What changed in this filing

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Item 1. Financial Statements

2025-05-12 compared with 2024-11-12 · 624 added, 806 removed, 310 unchanged (82% of the section changed)

1 unchanged sentence

Balance Sheets

September 30,

Current Assets:

Cash and cash equivalents

Cash and cash

Accounts receivable, net

Inventories, net

Prepaids and other current assets

Total current assets

of credit losses of $ 5,000 and $ 5,000 as of March 31, 2025 and December 31, 2024, respectively

Inventories, net of

reserves of $ 4,454 and $ 4,454 as of March 31, 2025 and December 31, 2024, respectively

and other current assets

current assets

Property and Equipment, at cost:

Less - accumulated depreciation

Property and equipment, net

- accumulated depreciation

and equipment, net

Other Assets:

Operating lease right of use asset, net

Operating lease right of

use asset, net

Intangible assets, net

Security Deposit

Current Liabilities:

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Accrued expenses

Current portion of operating lease payable

Current portion of operating

lease payable

Notes payable

Customer deposits

Share liability

Warrant liabilities

Total current liabilities

current liabilities

Non-current Liabilities:

Operating lease payable, net of current portion

Total non-current liabilities

Total liabilities

lease payable, net of current portion

Other non-current liabilities

non-current liabilities

Commitments and contingencies (see note 14)

Stockholders’ Deficit

Convertible Series A Preferred stock, $ 0.001

0 and 1,000,000

shares authorized;

shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Convertible Series Seed Preferred stock, $ 0.001

0 and 120,000

shares authorized;

shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Convertible Series B Preferred stock, $ 0.01 par value;

4,000,000 shares authorized, 2,073,524 and 0

shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Preferred stock, value

Stockholders’ Equity

Convertible Series B Preferred stock, $ 0.01

5,000,000 shares authorized, 4,280,939 shares issued and outstanding as of March 31, 2025 and December 31, 2024

Common stock, $ 0.001 par value;

100,000,000 shares authorized;

6,980,227 and 6,508,897 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

and 6,990,227 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid in capital

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( 56,799,612 )

Total Stockholders’ Deficit

( 1,793,932 )

( 1,403,241 )

Total Liabilities and Stockholders’ Deficit

stockholders’ equity

Liabilities and Stockholders’ Equity

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

Statements of Operations (Unaudited)

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

the Three Months Ended

Cost of Goods Sold

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General and Administrative

Operating Loss

( 2,295,098 )

( 1,832,120 )

( 5,690,225 )

( 5,041,290 )

Other (Expense) Income:

Other income (expense):

Financing charges

Interest expense

Interest income

Change in fair value of warrant liability

Change in fair value of derivative financial instruments

Amortization of debt discount and issuance cost

( 1,331,030 )

( 4,881,622 )

Extinguishment of debt liabilities

( 4,779,069 )

( 3,649,571 )

Other expense

Total other (expense) income, net

( 5,603,024 )

( 1,103,371 )

( 7,993,095 )

Change in fair value of

warrant liability

Amortization of debt discount

and issuance cost

other income (expense), net

( 2,278,684 )

( 2,120,651 )

stock dividends

Net loss available to common

$ ( 2,492,227 )

1 unchanged sentence

Per-Share Data

Basic and diluted loss per share

Basic and diluted loss

Weighted Average Common Shares Outstanding

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

Statements of Stockholders’ Deficit (Unaudited)

For the Three and Nine Months Ended September 30,

Additional Paid In

Stockholder’s

Balance at January 1, 2023

$ ( 33,931,428 )

$ ( 5,573,613 )

( 2,173,408 )

Balance at March 31, 2023

$ ( 36,104,836 )

$ ( 7,747,021 )

( 2,235,614 )

Balance at June 30, 2023

$ ( 38,340,450 )

$ ( 9,982,635 )

Common stock issued upon initial public offering, net

Common stock issued upon preferred stock conversion

Common stock issued upon debt conversion

Common stock issued from agreements

Change in fair value of warrant liability upon initial public offering

( 8,625,363 )

Balances at September 30, 2023

$ ( 46,965,813 )

$ ( 1,061,087 )

Statements of Stockholders’ Deficit (Unaudited)

For the Three and Nine Months

Ended September 30, 2024

Statements of Stockholders’ Equity (Deficit) (Unaudited)

Preferred Stock

Additional Paid In

Stockholder’s

Balance at January 1, 2024

$ ( 48,558,111 )

$ ( 1,403,241 )

Balances at January 1, 2024

$ ( 48,558,111 )

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Warrants exercised

Additional paid in capital from warrants issued under consulting agreement

Additional paid in capital from warrants issued as debt discount

Common stock issued from agreements

( 2,120,651 )

Balance at March 31, 2024

$ ( 50,678,762 )

$ ( 3,184,454 )

Additional paid in capital from warrants issued under consulting agreement

Additional paid in capital from warrants issued

under advisory agreement

Additional paid in capital from warrants issued

as debt discount

Common stock issued from agreements

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( 2,120,651 )

Balances at June 30, 2024

Balances at March 31,

$ ( 50,678,762 )

$ ( 3,184,454 )

Balances at January 1, 2025

$ ( 56,799,612 )

( 56,799,612 )

Additional paid in capital from warrants issued under consulting agreement

Warrants exercised

Common stock issued from agreements

Debt discount on mandatory conversion of convertible promissory notes to Series B preferred shares

Conversion of convertible promissory note to Series B Preferred Stock

( 1,755,234 )

Balances at September 30, 2024

Issuance of restricted stock awards

( 2,278,684 )

Balances at March 31,

$ ( 59,078,296 )

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Statements of Cash Flows (Unaudited)

For the Nine Months Ended

September 30,

Cash Flows from Operating Activities

the Three Months Ended

Cash Flows from Operating

$ ( 2,278,684 )

$ ( 2,120,651 )

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

Amortization of debt discount and issuance cost

Adjustments to reconcile

net loss to net cash used by operating activities:

Amortization of debt discount

and issuance cost

Depreciation and amortization

Provisions for losses on accounts receivable

Provision for losses on inventory

Provisions for losses on

accounts receivable

Loss on disposal of property and equipment

Non-cash lease expense

Non-cash interest expense

Stock-based compensation

Extinguishment of derivative liability

Issuance of common stock for non-cash consideration

Fair value of warrants issued for non-cash consideration

Finance charges

Change in fair value of derivative liabilities

Change in fair value of warrant liabilities

Changes in operating assets and liabilities:

Issuance of common stock

for non-cash consideration

Issuance of warrants for

non-cash consideration

Change in fair value of

warrant liabilities

Changes in operating assets

and liabilities:

Accounts receivable

Prepaids and other current assets

Prepaids and other current

Accounts payable

( 1,025,467 )

Accrued expenses

Customer deposits

Operating lease liability

Net cash used by operating activities

( 4,340,097 )

lease liability

Other non-current liabilities

cash used in operating activities

( 1,603,655 )

Cash Flows from Investing Activities

Additions to property and equipment

Additions to intangible assets

Net cash used by investing activities

Cash Flows from Financing Activities

Proceeds from issuance of common stock, net of issuance costs

Offering costs in advance of sale of common stock

( 1,332,160 )

Cash Flows from Investing

to property and equipment

cash used in investing activities

Cash Flows from Financing

Proceeds from exercised warrants

Principal payments on notes payable

( 3,487,578 )

Proceeds from notes payable

payments on notes payable

Proceeds from convertible notes, net of fees

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

Supplemental Disclosure of Operating Activities

cash (used in) provided by financing activities

Net (Decrease) Increase in Cash and

Cash Equivalents

( 1,691,500 )

Cash and Cash Equivalents

at Beginning of Period

and Cash Equivalents at End of Period

Supplemental Disclosure

of Operating Activities

Cash paid for interest

Cash paid for income taxes

Supplemental Schedule of Non-Cash Investing and Financing Activities

Recognition of right of use asset

Conversion of convertible promissory notes to Series B preferred stock

Fair value of warrant liabilities from convertible notes

Fair value of derivative liabilities of conversion feature from convertible notes

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

additional paid in capital

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

Issuance of note payable to financing company for insurance premiums

Supplemental Schedule of

Non-Cash Investing and Financing Activities

Recognition of right of

Common stock issued for

Common stock issued upon

cashless exercise of warrants

Fair value of warrants

from debt discount in convertible notes classified as additional paid in capital

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

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(“we,” “us,” the “Company,” or “NeurAxis”) was established in 2011 and incorporated

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

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

The name was changed to NeurAxis, Inc.

in March of 2022.

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

authorized shares were increased, and a par value established.

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

All per share information has been

adjusted for this reverse stock split.

The reverse split became effective on January 12, 2023.

All share and per share amounts for the

common stock have been retroactively restated to give effect to the splits.

