What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-10 compared with 2025-08-12 · 139 added, 130 removed, 79 unchanged (77% of the section changed)

20 unchanged sentences

our inception, we have incurred significant operating losses.

Our net loss was $1,690,418 and $2,917,710 for the three months ended June

30, 2025 and 2024, respectively, and $3,969,102 and $5,038,361 for the six months ended June 30, 2025 and 2024, respectively.

we had stockholders’ equity of $4,253,294 as of June 30, 2025, our auditors have expressed substantial doubt about our ability

Our net loss was $2,122,796 and $1,755,234 for the three months ended September

30, 2025 and 2024, respectively, and $6,091,898 and $6,793,596 for the nine months ended September 30, 2025 and 2024, respectively.

we had stockholders’ equity of $2,284,941 as of September 30, 2025, our auditors have expressed substantial doubt about our ability

to continue as a going concern in their audit opinion.

1 unchanged sentence

future as we continue to pursue widespread insurance coverage of our IB-Stim device and seek FDA clearance of our device for other indications

as we also fund sales and marketing efforts to expand the adoption of RED.

There are a number of milestones and conditions that we must

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

treat future indications.

as we also fund selling and marketing efforts to expand the adoption of RED.

There are a number of milestones and conditions that we

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

to treat future indications.

Affecting our Business and Results of Operations

13 unchanged sentences

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

Given the current

economic environment, we cannot predict whether inflation will have a material impact on our operations for the foreseeable future.

the current economic environment, we cannot predict whether inflation will have a material impact on our operations for the foreseeable

Profit and Gross Margin

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

effectiveness and allocation of resources.

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

profit divided by net sales.

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

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

costs related to components of our devices and cost-reduction strategies.

We expect our gross profit to increase for the

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

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

Our gross margin may fluctuate from quarter

to quarter due to changes in average selling prices and the mix of patient healthcare coverage (e.g.

discounts are provided to lower

income patients without healthcare insurance), particularly as we introduce enhancements to our IB-Stim device and new products to

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

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

and allocation of resources.

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

by net sales.

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

of our IB-Stim and RED devices, production volume, order flows, change in mix of customers, third-party manufacturing costs related to

components of our devices and cost-reduction strategies.

We expect our gross profit to increase for the foreseeable future as our net

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

of other indications over the longer term.

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

and the mix of patient healthcare coverage (e.g.

discounts are provided to lower income patients without healthcare insurance), particularly

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

and technologies.

have four categories of expenses:

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

of goods sold consist of costs paid for the IB-Stim and RED devices to our contract manufacturers along with shipping and handling

costs and expired inventory charges.

Expired inventory expense is related to the FDA clearance period from the date our devices are

manufactured, and if the device is not sold in such period, a reserve is recorded.

Expired and other inventory charges totaled

$12,174 and $12,174 for the three and six months ended June 30, 2025, respectively.

There was no expired inventory for the three and

six months ended June 30, 2024.

of goods sold consist of costs paid for the IB-Stim and RED devices to our contract manufacturers along with shipping and handling costs

and expired inventory charges.

Expired inventory expense is related to the FDA clearance period from the date our devices are manufactured,

and if the device is not sold in such period, a reserve is recorded.

Expired and other inventory charges totaled $11,598 and $2,030 for

the three months ended September 30, 2025 and 2024, respectively, and $24,339 and $2,030 for the nine months ended September 30, 2025

and 2024, respectively.

We have fixed-price contracts with the manufacturers of our devices.

core selling expenses primarily consist of commissions.

and development expense is attributable to our clinical trials and related efforts to have our IB-Stim and RED devices cleared by the

FDA for other indications.

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

syndrome and cyclic vomiting syndrome in children.

selling expenses primarily consist of advertising, marketing and promotion of the Company’s products including salaries and related

personnel costs and travel expenses.

