What changed in this filing

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Item 1. Financial Statements

2026-08-11 compared with 2026-05-12 · 482 added, 376 removed, 569 unchanged (60% of the section changed)

1 unchanged sentence

Balance Sheets

June 30, 2026

December 31, 2025

Current Assets:

Cash and cash equivalents

Accounts receivable, net of credit losses of $ 7,220 and $ 7,326 as of March 31, 2026 and December 31, 2025, respectively

Inventories, net of reserves of $ 28,048 and $ 34,524 as of March 31, 2026 and December 31, 2025, respectively

Accounts receivable, net of credit losses of $ 19,019 and $ 7,326 as of June 30, 2026 and December 31, 2025, respectively

Inventories, net of reserves of $ 10,926 and $ 34,524 as of June 30, 2026 and December 31, 2025, respectively

Prepaids and other current assets

22 unchanged sentences

Convertible Series B Preferred stock, $ 0.001 par value;

5,000,000 shares authorized, 3,796,907 shares issued and outstanding as of March 31, 2026 and December 31, 2025

5,000,000 shares authorized, 3,796,907 shares issued and outstanding as of June 30, 2026 and December 31, 2025

Common stock, $ 0.001 par value;

100,000,000 shares authorized;

11,450,045 and 10,652,812 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

12,468,059 and 10,652,812 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively

Additional paid in capital

7 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Cost of Goods Sold

5 unchanged sentences

( 1,717,858 )

( 3,865,391 )

( 4,012,955 )

Other Income (Expense):

1 unchanged sentence

Change in fair value of warrant liability

Total other (expense) income, net

Total other income, net

Loss Before Income Taxes

( 2,085,746 )

( 1,690,418 )

stock dividends

( 3,847,178 )

( 3,969,102 )

Income tax expense (benefit)

( 2,085,746 )

( 1,690,418 )

( 3,847,178 )

( 3,969,102 )

Preferred stock dividends

Net Loss Available to Common Stockholders

1 unchanged sentence

$ ( 1,897,883 )

$ ( 4,228,080 )

$ ( 4,390,110 )

Per-Share Data

3 unchanged sentences

accompanying notes are an integral part of these unaudited condensed financial statements

Condensed Statements of Stockholders’

Equity (Unaudited)

Stockholder’s

Statements of Stockholders’ Equity (Unaudited)

Convertible Series B

Preferred Stock

Additional Paid In

Stockholders’

Balances at January 1, 2025

8 unchanged sentences

( 59,078,296 )

Balances at January 1, 2026

Warrants exercised

Conversion of Series B Preferred Stock to common stock

Issuance of common stock pursuant to shelf registration statement

Offering costs

Stock-based compensation

( 1,690,418 )

Balances at June 30, 2025

$ ( 60,768,714 )

Balances at January 1, 2026

$ ( 64,600,167 )

Warrants exercised

9 unchanged sentences

( 66,361,599 )

Warrants exercised

Issuance of common stock pursuant to declaration of Series B Preferred Stock dividends

( 1,215,264 )

Issuance of common stock pursuant to the 2025 Employee Stock Purchase Plan

Issuance of common stock pursuant to shelf registration statement

Offering costs

Common stock issued under the 2022 Omnibus Securities and Incentive Plan

Stock-based compensation

( 2,085,746 )

Balances at June 30, 2026

$ ( 69,662,609 )

accompanying notes are an integral part of these unaudited condensed financial statements

Statements of Cash Flows (Unaudited)

For the Three Months Ended

For the Six Months Ended

Cash Flows from Operating Activities

1 unchanged sentence

$ ( 3,969,102 )

Adjustments to reconcile net loss to net cash used by operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

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Proceeds from exercised warrants

Proceeds from Employee Stock Purchase Plan common stock issuance

Fractional shares of preferred dividends declared settled in cash

Offering costs paid

Principal payments on notes payable

Repayment of license acquisition payable

Taxes paid related to net share settlement of restricted stock units

Net cash provided by (used in) financing activities

Net Increase (Decrease) in Cash and Cash Equivalents

( 1,691,500 )

Net cash provided by financing activities

Net Increase in Cash and Cash Equivalents

Cash and Cash Equivalents at Beginning of Period

2 unchanged sentences

Cash paid for interest

Cash paid for income taxes

Cash paid for federal income taxes

Cash refunded for state income taxes

Supplemental Schedule of Non-Cash Investing and Financing Activities

Issuance of common stock pursuant to declaration of Series B Preferred Stock dividends

Common stock issued for services

Common stock issued upon cashless exercise of warrants

Share settlement of restricted stock units, net of shares withheld for payment of

payroll taxes

Deferred offering costs reclassified to additional paid in capital upon completion

of stock offering

Common stock issued upon vesting of restricted stock units, net of shares withheld for

payment of payroll taxes

Deferred offering costs reclassified to additional paid in capital upon completion of stock offering

accompanying notes are an integral part of these unaudited condensed financial statements

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withdrawal and was licensed to Masimo Corporation (“Masimo”).

Masimo marketed and sold this product as its Masimo Bridge.

On July 1, 2025, the Company terminated the NSS-2 Bridge license with Masimo in exchange for $ 200,000 of consideration payable in

equal installments on December 31, 2025 and June 30, 2026.

The termination agreement allowed the Company to recapture its rights

to the trademark (U.S.

Masimo marketed and sold this product as its Masimo

On July 1, 2025, the Company terminated the NSS-2 Bridge license with Masimo in exchange for $ 200,000

of consideration paid in equal installments on December 31, 2025 and June 30, 2026.

The termination agreement allowed the Company to

recapture its rights to the trademark (U.S.

Registration No.

7,394,465) and two patent applications (Application No.

18/821,225 and Application No.

18/821,225 and

Application No.

29/960,608) that were licensed to Masimo on April 9, 2020.

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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, impairment of property and equipment

and intellectual property.

Actual results could differ from those estimates.

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, allowance for sales returns, warrant liabilities, stock-based compensation, income tax provisions, excess and

obsolete inventory reserve, impairment of property and equipment and intellectual property.

There were no material changes to the

Company’s critical accounting estimates disclosed in the 2025 Form 10-K.

Actual results could differ from those

Reclassification

1 unchanged sentence

prior year amounts have been reclassified to conform to current period presentation.

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.

Company also 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.

These reclassifications had no impact on previously reported net loss, total

assets, total liabilities or total equity.

The Company reclassified $ 391,760

and $ 757,925

of general and administrative expenses to selling expenses in the Condensed Statements of Operations for the three and six months

ended June 30, 2025, respectively.

The Company also reclassified $ 56,878

and $ 114,189

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

and six months ended June 30, 2025, respectively.

These reclassifications had no impact on previously reported net loss, total assets, total

liabilities or total equity.

Receivable and Allowance for Credit Losses

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

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 Company monitors accounts receivable

and estimates the allowance for lifetime expected credit losses.

Estimates of expected credit losses are based on historical collection

experience, aging schedule and other factor, including those related to current and forecasted market conditions and events.

The allowance

for credit losses was $ 7,220 and $ 7,326 as of March 31, 2026 and December 31, 2025, respectively.

The Company recorded no credit loss

expense for the three months ended March 31, 2026 and 2025.

accounts receivable is 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.

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

The Company monitors accounts receivable and estimates the allowance for lifetime expected credit losses.

Estimates of expected

credit losses are based on historical collection experience, aging schedule and other factors, including those related to current

and forecasted market conditions and events.

The allowance for credit losses was $ 19,019

as of June 30, 2026 and December 31, 2025, respectively.

The Company recorded $ 13,036

credit loss expense for the three months ended June 30, 2026 and 2025, respectively, and $ 13,036 and $ 0 for the six months ended

June 30, 2026 and 2025, respectively.

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

5 unchanged sentences

The Company has reserved for expired inventory as charges to cost of goods sold of $ 2,092 and

for the three months ended March 31, 2026 and 2025, respectively.

There was no reserve for research devices recorded as charges to research

and development expenses for the three months ended March 31, 2026 and 2025, respectively.

Inventory reserves totaled $ 28,048 and $ 34,524

as of March 31, 2026 and December 31, 2025, respectively.

$ 6,633 for the three months ended June 30, 2026 and 2025, respectively, and $ 2,850 and $ 6,633 for the six months ended June 30, 2026

and 2025, respectively.

The Company has reserved for research devices recorded as charges to research and development expenses of $ 1,165

and $ 5,541 for the three months ended June 30, 2026 and 2025, respectively, and $ 1,165 and $ 5,541 for the six months ended June 30, 2026

and 2025, respectively.

Inventory reserves totaled $ 10,926 and $ 34,524 as of June 30, 2026 and December 31, 2025, respectively.

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

1 unchanged sentence

Advertising expenses are expensed as incurred and amounted to $ 15,872 and $ 77,108 for the three months ended

March 31, 2026 and 2025, respectively.

June 30, 2026 and 2025, respectively, and $ 45,693 and $ 162,456 for the six months ended June 30, 2026 and 2025, respectively.

and Development

3 unchanged sentences

Research and development costs are expensed as incurred.

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

Intangible assets are stated at their historical cost and amortized on

a straight-line basis over their expected useful lives.

Capitalized patent costs, net of accumulated amortization, includes legal costs

incurred for patent applications.

In accordance with ASC 350, once a patent is granted, we amortize the capitalized patent costs over

the remaining life of the patent using the straight-line method.

If the patent is not granted, we write off any capitalized patent costs

at that time.

assets consist of software, patents, and a trademark.

Intangible assets are stated at their historical cost and

amortized on a straight-line basis over their expected useful lives.

Capitalized patent costs, net of accumulated amortization,

includes legal costs incurred for patent applications.

In accordance with ASC 350, once a patent is granted, we amortize the

capitalized patent costs over the remaining life of the patent using the straight-line method.

If the patent is not granted, we

write off any capitalized patent costs at that time.

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

1 unchanged sentence

the cost is not being amortized.

July 1, 2025, the Company terminated the NSS-2 Bridge license with Masimo in exchange for $ 200,000 of consideration payable in equal

installments on December 31, 2025, and June 30, 2026.

The termination agreement allowed the Company to recapture the rights to the trademark

The Company tests for impairment annually or upon the occurrence of an impairment indicator.

July 1, 2025, the Company terminated the NSS-2 Bridge license with Masimo in exchange for $ 200,000

of consideration paid in equal installments on December 31, 2025, and June 30, 2026.

The termination agreement allowed the Company

to recapture the rights to the trademark (U.S.

Registration No.

1 unchanged sentence

and Application No.

29/960,608) that were licensed

to Masimo on April 9, 2020 for use in the reduction of the symptoms of opioid withdrawal.

The intellectual property is amortized over

its remaining trademark life of approximately nine years.

29/960,608) that were licensed to Masimo on April 9, 2020 for use in the reduction of the symptoms of opioid

The intellectual property is amortized over its remaining trademark life of approximately nine years.

Value Measurements

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Level 3 assets and liabilities include financial instruments whose value is determined using pricing

models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value require

models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires

significant management judgment or estimation.

believes the estimated fair value of certain accounts including cash, accounts receivable, account payable and other current assets

on March 31, 2026, and December 31, 2025, approximate their carrying value as reflected in the balance sheets due to the short-term

nature of these instruments or the use of market interest rates for debt instruments.

believes the estimated fair value of certain accounts including cash, accounts receivable, accounts payable and other current assets on

June 30, 2026, and December 31, 2025, approximate their carrying value as reflected in the balance sheets due to the short-term nature

of these instruments or the use of market interest rates for debt instruments.

Company’s Level 3 accounts include warrant liabilities and the floating lookback option provision in the NeurAxis, Inc.

11 unchanged sentences

and liabilities.

were no transfers between any of the levels during the three months ended March 31, 2026 and 2025.

were no transfers between any of the levels during the periods ended June 30, 2026 and December 31, 2025.

In addition to assets and liabilities

that are recorded at fair value on a recurring basis, the Company had no assets that were measured on a nonrecurring basis as of March

that are recorded at fair value on a recurring basis, the Company had no assets that were measured on a nonrecurring basis as of June

30, 2026 and December 31, 2025.

4 unchanged sentences

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

In periods when losses are reported, which is the case for the three month periods ended March 31, 2026 and 2025 presented

In periods when losses are reported, which is the case for the three and six month periods ended June 30, 2026 and 2025 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 $ 1,215,264 and $ 1,025,865 as of March 31,

2026 and December 31, 2025, respectively.

to the Company’s Board of Directors declaration of dividends on Series B Preferred Stock to holders of record as of April 21,

2026, the Company issued 510,605 shares

of common stock on April 28, 2026, based on the 8.5 %

per annum cumulative dividend rate.

Company had the following potentially dilutive common stock equivalents:

6 unchanged sentences

Three Months Ended

Six Months Ended

$ ( 2,085,746 )

$ ( 1,690,418 )

$ ( 3,847,178 )

$ ( 3,969,102 )

Preferred stock dividends

2 unchanged sentences

( 1,897,883 )

Weighted average shares of common stock outstanding - basic and diluted

( 4,228,080 )

( 4,390,110 )

Weighted average shares of common stock outstanding - basic

and diluted (retroactively adjusted to January 1, 2025)

Basic and diluted net loss per share

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accordance with ASC 606, Revenue from Contracts with Customers , 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.

of promised goods, in an amount that reflects the consideration which the Company expects to be entitled in exchange for

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606,

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Company applies the five-step model to contracts when it determines that it is probable it will collect substantially all the consideration

it is entitled to in exchange for the goods or services it transfers to the customer.

it is entitled to in exchange for the goods it transfers to the customer.

At contract inception, once the contract is determined

to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that

are performance obligations and assesses whether each promised good or service is distinct.

to be within the scope of ASC 606, the Company assesses the goods promised within each contract and determines those that

are performance obligations and assesses whether each promised good is distinct.

The Company then recognizes as revenue the

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may not be cancelled after shipment.

Customers may return devices within 10 days of delivery if the goods are found to be defective,

Customers may return devices if the goods are found to be defective,

nonconforming, or otherwise do not meet the stated technical specifications.

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accounts to reflect its actual return experience.

Estimated returns totaled $ 33,261 and $ 13,824 as of March 31, 2026 and December 31,

Estimated returns totaled $ 24,147 and $ 13,824 as of June 30, 2026 and December 31,

2025, respectively.

4 unchanged sentences

financing component.

deposits are contract liabilities under ASC 606.

As of June 30, 2026 and December 31, 2025, the Company had customer deposits of

$ 31,174 and $ 28,660 , respectively.

devices that the Company contracts to sell and transfer to customers are manufactured by two third-party manufacturers located in Indiana

2 unchanged sentences

to transfer goods to the customer).

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

of June 30, 2026, the Company had stockholders’ equity of $ 6,735,053 and short-term outstanding borrowings of $ 42,726 .

Additionally,

the Company had cash of $ 7,078,659 and a working capital surplus of $ 5,328,867 as of March 31, 2026.

the Company had cash of $ 8,322,258 and a working capital surplus of $ 6,317,762 as of June 30, 2026.

However, we have incurred losses

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is deemed to exist about the Company’s ability to continue as a going concern.

As the Company continue to incur losses, the transition

As the Company continues to incur losses, the transition

to profitability is dependent upon achieving a level of revenues adequate to support its cost structure.

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Issued Accounting Standards

In December 2025, the FASB issued ASU

2025-11, Interim Reporting (Topic 270), which provides a comprehensive list of interim disclosures that are required by U.S.

to provide clarity on current requirements.

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

reporting periods beginning after December 15, 2027.

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

December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270), which provides a comprehensive list of interim disclosures

that are required by U.S.

GAAP to provide clarity on current requirements.

Public business entities are required to adopt the standard

for interim periods with annual reporting periods beginning after December 15, 2027.

The adoption is not expected to have a material

impact on the Company’s financial statements.

September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Improvement to the Accounting for Internal-Use Software , which replaces project stage milestones with required capitalization when

management has authorized and committed to funding the software project and it is probably that the project will be completed and the

management has authorized and committed to funding the software project and it is probable that the project will be completed and the

software will be used to perform the function intended.

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

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

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, with prospective or retrospective

adoption, including disclosures, at the Company’s election.

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

Company’s financial statements.

Related Party Transactions

Company has two demand notes receivable from shareholders related to the sale of common stock on January 1, 2016.

principal balances are $ 506,400 ,

with interest calculated monthly based on applicable federal rates.

The total note

principal balance is $ 1,012,800

as of June 30, 2026, and December 31, 2025, respectively, with interest calculated monthly based on applicable federal rates.

total interest receivable balance is $ 247,039

and $ 228,759 as

of June 30, 2026, and December 31, 2025, respectively.

No payments have been received on the notes.

Since repayment is

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

Since repayment is not assured,

the Company has fully reserved for the entire balance of principal and interest.

The current allowance is $ 1,259,839

and $1,241,559 as of March 31, 2026 and December 31, 2025, respectively.

The current loan balances are as follows:

Schedule of Related Party Transactions

March 31, 2026

December 31, 2025

Shareholder 1

Shareholder 2

Principal balance

Allowance for collection risk

( 1,012,800 )

Company has loans payable to shareholders related to funding needs for operations.

The current loan details for all related party loans

are as follows:

Schedule of Related Party Loans payable to shareholder

March 31, 2026

Other Convertibles

December 31, 2025

Other Convertibles

and $ 1,241,559

as of June 30, 2026, and December 31, 2025, respectively.

Company also has interest payable to certain shareholders related to the issuance of convertible notes in 2017, which have since

been converted into common stock.

The interest payable totaled $ 66,648

as of June 30, 2026, and December 31, 2025, and is included in accrued expenses in the Condensed Balance Sheets.

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

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The Company’s Board of Directors pre-approved the reimbursement of up to $ 20,000 for the year ending December

License costs totaled $ 453 and $ 1,317 for the three months ended March 31, 2026 and 2025, respectively.

The Company owed the

limited liability company $ 453 and $ 0 that are included in accounts payable in the Condensed Balance Sheets as of March 31, 2026 and

December 31, 2025, respectively.

License costs totaled $ 2,929 and $ 0 for the three months ended June 30, 2026 and 2025, respectively, and $ 3,382 and $ 1,317

for the six months ended June 30, 2026 and 2025, respectively.

The Company owed the limited liability company $ 2,929 and $ 0 that are

included in accounts payable in the Condensed Balance Sheets as of June 30, 2026 and December 31, 2025, respectively.

time to time, a member of the Company’s Board of Directors purchases NeuroStim devices from the Company at cost to conduct research

2 unchanged sentences

the year ended December 31, 2026.

The Company sold NeuroStim devices totaling $ 1,515 and $ 1,957 for the three months ended March 31,

2026 and 2025, respectively, under this program.

The Company sold NeuroStim devices totaling $ 3,030 and $ 4,394 for the three months ended June 30, 2026

and 2025, respectively, and $ 4,545 and $ 6,351 for the six months ended June 30, 2026 and 2025, respectively, under this program.

Prepaids and Other Current Assets

1 unchanged sentence

Schedule of Prepaids and Other Current Assets

March 31, 2026

June 30, 2026

December 31, 2025

Prepaid insurance

Prepaid software subscriptions

Prepaid insurance

Total prepaids and other current assets

2 unchanged sentences

Schedule of Other Non-Current Assets

offering costs

software subscriptions

other non-current assets

June 30, 2026

December 31, 2025

Security deposit

Deferred offering costs

Prepaid software subscriptions

Total other non-current assets

Accrued Expenses

1 unchanged sentence

Schedule of Accrued Expenses

March 31, 2026

June 30, 2026

December 31, 2025

1 unchanged sentence

Settled litigation

NSS-2 Bridge lease termination fee

Research and development fees

NSS-2 Bridge lease termination fee

Total accrued expenses

Notes Payable

August 9, 2025, the Company entered into a $ 170,000 note payable to finance the premiums of a business insurance policy, bearing interest

at an annual interest rate of 7.45 % and maturing on June 9, 2026 , to replace the $ 210,000 note payable entered into on August 9, 2024,

with an annual interest rate of 7.40 % that matured on June 9, 2025 in conjunction with the annual renewal period.

On May 26, 2025, the

Company also entered into a note payable with a principal balance of $ 122,253 to finance subscription fees on certain software arrangements

maturing on March 1, 2027.

The outstanding principal was $ 100,735 and $ 148,293 as of March 31, 2026 and December 31, 2025, respectively.

expense totaled $ 26,189 and $ 2,237 for the three months ended March 31, 2026 and 2025, respectively.

The Company’s accrued interest

totaled $ 66,648 as of March 31, 2026 and December 31, 2025.

August 9, 2025, the Company entered into a $ 170,000

note payable to finance the premiums of a business insurance policy, bearing interest at an annual interest rate of 7.45 %

and maturing on June

9, 2026 , to replace the $ 210,000

note payable entered into on August 9, 2024, with an annual interest rate of 7.40 %

that matured on June

9, 2025 in conjunction with the annual renewal period.

On May 26, 2025, the Company also entered into a note payable with a

principal balance of $ 122,253

to finance subscription fees on certain software arrangements maturing on March 1, 2027.

The outstanding principal was $ 42,726

and $ 158,292 ,

of which $0 and $ 9,999

is included in other non-current liabilities in the Condensed Balance Sheets, as of June 30, 2026 and December 31, 2025,

respectively.

expense totaled $ 19,794

and $ 13,434 for the

three months ended June 30, 2026 and 2025, respectively, and $ 45,983

and $ 15,672 for the

six months ended June 30, 2026 and 2025, respectively.

The Company’s accrued interest totaled $ 66,648

and $ 66,648 as of June 30, 2026 and December 31, 2025, respectively.

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

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The Company did not

have any finance leases at March 31, 2026 and December 31, 2025.

have any finance leases at June 30, 2026 and December 31, 2025.

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

The lease in Batesville, Indiana commenced on August

1, 2025, and has an initial term of three years, with automatic one-year renewals subject to an annual 4% rent escalation, unless 60-day notice of vacating is given.

On May 19, 2025, the Company terminated its prior lease in Versailles, Indiana, with a monthly lease

payment of $ 1,800 , effective July 31, 2025, without penalty due to relocation of the office space to Batesville, Indiana, with the same

1, 2025, and has an initial term of three years, with automatic one-year renewals subject to an annual 4% rent escalation, unless 60-day

notice of vacating is given.

On May 19, 2025, the Company terminated its prior lease in Versailles, Indiana, with a monthly lease payment

of $ 1,800 , effective July 31, 2025, without penalty due to relocation of the office space to Batesville, Indiana, with the same landlord.

The current monthly lease payment is $ 2,000 with no escalations during the initial lease term.

On June 13, 2025, the Company

prepaid $ 25,200 towards the monthly lease payments which will be amortized over the initial lease term.

The lease in Carmel, Indiana

commenced January 1, 2024, with an initial term of five years and five months.

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

increase of 2.5 %.

The Company was only obligated to pay an amount equal to 50% of the monthly base rent for the first 10 months of the

Company recognized operating lease expense of $ 26,116 and $ 25,523 for the three months ended March 31, 2026 and 2025, respectively, including

short-term lease expense and variable lease costs.

On June 13, 2025, the Company prepaid

$ 25,200 towards the monthly lease payments which will be amortized over the initial lease term.

The lease in Carmel, Indiana commenced

January 1, 2024, with an initial term of five years and five months.

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

The Company was only obligated to pay an amount equal to 50% of the monthly base rent for the first 10 months of the term.

Company recognized operating lease expense of $ 26,116 and $ 25,558 for the three months ended June 30, 2026 and 2025, respectively, and

$ 52,231 and $ 51,082 for the six months ended June 30, 2026 and 2025, respectively, including short-term lease expense and variable lease

following table presents information related to the Company’s operating leases:

6 unchanged sentences

Weighted-average discount rate

of March 31, 2026, the maturities of the Company’s operating lease liabilities were as follows:

Schedule of Maturities Operating Lease Liabilities

of June 30, 2026, the maturities of the Company’s operating lease liabilities were as follows:

Schedule of Maturities

Operating Lease Liabilities

Remainder of 2026

3 unchanged sentences

Common Stock and Warrants

Company has authorized 100,000,000

shares of common stock, of which 11,450,045

Company has authorized 100,000,000 shares of common stock, of which 12,468,059 and 10,652,812 shares were issued and outstanding as of

June 30, 2026 and December 31, 2025, respectively.

January 22, 2026, the Company issued 43,196

shares of common stock with a fair value of $ 199,995

to its Board of Directors for their services for the year ending December 31, 2026.

The Company recorded $ 50,000

and $ 100,000

shares were issued and outstanding as of March 31, 2026 and December 31, 2025, respectively.

January 22, 2026, the Company issued 43,196 shares of common stock with a fair value of $ 199,995 to its Board of Directors for their

services for the year ending December 31, 2026.

The Company recorded $ 50,000 as general and administrative expense in the Condensed Statements

of Operations for the three months ended March 31, 2026 and $ 149,995 as prepaids and other current assets in the Condensed Balance Sheet

as of March 31, 2026.

as general and administrative expense in the Condensed Statements of Operations for the three and six months ended June 30, 2026,

respectively, and $ 99,995

as prepaids and other current assets in the Condensed Balance Sheets as of June 30, 2026.

January 22, 2026, the Company issued another 43,196 shares of common stock with a fair value of $ 200,000 to its Board of Directors for

their service during the year ended December 31, 2025.

The Company recorded $ 50,000 as general and administrative expense in the Condensed

Statements of Operations for the three months ended March 31, 2025.

the three months ended March 31, 2026, pursuant to the August 2025 At The Market Offering Agreement, the Company issued 495,456 shares

of common stock to investors for gross proceeds of $ 2,990,361 with such shares registered pursuant to the Company’s effective Registration

Statement on Form S-3 (File No.

333-283798), previously filed with the Securities and Exchange Commission (“SEC”) on December

13, 2024, and declared effective on February 11, 2025, and the related prospectus supplements filed with the SEC on August 29, 2025,

and on October 23, 2025.

The Company recorded $ 50,000 and $ 100,000 as general and administrative expense

in the Condensed Statements of Operations for the three and six months ended June 30, 2025, respectively.

April 10, 2026, the Company’s Board of Directors declared a dividend on the Series B Preferred Stock.

Holders of record of the

Company’s Series B Preferred Stock as of the record date of April 21, 2026 received a stock dividend on April 28, 2026, of the

Company’s par value $ 0.001 common stock for every share of Series B Preferred Stock.

The Company issued 510,605 shares of common

stock based on the 8.5 % per annum cumulative dividend rate.

Additionally,

during the three months ended March 31, 2026, the Company issued (i) 213,040 common shares upon the exercise of warrants and (ii) 2,345

common shares pursuant to the 2022 Omnibus Securities and Incentive Plan.

the three months ended March 31, 2025, the Company issued (i) 39,471 shares of common stock with a fair value of $ 112,493 to its Board

of Directors for their service from April 1, 2024 through December 31, 2024, which was recorded as general and administrative expense

in the Condensed Statements of Operations and (ii) 186,166 shares of common stock to an investor in exchange for 502,647 warrants in

a cashless exercise transaction with $ 186 reclassified from additional paid in capital to common stock in the Condensed Statements of

Stockholders’ Equity.

following is a summary of warrant activity for common stock during the three months ended March 31, 2026 and year ended December 31,

Schedule of Warrant Activity for Common Stock

during the six months ended June 30, 2026, the Company issued (i) 747,911 shares

of common stock to investors pursuant to the 2025 At The Market Offering Agreement for

gross proceeds of $ 5,061,018 with

such shares registered pursuant to the Company’s effective Registration Statement on Form S-3 (File No.

previously filed with the Securities and Exchange Commission (“SEC”) on December 13, 2024, and declared effective on

February 11, 2025, and the related prospectus supplements filed with the SEC on August 29, 2025, October 23, 2025, and April 21,

2026, (ii) 396,626 common

shares upon the exercise of warrants for gross proceeds of $ 943,970 (iii) 29,828 common

shares pursuant to the 2022 Omnibus Securities and Incentive Plan and (iv) 43,885 common

shares pursuant to the NeurAxis Inc.

2025 Employee Stock Purchase Plan for gross proceeds of $ 86,015 .

the six months ended June 30, 2025, the Company issued (i) 39,471

shares of common stock with a fair value of $ 112,493

to its Board of Directors for their service from April 1, 2024 through December 31, 2024, which was recorded as general and

administrative expense in the Condensed Statements of Operations (ii) 186,166

shares of common stock to an investor in exchange for 502,647

warrants in a cashless exercise transaction with $ 186

reclassified from additional paid in capital to common stock in the Condensed Statements of Stockholders’ Equity (iii) 720,359

common shares upon the exercise of warrants for gross proceeds of $ 1,002,991

common shares to certain investors upon conversion of an equivalent amount of Series B Preferred Stock and (v) 1,538,461

common shares pursuant to a securities purchase agreement with certain institutional investors for gross proceeds of $ 4,999,999

offered by the Company pursuant to its shelf registration statement on Form S-3 (File No.

333-283798) which was declared effective

by the Securities and Exchange Commission on February 11, 2025, a base prospectus dated February 11, 2025 and a prospectus

supplement dated May 20, 2025.

following is a summary of warrant activity for common stock during the six months ended June 30, 2026 and year ended December 31, 2025:

of Warrant Activity for Common Stock

Weighted-Avg.

4 unchanged sentences

Outstanding as of December 31, 2025

Outstanding as of March 31, 2026

following table summarizes the Company’s warrants outstanding and exercisable as of March 31, 2026:

Schedule of Warrants outstanding and Exercisable

Outstanding as of June 30, 2026

following table summarizes the Company’s warrants outstanding and exercisable as of June 30, 2026:

of Warrants outstanding and Exercisable

Investor Warrant

9 unchanged sentences

Preferred Stock

Company’s shareholders authorized 5,000,000 shares of preferred stock of which 5,000,000 shares were designated as $ 0.001 par value

Series B Preferred Stock with 3,796,907 shares issued and outstanding as of March 31, 2026 and December 31, 2025.

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

Company’s shareholders authorized 5,000,000

shares of preferred stock of which 5,000,000

shares were designated as $ 0.001

par value Series B Preferred Stock with 3,796,907

shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively.

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 or common shares at the Company’s discretion on a quarterly basis through

December 31, 2026.

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.

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

any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the Series B Preferred Stock shareholders

4 unchanged sentences

event, thereby triggering payment of the liquidation preferences.

of March 31, 2026 and December 31, 2025, there were no preferred stock dividends declared or paid.

Series B Preferred Stock undeclared

cumulative dividends totaled $ 1,215,264 and $ 1,025,865 as of March 31, 2026 and December 31, 2025, respectively.

stock dividends of $ 1,215,264 and $ 0 were declared and issued as common stock as of June 30, 2026 and December 31, 2025, respectively.

Series B Preferred Stock undeclared cumulative dividends totaled $ 191,503 and $ 1,025,865 as of June 30, 2026 and December 31, 2025, respectively.

to the Company’s Board of Directors declaration of dividends on Series B Preferred Stock to holders of record as of July 21,

2026 and April 21 2026, the Company issued 80,456

shares of common stock on July 29, 2026, and April 28, 2026, respectively, based on the 8.5 %

per annum cumulative dividend rate.

Stock-Based Compensation

2 unchanged sentences

to certain employees as follows:

Schedule of Restricted Stock Units

Three Months Ended March 31,

of Restricted Stock Units

Six Months Ended June 30,

Number of RSUs

4 unchanged sentences

Outstanding as of End of Period

RSUs granted during the three months ended March 31, 2026 are subject to a pro rata annual vesting period over 3 years whereas the RSUs

granted during the three months ended March 31, 2025 are subject to a three-year cliff vesting period.

The RSUs are payable in shares

of the Company’s common stock and 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 March 31, 2026.

stock-based compensation expense related to RSUs is classified in the Company’s Condensed Statements of Operations as general and

administrative expense and amounted to $ 329,434 and $ 105,811 for the three months ended March 31, 2026 and 2025, respectively.

March 31, 2026, total unrecognized stock-compensation expense relating to unvested stock awards granted under the Company’s share-based

compensation plans amounted to $ 2,864,172 .

following is a summary of the Company’s outstanding stock options as of March 31, 2026 and December 31, 2025:

Schedule of Stock Option Activity

Of the RSUs granted during the six

months ended June 30, 2026, 437,431 are subject to a pro rata annual vesting period over three

years and 40,000 immediately vested whereas the RSUs granted during the six months

ended June 30, 2025 are subject to a three-year cliff vesting period.

The RSUs are payable in shares of the Company’s common

stock and fully vest upon (i) death or disability or (ii) change of control.

Dividend equivalents accrue on RSUs and are paid upon

there were no accrued dividends on unvested RSUs as of June 30, 2026.

stock-based compensation expense related to RSUs is classified in the Company’s Condensed Statements of Operations as (i)

selling expenses totaling $ 67,566 and $ 30,859 for the three months ended June 30, 2026 and 2025, respectively, and $ 129,022 and

$ 51,143 for the six months ended June 30, 2026 and 2025, respectively, and (ii) general and administrative expense totaling $ 552,304

and $ 142,183 for the three months ended June 30, 2026 and 2025, respectively, and $ 782,953 and $ 227,710 for the six months ended June

30, 2026 and 2025, respectively.

As of June 30, 2026, total unrecognized stock-compensation expense relating to unvested stock awards granted

under the Company’s share-based compensation plans amounted to $ 2,544,703 .

following is a summary of the Company’s outstanding stock options as of June 30, 2026 and December 31, 2025:

of Stock Option Activity

Number of Options

5 unchanged sentences

Outstanding as of December 31, 2025

Outstanding as of March 31, 2026

Vested and Exercisable as of March 31, 2026

was no stock-based compensation expense related to stock options recorded for the three months ended March 31, 2026 and 2025.

Outstanding as of June 30, 2026

Vested and Exercisable as of June 30, 2026

April 9, 2026, the Company’s Board of Directors approved the cancelation of 1,319,394

stock options issued under the 2017 Innovative Health Solutions, Inc.

Stock Compensation Plan and the grant of an equivalent amount

of RSUs with immediate vesting under the NeurAxis, Inc.

2022 Omnibus Securities and Incentive Plan which was approved by the

Company’s shareholders on June 10, 2026.

The stock option cancelation and RSU grant will be treated as a modification under

ASC 718, Compensation—Stock Compensation , whereby the Company will recognize incremental compensation cost as the

excess of the fair value of the granted RSUs over the fair value of the stock options upon the exchange on July 24, 2026.

estimates $ 3,400,000

of incremental compensation cost will be recorded upon execution of the stock option cancellation and RSU grant

was no stock-based compensation expense related to stock options recorded for the three and six months ended June 30, 2026 and 2025.

Stock Purchase Plan

July 1, 2025, the Compensation Committee of the Board of Directors (“Board”) of the Company adopted the NeurAxis, Inc.

2025 Employee Stock Purchase Plan (the “ESPP”), effective as of the same date and subject to Shareholder approval by

July 1, 2026.

2025 Employee Stock Purchase Plan (the “ESPP”) subsequently approved by the Shareholders on June 10, 2026.

purpose of the ESPP is to provide eligible employees an opportunity to acquire common stock of the Company at a 15% discount using

5 unchanged sentences

increase before February 1st of any given year.

Total stock-based compensation expense includes $ 37,329

relating to the ESPP for the three months ended March 31, 2026 and 2025, respectively.

Total stock-based compensation expense related to the ESPP is

classified in the Company’s Condensed Statements of Operations as (i) selling expenses totaling $ 7,008 and $ 0 for the three months

ended June 30, 2026 and 2025, respectively, and $ 15,421 and $ 0 for the six months ended June 30, 2026 and 2025, respectively, and

(ii) general and administrative expense totaling $ 12,925 and $ 0 for the three months ended June 30, 2026 and 2025, respectively, and

$ 41,841 and $ 0 for the six months ended June 30, 2026 and 2025, respectively.

Employee withholdings of $ 53,214 and

are included in accounts payable in the Condensed Balance Sheets as of March 31, 2026 and December 31, 2025,

respectively.

Warrant Liabilities

Company has evaluated financial instruments arising from warrants that are issued and outstanding as of March 31, 2026 and December 31,

The 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 89.1 % to 94.7 % 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 3.72 % to 3.96 % 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.

following are the changes in the warrant liabilities during the three months ended March 31, 2026 and year ended December 31, 2025:

Schedule of Changes in Warrant Liabilities

included in accrued expenses in the Condensed Balance Sheets as of June 30, 2026 and December 31, 2025, respectively.

Fair Value Measurement of Financial Instruments

The Company utilizes a Black-Scholes

option-pricing model to compute the fair value of the warrant 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

per share, (ii) an expected remaining term of each warrant based on the remaining contractual maturity of each warrant, (iii)

estimated volatility ranging from 89.1 %

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 3.72 %

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

following are the changes in the warrant liabilities during the six months ended June 30, 2026 and year ended December 31, 2025:

of Changes in Warrant Liabilities

Warrant liabilities as of January 1, 2025

2 unchanged sentences

Changes in fair value of warrant liabilities

Warrant liabilities as of March 31, 2026

Warrant liabilities as of June 30, 2026

ESPP Floating Lookback Option

The Company utilizes a Monte Carlo simulation model

to compute the fair value of the ESPP floating lookback option which is expensed pro rata over each six-month offering period.

utilized in the application of the Monte Carlo simulation model included (i) a stock price ranging from $ 2.72 to $ 7.40 subject to a 15%

discount, (ii) an expected remaining term of 6 months, (iii) estimated volatility ranging from 89.1 % to 90.9 % based on historical stock

prices of comparable companies with a lookback period commensurate with the offering period, (iv) a risk-free interest rate ranging from

3.69 % to 3.94 % based on interest rates of U.S.

Treasury Notes consistent with the offering period and (v) a 0 % expected dividend yield

as the Company has not paid dividends and does not anticipate declaring dividends in the near future.

The Company recorded the fair value of the ESPP floating

lookback option as stock-based compensation expense totaling $ 19,935 and $ 0 for the three months ended June 30, 2026 and 2025, respectively,

and $ 57,264 and $ 0 for the six months ended June 30, 2026 and 2025, respectively.

Segment Information

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 and in patients 8 years and

older with functional abdominal pain associated with functional dyspepsia and related nausea symptoms.

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 Chief Operating

Decision Maker (“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 Condensed Statements of Operations.

The CODM uses net sales

to evaluate IB-STIM’s adoption and utilization by insurance carriers and physicians.

As 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.

(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

years of age and older with functional abdominal pain associated with irritable bowel syndrome and with functional abdominal pain

associated with functional dyspepsia and related nausea symptoms.

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 Chief Operating Decision Maker

(“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 Condensed Statements of Operations.

The CODM uses net sales to evaluate

IB-STIM’s adoption and utilization by insurance carriers and physicians.

As 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

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:

Schedule of Reconciles the Company’s Net Sales and Operating Loss

Three months ended March 31,

of Reconciles the Company’s Net Sales and Operating Loss

Three months ended June 30,

Six months ended June 30,

Selling Expenses (a)

1 unchanged sentence

Compensation and Benefits (a)

Professional Services (a)

Professional Services (a) (b)

Legal Settlement

Other Operating Expenses (a) (b)

Other Operating Expenses (a) (c)

Segment Operating Loss

1 unchanged sentence

( 1,717,858 )

( 3,865,391 )

( 4,012,955 )

Interest Expense

Change in Fair Value of Warrant Liability

Total Other (Expense) Income, Net

Total Other Income, Net

$ ( 2,085,746 )

$ ( 1,690,418 )

$ ( 3,847,178 )

$ ( 3,969,102 )

significant expense categories and amounts align with the segment-level information provided on a regular basis to the CODM.

operating expenses include rent and utilities, insurance, travel, software subscription

fees, board fees and bad debt expense.

segment assets for IB-STIM amounted to $ 8,745,706 and $ 6,404,036 as of March 31, 2026 and December 31, 2025, respectively.

Total segment

capital expenditures for IB-STIM amounted to $ 0 and $ 18,000 for the three months ended March 31, 2026 and 2025, respectively.

Professional services include legal, audit, market access

and investor relations expenses.

operating expenses include rent and utilities, insurance, travel, software subscription fees, board fees and bad debt expense.

segment assets for IB-STIM amounted to $ 9,996,160 and $ 6,404,036 as of June 30, 2026 and December 31, 2025, respectively.

Total segment

depreciation and amortization amounted to $ 16,317 and $ 6,356 for the three months ended March 31, 2026 and 2025, respectively.

segment non-cash charges settled in common stock include (i) consulting and advisory fees totaling $ 399,995 and $ 112,493 for the three

months ended March 31, 2026 and 2025, respectively, and (ii) hiring grants totaling $ 5,534 and $ 0 for the three months ended March 31,

2026 and 2025, respectively.

capital expenditures for IB-STIM amounted to $ 106,303 and $ 7,288 for the three months ended June 30, 2026 and 2025, respectively, and

$ 106,303 and $ 25,288 for the six months ended June 30, 2026 and 2025, respectively.

Total segment depreciation and amortization amounted

to $ 16,650 and $ 12,885 for the three months ended June 30, 2026 and 2025, respectively, and $ 32,968 and $ 19,241 for the six months ended

June 30, 2026 and 2025, respectively.

segment non-cash charges settled in common stock include (i) consulting and advisory fees totaling $ 399,995 and $ 112,493 for the six

months ended June 30, 2026 and 2025, respectively, (ii) RSU grants totaling $ 300,400 and $ 0 for the three months ended June 30, 2026

and 2025, respectively, and $ 305,934 and $ 0 for the six months ended June 30, 2026 and 2025, respectively.

Settled Litigation

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;

On February 6, 2019, plaintiffs Ritu Bhambhani, M.D.

and Sudhir Rao initiated a lawsuit against Innovative Health Solutions, Inc.

others in the United States District Court for the District of Maryland, later as amended as the Third Amended Complaint (“Complaint”),

asserting claims under the RICO Act, as well as of fraudulent misrepresentation, intentional misrepresentation by concealment, and civil

conspiracy related to Medicare and insurance reimbursement of the Company’s NeuroStim device, seeking damages in excess of $ 5 million.

The Court granted the Company’s motion for summary judgment and dismissed the Complaint on June 14, 2022, and the Fourth Circuit Court

of Appeals affirmed the dismissal on June 3, 2024, with no further appeal sought by the plaintiffs.

On July 14, 2022, related entities

owned or partially owned by the same plaintiffs Ritu Bhambhani, LLC;

Box Hill Surgery Center, LLC;

Pain and Spine Specialists of Maryland, LLC;

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.

April 25, 2025, the parties reached a $ 750,000 settlement payable in 12 equal monthly installments that began in January of 2026.

Company recorded a charge of $ 619,097 classified as general and administrative expense in the Condensed Statements of Operations during

the three months ended March 31, 2025, while interest expense was recorded as incurred.

As of March 31, 2026, the Company maintained

a liability of $ 528,799 classified as accrued expenses in the Condensed Balance Sheets.

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 “2022 Lawsuit”), asserting the same claims and seeking damages in excess of $ 75,000 .

The Court dismissed the RICO claims on May 25, 2023, and the parties subsequently pursued mediation of the remaining claims.

April 25, 2025, the parties reached a $ 750,000

settlement payable in 12 equal monthly installments beginning in January 2026, with $ 375,000

remaining as of June 30, 2026.

The Company recorded a charge of $ 11,471

and $ 630,568

classified as general and administrative expense in the Condensed Statements of Operations during the three and six months ended

June 30, 2025, respectively, while interest expense was recorded as incurred.

As of June 30, 2026, the Company maintained a

liability of $ 358,975

classified as accrued expenses in the Condensed Balance Sheets.

Commitments and Contingencies

13 unchanged sentences

improve shareholder value and to contribute to the growth and financial success of the Company.

The agreements had an employment

start date of October 1, 2022, with initial terms from two 2 to five

years and optional

one-year renewals .

The agreements had an employment start

date of October 1, 2022, with initial terms from 2 two to five years and optional one-year renewals .

are nine key employees and two non-employees that have stock options of the Company totaling 1,319,394 shares.

7 unchanged sentences

There are additional provisions to cover termination and change of control events.

of the key employees have exercised any of the stock options as of March 31, 2026.

April 2023, the Company amended the employee agreements to, among other things, clarify that the special one-time incentive payment and

the deferred bonus are contingent upon the effective date of the planned initial public offering.

The amendment also sets forth a process

for executives to exercise the stock options in accordance with the terms of the stock option agreement in effect as of the date of the

employment agreement and to clarify that there is no modification to the stock option agreements.

Company recorded the fair value of the stock options totaling $ 5,610,234 as compensation cost on the grant date.

In addition, a $ 6,225,169

incremental tax gross up payment is contingent upon the employees exercising their deferred bonus provision which will be recorded when

of the key employees have exercised any of the stock options as of June 30, 2026.

April 9, 2026, the Company’s Board of Directors approved the cancelation of 1,319,394

stock options issued under the 2017 Innovative Health Solutions,

Stock Compensation Plan and the grant of an equivalent amount of RSUs with immediate vesting under the NeurAxis, Inc.

Omnibus Securities and Incentive Plan with shareholder approval received on June 10, 2026.

The stock option cancelation and RSU grant

will be treated as a modification under ASC 718, Compensation—Stock Compensation , whereby the Company will recognize incremental

compensation cost as the excess of the fair value of the granted RSUs over the fair value of the stock options upon the exchange which

occurred on July 24, 2026.

The Company estimates (i) $ 3,400,000

of incremental stock compensation expense will be recorded

upon execution of the stock option cancellation and RSU grant agreements and (ii) $ 3,000,000 of cash taxes paid related to net share issuance

time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business.

6 unchanged sentences

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

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.

Arturo Taca served notice to the Company of claims asserting an interest in U.S.

10,413,719 and seeking

compensation of approximately $2,000,000 based on his alleged contributions to certain neurostimulation technology.

disputes both the asserted ownership interest and the related compensation claim and intends to defend the matter vigorously.

Company does not believe that a material loss is probable, and accordingly, no liability has been recorded as of June 30, 2026.

Because the matter remains in its early stages, the ultimate outcome cannot be predicted.

Subsequent Events

April 1, 2026, the Company issued 43,885 shares of common stock to eligible employees pursuant to the NeurAxis, Inc.

2025 Employee Stock

Purchase Plan effective as of July 1, 2025 and subject to shareholder approval by July 1, 2026.

April 9, 2026, the Company’s Board of Directors approved the cancelation of 1,319,394 stock options issued under the 2017 Innovative

Health Solutions, Inc.

2017 Stock Compensation Plan and the grant of an equivalent amount of RSUs with immediate vesting under the NeurAxis,

2022 Omnibus Securities and Incentive Plan, subject to shareholder approval.

The stock option cancelation and RSU grant will be

treated as a modification under ASC 718, Compensation—Stock Compensation , whereby the Company will recognize incremental

compensation cost as the excess of the fair value of the granted RSUs over the fair value of the stock options immediately before the

The Company estimates $ 4,250,000 of incremental compensation cost will be recorded upon approval of the exchange by the shareholders.

April 10, 2026, the Company’s Board of Directors declared a dividend on the Series B Preferred Stock.

April 9, 2026, the Company’s Board of Directors approved the cancelation of 1,319,394

stock options issued under the 2017 Innovative Health Solutions,

Stock Compensation Plan and the grant of an equivalent amount of RSUs with immediate vesting under the NeurAxis, Inc.

Omnibus Securities and Incentive Plan with shareholder approval received on June 10, 2026.

The stock option cancelation and RSU grant

will be treated as a modification under ASC 718, Compensation—Stock Compensation , whereby the Company will recognize incremental

compensation cost as the excess of the fair value of the granted RSUs over the fair value of the stock options upon the exchange which

occurred on July 24, 2026.

The Company estimates (i) $ 3,400,000

of incremental stock compensation expense will be recorded

upon execution of the stock option cancellation and RSU grant agreements and (ii) $ 3,000,000 of cash taxes paid related to net share issuance

July 9, 2026, the Company’s Board of Directors declared a dividend on the Series B Preferred Stock.

Holders of record of the

Company’s Series B Preferred Stock as the record date of April 21, 2026, received a stock dividend on April 28, 2026, of the Company’s

par value $ 0.001 Common Stock for every share of Series B Preferred Stock.

The Company issued 510,605 shares of Common Stock based on

the 8.5 % per annum cumulative dividend rate.

April 22, 2026, the Company granted 40,000

RSUs to an employee and issued 27,483 shares of common stock, net of taxes, upon vesting.

May 7, 2026, the Company issued 72,282 shares of common stock to an investor upon conversion of an equivalent amount

of Series B Preferred Stock.

April and May of 2026, pursuant to the August 2025 At The Market Offering Agreement with Craig-Hallum Capital Group LLC, the Company

issued 242,255

shares of common stock to investors for gross proceeds of $ 1,982,528

with such shares registered pursuant to the Company’s effective Registration Statement on Form S-3 (File No.

previously filed with the Securities and Exchange Commission (“SEC”) on December 13, 2024, and declared effective on

February 11, 2025, and the related prospectus supplements filed with the SEC on August 29, 2025, October 23, 2025, and April 21,

April and May of 2026, the Company issued 37,850

shares of common stock upon exercise of an equivalent amount of common stock warrants for gross proceeds of $ 90,083 .

Company’s Series B Preferred Stock as of the record date of July 21, 2026, received a stock dividend on July 29, 2026, of the

Company’s par value $ 0.001

common stock for every share of Series B Preferred Stock.

The Company issued 80,456

shares of common stock based on the 8.5 %

per annum cumulative dividend rate.

July 16, 2026, the Company issued 9,250

shares of common stock upon exercise of an equivalent amount

of common stock warrants for gross proceeds of $ 22,015 .

On August 6, 2026, the Company’s

Compensation Committee approved the issuance of 142,345 RSUs to the Board of Directors and 833,958 RSUs to employees when granted pursuant

to the NeurAxis, Inc.

2022 Omnibus Securities and Incentive Plan, as amended on August 15, 2024, with varying vesting periods up to three

Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have been

1 unchanged sentence

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 1. Financial Statements