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

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

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

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

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

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

August 9, 2023, the Company consummated an initial public offering (“IPO”), conducted on a firm commitment basis, pursuant to which it sold 1,098,667

shares of its common stock at a price of $ 6.00

per share, resulting in gross proceeds to the Company of $ 6,592,002 .

Net proceeds to the Company, after deducting underwriting discounts and commissions, 2022 deferred offering costs totaling $ 736,736

and offering expenses paid by the Company, were $ 4,110,721 .

All shares sold in our IPO were registered pursuant to a registration statement on Form S-1 (File No.

333- 269179), as amended,

declared effective by the SEC on August 9, 2023.

Alexander Capital L.P.

(“Alexander”) acted as sole book-running manager

for the offering and Spartan Capital Securities, LLC acted as co-manager for the offering.

The underwriters did not exercise their

option to purchase up to an additional 164,801

shares of common stock.

The Company paid the underwriters an underwriting discount of seven percent ( 7 %)

of the amount raised in the offering.

In addition, we also paid the underwriters a non-accountable expense allowance in the amount

in commissions and fees amounted to a total of $ 527,000 )

at closing, as well as $ 175,000

for the reimbursement of certain of the underwriters’ expenses.

Additionally, as partial consideration for services rendered

in connection with the offering, the Company issued Alexander unregistered warrants to purchase an aggregate of 65,921

shares of Company common stock, representing 6.0 %

of the aggregate shares sold in the offering.

The warrants have an initial exercise price of $ 7.20

per share (equal to 120 %

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

August 15, 2024, the Company’s shareholders (i) authorized 5,000,000

shares of preferred stock of which 4,000,000

shares were designated as $ 0.001

par value “Series B Preferred Stock” with 2,073,524

shares issued and outstanding as of September 30, 2024, (ii)

retired 1,000,000 shares of Series A Preferred Stock and (iii) retired 120,000 shares of Series Seed Preferred Stock.

Company is headquartered in Carmel, Indiana.

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

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

510(K) clearance (K140530, 2014).

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

functional abdominal pain associated with irritable bowel syndrome.

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

the Company filed a Certificate of Conversion and became a Delaware corporation.

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

The Company has developed four FDA cleared products:

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

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

IB-STIM is a percutaneous electrical nerve field stimulator (PENFS) device that is indicated

in patients 8-21 years of age with functional abdominal pain associated with irritable bowel

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

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

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

RED is intended

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

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

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

fee of $ 250,000 from Masimo.

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

licensing payments or other revenue from this product.

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

The NSS-2 Bridge device is licensed to Masimo Corporation.

Masimo markets and sells this product as its Masimo Bridge.

original 510(K) device was an Electroacupuncture Device (“EAD”), now called NeuroStim.

The EAD is no longer being manufactured,

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Actual results could differ from those estimates.

Receivable and Allowance for Credit Losses

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

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

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

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

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

The allowance for credit losses was

of March 31, 2025 and December 31, 2024, respectively.

The Company recorded credit losses for the three months ended March 31, 2025

and 2024 of $ 0 and

respectively.

Inventories are valued at the lower of cost or

net realizable value.

Cost is determined using the weighted average method.

The inventory is comprised of finished medical devices

Certain components within the devices have an expiration date that are removed from current inventory and expensed at the

date of expiration.

For the three months ended March 31, 2025 and 2024, there was no expired inventory expensed.

Inventory reserves

totaled $ 4,454 and $ 4,454 as of March 31, 2025 and December 31, 2024,

respectively.

Value Measurements

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Company’s Level 1 accounts include cash, accounts receivable, accounts payable, prepaids, and other current assets.

believes the estimated fair value of these accounts on September 30, 2024 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 these accounts on March 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.

Inputs to determine fair value are generally unobservable

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

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

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

The fair value estimates may

not be indicative of the amounts that would be realized in a market exchange.

Additionally, there may be inherent uncertainties or changes

in the underlying assumptions used, which could significantly affect the current or future fair value estimates.

Unobservable inputs

used in the models are significant to the fair values of the assets and liabilities.

were no transfers between any of the levels during the periods ended September 30, 2024 and December 31, 2023.

In addition to assets

and liabilities that are recorded at fair value on a recurring basis, the Company’s assets and liabilities are also subject to

nonrecurring fair value measurements.

As of September 30, 2024 and December 31, 2023, the Company had no assets that were measured on

a nonrecurring basis.

Inputs to determine fair value are generally unobservable and typically

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

The fair values

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

The valuation

techniques involve management’s estimates and judgment based on unobservable inputs.

The fair value estimates may not be indicative

of the amounts that would be realized in a market exchange.

Additionally, there may be inherent uncertainties or changes in the underlying

assumptions used, which could significantly affect the current or future fair value estimates.

Unobservable inputs used in the models

are significant to the fair values of the assets and liabilities.

were no transfers between any of the levels during the periods ended March 31, 2025 and December 31, 2024.

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 31, 2025 and December 31, 2024.

and Diluted Net Income (Loss) per Share

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

number of shares of common stock outstanding during the period.

Diluted EPS is computed by dividing net income (loss) by the weighted

average of all potentially dilutive shares of common stock that were outstanding during the periods presented.

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

shares outstanding during the period.

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

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

In periods when losses are reported, which

is the case for September 30, 2024 and 2023 presented in these financial statements, the weighted-average number of common shares outstanding

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

Company had the following potentially dilutive common stock equivalents at September 30, 2024 and 2023:

of Dilutive Common Stock Equivalents

Pre-Funded Warrants for Common Stock

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

average number of common shares outstanding during the period.

Diluted EPS is determined using the weighted average number of common

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

In periods when losses are reported, which is the case for the three month periods ended March 31, 2025 and 2024 presented

in these financial statements, the weighted average number of common shares outstanding excludes common stock equivalents because their

inclusion would be anti-dilutive.

Company had the following potentially dilutive common stock equivalents:

Schedule of Dilutive Common Stock Equivalents

Restricted Stock Units

Series B Preferred Stock

following table presents the calculation of the basic and diluted net loss per share:

of Basic and Diluted Net Loss Per Share

Three Months Ended September 30,

Nine Months Ended September 30,

$ ( 1,755,234 )

$ ( 8,625,363 )

$ ( 6,793,596 )

$ ( 13,034,385 )

Preferred stock dividends

(loss) available to stockholders

Undeclared Cumulative Series B Preferred Stock Dividends

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

Schedule of Basic and Diluted Net Loss Per Share

$ ( 2,278,684 )

$ ( 2,120,651 )

stock dividends

Net loss available to common stockholders

( 2,492,227 )

( 2,120,651 )

Weighted average shares of common stock outstanding - basic and diluted

Basic and diluted net loss per share

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

in the United States.

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

Products are generally

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

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

average shares of common stock outstanding - basic and diluted

Basic and diluted net

loss per share

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

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

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

Company accounts for the granting of stock options and restricted stock units to employees and non-employees using the fair value method

whereby all awards are measured at fair value on the date of the grant.

The fair value of all employee stock options and restricted stock

units is expensed over the requisite service period with a corresponding increase to additional paid-in capital.

Upon exercise of stock

options, the consideration paid by the option holder is recorded in additional paid-in capital, while the par value of the shares received

is reclassified from additional paid-in-capital to common stock.

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

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

awards to non-employees are measured based on the fair value of the equity instrument issued.

Compensation expense for non-employee stock

awards is recognized over the requisite service period following the measurement of the fair value on the grant date.

Company uses the Black-Scholes option-pricing model to calculate the fair value of stock options.

The use of the Black-Scholes option-pricing

model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common

stock consistent with the expected term of the option, risk-free interest rates, the value of the common stock and expected dividend

yield of the common stock.

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

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

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obligation when the performance obligation is satisfied.

Company estimates credit losses on accounts receivable by estimating expected credit losses over the contractual term of the receivable

using a discounted cash flow method.

When developing this estimate of expected credit losses, the Company considers all available information

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

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

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that collection of the amount due is assured.

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

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

including hospitals and clinics.

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

location of customers:

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

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

in duration).

Performance Obligations with Customers:

of Satisfaction

Company typically satisfies its performance obligations as the goods are received at the customer’s destination.

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

As such, ownership of goods

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

and handling costs are recorded as cost of goods sold in the Statement of Operations.

Payment Terms

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

Invoices for goods are typically

sent to customers within three calendar days of shipment.

The Company does not offer discounts if the customer pays some or all of an

invoiced amount prior to the due date.

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

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

The manufacturer

is located within the state of Indiana.

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

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

Refunds, etc.

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

All of the Company’s

products are sold to healthcare customers including hospitals, clinics and physician offices.

Sales to healthcare customers lack seasonality

and have a mild correlation with economic cycles.

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

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

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

(rather than over time).

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

As such, ownership of goods in

transit is transferred to the customer upon receipt as the Company bears the associated risks (e.g., loss, damage, delay).

typically relies on shipping information from common carriers to evaluate when the customer has obtained control of the goods.

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

Company’s contracts with customers typically do not involve variable consideration.

The information that the Company uses to determine

the transaction price for a contract is similar to the information that the Company’s management uses in establishing the prices

of goods to be sold.

may not be cancelled after shipment.

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accounts to reflect its actual return experience.

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

As of September 30, 2024, we had a stockholders’ deficit of $ 1,793,932

and short-term outstanding borrowings of $ 147,688 .

As of September 30, 2024, we had cash of $ 260,885 and

a working capital deficit of $ 2,032,284 .

Estimated returns totaled $ 6,587 and $ 5,000 as of March 31, 2025 and December 31, 2024,

respectively.

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

The Company does not offer discounts

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

None of the Company’s contracts have a significant

financing component.

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

and Michigan.

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

to transfer goods to the customer).

As of March 31, 2025, we had stockholders’

equity of $ 258,479 and short-term outstanding borrowings

of $ 84,307 .

Additionally, we had cash of $ 2,005,370

and a working capital surplus of $ 439,823 as

of March 31, 2025.

have incurred losses and negative cash flows from operations since inception and have funded our operations primarily with a

combination of sales, debt, and the sale of capital stock.

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

11 unchanged sentences

concern for a period of one year from the date the financial statements are issued.

date, the Company has experienced operating losses and negative cash flows from operations.

Management believes that increased sales

and acceptance of their product by insurance providers will allow the Company to achieve profitability in the near term.

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

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Issued Accounting Pronouncements

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

(Subtopic (220-40):

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

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

and intangible amortization expense.

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

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

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

fiscal years beginning after December 15, 2027.

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

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

December 2023, the FASB issued ASU 2023-19, Income Taxes (Topic 740):

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

Both notes’ initial

balances were $ 506,400 , with interest calculated monthly based on applicable federal rates.

Both notes’ principal

balances are $ 506,400 , with interest calculated monthly based on applicable federal rates.

No payments have been received on the notes.

Since repayment is not assured, the Company provided an allowance for the entire balance of principal and interest as of December 31,

The current allowance is $ 1,012,800 as of September 30, 2024.

The current allowance is $ 1,012,800 as of March 31, 2025.

The current loan balances are as follows:

Schedule of Related Party Transactions

September 30, 2024

March 31, 2025

Shareholder 1

Shareholder 2

Allowance for Collection Risk

Principal Balance

Allowance for Collection

( 1,012,800 )

2 unchanged sentences

Shareholder 2

Allowance for Collection Risk

Principal Balance

Allowance for Collection

( 1,012,800 )

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

his appointment to the Board of Directors.

For the nine months ended September 30, 2024 and 2023, the Company paid Mr.

Watkins $ 0 and

$ 10,000 , respectively, for these services.

No amounts were owed to Mr.

Watkins as of September 30, 2024 and December 31, 2023, respectively,

for these services.

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

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

Compliance and Privacy Officer both maintain an ownership interest.

The license allows for the development, marketing and sales of

electro-therapy treatments by stimulation of cranial nerves, cranial nerve branches, auricular nerves, auricular nerve branches,

auricular nerve bundles and auricular anatomical structures in human patient.

The exclusive license agreement expires on October 18,

2037, may be terminated by either party upon 60 days prior written notice and requires the Company to pay costs associated with the

maintenance, prosecution and continuation of patent filings.

The Company’s Board of Directors pre-approved the reimbursement

of up to $ 10,000

for the year ending December 31,2025.

The license costs totaled $ 1,317

and $ 0 for the three months

ended March 31, 2025 and 2024, respectively.

The Company owed the limited liability company $ 210

that are included in accounts payable in the Condensed Balance Sheets as of March 31, 2025 and December 31, 2024,

respectively.

From time to time, a member of the Company’s

Board of Directors purchases IB-STIM devices from the Company at cost to conduct research and development activities.

The Company’s

Board of Directors pre-approved the sale of these IB-STIM devices up to $ 10,000 for the year ended December 31,2025.

The Company sold

IB-STIM devices for a total of $ 1,957 and $ 0 for the three months ended March 31, 2025 and 2024, respectively.

Company’s former Chief Financial Officer is contracted for services through a third-party public accounting firm.

firm’s managing partner and majority shareholder.

The firm is engaged by the Company to provide accounting and tax services on

a continuous basis.

Fees paid for services were $ 148,106

and $ 304,158

for the nine months ended September 30, 2024 and 2023, respectively.

The Company owed the firm for open invoices of $ 50,808

that are included in accounts payable as of September 30, 2024 and December 31, 2023, respectively.

He is the firm’s

managing partner and majority shareholder.

The firm is engaged by the Company to provide accounting and tax services on a continuous

The services totaled $ 21,871 and $ 62,987 for the three months ended March 31, 2025 and 2024, respectively.

The Company owed the

firm $ 2,710 and $ 4,173 that are included in accounts payable as of March 31, 2025 and December 31, 2024, respectively.

On June 28, 2024,

the Company also issued 20,000 common shares with a fair value $ 55,600 to the former Chief Financial Officer for services rendered during

the IPO process.

Prepaids and Other Current Assets

Prepaids and other current assets consisted of the following:

of Prepaids and Other Current Assets

March 31, 2025

December 31, 2024

Prepaid insurance

Prepaid software subscriptions

Total prepaids and other current assets

Accrued Expenses

Accrued expenses consisted of the following:

Schedule of Accrued Expenses

March 31, 2025

December 31, 2024

Compensation and benefits

Settled litigation

Advisory fees

Total accrued expenses

Notes Payable

Company borrowed $ 250,000 on December 16, 2021, from Channel Partners Capital.

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

the final payment scheduled for March 16, 2023.

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

The principal outstanding

as of January 1, 2022 was $ 244,048 .

The Company borrowed $ 122,000 on September 16, 2022, to bring the principal balance back to $ 250,000 .

After making scheduled payments, the Company borrowed $ 107,231 on May 24, 2023, to bring the principal balance back to $ 250,000 .

terms of the note are the same as the previous note with the final payment made on August 22, 2024.

The principal outstanding as of September

30, 2024 and December 31, 2023 was zero and $ 148,062 , respectively.

The Company believes that the advancement of additional funds is

a minor modification to the terms of the existing loan since the difference in present value of the cash flows under the terms of the

new loan is less than 10% of the present value of the remaining cash flows under the terms of the original loan.

As a result, the modification

was accounted for as a modification of debt.

lender was granted and assigned a continuing security interest in all the Company’s personal property assets including, but not

limited to, business equipment, inventory, accounts, accounts receivable, intellectual property, chattel paper, instruments, deposit

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

August 9, 2024, the Company entered into a $ 210,000 promissory note to finance the premiums of a business insurance policy, bearing interest

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

On November 1, 2024, the Company entered into a second promissory note with

a principal balance of $ 64,328 to finance premiums of other business insurance policies, bearing interest at a rate of 7.65 % per annum

and maturing on September 1, 2025 (collectively referred to as the “2024 Promissory Notes”).

The principal outstanding on

2024 Promissory Notes was $ 84,307 and $ 154,152 as of March 31, 2025 and December 31, 2024, respectively.

Convertible Notes

November 8, 2023, the Company entered into a Securities Purchase Agreement (“SPA”) with a shareholder for the issuance 1,260,504

1 unchanged sentence

purchase price of $ 3,000,000 paid in 15 monthly installments of $ 200,000 each, commencing on the later of January 10, 2024 or a date

after stockholders approve an amendment to the Company’s Certificate of Incorporation to authorize the creation of the Series B

Preferred Stock (the “Stockholder Approval”).

The Series B Preferred Stock is convertible at any time into shares of common

stock of the Company without any further consideration.

Following the issuance of the Series B Preferred Stock, it will rank senior to

the common stock with respect to payments upon the liquidation, dissolution and winding up of the Company.

Due to a delay in Stockholder

Approval, the Company amended the SPA on February 12, 2024 to issue a promissory note, due and payable on the earlier of 15 months or

12 months if the Series B Preferred Stock has not been authorized, convertible into Series B Preferred Stock with identical funding amounts

February and March of 2024, the Company entered into a series of convertible promissory notes totaling $ 3,135,000 with terms identical

to the $ 3,000,000 convertible promissory note issued on February 12, 2024 (collectively referred to as the “Original 2024 Convertible

Promissory Notes”).

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

of the Company.

At any time following the date of shareholder approval to authorize the creation of Series B Preferred Stock prior to

the maturity date, the investor may elect to convert all or part of the principal into the Company’s Series B Preferred Stock at

a conversion price per share equal to $ 2.38 .

Without limiting the forgoing, all principal amounts outstanding on the maturity date will

automatically convert into the Company’s Series B Preferred Stock.

The Series B Preferred Stock is entitled to cumulative dividends

at 8.5 % per annum (whether or not declared) payable quarterly in either cash or common stock at the $ 2.38 conversion price at the election

of the Company.

Upon conversion to Series B Preferred Stock, the investor may elect, at its option at any time, to convert all or part

of the Series B Preferred Stock plus accrued but unpaid dividends into an equivalent amount of common stock at the $ 2.38 conversion price.

As of September 30, 2024, no investor has converted any portion of the Original 2024 Convertible Notes into Series B Preferred Stock

as the shareholders have not yet authorized its issuance.

May 21, 2024, the Company entered into three convertible promissory notes with related institutional accredited investors with terms

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

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

Certain provisions to the SPA and Certificate of Designation previously issued

on February 12, 2024 changed, including (i) the number of shares of preferred stock to be designated as Series B Preferred Stock was

increased from 1,500,000 to 5,000,000 , (ii) the stated value of the Series B Preferred Stock was changed from $ 1.00 to $ 2.38 per share,

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

on June 30, 2025, and (v) the number of shares of the common stock that a holder of Series B preferred stock is entitled to receive shall

not exceed the maximum percentage chosen by the holder, which is initially set at between 4.99 % and 19.99 % until shareholder approval

is obtained, of the number of outstanding shares of the common stock at the time of the conversion of the Series B preferred stock shares.

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

that the Series B preferred shares have not been duly authorized on or before such date, or (iii) immediately upon the occurrence of

an event of default.

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

following the date of shareholder approval.

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

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

after stockholder approval of an amendment to the Company’s Certificate of Incorporation to authorize the creation of the Series

B Preferred Stock.

The Series B Preferred Stock was convertible at any time into shares of common stock of the Company without any further

consideration.

Following the issuance of the Series B Preferred Stock, it would rank senior to the common stock with respect to payments

upon the liquidation, dissolution and winding up of the Company.

Due to a delay in the stockholder approval, the Company amended the

SPA on February 12, 2024 to issue a convertible promissory note, due and payable on the earlier of 15 months or 12 months if the Series

B Preferred Stock has not been authorized, convertible into Series B Convertible Preferred Stock with identical funding amounts and terms

(the “$ 3,000,000 Convertible Promissory Note”).

The shareholder funded $ 800,000 of the $ 3,000,000 commitment in 2024.

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

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

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

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

election of the Company.

At any time following the date of shareholder approval to authorize the creation of Series B Preferred Stock

prior to the maturity date, the investor may elect to convert all or part of the principal into the Company’s Series B Preferred

Stock at a conversion price per share equal to $ 2.38 .

Without limiting the forgoing, all principal amounts outstanding on the maturity

date will automatically convert into the Company’s Series B Preferred Stock.

The Series B Preferred Stock is entitled to cumulative

dividends at 8.5 % per annum (whether or not declared) payable quarterly in either cash or common stock at the $ 2.38 conversion price

at the election of the Company.

Upon conversion to Series B Preferred Stock, the investor may elect, at its option at any time, to convert

all or part of the Series B Preferred Stock plus accrued but unpaid dividends into an equivalent amount of common stock at the $ 2.38

conversion price.

Subsequently,

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

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

for an additional principal amount of $ 3,000,000 .

Certain provisions to the SPA and Certificate of Designation previously issued on February

12, 2024 changed, including (i) the number of shares of preferred stock to be designated as Series B Preferred Stock was increased to

4,000,000 shares, (ii) the stated value of the Series B Preferred Stock was changed to $ 2.38 per share, (iii) the right to receive dividends

will expire automatically on June 30, 2025, (iv) the liquidation rights will automatically expire on June 30, 2025, and (v) the number

of shares of the common stock that a holder of Series B Preferred Stock is entitled to receive shall not exceed the maximum percentage

chosen by the holder, which is initially set at between 4.99 % and 19.99 % until shareholder approval is obtained, of the number of outstanding

shares of the common stock at the time of the conversion of the Series B Preferred Stock shares.

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

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

Automatic conversion into shares of Series B Preferred Stock (at a conversion price of $ 2.38 per share) would occur following

the date of shareholder approval.

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

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

of August 15, 2024, the Company received $ 4,935,000 of the principal amount of the Amended 2024 Convertible Notes with the remainder

due in monthly installments through March of 2025.

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

preferred stock of which 4,000,000 shares were designated as $ 0.001 par value Series B preferred stock.

Pursuant to the Amended 2024

Convertible Promissory Notes, the outstanding principal balance of $ 4,935,000 was mandatorily converted into 2,073,524 Series B Preferred

Shares at a conversion price of $ 2.38 .

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

policy, bearing interest at a rate of 7.40 %

per annum and maturing on June 9, 2025.

The outstanding balance of $ 166,149 consisted of a $ 147,688 note payable and $ 18,461 in

accounts payable on the condensed balance sheets as of September 30, 2024.

Company’s private placement agent fees included (i) 10% of the Original 2024 Convertible Promissory Notes funded principal amount

and (ii) warrants calculated as 6.0% of the funded principal amount divided by the $2.38 exercise price.

The fair value of the warrants

of $97,465 were deferred as a financing fee and classified as additional paid in capital.

The private placement agreement was terminated

on March 18, 2024 pursuant to an new advisory agreement (See Note 12).

interest totaled $ 66,648 and

of September 30, 2024 and December 31, 2023, respectively.

Interest expense totaled $ 64,676 and $ 102,628 for the three months ended

September 30, 2024 and 2023, respectively, and $ 171,934 and $ 453,869 for the nine months ended September 30, 2024 and 2023,

respectively.

Amortization of the debt discount on the Amended 2024 Convertible Notes totaled $ 40,888 and

$ 126,387 for

the three and nine months ended September 30, 2024, respectively.

Upon mandatory conversion of the Amended 2024 Convertible

Promissory Notes to Series B Preferred Stock, the Company wrote off the amortized debt discount of $ 165,577 to

additional paid in capital included in stockholder’s deficit on the condensed balance sheet.

the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and

circumstances present in the arrangement.

Leases with a term greater than one year are recognized on the balance sheet as right-of-use

assets and current and non-current lease liabilities, as applicable.

lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over

the expected remaining lease term.

Certain adjustments to the right-of-use asset may be required for items such as incentives received.

The interest rate implicit in lease contracts is typically not readily determinable.

As a result, the Company utilizes its incremental

borrowing rate to discount lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis

the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.

Prospectively, the Company

will adjust the right-of-use assets for straight-line rent expense, or any incentives received and remeasure the lease liability at the

net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date.

has elected not to recognize leases with an original term of one year or less on the balance sheet.

The Company typically only includes

an initial lease term in its assessment of a lease arrangement.

Options to renew a lease are not included in the Company’s assessment

unless there is reasonable certainty that the Company will renew.

Certain leases may contain rent escalation clauses, either fixed or adjusted periodically for inflation

of market rates, that are factored into the calculation of lease payments to the extent they are fixed and determinable at lease inception.

The Company also has variable lease payments that do not depend on a rate or index, primarily for items such as common area maintenance

and real estate taxes, which are recorded as expenses when incurred.

made by the Company at the commencement date are re-evaluated upon occurrence of certain events, including a lease modification.

modification results in a separate contract when the modification grants the lessee an additional right of use not included in the original

lease and when lease payments increase commensurate with the standalone price for the additional right of use.

When a lease modification

results in a separate contract, it is accounted for in the same manner as a new lease.

may elect not to separate lease and non-lease components.

The Company has elected to account for lease and non-lease components together

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

due in monthly installments through March of 2025 resulting in an effective interest rate of 12.5 %.

On August 15, 2024, the Company’s

shareholders authorized 5,000,000 shares of preferred stock of which 4,000,000 shares were designated as $ 0.001 par value Series B preferred

Pursuant to the terms of the Amended 2024 Convertible Promissory Notes, the outstanding principal balance of $ 4,935,000 was mandatorily

converted into 2,073,524 Series B Preferred Shares at a conversion price of $ 2.38 on August 15, 2024.

Amortization of the debt discount

on the Amended 2024 Convertible Notes totaled $ 21,683 for the three months ended March 31, 2024.

There was no amortization of the debt

discount for the three months ended March 31, 2025 as the unamortized debt discount of $ 165,577 was reclassified to Additional Paid-In-Capital

in the Statements of Stockholders’ Equity (Deficit) on August 15, 2024 upon mandatory conversion.

expense totaled $ 2,237 and $ 26,560 for the three months ended March 31, 2025 and 2024, respectively.

The Company’s accrued interest

totaled $ 66,648 as of March 31, 2025 and December 31, 2024.

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

5 unchanged sentences

The Company did not have any finance

leases as of September 30, 2024 and December 31, 2023.

leases at March 31, 2025 and December 31, 2024.

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

lease in Versailles started January 1, 2022 and has a term of one year, with automatic one year renewal, unless 60 day notice of vacating

is given, commencing on the execution hereof and continuing through December 31 st of each year.

The current monthly lease

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

The new lease in Carmel started January 1, 2024.

The initial term is five

years and five months.

The monthly lease payment started at $ 6,721 with an annual increase of 2.5 %.

As long as the Company is not in

default, it is only obligated to pay an amount equal to 50% of the monthly base rent for months 1-10.

the nine months ended September 30, 2024 and 2023, the Company recognized $ 74,314 and $ 35,678 of operating lease expense, including short-term

lease expense and variable lease costs.

The lease in Versailles started January

1, 2022 and had a term of one year, with automatic one year renewal, unless 60 day notice of vacating is given, commencing on the execution

hereof and continuing through December 31 st of each year.

The current monthly lease payment for this lease is $ 1,800 with

a 4 % per annum increase.

A new lease in Carmel, Indiana commenced January 1, 2024.

The initial term is five years and five months.

monthly lease payment started at $ 6,721 with an annual increase of 2.5 %.

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

to pay an amount equal to 50% of the monthly base rent for the first 10 months of the term .

Company recognized operating lease expense of $ 25,523 and $ 25,756 for the three months ended March 31, 2025 and 2024, respectively, including

short-term lease expense and variable lease costs.

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

Schedule of Operating Leases

September 30,

Operating lease right-of-use assets

3 unchanged sentences

Weighted-average discount rate

of September 30, 2024, the maturities of the Company’s operating lease liabilities were as follows:

of March 31, 2025, the maturities of the Company’s operating lease liabilities were as follows:

Schedule of Maturities Operating Lease Liabilities

3 unchanged sentences

Common Stock and Warrants

Company authorized 100,000,000 shares of common stock, of which 6,980,227 and 6,508,897 shares were issued and outstanding as of September

Company authorized 100,000,000 shares of common stock, of which 7,215,864 and 6,990,227 shares were issued and outstanding as of March

31, 2025 and December 31, 2024, respectively.

In conjunction with 1,098,667 common shares issued upon the completion of the initial public

offering on August 8, 2023, the Company also issued (i) 1,244,228 common shares upon conversion of 506,637 shares of Convertible Series

A Preferred Stock and 115,477 shares of Convertible Series Seed Preferred Stock, (ii) 1,649,900 common shares upon conversion of convertible

notes, (iii) 425,000 common shares as payment to vendors for services and (iv) 127,780 common shares upon the exercise of warrants.

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

reverse stock split .

All share information in

these financial statements has been adjusted for this reverse stock split.

Stock Issuances

January 2, 2024, the Company issued 75,000 shares of common stock with a fair value of $ 200,250 pursuant to a consulting agreement related

to the Company’s transition to a public company.

As the term of the consulting agreement covers the full fiscal year ending December

31, 2024, the Company expensed $ 50,062 and $ 100,125 in the three month and nine months ended September 30, 2024, respectively, with the

remaining $ 50,063 recorded in prepaids and other current assets in the condensed balance sheets as of September 30, 2024.

January 19, 2024, the Company received proceeds of $ 26,180 from an existing shareholder and issued 11,000 shares of common stock upon

the exercise of a warrant agreement at $ 2.38 per share.

April 11, 2024, the Company issued 53,063 shares of common stock to an existing shareholder to settle a convertible note dispute.

Company recorded the fair value of the settlement totaling $ 230,823 as financing charge in the condensed statements of operations.

June 28, 2024 the Company issued 90,032 shares of common stock to pre-IPO Series A Preferred Shareholders to settle certain claims.

Company recorded the fair value of the settlement totaling $ 286,458 as other expense in the condensed statements of operations.

June 28, 2024, the Company issued 33,454 shares of common stock to holders of the Amended 2024 Convertible Promissory Notes in lieu of

$ 79,588 in cash payments for interest through June 30, 2024.

June 28, 2024, the Company issued 24,343 shares of common stock to its Board of Directors for their service from the Company’s

IPO on August 9, 2023 through March 31, 2024.

The fair value of the services was recorded as general and administrative expense in the

condensed statements of operations totaling $ 39,452 from August 9, 2023 through December 31, 2023 and $ 28,219 during the nine months

ended September 30, 2024.

June 28, 2024, the Company issued 25,832 shares of common stock to its previous Chief Operating Officer in accordance with a severance

agreement executed on April 10, 2024.

The Company recorded the fair value of the severance provision totaling $ 78,788 as general and

administrative expense in the condensed statements of operations.

June 28, 2024, the Company issued 20,000 shares of common stock to it previous CFO for services provided during the IPO.

recorded the fair value of the services totaling $ 55,600 as general and administrative expense in the condensed statements of operations.

August 22, 2024, the Company issued 25,601 shares of common stock to holders of the Amended 2024 Convertible Promissory Notes in lieu

of $ 60,911 in cash payments for interest through August 22, 2024.

August 28, 2024 the Company issued 102,860 shares of common stock to pre-IPO Series A Preferred Shareholders to settle certain claims.

The Company recorded the fair value of the settlement totaling $ 293,791 as other expense in the condensed statements of operations.

September 17, 2024, the Company issued 10,145 shares of common stock to a vendor pursuant to a marketing agreement.

The Company recorded

the fair value of services totaling $ 30,131 as general and administrative expense in the condensed statements of operations.

connection with a bridge loan, the Company issued a warrant on September 18, 2018 that allows the holder to purchase common stock from

the Company at a share price of $ 4.38 per share.

The number of shares was based on a formula tied to the final amount of loans made by

the holder of $ 375,000 , multiplied by 150 %, and divided by $ 70.03 .

The number of shares based on this formula is 12,852 .

contains certain rights in the event of liquidation, merger, or consolidation of the Company.

If the fair market value of one share is

greater than the warrant price, the holder may elect to receive a number of shares equal to the value of the warrant.

If the exercise

is in connection with the sale of the Company, the holder may, at its option, condition its exercise of the warrant upon the consummation

of such transaction.

The warrant expires on September 18, 2028 and can be exercisable either in whole or from time to time in part prior

to the expiration date.

Company issued a second warrant on September 6, 2019, under similar terms but is a penny warrant that allows the holder to purchase 40,000

shares of common stock and is subject to adjustment for certain equity events.

The warrant contains certain rights in the event of liquidation,

merger, or consolidation of the Company.

The warrant expires on September 6, 2029.

This warrant was converted to 39,924 shares of common

stock on December 28, 2023.

The fair market value of the stock on that day was calculated as the average of the daily closing prices

per share for the 30 consecutive trading day period ending on the second trading day prior to such date or $ 2.61 per share.

fair value was greater than the warrant price of $0.01 per share the holder elected to receive the number of shares equal to 40,000 times

the difference between the fair market value and the exercise price divided by the fair market value, resulting in 39,924.

Company issued a third warrant to Masimo Corporation on April 9, 2020.

This warrant was pre-funded in the amount of $ 2,734,340 .

allows the holder to purchase 289,779 shares of Series A Preferred Stock at $ 9.44 per share and is subject to adjustment for certain

equity events.

The warrant contains certain rights in the event of liquidation, merger, or consolidation of the Company.

There will be

no additional purchase price for the Warrants.

In the event that all outstanding shares of Series A Preferred Stock are converted, automatically

or by action of the holders thereof, into Common Stock, including, without limitation, in connection with the Company’s initial,

underwritten public offering and sale of its Common Stock pursuant to an effective registration statement under the Act, then from and

after the date on which all outstanding shares of Series A Preferred Stock have been so converted, this Warrant shall be exercisable

for such number of shares of Common Stock into which the Warrant Shares would have been converted had the Warrant Shares been outstanding

on the date of such conversion, and the Exercise Price shall equal the Exercise Price in effect as of immediately prior to such conversion

divided by the number of shares of Common Stock into which one share of Series A Preferred Stock would have been converted, all subject

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

On August 14, 2023, the 144,890

Series A Preferred Stock warrants were converted to 289,779 common stock warrants.

2022, the Company issued 793,655 five-year warrants to purchase common stock equal to one hundred percent (100%) of the shares into which

the 2022 convertible notes can be converted at issuance.

The 2024 Convertible Promissory Notes triggered the anti-dilution clause of

the original agreement and decreased the exercise price to $ 2.38 .

March to June of 2023, the Company issued 505,570 one-year warrants to purchase common stock equal to fifty percent (50%) of the shares

into which the 2023 convertible notes can be converted at issuance.

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

Convertible Promissory Notes triggered the anti-dilution clause of the original agreement and decreased the exercise price to $ 2.38 .

