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Item 9A. Controls and Procedures

2025-03-20 compared with 2024-04-16 · 1276 added, 1279 removed, 1397 unchanged (65% of the section changed)

CONTROLS AND PROCEDURES

Company’s financial statements are maintained in accordance with U.S.

Our application and compliance with U.S.

based on guidance and interpretations issued by the Financial Accounting Standards Board through the Accounting Standards

Codification and Accounting Standards Updates.

Our conclusions are communicated to our management, including our principal executive

officer and principal financial officer, to allow timely and accurate decisions and reporting.

Our management, with the participation of our

principal executive and principal financial officer, evaluated our Company’s controls over the application of U.S.

the end of the period covered by this Form 10-K.

Based on this evaluation, our principal executive officer and principal financial

officer concluded that as of December 31, 2023, our controls over the application of U.S.

GAAP were not effective as evidenced by

the restatement of our unaudited financial statements as of and for the three and nine month periods ended September 30, 2023

included in Note 19 to this Form 10-K that constituted a material weakness.

Controls and Procedures

maintain “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e), promulgated by the SEC

pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Disclosure controls and procedures

include controls and procedures designed to ensure that information required to be disclosed in our Company’s reports filed

under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules

and forms, and that such information is accumulated and communicated to our management, including our principal executive officer

and principal financial officer to allow timely decisions regarding required disclosure.

Our management, with the participation of

our principal executive officer and principal financial officer, evaluated our Company’s disclosure controls and procedures as

of the end of the period covered by this Form 10-K.

Based on this evaluation, our principal executive officer and principal

financial officer concluded that as of December 31, 2023, our disclosure controls and procedures were not effective.

ineffectiveness of our disclosure controls and procedures was due to material weaknesses as a result of the (i) lack of segregation

of duties, (ii) lack of internal controls structure review and (iii) misapplication of GAAP.

maintain “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e), promulgated by the SEC pursuant

to the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Disclosure controls and procedures include controls

and procedures designed to ensure that information required to be disclosed in our Company’s reports filed under the Exchange Act

is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information

is accumulated and communicated to our management, including our principal executive officer and principal financial officer to allow

timely decisions regarding required disclosure.

Our management, with the participation of our principal executive officer and principal

financial officer, evaluated our Company’s disclosure controls and procedures as of the end of the period covered by this Form

Based on this evaluation, our principal executive officer and principal financial officer concluded that as of December 31, 2024,

our disclosure controls and procedures were, is design and operation, not effective.

Annual Report on Internal Control Over Financial Reporting

Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting due

to a transition period established by the rules of the SEC for newly public companies.

management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f)

of the Exchange Act.

Under the supervision and with the participation of our principal executive officer and principal financial officer

and oversight of the Board of Directors, we conducted an evaluation of the effectiveness of our internal control over financial reporting

based on criteria established in the framework set forth in Internal Control—Integrated Framework (2013) issued by the Committee

of Sponsoring Organizations of the Treadway Commission.

management, including our principal executive officer and principal financial officer, recognizes that disclosure controls and procedures

and internal controls over financial reporting, no matter how well designed and operated, can provide only reasonable assurance of achieving

the desired control objectives.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute

assurance that all control issues and instances of fraud, if any, have been detected.

Additionally, controls can be circumvented by the

individual acts of some persons, by collusion of two or more people, or by management override of the controls.

Based on our evaluation, management concluded that our internal control over financial reporting was not effective as of December 31,

material weakness is a significant deficiency, or a combination of significant deficiencies, in internal control over financial reporting

such that it is reasonably possible that a material misstatement of the annual or interim financial statements will not be prevented

following material weaknesses in our internal control over financial reporting were identified as of December 31, 2024:

● Ineffective

approval processes governing (i) timely Board of Directors authorization and (ii) segregation of duties

and roles and responsibilities configurations within the Company’s financial reporting

contract management process to capture all executed agreements prior to the commencement

of services in order to ensure accuracy within the proper accounting period.

following material weaknesses in our internal control over financial reporting were previously disclosed in our Annual Report on Form

10-K for the year ended December 31, 2023:

● Misapplication

GAAP as evidenced by the restatement of our unaudited financial statements as of and

for the three and nine months ended September 30, 2023;

● Ineffective

disclosure controls and procedures a result of (i) lack of segregation of duties, (ii) lack

of internal control structure review and (iii) misapplication of U.S.

order to remediate the identified material weaknesses, management, with the oversight of the Audit Committee of the Board of

Directors, undertook measures to enhance the Company’s internal control environment, including the (i) hiring of a principal

financial officer and other accounting personnel, (ii) implementation of a documented internal control framework and program, (iii)

documentation and communication of business policies such as a delegation of authority over company transactions and invoice

approvals and (iv) completion of a formal monthly close process including account reconciliations with supporting documentation.

However, management has not fully implemented the remediation steps and expects remediation efforts to continue into fiscal year

these remediation efforts are subject to ongoing management evaluation and will require validation and testing of the design and operating

effectiveness of the Company’s internal controls over a sustained period of financial reporting cycles, management is committed

to maintaining a strong internal control program over financial reporting and will take further actions and implement additional enhancements

or improvements as necessary.

in Internal Control Over Financial Reporting

were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the

Exchange Act) during the year ended December 31, 2023, that has materially affected, or is reasonably likely to materially affect,

the Company’s internal control over financial reporting.

the most recent quarter as discussed above, there were changes to the design and operation of our internal control over financial reporting.

Other than those measures, there were no changes in the Company’s internal control over financial reporting (as defined in Rules

13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended December 31, 2024 that has materially affected, or is reasonably

likely to materially affect, the Company’s internal control over financial reporting.

Report of the Independent Registered Public Accounting Firm

independent registered public accounting firm is not required to provide an attestation report on the effectiveness of our internal control

over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act due to an exemption for “smaller reporting companies”

as defined by Rule 12b-2 under the Exchange Act.

OTHER INFORMATION

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following table and biographical summaries set forth information, including principal occupation and business experience, about our directors

and executive officers as of April 12, 2024:

and executive officers as of March 13, 2025:

Chief Executive Officer, and Director

Timothy Henrichs (1)

Financial Officer

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Mitch Watkins

January 30, 2024, our former Chief Financial Officer John Seale resigned from his position,

effective as of the close of business on January 30 th .

On the same day, Timothy

and Chairman of the Board

January 30, 2024, our former Chief Financial Officer John Seale resigned from his position, effective as of the close of business

on January 30 th .

On the same day, Timothy R.

Henrichs resigned as a member of the board of directors, effective February

January 26, 2024, the board of directors appointed Mr.

Henrichs to serve as the CFO, effective

on February 5, 2024.

On January 26, 2024, the board of directors appointed Mr.

Henrichs to serve as the CFO, effective on February 5, 2024.

Carrico, President, Chief Executive Officer and Director

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Henrichs, Chief Financial Officer

Henrichs currently serves as the Company’s Chief Financial Officer since February 5, 2024 and was a director of the Company

from August 9, 2023 to February 2, 2024.

Henrichs’ global leadership experience spans over 20 years and across several

industries, including healthcare, home improvement, retail, software and education.

Henrichs currently serves as the Company’s Chief Financial Officer since February 5, 2024 and was a director of the Company from

August 9, 2023 to February 2, 2024.

Henrichs’ global leadership experience spans over 20 years and across several industries,

including healthcare, home improvement, retail, software and education.

Previously Mr.

Henrichs served as the Chief

Financial Officer of Renovo Home Partners since 2022.

He also served as the Executive Vice President and Chief Financial Officer of

Follett Corporation from 2008 to 2022 and Global Controller of General Electric Company’s Healthcare Clinical Systems division

responsible for the manufacture and distribution of medical devices to the ultrasound, patient monitoring and anesthesiology markets

form 2005 to 2008 in addition to leadership positions at Federal Signal Corporation and Ernst & Young LLP.

Henrichs earned

his bachelor’s degree in accounting from the University of Notre Dame and is a Certified Public Accountant with an inactive

license in the State of Illinois.

Henrichs served as the Chief Financial Officer

of Renovo Home Partners since 2022.

He also served as the Executive Vice President and Chief Financial Officer of Follett Corporation

from 2008 to 2022 and Global Controller of General Electric Company’s Healthcare Clinical Systems division responsible for the

manufacture and distribution of medical devices to the ultrasound, patient monitoring and anesthesiology markets from 2005 to 2008 in

addition to leadership positions at Federal Signal Corporation and Ernst & Young LLP.

Henrichs earned his bachelor’s degree

in accounting from the University of Notre Dame and is a Certified Public Accountant with an inactive license in the State of Illinois.

Adrian Miranda, Chief Medical Officer, Senior Vice President of Science and Technology

Adrian Miranda has served as our Chief Medical Officer since 2018 and brings a unique background of research and clinical expertise

Adrian Miranda has served as our Chief Medical Officer since 2018 and brings a unique background of research and clinical expertise to

Prior to joining Neuraxis, Dr.

Miranda was an Assistant professor at the Medical College of Wisconsin.

board-certified pediatric gastroenterologist.

He obtained his undergraduate degree in Biology from San Diego State University and

obtained his medical degree from the Medical College of Wisconsin.

He completed his residency and subspecialty training in pediatric

gastroenterology at Children’s Hospital of Wisconsin.

He is a board-certified

pediatric gastroenterologist.

He obtained his undergraduate degree in Biology from San Diego State University and obtained his medical

degree from the Medical College of Wisconsin.

He completed his residency and subspecialty training in pediatric gastroenterology at Children’s

Hospital of Wisconsin.

a physician scientist, he has spent the past 20 years of his career investigating the pathophysiology of visceral and somatic pain, as

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He has an extensive publication record and has lectured nationally and internationally.

Carrico, Chief Regulatory Officer, Compliance Officer and Privacy Officer

Thomas Carrico, Chief Regulatory Officer, Compliance Officer and Privacy Officer

Thomas Carrico has served as our Chief Regulatory Officer since November 2017.

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Regulatory Affairs.

Prior to and during his early years with Neuraxis, he was President & Clinic Director at Spine and

Neuromuscular Associates in Lawrenceburg, Indiana from January 2002 to December 2018.

He has over 40 years of experience in the

healthcare field and has been involved in the study and application of techniques and treatments that directly affect the autonomic

nervous system, especially regarding homeostasis and balance of the parasympathetic and the sympathetic nervous system.

has a history of working with attorneys while serving on state and national boards, which has positioned him to integrate into

regulatory responsibilities at the Company.

Carrico received his undergraduate education from Indiana University and his

Doctorate from Palmer College of Chiropractic.

Prior to and during his early years with Neuraxis, he was President & Clinic Director at Spine and Neuromuscular

Associates in Lawrenceburg, Indiana from January 2002 to December 2018.

He has over 40 years of experience in the healthcare field and

has been involved in the study and application of techniques and treatments that directly affect the autonomic nervous system, especially

regarding homeostasis and balance of the parasympathetic and the sympathetic nervous system.

Carrico has a history of working with

attorneys while serving on state and national boards, which has positioned him to integrate into regulatory responsibilities at the Company.

Carrico received his undergraduate education from Indiana University and his Doctorate from Palmer College of Chiropractic.

Christopher Robin Brown, Director

Chirstopher Robin Brown is a co-founder of the Company.

He developed clinical protocol, initial practice guidelines, designed and

implemented the practitioner certification program and personally financed the first two years of the Company.

After developing the

technique of transillumination to isolate auricular neurovascular bundles, he authored and designed the initial studies establishing

neurovascular and tissue energy transfer theories upon which the devices’ use are based.

Brown is listed as the sole or

principal inventor on all Neuraxis patents and is currently active in further device development working closely with compliance,

product design and engineering.

He developed clinical protocol, initial practice guidelines, designed and implemented

the practitioner certification program and personally financed the first two years of the Company.

After developing the technique of

transillumination to isolate auricular neurovascular bundles, he authored and designed the initial studies establishing neurovascular

and tissue energy transfer theories upon which the devices’ use are based.

Brown is listed as the sole or principal inventor

on all Neuraxis patents and is currently active in further device development working closely with compliance, product design and engineering.

graduation from the Indiana University School of Dentistry in 1982, while serving as clinic chief in the United States Army Reserve (USAR)

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his career, Dr.

Brown has been active in the purchasing and management of several destressed clinics and re-structuring them into

profitable enterprises.

He has performed extensive volunteer work overseas providing surgical care in the Dominican Republic, local

dental clinics serving the underprivileged, and recently provided dental screenings for the deployment of soldiers in the USAR and

National Guard.

Mitch Watkins, Director

Brown has been active in the purchasing and management of several destressed clinics and re-structuring them into profitable

He has performed extensive volunteer work overseas providing surgical care in the Dominican Republic, local dental clinics

serving the underprivileged, and recently provided dental screenings for the deployment of soldiers in the USAR and National Guard.

Mitch Watkins, Director and Chairman of the Board

Mitch Watkins has overseen four companies through their early commercialization periods within the medical device sector over the last

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complex needs of multiple market segments and devises solutions that meet their specific goals.

Ms.Keyser is the President, BCBS of

Keyser is the President, BCBS of

Indiana at Anthem, Inc.

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received her master’s degree in Executive Master of Science, Health Administration, from University of Alabama at

Kristin Ferge, Director

Kristin Ferge has been President and Chief Financial Officer of Capri Communities and Bridges Home Healthcare, a Wisconsin-based privately

held senior living corporation, since 2016.

Ferge, Director

Ferge has been President and Chief Financial Officer of Capri Communities and Bridges Home Healthcare, a Wisconsin-based privately held

senior living corporation, since 2016.

Prior to joining Capri, Ms.

Ferge was an executive for 18 years with Brookdale Senior Living

Ferge was an executive for 18 years with Brookdale Senior Living Inc.

or one of its predecessors.

Ferge ended her tenure at Brookdale, a publicly traded senior living company, as Executive Vice

President, Treasurer, and Chief Accounting Officer.

Ferge ended her tenure at Brookdale, a publicly traded senior living company, as Executive Vice President,

Treasurer, and Chief Accounting Officer.

Prior to Brookdale, Ms.

Ferge was an auditor with KPMG.

Ferge is a certified

public accountant.

Ferge is a certified public accountant.

Aharon, Ph.D.

Aharon is a co-founder of and has served as a Portfolio Manager at Rosalind Advisors, Inc., since 2006.

Aharon holds a Ph.D.

in Biophysics

and Molecular Biology from the University of Toronto.

Prior to co-founding Rosalind Advisors, Dr.

Aharon worked as an equity analyst

at Infinium Securities Inc.

Relationships

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Carrico, our Chief Regulatory Officer.

There are no other

family relationships between or among any of our executive officers or other directors.

There are no other family

relationships between or among any of our executive officers or other directors.

is the paramount duty of the board to oversee our management in the competent and ethical operation of the Company on a day-to-day basis

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acts or omissions in their capacities as directors or officers, subject to certain exclusions.

Such insurance may also insure the

Company against losses, which it may incur in indemnifying its officers and directors.

In addition, officers and directors also have

indemnification rights under applicable laws, and the Company’s Certificate of Incorporation and Bylaws.

Such insurance may also insure the Company

against losses, which it may incur in indemnifying its officers and directors.

In addition, officers and directors also have indemnification

rights under applicable laws, and the Company’s Certificate of Incorporation and Bylaws.

listing rules of NYSE American require that independent directors must comprise a majority of a listed company’s board of directors.

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Nominating and Corporate Governance Committee.

Each of our independent directors, Bradley Mitch Watkins, Beth Keyser and Kristin Ferge, serve on

each committee.

Each of our independent directors, Bradley Mitch Watkins, Beth Keyser, Kristin Ferge

Gil Aharon, serve on certain committees.

Our board has adopted written charters for each of these committees.

Copies of the charters are available on our

Our board may establish other committees as it deems necessary or appropriate from time to time.

Copies of the

charters are available on our website.

Our board may establish other committees as it deems necessary or appropriate from time to

Audit Committee, among other things, is responsible for:

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The board of directors has adopted a written charter setting forth the authority and responsibilities of the Audit Committee.

