What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-12 compared with 2024-08-09 · 137 added, 134 removed, 80 unchanged (77% of the section changed)

5 unchanged sentences

for our business and related financing, includes forward-looking statements that involve risks, uncertainties, and assumptions.

read the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections of o ur

final prospectus filed with the United States Securities and Exchange Commission (the “SEC”) on August 11, 2023 pursuant

to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Prospectus”) (filed in connection with our IPO) for

a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the

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

read the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections of our Form 10-K for the period ended December 31, 2023 (the “2023 Annual Report”) for a discussion of important

factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements

contained in the following discussion and analysis.

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

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our inception, we have incurred significant operating losses.

Our net loss was $2,917,710 and $2,235,614 for the three months ended June

30, 2024 and 2023, respectively, and $5,038,361 and $4,409,022 for the six months ended June 30, 2024 and 2023, respectively.

30, 2024, we had an accumulated deficit of $5,258,382.

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.

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 net loss was $1,755,234 and $8,625,363 for the three months ended September

30, 2024 and 2023, respectively, and $6,793,596 and $13,034,385 for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had an accumulated deficit of $1,793,932.

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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Profit and Gross Margin

management uses gross profit and gross margin to evaluate the efficiency of operations and as a key component to determining the effectiveness

and allocation of resources.

We calculate gross profit as revenue less cost of goods sold, and gross margin as gross profit divided by

Our gross margin has been and will continue to be affected by a variety of factors, primarily the average selling price of our

IB-Stim device, production volume, order flows, change in mix of customers, third-party manufacturing costs related to components of

our IB-Stim device, and cost-reduction strategies.

We expect our gross profit to increase for the foreseeable future as our revenue grows,

both through broader insurer acceptance of our IB-Stim device in the near term and approval of our technology for the treatment of other

indications over the longer term.

Our gross margin may fluctuate from quarter to quarter due to changes in average selling prices, particularly

as we introduce enhancements to our IB-Stim device and new products to address other indications, and as we adopt new manufacturing processes

and technologies.

management uses gross profit and gross margin to evaluate the efficiency of operations and as a key component to determining the

effectiveness and allocation of resources.

We calculate gross profit as net sales less cost of goods sold, and gross margin as gross

profit divided by net sales.

Our gross margin has been and will continue to be affected by a variety of factors, primarily the

average selling price of our IB-Stim device, production volume, order flows, change in mix of customers, third-party manufacturing

costs related to components of our IB-Stim device, and cost-reduction strategies.

We expect our gross profit to increase for the

foreseeable future as our net sales grows, both through broader insurer acceptance of our IB-Stim device in the near term and

approval of our technology for the treatment of other indications over the longer term.

Our gross margin may fluctuate from quarter

to quarter due to changes in average selling prices, particularly as we introduce enhancements to our IB-Stim device and new

products to address other indications, and as we adopt new manufacturing processes 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.

cost of goods sold, selling, 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 shipping

and handling costs and

expired inventory charges.

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

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write it off.

We had no expired inventory for the three and six months ended June 30, 2024 and 2023.

Expired inventory has not been material to our results.

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.

We had no expired inventory for the three and nine months ended September 30, 2024 and 2023.

Expired inventory has not

been material to our results.

We have a fixed-price contract with the manufacturer of our IB-Stim device to produce the device.

production costs to remain relatively constant and only nominal inventory expirations in the foreseeable future.

core selling expenses primarily consist of commissions.

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

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of Operations

following table presents our statements of operations for the three and six months ended June 30, 2024 and 2023, respectively:

Months Ended June 30,

of goods sold

and development

and administrative

(expense) income:

in fair value of warrant liability

in fair value of derivative financial instruments

of debt discount and issuance costs

Extinguishment

of debt liabilities

other expense, net

following table presents our statements of operations for the three and nine months ended September 30, 2024 and 2023, respectively:

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of goods sold

Selling expenses

Research and development

General and administrative

Operating loss

Other (expense) income:

Financing charges

Interest expense, net

Change in fair value of warrant liability

Change in fair value of derivative financial instruments

Amortization of debt discount and issuance costs

Extinguishment of debt liabilities

Other expense

Total other (expense) income, net

$ (1,755,234 )

2 unchanged sentences

$ (13,034,385 )

sales decreased $34,521, or 5.3%, from $646,021 for the three months ended June 30, 2023, to $611,500 for the three months ended June

Net sales decreased $192,996, or 13.3%, from $1,451,131 for the six months ended June 30, 2023, to $1,258,135 for the six months

ended June 30, 2024.

