What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-20 compared with 2023-11-20 · 102 added, 416 removed, 76 unchanged (87% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

should read the following discussion and analysis of our financial condition and results of operations together with our unaudited financial

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forward-looking statements contained in the following discussion and analysis.

are a medical technology company focused on developing neuromodulation therapies to address chronic and debilitating conditions in children

are a growth stage company focused on developing neuromodulation therapies to address chronic and debilitating conditions in children.

Our mission is to provide solutions that create value and provide better and safer patient outcomes.

Our IB-Stim device is

a PENFS system intended to be used in patients 11-18 years of age with functional abdominal pain associated with IBS.

Our device already

has market clearance from FDA for functional abdominal pain associated with IBS in children.

Other indications in our pipeline are comprised

of functional nausea in children, post-concussion syndrome in children, and cyclic vomiting syndrome in children.

Since our inception, we have incurred significant operating losses.

net loss was $4.9 million and $2.1 million for the three months ended September 30, 2023 and 2022, respectively, and $9.3 million and

$4.8 million for the nine months ended September 30, 2023, and 2022, respectively.

As of September 30, 2023, we had an accumulated deficit

of $43.2 million.

Our auditors have expressed substantial doubt about our ability to continue as a going concern paragraph in their audit

We expect to incur significant expenses and operating losses for the foreseeable future as we continue to pursue widespread insurance

coverage of our IB-Stim device and seek FDA clearance of our device for other indications.

There are a number of milestones and conditions

that we must satisfy before we will be able to generate sufficient revenue to fund our operations, including FDA clearance of our IB-Stim

device to treat future indications.

Our IB-Stim device is a PENFS system

intended to be used in patients 11-18 years of age with functional abdominal pain associated with IBS.

Our device already has market

clearance from FDA for functional abdominal pain associated with IBS in children.

Other indications in our pipeline are comprised of

functional nausea in children, post-concussion syndrome in children, and cyclic vomiting syndrome in children.

For more information,

see “ Business—Our Pipeline ” and “—Products .”

our inception, we have incurred significant operating losses.

Our net loss was $2,120,651 and $2,173,410 for the three months ended March

31, 2024 and 2023, respectively.

Our auditors have expressed substantial doubt about our ability to continue as a going concern in their

audit opinion.

We expect to incur significant expenses and operating losses for the foreseeable future as we continue to pursue widespread

insurance coverage of our IB-Stim device and seek FDA clearance of our device for other indications.

There are a number of milestones

and conditions that we must satisfy before we will be able to generate sufficient revenue to fund our operations, including FDA clearance

of our IB-Stim device to treat future indications.

Affecting our Business and Results of Operations

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not seasonal and only mildly correlated with economic cycles.

Our IB-Stim device costs $1,195 per device, and each child being treated

Our IB-Stim device sells for $1,195 per device, and each child being treated

for functional abdominal pain associated with IBS will use three to four devices.

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and conditions of sale.

Standard payment terms generally are that payment is due within 30 to 90 days.

Our largest sales were to three

hospitals representing approximately 50% and 41% of total sales for the three months ended September 30, 2023 and 2022, respectively,

and to three hospitals representing approximately 43% and 51% of total sales for the nine months ended September 30, 2023 and 2022, respectively.

Standard payment terms generally are that payment is due within 30 days.

did not have a material impact on our operations for any applicable period, and we do not expect inflation to have a material impact

on our operations for the foreseeable future.

have four categories of expenses:

cost of goods sold, selling expenses, research and development (“R&D”), and general

and administrative (“G&A”).

of goods sold consist of costs paid for the IB-Stim device to our contract manufacturer along with periodic inventory adjustments and

expired inventory write-offs.

We expect production costs to remain relatively constant and only nominal inventory expirations in the

foreseeable future.

core selling expenses primarily consist of commissions and shipping costs.

These expense items are generally correlated with sales.

expense is attributable to our clinical trials and related efforts to have our IB-Stim device cleared by the FDA for other indications.

We expect to spend approximately $0.3 million for research and development in 2023 for clinical trials for cyclic vomiting syndrome in

children, and we anticipate that these costs will decrease in 2024 as a majority of the clinical trials will be completed.

expense consists of payroll and professional fees and is our most significant expense category.

Payroll and professional fees

account for approximately 86.8% of our G&A expenses for the nine months ended.

The balance of the expenses are normal operating expenses for facility

expenses, utilities, travel, etc.

We expect G&A expenses to increase during the remainder of 2023 as we transition to operating

as a public company, but we expect G&A expense to stabilize within two years of completion of the IPO.

Profit and Gross Margin

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and technologies.

have four categories of expenses:

cost of goods sold, selling expenses, research and development, and general and administrative.

of goods sold consist of costs paid for the IB-Stim device to our contract manufacturer along with periodic inventory adjustments and

expired inventory write-offs.

Expired inventory expense is related to our FDA clearance for our device in the treatment of functional

abdominal pain associated with IBS in children.

Specifically, a certain component of our IB-Stim device is cleared for a two-year period

after the date the device is manufactured, and if the device is not sold in such period, we must take the device out of inventory and

write it off.

We had no expired inventory for the three months ended March 31, 2024 and 2023.

Expired inventory has not been material

to our results, averaging 1% or less of revenue over the last four years.

We have a fixed-price contract with the manufacturer of our

IB-Stim device to produce the device.

We expect production costs to remain relatively constant and only nominal inventory expirations

in the foreseeable future.

core selling expenses primarily consist of commissions and shipping costs.

These expense items are generally correlated with sales.

and development expense is attributable to our clinical trials and related efforts to have our IB-Stim device cleared by the FDA for

other indications.

We expect to incur future R&D expenses for other indications, such as functional nausea, post-concussion syndrome

and cyclic vomiting syndrome in children.

and administrative expense primarily consists of wages and benefits, professional fees including legal and audit, insurance, investor

relations, advertising, facility costs, utilities and travel.

of Operations

of the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

following table presents our statements of operations for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

Cost of goods sold

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Operating loss

$ (3,022,339 )

$ (1,203,124 )

$ (1,819,215 )

$ (5,041,290 )

$ (2,386,012 )

$ (2,655,278 )

Other income (expense):

Other (expense) income, net:

Financing charges

Interest expense

Interest income

Change in fair value of warrant liability

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Extinguishment of debt liabilities

Other expense

Total other income (expense)

$ (4,904,356 )

$ (2,079,682 )

$ (2,824,674 )

$ (9,313,378 )

Other expense, net

Total other (expense) income, net

$ (2,120,651 )

$ (2,173,410 )

sales decreased $141 thousand, or 23%, from $618 thousand for the three months ended September 30, 2022, to $477 thousand for the three

months ended September 30, 2023.

Net sales decreased $143 thousand, or 6.9%, from $2,072 thousand for the nine months ended September

30, 2022, to $1,929 thousand for the nine months ended September 30, 2023.The decreases were primarily due to ordering patterns of our

major customers.

We believe net sales will increase as we ramp up our marketing efforts and as our IB-Stim device is cleared by the FDA

for other indications, such as functional nausea, post-concussion syndrome and cyclic vomiting syndrome in children.

of Goods Sold

of goods sold decreased 0.5% in the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

Cost of goods sold slightly decreased while sales decreased significantly, mainly because a small amount of devices that were sold below

the regular price.

Costs of goods sold increased 4.1% in the nine months ended September 30, 2023, as compared to the nine months ended

September 30, 2022.

Cost of goods sold increased while sales decreased, mainly because a small amount of devices that were sold below

the regular price.

We expect costs of goods sold to remain relatively constant as we grow, primarily due to our current pricing with

our contract manufacturer.

profit decreased $141 thousand, from $551 thousand for the three months ended September 30, 2022, to $410 thousand for the three months

ended September 30, 2023, representing 85.9% of revenue in the 2023 period and 89.1% of revenue in the 2022 period.

Gross profit decreased

$152 thousand, from $1,850 thousand for the nine months ended September 30, 2022, to $1,698 thousand for the nine months ended September

30, 2023, representing 88.0% of revenue in the 2023 period and 89.3% of revenue in the 2022 period.

The decreases were primarily due

to decreased net sales mentioned above.

We believe gross profit will continue to grow as sales increase, which, in turn, is tied to broader

insurance coverage.

margin decreased 3.2%, from 89.1% for the three months ended September 30, 2022, to 85.9% for the three months ended September 30, 2023.

Gross margin remained relatively flat with sales.

Gross margin decreased 1.3%, from 89.3% for the nine months ended September 30, 2022,

to 88.0% for the nine months ended September 30, 2023.

Gross margin remained relatively flat with sales.

expenses were down 21.3% in the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

expenses were down 27.2% in the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

primarily due to lower commission costs in 2023.

The commission costs were directly attributable to the decrease in commission rate from

15.0% in 2022 to 12.0% in 2023.

sales declined $158,475, or 19.7%, to $646,635 for the three months ended March 31, 2024 due to (i) management’s focus on gaining

further insurance coverage for our products and capital funding and (ii) fewer shipments to certain customers as they transition to the

insurance reimbursement process which requires alignment with physician protocols, billing and coding, partially offset by growth in

our patient assistance program that provides discounts to patients without insurance coverage.

Profit and Gross Margin

profit declined $137,656, or 19.4%, to $571,554 for the three months ended March 31, 2024 due to lower sales volume, partially

offset by an increase in our gross margin of 30 bps to 88.4% for the three months ended March 31, 2024 from 88.1% for the three

months ended March 31, 2023, due to growth in our patient assistance program at lower discounts to patients without insurance

expenses declined $27,902, or 25.9%, to $80,030 for the three months ended March 31, 2024 due to lower sales volume.

and Development

expense decreased 47.8% in the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

expense increased 18.9% in the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

This increase

was due to new product development expense in the third quarter of 2023.

R&D costs are expected to increase during the remainder

and development expense declined $11,227, or 66.8%, to $5,570 for the three months ended March 31, 2024 due to more patient trials conducted

in the three months ended March 31, 2023 as the Company prepared for more FDA submissions.

and Administrative

expense increased 110.0% in the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

expense increased 68.6% in the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

This increase

was due primarily to wages and professional fees.

We expect G&A expense to decrease in 2024 primarily because of reduced costs following

the completion of the IPO.

Our operating loss increased $1,819 thousand, or 151.2%, for the three months

ended September 30, 2023, as compared to the three months ended September 30, 2022.

Operating loss increased $2,655 thousand, or 111.3%,

for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022 primarily due to increased wages

and professional fees.

Income (Expense)

Other expense increased $1,005 thousand for the three months ended September

30, 2023 and increased $1,891 thousand for the nine months ended September 30, 2023.

The increases were primarily attributable to amortization

of debt discount.

These losses were primarily offset by gain on share conversion and change in fair value.

Our net loss increased approximately $2.8 million, or 135.8%, in the three

months ended September 30, 2023, as compared to the three months ended September 30, 2022.

Net loss increased approximately $4.5 million,

or 95.4%, in the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

The change was attributable

to the increase in G&A expenses, and the other income (expense) section discussed above.

and administrative expense increased $837,319, or 56.5%, to $2,318,074 for the three months ended March 31, 2024 due to (i)

incremental headcount to build out the market access, sales and finance teams including recruiting costs, (ii) higher legal,

insurance, investor relations and board of director costs as a publicly-held entity that the Company did not incur previously, (iii)

one-time non-cash advisory costs of $50,000, (iv) one-time non-cash stock compensation charges of $237,000 for a hiring grant of

stock and (v) higher advertising costs in order to expand market awareness.

operating loss increased $935,846, or 104.4%, to $1,832,120 for the three months ended March 31, 2024 primarily due to lower sales volume

and higher general and administrative expenses including $287,000 of one-time non-cash charges.

(Expense) Income

expense decreased $988,605, or 77.4%, to $288,531 for the three months ended March 31, 2024 primarily due to (i) the full

conversion of the convertible notes upon the IPO on August 9, 2023 that eliminated any further debt discount, issuance cost, debt

extinguishment and derivative fair valuation net charges and (ii) lower interest expense and issuance cost amortization from a lower debt

burden, partly offset by finance charges incurred to settle a 2023 convertible note dispute.

net loss improved $52,759, or 2.4%, to $2,120,651 for the three months ended March 31, 2024 primarily due to the

elimination of debt discount, issuance cost, debt extinguishment and derivative fair valuation net charges due to conversion of the

convertible notes upon the IPO on August 9, 2023, partly offset by lower sales volume, higher general and administrative expenses

(inclusive of $287,000 of one-time non-cash charges) and the settlement of a 2023 convertible note dispute.

and Capital Resources

We had cash on hand of approximately $761 thousand at September 30, 2023,

as compared to cash-on-hand of approximately $254 thousand at December 31, 2022.

Working capital deficit for September 30, 2023 was $1.3

million as compared to working deficit of $6.5 million at December 31, 2022.

The decrease in working capital was due to liabilities assumed

in connection with unissued shares.

We have incurred losses since inception and have funded our operations primarily

with a combination of sales, debt, and the sale of capital stock.

As of September 30, 2023, we had an stockholders’ deficit of approximately

$1.1 million.

At September 30, 2023, we had short-term outstanding borrowings of approximately $194 thousand, and no long-term outstanding

had cash on hand of $81,752 and $45,463 as March 31, 2024 and 2023, respectively.

We maintained a working capital deficit of $3,407,877

and $8,755,744 as of March 31, 2024 and 2023, respectively.

The increase in working capital was primarily due to (i) the conversion of

notes payable upon the IPO on August 9, 2023 along with the corresponding elimination or reduction of the fair value liability of warrants

and derivatives and (ii) payments of employee bonuses and vendors with proceeds from the IPO.

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

As of March 31, 2024, we had a stockholders’ deficit of $3,184,454 and short-term borrowings of $1,396,175.

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

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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.

Additionally,

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the amount of time our management has to implement our business plan and may delay our anticipated growth plans.

We anticipate over the

next 12 months the cost of being a reporting public company will be approximately $0.5 million.

following table summarizes our cash flows from operating, investing, and financing activities for the nine months ended September 30,

2023 and 2022:

Months Ended September 30,

cash used in operating activities

$ (4,064,419 )

following table summarizes our cash flow from operating, investing and financing activities for the three months ended March 31, 2024

Three Months Ended March 31,

Net cash used in operating activites

$ (1,332,160 )

cash used by investing activities

cash provided by financing activities

Activities – Cash used in operating activities primarily consisted of the extinguishment of derivative, warrant liabilities,

and accounts payable.

The net loss was partially offset by a favorable change in the amortization of debt discount and issuance cost

in the 2023 period.

Activities – Net cash provided by investing activities primarily consisted of equipment additions.

Activities - Net cash provided by financing activities in the nine months ended September 30, 2023 primarily consisted of proceeds

from the issuance of common stock and convertible notes, partially offset by principal payments on notes payable.

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 $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 (the “Registration Statement”), declared effective by the SEC on August 8, 2023.

Alexander Capital

(“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.

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 reimbursement of certain of the underwriters’ expenses.

Additionally, as

partial consideration for services rendered in connection with the offering, the Company issued Alexander unregistered warrants to purchase

an aggregate of 65,921 shares of Company common stock, representing 6.0% of the aggregate shares sold in the offering.

The warrants have

an initial exercise price of $7.20 per share (equal to 120% of the offering price per share), have a term of five years from the commencement

of sales in the offering, and are exercisable at any time.

Trademark - The 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.

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.

Convertible Debt Conversion – Pursuant to the IPO, all the convertible

debt including interest from 2022 and 2023 was either converted into common stock or paid back.

$6,760,708 of principal and interest was

converted into 1,605,841 shares of common stock at the exercise price of $4.20 per share.

During August 2023, $737,453 of principal and

interest was repaid in full.

These actions extinguished the remaining derivative liabilities, warrant liabilities, and debt discount.

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

Preferred Stock Conversion – Masimo Corporation, being the requisite

holder of our outstanding Series A Preferred Stock and Series Seed Preferred Stock delivered a consent, dated December 22, 2022, to automatically

convert all shares of preferred stock into shares of common stock upon consummation of the initial public offering.

As such, upon closing

of the IPO, all Series A Preferred Stock and Series Seed Preferred Stock was converted into 1,244,228 shares of common stock.

A Preferred Stock was converted before any dividends were declared or paid.

As of September 30, 2023, 1,076,242 shares of converted preferred

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

See Note 12 Share Liabilities

Employment Agreements – On May 4, 2023, the Company amended the Executive Employment Agreements dated August 9, 2022 to state that

the deferred bonuses and one-time incentive bonuses will be contingent upon the public offering.

As such, upon closing of the IPO, the

one-time inventive payments totaling $1.1 million became due immediately.

The closing of the IPO also triggered the deferred bonus program

to exercise stock options granted in the past.

The company will give each employee a cash reimbursement to exercise their options.

cash reimbursement will be in an amount equal to (i) the aggregate of the strike price or exercise price of all Stock Options, as defined

hereinafter plus (ii) a tax gross-up payment on the Aggregate Strike Price reasonably calculated by the Company at the highest marginal

rates so that after payment of all ordinary income taxes on such Aggregate Strike Price, there remains an amount sufficient to pay such

ordinary income taxes.

The cash reimbursement will be issued 20% equally during the years 2024 – 2028.

The employee must exercise

the options on or before the annual deferral bonus payment date to receive the bonus.

There are a total of 1,238,712 options pertaining

to these agreements with an exercise price of $6.94.

March through July 2023, we entered into Securities Purchase Agreements (the “2023 SPAs”) which provide for advances of up

to $6 million in proceeds to us, subject to our satisfaction of certain conditions (“2023 Private Placement”).

the 2023 SPAs, from March through July of 2023, we issued Senior Secured Convertible Promissory Notes (“Notes”) with an aggregate

principal amount of $6,066,667, which amount included an original issue discount (“OID”) of $606,667, and underwriter fees

for $464,250, resulting in advance proceeds to us of $5.0 million.

The notes automatically converted into Common Stock at an initial

public offering on a primary exchange.

As a result of the $6 price of the shares sold in the IPO, the Conversion Price was set at $4.20

The Company issued 1,498,332 shares of common stock following the IPO.

In connection with the issuance of the Notes, we also

issued five-year warrants exercisable for an aggregate of 505,570 shares of common stock with a strike price at a 25% premium to the

Conversion Price or $5.25 per share subject to anti-dilution, issuable on a pro rata basis at each funding.

Company used $2.65 million of the cash received from the 2023 Private Placement pay the principal portion of some of the 2022 Senior

Secured Convertible Promissory Notes from Leonite Fund I, LP, Bigger Capital Fund, LP, and District 2 Capital Fund, LP reducing the amount

due to the original issue discount or an aggregate principal amount of $294,444 which will accrue interest at a rate of 8% per annum

without maturity or default rights.

The total balance is automatically converting into shares of common stock at a 27.5% discount ($1.65)

to the per share offering price ($6.00) in the IPO.

January 12, 2023, we filed a certificate of amendment to our certificate of incorporation with the Secretary of State of the State of

Delaware and effectuated a reverse stock split of our common stock at a ratio of 1-for-2.

All share information has been adjusted for

this reverse stock split.

June 23, 2022, the Company filed a Certificate of Conversion to become a Delaware corporation.

June through November of 2022, we entered into Securities Purchase Agreements (the “2022 SPAs”) with Leonite Fund I, LP,

Emmis Capital II, LLC, Bigger Capital Fund, LP, District 2 Capital Fund, LP, and Exchange Listing, LLC, which provide for advances of

up to $3 million in proceeds to us, subject to our satisfaction of certain conditions.

Pursuant to the 2022 SPAs, from June through November

of 2022, we issued Senior Secured Convertible Promissory Notes (“2022 Senior Secured Convertible Promissory Notes”) with

an aggregate principal amount of $3,333,333, which amount included an original issue discount (“OID”) of $333,333, and legal

fees for $130,000, resulting in advance proceeds to us of $3 million.

In connection with the issuance of the 2022 Senior Secured Convertible

Promissory Notes, we also issued five-year warrants exercisable for an aggregate of 353,111 shares of common stock with an exercise price

of the lower of (a) $11.80 and (b) a 12% discount to the price per share in any subsequent offering by the Company, and we entered into

a Pledge and Security Agreement with Leonite Fund I, LP, dated June 3, 2022.

Pursuant to the Pledge and Security Agreement, the Company

granted a security interest in all of its assets in favor of Leonite Fund I, LP, in its capacity as collateral agent for the purchaser

parties under the 2022 SPAs.

2022 Senior Secured Convertible Promissory Notes were issued with OID of 10% of the principal amount and bear interest at the greater

of (a) the prime rate of interest, as published by the Wall Street Journal, plus 8.5% per annum, or (b) 12%.

The 2022 Senior Secured

Convertible Promissory Notes will mature in twelve (12) months from their respective issue dates.

Any amount of principal, interest,

other amounts due hereunder or penalties on the 2022 Senior Secured Convertible Promissory Notes, which is not paid by maturity date,

shall bear interest at the lesser of the rate of twenty four percent (24%) per annum or the maximum legal amount permitted by law, from

the due date thereof until the same is paid in full, including following the entry of a judgment in favor of Noteholder.

The 2022 Senior

Secured Convertible Promissory Notes are convertible into shares of common stock at the lower of (a) $9.44 per share, or (b) a discount

of 30% to the price per share in any subsequent offering, subject to adjustment in the event of common stock distribution, stock splits,

fundamental transactions, dilutive issuances or similar events affecting our common stock and the conversion price.

Interest accrues

on the aggregate principal amount (which includes OID) and is payable monthly, at the Company’s election, in cash or in-kind.

the advance of the consideration under the 2022 SPAs, the Company is required to issue to the noteholders a number of shares of common

stock, calculated based on the value of 10% of the principal amount of the Notes issued in such advance, at a value per share equal to

the conversion price of the 2022 Senior Secured Convertible Promissory Notes at the date of such advance (the “Commitment Shares”).

Accordingly, in connection with the initial advance and issuance of 2022 Senior Secured Convertible Promissory Notes, assuming a conversion

price of $9.44 per share, we issued 35,317 Commitment Shares to the Noteholders.

2022 Senior Secured Convertible Promissory Notes have certain restrictions on the Company’s issuance of securities, including,

among other restrictions, (i) the Company shall not without the Noteholder’s written consent (a) pay, declare or set apart for

such payment, any dividend or other distribution (whether in cash, property or other securities) on the common stock of the Company other

than dividends on common stock solely in the form of additional common stock, or (b) directly or indirectly or through any subsidiary

make any other payment or distribution in respect of common stock or equivalents, (ii) unless approved by the Noteholders in writing,

the Company shall not enter into an agreement or amend an existing agreement to effect any sale of securities involving, or convert any

securities previously issued under, a variable rate transaction, which means a transaction in which the Company (A) issues or sells any

convertible securities either (x) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the

trading prices of, or quotations for, the common stock, or (y) with a conversion, exercise or exchange price that is subject to being

reset at some future date after the initial issuance of such convertible securities or upon the occurrence of specified or contingent

events directly or indirectly related to the business of the Company, or the market for the common stock, or (B) enters into any agreement

whereby the Company may sell securities at a future determined price (other than standard and customary “preemptive” or “participation”

rights), (iii) the Noteholders have the right, but not the obligation, to participate in the purchase of the securities being offered

up to an amount equal to thirty percent (30%) of the principal amount of 2022 Senior Secured Convertible Promissory Notes (the “

Participation Right”) when the Company or its subsidiary proposes to offer and sell its securities, whether in the form of debt,

equity financing, or any other financing transaction (each a “Future Offering”);

provided that, the Participation Right shall

not exceed the lesser of (i) one-third of the aggregate amount of the Future Offering, and (ii) an amount equal to the principal amount

(allocated to the Noteholder’s pro-rata to their portion of the principal amount), and (iv) if the Company has a bona fide offer

of capital or financing from any third party that the Company intends to act upon, other than an underwritten initial public offering

of the Company’s common shares, then the Company must first offer such opportunity to the Noteholders to provide such capital or

financing to the Company on the same terms.

The 2022 Senior Secured Convertible Promissory Notes holders waived their Participation Right

to participate in the December 2022 and January 2023 convertible note issuances described below.

have agreed to pay to the Noteholders any outstanding principal amount of 2022 Senior Secured Convertible Promissory Notes, all accrued

and unpaid interest, and fees and penalties, if any, from any future financing proceeds and other future receipts, at the Noteholder’s

discretion, except for the right of the Company to make bona fide payments to vendors with common stock.

The Company used $2.65 million of the cash received from the 2023 Private

Placement pay the principal portion of some of the 2022 Senior Secured Convertible Promissory Notes from Leonite Fund I, LP, Bigger Capital

Fund, LP, and District 2 Capital Fund, LP reducing the amount due to the original issue discount or an aggregate principal amount of $294,444

which will accrue interest at a rate of 8% per annum without maturity or default rights.

The total balance is automatically converting

into shares of common stock at a 27.5% discount ($1.65) to the per share offering price ($6.00) in the IPO.

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.

As of September 30, 2023, 107,509 shares of converted stock from this raise have not been issued and are recorded in extinguishment of

derivative liabilities.

See Note 12 Share Liabilities

December 2022 through January 2023, the Company issued unsecured convertible promissory notes to three existing investors, Todd Maxwell,

Rogan O’Donnell and Michael & Michele Robuck, with an aggregate principal amount of $222,222, which amount included an OID

of $22,222, resulting in advance proceeds to us of $200,000.

The notes carry an OID 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 OID) and is payable on the maturity date, at the Company’s election, in cash

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.

are a party to three advisory agreements with Exchange Listing, LLC, a consultant engaged in connection with listing our common stock

for trading on NYSE American.

Pursuant to the first advisory agreement with Exchange Listing, dated March 3, 2022, and amended February

10, 2023, we have agreed to pay Exchange Listing a monthly consulting fee of $5,000 and a final payment of $50,000 upon a successful

NYSE American listing, and, also upon such listing, to issue Exchange Listing 125,000 shares of our common stock and to issue Exchange

Listing five-year warrants to purchase 176,939 shares of our common stock (representing 2.0% of our outstanding shares, after giving

effect to the IPO, on a fully-diluted basis) with an exercise price of $6.00 per share (representing the public offering price of the

Pursuant to the second advisory agreement with Exchange Listing, dated June 20, 2022, and amended December 20, 2022, and amended

February 10, 2023, we have agreed to pay Exchange Listing fees in the aggregate of up to $136,166 for advice in connection with communication

and other related matters leading up to the IPO.

Pursuant to the third advisory agreement with Exchange Listing, dated February 10, 2023,

we have agreed to issue Exchange Listing 125,000 shares of our common stock as pre-payment for future services.

We have agreed to piggyback

registration rights with respect to the shares issuable upon exercise of the warrants.

and Qualitative Disclosures About Market Risk

have not utilized any derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contracts

or interest rate swaps and futures.

We believe that adequate controls are in place to monitor any hedging activities.

We do not intend

to hedge any existing or future borrowings and, consequently, we do not expect to be affected by changes in market interest rates.

do not currently have any sales or own assets and operate facilities in countries outside the United States and, consequently, we are

not affected by foreign currency fluctuations or exchange rate changes.

Overall, we believe that our exposure to interest rate risk and

foreign currency exchange rate changes is not material to our financial condition or results of operations.

Sheet Arrangements

do not have any off-balance sheet arrangements.

Accounting Policies

prepare our financial statements in conformity with accounting principles generally accepted in the United States (“U.S.

which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent

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

reporting period.

We continually evaluate these estimates and assumptions based on the most recently available information, our own historical

experience and on various other assumptions that we believe to be reasonable under the circumstances.

Since the use of estimates is an

integral component of the financial reporting process, actual results could differ from those estimates.

Some of our accounting policies

require higher degrees of judgment than others in their application.

We consider the policies discussed below to be critical to an understanding

of our financial statements.

SEC defines critical accounting policies as those that are, in management’s view, most important to the portrayal of our financial

condition and results of operations and those that require significant judgments and estimates.

accounting principles we utilized in preparing our financial statements conform in all material respects to U.S GAAP.

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

Our inventory is comprised of finished medical devices on hand.

Certain components

within the devices have an expiration date and are removed from current inventory and expensed at the date of expiration.

account for our leases under Accounting Standards Update No.

2016-02, Leases .

We do not record an operating lease right of use

(“ROU”) asset and corresponding lease liability for leases with an expected term of 12 months or less and recognize lease

expense for these leases as incurred over the lease term.

Operating lease ROU assets and operating lease liabilities for leases with

an expected term of more than 12 months are recognized based on the present value of lease payments over the lease term.

For lease present

value calculations, absent a rate implicit in the lease, we determine a comparable incremental borrowing rate.

The present value is then

recognized as lease expense on a straight-line basis over the lease term.

Financial Instruments

evaluate our financial instruments and other contracts to determine if those contracts or embedded components of those contracts qualify

as derivatives to be separately accounted for in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC

The result of this accounting treatment is that the fair value of the derivative is re-measured at each balance sheet date

and recorded as a liability or asset and the change in fair value is recorded in the statements of operations and comprehensive loss.

As of December 31, 2020, our derivative financial instruments were comprised of warrants issued in connection with capital raising transactions.

Upon settlement of a derivative financial instrument, the instrument is re-measured at the settlement date and the fair value of the

underlying instrument is reclassified to equity.

classification of derivative financial instruments, including whether such instruments should be recorded as liabilities/assets or as

equity, is reassessed at the end of each reporting period.

Derivative financial instruments that become subject to reclassification are

reclassified at the fair value of the instrument on the reclassification date.

Derivative financial instruments will be classified in

the balance sheet as current if the right to exercise or settle the derivative financial instrument lies with the holder.

is recognized in one major product segment – commercial products.

The timing of revenue recognition for this product segment occurs

as goods are transferred at a point in time.

estimate credit losses on accounts receivable by estimating expected credit losses over the contractual term of the receivable using

a discounted cash flow method.

When developing this estimate of expected credit losses, we consider all available information (past,

current, and future) relevant to assessing the collectability of cash flows.

The Company has concluded that realization losses on balances

outstanding at year-end will be immaterial.

Accounting Pronouncements

are several recently issued accounting pronouncements that have been reviewed and adopted.

The pronouncements regarding leases had a

material impact on our financial statements.

There are no other recently issued accounting pronouncements that we have not yet adopted

that we believe are applicable or would have a material impact on our financial statements.

For more information regarding recent accounting

pronouncements, refer to Note 1 to our audited financial statements contained in the Prospectus.

are an emerging growth company, and under the JOBS Act, an emerging growth company can delay the adoption of certain accounting standards

until those standards would otherwise apply to private companies.

We have elected not to take advantage of the extended transition period

for complying with new or revised accounting standards provided to emerging growth companies under the JOBS Act.

Net cash used in investing activities

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Activities – Net cash used in operating activities decreased $709,248, or 113.9% for the three months ended March 31, 2024

compared to the three months ended March 31, 2023 primarily due to lower sales volume, higher general and administrative expenses

and payment of past due vendors.

Activities – Net cash used in investing activities increased $7,114, or 93.5%, for the three months ended March 31, 2024

compared to the three months ended March 31, 2023 due to purchases of equipment.

Activities – Net cash provided by financing activities increased $927,790, or 219.7%, for the three months ended March

31, 2024 compared to the three months ended March 31, 2023 primarily due to proceeds from the issuance of convertible notes whereas

the proceeds from convertible notes issued during the three months ended March 31, 2023 were used to repay previously issued notes

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-Q

Item 2. Management’s Discussion and Analysis