The board of directors has affirmatively determined that each member of the Audit Committee is financially literate, and that Kristin Ferge meets

the qualifications of an Audit Committee financial expert.

The board of directors has affirmatively determined that each member of the Audit Committee is financially literate, and that Kristin

Ferge meets the qualifications of an Audit Committee financial expert.

Audit Committee consists of Kristin Ferge, Bradley Mitch Watkins, and Beth Keyser and Ms.

Ferge serves as chair of the Audit

The functioning of the Audit Committee complies with the applicable requirements of the rules and listing standards of

NYSE American and the SEC.

Ferge serves as chair of the Audit Committee.

The functioning of the Audit Committee complies with the applicable requirements of the rules and listing standards of NYSE American

Compensation Committee is responsible for:

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how the Company’s compensation policies and practices may affect the Company’s risk management practices and/or risk-taking

Compensation Committee consists of Bradley Mitch Watkins, Beth Keyser, and Kristin Ferge, and Mr.

Watkins serves as chair of the Compensation

The board of directors has affirmatively determined that each member of the Compensation Committee meets the independence

criteria applicable to compensation committee members under SEC rules and listing standards of NYSE American.

The Company believes that

the composition of the Compensation Committee meets the requirements for independence under, and the functioning of such Compensation

Committee comply with, any applicable requirements of the rules and regulations of listing standards of NYSE American and the SEC.

Compensation Committee consists of Dr.

Gil Aharon, Bradley Mitch Watkins, Beth Keyser, and Kristin Ferge, and Dr.

Aharon serves as

chair of the Compensation Committee.

The board of directors has affirmatively determined that each member of the Compensation

Committee meets the independence criteria applicable to compensation committee members under SEC rules and listing standards of NYSE

The Company believes that the composition of the Compensation Committee meets the requirements for independence under, and

the functioning of such Compensation Committee comply with, any applicable requirements of the rules and regulations of listing

standards of NYSE American and the SEC.

and Corporate Governance Committee

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Nominating and Corporate Governance Committee consists of Bradley Mitch Watkins, Beth Keyser, and Kristin Ferge and Ms.

serves as chair of the Nominating and Corporate Governance Committee.

The Company’s board of directors has determined that

each member of the Nominating and Corporate Governance Committee is independent within the meaning of the independent director

requirements for independence under the NYSE American listing standards and SEC rules and regulations.

Keyser serves

as chair of the Nominating and Corporate Governance Committee.

The Company’s board of directors has determined that each member

of the Nominating and Corporate Governance Committee is independent within the meaning of the independent director requirements for independence

under the NYSE American listing standards and SEC rules and regulations.

Committee Interlocks and Insider Participation

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Compensation Table

following table sets forth information concerning all compensation earned by our Chief Executive Officer and two other persons

who served as executive officers as, at, or during the year ended December 31, 2023, and who earned compensation exceeding $100,000 during

2023 (the “Named Executive Officers”), for services as executive officers for the last two years.

following table sets forth information concerning all compensation earned by our Chief Executive Officer and three other persons who

served as executive officers as, at, or during the years ended December 31, 2024 and 2023, and who earned compensation exceeding $100,000

during 2024 and 2023 (the “Named Executive Officers”), for services as executive officers for the last two years.

Name and Principal Position

Salary ($) (1)

Stock Awards ($) (3)

Brian Carrico

Chief Executive Officer

Timothy Henrichs

Chief Financial Officer

Thomas Carrico

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Chief Medical Officer

payments to our executive officers pursuant to their respective employment agreements.

For more information, see “ —Employment

W-2 Box 1 bi-weekly payments to our executive officers pursuant to their respective employment agreements.

Henrichs began employment

on February 5, 2024.

bonus earned by our executive officers from the annual incentive plan adopted in 2024 upon achievement of certain targets.

bonus includes $62,222 related to the successful issuance of the 2024 Convertible Notes.

Bonuses are expected to be paid in 2025.

Henrichs was granted 100,000 common stock awards as a hiring grant.

medical, dental and vision benefits.

Equity Awards at Fiscal Year-End

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Brian Carrico

Timothy Henrichs

Thomas Carrico

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to such awards.

2022 Omnibus Securities and Incentive Plan, As Amended

2022 Omnibus Securities and Incentive Plan, As Amended on August 15, 2024

November 1, 2022, the Company adopted the Neuraxis, Inc.

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directors and non-employee consultants with those of the Company’s stockholders.

The maximum numbers of shares of common stock

that may be issued pursuant to awards granted are 300,000.

The maximum number of shares of common stock that

may be issued pursuant to awards granted are 300,000.

Cancelled and forfeited stock options and stock awards may again become available

for grant under the 2022 Plan.

As of the date of this prospectus, no awards have been granted under the 2022 Plan, and 300,000 shares

of common stock remain available for issuance under the 2022 Plan.

The following summary briefly describes the principal features of

the 2022 Plan and is qualified in its entirety by reference to the full text of the 2022 Plan.

On August 15, 2024, the Company held an annual meeting of stockholders whereby an amendment was approved

such that the maximum number of shares of common stock (including shares of common stock underlying options designated as incentive stock

options) that may be issued under the Plan shall not exceed six hundred thousand (600,000) shares of Common Stock, plus an annual increase

on the first day of each calendar year beginning January 1, 2025 and ending on and including January 1, 2031 equal to the lesser of (i)

five percent (5%) of the shares of common stock outstanding on the final day of the immediately preceding calendar year, and (ii) such smaller

number of shares of common stock as determined by the Board or the Compensation Committee.

of the date of this Form 10-K, 896,028 awards have been granted under the 2022 Plan, and 62,791 shares of common stock

remain available for issuance under the 2022 Plan.

The following summary briefly describes the principal features of the 2022 Plan and

is qualified in its entirety by reference to the full text of the 2022 Plan.

of the 2022 Plan :

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Shares subject to

an award under the 2022 Plan for which the award is lapses, expires, is canceled, terminated unexercised or ceases to be exercisable

again become available for grants under the 2022 Plan.

an award under the 2022 Plan for which the award lapses, expires, is canceled, terminated, unexercised or ceases to be exercisable again

become available for grants under the 2022 Plan.

Subject to the provisions of the 2022 Plan, the administrator has the authority to determine all grants of stock options.

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after his separation from the Company.

Adrian Miranda , our Chief Medical Officer and Senior Vice President of Science and Technology, entered into an employment

agreement with the Company, dated August 17, 2022, which has a two-year initial term and provides for a base salary of $300,000 with

annual compensation increase.

Henrichs , our Chief Financial Officer entered into an employment agreement with the Company, dated January 1, 2025 which has a five-year

initial term and provides for a base salary of $330,000, which shall be increased each year by not less than 3% per annum.

also will receive a one-time hiring grant of 100,000 shares of common stock.

the employment agreement is terminated by the Company without cause (as defined in the employment agreement), Mr.

Henrichs will receive

any accrued compensation (as defined in the employment agreement) and is entitled to severance payments as follows:

termination occurs during the initial term, the severance payment shall be the amount equal to the greater of (a) one times Mr.

base salary as of the termination date;

and (b) one times the total amount of Mr.

Henrichs’ bonus payments the Company paid

Henrichs over the one year prior to the termination date, to be paid in substantially equal monthly installments over the course

termination occurs after the initial term, the severance payment shall be the amount equal to the greater of (a) one and times Mr.

Henrichs’ base salary as of the termination date;

and (b) one times the total amount of Mr.

Henrichs’ bonus payments

the Company paid Mr.

Henrichs over the one (1) year prior to the termination date, to be paid in substantially equal monthly installments

over the course of 12 months following the termination date.

addition, as part of the severance payment, we agreed to pay Mr.

Henrichs monthly COBRA premiums for continuation of health coverage

for 18 months post termination.

the employment agreement is terminated by the Company for cause, Mr.

Henrichs will forfeit any unpaid Annual Deferred Bonus Payment,

but will receive any unpaid base salary that has been earned at the time of such termination, reimbursement of any expenses properly

incurred prior to the Mr.

Henrichs’ termination date;

and accrued and unused paid time off (“PTO”), if any, in accordance

with the Company’s PTO policy in effect on Mr.

Henrichs’ termination date.

Henrichs may terminate the employment agreement without good reason upon more than thirty (30) days’ prior written notice or for

good reason without prior written consent, and will receive accrued compensation (as defined in the employment agreement) and the unpaid

balance of the deferred bonus.

to the employment agreement, Mr.

Henrichs also agreed to (i) not disclose to any unauthorized person or use for his own account any confidential

information without the prior written consent of the Company or the board of directors, (ii) will not, directly or indirectly encourage,

solicit, induce (or attempt to encourage, solicit or induce) any employee or agent of the Company that was employed (or otherwise engaged)

at the time of his separation during his employment and for 24 months after his separation from that employment for any reason;

will not, directly or indirectly, have any ownership interest in, work for, advise, manage, act as an agent or consultant for, or have

any business connection or business or employment relationship with any entity or person which competes with Company;

(iv) will not,

directly or indirectly, have any ownership interest in, work for, advise, manage, act as an agent or consultant for, or have any business

connection or business or employment relationship with any entity or person which competes with the Company during his employment and,

(v) will not, directly or indirectly and in a competitive capacity own, manage, finance, operate, control or participate in ownership,

management, or operation of, act as an agent, consultant, or be employed with, any business engaged in the design, manufacture, marketing,

sale or servicing of any service or product with which Mr.

Henrichs was involved during his last year of employment with the Company;

or which the Company is developing, producing, marketing, selling or servicing (or plans to develop, produce, market, sale or service)

and about which Mr.

Henrichs gained any confidential information in the course of his employment with the Company for a period of 24

months after his separation from the Company.

Adrian Miranda , our Chief Medical Officer and Senior Vice President of Science and Technology, entered into an employment agreement

with the Company, dated August 17, 2022, which has a two-year initial term and provides for a base salary of $300,000 with annual compensation

In addition, Dr.

Miranda shall be entitled to payment of a special deferred bonus in an amount equal

to (i) the aggregate of the strike price or exercise price of all 337,204 unexercised options to purchase stock or shares of the

Company held by Dr.

Miranda (the “Aggregate Strike Price”) 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 deferred bonus will be paid in

substantially equal 20% installments (the “Annual Deferred Bonus Payment”) on January 2 on each of 2024, 2025, 2026,

2027, and 2028, with a condition that on or before each scheduled payment date, Dr.

Miranda shall exercise at least 67,441 of the

stock options.

Miranda shall be entitled to payment of a special deferred bonus in an amount equal to (i) the aggregate of

the strike price or exercise price of all 337,204 unexercised options to purchase stock or shares of the Company held by Dr.

(the “Aggregate Strike Price”) 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 deferred bonus will be paid in substantially equal 20% installments (the

“Annual Deferred Bonus Payment”) on January 2 on each of 2024, 2025, 2026, 2027, and 2028, with a condition that on or before

each scheduled payment date, Dr.

Miranda shall exercise at least 67,441 of the stock options.

the employment agreement is terminated by the Company without cause (as defined in the employment agreement) occurs during the term of

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his separation from the Company.

Thomas Carrico , Chief Regulatory Officer, entered into an employment agreement with the Company, dated August 9, 2022 and

amended on May 4, 2023, which has a two-year initial term and provides for a base salary of $275,000 with annual compensation

Carrico will also receive a one-time incentive payment in the amount of $135,655, which amount includes accrued and

unpaid salary and a bonus to incentivize Dr.

Thomas Carrico , Chief Regulatory Officer, entered into an employment agreement with the Company, dated August 9, 2022 and amended

on May 4, 2023, which has a two-year initial term and provides for a base salary of $275,000 with annual compensation increase.

will also receive a one-time incentive payment in the amount of $135,655, which amount includes accrued and unpaid salary and a bonus

to incentivize Dr.

Carrico to remain with the Company for future service.

Neither the accrued and unpaid

salary nor bonus was the subject of any contract or agreement between Dr.

Carrico and the Company prior to the execution of the

employment agreement.

The agreement contemplated that the incentive payment would be paid by December 15, 2022, but due to

administrative impracticability, payment was made with a portion of the proceeds from the IPO in August 2023.

Neither the accrued and unpaid salary nor bonus was the subject

of any contract or agreement between Dr.

Carrico and the Company prior to the execution of the employment agreement.

The agreement contemplated

that the incentive payment would be paid by December 15, 2022, but due to administrative impracticability, payment was made with a portion

of the proceeds from the IPO in August 2023.

In addition, Dr.

Carrico shall be entitled to payment of a deferred bonus in an amount equal to (i) the aggregate of the strike price or exercise

price of all 306,236 unexercised options to purchase stock or shares of the Company held by Dr.

Carrico (the “Aggregate Strike

Price”) 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 special deferred bonus will be paid in substantially equal 20% installments (the

“Annual Deferred Bonus Payment”) on January 2 on each of 2024, 2025, 2026, 2027, and 2028 (the “Scheduled Payment

Dates”), with a condition that on or before each Scheduled Payment Date, Dr.

Carrico shall exercise at least 61,274 of the

stock option.

Carrico shall be entitled to payment of a deferred bonus in an amount equal

to (i) the aggregate of the strike price or exercise price of all 306,236 unexercised options to purchase stock or shares of the Company

Carrico (the “Aggregate Strike Price”) 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 special deferred bonus will be paid in substantially equal

20% installments (the “Annual Deferred Bonus Payment”) on January 2 on each of 2024, 2025, 2026, 2027, and 2028 (the “Scheduled

Payment Dates”), with a condition that on or before each Scheduled Payment Date, Dr.

Carrico shall exercise at least 61,274 of

the stock option.

None of stock options has been exercised, therefore, no special deferred bonus has been paid as of the date of this

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following table presents the compensation awarded to or earned by or paid to all individuals who served as non-employee directors during

the year ended December 31, 2023.

We do not provide additional compensation to directors who are our employees for also serving as a

the years ended December 31, 2024 and 2023.

We do not provide additional compensation to directors who are our employees for also serving

as a director.

Fees Earned ($)

Stock Awards Earned ($)

Kristin Ferge (1)

Timothy Henrichs (2)

Kristin Ferge was appointed to the board of directors on March 7, 2023.

On January 30, 2024, Timothy R.

Henrichs resigned as a member of the board of directors, effective February 2, 2024 and became

the Company’s Chief Financial Officer.

Henrichs resigned as a member of the board of directors, effective February 2, 2024 and became the Company’s

Chief Financial Officer.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of April

12, 2024 based on 6,594,897 common shares outstanding.

following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of March

13, 2025 based on 7,215,864 shares of common stock outstanding.

In addition, holders of Series B Preferred Stock are entitled to an

additional 2,681,208 votes (solely for purposes of voting rights, the conversion price is $3.80 per share).

Therefore, the total

votes of the Company’s currently outstanding securities is 9,897,072 votes, subject to a maximum voting percentage cap of

between 4.99% and 19.99% of the votes outstanding set at the discretion of each holder of Series B Preferred Stock.

have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission, and the information is not

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to persons who possess sole or shared voting power or investment power with respect to those securities as well as any common stock that

the person has the right to acquire within 60 days of April 12, 2024 through the exercise of stock options or other rights.

the person has the right to acquire within 60 days of March 13, 2025 through the exercise of stock options or other rights.

are deemed to be outstanding and beneficially owned by the person holding those options for the purpose of computing the percentage ownership

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shown as beneficially owned by them.

Ownership Common Stock

of beneficial owner 5% shareholders:

Corporation (1)

PBF Venture Group LLC (3)

Gary Peterson

108 Sussex LLC (4)

executive officers and directors:

Mitch Watkins

Beneficially Ownership Common Stock

Percentage of

Name of beneficial owner 5% shareholders:

Masimo Corporation (1)

Rosalind Master Fund LP (3) (8)

Named executive officers and directors:

Brian Carrico (4)

Timothy Henrichs

Adrian Miranda (5)

Thomas Carrico (6)

Christopher Robin Brown

Bradley Mitch Watkins

Kristin Ferge

executive officers and directors as a group ( eight (8) persons)

Less than 1%.

The business address for Masimo Corporation is 52 Discovery, Irvine, California 92618.

Shares of common stock beneficially owned

includes 289,779 warrants.

(2) Shares of common stock beneficially

owned includes 12,852 warrants.

The business address for PBF Venture Group LLC is 5501 Woodrow Avenue, Austin, Texas 78756.

business address for 108 Sussex LLC is 304 South Euclid Avenue, Westfield, New Jersey 07090.

Gil Aharon (7)

All executive officers and directors as a group (nine (9) persons)

(1) The business address

for Masimo Corporation is 52 Discovery, Irvine, California 92618.

Shares of common stock beneficially owned consist of (i) 531,548 shares

of common stock and (ii) warrants to purchase 289,779 shares of common stock.

(2) Shares of common stock

beneficially owned consist of (i) 757,901 shares of common stock and (ii) warrants to purchase 12,852 shares of common stock.

(3) The business

address for Rosalind Master Fund LP is c/o Rosalind Advisors, Inc., 15 Wellesley Street West, Suite 326, Toronto, ON, Canada M4Y

Shares of beneficially owned common stock consist of 1,890,756 shares of common stock issuable upon conversion of 1,890,756 shares

of Series B Preferred Stock, subject to an ownership cap of 9.99%, which equals 796,800 shares.

1,890,756 shares of Series B Preferred Stock entitle Rosalind Master Fund LP to 1,184,210 votes, subject to a maximum

percentage of 9.99%, or 988,717 votes.

(4) Shares of common stock

beneficially owned consist of (i) 20,118 shares of common stock and (ii) 320,000 stock options.

(5) Shares of common stock

beneficially owned consist of 337,204 stock options.

(6) Shares of common stock

beneficially owned consist of (i) 5,000 shares of common stock and (ii) 306,236 stock options.

(7) Shares of common

stock beneficially owned consist of 105,042 shares of common stock issuable upon conversion of 105,042 shares of Series B Preferred

105,042 shares of Series B Preferred Stock entitle Gil

Aharon to 65,789 votes.

Aharon has indirect

ownership over Rosalind Master Fund LP.

Certain Relationships and Related Transactions and Director Independence

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Watkins $0 and $11,083, respectively.

Seale, our former Chief Financial Officer, is also the managing partner of RBSK.

Seale, through RBSK, has provided accounting

services since 2017.

For the fiscal years ended December 31, 2023 and 2022, the Company paid RBSK $312,803 and $116,542,

respectively, for accounting services.

Seale, our former Chief Financial Officer, is also the managing partner of a third- party public accounting firm that provides contracted

services to the Company.

Seale, through the third-party firm, has provided accounting services since 2017.

For the fiscal years ended

December 31, 2024 and 2023, the Company paid the third-party accounting firm $207,103 and $312,803, respectively, for accounting services.

have adopted a formal policy that our executive officers, directors, holders of more than 5% of any class of our voting securities, and

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Certificate of Amendment to Certificate of Incorporation (incorporated by reference to exhibit 3.2 to Registration Statement on Form S-1, filed on January 26, 2023)

Certificate of Amendment to the Certificate of Incorporation of Neuraxis, Inc., dated August 22, 2024 (incorporated by reference to exhibit 3.1 to Quarterly Report on Form10-Q, filed on November 12, 2024)

Certificate of Designation of Series B Preferred Stock, dated August 22, 2024 (incorporated by reference to exhibit 3.2 to Quarterly Report on Form10-Q, filed on November 12, 2024)

Amendment No.

1 to Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred Stock (incorporated by reference to exhibit 3.1 to current report on Form 8-K, furnished to the SEC on November 21, 2024)

Bylaws (incorporated by reference to exhibit 3.3 to Registration Statement on Form S-1, filed on January 10, 2023)

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Second Amendment to Shareholders’ Agreement, dated January 8, 2023 (incorporated by reference to exhibit 4.21 to Registration Statement on Form S-1, filed on January 10, 2023)

Form of Warrant related to 2023 Private Placement (incorporated by reference to exhibit 4.23 to Registration Statement on Form S-1, filed on June 1, 2023)

Employment Agreement between Neuraxis, Inc.

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2022 Omnibus Securities and Incentive Plan (incorporated by reference to exhibit 10.26 to Registration Statement on Form S-1, filed on January 26, 2023)

Form of Securities Purchase Agreement related to 2023 Private Placement (incorporated by reference to exhibit 10.32 to Registration Statement on Form S-1, filed on June 1, 2023)

Form of Senior Secured Convertible Note related to 2023 Private Placement (incorporated by reference to exhibit 10.33 to Registration Statement on Form S-1, filed on June 1, 2023)

Form of Security Agreement related to 2023 Private Placement (incorporated by reference to exhibit 10.34 to Registration Statement on Form S-1, filed on June 1, 2023)

Form of Registration Rights Agreement related to 2023 Private Placement (incorporated by reference to exhibit 10.35 to Registration Statement on Form S-1, filed on June 1, 2023)

Securities purchase agreement, dated November 9, 2023, between the Company and Flagstaff International, LLC (incorporated by reference to exhibit 10.1 to current report on Form 8-K, furnished to the SEC on November 14, 2023)

Registration rights agreement, dated November 9, 2023, between the Company and Flagstaff International, LLC (incorporated by reference to exhibit 10.2 to current report on Form 8-K, furnished to the SEC on November 14, 2023)

Form of Securities Purchase Agreement (incorporated by reference to exhibit 10.1 to current report on Form 8-K, furnished to the SEC on February 15, 2024)

Form of Convertible Promissory Note (incorporated by reference to exhibit 10.2 to current report on Form 8-K, furnished to the SEC on February 15, 2024)

Form of Registration Rights Agreement (incorporated by reference to exhibit 10.3 to current report on Form 8-K, furnished to the SEC on February 15, 2024)

First Amendment to Securities Purchase Agreement, dated February 12, 2024, between the Company and Flagstaff International (incorporated by reference to exhibit 10.4 to current report on Form 8-K, furnished to the SEC on February 15, 2024)

Third Amendment to Securities Purchase Agreement, dated March 22, 2024, between the Company and Flagstaff International, LLC (incorporated by reference to exhibit 10.1 to current report on Form 8-K, furnished to the SEC on March 28, 2024)

Form of Convertible Promissory Note issued to Flagstaff International, LLC (incorporated by reference to exhibit 10.2 to current report on Form 8-K, furnished to the SEC on March 28, 2024)

Form of Securities Purchase Agreement (incorporated by reference to exhibit 10.1 to current report on Form 8-K, furnished to the SEC on May 28, 2024)

Form of Convertible Promissory Note (incorporated by reference to exhibit 10.2 to current report on Form 8-K, furnished to the SEC on May 28, 2024)

Form of Registration Rights Agreement (incorporated by reference to exhibit 10.3 to current report on Form 8-K, furnished to the SEC on May 28, 2024)

Form of Unrestricted Stock Award Agreement by and between NeurAxis, Inc.

and Grantees dated on July 1, 2024 (incorporated by reference to exhibit 10.1 to current report on Form 8-K, furnished to the SEC on July 5, 2024)

Fourth Amendment to Securities Purchase Agreement, dated October 12, 2024, between the Company and Flagstaff International, LLC (incorporated by reference to exhibit 10.1 to current report on Form 8-K, furnished to the SEC on October 18, 2024)

Form of Securities Purchase Agreement (incorporated by reference to exhibit 10.2 to current report on Form 8-K, furnished to the SEC on October 18, 2024)

Form of Registration Rights Agreement (incorporated by reference to exhibit 10.3 to current report on Form 8-K, furnished to the SEC on October 18, 2024)

Form of Securities Purchase Agreement (incorporated by reference to exhibit 10.1 to current report on Form 8-K, furnished to the SEC on November 15, 2024)

Form of Registration Rights Agreement (incorporated by reference to exhibit 10.2 to current report on Form 8-K, furnished to the SEC on November 15, 2024)

Insider Trading Policy

List of Subsidiaries of Neuraxis, Inc.

(incorporated by reference to exhibit 21.1 to Registration Statement on Form S-1, filed on January 10, 2023)

Consent of Rosenberg Rich Baker Berman, P.A.

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002

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NeurAxis, Inc.

Compensation Recovery Policy

Compensation Recovery Policy (incorporated by reference to exhibit 97.1 to Annual Report on Form 10-K, filed on April 16, 2024)

XBRL Instance Document.

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FORM 10-K SUMMARY

Index to Financial Statements

to Financial Statements

THE YEARS ENDED DECEMBER 31, 2024 AND 2023

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Statements of Operations for the Years Ended December 31, 2024 and 2023

Statements of Stockholders’ Deficit for the Years Ended December 31, 2023 and 2022

of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2024 and 2023

Statements of Cash Flows for the Years Ended December 31, 2024 and 2023

Notes to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and

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have audited the accompanying balance sheets of Neuraxis, Inc.

(the Company) as of December 31, 2023 and 2022, and the related statements

of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two year period ended December 31, 2023,

and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and

its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of

of Previously Issued Financial Statements

discussed in Note 19 to the financial statements, the Company restated its 2023 quarterly information for an error in the classification

(the Company) as of December 31, 2024 and 2023, and the related

statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended

December 31, 2024, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial

statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the

results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with

accounting principles generally accepted in the United States of America.

of Matter Regarding Going Concern

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have served as the Company’s auditor since 2022.

Balance Sheets

December 31, 2024

2 unchanged sentences

Cash and cash equivalents

Accounts receivable, net

Accounts receivable, net of credit losses of $ 5,000 and $ 11,993 as of December 31, 2024 and 2023, respectively

Inventories, net of reserves of $ 4,454 and $ 0 as of December 31, 2024 and 2023, respectively

Prepaids and other current assets

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Other Assets:

Deferred offering costs

Operating lease right of use asset, net

Intangible assets, net

Security deposit

to financial statements are an integral part of these statements.

Balance Sheets

December 31, 2024

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Notes payable

portion of operating lease payable

Notes payable - related party

Notes payable - convertible notes, net of unamortized discount of $ 0

and $ 3,327,213 as of December 31, 2023 and December 31, 2022

Current portion of operating lease payable

Customer deposits

Derivative liabilities

Warrant liabilities

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Non-current Liabilities:

lease payable, net of current portion

non-current liabilities

Operating lease payable, net of current portion

Total non-current liabilities

Total liabilities

Commitments and contingencies (see note 16)

Stockholders’ Deficit

Convertible Series A

Preferred stock, $ 0.001 par value;

1,000,000 shares authorized;

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

December 31, 2022

Convertible Series Seed Preferred Stock, $ 0.001 par value;

120,000 shares authorized;

0 issued and outstanding as of December

31, 2023 and 115,477 as of December 31, 2022

Stockholders’ Equity (Deficit)

Convertible Series B Preferred stock, $ 0.01

and 0 shares authorized, 4,280,939

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

Common stock, $ 0.001 par value;

100,000,000 shares authorized;

6,508,897 issued and outstanding as of

December 31, 2023 and 1,963,322 as of December 31, 2022

6,990,227 and 6,508,897 issued and outstanding as of December 31, 2024 and 2023, respectively

Additional paid in capital

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( 48,558,111 )

Total stockholders’

( 1,403,241 )

Total stockholders’ equity (deficit)

( 1,403,241 )

Total Liabilities and Stockholders’ Deficit

Total Liabilities and Stockholders’ Equity (Deficit)

to financial statements are an integral part of these statements.

Statements of Operations

of Operations

For the Years Ended December 31,

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Financing charges

( 2,322,216 )

Interest expense

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$ ( 14,626,683 )

Preferred stock dividends

Net loss available to common stockholders

$ ( 8,452,769 )

$ ( 14,626,683 )

Per-share data

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to financial statements are an integral part of these statements.

Statements of Stockholders’ Deficit

For the Twelve

Months Ended December 31, 2023 and 2022

of Stockholders’ Equity (Deficit)

Convertible Series A Preferred Stock

Convertible Series Seed Preferred Stock

Convertible Series B Preferred Stock

Additional Paid In

Stockholders’

Balances as of January 1, 2022

$ ( 29,151,367 )

$ ( 825,660 )

Stock based compensation

Common stock issued upon signing of notes payable

( 4,780,061 )

Balances as of December 31, 2022

Stockholder’s Equity

Balance at January 1, 2023

$ ( 33,931,428 )

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Common stock issued from agreements

Reclassification

of warrant liability to equity

Reclassification of warrant liability to equity

Warrants exercised

1 unchanged sentence

( 14,626,683 )

Balances as of December 31, 2023

Balances at December 31, 2023

( 48,558,111 )

( 1,403,241 )

( 48,558,111 )

( 1,403,241 )

Warrants exercised

Additional paid in capital from warrants issued under advisory agreement

Additional paid in capital from warrants issued as debt discount

Common stock issued from agreements

Debt discount on mandatory conversion of convertible promissory notes to Series B Preferred Stock

Conversion of convertible promissory notes to Series B Preferred Stock

Issuance of Series B Preferred Stock

( 8,241,501 )

Balances at December 31, 2024

$ ( 56,799,612 )

to financial statements are an integral part of these statements.

Statements of Cash Flows

of Cash Flows

For the Years Ended December 31,

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Provisions for losses on accounts receivable

Provision for losses on inventory

Non-cash lease expense

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Issuance of common stock for non-cash consideration

Fair value of warrants issued for non-cash consideration

Finance charges

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Proceeds from issuance of common stock, net of issuance costs

Proceeds from issuance of Series B preferred stock

Deferred offering costs paid

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Net cash provided by financing activities

Net Decrease in Cash and Cash Equivalents

Net Increase (Decrease) in Cash and Cash Equivalents

Cash and Cash Equivalents at Beginning of Period

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Cash paid for interest

Cash paid for income taxes

Cash received for income taxes

Supplemental Schedule of Non-Cash Investing and Financing Activities

Recognition of right of use asset

Conversion of convertible promissory notes to Series B preferred stock

Fair value of warrants from debt discount in convertible notes classified as additional paid in capital

Write-off of debt discount on convertible notes classified as additional paid in capital

Issuance of note payable to financing company for insurance premiums

Fair value of warrant liabilities of warrants from convertible notes

Fair value of derivative liabilities of conversion feature from convertible notes

Prior year offering costs paid

Reclassification of warrant liability to equity

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to financial statements are an integral part of these statements.

Notes to Financial Statements

to Financial Statements

Basis of Presentation, Organization and Other Matters

1 unchanged sentence

in the state of Indiana on April 17, 2012, under the name of Innovative Health Solutions, Inc.

The name was changed to Neuraxis, Inc.

in March of 2022.

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

authorized shares were increased, and a par value established.

In 2022, the name was changed to Neuraxis,

and the Company filed a Certificate of Conversion to become a Delaware corporation that increased the number of authorized shares

and established a par value.

Company is headquartered in Carmel, Indiana, and specializes in the development, production, and sale of medical neuromodulation devices.

The Company has developed four FDA cleared products:

(i) the IB-STIM (DEN180057, 2019), (ii) the Rectal Expulsion Device (“RED”)

(K242304, 2024), (iii) NSS-2 Bridge (DEN170018, 2017) and (iv) the original 510(K) clearance (K140530, 2014).

IB-STIM is a percutaneous electrical nerve field stimulator (PENFS) device that is indicated in patients 8-21 years of age with functional

abdominal pain associated with irritable bowel syndrome.

The IB-STIM currently is one of two products marketed and sold by the Company.

is indicated to evaluate the neuromuscular function of a patient’s ability to expel its contents from the rectum and as a qualitative

test for rectal hypersensitivity patients who experience desire or urge to defecate at lower volumes of distention.

RED is intended to

be used in a clinical setting by trained health care providers in adult populations.

NSS-2 Bridge is a percutaneous nerve field stimulator (PNFS) device indicated for use in the reduction of the symptoms of opioid

The NSS-2 Bridge device was licensed to Masimo Corporation in April 2020, and the Company received a one-time licensing

fee of $250,000 from Masimo.

Masimo markets and sells this product as its Masimo Bridge, and the Company will not receive any further

licensing payments or other revenue from this product.

original 510(K) device was the EAD, an electroacupuncture device, now called NeuroStim.

The EAD is no longer being manufactured,

sold or distributed but reserved only for research purposes.

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

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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

authority to issue is (1) 100,000,000 shares of Common Stock, par value $ 0.001 per share (“Common Stock”) and (ii) 1,120,000

shares of Preferred Stock, par value $ 0.001 per share (“Preferred Stock”), 1,000,000 of which is hereby designated as “Series

A Preferred Stock” and 120,000 of which is hereby designated as “Series Seed Preferred Stock” with the rights, preferences,

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

to issue was (1) 100,000,000 shares of Common Stock, par value $ 0.001 per share (“Common Stock”) and (ii) 1,120,000 shares

of Preferred Stock, par value $ 0.001 per share (“Preferred Stock”), 1,000,000 shares of which was designated as “Series

A Preferred Stock” and 120,000 shares of which were designated as “Series Seed Preferred Stock” with the rights, preferences,

powers, privileges and restrictions, qualifications and limitations set forth in this Article IV of the Delaware Certificate of Incorporation.

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

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 .

August 9, 2023, the Company consummated an initial public offering (“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 $ 6,592,002 .

Net proceeds to the Company, after deducting underwriting discounts and commissions and other 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 No.

333- 269179), as amended, declared

effective by the SEC on August 9, 2023.

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

in commissions and fees amounted to a total of

at closing, as well as $ 175,000

for the reimbursement of certain of the underwriters’

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

(“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.

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.

Company is headquartered in Carmel, Indiana.

The Company specializes in the development, production, and sale of medical neuromodulation

Company has developed three FDA cleared products, the IB-STIM (DEN180057, 2019), the NSS-2 Bridge (DEN170018, 2017), and the original

510(K) clearance (K140530, 2014).

IB-STIM is a percutaneous electrical nerve field stimulator (PENFS) device that is indicated in patients 11-18 years of age with

functional abdominal pain associated with irritable bowel syndrome.

The IB-STIM currently is the only product marketed and sold by

NSS-2 Bridge is a percutaneous nerve field stimulator (PNFS) device indicated for use in the reduction of the symptoms of opioid

The NSS-2 Bridge device was licensed to Masimo Corporation in April 2020, and the Company received a one-time licensing

fee of $ 250,000 from Masimo.

Masimo markets and sells this product as its Masimo Bridge, and the Company will not receive any further

licensing payments or other revenue from this product.

original 510(K) device was the EAD, an electroacupuncture device, now called NeuroStim.

The EAD is no longer being manufactured,

sold or distributed but reserved only for research purposes.

Notes to Financial Statements

The warrants had an initial exercise price of $ 7.20 per share (equal to 120 % of the offering

price per share), a term of five years from the commencement of sales in the offering, and are exercisable at any time.

August 15, 2024, the Company’s shareholders (i) authorized 5,000,000 shares of preferred stock of which 4,000,000 were designated

at $ 0.001 par value “Series B Preferred Stock” inclusive of cumulative dividends, due and payable quarterly at the Company’s

discretion either in cash or common stock when declared, at a rate of 8.5% per annum through June 30, 2025 , (ii) retired 1,000,000 shares

of Series A Preferred Stock and (iii) retired 120,000 shares of Series Seed Preferred Stock.

On November 11, 2024, the Company’s

shareholders authorized (i) an increase in the number of designated Series B Preferred Stock to 5,000,000 shares and (ii) an extension

of the 8.5% cumulative dividend period to December 31, 2026 .

to Financial Statements

Summary of Significant Accounting Policies

21 unchanged sentences

in facts and circumstances, historical experience, and reasonable assumptions.

After such evaluations, if deemed appropriate, those

estimates are adjusted accordingly.

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.

After such evaluations, if deemed appropriate, those estimates

are adjusted accordingly.

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.

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accounts receivable are stated at the amount management expects to collect from outstanding balances, net of an allowance for credit

Management evaluates many factors when determining the collectability of specific customer accounts, including, but not limited

to, creditworthiness, past transaction and payment history, current economic industry trends and changes in payment terms.

We use assumptions

and judgment based on the best available facts and circumstances to estimate and record an allowance.

The allowance for credit losses

was $ 11,993 and $ 31,275 as of December 31, 2023 and 2022, respectively.

The Company recorded credit losses for the years ended December

31,2023 and 2022 of $ 25,281 and 64,197 , respectively.

Notes to Financial Statements

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

Management evaluates many factors when determining the collectability of specific customer accounts, including, but not

limited to, creditworthiness, past transaction and payment history, current economic industry trends and changes in payment terms.

Management used assumptions and judgment based on the best available facts and circumstances to estimate and record an allowance.

The allowance for credit losses was $ 5,000

as of December 31, 2024 and 2023, respectively.

The Company recorded credit losses for the years ended December 31, 2024 and 2023 of

$ 7,395 and $ 25,281 ,

respectively.

to Financial Statements

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

The Company will recognize

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and expensed at the date of expiration.

For the years ended December 31, 2023 and 2022, $ 25,008 and $ 10,026 were expensed as expired

inventory, respectively.

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, were charged to additional paid in capital upon the IPO.

As of December 31, 2023 and 2022,

the Company had deferred offering costs of $ 0 and $ 736,736 , respectively.

For the years ended December 31, 2024 and 2023, $ 0 and $ 25,008 were expensed as expired inventory,

respectively.

Inventory reserves totaled $ 4,454 and $ 0 as of December 31, 2024 and 2023, respectively.

and Equipment

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Classification

Machinery and Equipment

Furniture and Fixtures

Computer Hardware

Leasehold Improvements

and Equipment

expense was $ 26,346 and $ 30,240 during the years ended December 31, 2024 and 2023, respectively.

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and new product development.

assets consist of software, patents and a trademark.

assets consist of software, patents, a trademark and a license.

Intangible assets are stated at their historical cost and amortized on

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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.

Company purchased a trademark related to the Company’s name for $ 50,000 .

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

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.

Notes to Financial Statements

Company entered into an option agreement on April 12, 2023 to bring an optionor’s invention to commercialization via a royalty-bearing

licensing agreement.

The agreement required an initial payment of $ 1,000 and was fully amortized in the year ended December 31, 2024.

to Financial Statements

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

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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 December 31, 2023 and 2022 and for the years

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 returns have a three-year statute of limitations.

of December 31, 2023, the following tax years are subject to examination:

Open Years for Filed Returns

Return to File in 2024

Various States

costs are expensed as incurred and amounted to $ 192,400 and $ 14,900 for the years ended December 31, 2023 and 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.

Company utilizes a Monte Carlo simulation model for the common stock conversion feature of the notes payable 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 stock

price, an expected remaining term of each note as of the valuation date, estimated volatility, drift, and a risk-free rate.

Company records the change in the fair value of the derivative as other income or expense in the Statements of Operations.

Notes to Financial Statements

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

determine if such instruments are liabilities or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC

The classification of derivative financial 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 warrant as other

income or expense in the statements of operations.

evaluation of the Company’s deferred tax assets and liabilities did not have a material effect on the Company’s financial

Furthermore, no interest or penalties have been accrued or charged to expense as of December 31, 2024 and 2023 and for the

years then ended.

costs are expensed as incurred and amounted to $ 232,125

and $ 192,400 for

the years ended December 31, 2024 and 2023, respectively, and are classified as general and administrative expenses in the

statements of operations.

to Financial Statements

evaluates all of the Company’s financial instruments, including issued warrants to purchase its common stock, to determine if such

instruments are liabilities pursuant to ASC 480 and ASC 815-15.

The classification

of derivative financial 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 Black-Scholes option-pricing model 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 Black-Scholes option-pricing model included

an exercise price, the stock price as of the valuation date, an expected remaining term of each warrant as of the valuation date, estimated

volatility, a dividend yield, and a risk-free rate.

The Company records the change in the fair value of the warrant as other income or

expense in the statements of operations.

Value Measurements

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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.

Inputs to determine fair value are generally

unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the

asset or liability.

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

discounted cash flow models.

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

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

Notes to Financial Statements

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

Fair Value Measurements as of

December 31, 2023

Schedule of Fair Value On a Recurring Basis Assets and Liability

Warrant liabilities

Derivative liabilities

Total Liabilities

Fair 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 December 31, 2023 and December 31, 2022:

Schedule of Unobservable Inputs for Level 3 Assets and Liabilities

Fair Value As of

December 31, 2023

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

Inputs to determine fair value are generally unobservable

and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

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

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.

to Financial Statements

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

of Fair Value of Assets and Liabilities measured on Recurring Basis

Valuation Methodology

Fair value of warrant liabilities as of

December 31, 2024

Warrant liabilities

Monte Carlo model

Black-Scholes model

Project simulated cash flows

Derivative liabilities

Monte Carlo model

Fair value of warrant liabilities as of

December 31, 2023

Black-Scholes model

Project simulated cash flows

were no transfers between any of the levels during the years ended December 31, 2023 and year ended December 31, 2022.

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 December 31, 2023 and 2022, the Company had no assets that were measured on a

nonrecurring basis.

were no transfers between any of the levels during the years ended December 31, 2024 and 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 recurring fair

value measurements.

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

and Diluted Net Income (Loss) per Share

or loss per share (“EPS”) is computed by dividing net income (loss), net of preferred stock dividends, by the weighted average

number of shares of common stock outstanding during the period.

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 December 31, 2023 and 2022, respectively.

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

shares outstanding during the period.

Diluted net loss per common share is determined using the weighted-average number of common shares

outstanding during the period, adjusted for the dilutive effect of common stock equivalents.

In periods when losses are reported, which

is the case for December 31, 2023 and 2022 presented in these financial statements, the weighted-average number of common shares outstanding

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

Notes to Financial Statements

earnings or loss per share (“EPS”) is computed by dividing net income (loss), net of preferred stock dividends, by the

weighted average number of common shares outstanding during the period.

Diluted EPS is determined using the weighted average number

of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents that were outstanding

for the periods presented.

In periods when losses are reported, which is the case for December 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.

Preferred stock dividends (neither declared nor paid) were $ 211,268

as of December 31, 2024 and 2023, respectively.

to Financial Statements

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

Schedule of Dilutive Common Stock Equivalents

Convertible Series A Preferred Stock

Convertible Series Seed Preferred Stock

Pre-Funded Warrants for Convertible Series A Preferred Stock

Convertible Bridge Debt

Pre-Funded Warrants for Common Stock

Series B Preferred Stock

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

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Preferred stock dividends

Net income (loss) available to common stockholders

Net loss available to common stockholders

( 8,452,769 )

( 14,626,683 )

Weighted-average shares of common stock outstanding - basic

Weighted-average shares of common stock outstanding - basic and diluted

Basic and diluted net loss per share

Company accounts for all stock-based payments and awards at fair value.

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 accounts for all stock-based awards at fair value.

The Company recognizes its stock-based compensation expense using the straight-line

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

Company accounts for the granting of stock options and restricted stock units 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 and restricted stock

units 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.

Upon vesting of restricted stock units, the par value of the shares

issued are reclassified from additional paid-in-capital to common stock.

awards 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.

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

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

in the United States.

Patented and trademarked neuromodulation devices is the Company’s major product line.

Products are generally

transferred at a point in time (rather than over time).

Essentially all the Company’s revenue is generated from purchase order

Notes to Financial Statements

to Financial Statements

accordance with FASB’s ASC 606, Revenue from Contracts with Customers , (“ASC 606”), the Company recognizes revenue

when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects

to be entitled in exchange for those goods or services, in an amount that reflects the consideration which the Company expects to be

entitled in exchange for those goods or services.

To determine revenue recognition for arrangements that the Company determines are within

the scope of ASC 606, it performs the following five steps:

to be entitled in exchange for those goods or services.

To determine revenue recognition for arrangements that the Company determines

are within the scope of ASC 606, it performs the following five steps:

the contract(s) with a customer;

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obligation when the performance obligation is satisfied.

Company estimates 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, the Company considers all available information

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

Company estimates credit losses on accounts receivable by utilizing an aging schedule.

Company offers a Patient Assistance Program for patients without insurance coverage for IB-Stim.

This program extends potential self-pay

This program offers potential self-pay

discounts for IB-Stim devices, based upon household income and size.

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All other states

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

Based on dollar amounts of revenue, essentially all of the goods sold by the Company are sold to healthcare customers

including hospitals and clinics.

Sales to healthcare customers lack seasonality and have a mild correlation with economic cycles.

location of customers:

Sales to customers located within the United States represent essentially all of the Company’s sales.

Notes to Financial Statements

Sales contracts consist of purchase order contracts that tend to be short-term (i.e., less than or equal to one year

in duration).

Performance Obligations with Customers:

of Satisfaction

Company typically satisfies its performance obligations as the goods are delivered.

that are shipped to customers are typically shipped FOB shipping point with freight prepaid by the Company.

As such, ownership of goods

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

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

Payment Terms

for goods sold by the Company is typically due after an invoice is sent to the customer, within 30 days.

However, other payment terms

are frequently negotiated with customers ranging from due upon receipt to due within 90 days.

Some payment terms may call for payment

only after the healthcare provider receives their insurance reimbursement.

Invoices for goods are typically sent to customers within

three calendar days of shipment.

The Company does not offer discounts if the customer pays some or all of an invoiced amount prior to

the due date.

of the Company’s contracts have a significant financing component.

devices that the Company contracts to sell and transfer to customers are manufactured by one specific third-party manufacturer.

The manufacturer

is located within the state of Indiana.

In no case does the Company act as an agent (i.e., the Company does not provide a service of

arranging for another party to transfer goods to the customer).

Refunds, etc.

economic factors affect the nature, amount, timing, and uncertainty of the Company’s revenue and cash flows.

All of the Company’s

products are sold to healthcare customers including hospitals and clinics.

Sales to healthcare customers lack seasonality and have a

mild correlation with economic cycles.

All of the Company’s sales are to customers located within the United States.

Sales contracts

consist of purchase orders that are short-term (i.e., less than or equal to one year).

to Financial Statements

Company typically satisfies its performance obligations for goods at a point in time as they are received at the customer’s

destination (rather than over time).

Goods are shipped by common carrier to customers under FOB destination terms.

ownership of goods in transit is transferred to the customer upon receipt as the Company bears the associated risks (e.g., loss,

damage, delay).

Management typically relies on shipping information from common carriers to evaluate when the

customer has obtained control of the goods.

Shipping and handling costs are recorded as Cost of Goods Sold in the Statements of

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.

may not be cancelled after shipment.

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the time revenue is recognized, the Company estimates expected returns and excludes those amounts from revenue.

The Company also maintains

appropriate accounts to reflect the effects of expected returns on the Company’s financial position and periodically adjusts those

accounts to reflect its actual return experience.

Historically, returns have been immaterial, and the Company currently does not provide

a provision for this liability.

Notes to Financial Statements

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.

The Company also

maintains appropriate accounts to reflect the effects of expected returns on the Company’s financial position and periodically

adjusts those accounts to reflect its actual return experience.

Estimated returns totaled $ 5,000 and $ 0 as of December 31,

2024 and 2023, respectively.

for goods sold by the Company is typically due after an invoice is sent to the customer, within 30 days.

The Company does not offer discounts

if the customer pays some or all of an invoiced amount prior to the due date.

None of the Company’s contracts have a significant

financing component.

devices that the Company contracts to sell and transfer to customers are manufactured by one specific third-party manufacturer located

within the state of Indiana.

In no case does the Company act as an agent (i.e., the Company does not provide a service of arranging for

another party to transfer goods to the customer).

to Financial Statements

accordance with Accounting Standards Updated (“ASU”) No.

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

Notes to Financial Statements

to Financial Statements

of Long-Lived Assets

9 unchanged sentences

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 December 31, 2023, accounts receivable from four customers with balances due

in excess of 10 %

of total accounts receivable were approximately 28 %, 28 %, 17 %

and 11 %, 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 %,

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

Receivables consist of unsecured amounts due from customers.

The table below sets forth the Company’s customers

that accounted for greater than 10% of its net accounts receivable for the years ended December 31, 2024 and 2023,

respectively.

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

31, 2023 and 2022, respectively.

Schedule of Customer Accounts Receivable

of Net Accounts

table below sets forth the Company’s customers that accounted for greater than 10% of its net sales for the years ended

December 31, 2024 and 2023, respectively.

Schedule of Customers Accounted Revenues

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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 December 31, 2023 and 2022, the Company didn’t have any uninsured cash balance.

As of December 31, 2024 and 2023, the Company had $ 3,263,618

and $ 0 of its cash balance

uninsured, 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 December 31, 2023, we had a stockholders’ deficit totaling $ 1,403,241 .

At December 31, 2023, we had short-term outstanding

borrowings of approximately $ 148,062 .

As of December 31, 2023, we had cash of $ 78,560 and a working capital deficit of $ 1,643,058 .

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 .

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 No.

333- 269179), as amended,

declared effective by the SEC on August 9, 2023.

Alexander Capital L.P.

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.

Notes to Financial Statements

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

technologies, the time and costs involved in preparing, filing, prosecuting, maintaining, and enforcing patent claims and other

proprietary rights, our ability to establish collaborative arrangements, marketing activities and competing technological and market

developments, including regulatory changes and overall economic conditions in our target markets.

Our ability to generate revenue

and achieve profitability requires us to successfully market and secure purchase orders for our products from customers currently

identified in our sales pipeline and to new customers as well.

The primary activity that will drive all customers and revenues is

the adoption of insurance coverage by commercial insurance carriers nationally which is a top priority of the Company.

activities, including our planned research and development 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.

As of December 31, 2024, we had stockholders’ equity of $ 2,067,748 , short-term outstanding borrowings of $ 154,152 , cash

of $ 3,696,870 and a working capital surplus of $ 1,832,858 .

to Financial Statements

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

the time and costs involved in preparing, filing, prosecuting, maintaining, and enforcing patent claims and other proprietary rights,

our ability to establish collaborative arrangements, marketing activities and competing technological and market developments, including

regulatory changes and overall economic conditions in our target markets.

Our ability to generate revenue and achieve profitability requires

us to successfully market and secure purchase orders for our products from customers currently identified in our sales pipeline and to

new customers as well.

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

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

These activities, including our planned research and development

efforts, will require significant uses of working capital through the rest of 2025 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 before the

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

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the Company believes in the viability of its strategy to further implement its business plan and generate sufficient revenues and in

its ability to raise additional funds by way of a public or private offering of its debt or equity securities, there can be no

assurance that it will be able to do so on reasonable terms, or at all.

The ability of the Company to continue as a going concern is

dependent upon its ability to further implement its business plan and generate sufficient revenues and its ability to raise

additional funds by way of a public or private offering.

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

As a result, substantial doubt is deemed to exist about the Company’s ability to continue as a going concern.

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.

its ability to raise additional funds by way of a public or private offering of its debt or equity securities, there can be no assurance

that it will be able to do so on reasonable terms, or at all.

The ability of the Company to continue as a going concern is dependent

upon its ability to further implement its business plan and generate sufficient revenues and its ability to raise additional funds by

way of a public or private offering.

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.

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

amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Recently Adopted Accounting Pronouncements

Adopted Accounting Pronouncements

November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

to Reportable Segment Disclosures , which requires disclosure of (i) significant segment expenses, (ii) other segment items and (iii)

the title and position of the Chief Operating Decision Maker (“CODM”) on an annual and interim basis.

Additionally, ASU 2023-07

requires that a public entity that has a single reportable segment provide all the disclosures required by Topic 280.

Public business

entities are required to adopt the standard for fiscal years beginning after December 15, 2023 and interim periods withing fiscal year

beginning after December 15, 2024.

Disclosures are required for all prior periods presented in the financial statements.

adopted the disclosure provisions of ASU 2023-07 as of December 31, 2024 as operations are managed through one reportable segment.

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

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

regarding significant estimates and judgments used in estimating credit losses.

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on the Company’s financial statements.

Recently Issued Accounting Pronouncements

In 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 threshold.

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

Issued Accounting Pronouncements

November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures

(Subtopic (220-40):

Disaggregation of Income Statement Expenses , which requires disclosures that disaggregate, in a tabular presentation,

each relevant expense caption on the face of the income statement that includes inventory purchases, employee compensation, depreciation

and intangible amortization expense.

Additional disclosures are also required to provide a qualitative description of the amounts in

an expense caption that are not separately disaggregated quantitatively and the total amount of selling expenses including a definition.

Public business entities are required to adopt the standard for fiscal years beginning after December 15, 2026 and interim periods within

fiscal years beginning after December 15, 2027.

Disclosures are required for all prior periods presented in the financial statements.

Although the standard requires enhanced disclosures, the adoption is not expected to have a material impact on the Company’s financial

December 2023, the FASB issued ASU 2023-09, 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 threshold.

Public business entities are required to adopt the standard for annual periods beginning

after December 15, 2024.

All other 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.

Notes to Financial Statements

The adoption of the standard is not expected to have a material impact on the Company’s financial statements.

to Financial Statements

Related Party Transactions

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No payments have been received on the notes.

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 $ 1,154,541 as of December 31, 2023.

Since repayment is not assured, the Company has fully reserved for the entire balance of principal and interest.

The current allowance

is $ 1,201,367 as of December 31, 2024.

The current loan balances are as follows:

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Shareholder 2

Principal Balance

Allowance for Collection Risk

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Shareholder 2

Principal Balance

Allowance for Collection Risk

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December 31, 2024

Shareholder 1

Other Convertibles

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Other Convertibles

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

appointment to the Board of Directors.

Company was granted an exclusive, worldwide non-transferable, royalty-free license for the auricular portion of certain patents owned

by a limited liability company in which the Company’s President and Chief Executive Officer and Chief Regulatory, Compliance and

Privacy Officer both maintain an ownership interest.

The license allows for the development, marketing and sales of electro-therapy treatments

by stimulation of cranial nerves, cranial nerve branches, auricular nerves, auricular nerve branches, auricular nerve bundles and auricular

anatomical structures in human patient.

The exclusive license agreement expires on October 18, 2037, may be terminated by either party

upon 60 days prior written notice and requires the Company to pay costs associated with the maintenance, prosecution and continuation

of patent filings.

For the year ended December 31, 2024, the Company paid the limited liability company $ 4,973 .

No costs were incurred

during the year ended December 31, 2023.

No amounts were owed to the limited liability company as of December 31, 2024 and 2023.

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 years ended December 31, 2024 and 2023, the Company paid Mr.

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Watkins as of December 31, 2024 and 2023.

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 $ 312,803 and $ 116,542 for the years ended December 31, 2023 and 2022, respectively.

The Company owed

RBSK for open invoices of $ 84,279 and $ 68,142 that are included in accounts payable as of December 31, 2023 and 2022, respectively.

Notes to Financial Statements

Company’s former Chief Financial Officer provides certain accounting and tax services on a continuous basis through a

third-party public accounting firm.

He is the third-party public accounting firm’s managing partner and majority shareholder.

Fees paid for services were $ 207,103

and $ 312,803

for the years ended December 31, 2024 and 2023, respectively.

The Company owed the third-party accounting firm for open invoices of

that are included in accounts payable as of December 31, 2024 and 2023, respectively.

On June 28, 2024, the Company also issued 20,000

common shares with a fair value $ 55,600

to the former Chief Financial Officer for services rendered during the IPO process.

to Financial Statements

Property and Equipment

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Property and equipment, net

expense was $ 30,240 and $ 30,920 for the years ended December 31, 2023 and 2022, respectively.

expense was $ 26,346 and

the years ended December 31, 2024 and 2023, respectively.

The Company expects to record future depreciation expense totaling $ 13,438 ,

$ 12,344 , $ 11,977 , $ 9,753 , $ 6,259 and $ 14,111 for the years ending December 31, 2025, 2026, 2027, 2028, 2029 and thereafter, respectively.

Intangible Assets

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Intangible assets, net

expense was $ 10,485 and $ 6,213 for the years ended December 31, 2023 and 2022, respectively.

expense was $ 11,485

for the years ended December 31, 2024 and 2023, respectively.

The Company expect to record future amortization expense totaling $ 10,485 , $ 10,485 , $ 10,485 , $ 4,760 , $ 1,941 and $ 8,432 for the years

ending December 31, 2025, 2026, 2027, 2028, 2029 and thereafter, respectively.

The Company’s trademark does not have a determinate life

and therefore the cost is not being amortized.

Accrued Expenses

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Compensation and benefits

Underwriter fees

Related party interest

Advisory fees

Total accrued expenses

Notes Payable

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

The note carried an interest rate of 1 %.

The note shall be paid on the earlier of (i) three months or (ii) the Company receiving financing in the minimum of $ 3,000,000 .

In August 2023, the Company used proceeds from the initial public offering to pay the note back in full, including interest, in

the amount of $ 52,858 .

Notes to Financial Statements

to Financial Statements

Company borrowed $ 250,000 on

December 16, 2021, from Channel Partners Capital.

The note called for 65 weekly payments of $ 4,923 with

December 16, 2021, from Channel Partners Capital (the “2021 Promissory Note”).

The 2021 Promissory Note called for 65

weekly payments of $ 4,923 with

the final payment scheduled for March 16, 2023.

The note’s interest rate computes to a nominal rate of 40.9 %.

The principal outstanding at January 1, 2022 was $ 244,048 .

The Company borrowed $ 122,000 on

September 16, 2022, to bring the principal balance back to $ 250,000 .

After making scheduled payments, 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 December 31, 2023 and 2022 was $ 148,062

and $ 202,834 ,

respectively.

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

September 16, 2022, to bring the 2021 Promissory Note’s principal balance back to $ 250,000 .

After making scheduled payments, the Company borrowed another $ 107,231 on

May 24, 2023, to bring the 2021 Promissory Note’s principal balance back to $ 250,000 once

The terms of the incremental borrowings were the same as the 2021 Promissory Note with the final payment made on August 22,

The principal outstanding as of December 31, 2024 and 2023 was $ 0 and

respectively, with an effective interest rate of 55.9 %.

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

modification to the terms of the existing promissory note 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.

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

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

future minimum principal payments to be paid in 2024 is $ 148,062 .

following table presents a summary of the Company’s convertible notes:

of Convertible Notes

Original issue discount

Debt discount

( 2,841,658 )

Deferred financing fees

From March to July of 2023, the Company conducted

multiple closings of a private placement offering to accredited investors for aggregate gross principal amounts of $ 6,066,667 and net

proceeds of $ 4,908,000 .

The offering consisted of a convertible promissory note that accrues interest at 12 % that can be paid in cash

or PIK and an original issue discount of 10 %.

The convertible promissory notes automatically convert into common shares at a 30 % discount

The notes mature on the sooner of the six-month anniversary date from issuance or a successful IPO on primary exchange in

and include a five-year warrant to purchase common stock equal to fifty percent (50%) of the shares into which the 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.

As facilitators to the 2023 convertible notes,

Signature Bank received a $ 6,000

escrow fee and Alexander Capital, L.P.

received (i) a cash commission of nine percent (9%) of the proceeds raised in the offering

from investors introduced to the Company and (ii) warrants for the purchase of a number of shares of Common Stock equal to 6% of the

number of underlying securities.

Alexander Capital, L.P., received (i) fees totaling $ 546,000

in 2023 which were recorded in deferred financing fees as a reduction to notes payable on the balance sheet and (ii) 120,235

warrants which were recorded at fair value in the warrant liability and debt discounts on the balance sheet.

After the closing of the initial public offering

on August 8, 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 $ 4,115,223

loss to the Company which is recorded in extinguishment of debt liabilities.

In March of 2023, the Company used borrowings from

the 2023 convertible notes to pay the principal balance of some of the 2022 notes totaling $ 2,650,000

which resulted in a $ 1,129,653 gain to the Company which is recorded in extinguishment of debt liabilities.

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

After the closing of the initial public offering on August 8, 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 $ 663,991 loss to the Company which is recorded in extinguishment of debt liabilities.

The remaining investors of the 2022 notes 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 .

Notes to Financial Statements

The convertible notes signed between June 3, 2022

and November 30, 2022 had aggregate gross principal amounts totaling $ 3,333,333 and net proceeds of $ 2,870,000 and consisted of an original

issue discount of 10% with an interest rate of the greater of (i) Prime rate plus 8.5% or (ii) 12%.

The notes convert into common shares

at the lower of (i) $ 9.44 or (ii) a 30 % discount to the price per share of any subsequent offering.

The notes matured on the one-year

anniversary date from issuance and contain a 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 (i) $ 11.80

per share or (ii) a 12.5 % discount to the price per share of any subsequent offering, (c) shares of the Company’s common stock

equal to 10 % of the principal amount of these notes, at a value per share equal to the conversion price.

The 35,318 shares of common

stock issued to investors 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.

The shares 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 debt liabilities.

The convertible notes signed on December 19, 2022

had aggregate gross principal amounts totaling $ 222,222 and net proceeds of $ 200,000 and consisted of an original issue discount of 10 %

of the principal amount with an interest rate of 12 % per annum.

The notes matured 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

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

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 provisions.

February 15, 2023, The Company signed a note with Exchange Listing, LLC in the amount of $ 52,600 (the “2023 Promissory Note”).

The 2023 Promissory Note carried an interest rate of 1 % and was to be paid on the earlier of (i) three months or (ii) the Company receiving

financing at the minimum of $ 3,000,000 .

In August 2023, the Company used proceeds from the IPO to pay the 2023 Promissory Note back in

full, including interest, in the amount of $ 52,858 .

August 9, 2024, the Company entered into a $ 210,000 promissory note to finance the premiums of its annual directors and officers insurance

policy, bearing interest at a rate of 7.40 % per annum and maturing on June 9, 2025 .

On November 1, 2024, the Company entered into

a second promissory note with a principal balance of $ 64,328 to finance premiums of its annual business insurance policies, bearing interest

at a rate of 7.65 % per annum and maturing on September 1, 2025 (collectively referred to as the “2024 Promissory Notes”).

The principal outstanding on 2024 Promissory Notes was $ 154,152 and $ 0 as of December 31, 2024 and 2023, respectively.

Convertible Notes

2022, the Company issued multiple convertible notes with aggregate gross principal amounts totaling $ 3,333,333

and net proceeds of $ 2,870,000

(the “2022 Convertible Notes”).

The 2022 Convertible Notes consisted of an original

issue discount of 10% with an interest rate of the greater of (i) Prime rate plus 8.5% or (ii) 12% resulting in an effective

interest rate of 24.2 %.

The 2022 Convertible Notes converted into common shares at the lower of (i) $ 9.44

or (ii) a 30 %

discount to the price per share of any subsequent offering.

The 2022 Convertible Notes matured on the one-year anniversary date from

issuance and contained a

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

could be converted into at issuance.

The warrants had an exercise price at the lower of (i) $ 11.80

per share or (ii) a 12.5 %

discount to the price per share of any subsequent offering.

convertible notes signed on December 19, 2022 had aggregate gross principal amounts totaling $ 222,222 and net proceeds of $ 200,000 and

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

The notes matured 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 provisions.

investors of the notes signed on December 19, 2022 above 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 $ 239,104 .

The Company paid $ 130,000

in fees to law firms related to the 2022 convertible note offerings and were recorded as deferred financing fees as a reduction to

notes payable on the balance sheet.

The Company has applied ASC 815 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 $ 2,375,378 and $ 2,446,502 , respectively.

See Notes 12 and 13.

The 2023 and 2022 convertible notes transferred

fair value to investors in the form of principal, warrants and common shares totaling $ 11,947,212 .

As the Company received cash proceeds of $ 8,660,000 ,

net of an original issue discount of $ 962,223 , the remaining fair value of incentives in excess of principal of $ 2,234,988

was expensed as finance charges totaling $ 2,772

and $ 2,322,216

for the years ended December 31, 2023 and 2022, respectively.

On August 8, 2023, the Company amortized the remaining original issue

discount, debt discount reflective of the fair value of embedded warrants and financing fees as the 2023 and 2022 convertible notes

were either paid in full or converted to common stock pursuant to the initial public offering.

During the years ended December 31, 2023 and 2022,

the Company accrued interest on these convertible notes totaling $ 399,597 and $ 107,544 , respectively, which was paid or converted into

common stock.

Notes to Financial Statements

Convertible Notes

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

amounts of $ 6,066,667

and net proceeds of $ 4,908,000

(the “2023 Convertible Notes”).

The offering consisted of a convertible promissory note that accrued interest at 12 %

that could be paid in cash or PIK and had an original issue discount of 10 %

resulting in an effective interest rate of 27.5 %.

The 2023 Convertible Notes automatically converted into common shares at a 30 %

discount to the IPO.

The 2023 Convertible Notes matured on the sooner of the six-month anniversary date from issuance or a

successful IPO on primary exchange in the U.S.

and included a

five-year warrant to purchase common stock equal to fifty percent (50%) of the shares into which the 2032 Convertible Notes could be

converted into at issuance.

The warrants had a strike price at a 25 %

premium to the conversion price subject to anti-dilution, issuable on a pro rata basis at each funding.

Company used proceeds from the 2023 Convertible Notes to pay a portion of the principal balance of the 2022 Convertible Notes totaling

$ 2,650,000 which resulted in a $ 1,129,653 gain recorded as a benefit to Extinguishment of Debt Liabilities in the Statements of Operations.

Upon partial repayment, the terms of the remaining 2022 Convertible Notes were amended to accrue interest at 8 % per annum without maturity

or default rights.

The remaining principal balance also automatically converted into shares of common stock at a 27.5 % discount to the

per share offering price in the Company’s IPO, or $ 4.35 per share.

After the closing of the IPO on August 9, 2023, the Company

converted some of the remaining balance of the 2022 Convertible Notes and $ 173,205 of accrued interest into 107,509 shares of common

The shares were issued at a discounted price of $ 4.35 per share resulting in a $ 663,991 loss to the Company recorded as a charge

to Extinguishment of Debt Liabilities in the Statements of Operations.

As the remaining holders of the 2022 Convertible Notes did not

convert, the Company used proceeds from the IPO to pay the remaining balance in full, including interest in the amount of $ 445,544 .

facilitators to the 2023 Convertible Notes, Signature Bank received a $ 6,000 escrow fee and Alexander Capital, L.P.

received (i) a $ 546,000

cash commission representing nine percent (9%) of the proceeds raised in the offering from investors introduced to the Company and (ii)

120,235 warrants for the purchase of a number of shares of Common Stock equal to 6% of the number of underlying securities.

the closing of the IPO on August 9, 2023, the Company converted the 2023 Convertible Notes and $ 226,391 of accrued interest into 1,498,332

shares of common stock.

The shares were issued at a discounted price of $ 4.20 per share that resulted in a $ 4,115,223 loss to the Company

which was recorded as a charge to Extinguishment of Debt Liabilities in the Statements of Operations.

Convertible Notes

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 stockholder approval of an amendment to the Company’s Certificate

of Incorporation to authorize the creation of the Series B Preferred Stock.

The Series B Preferred Stock was 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 would rank senior to the common stock with respect to payments upon the liquidation, dissolution and winding up of the

Due to a delay in the 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, convertible into

Series B Convertible Preferred Stock with identical funding amounts and terms (the “$ 3,000,000

Convertible Promissory Note”).

The shareholder funded $ 800,000

of the $ 3,000,000

commitment in 2024.

Company then proceeded to enter into a series of incremental convertible promissory notes with other investors totaling $ 1,135,000 with

terms identical to the $ 3,000,000 Convertible Promissory Note (collectively referred to as the “Original 2024 Convertible

Promissory Notes”) for an aggregate principal amount of $ 1,935,000 .

2024 Original Convertible Promissory Notes earned interest at 8.5 % per annum payable quarterly in either cash or common stock at the

election of the Company.

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.

Subsequently,

the Company entered into three convertible promissory notes with related institutional accredited investors with terms similar to

the Original 2024 Convertible Promissory Notes (collectively referred to as the “Amended 2024 Convertible Promissory

Notes”) for an additional principal amount of $ 3,000,000 .

Certain provisions to the SPA and Certificate of Designation previously issued on February 12, 2024 changed, including (i) the

number of shares of preferred stock to be designated as Series B Preferred Stock was increased to 4,000,000 shares,

(ii) the stated value of the Series B Preferred Stock was changed to $ 2.38 per

share, (iii) the right to receive dividends will expire automatically on June 30, 2025, (iv) the liquidation rights will

automatically expire on June 30, 2025, and (v) the number of shares of the common stock that a holder of Series B preferred stock is

entitled to receive shall not exceed the maximum percentage chosen by the holder, which is initially set at between 4.99 %

until shareholder approval is obtained, of the number of outstanding shares of the common stock at the time of the conversion of the

Series B Preferred Stock shares.

maturity date was on the earlier of (i) June 21, 2025, (ii) upon written demand occurring on or after March 21, 2025 in the event that

the Series B Preferred Stock has not been duly authorized on or before such date, or (iii) immediately upon the occurrence of an event

Automatic conversion into shares of Series B preferred stock (at a conversion price of $ 2.38 per share) would occur

following the date of shareholder approval.

In the event the Company failed to obtain shareholder approval before August 15, 2024, rights

existed to convert the outstanding amount into shares of the common stock, at a price per share of $ 2.38 .

of August 15, 2024, the Company received $ 4,935,000 of

the principal amount of the Amended 2024 Convertible Notes with the remainder due in monthly installments through March of 2025

resulting in an effective interest rate of 12.5 %.

On August 15, 2024, the Company’s shareholders authorized 5,000,000 shares

of preferred stock of which 4,000,000 shares

were designated as $ 0.001 par

value Series B preferred stock.

Pursuant to the terms of the Amended 2024 Convertible Promissory Notes, the outstanding principal

balance of $ 4,935,000 was

mandatorily converted into 2,073,524 Series

B Preferred Shares at a conversion price of $ 2.38 .

Upon the mandatory conversion, the unamortized debt discount of $ 165,577

was reclassified to Additional Paid-In-Capital in the Statements of Stockholders’ Equity (Deficit).

expense totaled $ 174,328 and $ 476,416 for the years ended December 31, 2024 and 2023, respectively.

The Company’s accrued interest

total $ 66,648 as of December 31, 2024 and 2023.

to Financial Statements

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

6 unchanged sentences

leases at December 31, 2024 and 2023.

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

Company has two leases primarily consisting of office space in Versailles and Carmel, Indiana.

The lease in Versailles, Indiana

started January 1, 2022 and had a term of one year, with automatic one year renewal options, unless 60 day notice of vacating is given.

The current monthly lease payment for this lease is $ 1,800 with a 4 % per annum increase.

A new lease in Carmel, Indiana commenced

January 1, 2024.

The initial term is five years and five months.

The monthly lease payment started at $ 6,721 with an annual increase

As long as the Company is not in default, it is 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

27 unchanged sentences

Common Stock and Warrants

Company authorized 100,000,000 shares

of common stock, of which 6,508,897 and 1,963,322 shares

were issued and outstanding as of December 31, 2023 and 2022, 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 commons

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.

On 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 .

Notes to Financial Statements

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

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

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.

Since the 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 .

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.

The warrant contains certain rights in the event of liquidation,

merger, or consolidation of the Company.

There will be no additional purchase price for the Warrants.

In the event that all

outstanding shares of Series A Preferred Stock are converted, automatically or by action of the holders thereof, into Common Stock,

including, without limitation, in connection with the Company’s initial, underwritten public offering and sale of its Common

Stock pursuant to an effective registration statement under the Act, then from and after the date on which all outstanding shares of

Series A Preferred Stock have been so converted, this Warrant shall be exercisable for such number of shares of Common Stock into

which the Warrant Shares would have been converted had the Warrant Shares been outstanding on the date of such conversion, and the

Exercise Price shall equal the Exercise Price in effect as of immediately prior to such conversion divided by the number of shares

of Common Stock into which one share of Series A Preferred Stock would have been converted, all subject to further adjustment

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

On August 14, 2023, the 144,890 Series A Preferred

Stock warrants were converted to 289,779 common stock warrants after giving effect to the 2-for-1 common stock split.

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 warrants have an exercise price of $ 5.25 per share.

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 at issuance.

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

August 9, 2023, the Company issued 122,202

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

August 14, 2023, the Company issued 186,156

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

Company authorized 100,000,000 shares of common stock, of which 6,990,227 and 6,508,897 shares were issued and outstanding as of December

31, 2024 and 2023, respectively.

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.

the year ended December 31, 2023, the Company issued (i) 1,098,667 common shares issued upon the completion of the IPO on August 9, 2023

at a price of $ 6.00 per share resulting in net proceeds of $ 4,110,677 , (ii) 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, (iii) 1,649,900 common shares

upon conversion of the 2022 and 2023 Convertible Notes, (iv) 425,000 common shares as payment to vendors for services and (v) 127,780

common shares upon the exercise of warrants.

the year ended December 31, 2024, the Company issued (i) 245,955 common shares to settle 2022 Convertible Note and Series A Preferred

Stock holder disputes, (ii) 11,000 common shares upon the exercise of warrants, (iii) 115,145 common shares as payment to vendors for

services, (iv) 59,055 common shares in lieu of interest on the 2024 Convertible Notes, (v) 25,832 shares pursuant to the severance provisions

of an employment agreement and (vi) 24,343 common shares for board service.

to Financial Statements

the year ended December 31, 2023, the Company issued (i) 505,570 five-year warrants to purchase common stock equal to fifty percent (50%)

of the shares into which the 2023 Convertible Promissory Notes could be converted at issuance at an exercise price of $ 5.25 per share,

(ii) 122,202 five year warrants to purchase common stock pursuant an advisory agreement with a consulting firm upon closing of the Company’s

IPO at an exercise price of $ 5.25 per share and (iii) 186,156 five-year warrants to purchase common stock pursuant to an underwriting

agreement upon closing of the Company’s IPO at an exercise price of $ 5.25 per share.

Additionally, investors converted (i) 87,856

warrants into an equivalent number of common shares at an exercise price of $2.38 in exchange for $209,097 in cash proceeds and (ii)

40,000 warrants into 39,924 common shares in a cashless exercise transaction.

the year ended December 31, 2024, the Company issued (i) 38,697 five-year warrants to purchase common stock equal to six percent (6%)

of the aggregate number of Original 2024 Convertible Promissory Note common stock equivalents pursuant to an underwriting agreement at

an exercise price of $ 2.38 per share, (ii) 68,067 five-year warrants to purchase common stock pursuant to an advisory agreement at an

exercise price of $ 2.38 per share.

The Common Stock Purchase Warrant Agreements attached to the 2023 Convertible Promissory Notes contained

anti-dilution provisions on both the exercise price and the number of warrants.

These anti-dilution features were triggered when the

Company issued the Original 2024 Convertible Promissory Notes that contained a conversion price of $ 2.38 per share as compared to the

$ 5.25 per share exercise price in the 2023 Convertible Promissory Note Common Stock Purchase Warrant Agreements.

As a result, the Company

issued 754,660 additional warrants in 2024 to the holders of the 2023 Convertible Promissory Note Common Stock Purchase Warrant Agreements.

Additionally, investors converted 11,000 warrants into an equivalent number of common shares at an exercise price of $2.38 in exchange

for $26,180 in cash proceeds.

The Company also

canceled 30,252 warrants for no consideration in conjunction with an amendment to an advisory agreement.

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

Schedule of Warrant Activity for Common Stock

Number of Warrants for Common

Number of Warrants for Common Stock

Weighted-Avg.

1 unchanged sentence

Weighted-Avg.

Remaining Contractual

Remaining Contractual Life

Outstanding as of January 1, 2023

Cancelled/Expired

Outstanding as of December 31, 2022

Converted Prefunded Warrants

Outstanding as of December 31, 2023

Notes to Financial Statements

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

Outstanding as of December 31, 2024

to Financial Statements

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

Schedule of Warrant Activity for Preferred Stock

1 unchanged sentence

Preferred Stock

Outstanding as of January 1, 2022

Cancelled/Expired

Outstanding as of December 31, 2022

2 unchanged sentences

Outstanding as of December 31, 2023

was no preferred stock warrant activity during the year ended December 31, 2024.

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

Schedule of Warrants outstanding and Exercisable

Investor Warrant W-01

Investor Warrant

September 18, 2028

Investor Warrant PSA-01

Investor Warrant

2022 Convertible Notes

Various in 2027

2023 Convertible Notes

Consulting Agreement Warrants

August 8, 2028

Underwriter’s Warrants

Various in 2028

Underwriter Warrants

August 8, 2028

Advisory Agreement Warrants

Various in 2029

Preferred Stock

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 December 31, 2023 and 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.

Notes to Financial Statements

following is a summary of Preferred Stock terms:

Rights - The Series A Preferred and Series Seed Preferred shall vote together with the Common Stock on an as-converted basis, and

not as separate classes.

- The Series A Preferred and Series Seed initially convert 1:1 to Common Stock at any time at option of holder, subject to adjustments

for stock dividends, splits, combinations, and similar events and as described below under “Anti-dilution Provisions.”

- The Series A Preferred will carry an annual 8 % cumulative dividend, payable upon any liquidation, dissolution or winding up of

the Company (the “Accruing Dividend”).

For any other dividends or distributions, participation with Common Stock on an as-converted

- In the event of any liquidation, dissolution or winding up of the Company, the proceeds shall be paid in the following priority:

to the Series A Preferred in proportion to each holder’s respective pro rata Series A Original Purchase Price, plus any pro rata

share of the Accruing Dividend until the entire Series A Original Purchase Price and Accruing Dividend are paid;

to the Series Seed Preferred in proportion to each holder’s respective pro rata Series Seed Original Purchase Price until the entire

amount of the Series Seed Original Purchase Price is paid;

the Series A Preferred and Series Seed Preferred participate with the Common Stock pro rata on an as-converted basis.

merger or consolidation (other than one in which stockholders of the Company own a majority by voting power of the outstanding shares

of the surviving or acquiring corporation) and a sale, lease, transfer, exclusive license or other disposition of all or substantially

all of the assets of the Company will be treated as a liquidation event (a “Deemed Liquidation Event”), thereby triggering

payment of the liquidation preferences described.

Anti-dilution

Provisions - The Series A Preferred have full-ratchet anti-dilution protection so that the conversion price will be reduced to 80 %

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 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.

As of December 31, 2023, all preferred stock has been converted pursuant to the initial public offering.

Company signed a Convertible Promissory Note on November 8, 2023 for a principal amount of $ 3,000,000

bearing interest at 8.5 %

per annum payable quarterly in either cash or common stock with a 15 month maturity date.

The agreement calls for $ 200,000

monthly installments from January 2024 through March of 2025;

there was no outstanding balance as of December 31, 2023.

The Convertible

Promissory Note allows for a voluntary conversion by the investor into Series B Preferred Stock at $ 2.38

per share any time prior to the maturity date with mandatory conversion by the Company at the maturity date.

The Company shall use

the proceeds solely for working capital and general corporate purposes and not pay any dividends or distributions or to advance any

funds to its officers, directors or affiliates.

Stock Options and Awards

of December 31, 2023, the Company had 1,000,000 and 120,000 shares authorized as Series A and Series Seed Preferred

Stock, respectively, of which zero shares are issued and outstanding for both classes of preferred stock.

The Series A and

Series Seed Preferred Stock (i) voted together with common stock on an as-converted basis, and not as separate classes and (ii) converted

1:1 to common stock at any time at option of holder, subject to adjustments for stock dividends, splits, combinations, and similar events.

The Series A Preferred Stock carried an annual 8 % cumulative dividend, payable upon any liquidation, dissolution or winding up of

For any other dividends or distributions, the Series A Preferred Stock participated with common stock on an as-converted

The Company’s 1,000,000 shares of Series A Preferred Stock and 120,000 shares of Series Seed Preferred

Stock were retired on August 15, 2024.

August 15, 2024, the Company’s shareholders authorized 5,000,000 shares of preferred stock of which 4,000,000 shares

were designated as $ 0.001 par value Series B Preferred Stock.

Series B Preferred Stock shareholders vote with Common Stock shareholders

on an as-converted basis and not as a separate class.

Cumulative dividends accrue at 8.5 % per annum and are due and payable in either

cash for common shares as the Company’s discretion on a quarterly basis through June 30, 2025.

Series B Preferred Stock converts

to common stock on a 1:1 basis, subject to adjustments for stock dividends, splits, combinations and similar events as well as unpaid

dividends thereon, solely at the election of the holder at any time.

to the terms of the Amended 2024 Convertible Notes, the principal balance of $ 4,935,000 on August 15, 2024 was mandatorily converted

into 2,073,524 Series B Preferred Shares at a conversion price of $ 2.38 .

Subsequently, the Company then proceeded to issue 64,913 shares

of Series B Preferred Stock to various investors for $ 154,500 .

November 11, 2024, the Company’s shareholders authorized (i) an increase in the number of designated Series B Preferred Stock

shares and (ii) an extension of the 8.5 %

per annum cumulative dividend period to December 31, 2026.

Subsequently, the Company issued 2,100,840

shares of Series B Preferred Stock to a dedicated life sciences fund for $ 5,000,000

and 41,662 shares of Series B Preferred Stock to various investors for $ 99,164 .

any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the Series B Preferred Stock

shareholders maintain priority preference over all other classes of capital stock.

A merger or consolidation (other than one in

which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring

corporation) and a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the

Company will be treated as a liquidation event, thereby triggering payment of the liquidation preferences.

of December 31, 2024, there were 4,280,939 shares

of Series B Preferred Stock issued and outstanding.

As of December 31, 2024 and 2023, there were no preferred

stock dividends declared or paid.

Series B Preferred Stock undeclared cumulative dividends totaled $ 211,268 ,

or $ 0.05 per share, as of December 31, 2024.

Series B Preferred Stock did not exist during the year ended December 31, 2023.

Stock-Based Compensation

October 12, 2017, the Company adopted the 2017 Stock Compensation Plan authorizing the issuance of 1,435,652 shares of common stock.

15 unchanged sentences

Dividend rate

Notes to Financial Statements

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

to Financial Statements

following is a summary of the outstanding stock options as of December 31, 2024 and 2023:

Schedule of Stock Option Activity

5 unchanged sentences

Aggregate Intrinsic Value

Outstanding as of January 1, 2022

Cancelled/Expired

Outstanding as of December 31, 2023

Cancelled/Expired

Outstanding as of December 31, 2024

Vested and Exercisable as of December 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 years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, there was no unrecognized

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

Total stock-based compensation

expense is classified in the Company’s statements of operations as general and administrative expense totaling $ 227,000

for the years ended December 31, 2024 and 2023, respectively.

The stock compensation incurred during the year ended December 31,

2024 related to a hiring grant of 100,000 common

shares to the Company’s Chief Financial Officer at a fair value of $ 2.27 per share.

Warrant Liabilities

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

of December 31, 2023 and 2022.

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 liability 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 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 %.

interest rate:

The Company uses the risk-free interest rate of a U.S.

Treasury Note adjusted to be on a continuous return basis to align

with the Black-Scholes option-pricing model.

The Company uses a 0 % expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring

dividends in the near future.

Notes to Financial Statements

The Company calculates the expected volatility based on comparable company’s historical stock prices with a look back period commensurate

with the period to maturity.

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

Company has evaluated financial instruments arising from warrants that are issued and outstanding as of December 31, 2024 and 2023.

Company utilizes a Black-Scholes option-pricing model to compute the fair value of the liability and to mark to market the fair value

of the warrant at each balance sheet date.

The inputs utilized in the application of the Black-Scholes option-pricing model included

(i) an exercise price of $ 8.76 per share, (ii) an expected remaining term of each warrant based on the remaining contractual maturity

of the each warrant, (iii) estimated volatility ranging from 75.0 % to 84.5 % based on historical stock prices of comparable companies

with a look back period commensurate with the period to maturity, (iv) a risk-free interest rate ranging from 3.84 % to 4.38 % based on

the interest rates of U.S.

Treasury Notes consistent with the expected remaining contract term and (v) a 0 % expected dividend yield as

the Company has not paid dividends to date and does not anticipate declaring dividends in the near future.

to Financial Statements

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

1 unchanged sentence

Warrant liabilities as of January 1, 2023

Reclassified to equity

( 3,827,807 )

Changes in fair value of warrant liabilities

1 unchanged sentence

Changes in fair value of warrant liabilities

Reclassified to equity

( 3,827,807 )

Warrant liabilities as of December 31, 2024

Derivative Liabilities

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

as of December 31, 2023 and 2022.

Company utilizes a Monte Carlo simulation model for commitment shares 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.

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 70 %, drift, and a risk-free rate ranging from 3.46 % to 5.47 %.

interest rate:

The Company uses the risk-free interest rate of a U.S.

Treasury Note adjusted to be on a continuous return basis to align

with the Black-Scholes option-pricing model.

The Company uses a 0 % expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring

dividends in the near future.

The Company calculates the expected volatility based on comparable company’s historical stock prices with a look back period commensurate

with the period to maturity.

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 years ended December 31, 2023 and 2022.

Company has evaluated derivatives arising from convertible financial instruments as of December 31, 2024 and 2023.

The Company utilized

a Monte Carlo simulation model for commitment shares 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 of $ 7.91 per share, (ii) an expected remaining term of each derivative

based on the remaining contractual maturity of the each derivative, (iii) estimated volatility of 70.0 % based on historical stock prices

of comparable companies with a look back period commensurate with the period to maturity, (iv) a risk-free interest rate ranging from

3.46 % to 5.47 % based on the interest rates of U.S.

Treasury Notes consistent with the expected remaining contract term and (v) a 0 % expected

dividend yield as the Company has not paid dividends to date and does not anticipate declaring dividends in the near future and (vi)

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

Schedule of Changes in Derivative Liabilities

Derivative liabilities as of January 1, 2022

Changes in fair value of Derivative liabilities

Derivative liabilities as of December 31, 2022

3 unchanged sentences

Derivative liabilities as of December 31, 2023

Notes to Financial Statements

were no derivatives identified during the year ended December 31, 2024.

to Financial Statements

Retirement Plan

2 unchanged sentences

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

The Company matches the employees’ contribution up to 3 %.

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

Expense totaled $ 6,980 and $ 17,183

for years ended December 31, 2023 and 2022, respectively.

The Company can also make a 3 % discretionary profit-sharing contribution on

an annual basis to employees with earnings under a certain threshold.

Profit sharing expense totaled $ 20,868 and $ 6,980 for years ended

December 31, 2024 and 2023, respectively.

Segment Information

The Company evaluates the following factors to identify its reportable segments:

(i) nature of products and services, (ii) type of customer

for the products and services, (iii) sales, production and distribution methods of the products and services and (iv) the nature of the

regulatory environment, if applicable.

Based on an evaluation of these factors, management concluded that the Company’s operations are managed through one reportable segment, IB-STIM, that derives its revenues in the United States from a

PENFS device that is used to treat patients 8-21 years of age with functional abdominal pain associated with irritable bowel syndrome.

IB-STIM currently is the only product marketed and sold by the Company.

The accounting policies of the IB-STIM segment are the same as

those described in the Summary of Significant Accounting Policies (see Footnote 2).

The CODM regularly evaluates the performance of the

IB-STIM segment for the purpose of allocating resources based on net sales and operating loss, both of which are reported in the Statements

of Operations.

The CODM uses net sales to evaluate IB-STIM’s adoption and utilization by insurance carriers and physicians.

Neuraxis is an emerging growth company, operating loss is used to monitor the Company’s cost structure in order to achieve future

segment profitability.

Both net sales and operating loss are measured against the budget on a periodic basis to assess achievement toward

annual compensation incentive targets.

The Company’s CODM is its Chief Executive Officer.

following reconciles the reportable segment net sales and operating loss to the Company’s reported net loss:

of Reconciles the Company’s Net Sales and Operating Loss

For the Years Ended December 31,

Cost of Goods Sold

Selling Expenses (a)

Research and Development (a)

Wages and Benefits (a)

Professional Services (a)

Other Operating Expenses (a) (b)

Segment Operating Loss

( 7,156,817 )

( 6,664,495 )

Other (Expense) Income:

Financing charges

Interest expense

Change in fair value of warrant liability

Change in fair value of derivative liability

Amortization of debt discount and issuance cost

( 4,881,622 )

Extinguishment of debt liabilities

( 3,649,561 )

Other expense

Total other (expense) income, net

( 1,084,684 )

( 7,962,188 )

$ ( 8,241,501 )

$ ( 14,626,683 )

significant expense categories and amounts align with the segment-level information provided

on a regular basis to the CODM.

operating expenses include advertising, rent and utilities, insurance, depreciation and

amortization, travel, software subscription fees, board fees and bad debt expense.

segment assets for IB-STIM amounted to $ 4,757,572

and $ 509,498 as of December 31, 2024 and 2023,

respectively.

Total segment capital expenditures for IB-STIM amounted to $ 27,776

for the years ended December 31, 2024 and 2023, respectively.

Total segment depreciation and amortization amounted to $ 37,831 and $ 40,725 for the years ended December 31, 2024 and 2023, respectively.

Significant segment non-cash charges settled in common stock

include (i) consulting and advisory fees totaling $ 754,685 and $ 750,000 for the years ended December 31, 2024 and 2023, respectively,

and (ii) hiring grants totaling $ 227,000 and $ 0 for the years ended December 31, 2024 and 2023, respectively.

Commitments and Contingencies

1 unchanged sentence

Services Agreement

August 21, 2020, the Company entered into a Manufacturing Services Agreement (MSA) for the manufacture and supply of the Company’s

IB-STIM device based upon the Company’s product specifications as set forth in the MSA.

This agreement terminated any prior manufacturing

Company provides the necessary equipment to the manufacturer and retains ownership.

The manufacturer bears the risk of loss of and damage

to the equipment and consigned materials.

Performance under the MSA is initiated by orders issued by the Company and accepted by the

manufacturer.

term of the MSA is 24 months and shall automatically renew for renewal terms of twelve months unless either party provides a written

termination notice to the other party within 180 days prior to the end of the then-current term.

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.

Company is party to a manufacturing services agreement for the manufacture and supply of the Company’s IB-STIM device based on

the Company’s product specifications that automatically renews annually unless either party provides a written termination notice

to the other party within 180 days prior to the end of the then-current term.

The Company provides the necessary equipment to the manufacturer

and retains ownership.

The manufacturer bears the risk of loss of and damage to the equipment and consigned materials.

Performance under

the agreement is initiated by orders issued by the Company and accepted by the manufacturer.

March 18, 2024, the Company terminated its private placement services agreement and entered into an advisory agreement with a financial

advisor for debt, equity and public securities market services for one year.

The advisory agreement included 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.

On December 31, 2024, the

Company and the financial advisor terminated the advisory agreement subject to the cancelation of all common stock warrants issued after

July 2024 and the payment for services rendered in three equal installments of $ 60,000 by March 26, 2025.

Company issued 245,955 shares of common stock to various pre-IPO 2022 Convertible Note and Series A Preferred Stock holders to settle

certain claims.

The Company recorded the fair value of the settlements as $ 230,824 of Finance Charges and $ 580,250 of Other Expense in

the Statements of Operations.

the Company authorized the issuance of 1,518 shares of its common stock to settle remaining claims with one pre-IPO Series A Preferred

Stock shareholder classified as $ 4,220 of Other Expense for the year ended December 31, 2024 in the Statements of Operations and accrued

expenses in the Balance Sheets as of December 31, 2024.

These common shares have not yet been issued as of the reporting date as the

Company awaits execution of the settlement agreements by the counterparties.

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 $ 1,920,000

per year with various provisions for annual increases.

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

1 unchanged sentence

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.

The amount for backpay of $ 417,390 was accrued

as of December 31, 2022 and paid in the year ended December 31, 2023.

The special incentive payment amount includes

any accrued backpay wages for the employee.

The amount for backpay of $ 417,390 was paid in the year ended December 31, 2023.

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

8 unchanged sentences

None of the key employees

exercised the options on January 2, 2024

exercised any of options as of January 2, 2025.

April 2023, the Company amended the employee agreements to, among other things, clarify that the special one-time incentive payment and

3 unchanged sentences

employment agreement and to clarify that there is no modification to the stock option agreements.

Notes to Financial Statements

The Company has recorded the backpay portion of the incentive

bonus notes above.

The balance of the incentive bonuses of $ 694,056 and the special options bonuses of $ 14,821,830 were contingent upon

a successful IPO.

The incentive bonuses have been paid in full while the special options bonuses will be recorded when paid.

From time to time, the Company may be involved

in litigation relating to claims arising out of operations in the normal course of business.

As of the date of issuance, other than those

described below, there were no pending or threatened legal proceedings that could reasonably be expected to have a material effect

on the results of the Company’s operations.

There are also no proceedings in which any of the Company’s directors,

officers or affiliates is an adverse party to the Company or has a material interest adverse to the Company’s interest.

On February 6, 2019, plaintiff Ritu Bhambhani, M.D.,

initiated a lawsuit against Innovative Health Solutions, Inc.

and others in the United States District Court for the District of Maryland.

Plaintiffs Bhambhani and Sudhir Rao subsequently amended the complaint, with the Third Amended Complaint (“Complaint”) containing

the most recent set of allegations.

The Complaint asserted claims under the RICO Act, as well as of fraudulent misrepresentation, intentional

misrepresentation by concealment, and civil conspiracy and sought compensatory damages in excess of $ 5 million, pre-judgment interest,

punitive damages, attorney’s fees, court costs and designation of the case as a class action.

The Complaint states that the Company,

distributors of the Company’s product, and medical billing and coding consultants allegedly made misrepresentations to the plaintiffs

that the Company’s NeuroStim device and related procedures could be billed to, and reimbursed by, Medicare and other insurance payors

as a surgically implantable neurostimulator.

Plaintiffs claim to have suffered damages when Medicare administrative contractors declined

to pay plaintiffs for their use of the device.

On February 11, 2022, the Company filed a motion for

summary judgment based upon the plaintiffs not being proper parties to assert claims against the Company.

On June 14, 2022, the Court

granted the Company’s motion for summary judgment and dismissed the Complaint.

On July 14, 2022, plaintiffs Ritu Bhambhani and Sudhir

Rao filed a notice of appeal with the Fourth Circuit Court of Appeals.

The Company filed a motion to dismiss.

On January 4, 2023,

the Court issued an order that stated it was deferring a ruling on the motion to dismiss the appeal and that it would address those

arguments at the same time that it addressed the substantive merits of the case.

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

meritorious defenses, that the dismissal of the Complaint should be upheld, and intend to continue to defend this matter vigorously.

to Financial Statements

Company recorded the backpay portion of the incentive bonus notes above.

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

options bonuses of $ 14,821,830 were contingent upon a successful IPO.

The incentive bonuses have been paid in full while the special

options bonuses will be recorded when paid.

April 10, 2024, the Company terminated the employment of the Company’s Chief Operating Officer.

Pursuant to the employment agreement,

the Company made (i) make salary continuation payments for six months during the year ended December 31, 2024, (ii) issued 25,832 shares

of common stock at a fair value of $ 78,788 and (iii) made a $ 41,980 one-time payment in lieu of the exercise of 13,764 stock options

that expired on January 2, 2024.

The Company is obligated to provide health care coverage through October 2025 and has accrued for that

obligation totaling $ 21,418 classified as Accrued Expenses in the Balance Sheets as of December 31, 2024.

time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business.

As of the date of issuance, other than those described below, there were no pending or threatened legal proceedings that could reasonably

be expected to have a material effect on the results of the Company’s operations.

There are also no proceedings in which any of

the Company’s directors, officers or affiliates is an adverse party to the Company or has a material interest adverse to the Company’s

Legal fees are expensed as incurred.

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

and others in the United

States District Court for the District of Maryland.

Plaintiffs Bhambhani and Sudhir Rao subsequently amended the complaint, with the

Third Amended Complaint (“Complaint”) containing the most recent set of allegations.

The Complaint asserted claims under

the RICO Act, as well as of fraudulent misrepresentation, intentional misrepresentation by concealment, and civil conspiracy and sought

compensatory damages in excess of $ 5 million, pre-judgment interest, punitive damages, attorney’s fees, court costs and designation

of the case as a class action.

The Complaint stated that the Company, distributors of the Company’s product, and medical billing

and coding consultants allegedly made misrepresentations to the plaintiffs that the Company’s NeuroStim device and related procedures

could be billed to, and reimbursed by, Medicare and other insurance payors as a surgically implantable neurostimulator.

Plaintiffs claim

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

February 11, 2022, the Company filed a motion for summary judgment based upon the plaintiffs not being proper parties to assert claims

against the Company.

On June 14, 2022, the Court granted the Company’s motion for summary judgment and dismissed the Complaint.

July 14, 2022, plaintiffs Ritu Bhambhani and Sudhir Rao filed a notice of appeal with the Fourth Circuit Court of Appeals.

2024, the Fourth Circuit denied the plaintiff’s appeal and entered judgment against the plaintiffs.

On June 25, 2024, the Fourth

Circuit entered its mandate declaring that its judgment against the plaintiffs took effect that day.

The plaintiffs did not seek any

further review or appeal of that judgment.

on July 14, 2022, plaintiffs Ritu Bhambhani, LLC;

1 unchanged sentence

Pain and Spine Specialists of Maryland, LLC;

and SimCare ASC, LLC initiated a lawsuit against the Company

and others in the United States District Court for the District of Maryland.

The plaintiffs in this lawsuit are business entities owned

or partially owned by the plaintiffs that initiated the litigation described above.

The Complaint asserted claims under the RICO Act,

as well as fraudulent misrepresentation, intentional misrepresentation by concealment, and civil conspiracy and seeks compensatory damages

in excess of $ 75,000 , pre-judgment interest, punitive damages, attorney’s fees, and court costs.

The Complaint states that the Company,

distributors of the Company’s product, and medical billing and coding consultants allegedly made misrepresentations to the plaintiffs

that the Company’s NeuroStim device and related procedures could be billed to, and reimbursed by, Medicare and other insurance payors

as a surgically implantable neurostimulator.

Plaintiffs claim to have suffered damages when Medicare administrative contractors declined

to pay plaintiffs for their use of the device.

On September 28, 2022, the Company filed a motion to dismiss all

On May 25, 2023, the Court issued an Order and a Memorandum Opinion which dismissed the plaintiffs’claims related to the

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.

Notes to Financial Statements

ASC, LLC initiated a lawsuit against the Company and others in the United States District Court for the District of Maryland.

The plaintiffs

in this lawsuit are business entities owned or partially owned by the plaintiffs that initiated the litigation described above.

The Complaint

asserted claims under the RICO Act, as well as fraudulent misrepresentation, intentional misrepresentation by concealment, and civil

conspiracy and seeks compensatory damages in excess of $ 75,000 , pre-judgment interest, punitive damages, attorney’s fees, and court

The Complaint states that the Company, distributors of the Company’s product, and medical billing and coding consultants

allegedly made misrepresentations to the plaintiffs that the Company’s NeuroStim device and related procedures could be billed

to, and reimbursed by, Medicare and other insurance payors as a surgically implantable neurostimulator.

Plaintiffs claim to have suffered

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

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 plaintiffs’ 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 mediator.

Mediation has not yet resulted in a

resolution of the case.

to Financial Statements

In January 2024, Dr.

Arturo Taca served notice to the Company that asserted

an interest in its U.S.

10,413,719 valued at $ 2,000,000 based on his own work in neurostimulation.

The Company denied

both the neurostimulation patent and compensation claims.

The case remains unresolved.

While it is too early to predict

the ultimate outcome of these matters, we believe the Company has meritorious defenses and intends to defend these matters vigorously.

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

Company participates in a self-funded employer program in conjunction with a group health plan for the benefit of eligible employees.

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

14 unchanged sentences

This amount is recognized by the Company when received.

The Inflation Reduction Act (IRA) was signed

into law on August 16, 2022, imposing a 15% corporate alternative minimum tax on adjusted financial statement income and a 1% excise

tax on stock repurchases after January 1, 2023.

The IRA did not have an impact on the Company’s 2023 or 2022 financial

The Tax Cuts and Jobs Act (TCJA) requires taxpayers

to capitalize and amortize research and developmental (“R&D”) expenditures undersection 174 for tax years beginning after

December 31, 2021 and, therefore, became effective for the Company during the year ended December 31, 2022.

The TCJA resulted in the capitalization

of R&D costs of $ 169,315 and $ 225,466 for tax purposes for the years ended December 31, 2023 and 2022, respectively.

The Company is

amortizing these costs over 5 years if the R&D was performed in the U.S.

and over 15 years if the R&D was performed outside the

The Company did not recognize a current provision for income taxes for 2023 and 2022 since there were net operating losses reported

in both years.

Deferred income taxes are provided for temporary

differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities.

Differences are primarily

attributable to net operating loss carryforwards and stock-based compensation.

The Company does not reflect any deferred taxes in its financial

statements due to a full valuation allowance.

The net deferred tax amounts include the following components:

Schedule of Deferred Tax Asset

December 31, 2023

December 31, 2022

Net deferred tax assets - Non-current

Accrual to cash

Stock based compensation

Expected income tax benefit from NOL carry-forwards

Less valuation allowance

income tax provision consists of:

of Income Tax Provision

For the Years Ended December 31,

Total current provision

( 1,721,242 )

( 3,067,056 )

Deferred tax assets, net of valuation allowance

Notes to Financial Statements

reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income

taxes is as follows:

Total deferred benefit

( 1,596,419 )

( 3,221,116 )

Valuation allowance

Total income tax provision

reconciliation of the U.S.

federal statutory income tax rate to the effective income tax rate is as follows:

Schedule of Federal Statutory Income Tax Rate and Effective Income Tax Rate

For the Years Ended December 31,

Federal statutory income tax rate

State tax rate, net of federal benefit

Nondeductible expenses

Nontaxable income

Change in valuation allowance on net deferred tax assets

Change in valuation allowance

Effective income tax rate

Company had no income tax expense due to the operating loss incurred for the years ended December 31, 2023 and 2022.

Company’s management has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax

assets and has determined that it is more likely than not that the Company will not recognize the benefits of the net deferred tax

As a result, the Company recorded a full valuation allowance at December 31, 2023 and 2022.

The valuation allowance

increased by $ 3,221,116

and $ 1,136,470 for the years ended December 31, 2023 and 2022, respectively, primarily due to net operating loss (NOL)

carryforwards.

December 31, 2023, the Company had federal and state net operating loss (NOL) carryforwards totaling $ 28,238,445 and $ 25,543,000 , respectively.

These loss carryforwards may be offset against future taxable income.

There is no limitation on the number of years to utilize the federal

The federal deduction will be limited to 80% of modified taxable income.

The state NOL allows up to 100% of taxable income to be

offset and can be carried forward no longer than 20 years after the year of the taxable loss.

and state tax laws impose limitations on the utilization of NOLs and credit carryforwards in the event of an ownership

change for tax purposes, as defined in Section 382 of the Internal Revenue Code.

Accordingly, the Company’s ability to utilize

these carryforwards may be limited as a result of an ownership change.

an ownership change could result in a limitation in the use of the net operating losses in future years and possibly a reduction of the

net operating losses available.

not used, the state carryforwards will expire as follows:

Schedule of State Carryforwards

State Carryforwards

Subsequent Events

Company evaluated events through the date of issuance.

Subsequent to December 31, 2023, the Company entered into a series of

Convertible Promissory Notes totaling $ 3,135,000

with terms identical to the $ 3,000,000 Convertible Promissory Note issued on November 8, 2023 (see Footnote 10).

The Company has

received $ 1,535,000

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

The Convertible Promissory Notes bear interest at 8.5 % per annum payable quarterly in either cash or common

The Convertible

Promissory Notes contain a provision that allows for a voluntary conversion by the investors into Series B Preferred Stock at $ 2.38

per share any time prior to the maturity date with mandatory conversion by the Company at the maturity date.

The Company shall

use the proceeds solely for working capital and general corporate purposes and not pay any dividends or distributions or to advance

any funds to its officers, directors or affiliates.

Restatement of Interim Financial Statements (Unaudited)

In connection with the preparation of the Company’s

financial statements as of and for the year ended December 31, 2023, management identified a material accounting error in the unaudited

interim financial statements as of and for the three and nine month periods ended September 30, 2023 relating to the improper classification

of the reduction of the fair value of warrant liabilities as a reduction to the extinguishment of debt charge on the Statement of Operations

rather than an increase to additional paid in capital on the Balance Sheet.

Upon the consummation of the Company’s IPO,

the exercise price of certain warrants issued prior to the IPO became known.

As a result of the exercise price becoming known, our warrant

liability was reduced by $ 3,721,007 .

This warrant liability reduction should have triggered a reclassification to additional paid in capital

instead of an extinguishment of debt charge.

This accounting error resulted in a (i) $ 3,721,007 understatement of the extinguishment of

debt expense on the Statement of Operations, (ii) $ 3,721,007 understatement of the net loss on the Statement of Operations, and (iii)

$ 3,721,007 understatement of additional paid in capital on the Balance Sheet as of and for the three and nine month periods ended September

The Board of Directors of the Company, upon the recommendation

of the Audit Committee and after discussion with management, concluded that the Company’s previously issued unaudited financial

statements as of and for the three and nine month periods ended September 30, 2023 should no longer be relied upon and should be restated

due to identification of the material accounting error.

The following tables present the amounts previously reported, the restatement

impact and the restated amount in the respective unaudited financial statements.

of Restatement of Interim Financial Statements (Unaudited)

As of September 30,

Current assets:

Cash and cash equivalents

Accounts receivable, net

Prepaid and other current assets

Total current assets

Property and equipment, at cost

Less - accumulated depreciation

Property and equipment, net

Operating lease right of use asset, net

Intangible assets

Liabilities and Stockholders’ Deficit

Current liabilities:

Accounts payable

Accrued expenses

Notes payable

Current portion of operating lease payable

Customer deposits

Share liabilities

Warrant liabilities

Total current liabilities

Operating lease payable, net of current portion

Total liabilities

Stockholders’ deficit:

Convertible Series A preferred stock

Convertible Series Seed preferred stock

Additional paid in capital

Accumulated deficit

( 43,244,806 )

( 3,721,007 )

( 46,965,813 )

Total stockholders’ deficit

( 1,061,087 )

Total liabilities and stockholders’ deficit

of Operations

For the Three Months Ended September 30, 2023

Nine Months Ended September 30, 2023

Cost of goods sold

Selling expenses

Research and development

General and administrative

Operating loss

( 3,022,339 )

( 5,041,290 )

Other (expense) income, net:

Financing charges

Interest expense

Interest income

Change in fair value of warrant liability

Change in fair value of derivative financial instruments

Amortization of debt discount and issuance cost

( 1,331,030 )

( 4,881,622 )

Extinguishment of debt liabilities

( 1,058,062 )

( 3,721,007 )

( 4,779,069 )

( 3,721,007 )

( 3,649,571 )

Other expense

Total other (expense) income, net

( 1,882,017 )

( 3,721,007 )

( 5,603,024 )

( 4,272,088 )

( 3,721,007 )

( 7,993,095 )

$ ( 4,904,356 )

$ ( 3,721,007 )

$ ( 8,625,363 )

$ ( 9,313,378 )

$ ( 3,721,007 )

$ ( 13,034,385 )

of Cash Flows

For the Nine Months Ended September 30, 2023

Cash flows from operating activities

$ ( 9,313,378 )

$ ( 3,721,007 )

$ ( 13,034,385 )

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

Amortization of debt discount and issuance cost

Depreciation and amortization

Provision for losses on accounts receivable

Non-cash lease expense

Non-cash interest expense

Company did not recognize an income tax provision for the years ended December 31, 2024 and 2023 due to net operating losses reported

in both years.

income taxes are provided for temporary differences between the financial and tax bases of the Company’s assets and liabilities.

The temporary differences that give rise to net deferred tax assets and liabilities were as follows:

of Net Deferred Tax Assets and Liabilities

Deferred tax assets:

Net operating losses

Stock based compensation

Extinguishment of derivative liability

Issuance of common stock for non-cash consideration

Finance charges

Change in fair value of derivative liabilities

Change in fair value of warrant liabilities

Changes in operating assets and liabilities:

Accounts receivable

Prepaids and other current assets

Notes receivable reserve

Accrued compensation

Accounts payable

( 1,025,467 )

Accrued expenses

Customer deposits

Operating lease liability

Net cash used by operating activities

( 4,064,419 )

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

( 2,417,185 )

Principal payments on notes payable

Operating lease payable

Total gross deferred tax assets

Valuation allowance

( 10,225,739 )

( 8,629,320 )

Proceeds from notes payable

Proceeds from convertible notes, net of fees

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

Total deferred tax assets

Deferred tax liabilities:

Operating lease right of use asset

Prepaid expenses

Accounts receivable

Total deferred tax liabilities

Deferred tax assets, net

to Financial Statements

assessed the realizability of its deferred tax assets and determined that it is more likely than not that the Company will not recognize

the benefits of the net deferred tax assets due to a history of operating losses.

As a result, the Company maintained a full valuation

allowance and does not reflect any deferred taxes in its Balance Sheets as of December 31, 2024 and 2023.

December 31, 2024, the Company’s federal and state net operating loss (NOL) carryforwards totaled $ 36,202,858

and $34 ,748,524 respectively.

These NOL carryforwards

may be offset against future taxable income.

There is no limitation on the number of years to utilize the federal NOLs.

The federal deduction

will be limited to 80% of modified taxable income.

The state NOLs are allowed up to 100 %

of taxable income and generally can be carried forward no longer than 20 years after the year of the taxable loss.

and state tax laws impose limitations on the utilization of NOLs and credit carryforwards in the event of an ownership change for tax

purposes, as defined in Section 382 of the Internal Revenue Code.

Accordingly, the Company’s ability to utilize these carryforwards

may be limited as a result of an ownership change.

Such an ownership change could result in a limitation in the use of the NOLs in future

years and possibly a reduction of the net operating losses available.

not used, the state NOL carryforwards will expire as follows:

Schedule of State Carryforwards

No expiration

Total state NOL carryforwards

Company believes it has made adequate provision for all income tax uncertainties.

The assessment is subject to change based on the completion

of audits or statute of limitation expirations.

federal and state income tax returns have a three-year statute of limitations once filed with the appropriate jurisdiction.

The Company’s

income tax returns are subject to examination by the federal and state taxing authorities in the United States for the years ended 2021

through 2024 and 2021 through 2024, respectively.

Subsequent Events

On January 3, 2025 and March 6, 2025,

the Company granted 360,902

and 373,275 restricted stock units (“RSUs”), respectively, pursuant to the Neuraxis, Inc.

2022 Omnibus Securities and Incentive

Plan as amended on August 15, 2024.

The RSUs cliff-vest at the end of a three year period and are payable in shares of the Company’s

common stock.

The RSUs fully vest upon (i) death or disability or (ii) change of control.

Dividend equivalents accrue on RSUs and are

paid upon vesting;

there were no accrued dividends on unvested RSUs as of the report date.

January 17, 2025, the Company issued 39,471 common

shares to its independent board members for their service from April 1, 2024 through December 31, 2024 and an investor converted

502,647 warrants into 186,166 common shares in a cashless exercise transaction.

Company has evaluated subsequent events through the filing of this Annual Report on Form 10-K and determined that there have been no

other events that have occurred that would require adjustments to our disclosures in the financial statements.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.

April 16, 2024

March 20, 2025

Brian Carrico

Executive Officer

April 16, 2024

March 20, 2025

Financial Officer

3 unchanged sentences

Executive Officer and Director

April 16, 2024

March 20, 2025

Executive Officer)

Financial Officer (Principal

April 16, 2024

March 20, 2025

Officer and Principal Accounting Officer)

Christopher Robin Brown

April 16, 2024

March 20, 2025

Bradley Mitch Watkins

April 16, 2024

March 20, 2025

Mitch Watkins

April 16, 2024

Kristin Ferge

March 20, 2025

Kristin Ferge

March 20, 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-K

Item 9A. Controls and Procedures