What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-12 compared with 2025-11-10 · 116 added, 155 removed, 63 unchanged (81% of the section changed)

10 unchanged sentences

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

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

Our IB-Stim device is a PENFS system

intended to be used in patients 8-21 years of age with functional abdominal pain associated with IBS and has market clearance from FDA

for functional abdominal pain associated with IBS in children.

Our RED device is an easy-to-use, office-based, point-of-care test that

identifies patients with chronic constipation due to pelvic floor dyssynergia and has FDA market clearance for adults.

Other indications

in our pipeline are comprised of functional nausea in children, post-concussion syndrome in children, cyclic vomiting syndrome in children

and functional abdominal pain associated with IBS in adults.

Our mission is to advance drug-free neuromodulation therapies that improve patient outcomes and reduce medication burden in complex disorders,

while expanding access to effective care for populations with significant unmet needs.

Our IB-Stim device is a PENFS system with FDA

indications for patients 8 years and older with functional abdominal pain associated with IBS, functional dyspepsia (FD) and associated

FD nausea symptoms.

Our RED device is an easy-to-use, office-based, point-of-care test that identifies patients with chronic constipation

due to pelvic floor dyssynergia and has FDA market clearance for adults.

Other indications in our pipeline are comprised of post-concussion

syndrome, cyclic vomiting syndrome, post-operative pain and fibromyalgia pain.

our inception, we have incurred significant operating losses.

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.

We expect to incur significant expenses and operating losses for the foreseeable

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

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.

Our net loss was $1,761,432 and $2,278,684 for the three months ended March

31, 2026 and 2025, respectively.

Although we had stockholders’ equity of $5,747,550 as of March 31, 2026, our auditors have expressed

substantial doubt about our ability to continue as a going concern in their audit opinion.

We expect to incur significant expenses and

operating losses for the foreseeable future as we continue to pursue widespread insurance coverage of our IB-Stim and RED devices and

seek FDA clearance of our device for other indications.

There are a number of milestones and conditions that we must satisfy before we

are able to generate sufficient revenue to fund our operations, including FDA clearance of our IB-Stim device to treat future indications.

Affecting our Business and Results of Operations

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not seasonal and only mildly correlated with economic cycles.

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

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

Potential patients with future indications are expected

to use four to six or more devices per patient.

In an effort to treat all patients, the Company provides devices at a discount to lower

income patients without healthcare insurance.

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

treated for functional abdominal pain associated with IBS, functional dyspepsia (FD) and/or associated FD with nausea symptoms will use

four devices.

sales typically are made on a purchase order basis rather than through long-term purchase commitments.

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

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

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

our operations for the foreseeable future.

Profit and Gross Margin

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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

of our IB-Stim device, 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

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have four categories of expenses:

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

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

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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.

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,

facility costs, utilities and travel costs.

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

Expired inventory charges totaled $758 and $0 for the three months

March 31, 2026 and 2025, respectively.

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

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

and other related personnel costs including travel expenses.

The Company reclassified $366,165 of general and administrative expenses

to selling expenses in the Condensed Statements of Operations for the three months ended March 31, 2025, to conform to current year presentation.

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

used in research and development activities and salaries and other 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 $57,311 of general

and administrative expenses to research and development expenses in the Condensed Statements of Operations for the three months ended

March 31, 2025, to conform to current year presentation.

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

syndrome, cyclic vomiting syndrome, post-operative pain and fibromyalgia pain.

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

relations, facility costs, utilities and travel.

of Operations

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

and development

and administrative

(expense) income:

in fair value of warrant liability

of debt discount and issuance costs

other (expense) income, net

$ (2,122,796 )

$ (1,755,234 )

following table presents our statements of operations for the three months ended March 31, 2026 and 2025, respectively:

Three Months Ended March 31,

Cost of goods sold

Selling expenses

Research and development

General and administrative

Operating loss

Other (expense) income:

Interest expense, net

Change in fair value of warrant liability

Total other (expense) income, net

$ (1,761,432 )

$ (2,278,684 )

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.

sales increased $712,228, or 79.5%, from $895,655 for the three months ended March 31, 2025, to $1,607,883 for the three months ended

March 31, 2026, due to volume growth from customers with full insurance reimbursement coverage that is a function of IB-Stim’s

Category I CPT code effective date of January 1, 2026 and broader insurance coverage year over year.

Profit and Gross Margin

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.

profit increased $633,337, or 83.8%, from $756,180 for the three months ended March 31, 2025, to $1,389,517 for the three months ended

March 31, 2026, due to higher unit volume from customers with full insurance reimbursement coverage.

The increase in gross margin from

84.4% for the three months ended March 31, 2025, to 86.4% for the three months ended March 31, 2026, was due to higher growth from the

Company’s undiscounted full reimbursement customers compared to the Company’s financial assistance programs that are discounted

to patients without insurance coverage, partially offset by higher device manufacturing costs.

expenses increased $324,217, or 64.8%, from $500,119 for the three months ended March 31, 2025, to $824,336 for the three months ended

March 31, 2026, due to commission from higher sales volume and additional sales reps and marketing personnel to facilitate growth resulting

from the IB-Stim Category I CPT code and broader insurance coverage.

and Development

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 development expenses declined $18,300, or 15.5%, from $117,867 for the three months ended March 31, 2025, to $99,567 for the

three months ended March 31, 2026, due to non-recurring RED device development costs in 2025 and proceeds received for devices

used in 2026 clinical research studies.

and Administrative

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.

and administrative expenses declined $226,999, or 9.3%, from $2,433,292 for the three months ended March 31, 2025, to $2,206,293 for

the three months ended March 31, 2026, primarily due to a one-time, non-recurring charge in 2025 to settle a lawsuit partially offset

by incremental stock compensation expense from the third year of a three-year vesting plan, higher benefit costs and consulting fees

incurred to secure a Federal Supply Schedule agreement with the Veterans Administration.

operating loss improved $554,419, or 24.2%, from $2,295,098 for the three months ended March 31, 2025, to $1,740,679 for the three months

ended March 31, 2026, primarily due to higher sales volume and the corresponding gross profit and the absence of a one-time, non-recurring

charge in 2025 to settle a lawsuit, partly offset by higher selling expenses.

(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.

expense increased $37,167, or 226.4%, from $16,414 of income for the three months ended March 31, 2025, to $20,753 of expense for the

three months ended March 31, 2026, primarily due to the change in fair value of warrants and interest expense associated with the settlement

of the lawsuit.

net loss improved $517,252, or 22.7%, from $2,278,684 for the three months ended March 31, 2025, to $1,761,432 for the three months ended

March 31, 2026, due to higher sales volume and the corresponding gross profit and the absence of a one-time, non-recurring charge in

2025 to settle a lawsuit, partly offset by higher selling expenses.

and Capital Resources

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,

had cash on hand of $7,078,659 and $4,965,072 as of March 31, 2026, and December 31, 2025, respectively.

We maintained a working capital

surplus of $5,328,867 and $2,941,091 as of March 31, 2026, and December 31, 2025, respectively.

The increase in working capital was primarily

due to (i) proceeds from the issuance of common stock pursuant to the At The Market capital facility and the exercise of warrants and

(ii) higher accounts receivable driven by IB-Stim device sales.

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

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

As of March 31, 2026, we had stockholders’ equity of $5,747,550 and short-term borrowings of $100,735.

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 nine months ended September 30, 2025

September 30,

cash used in operating activities

following table summarizes our cash flow from operating, investing and financing activities for the three months ended March 31, 2026

Three Months Ended March 31,

Net cash used in operating activities

$ (1,229,757 )

$ (1,603,655 )

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 $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.

Net cash used in investing activities

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Activities – Net cash used in operating activities decreased $373,898, or 23.3%, for the three months ended March 31,

2026, compared to the three months ended March 31, 2025, primarily due to a lower operating loss attributable to growth from the

Category I CPT code and increased payor coverage as well as more efficient working capital utilization during the three months ended

March 31, 2026.

Activities – Net cash used in investing activities decreased $18,000, or 100.0%, for the three months ended March 31, 2026

compared to the three months ended March 31, 2025, due to capital expenditures to manufacture the RED device in 2025 that did not recur

in 2026 once the device was launched.

Activities – Net cash provided by (used in) financing activities increased $3,413,189, or 4,886.8%, for the three months ended

March 31, 2026 compared to the three months ended March 31, 2025, primarily due to proceeds from the issuance of common stock pursuant

to the At The Market capital facility and the exercise of warrants during the three months ended March 31, 2026.

Accounting Estimates

There have been

no material changes to the critical accounting estimates previously described in our Form 10-K for fiscal year ended December 31, 2025.

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