August 9, 2023, the Company issued 122,202 five-year warrants to purchase common stock pursuant to an advisory agreement with a consulting

firm upon closing of the Company’s initial public offering.

The warrants have an exercise price of $ 6.00 per share.

The 2024 Convertible

Promissory Notes triggered the anti-dilution clause of the original agreement and decreased the exercise price to $ 2.38 .

August 14, 2023, the Company issued 186,156 five-year warrants to purchase common stock pursuant to an agreement with an underwriter

upon closing of the Company’s initial public offering.

The warrants have an exercise price of $ 7.20 per share.

The 2024 Convertible

Promissory Notes triggered the anti-dilution clause of the original agreement and decreased the exercise price to $ 2.38 .

January to March of 2024, the Company issued 38,697 warrants to its private placement agent in conjunction with the 2024 Convertible

Promissory Notes at an exercise price of $ 2.38 to purchase common stock.

The Company recorded the fair value of the services totaling

$ 74,278 as financing fees in the condensed balance sheets as of September 30, 2024.

March to September of 2024, the Company issued 52,941 warrants pursuant to a capital markets advisory agreement at an exercise price

of $ 2.38 to purchase common stock (See Note 12).

The Company recorded the fair value of the advisory services totaling $ 125,824 as general

and administrative expense in the condensed statements of operations.

following is a summary of warrant activity for common stock during the periods ended September 30, 2024 and December 31, 2023:

January 17, 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 (Deficit).

the three months ended March 31, 2024, the Company issued (i) 11,000 common shares upon the exercise of warrants for $ 26,180 , (ii) 75,000

shares as payment to a vendor for services.

following is a summary of warrant activity for common stock during the three months ended March 31, 2025 and year ended December 31,

Schedule of Warrant Activity for Common Stock

3 unchanged sentences

Outstanding as of January 1, 2024

Converted Prefunded Warrants

Outstanding as of December 31, 2024

Outstanding as of September 30, 2024

following is a summary of warrant activity for preferred stock during the year ended December 31, 2023:

Schedule of Warrant Activity for Preferred Stock

Weighted-Avg.

Preferred Stock

Outstanding as of January 1, 2023

Cancelled/Expired

Outstanding as of December 31, 2023

was no preferred stock warrant activity for the three and nine months ended September 30, 2024.

following table summarizes the Company’s warrants outstanding and exercisable as of September 30, 2024:

Outstanding as of March 31, 2025

following table summarizes the Company’s warrants outstanding and exercisable as of March 31, 2025:

Schedule of Warrants outstanding and Exercisable

Brian Hannasch W-01

Investor Warrant

September 18, 2028

Masimo Corporation PSA-01

Investor Warrant

2022 Convertible Notes

Various in 2027

2023 Convertible Notes

Consulting Agreement Warrants

Underwriter’s Warrants

Various in 2028

Underwriter Warrants

August 8, 2028

Advisory Agreement Warrants

Various in 2029

Preferred Stock

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

shares of preferred stock of which 4,000,000

shares were designated as $ 0.001

par value Series B Preferred Stock with 2,073,524

shares issued and outstanding as of September

Series B Preferred Stock shareholders vote with Common Stock shareholders on an as-converted basis and not as a separate class.

Cumulative dividends accrue at 8.5 %

per annum and are due and payable in either cash for common shares as the Company’s discretion on a quarterly basis through June

Series B Preferred Stock converts to common stock on a 1:1 basis, subject to adjustments for stock dividends, splits, combinations

and similar events as well as unpaid dividends thereon, solely at the election of the holder at any time.

to August 15, 2024 the Company had 1,000,000

shares authorized as Series A and Series Seed Preferred Stock, respectively, of which zero

shares are issued and outstanding for both classes of preferred stock as of December 31, 2023, respectively.

The Series A and Series

Seed Preferred Stock (i) voted together with common stock on an as-converted basis, and not as separate classes and (ii) converted

1:1 to common stock at any time at option of holder, subject to adjustments for stock dividends, splits, combinations, and similar

The Series A Preferred Stock carried an annual 8 %

cumulative dividend, payable upon any liquidation, dissolution or winding up of the Company.

For any other dividends or

distributions, the Series A Preferred Stock participated with common stock on an as-converted basis.

The Company’s 1,000,000

shares of Series A Preferred Stock and 120,000

shares of Series Seed Preferred Stock were retired on August 15, 2024.

Upon any liquidation, dissolution or winding up

of the Company, whether voluntary or involuntary, the Series B Preferred Stock shareholders maintain priority preference over all other

classes of capital stock.

A merger or consolidation (other

than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring

corporation) and a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the Company

will be treated as a liquidation event, thereby triggering payment of the liquidation preferences.

of September 30, 2024 and December 31, 2023, there were no preferred stock dividends declared or paid.

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

as $ 0.001 par value Series B Preferred Stock with 4,280,939 shares issued and outstanding as of March 31, 2025.

Series B Preferred Stock

un declared cumulative dividends totaled $ 44,820 and $ 0 as of September 30, 2024 and December 31, 2023, respectively.

Stock Options and Awards

following is a summary of stock option activity for the periods ended September 30, 2024 and December 31, 2023:

shareholders vote with Common Stock shareholders on an as-converted basis and not as a separate class.

Cumulative dividends accrue at

8.5 % per annum and are due and payable in either cash for common shares as the Company’s discretion on a quarterly basis through

June 30, 2025.

Series B Preferred Stock converts to common stock on a 1:1 basis, subject to adjustments for stock dividends, splits,

combinations and similar events as well as unpaid dividends thereon, solely at the election of the holder at any time.

to August 15, 2024 the Company had 1,000,000 and 120,000 shares authorized as Series A and Series Seed Preferred Stock, respectively,

of which zero shares are issued and outstanding for both classes of preferred stock as of December 31, 2023, respectively.

A and Series Seed Preferred Stock (i) voted together with common stock on an as-converted basis, and not as separate classes and (ii)

converted 1:1 to common stock at any time at option of holder, subject to adjustments for stock dividends, splits, combinations, and

similar events.

The Series A Preferred Stock carried an annual 8 % cumulative dividend, payable upon any liquidation, dissolution or winding

up of the Company.

For any other dividends or distributions, the Series A Preferred Stock participated with common stock on an as-converted

The Company’s 1,000,000 shares of Series A Preferred Stock and 120,000 shares of Series Seed Preferred Stock were retired

on August 15, 2024.

to the terms of the Amended 2024 Convertible Notes, the principal balance of $ 4,935,000

on August 15, 2024 was mandatorily converted into 2,073,524

Series B Preferred Shares at a conversion price of $ 2.38 .

Subsequently, the Company then proceeded to issue 64,913

shares of Series B Preferred Stock to various investors for

November 11, 2024, the Company’s shareholders authorized (i) an increase in the number of designated Series B Preferred Stock

shares and (ii) an extension of the 8.5 %

per annum cumulative dividend period to December 31, 2026.

Subsequently, the Company issued 2,100,840

shares of Series B Preferred Stock to a dedicated life sciences fund for $ 5,000,000

and 41,662 shares of Series B Preferred Stock to various investors for $ 99,164 .

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

maintain priority preference over all other classes of capital stock.

A merger or consolidation (other than one in which stockholders

of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation) and a sale, lease,

transfer, exclusive license or other disposition of all or substantially all of the assets of the Company will be treated as a liquidation

event, thereby triggering payment of the liquidation preferences.

of March 31, 2025 and December 31, 2024, there were no preferred stock dividends declared or paid.

Series B Preferred Stock undeclared

cumulative dividends totaled $ 424,811 and $ 211,268 as of March 31, 2025 and December 31, 2024, respectively.

Stock-Based Compensation

to the NeurAxis, Inc.

2022 Omnibus Securities and Incentive Plan, the Company initiated grants of restricted stock units (“RSUs”)

on January 3, 2025 and March 4, 2025 to certain employees as follows:

of Stock Non Option Activity

Weighted Average Fair Value

Outstanding as of December 31, 2024

Outstanding as of March 31, 2025

Vested as of March 31, 2025

RSUs are subject to a three-year cliff-vesting period and are payable in shares of the Company’s common stock.

The RSUs fully

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

Dividend equivalents accrue on RSUs and are paid upon vesting;

no accrued dividends on unvested RSUs as of March 31, 2025.

No RSUs were granted during the year ended December 31, 2024.

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 $ 105,811

and $ 227,000

for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, total unrecognized stock-compensation

expense relating to unvested stock awards granted under the Company’s share-based compensation plans amounted to $ 1,654,312 .

following is a summary of the Company’s outstanding stock options as of March 31, 2025 and December 31, 2024:

Schedule of Stock Option Activity

Contractual Life

Number of Options

Weighted Avg.

Outstanding as of January 1, 2023

Cancelled/Expired

Remaining Contractual Life (in years)

Weighted Avg.

Exercise Price

Aggregate Intrinsic Value

Outstanding as of December 31, 2024

Cancelled/Expired

Outstanding as of September 30, 2024

Vested and Exercisable as of September 30, 2024

compensation expense is classified in the Company’s statements of operations as general and administrative expense.

expense totaled $ 227,000 and $ 0 for the nine months ended September 30, 2024 and 2023, respectively (See Note 9).

As of September 30,

2024, there was no unrecognized compensation expense related to unvested options granted under the Company’s share-based compensation

Share Liability

of September 30, 2024, the Company had not issued 100,000

shares of its common stock pursuant to a hiring

grant of an executive officer, representing stock compensation expense of $ 227,000

in the nine months ended September 30, 2024 due

to administrative delays.

These shares are classified as share liabilities as they have been authorized but not yet issued as of the

reporting date.

On October 1, 2024, the Company amended the hiring grant and replaced the 100,000 unissued common shares with 100,000

restricted stock units that vest over three years .

Outstanding as of March 31, 2025

Vested and Exercisable as of March 31, 2025

There was no stock-based compensation expense related to stock options recorded for the three months ended March 31, 2025 and 2024.

Warrant Liabilities

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

stock and Series B Preferred Stock, to determine if such instruments are liabilities or contain features that qualify as embedded

derivatives, pursuant to ASC 480 and ASC 815-15.

The classification of these financial instruments, including whether such

instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.

Company utilizes a Black-Scholes option-pricing model for warrants that have an option to convert at a variable number of shares to compute

the fair value 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 an expected remaining term of each warrant as of the valuation date, estimated volatility

of 65.3 %, and a risk-free rate of 3.6 %.

interest rate:

The Company uses the risk-free interest rate of a U.S.

Treasury Note adjusted to be on a continuous return basis to align

with the Black-Scholes option-pricing model.

The Company uses a 0 % expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring

dividends in the near future.

The Company calculates the expected volatility based on comparable company’s historical stock prices with a look back period commensurate

with the period to maturity.

The Company’s remaining term is based on the remaining contractual maturity of the warrants.

following are the changes in the warrant liabilities during the periods ended September 30, 2024 and December 31, 2023.

Company has evaluated financial instruments arising from warrants that are issued and outstanding as of March 31, 2025 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 75.0 % to 84.5 % based on historical stock prices of comparable companies

with a look back period commensurate with the period to maturity, (iv) a risk-free interest rate ranging from 3.84 % to 4.38 % based on

the interest rates of U.S.

Treasury Notes consistent with the expected remaining contract term and (v) a 0 % expected dividend yield as

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

following are the changes in the warrant liabilities during the three months ended March 31, 2025 and year ended December 31, 2024:

Schedule of Changes in Warrant Liabilities

1 unchanged sentence

Changes in fair value of warrant liabilities

Reclassify to equity

( 3,827,807 )

Warrant liabilities as of December 31, 2024

1 unchanged sentence

Warrant liabilities as of March 31, 2025

Changes in fair value of warrant liabilities

Warrant liabilities as of June 30, 2024

Changes in fair value of warrant liabilities

Warrant liabilities as of September 30, 2024

Derivative Liabilities

Company accounts for derivative financial instruments as either equity or liabilities in accordance with ASC Topic 815, Derivatives

and Hedging , or ASC 815, based on the characteristics and provisions of each instrument.

Embedded derivatives are required to be

bifurcated from the host instruments and recorded at fair value if the derivatives are not clearly and closely related to the host instruments

on the date of issuance.

Derivative instrument liabilities are classified in the balance sheets as current or non-current based on whether

or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Company identified derivative instruments arising from the conversion shares from convertible notes in Note 4 as of December 31, 2023.

Company utilizes a Monte Carlo simulation model for commitment shares that have an option to convert at a variable number of shares to

compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date.

utilized in the application of the Monte Carlo model included a starting stock price of $ 9.20 per share, an expected remaining term of

each warrant as of the valuation date, estimated volatility of 80.0 %, drift, and a risk-free rate ranging from 3.5 % to 5.5 %.

interest rate:

The Company uses the risk-free interest rate of a U.S.

Treasury Note adjusted to be on a continuous return basis to align

with the Black-Scholes option-pricing model.

The Company uses a 0 % expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring

dividends in the near future.

The Company calculates the expected volatility based on comparable company’s historical stock prices with a look back period commensurate

with the period to maturity.

The Company’s remaining term is based on the remaining contractual maturity of the warrants.

following are the changes in the derivative liabilities during the year ended December 31, 2023.

Schedule of Changes in Derivative Liabilities

Derivative liabilities as of January 1, 2023

Changes in fair value of derivative liabilities

Extinguishment of derivative liabilities

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.

IB-STIM currently is the

only product marketed and sold by the Company.

The accounting policies of the IB-STIM segment are the same as those described in the

Summary of Significant Accounting Policies (see Footnote 2).

The CODM regularly evaluates the performance of the IB-STIM segment for

the purpose of allocating resources based on net sales and operating loss, both of which are reported in the Statements of Operations.

The CODM uses net sales to evaluate IB-STIM’s adoption and utilization by insurance carriers and physicians.

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.

The Company’s CODM is its Chief Executive Officer.

following reconciles the reportable segment net sales and operating loss to the Company’s reported net loss:

of Reconciles the Company’s Net Sales and Operating Loss

Three months ended March 31,

Selling Expenses (a)

Research & Development (a)

Compensation and Benefits (a)

Professional Services (a)

Other Operating Expenses (a) (b)

Segment Operating Loss

( 2,295,098 )

Derivative liabilities as of December 31, 2023

was no derivative liability activity for the three and nine months ended September 30, 2024.

( 1,832,120 )

Financing Charges

Interest Expense

Change in Fair Value of Warrant Liability

Amortization of Debt Discount and Issuance Cost

Other Expense

Total Other (Expense) Income, Net

$ ( 2,278,684 )

$ ( 2,120,651 )

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

operating expenses include advertising, rent and utilities, insurance, depreciation and amortization, travel, software subscription

fees, board fees and bad debt expense.

segment assets for IB-STIM amounted to $ 3,029,809 and $ 4,757,572 as of March 31, 2025 and December 31, 2024, respectively.

Total segment

capital expenditures for IB-STIM amounted to $ 18,000 and $ 14,722 for the three months ended March 31, 2025 and 2024, respectively.

segment depreciation and amortization amounted to $ 6,356 and $ 10,737 for the three months ended March 31, 2025 and 2024, respectively.

segment non-cash charges settled in common stock include (i) consulting and advisory fees totaling $ 112,493 and $ 200,250 for the three

months ended March 31, 2025 and 2024, respectively.

Settled Litigation

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

initiated a lawsuit against Innovative Health Solutions, Inc.

and others in the United States District Court for the District of Maryland.

Plaintiffs Bhambhani and Sudhir Rao subsequently amended the complaint, with the Third Amended Complaint (“Complaint”) containing

the most recent set of allegations.

The Complaint asserted claims under the RICO Act, as well as of fraudulent misrepresentation, intentional

misrepresentation by concealment, and civil conspiracy and sought compensatory damages in excess of $ 5 million, pre-judgment interest,

punitive damages, attorney’s fees, court costs and designation of the case as a class action.

The Complaint 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.

On February 11, 2022, the Company filed a motion

for summary judgment based upon the plaintiffs not being proper parties to assert claims against the Company.

On June 14, 2022, the Court

granted the Company’s motion for summary judgment and dismissed the Complaint.

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;

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.

On April 25, 2025, the parties reached a

tentative $ 750,000

settlement payable in 12 equal monthly installments beginning in January of 2026.

The 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 will be recorded as incurred.

As of March 31, 2025, the Company accrued $ 187,500

as accrued expenses and $ 431,597

as other non-current liabilities in the Condensed Balance Sheets.

Commitments and Contingencies

1 unchanged sentence

Services Agreement

August 21, 2020, the Company entered into a Manufacturing Services Agreement (MSA) for the manufacture and supply of the Company’s

IB-STIM device based upon the Company’s product specifications as set forth in the MSA.

This agreement terminated any prior manufacturing

Company provides the necessary equipment to the manufacturer and retains ownership.

The manufacturer bears the risk of loss of and damage

to the equipment and consigned materials.

Performance under the MSA is initiated by orders issued by the Company and accepted by the

manufacturer.

term of the MSA is 24 months and shall automatically renew for renewal terms of twelve months unless either party provides a written

termination notice to the other party within 180 days prior to the end of the then-current term.

Company is party to a manufacturing services agreement for the manufacture and supply of the Company’s IB-STIM device based on

the Company’s product specifications that automatically renews annually unless either party provides a written termination notice

to the other party within 180 days prior to the end of the then-current term.

The Company provides the necessary equipment to the manufacturer

and retains ownership.

The manufacturer bears the risk of loss of and damage to the equipment and consigned materials.

Performance under

the agreement is initiated by orders issued by the Company and accepted by the manufacturer.

March 18, 2024, the Company terminated its private placement services agreement and entered into an advisory agreement for debt, equity

and public securities market services for one year.

The advisory agreement includes a monthly fee of $ 30,000 and 7,563 common stock warrants

The advisory agreement included a monthly fee of $ 30,000 and 7,563 common stock warrants

to be issued monthly at an exercise price of $ 2.38 with a term of five years.

Company issued 102,860 and 192,892 shares of common stock for the three and nine months ended September 30, 2024, respectively, to various

pre-IPO Series A Preferred Stock shareholders to settle certain claims.

The Company recorded the fair value of the settlements totaling

$ 293,791 and $ 580,249 for the three and nine months ended September 30, 2024, respectively, as other expense in the Condensed Statements

of Operations (See Note 6).

On December 31, 2024, the Company and the financial advisor

terminated the advisory agreement subject to the cancelation of all common stock warrants issued after July 2024 and the payment for

services rendered totaling $ 180,000 during the three months ended March 31, 2025.

Company settled a 2023 convertible note dispute with an existing shareholder for $ 230,824 during the three months ended March 31, 2024.

The Board approved the issuance of 53,063 common shares on April 4, 2024 as consideration in lieu of payment recorded as financing charges

in the Condensed Statements of Operations.

There were no shares of common stock issued to settle any claims during the three months ended

March 31, 2025.

the Company authorized the issuance of 1,518 shares of its common stock to settle remaining claims with pre-IPO Series A Preferred Stock

shareholders classified as $ 0 and $ 4,220 of other expense for the three and nine months ended September 30, 2024, respectively, in the

Condensed Statements of Operations and accrued expenses in the Condensed Balance Sheets as of September 30, 2024.

These common shares

have not yet been issued as of the reporting date as the Company awaits execution of the settlement agreements by the counterparties.

shareholders classified as $ 4,220 of other expense for the three months ended June 30, 2024 in the Condensed Statements of Operations

and accrued expenses in the Condensed Balance Sheets as of March 31, 2025 and December 31, 2024.

These common shares have not yet been

issued as of the reporting date as the Company awaits execution of the settlement agreements by the counterparties.

There are no further

settlement obligations as of March 31, 2025.

Employment Agreements

Company, as authorized by the board of directors, entered into employment agreements with nine key employees to provide incentives to

Company, as authorized by the board of directors, entered into employment agreements with certain employees to provide incentives to

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 2 to 5 years and optional one-year renewals .

total base salaries for the nine key employees in the agreements are $ 1,920,000 per year with various provisions for annual increases.

In addition to base salaries, eight of the employees have a provision for a special one-time incentive payment to be paid in a lump sum

after the start date.

The total amount of these special incentive payments is $ 1,100,000 .

The special incentive payment amount includes

any accrued backpay wages for the employee.

That amount for backpay was $ 417,390 and was paid in 2023.

The agreements had an employment

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

years and optional

one-year renewals .

are seven key employees that have stock options of the Company totaling 1,238,712 shares.

12 unchanged sentences

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

Company has recorded the backpay portion of the incentive bonus noted above.

The balance of the incentive bonuses of $ 694,056 and the

special options bonuses of $ 14,821,830 were contingent upon a successful initial public offering.

The incentive bonuses have been paid

in full while the special options bonuses will be recorded when paid.

special options bonuses of $ 14,821,830

were contingent upon a successful initial public

offering and will be recorded when paid.

April 10, 2024, the employment of the Company’s Chief Operating Officer was terminated.

Pursuant to the employment agreement, the

Company will (i) make salary continuation payments based on an annual salary of $ 275,000 through October 10, 2024, (ii) provide health

care coverage through October 10, 2025, (iii) issue 25,832 shares of common stock at a fair value of $ 78,788 and (iv) make a $ 41,980

one-time payment in lieu of the exercise of 13,764 stock options that expired on January 2, 2024 .

time to time in the normal course of our business operations, we may become subject to litigation that may result in liability material

to our financial condition as a whole or may negatively affect our operating results if changes to our business operations are required.

The cost to defend such litigation may be significant and may require a significant diversion of our resources, and there is no guarantee

that we will be able to successfully defend against any such litigation regardless of particular merits.

There also may be adverse publicity

associated with litigation that could negatively affect customer perception of our business, regardless of whether the allegations are

valid or whether we are ultimately found liable.

Insurance may not be available on favorable terms, at all, or in sufficient amounts

to cover any liabilities with respect to these or other matters.

A judgment or other liability in excess of our insurance coverage for

any claims could adversely affect our business, financial condition and the results of our operations.

February 6, 2019, plaintiff Ritu Bharnbhani, M.D., initiated a lawsuit against Innovative Health Solutions, Inc.

and others in the United

States District Court for the District of Maryland.

Plaintiffs Bhambhani and Sudhir Rao subsequently amended the complaint, with the

Third Amended Complaint (“Complaint”) containing the most recent set of allegations.

The Complaint asserted claims under

the RICO Act, as well as of fraudulent misrepresentation, intentional misrepresentation by concealment, and civil conspiracy and sought

compensatory damages in excess of $ 5 million, pre-judgment interest, punitive damages, attorney’s fees, court costs and designation

of the case as a class action.

The Complaint states that the Company, distributors of the Company’s product, and medical billing

and coding consultants allegedly made misrepresentations to the plaintiffs that the Company’s NeuroStim device and related procedures

could be billed to, and reimbursed by, Medicare and other insurance payors as a surgically implantable neurostimulator.

Plaintiffs claim

to have suffered damages when Medicare administrative contractors declined to pay plaintiffs for their use of the device.

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.

filed a motion to dismiss.

On January 4, 2023, the Court issued an order that stated it was deferring a ruling on the motion to dismiss

the appeal and that it would address those arguments at the same time that it addressed the substantive merits of the case.

5, 2023, the parties have submitted their appellate briefs to the Fourth Circuit.

No date has been set for either oral argument or for

issuance of a decision by the court.

While it is too early to predict the ultimate outcome of this matter, we continue to believe we

have meritorious defenses, that the dismissal of the Complaint should be upheld, and intend to continue to defend this matter vigorously.

July 14, 2022, 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 plaintiff’s claims related to the RICO Act.

The remaining claims are still pending, and no trial date has been

set for the case.

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.

No mediation date has been set.

While it is too early to predict the ultimate outcome of

this matter, we believe the Company has meritorious defenses and intends to defend this matter vigorously.

Company (i) made salary continuation payments based on an annual salary of $275,000 through October 10, 2024, (ii) issued 25,832 shares

of common stock at a fair value of $ 78,788 and (iii) made a $ 41,980 one-time payment in lieu of the exercise of 13,764 stock options

that expired on January 2, 2024.

The Company is contracted to provide health care coverage through October 2025 and has accrued for that

obligation totaling $ 15,421 and $ 21,418 classified as Accrued Expenses in the Condensed Balance Sheets as of March 31, 2025 and December

31, 2024, respectively.

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

As of the date of issuance, other than those described below and in note 13, there were no pending or threatened legal

proceedings that could reasonably be expected to have a material effect on the results of the Company’s operations.

also no proceedings in which any of the Company’s directors, officers or affiliates is an adverse party to the Company or has

a material interest adverse to the Company’s interest.

Legal fees are expensed as incurred.

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.

Subsequent Events

October 1, 2024, the Company granted 481,312

restricted stock units to certain employees with a three-year

vesting period pursuant to the Neuraxis, Inc.

2022 Omnibus Securities and Incentive Plan, including an amendment to a hiring grant that replaced 100,000 unissued common shares with 100,000 restricted stock units included herein

(see Note 9).

October 15, 2024, the Company received $ 145,000

in exchange for 60,924

shares of Series B Preferred Stock.

November 9, 2024, the Company entered into a $ 5,000,000 investment agreement with a reputable life sciences fund at terms identical to

the Series B Preferred Stock Shareholders, including the extension of the expiration date of the cumulative dividends from June 30, 2025

to December 31, 2026, that replaced a $ 3,200,000 reduction in committed funding from an existing investor.

The transaction is expected

to close mid-November.

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

settlement payable in 12 equal monthly installments beginning in January of 2026.

The 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 will be recorded as incurred.

As of March 31, 2025, the Company accrued $ 187,500

as accrued expenses and $ 431,597

as other non-current liabilities in the Condensed Balance Sheets.

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

no events that have occurred that would require adjustments to our disclosures in the condensed financial statements.

no other events that have occurred that would require adjustments to our disclosures in the condensed financial

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