What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-11 compared with 2026-05-12 · 96 added, 72 removed, 107 unchanged (61% of the section changed)

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our inception, we have incurred significant operating losses.

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.

Our net loss was $2,085,746 and $1,690,418 for the three months ended June

30, 2026 and 2025, respectively, and $3,847,178 and $3,969,102 for the six months ended June 30, 2026 and 2025, respectively.

we had stockholders’ equity of $6,735,053 as of June 30, 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 and incremental payor coverage.

Affecting our Business and Results of Operations

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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.

Expired inventory charges totaled $2,092 and $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.

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

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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.

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,

to conform to current year presentation.

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

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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.

The Company 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, 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.

relations, market access, facility costs, utilities and travel.

of Operations

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

Three Months Ended March 31,

following table presents our statements of operations for the three and six months ended June 30, 2026 and 2025,

respectively:

Three Months Ended June 30,

Six Months Ended June 30,

Cost of goods sold

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Change in fair value of warrant liability

Total other (expense) income, net

Total other income, net

$ (2,085,746 )

$ (1,690,418 )

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.

$ (3,847,178 )

$ (3,969,102 )

sales increased $1,034,609, or 115.7%, from $894,086 for the three months ended June 30, 2025, to $1,928,695 for the three months ended

June 30, 2026, and increased $1,746,837 or 97.6%, from $1,789,741 for the six months ended June 30, 2025, to $3,536,578 for the six months

ended June 30, 2026.

The increases were due to unit volume growth from broader insurance coverage attributable to IB-Stim’s Category

I CPT code effective date of January 1, 2026 and an increase in the average selling price as more units were sold to patients with full

reimbursement insurance coverage compared to the Company’s discounted financial assistance program.

Profit and Gross Margin

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.

profit increased $908,679, or 121.6%, from $747,443 for the three months ended June 30, 2025, to $1,656,122 for the three months ended

June 30, 2026, and increased $1,542,016, or 102.6%, from $1,503,623 for the six months ended June 30, 2025, to $3,045,639 for the six

months ended June 30, 2026.

The increases were due to higher unit volume from more customers with full reimbursement insurance coverage.

Gross margin increased from 83.6% for the three months ended June 30, 2025, to 85.9% for the three months ended June 30, 2026, and increased

from 84.0% for six months ended June 30, 2025, to 86.1% for the six months ended June 30, 2026, due to higher growth from the Company’s

patients with full reimbursement insurance coverage compared to patients that pay through the Company’s discounted financial assistance

program, partially offset by higher device manufacturing costs.

expenses increased $327,374, or 61.3%, from $534,013 for the three months ended June 30, 2025, to $861,387 for the three months ended

June 30, 2026, and increased $651,593 or 63.0%, from $1,034,131 for the six months ended June 30, 2025, to $1,685,724 for the six months

ended June 30, 2026.

The increases were due to commissions from higher sales volume, additional sales reps and marketing personnel including

recruiting fees and higher travel expenses to facilitate growth resulting from the IB-Stim Category I CPT code and broader insurance

and Development

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 development expenses increased $159,147, or 138.2%, from $115,197 for the three months ended June 30, 2025, to $274,344 for the

three months ended June 30 2026, and increased $151,710, or 68.3%, from $222,201 for the six months ended June 30, 2025 to $373,911

for the six months ended June 30, 2026.

The increases were due to more clinical research studies in 2026 as the Company continues

its expansion of IB-Stim’s FDA indications, partially offset by non-recurring RED device development costs in

and Administrative

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 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 administrative expenses increased $829,012, or 45.6%, from $1,816,091 for the three months ended June 30, 2025, to $2,645,103 for

the three months ended June 30, 2026, primarily due to (i) incremental stock compensation expense from the third year of a three-year

vesting plan, (ii) higher market access advisory costs and additional headcount, including recruiting fees, as the Company pursues incremental

insurance payor coverage and (iii) higher benefit costs.

and administrative expenses increased $591,149, or 13.9%, from $4,260,246 for the six months ended June 30, 2025, to $4,851,395 for the

six months ended June 30, 2026, primarily due to (i) incremental stock compensation expense from the third year of a three-year vesting

plan, (ii) higher market access advisory costs and additional headcount, including recruiting fees, as the Company pursues incremental

insurance payor coverage, (iii) higher benefit costs and (iv) consulting fees incurred to secure a Federal Supply Schedule agreement

with the Veterans Administration, partly offset by a one-time non-recurring charge in 2025 to settle a lawsuit.

operating loss increased $406,854, or 23.7%, from $1,717,858 for the three months ended June 30, 2025, to $2,124,712 for the three months

ended June 30, 2026, primarily due to higher operating expenses from selling costs that are a function of the higher sales, research

and development costs as the Company continues its pursuit of additional IB-Stim FDA indications and stock compensation expense, partly

offset by higher gross profit as the Company’s sales increased from the Category I CPT code and broader payor coverage.

operating loss decreased $147,564, or 3.7%, from $4,012,955 for the six months ended June 30, 2025, to $3,865,391 for the six months

ended June 30, 2026, primarily due to higher gross profit as the Company’s sales increased due to the Category I CPT code and broader

payor coverage and the absence of a one-time non-recurring charge in 2025 to settle a lawsuit, partly offset by higher operating expenses

due to selling costs that are a function of the higher sales, research and development costs as the Company continues its pursuit of

additional IB-Stim FDA indications and stock compensation expense.

income increased $11,526, or 42.0%, from $27,440 for the three months ended June 30, 2025, to $38,966 for the three months ended June

30, 2026, primarily due to higher interest income on the Company’s cash balances.

income decreased $25,640, or 58.5%, from $43,853 for the six months ended June 30, 2025, to $18,213 for the six months ended June 30,

2026, primarily due to the change in fair value of warrants and higher interest expense associated with the settlement of the lawsuit,

partly offset by higher interest income on the Company’s cash balances.

net loss increased $395,328, or 23.4%, from $1,690,418 for the three months ended June 30, 2025, to $2,085,746 for the three months ended

June 30, 2026, due to a higher operating loss partly offset by higher interest income.

net loss decreased $121,924, or 3.1%, from $3,969,102 for the six months ended June 30, 2025, to $3,847,178 for the six months ended

June 30, 2026, due to a lower operating loss partly offset by the change in fair value of warrants and higher interest expense.

and Capital Resources

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

had cash on hand of $8,322,258 and $4,965,072 as of June 30, 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.

surplus of $6,317,762 and $2,941,091 as of June 30, 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.

(ii) higher accounts receivable driven by IB-Stim device sales, partly offset by higher accounts payable related market access and clinical

research study costs incurred.

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

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

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

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

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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 three months ended March 31, 2026

Three Months Ended March 31,

following table summarizes our cash flow from operating, investing and financing activities for the six months ended June 30, 2026 and

Six Months Ended June 30,

Net cash used in operating activities

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Net cash used in investing activities

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Activities – Net cash used in operating activities 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.

Activities – Net cash used in operating activities decreased $811,840 or 26.4%, for the six months ended June 30, 2026, compared

to the six months ended June 30, 2025, primarily due to (i) a lower operating loss excluding non-cash stock compensation expense and

(ii) inventory purchased and market access advisory services rendered and accrued in June, partly offset by higher accounts receivable

resulting from sales growth due the Category I CPT code and increased payor coverage.

Activities – Net cash used in investing activities decreased $18,985 or 75.1%, for the six months ended June 30, 2026 compared

to the six months ended June 30, 2025, due to nonrecurring capital expenditures to manufacture the RED device in 2025.

Activities – Net cash provided by financing activities increased $234,775, or 4.4%, for the six months ended June 30, 2026

compared to the six months ended June 30, 2025, primarily due to lower offering costs from the issuance of common stock pursuant to the

At The Market capital facility and proceeds from the issuance of common stock subject to the Employee Stock Purchase Plan.

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