The decreases were primarily 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 financial assistance programs that provide

sales increased $189,165, or 39.6%, from $477,460 for the three months ended September 30, 2023, to $666,625 for the three months ended

September 30, 2024.

Net sales decreased $3,830, or 0.2%, from $1,928,590 for the nine months ended September 30, 2023, to $1,924,760

for the nine months ended September 30, 2024.

The increase for the three months ended September 30, 2024 was primarily due to volume

growth from new and existing full insurance reimbursement customers as well as growth in our financial assistance programs that provide

discounts to patients without insurance coverage.

Profit and Gross Margin

profit decreased $40,166, or 6.9%, from $578,208 for the three months ended June 30, 2023, to $538,042 for the three months ended June

gross margin was 88.0% and 89.5% for the three months ended June 30, 2024 and 2023, respectively.

Gross profit decreased $177,822,

or 13.8%, from $1,287,418 for the six months ended June 30, 2023, to $1,109,596 for the six months ended June 30, 2024;

was 88.2% and 88.7% for the six months ended June 30, 2024 and 2023, respectively.

The decreases were due to (i) lower sales volume to

certain customers as they transition through the full reimbursement insurance process and (ii) lower gross margin due to growth in our

financial assistance programs that are discounted to patients without insurance coverage.

expenses decreased $16,517, or 21.0%, from $78,791 for the three months ended June 30, 2023, to $62,274 for the three months ended June

Selling expenses decreased $44,419, or 23.8%, from $186,723 for the six months ended in the six months ended June 30, 2023,

to $142,304 for the six months ended June 30, 2024.

The decreases were due to lower sales volume.

profit increased $159,402, or 38.9%, from $410,173 for the three months ended September 30, 2023, to $569,575 for the three months

ended September 30, 2024 due to higher sales volume.

Despite the increase in sales volume, the decrease in gross margin from 85.9%

for the three months ended September 30, 2023 to 85.4% for the three months ended September 30, 2024 was due to higher growth in the

Company’s financial assistance programs that are discounted to patients without insurance coverage compared to the

Company’s undiscounted full reimbursement customers.

Gross profit decreased $29,779, or 1.8%, from $1,697,590 for the nine

months ended September 30, 2023, to $1,667,811 for the nine months ended September 30, 2024 due to gross margin.

The decrease in

gross margin from 88.0% for the nine months ended September 30, 2023 to 86.7% for the nine months ended September, 2024 was due to

growth in our financial assistance programs that are discounted to patients without insurance coverage despite higher sales

expenses increased $31,220, or 48.6%, from $64,210 for the three months ended September 30, 2023, to $95,430 for the three months ended

September 30, 2024 due to higher sales volume.

Selling expenses decreased $24,559, or 9.8%, from $250,933 for the nine months ended September

30, 2023, to $226,374 for the nine months ended September 30, 2024 due to lower sales volume.

and Development

and development expenses decreased $55,477, or 50.5%, from $109,789 for the three months ended June 30, 2023, to $54,312 for the three

months ended June 30, 2024.

Research and development expenses decreased $66,704, or 52.7%, from $126,586 for the six months ended June

30, 2023 to $59,882 for the six months ended June 30, 2024.

The decreases were due to more patient trials conducted in 2023 as the

company prepared for more FDA submissions.

and development expenses increased $27,472, or 61.1%, from $44,950 for the three months ended September 30, 2023, to $72,422 for

the three months ended September 30, 2024 due to higher quarter-to-date spending in

2024 on a medical research project.

Research and development expenses decreased $39,232, or 22.9%, from $171,536 for the

nine months ended September 30, 2023 to $132,304 for the nine months ended September 30, 2024 due to higher year-to-date spending in

2023 on a medical research project.

and Administrative

and administrative expenses increased $1,121,119, or 74.4%, from $1,507,169 for the three months ended June 30, 2023, to $2,628,288 for

the three months ended June 30, 2024 primarily due to (i) higher legal, insurance, investor relation and board of director costs as a

publicly held entity that the Company did not incur prior to its IPO, (ii) incremental headcount to build out the market access, sales

and finance teams including recruiting costs, (iii) a severance charge related to the Company’s prior Chief Operating Officer,

(iv) one-time non-cash advisory costs of $105,600, (v) expenses related to the introduction of an annual short-term incentive bonus program,

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

and administrative expenses increased $1,958,439, or 65.5%, from $2,987,923 for the six months ended June 30, 2023, to $4,946,362 for

the six months ended June 30, 2024 primarily due to (i) higher legal, insurance, investor relation and board of director costs as a

publicly held entity that the Company did not incur prior to its IPO, (ii) incremental headcount to build out the market access, sales

and finance teams including recruiting costs, (iii) a severance charge related to the Company’s prior Chief Operating Officer,

(iv) one-time non-cash advisory costs of $155,600, (v) a one-time non-cash stock compensation charge of $227,000 for a hiring grant of

stock, (vi) expenses related to the introduction of an annual short-term incentive bonus program, and (vii) higher advertising costs

in order to expand market awareness.

operating loss increased $1,089,291, or 97.5%, from $1,117,541 for the three months ended June 30, 2023, to $2,206,832 for the three

months ended June 30, 2024.

Our operating loss increased $2,025,138, or 100.6%, from $2,013,814 for the six months ended June 30,

2023, to $4,038,952 for the six months ended June 30, 2024.

The increases were primarily due to lower sales volume, lower gross

margin as the Company’s discounted financial assistance program grows and higher general and administrative

and administrative expenses decreased $1,270,356, or 38.2%, from $3,323,352 for the three months ended September 30, 2023, to $2,052,996

for the three months ended September 30, 2024 primarily due to 2023 post-IPO consulting and recruiting services and the payment of incentive

bonuses relating to the 2023 IPO that did not recur in 2024, partially offset by (i) incremental headcount to build out the market access,

sales and finance teams including, (ii) 2024 one-time non-cash advisory costs, (iii) expenses related to the introduction of an annual

short-term incentive bonus plan in 2024 and (iv) higher advertising costs in order to expand market awareness.

and administrative expenses increased $682,947, or 10.8%, from $6,316,411 for the nine months ended September 30, 2023, to $6,999,358

for the nine months ended September 30, 2024 primarily due to (i) higher legal, insurance, investor relation, board of director and exchange

listing costs as a publicly held entity that the Company did not incur prior to its IPO, (ii) incremental headcount to build out the

market access, sales and finance teams, (iii) severance charges related to the Company’s prior Chief Operating Officer, (iv) one-time

non-cash advisory costs, (v) a one-time non-cash stock compensation charge of $227,000 as a hiring grant, (vi) expenses related to the

introduction of an annual short-term incentive bonus program, and (vii) higher advertising costs in order to expand market awareness,

partially offset by non-recurrence of 2023 post-IPO consulting and recruiting services and the payment of incentive bonuses relating

to the 2023 IPO.

operating loss decreased $1,371,066, or 45.4%, from $3,022,339 for the three months ended September 30, 2023, to $1,651,273 for the three

months ended September 30, 2024 primarily due to the absence of 2023 post-IPO consulting and recruiting services, 2023 incentive bonuses

relating to the IPO and higher sales and gross profit in 2024, partially offset by incremental headcount, advisory costs, a new annual

short-term incentive bonus plan and higher advertising costs in 2024.

Our operating loss increased $648,935, or 12.9%, from $5,041,290

for the nine months ended September 30, 2023, to $5,690,225 for the nine months ended September 30, 2024 primarily due to new costs as a publicly

held company that were not incurred prior to the 2023 IPO.

(Expense) Income, Net

expense decreased $407,195, or 36.4%, from $1,118,073 for the three months ended June 30, 2023, to $710,878 for the three months

ended June 30, 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 and fair value derivative valuation net charges and (ii) lower interest expense

and issuance cost amortization from a lower debt burden, partially offset the settlement of certain claims of pre-IPO Series A

Preferred Stock shareholders.

expense decreased $1,395,799, or 58.3%, from $2,395,208 for the six months ended June 30, 2023, to $999,409 for the six months ended

June 30, 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 fair value derivative valuation net charges and (ii) lower interest expense and

issuance cost amortization from a lower debt burden, partially offset by finance charges incurred to settle a 2023 convertible note dispute

and other expense to settle certain claims of pre-IPO Series A Preferred Stock shareholders.

net loss increased $682,096, or 30.5%, from $2,235,614 for the three months ended June 30, 2023, to $2,917,710 for the three months ended

June 30, 2024.

Our net loss increased $629,339, or 14.3%, from $4,409,022 for the six months ended June 30, 2023, to $5,038,361 for the

six months ended June 30, 2024.

The increases were primarily due to (i) higher general and administrative expenses and (ii) the settlements

of a 2023 convertible note dispute and certain pre-IPO Series A Preferred Stock shareholders claims, partially offset

by the elimination of debt discount, issuance costs, debt extinguishment and derivative fair valuation net charges.

expense decreased $5,499,063, or 98.1%, from $5,603,024 for the three months ended September 30, 2023, to $103,961 for the three months

ended September 30, 2024 primarily due to the full conversion of the convertible notes upon the IPO on August 9, 2023, that eliminated

any further debt discount, issuance cost and fair value derivative valuation net charges and lower interest expense and issuance cost

amortization from a lower debt burden in 2024.

expense decreased $6,889,724, or 86.2%, from $7,993,095 for the nine months ended September 30, 2023, to $1,103,371 for the nine months

ended September 30, 2024 primarily due to 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 fair value derivative valuation net charges and lower interest expense

and issuance cost amortization from a lower debt burden in 2024, partially offset by financing charges incurred to settle a 2023 convertible

note dispute and other expense to settle certain claims of pre-IPO Series A Preferred Stock shareholders.

net loss decreased $6,870,129, or 79.7%, from $8,625,363 for the three months ended September 30, 2023, to $1,755,234 for the three

months ended September 30, 2024.

Our net loss decreased $6,240,789, or 47.9%, from $13,034,385 for the nine months ended September

30, 2023, to $6,793,596 for the nine months ended September 30, 2024.

The decreases were primarily due to (i) higher sales for the

three months ended September 30, 2024 compared to the three months ended September 30, 2023, (ii) lower general and administrative

expenses due to the absence of 2023 post-IPO consulting and recruiting services and the payment of incentive bonuses relating to the

2023 IPO, (iii) the elimination of debt discount, issuance cost and fair value derivative valuation net charges as a result of the

conversion of notes upon the 2023 IPO and (iv) lower interest expense and issuance cost amortization from a lower debt burden in

2024, partially offset by financing charges incurred to settle a 2023 convertible note dispute and other expense to settle certain

claims of pre-IPO Series A Preferred Stock shareholders.

and Capital Resources

had cash on hand of $1,765,274 and $51,440 as June 30, 2024 and 2023, respectively.

had cash on hand of $260,885 and $761,249 as of September 30, 2024 and 2023, respectively.

We maintained a working capital deficit of

and $1,643,058 as of June 30, 2024 and December 31, 2023, respectively.

The decrease in working capital was primarily due to the issuance

of $4,935,000 of convertible notes during the six months ended June 30, 2024, net of cash on hand as of June 30, 2024.

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 June 30, 2024, we had a stockholders’ deficit of $5,258,382 and short-term borrowings of $4,767,335, net

of financing fees.

$2,032,284 and $1,643,058 as of September 30, 2024 and December 31, 2023, respectively.

The decrease in working capital was primarily

due to the unpaid severance, annual bonus and consulting fees that were not incurred in 2023.

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, 2024, we had an accumulated deficit of $1,793,932 and short-term borrowings of $147,688.

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

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efforts, will require significant uses of working capital through the rest of 2024 and beyond.

Based on our current operating plans,

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

the end of 2024.

Additionally,

we will have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company.

we have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company.

management will have to spend additional time on policies and procedures to make sure it is compliant with various regulatory requirements,

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

following table summarizes our cash flow from operating, investing and financing activities for the six months ended June 30, 2024 and

Six Months Ended June 30,

Net cash used in operating activities

following table summarizes our cash flow from operating, investing and financing activities for the nine months ended September 30, 2024

Nine Months Ended September 30,

Net cash used in operating activites

$ (4,340,097 )

2 unchanged sentences

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net increase 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 increased $1,699,158, or 136.1% for the six months ended June 30, 2024 compared

to the six months ended June 30, 2023 primarily due to lower sales volume, higher general and administrative expenses and payments of

past due vendors.

Activities – Net cash used in investing activities increased $10,341, or 79.1%, for the six months ended June 30, 2024

compared to the six months ended June 30, 2023 due to purchases of equipment.

Activities – Net cash provided by financing activities increased $3,598,472, or 339.8%, for the six months ended June 30, 2024

compared to the six months ended June 30, 2023 primarily due to proceeds from the issuance of convertible notes whereas the proceeds

from convertible notes issued during the six months ended June 30, 2023 were used to repay previously issued notes payable.

Activities – Net cash used in operating activities increased $275,678, or 6.8% for the nine months ended September 30, 2024

compared to the nine months ended September 30, 2023 primarily due to a higher operating loss.

Activities – Net cash used in investing activities decreased $27,965, or 50.2%, for the nine months ended September 30, 2024

compared to the nine months ended September 30, 2023 due to lower capital expenditures.

Activities – Net cash provided by financing activities decreased $77,512, or 1.7%, for the nine months ended September 30,

2024 compared to the nine months ended September 30, 2023 primarily due to lower proceeds from the issuance of convertible notes in

2024 compared to the net IPO and notes payable proceeds in 2023.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis