to the IPO.

The notes mature on the sooner of the six-month anniversary date from issuance

or a successful IPO on primary exchange in the U.S.

(b) a five-year warrant to purchase common stock equal to fifty percent (50%) of

the shares into which the 2023 Convertible Notes can be converted into at issuance .

The warrants have a strike price at a 25 % premium

to the Conversion Price subject to anti-dilution, issuable on a pro rata basis at each funding.

facilitators to the notes Signature Bank and Alexander Capital, L.P.

have received certain fees.

Signature Bank received a $ 6,000

escrow fee from the first round of funding.

Capital, L.P.

has received (i) a cash commission of ten percent (10%) of the proceeds raised in the offering from investors introduced

to the Company by the Placement Agent;

(ii) the granting to the Placement Agent of a warrant for the purchase of a number of shares of

Common Stock equal to 6% of the number of Underlying Securities;

and (iii) the other matters set forth in the engagement letter between

the Company and the Placement Agent dated April 13, 2022.

As of September 30, 2023, Alexander Capital, L.P., has received fees totaling

which were recorded in debt discounts and received

warrants which were recorded at fair value in

warrant liability and debt discounts on the balance sheet.

After the closing of the initial public offering on August 14, 2023, The Company

converted the notes payable plus $ 226,391

in interest into 1,498,332

shares of common stock.

The shares were to be

issued at a discounted price of $ 4.20 per share resulting in a loss to the Company which is recorded in extinguishment of derivative

As of September 30, 2023, 3,973 shares of converted stock from this raise have not been issued and are recorded at fair

value on the balance sheet in share liability.

See Note 12 Share Liabilities

the year ended December 31, 2022, the Company conducted multiple closings of a private placement offering to accredited investors for

aggregate gross amount of $ 3,555,556 and net proceeds of $ 3,070,000 .

2022 Convertible Notes signed from June 3, 2022 to November 30, 2022 have aggregate gross amounts of $ 3,333,333

and net proceeds of $ 2,870,000

and consisted of (a) a

Convertible Promissory Note that accrues interest at the greater of Prime rate plus 8.5% or 12% .

The notes convert into common shares at the lower of $ 9.44

discount to the price per share of any subsequent offering.

The notes mature on the one -year

anniversary date from issuance.

five-year warrant to purchase common stock equal to one hundred percent (100%) of the shares into which the 2022 Convertible Notes can

be converted into at issuance .

The warrants have

an exercise price at the lower of $ 11.80

per share or a 12.5 %

discount to the price per share of any subsequent offering.

of the principal amount of these notes, at a value per share equal to the conversion price.

shares of common stock issued to inves tors

had a relative fair value of $ 4,789 .

Due to the second prong of the conversion equation after the IPO an additional 44,048 commitment shares are to be issued.

are to be issued at a discounted price of $ 4.20

per share resulting in a loss to the Company

which is recorded in extinguishment of derivative liabilities.

As of September 30, 2023, these shares have not been issued and are recorded

at fair value on the balance sheet in share liability.

See Note 12 Share Liabilities

an additional incentive for entering into the convertible note offering, the Company offered an original issue discount equal to 10 %

of the principal amount of the notes.

The Company also paid $ 130,000 to law firms related to the convertible note offering.

March of 2023, the Company used borrowings from the 2023 convertible notes to pay the principal balance of some of the notes totaling,

$ 2.65 million.

Upon payment, the terms for the remaining balance of those notes were also updated.

The remaining balance accrued interest

at 8 % per annum without maturity or default rights.

The new balance shall also automatically convert into shares of common stock at a

27.5 % discount to the per share offering price in the Company’s initial public offering or $ 4.35 per share.

After the closing of

the initial public offering on August 14, 2023, the Company converted the notes payable plus $ 173,205 in interest into 107,509 shares

of common stock.

The shares are to be issued at a discounted price of $ 4.35 per share resulting in a loss to the Company which is

recorded in extinguishment of derivative liabilities.

As of September 30, 2023, 107,509 shares of converted stock from this raise have

not been issued and are recorded at fair value on the balance sheet in share liability.

See Note 12 Share Liabilities

remaining investors did not convert their notes and, as such the Company used proceeds from the initial public offering to pay the remaining

promissory notes back in full, including interest in the amount of $ 445,554 .

2022 Convertible Notes signed on December 19, 2022 have aggregate gross proceeds of $ 200,000 or net proceeds of $ 222,222 and consisted

of an original issue discount of 10 % of the principal amount and have an interest rate of 12 % per annum.

The notes will mature at the

earlier of (i) twelve (12) months from the issue date or (ii) the date upon which the Company completes a registered public offering

of shares of the Company, which encompasses the closing of the IPO.

The notes are convertible into shares of common stock at the higher

of (i) $ 9.44 per share, or (ii) the price per share of common stock issued pursuant to the next registered public offering of shares

of the Company made prior to the conversion of any portion of the note.

Interest accrues on the aggregate principal amount (which includes

original issue discount) and is payable on the maturity date, at the Company’s election, in cash or in-kind.

The holders of the

notes are entitled to piggyback registration rights on any registration statement filed by the Company, other than any registration statement

filed on Form S-4 or Form S-8.

The warrants and conversion shares are subject to anti-dilution adjustments outlined in the Agreement.

Company has applied ASC 815 and ASC 480, due to the potential for settlement in a variable quantity of shares.

Since these convertible

notes and warrants have the option to convert or be exercised at a variable amount, they are subject to derivative liability treatment.

The conversion feature has been measured at fair value using a Monte Carlo model at the date of issuance and is adjusted to fair value

at each reporting period.

The fair value of the embedded derivative and the warrant liability at date of issuance was $ 4,825,067 and

$ 5,254,834 , respectively.

See Notes 12 and 13.

value of the incentives given to investors totaled $ 11,728,912 .

Since the value of the incentives given to certain investors was in excess

of the principal value of the notes, the Company recognized $ 9,403,924 as debt discount and expensed the remaining $ 2,324,988 as financing

The debt discount is being accreted over the life of these notes to accretion of debt discount and issuance cost.

On August 14,

2023, The Company amortized the remaining debt discount as the notes were all either paid off or converted pursuant to the initial public

As of September 30, 2023, 1,231,772 shares of converted stock have not been issued and are recorded at fair value

on the balance sheet in share liability.

See Note 12 Share Liabilities

the periods ended September 30, 2023 and December 31, 2022, the Company accrued interest to these convertible notes of $ 399,597 and $ 107,544 ,

respectively, which was paid or converted into common stock as mentioned above.

November 8, 2023, the Company entered into a Securities Purchase Agreement (“SPA”) with a shareholder for the issuance

1,260,504 shares of Series B Convertible Preferred Stock, par value $ 0.001 per share (the “Series B Preferred Stock”),

for an aggregate purchase price of $ 3,000,000 paid in 15 monthly installments of $ 200,000 each, commencing on the later of January

10, 2024 or a date after stockholders approve of an amendment to the Company’s Certificate of Incorporation to authorize the

creation of the Series B Preferred Stock (the “Stockholder Approval”).

The Series B Preferred Stock is convertible at

any time into shares of common stock of the Company without any further consideration.

Following the issuance of the Series B

Preferred Stock, it will rank senior to the common stock with respect to payments upon the liquidation, dissolution and winding up

of the Company.

Due to a delay in Stockholder Approval, the Company amended the SPA on February 12, 2024 to issue a promissory note,

due and payable on the earlier of 15 months or 12 months if the Series B Preferred Stock has not been authorized before such date, convertible into Series B Preferred Stock with identical funding amounts and terms.

the first quarter of 2024, the Company entered into a series of convertible promissory notes totaling $ 3,135,000

with identical terms to the $ 3,000,000

convertible promissory note issued on February 12, 2024 (collectively referred to as the “2024 Convertible Promissory

As of March 31, 2024, the Company has received $ 1,535,000

of the principal amount with the remainder due in monthly installments through the maturity date in March of 2025.

Company’s private placement agent fees included (i) 10% of the funded principal amount and (ii) warrants calculated as 6.0% of

the funded principal amount divided by the $2.38 exercise price.

The fair value of the warrants of $97,465 were deferred as a

financing fee and classified as additional paid in capital .

The private placement agreement was terminated on March 18, 2014

pursuant to an new advisory agreement (See Note 12).

2024 Convertible Promissory Notes bear interest at 8.5 % per annum payable quarterly in either cash or common stock at the election of

At any time following the date of shareholder approval to authorize the creation of Series B Preferred Stock prior to the

maturity date, the investor may elect to convert all or part of the principal into the Company’s Series B Preferred Stock at a

conversion price per share equal to $ 2.38 .

Without limiting the forgoing, all principal amounts outstanding on the maturity date will

automatically convert into the Company’s Series B Preferred Stock.

The Series B Preferred Stock is entitled to cumulative dividends

at 8.5 % per annum (whether or not declared) payable quarterly in either cash or common stock at the $ 2.38 conversion price at the election

of the Company.

Upon conversion to Series B Preferred Stock, the investor may elect, at its option at any time, to convert all or part

of the Series B Preferred Stock plus accrued but unpaid dividends into an equivalent amount of common stock at the $ 2.38 conversion price.

As of March 31, 2024, no investor has converted any portion of the 2024 Convertible Notes into Series B Preferred Stock as the shareholders

have not yet authorized its issuance.

Accrued interest totaled $ 76,319 and $ 66,648

as of March 31, 2024 and December 31, 2023, respectively.

The unamortized debt discount on the 2024 Convertible Promissory Notes total $ 235,281 as of March 31, 2024.

Amortization of the debt

discount on the 2024 Convertible Notes totaled $ 21,863 for the three months ended March 31, 2024.

the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and

circumstances present in the arrangement.

Leases with a term greater than one year are recognized on the balance sheet as right-of-use

assets and current and non-current lease liabilities, as applicable.

lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over

the expected remaining lease term.

Certain adjustments to the right-of-use asset may be required for items such as incentives received.

The interest rate implicit in lease contracts is typically not readily determinable.

As a result, the Company utilizes its incremental

borrowing rate to discount lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis

the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.

Prospectively, the Company

will adjust the right-of-use assets for straight-line rent expense, or any incentives received and remeasure the lease liability at the

net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date.

has elected not to recognize leases with an original term of one year or less on the balance sheet.

The Company typically only includes

an initial lease term in its assessment of a lease arrangement.

Options to renew a lease are not included in the Company’s assessment

unless there is reasonable certainty that the Company will renew.

made by the Company at the commencement date are re-evaluated upon occurrence of certain events, including a lease modification.

modification results in a separate contract when the modification grants the lessee an additional right of use not included in the original

lease and when lease payments increase commensurate with the standalone price for the additional right of use.

When a lease modification

results in a separate contract, it is accounted for in the same manner as a new lease.

may elect not to separate lease and non-lease components.

The Company has elected to account for lease and non-lease components together

as a single lease component for all underlying assets and allocate all the contract consideration to the lease component only.

Company’s leases are comprised of operating leases for office space.

5 unchanged sentences

The Company did not have any finance

leases at September 30, 2023 and December 31, 2022.

leases as of March 31, 2024 and December 31, 2023.

Company had three leases primarily consisting of office space in Versailles and Carmel Indiana.

Two of the leases in Versailles started

January 1, 2017.

Both have an initial term of five years with an option for an additional five-year term.

The monthly lease payments

for these leases are $ 550 and $ 1,600 with a 3 % per annum increase starting with the optional five-year term.

The lease in Carmel started

March 1, 2016.

The initial term is five years and three months with an option for an additional three-year term.

The monthly lease payment

started at $ 1,472 with an annual increase of approximately 2.7 %.

On December 16, 2020, the Company entered into an amendment of the Carmel

lease that extended the initial term by two years .

of the leases in Versailles started January 1, 2022.

Both have an term of one year, with automatic one year renewal, unless 60 day notice

of vacating is given, commencing on the execution hereof and continuing through December 31 st of each year..

The monthly lease

payments for these leases are $ 470 and $ 1,664 with a 4 % per annum increase.

The new lease in Carmel started January 1, 2024.

term is five years and five months.

The monthly lease payment started at $ 6,721 with an annual increase of 2.5 %.

As long as the Company

isn’t in default, they are only obligated to pay an amount equal to 50% of the monthly base rent for months 1-10 .

lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the

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and real estate taxes, which are recorded as expenses when incurred.

the periods ended September 30, 2023 and December 31, 2022, the Company recognized $ 35,678 and $ 47,571 of operating lease expense, including

short-term lease expense and variable lease costs, which are immaterial.

the three months ended March 31, 2024 and 2023, the Company recognized $ 25,756 and $ 11,729 of operating lease expense, including short-term

lease expense and variable lease costs, which are immaterial.

following table presents information related to the Company’s operating leases:

of Operating Leases

Schedule of Operating Leases

lease right-of-use assets

5 unchanged sentences

discount rate

of September 30, 2023, the maturities of the Company’s operating lease liabilities were as follows:

of Maturities Operating Lease Liabilities

of March 31, 2024, the maturities of the Company’s operating lease liabilities were as follows:

Schedule of Maturities Operating Lease Liabilities

lease payments

2 unchanged sentences

Common Stock and Warrants

September 7, 2021, the Company’s board of directors authorized a 4-for-1 stock split .

They also increased the number of authorized

common stock shares from 2,700,000 to 10,800,000 .

Furthermore, on September 9, 2021, the board authorized an increase of authorized shares

of common stock from 10,800,000 to 13,400,000 in anticipation of a capital offering.

As part of the conversion to a Delaware Corporation

in June of 2022, the total number of common stock shares authorized was increased to 100,000,000.

All share and per share amounts for

the common stock have been retroactively restated to give effect to the split.

on January 10, 2023, the Company’s board of directors authorized a 2-for-1 reverse stock split .

All share information in these

financial statements has been adjusted for this reverse stock split.

connection with a bridge loan, the Company issued a warrant to a shareholder, Brian Hannasch, on September 18, 2018.

The warrant allows

the holder to purchase common stock from the Company at a share price of $ 4.38 per share.

The number of shares was based on a formula

tied to the final amount of loans made by the holder of $ 375,000 , multiplied by 150 %, and divided by $ 70.03 .

The number of shares based

on this formula is 12,852 .

The warrant contains certain rights in the event of liquidation, merger, or consolidation of the Company.

If the fair market value of one share is greater than the warrant price, the holder may elect to receive a number of shares equal to

the value of the warrant.

If the exercise is in connection with the sale of the Company, the holder may, at its option, condition its

exercise of the warrant upon the consummation of such transaction.

The warrant expires on September 18, 2028 and can be exercisable either

in whole or from time to time in part prior to the expiration date.

Company issued a second warrant to Brian Hannasch on September 6, 2019, under similar terms.

This is a penny warrant that allows the

holder to purchase 40,000 shares of common stock and is subject to adjustment for certain equity events.

The warrant contains certain

rights in the event of liquidation, merger, or consolidation of the Company.

Company authorized 100,000,000 shares

of common stock, of which 6,594,897 and 6,508,897 were

issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.

In conjunction with 1,098,667 common

shares issued upon the completion of the initial public offering on August 8, 2023, the Company also issued (i) 1,244,228 common

shares upon conversion of 506,637 shares

of Convertible Series A Preferred Stock and 115,477 shares

of Convertible Series Seed Preferred Stock, (ii) 1,649,900 common

shares upon conversion of convertible notes, (iii) 425,000 common

shares as payment to vendors for services and (iv) 127,780 common

shares upon the exercise of warrants.

On January 10, 2023, the Company’s board of directors authorized a 2-for-1

reverse stock split .

All share information

in these financial statements has been adjusted for this reverse stock split.

January 10, 2023, the Company’s board of directors authorized a 2-for-1 reverse stock split .

All share information in these financial

statements has been adjusted for this reverse stock split.

August 9, 2023, the Company consummated an initial public offering, conducted on a firm commitment basis, pursuant to which it sold 1,098,667

shares of its common stock at a price of $ 6.00 per share, resulting in gross proceeds of $ 6,592,002 .

On January 2, 2024, the Company issued 75,000 shares of common stock with a fair value of $ 200,250 pursuant to a consulting agreement.

As the term of the consulting agreement covers the full fiscal year ending December 31, 2024, the Company expensed $ 50,062 in the three

month’s ended March 31, 2024 with the remaining $ 150,188 recorded in prepaids and other current assets as of March 31, 2024.

connection with a bridge loan, the Company issued a warrant on September 18, 2018 that allows the holder to purchase common stock from

the Company at a share price of $ 4.38 per share.

The number of shares was based on a formula tied to the final amount of loans made by

the holder of $ 375,000 , multiplied by 150 %, and divided by $ 70.03 .

The number of shares based on this formula is 12,852 .

contains certain rights in the event of liquidation, merger, or consolidation of the Company.

If the fair market value of one share is

greater than the warrant price, the holder may elect to receive a number of shares equal to the value of the warrant.

If the exercise

is in connection with the sale of the Company, the holder may, at its option, condition its exercise of the warrant upon the consummation

of such transaction.

The warrant expires on September 18, 2028 and can be exercisable either in whole or from time to time in part prior

to the expiration date.

Company issued a second warrant on September 6, 2019, under similar terms but is a penny warrant that allows the holder to purchase 40,000

shares of common stock and is subject to adjustment for certain equity events.

The warrant contains certain rights in the event of liquidation,

merger, or consolidation of the Company.

The warrant expires on September 6, 2029.

This warrant was converted to 39,924 shares of common

stock on December 28, 2023.

The fair market value of the stock on that day was calculated as the average of the daily closing prices

per share for the 30 consecutive trading day period ending on the second trading day prior to such date or $ 2.61 per share.

fair value was greater than the warrant price of $0.01 per share the holder elected to receive the number of shares equal to 40,000 times

the difference between the fair market value and the exercise price divided by the fair market value, resulting in 39,924 .

Company issued a third warrant to Masimo Corporation on April 9, 2020.

This warrant was pre-funded in the amount of $ 2,734,340 .

allows the holder to purchase 289,779 shares of Series A Preferred Stock at $ 9.44 per share and is subject to adjustment for certain

The warrant allows the holder to purchase 289,779

shares of Series A Preferred Stock at $ 9.44

per share and is subject to adjustment for certain

equity events.

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to further adjustment thereafter from time to time in accordance with the provisions of this Warrant.

On August 14, 2023 the warrant

was converted to be exercisable for 289,779 shares of common stock as described above.

2022, the Company issued 793,655 five-year warrants to purchase common stock equal to one hundred percent (100%) of the shares into which

the 2022 convertible notes can be converted into at issuance.

The warrants have an exercise price of $ 5.25 per share.

On August 14, 2023, the 144,890

Series A Preferred Stock warrants were converted

common stock warrants.

2022, the Company issued 793,655

five-year warrants to purchase common stock equal

to one hundred percent (100%) of the shares into which the 2022 convertible notes can be converted at issuance.

The 2024 Convertible

Promissory Notes triggered the anti-dilution clause of the original agreement and decreased the exercise price to $ 2.38 .

March to June of 2023, the Company issued 505,570 one-year warrants to purchase common stock equal to fifty percent (50%) of the shares

into which the 2023 convertible notes can be converted into at issuance.

into which the 2023 convertible notes can be converted at issuance.

The warrants have an exercise price of $ 5.25 per share.

August 14, 2023, the Company issued 65,921 five-year warrants to purchase common stock pursuant to the agreement with underwriter upon

closing of the Company’s initial public offering.

The 2024 Convertible Promissory Notes triggered the anti-dilution clause of the original agreement and decreased the exercise price to $ 2.38 .

August 9, 2023, the Company issued 122,202 five-year warrants to purchase common stock pursuant to an advisory agreement with a consulting

firm upon closing of the Company’s initial public offering.

The warrants have an exercise price of $ 6.00 per share.

following is a summary of warrant activity for common stock during the periods ended September 30, 2023 and December 31, 2022:

of Warrant Activity for Common Stock

The 2024 Convertible Promissory Notes triggered the anti-dilution clause of the original agreement and decreased the exercise price to $ 2.38 .

August 14, 2023, the Company issued 186,156 five-year warrants to purchase common stock pursuant to an agreement with an underwriter

upon closing of the Company’s initial public offering.

The warrants have an exercise price of $ 7.20 per share.

The 2024 Convertible Promissory Notes triggered the anti-dilution clause of the original agreement and decreased the exercise price to $ 2.38 .

From January to March of 2024, the Company issued 38,697 warrants to its private placement agent in conjunction with the 2024 Convertible

Promissory Notes at an exercise price of $ 2.38 to purchase common stock.

March 30, 2024, the Company issued 7,563 warrants pursuant to an advisory agreement at

an exercise price of $ 2.38 to purchase common stock (See Note 12).

following is a summary of warrant activity for common stock during the periods ended March 31, 2024 and December 31, 2023:

Schedule of Warrant Activity for Common Stock

Weighted-Avg.

as of December 31, 2021

as of January 1, 2023

Cancelled/Expired

1 unchanged sentence

Prefunded Warrants

Cancelled/Expired

as of September 30, 2023

following is a summary of warrant activity for preferred stock during the periods ended September 30, 2023 and December 31, 2022:

of Warrant Activity for Preferred Stock

as of March 31, 2024

following is a summary of warrant activity for preferred stock during the year ended December 31, 2023:

Schedule of Warrant Activity for Preferred Stock

Weighted-Avg.

as of December 31, 2021

as of January 1, 2023

Cancelled/Expired

as of December 31, 2023

Cancelled/Expired

to Common Stock Warrant

as of September 30, 2023

following table summarizes the Company’s warrants outstanding and exercisable as of September 30, 2023.

of Warrants outstanding and Exercisable

Hannasch W-01

There was no preferred

stock warrant activity for the three months ended March 31, 2024.

following table summarizes the Company’s warrants outstanding and exercisable as of March 31, 2024.

Schedule of Warrants outstanding and Exercisable

Hannasch W-01

2 unchanged sentences

Convertible Notes

Agreement Warrants

Underwriter’s

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Preferred Stock

The Company has authorized 1,120,000

shares of preferred stock of which 1,000,000

has been designated Series A Preferred and 120,000

has been designated Series Seed Preferred, of which 0

and 506,637 shares of Series A Preferred and 0 and 115,477

shares of Series Seed Preferred are issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.

aggregate purchase price of the Series A Preferred Stock was $ 9,321,165 , of which $ 7,692,664 was comprised of cash and the remaining

$ 1,628,501 was comprised of converted debt and common stock.

The aggregate purchase price of the Series Seed Preferred shares was $ 0 ,

as all the Series Seed shares were converted from common stock as an incentive to reinvest in Series A Preferred Stock.

Company has authorized 1,120,000 shares

of preferred stock of which 1,000,000 has

been designated Series A Preferred Stock and 120,000 has

been designated Series Seed Preferred Stock, of which 0 shares

of Series A Preferred Stock and 0 shares

of Series Seed Preferred Stock are issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.

following is a summary of Preferred Stock terms:

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of the price at which any future shares are issued, if less than the Series A Original Purchase Price.

consideration for shareholders to make an additional investment in the Company, upon the purchase of the Series A Preferred stock by

the shareholder, the Company converted the existing common shares held by shareholders to Series Seed Preferred Stock at a $ 100 million

valuation and at a 120 % share premium.

As of September 30, 2023 and December 31, 2022, there were 97,702 common shares converted into

115,477 shares of Series Seed Preferred shares that have no par value and are outstanding.

stock has all converted pursuant to the initial public offering.

As of September 30, 2023, 1,076,242 shares of converted preferred stockhave not been issued and are recorded at fair

value on the balance sheet in share liability.

See Note 12 Share Liabilities

Stock Options and Awards

following is a summary of stock option activity for the periods ended September 30, 2023 and December 31, 2022:

of Stock Option Activity

as of December 31, 2021

following is a summary of stock option activity for the periods ended March 31, 2024 and December 31, 2023:

Schedule of Stock Option Activity

as of January 1, 2023

Cancelled/Expired

1 unchanged sentence

Cancelled/Expired

as of September 30, 2023

and Exercisable as of September 30, 2023

as of March 31, 2024

and Exercisable as of March 31, 2024

compensation expense is classified in the Company’s statements of operations as general and administrative expense.

were $ 0 and $ 27,319 for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, there was no unrecognized

Compensation expense totaled $ 237,000 and $ 0 for the three months ended March 31, 2024 and 2023, respectively (See Note 9).

March 31, 2024, there was no unrecognized

compensation expense related to unvested options granted under the Company’s share-based compensation plans.

Share Liabilities

As of September 30, 2023, the

Company had not issued 1,231,772 shares of its common stock, representing a total amount of $ 934,256 , due to administrative delays related

to the initial public offering (IPO) that took place on August 11, 2023.

These shares are classified as share liabilities as they have

been authorized but not yet issued as of the reporting date.

The Company expects to issue

these shares to the respective shareholders as soon as the administrative delays are resolved.

These shares will be recorded as issued

and outstanding upon their issuance, and the corresponding share liability will be reclassified to shareholders’ equity.

The administrative delays are

not expected to have any material impact on the financial position or results of operations of the Company.

Management’s best estimate is that the administrative delays will be resolved

within the next fiscal quarter, at which point the share liabilities will be eliminated, and the shares will be issued.

However, the timing

of resolution is subject to various factors, and actual timing may vary.

Share liability consists of the following:

of Share Liability

Series A Shares Unissued

Series Seed Shares Unissued

Shares Unissued

Share Liability

of March 31, 2024, the Company had not issued 100,000

shares of its common stock pursuant to a hiring grant of an executive officer, representing stock compensation expense of $ 237,000

in the three months ended March 31, 2024, due to administrative delays.

These shares are classified as share liabilities as

they have been authorized but not yet issued as of the reporting date.

Company expects to issue these shares to the respective shareholder as soon as the administrative delays are resolved.

These shares will

be recorded as issued and outstanding upon their issuance, and the corresponding share liability will be reclassified to shareholders’

The administrative delays are not expected to have any material impact on the financial position or results of operations of

best estimate is that the administrative delays will be resolved within the next fiscal quarter, at which point the share

liabilities will be eliminated, and the shares will be issued.

However, the timing of resolution is subject to various factors, and

actual timing may vary.

Warrant Liabilities

Company has evaluated financial instruments arising from an adjustable exercise price for warrants that are issued and outstanding as

of September 30, 2023 and December 31, 2022.

evaluates all of the Company’s financial instruments and contracts, including issued warrants to purchase its Class A common

stock and Series B Preferred Stock, to determine if such instruments are derivatives or contain features that qualify as embedded

derivatives, pursuant to ASC 480 and ASC 815-15.

The classification of derivative instruments, including whether such instruments

should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.

Company utilizes a Monte Carlo simulation model for warrants that have an option to convert at a variable number of shares to compute

1 unchanged sentence

The inputs utilized

in the application of the Monte Carlo model included a starting stock price of $ 7.91 per share, an expected remaining term of each warrant

as of the valuation date, estimated volatility of 75 %, drift, and a risk-free rate ranging from 3.46 % to 59.01 %.

in the application of the Monte Carlo model included a starting stock price, an expected remaining term of each warrant as of the valuation

date, estimated volatility, drift, and a risk-free rate.

The Company records the change in the fair value of the derivative as other

income or expense in the statements of operations.

Company utilizes a Monte Carlo simulation model for warrants that have an option to convert at a variable number of shares to

compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date.

inputs utilized in the application of the Monte Carlo model included a starting stock price of $ 9.20

per share, an expected remaining term of each warrant as of the valuation date, estimated volatility ranging from 68% to 80 %,

drift, and a risk-free rate ranging from 4.00 %

interest rate:

7 unchanged sentences

The Company’s remaining term is based on the remaining contractual maturity of the warrants.

following are the changes in the warrant liabilities during the quarter ended September 30, 2023 and year ended December 31, 2022.

of Changes in Warrant Liabilities

following are the changes in the warrant liabilities during the periods ended March 31, 2024 and December 31, 2023.

Schedule of Changes in Warrant Liabilities

liabilities as of January 1, 2023

in fair value of warrant liabilities

liabilities as of January 1, 2023

( 3,827,807 )

liabilities as of December 31, 2023

in fair value of warrant liabilities

liabilities as of March 31, 2024

in fair value of Warrant liabilities

liabilities as of June 30, 2023

in fair value of Warrant liabilities

Extinguishment

of Warrant liabilities

( 3,721,007 )

liabilities as of September 30, 2023

Derivative Liabilities

Company has identified derivative instruments arising from the conversion shares discussed in the Convertible Notes section of Note 7

as of September 30, 2023 and December 31, 2022.

Company accounts for derivative financial instruments as either equity or liabilities in accordance with ASC Topic 815, Derivatives

and Hedging , or ASC 815, based on the characteristics and provisions of each instrument.

Embedded derivatives are required to be

bifurcated from the host instruments and recorded at fair value if the derivatives are not clearly and closely related to the host instruments

on the date of issuance.

Derivative instrument liabilities are classified in the balance sheets as current or non-current based on whether

or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Company has identified derivative instruments arising from the conversion shares from convertible notes in Note 4 as of March 31,

2024 and December 31, 2023.

Company utilizes a Monte Carlo simulation model for commitment shares that have an option to convert at a variable number of shares to

11 unchanged sentences

The Company’s remaining term is based on the remaining contractual maturity of the warrants.

following are the changes in the warrant liabilities during the quarter ended September 30, 2023 and year ended December 31, 2022.

of Changes in Derivative Liabilities

liabilities as of January 1, 2022

in fair value of Derivative liabilities

following are the changes in the derivative liabilities during the year ended December 31, 2023.

Schedule of Changes in Derivative Liabilities

liabilities as of January 1, 2023

3 unchanged sentences

( 3,912,527 )

liabilities as of March 31, 2023

in fair value of Derivative liabilities

liabilities as of June 30, 2023

in fair value of Derivative liabilities

Extinguishment

of Derivative liabilities

( 2,783,029 )

liabilities as of September 30, 2023

Retirement Plan

Company sponsors a 401(k)-retirement plan for its employees.

Employees are eligible to participate in the elective deferral portion of

the plan after twelve months and 1,000 hours of service.

The Company matches the employee’s contribution up to 3 %.

can also make an optional profit-sharing contribution to the employee accounts on an annual basis.

There was an expense of $ 3,657 and

$ 13,058 for nine months ended September 30, 2023 and 2022, respectively.

liabilities as of December 31, 2023

There was no derivative

liability activity for the three months ended March 31, 2024.

Commitments and Contingencies

12 unchanged sentences

Company entered into an agreement for a trademark related to the Company’s name on July 11, 2022.

The agreement called for an

initial payment of $ 10,000

upon execution of the agreement.

A second and final payment of $ 40,000

was contingent upon the completion of the Company’s planned initial public offering.

The second payment has been accrued and

is recorded in accounts payable and intangible assets on the balance sheet.

The trademark

does not have a determinate life and therefore the cost is not being amortized.

The agreement called for an initial

payment of $ 10,000 upon execution of the agreement.

A second and final payment of $ 40,000 was contingent upon the completion of the Company’s

planned initial public offering.

The second payment has been accrued and is recorded in accounts payable and intangible assets on the

balance sheet.

The trademark does not have a determinate life and therefore the cost is not being amortized.

Advisory Agreement

On March 18, 2024, the Company terminated

its private placement services agreement and entered into an advisory agreement for debt, equity and public securities market services for one year.

The advisory agreement includes a monthly fee of $ 30,000

and 7,563 common stock warrants to be issued monthly at an exercise price of $ 2.38 with a term of five years.

Employment Agreements

3 unchanged sentences

date of October 1, 2022, with initial terms from 2 to 5 years and optional one-year renewals .

total base salaries for the nine key employees in the agreements are $ 1.92 million per year with various provisions for annual increases.

In addition to base salaries, eight of the employees have a provision for a special one-time incentive payment to be paid in a lump sum

after the start date.

The total amount of these special incentive payments is $ 1.11 million.

The special incentive payment amount includes

any accrued backpay wages for the employee.

That accrued amount for backpay was $ 417,390 and has been recorded and is reflected in the

financial statements at September 30, 2023.

total base salaries for the nine key employees in the agreements are $ 1,920,000

per year with various provisions for annual increases.

In addition to base salaries, eight of the employees have a provision for a

special one-time incentive payment to be paid in a lump sum after the start date.

The total amount of these special incentive

payments is $ 1,100,000 .

The special incentive payment amount includes any accrued backpay wages for the employee.

That amount for backpay was $ 417,390

and was paid in 2023.

are seven key employees that have stock options of the Company totaling 1,238,712 shares.

14 unchanged sentences

The balance of the incentive bonuses of $ 694,056 and the

special options bonuses of $ 14.82 million were contingent upon a successful initial public offering.

special options bonuses of $ 14,821,830 were contingent upon a successful initial public offering.

The incentive bonuses have been

11 unchanged sentences

any claims could adversely affect our business, financial condition and the results of our operations.

February 6, 2019, plaintiff Ritu Bhambhani, M.D., initiated a lawsuit against Innovative Health Solutions, Inc.

February 6, 2019, plaintiff Ritu Bharnbhani, M.D., initiated a lawsuit against Innovative Health Solutions, Inc.

and others in the United

18 unchanged sentences

the appeal and that it would address those arguments at the same time that it addressed the substantive merits of the case.

3, 2023, the parties had submitted their appellate briefs to the Fourth Circuit.

5, 2023, the parties have submitted their appellate briefs to the Fourth Circuit.

No date has been set for either oral argument or for

16 unchanged sentences

damages when Medicare administrative contractors declined to pay plaintiffs for their use of the device.

September 28, 2022, the Company has filed a motion to dismiss all claims.

On May 25, 2023, the Court issued an Order and a Memorandum

Opinion which dismissed the plaintiffs’ claims related to the RICO Act.

The remining claims are still pending and no trial date has been set for

While it is too early to predict the ultimate outcome of

this matter, we believe the Company has meritorious defenses and intend to defend this matter vigorously.

July 25, 2023, the court entered a scheduling order that set the deadline to file dispositive motions as March 11, 2024.

No trial date

has been scheduled.

Counsel for NeurAxis and counsel for the Plaintiffs

in both of the above-described cases have agreed to try to resolve the disputes in both cases through an independent third-party mediator.

No date has been set yet for that mediation.

Health Benefit Plan

Company entered into a self-funded program employer agreement in 2018 in conjunction with a group health plan for the benefit of eligible

This plan is a level funded plan, and the services and products include:

self-funded employer health benefit plan.

loss insurance purchased from a stop loss insurance company.

party administrator to provide administrative services with regard to the plan.

Company maintains a stop loss contract that reimburses the Company for claims paid under the plan if they exceed a predetermined level.

The Company makes contributions for health care costs and associated expenses that are expected during the plan year.

The amount of contributions

is determined annually based on the Company’s maximum liability for expected claims, administrative expenses, and premiums for

the stop loss policy.

The Company paid premiums of $ 175,616 and $ 136,428 for the nine months ended September 30, 2023 and 2022, respectively.

Company is responsible for the monthly premiums, as established, and nothing further.

The stop loss policy covers the claims if they

exceed the claims funds.

After a certain time, and if there is a surplus in the claims fund, the Company may be entitled to receive a

48.5 % refund from the fund.

This amount is recognized by the Company when received.

On September 28, 2022, the Company filed a

motion to dismiss all claims.

On May 25, 2023, the Court issued an Order and a Memorandum Opinion which dismissed the

plaintiff’s claims related to the RICO Act.

The remaining claims are still pending, and no trial date has been set for the case.

The Court has vacated its Scheduling Order

at the parties’ request so that the parties could try to resolve the disputes in both cases through an independent third-party

No mediation date has been set.

While it is too early to predict the ultimate outcome of this matter, we believe the

Company has meritorious defenses and intends to defend this matter vigorously.

Subsequent Events

Company evaluated subsequent events through the date of issuance.

The following changes occurred subsequent to September 30, 2023:

B Preferred Stock – The Company signed an agreement on November 8, 2023 with an investor to sell shares of Series B Preferred Stock.

The aggregate purchase price of $ 3,000,000 for 1,260,504 shares is payable by the investor to the Company in fifteen equal monthly installments

of $ 200,000 each.

The first installment is due on January 10, 2024, with subsequent installments payable on or before the tenth day of

each succeeding month.

All payments are to be made by wire transfer of immediately available funds to an account of the Company as designated

in writing by the Company to the Investor.

Company shall use the proceeds from the issuance of the Series B Preferred Stock solely for the Company’s working capital and general

corporate purposes.

The Company shall not use any of such proceeds to pay any dividends or distributions or to pay or advance any funds

to any of its officers, directors, or affiliates.

The Company is using the investment to support and accelerate the Company’s sales

and marketing efforts.

Between October 1, 2023 and November 20, 2023, the

Company issued 113,693 of the previously unissued shares recorded in share liability.

The remaining 1,118,079 shares will be issued during

the fourth quarter of 2023.

See Note 12 Share Liability.

On April 4, 2024, the Board approved the

issuance of 53,063 shares of common stock to an existing shareholder to settle a 2023 convertible note dispute.

As the condition

existed as of March 31, 2024, the Company expensed the settlement value of $230,823 to financing charges for the three months ended

March 31, 2024.

On April 10, 2024, the employment of the Company’s

Chief Operating Officer was terminated.

Pursuant to the employment agreement, the Company will make salary continuation payments based

on an annual salary of $ 275,000 through October 10, 2024 and provide health care coverage through October 10, 2025.

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

What changed 10-Q

Item 1. Financial Statements