The Company reclassified $243,093 and $786,546 of General and Administrative Expenses to Selling

Expenses in the Condensed Statements of Operations for the three and nine months ended September 30, 2024, respectively, to conform to

current period presentation.

and development expenses consist primarily of clinical research studies, new product development, costs of materials and supplies used

in research and development activities and salaries and related personnel costs for employees engaged in research and development activities

to have our IB-Stim and RED devices cleared by the FDA for other indications.

The Company reclassified $53,825 and $164,396 of General

and Administrative Expenses to Research and Development Expenses in the Condensed Statements of Operations for the three and nine months

ended September 30, 2024, respectively, to conform to current period presentation.

We expect to incur future research

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

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

advertising, facility costs, utilities and travel costs.

facility costs, utilities and travel costs.

of Operations

following table presents our statements of operations for the three and six months ended June 30, 2025 and 2024, respectively:

Months Ended June 30,

following table presents our statements of operations for the three and nine months ended September 30, 2025 and 2024, respectively:

September 30,

of goods sold

Selling expenses

Research and development

and development

and administrative

Operating loss

Financing charges

Interest expense, net

Change in fair value of warrant

Amortization of debt discount

and issuance costs

other income (expense), net

(expense) income:

in fair value of warrant liability

of debt discount and issuance costs

other (expense) income, net

$ (2,122,796 )

2 unchanged sentences

$ (6,793,596 )

sales increased $282,586, or 46.2%, from $611,500 for the three months ended June 30, 2024, to $894,086 for the three months ended

June 30, 2025, and increased $531,606, or 42.3%, from $1,258,135 for the six months ended June 30, 2024, to $1,789,741 for the

six months ended June 30, 2025.

The increases were due to volume growth from customers with full health insurance reimbursement

coverage and those participating in our financial assistance programs that provide discounts to patients without insurance coverage

and device sales from the Company’s launch of its RED product in 2025.

sales increased $144,789, or 21.7%, from $666,625 for the three months ended September 30, 2024, to $811,414 for the three months ended

September 30, 2025, and increased $676,395, or 35.1%, from $1,924,760 for the nine months ended September 30, 2024, to $2,601,155 for

the nine months ended September 30, 2025.

The increases were due to volume growth from (i) customers with full health insurance reimbursement

coverage and those participating in our financial assistance programs that provide discounts to patients without insurance coverage and

(ii) device sales from the Company’s launch of its RED product in 2025.

Unit growth from the discounted financial assistance programs

outpaced the full health insurance reimbursement programs.

Profit and Gross Margin

profit increased $209,401, or 38.9%, from $538,042 for the three months ended June 30, 2024, to $747,443 for the three months ended June

30, 2025, due to higher sales volume.

Despite the increase in sales volume, the decrease in gross margin from 88.0% for the three months

ended June 30, 2024, to 83.6% for the three months ended June 30, 2025, was due to higher discounting in the Company’s financial

assistance programs provided to patients without health insurance coverage and expired RED inventory.

profit increased $394,027, or 35.5%, from $1,109,596 for the six months ended June 30, 2024, to $1,503,623 for the six months ended

June 30, 2025, due to higher sales volume.

Despite the increase in sales volume, gross margin decreased from 88.2% for the six

months ended June 30, 2024, to 84.0% for the six months ended June 30, 2025, due to higher growth of the financial assistance

programs versus the full reimbursement patients, higher discounting in the Company’s financial assistance programs provided to

patients without health insurance coverage and expired RED inventory.

expenses increased $79,979, or 128.4%, from $62,274 for the three months ended June 30, 2024, to $142,253 for the three months ended

June 30, 2025, and increased $133,902, or 94.1%, from $142,304 for the six months ended June 30, 2024, to $276,206 for the

six months ended June 30, 2025.

The increases were due to higher sales volume and a temporary commission structure to facilitate growth

and adoption in new states.

profit increased $106,352, or 18.7%, from $569,575 for the three months ended September 30, 2024, to $675,927 for the three months ended

September 30, 2025, due to higher sales volume.

Despite the increase in sales volume, the decrease in gross margin from 85.4% for the

three months ended September 30, 2024, to 83.3% for the three months ended September 30, 2025, was due to higher discounting in the Company’s

financial assistance programs provided to patients without health insurance coverage, a higher unit growth rate of the discounted financial

assistance programs compared to the full health insurance reimbursement programs and expired RED inventory.

profit increased $512,079, or 30.7%, from $1,667,811 for the nine months ended September 30, 2024, to $2,179,890 for the nine months

ended September 30, 2025, due to higher sales volume.

Despite the increase in sales volume, gross margin decreased from 86.7% for the

nine months ended September 30, 2024, to 83.8% for the nine months ended September 30, 2025, due to higher discounting in the Company’s

financial assistance programs provided to patients without health insurance coverage, a higher unit growth rate of the discounted financial

assistance programs compared to the full health insurance reimbursement programs and expired RED inventory.

expenses increased $424,025, or 125.3%, from $338,523 for the three months ended September 30, 2024, to $762,548 for the three

months ended September 30, 2025, and increased $681,434, or 67.3%, from $1,012,920 for the nine months ended September 30, 2024, to

$1,694,354 for the nine months ended September 30, 2025.

The increases were due to higher commissions from sales volume, a temporary

commission structure to facilitate growth and adoption in new states, incremental sales and marketing headcount and increased

advertising and marketing costs targeting patients and health insurance carriers as IB-Stim’s new Current Procedural

Terminology (CPT) Category I code becomes effective January 1, 2026.

and Development

and development expenses increased $4,007, or 7.4%, from $54,312 for the three months ended June 30, 2024, to $58,319 for the three months

ended June 30, 2025, and increased $48,130, or 80.4%, from $59,882 for the six months ended June 30, 2024

to $108,012 for the six months ended June 30, 2025.

The increases were due to higher year-over-year spending on a medical research project

and costs to develop the RED device.

and development expenses increased $4,603, or 3.6%, from $126,247 for the three months ended September 30, 2024, to $130,850 for the

three months ended September 30, 2025, and increased $52,245, or 17.7%, from $295,188 for the nine months ended September 30, 2024 to

$347,433 for the nine months ended September 30, 2025.

The increases were due to higher year-over-year spending on a medical research

project, improved IB-Stim design features and costs to develop the RED device.

and Administrative

and administrative expenses decreased $363,559, or 13.8%, from $2,628,288 for the three months ended June 30, 2024, to $2,264,729

for the three months ended June 30, 2025, primarily due to the absence of certain one-time, non-recurring severance, consulting and

advisory costs incurred in 2024 and lower accounting, investor relations, insurance and advertising costs as new hires in 2024

have internally absorbed certain services, partially offset by third party costs incurred to enhance the Company’s internal

control environment.

and administrative expenses increased $185,998, or 3.8%, from $4,946,362 for the six months ended June 30, 2024, to $5,132,360 for

the six months ended June 30, 2025, primarily due to a one-time, non-recurring charge to settle a lawsuit, third party costs

incurred to enhance the Company’s internal control environment and the introduction of annual short-term and long-term

incentive plans in 2024 that were not outstanding for the full fiscal year, partially offset by the absence of certain one-time,

non-recurring severance, hiring, consulting and advisory costs incurred in 2024 and lower legal, accounting, investor relations and

insurance costs as new hires in 2024 have internally absorbed certain services.

operating loss decreased $488,974, or 22.2%, from $2,206,832 for the three months ended June 30, 2024, to $1,717,858 for the three months

ended June 30, 2025, primarily due to higher sales volume and lower general and administrative expenses, partially offset by a lower

gross margin and higher selling costs that are a function of revenue.

operating loss decreased $25,997, or 0.6%, from $4,038,952 for the six months ended June 30, 2024, to $4,012,955 for the six months ended

June 30, 2025, primarily due to higher sales volume, partially offset by a lower gross margin, higher general and administrative costs

primarily due to a one-time, non-recurring settlement of a lawsuit, higher research and development costs and higher selling costs that

are a function of revenue.

Income (Expense), Net

income increased $738,318, or 103.9%, from $710,878 of expenses for the three months ended June 30, 2024, to $27,440 of income for the

three months ended June 30, 2025, primarily due to the absence of a one-time, non-recurring 2024 settlement of certain claims relating

to pre-IPO Series A Preferred Stock shareholders.

income increased $1,043,262, or 104.4% from $999,409 of expense for the six months ended June 30, 2024, to $43,853 of income for the

six months ended June 30, 2025, primarily due the absence of one-time, non-recurring 2024 settlements relating to a 2023 convertible

note dispute and certain pre-IPO Series A Preferred Stock shareholder claims.

net loss decreased $1,227,292, or 42.1%, from $2,917,710 for the three months ended June 30, 2024, to $1,690,418 for the three months

ended June 30, 2025, due to higher sales volume, lower general and administrative expenses and the absence of a one-time, non-recurring

2024 settlement of certain claims relating to pre-IPO Series A Preferred Stock shareholders.

net loss decreased $1,069,259 from $5,038,361 for the six months ended June 30, 2024, to $3,969,102 for the six months ended June 30,

2025, primarily due to higher sales volume and the absence of one-time, non-recurring 2024 settlements relating to a 2023 convertible

note dispute and certain pre-IPO Series A Preferred Stock shareholder claims, partially offset by the one-time, non-recurring settlement

of a lawsuit in 2025.

and administrative expenses increased $126,536, or 7.2%, from $1,756,078 for the three months ended September 30, 2024, to $1,882,614

for the three months ended September 30, 2025, primarily due to the introduction of annual short-term and long-term incentive plans in

2024 that were not outstanding for the full fiscal year and headcount and related costs incurred to enhance the Company’s internal

control environment and financial operations, partially offset by the absence of certain one-time, non-recurring severance, consulting

and advisory costs incurred in 2024.

and administrative expenses increased $201,215, or 3.3%, from $6,049,928 for the nine months ended September 30, 2024, to $6,251,143

for the nine months ended September 30, 2025, primarily due to a one-time, non-recurring charge to settle a lawsuit, headcount and related

costs incurred to enhance the Company’s internal control environment and the introduction of annual short-term and long-term incentive

plans in 2024 that were not outstanding for the full fiscal year, partially offset by the absence of certain one-time, non-recurring

severance, hiring, consulting and advisory costs incurred in 2024 and lower legal, accounting, investor relations and insurance costs

as new hires in 2024 have internally absorbed certain services.

operating loss increased $448,812, or 27.2%, from $1,651,273 for the three months ended September 30, 2024, to $2,100,085 for the three

months ended September 30, 2025, primarily due to higher selling and general and administrative expenses, partially offset by higher

sales volume.

operating loss increased $422,815, or 7.4%, from $5,690,225 for the nine months ended September 30, 2024, to $6,113,040 for the nine

months ended September 30, 2025, primarily due to higher selling and general and administrative expenses including a one-time non-recurring

settlement of a lawsuit, partially offset by higher sales volume.

(Expense) Income, Net

expense decreased $81,250 or 78.2%, from $103,961 for the three months ended September 30, 2024, to $22,711 for the three months ended

September 30, 2025, primarily due to the conversion of convertible notes into Series B Preferred Stock in 2024 which eliminated any related

debt discount and interest charges, partially offset by the settlement of certain shareholder claims.

expense decreased $1,124,513, or 101.9% from $1,103,371 of expense for the nine months ended September 30, 2024, to $21,142 of income

for the nine months ended September 30, 2025, primarily due to the absence of one-time, non-recurring 2024 settlements relating to a

2023 convertible note dispute and certain pre-IPO Series A Preferred Stock shareholder claims and the conversion of convertible notes

into Series B Preferred Stock in 2024 which eliminated any related debt discount and interest charges.

net loss increased $367,562, or 20.9%, from $1,755,234 for the three months ended September 30, 2024, to $2,122,796 for the three months

ended September 30, 2025, due to higher selling and general and administrative expenses, partially offset by higher sales volume and

the conversion of convertible notes into Series B Preferred Stock in 2024 which eliminated any related debt discount and interest charges.

net loss decreased $701,698, or 10.3%, from $6,793,596 for the nine months ended September 30, 2024, to $6,091,898 for the nine months

ended September 30, 2025, primarily due to higher sales volume and the absence of one-time, non-recurring 2024 settlements relating to

a 2023 convertible note dispute and certain pre-IPO Series A Preferred Stock shareholder claims, partially offset by higher selling expenses

and the one-time, non-recurring settlement of a lawsuit in 2025.

and Capital Resources

had cash on hand of $5,988,456 and $3,696,870 as of June 30, 2025, and December 31, 2024, respectively.

We maintained a working capital

surplus of $4,271,446 and $1,832,858 as of June 30, 2025, and December 31, 2024, respectively.

The increase in working capital was primarily

due to proceeds from the issuance of common stock and the exercise of common stock warrants during the six months ended June 30, 2025.

had cash on hand of $4,377,109 and $3,696,870 as of September 30, 2025, and December 31, 2024, respectively.

We maintained a working

capital surplus of $1,840,599 and $1,832,858 as of September 30, 2025, and December 31, 2024, respectively.

The increase in working

capital was primarily due to proceeds from the issuance of common stock and the exercise of common stock warrants partially offset

by liabilities incurred to settle a lawsuit and purchase the NSS-2 Bridge trademark during the nine months ended September 30,

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

As of June 30, 2025, we had stockholders’ equity of $4,253,294 and short-term borrowings of $121,433.

As of September 30, 2025, we had stockholders’ equity of $2,284,941 and short-term borrowings of $195,658.

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

16 unchanged sentences

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

following table summarizes our cash flow from operating, investing and financing activities for the six months ended June 30, 2025 and

Months Ended June 30,

Net cash used

in operating activities

following table summarizes our cash flow from operating, investing and financing activities for the nine months ended September 30, 2025

September 30,

cash used in operating activities

$ (4,498,684 )

$ (4,340,097 )

Net cash used in investing

provided by financing activities

Net increase in cash and cash

cash used in investing activities

cash provided by financing activities

increase in cash and cash equivalents

and cash equivalents at beginning of period

and cash equivalents at end of period

Activities – Net cash used in operating activities increased $123,850, or 4.2%, for the six months ended June 30, 2025, compared

to the six months ended June 30, 2024, primarily due to higher inventory purchases to support sales growth and the 2025 payment of the

2024 short-term incentive program, partially offset by increased cash collections.

Activities – Net cash used in investing activities increased $1,880, or 8.0%, for the six months ended June 30, 2025, compared

to the six months ended June 30, 2024, due to capital expenditures to manufacture the RED device.

Activities – Net cash provided by financing activities increased $730,602, or 15.7%, for the six months ended June 30, 2025, compared

to the six months ended June 30, 2024, primarily due to proceeds received from the issuance of common stock and the exercise of common

stock warrants in 2025 compared to the issuance of convertible notes in 2024.

Activities – Net cash used in operating activities increased $158,587, or 3.7%, for the nine months ended September 30, 2025, compared

to the nine months ended September 30, 2024, primarily due to higher inventory purchases to support current sales growth and readiness

for the January 1, 2026 effective date for the IB-Stim Category I CPT code and the 2025 payment of the 2024 short-term incentive program,

partially offset by increased cash collections.

Activities – Net cash used in investing activities decreased $2,488, or 9.0%, for the nine months ended September 30, 2025, compared

to the nine months ended September 30, 2024, due to lower office equipment purchases partially offset by expenditures to manufacture

the RED device.

Activities – Net cash provided by financing activities increased $654,013, or 14.4%, for the nine months ended September 30, 2025,

compared to the nine months ended September 30, 2024, primarily due to proceeds received from the issuance of common stock and the exercise

of common stock warrants in 2025 compared to the issuance of convertible notes in 2024.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis