What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-12 compared with 2024-11-12 · 104 added, 148 removed, 69 unchanged (79% of the section changed)

5 unchanged sentences

for our business and related financing, includes forward-looking statements that involve risks, uncertainties, and assumptions.

read the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections of our Form 10-K for the period ended December 31, 2023 (the “2023 Annual Report”) for a discussion of important

factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements

contained in the following discussion and analysis.

read the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections of our Form 10-K

for the period ended December 31, 2024 (the “2024 Annual Report”) for a discussion of important factors that could cause

actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following

discussion and analysis.

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

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Our IB-Stim device is a PENFS system

intended to be used in patients 11-18 years of age with functional abdominal pain associated with IBS.

Our device already has market

clearance from FDA for functional abdominal pain associated with IBS in children.

Other indications in our pipeline are comprised of

functional nausea in children, post-concussion syndrome in children, and cyclic vomiting syndrome in children.

For more information,

see “ Business—Our Pipeline ” and “—Products .”

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

for functional abdominal pain associated with IBS in children.

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

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

Other indications

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

and functional abdominal pain associated with IBS in adults.

our inception, we have incurred significant operating losses.

Our net loss was $1,755,234 and $8,625,363 for the three months ended September

30, 2024 and 2023, respectively, and $6,793,596 and $13,034,385 for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had an accumulated deficit of $1,793,932.

Our auditors have expressed substantial doubt about our ability

to continue as a going concern in their audit opinion.

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

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

There are a number of milestones and conditions that we must satisfy before we will be able to generate sufficient revenue to fund our

operations, including FDA clearance of our IB-Stim device to treat future indications.

Our net loss was $2,278,684 and $2,120,651 for the three months ended

March 31, 2025 and 2024, respectively.

As of March 31, 2025, we had stockholders’ equity of $258,479.

Our auditors have

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

We expect to incur significant

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

device and seek FDA clearance of our device for other indications as we also fund sales and marketing efforts to expand the adoption

There are a number of milestones and conditions that we must satisfy before we will be able to generate sufficient revenue

to fund our operations, including FDA clearance of our IB-Stim device to treat future indications.

Affecting our Business and Results of Operations

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Potential patients with future indications are expected

to use six or more devices per patient.

to use four to six or more devices per patient.

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

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

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

on our operations for the foreseeable future.

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

Profit and Gross Margin

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

effectiveness and allocation of resources.

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

profit divided by net sales.

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

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

costs related to components of our IB-Stim device, and cost-reduction strategies.

We expect our gross profit to increase for the

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

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

Our gross margin may fluctuate from quarter

to quarter due to changes in average selling prices, particularly as we introduce enhancements to our IB-Stim device and new

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

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

and allocation of resources.

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

by net sales.

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

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

of our IB-Stim device, and cost-reduction strategies.

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

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

of other indications over the longer term.

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

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

processes and technologies.

have four categories of expenses:

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

of goods sold consist of costs paid for the IB-Stim device to our contract manufacturer along with shipping

and handling costs and

expired inventory charges.

Expired inventory expense is related to our FDA clearance for our device in the treatment of functional

abdominal pain associated with IBS in children.

Specifically, a certain component of our IB-Stim device is cleared for a two-year period

after the date the device is manufactured, and if the device is not sold in such period, we must take the device out of inventory and

write it off.

We had no expired inventory for the three and nine months ended September 30, 2024 and 2023.

Expired inventory has not

been material to our results.

of goods sold consist of costs paid for the IB-Stim device to our contract manufacturer along with shipping and handling costs and expired

inventory charges.

Expired inventory expense is related to our FDA clearance for our device in the treatment of functional abdominal

pain associated with IBS in children.

Specifically, a certain component of our IB-Stim device is cleared for a two-year period after

the date the device is manufactured, and if the device is not sold in such period, we must take the device out of inventory and write

We had no expired inventory for the three months ended March 31, 2025 and 2024.

Expired inventory has not been material to our

We have a fixed-price contract with the manufacturer of our IB-Stim device to produce the device.

production costs to remain relatively constant and only nominal inventory expirations in the foreseeable future.

We expect production costs

to remain relatively constant and only nominal inventory expirations in the foreseeable future.

core selling expenses primarily consist of commissions.

and development expense is attributable to our clinical trials and related efforts to have our IB-Stim device cleared by the FDA for

other indications.

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

and cyclic vomiting syndrome in children.

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

FDA for other indications.

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

syndrome and cyclic vomiting syndrome in children.

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

relations, advertising, facility costs, utilities and travel.

relations, advertising, facility costs, utilities and travel costs.

of Operations

following table presents our statements of operations for the three and nine months ended September 30, 2024 and 2023, respectively:

Three Months Ended September 30,

Nine Months Ended September 30,

following table presents our statements of operations for the three months ended March 31, 2025 and 2024, respectively:

Three Months Ended March 31,

Cost of goods sold

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Change in fair value of warrant liability

Change in fair value of derivative financial instruments

Amortization of debt discount and issuance costs

Extinguishment of debt liabilities

Other expense

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$ (2,120,651 )

$ (6,793,596 )

$ (13,034,385 )

sales increased $189,165, or 39.6%, from $477,460 for the three months ended September 30, 2023, to $666,625 for the three months ended

September 30, 2024.

Net sales decreased $3,830, or 0.2%, from $1,928,590 for the nine months ended September 30, 2023, to $1,924,760

for the nine months ended September 30, 2024.

The increase for the three months ended September 30, 2024 was primarily due to volume

growth from new and existing full insurance reimbursement customers as well as growth in our financial assistance programs that provide

discounts to patients without insurance coverage.

sales increased $249,020, or 38.5%, from $646,635 for the three months ended March 31, 2024, to $895,655 for the three months ended March

31, 2025, due to volume growth from customers that provide full insurance reimbursement coverage and those participating in our financial

assistance programs that provide discounts to patients without insurance coverage.

Profit and Gross Margin

profit increased $159,402, or 38.9%, from $410,173 for the three months ended September 30, 2023, to $569,575 for the three months

ended September 30, 2024 due to higher sales volume.

Despite the increase in sales volume, the decrease in gross margin from 85.9%

for the three months ended September 30, 2023 to 85.4% for the three months ended September 30, 2024 was due to higher growth in the

Company’s financial assistance programs that are discounted to patients without insurance coverage compared to the

Company’s undiscounted full reimbursement customers.

Gross profit decreased $29,779, or 1.8%, from $1,697,590 for the nine

months ended September 30, 2023, to $1,667,811 for the nine months ended September 30, 2024 due to gross margin.

The decrease in

gross margin from 88.0% for the nine months ended September 30, 2023 to 86.7% for the nine months ended September, 2024 was due to

growth in our financial assistance programs that are discounted to patients without insurance coverage despite higher sales

expenses increased $31,220, or 48.6%, from $64,210 for the three months ended September 30, 2023, to $95,430 for the three months ended

September 30, 2024 due to higher sales volume.

Selling expenses decreased $24,559, or 9.8%, from $250,933 for the nine months ended September

30, 2023, to $226,374 for the nine months ended September 30, 2024 due to lower sales volume.

profit increased $184,626, or 32.3%, from $571,554 for the three months ended March 31, 2024, to $756,180 for the three months ended

March 31, 2025, due to higher sales volume.

Despite the increase in sales volume, the decrease in gross margin from 88.4% for the three

months ended March 31, 2024, to 84.4% for the three months ended March 31, 2025, was due to higher growth in the Company’s financial

assistance programs that are discounted to patients without insurance coverage compared to the Company’s undiscounted full reimbursement

customers and higher device manufacturing and shipping costs.

expenses increased $53,924, or 67.4%, from $80,030 for the three months ended March 31, 2024, to $133,954 for the three months ended

March 31, 2025, due to higher sales volume and a temporary commission structure to facilitate growth and adoption in new states.

and Development

and development expenses increased $27,472, or 61.1%, from $44,950 for the three months ended September 30, 2023, to $72,422 for

the three months ended September 30, 2024 due to higher quarter-to-date spending in

2024 on a medical research project.

Research and development expenses decreased $39,232, or 22.9%, from $171,536 for the

nine months ended September 30, 2023 to $132,304 for the nine months ended September 30, 2024 due to higher year-to-date spending in

2023 on a medical research project.

and development expenses increased $54,986, or 987.2%, from $5,570 for the three months ended March 31, 2024, to $60,556 for the three

months ended March 31, 2025, due to higher quarter-to-date spending on a medical research project and costs to develop the RED device.

and Administrative

and administrative expenses decreased $1,270,356, or 38.2%, from $3,323,352 for the three months ended September 30, 2023, to $2,052,996

for the three months ended September 30, 2024 primarily due to 2023 post-IPO consulting and recruiting services and the payment of incentive

bonuses relating to the 2023 IPO that did not recur in 2024, partially offset by (i) incremental headcount to build out the market access,

sales and finance teams including, (ii) 2024 one-time non-cash advisory costs, (iii) expenses related to the introduction of an annual

short-term incentive bonus plan in 2024 and (iv) higher advertising costs in order to expand market awareness.

and administrative expenses increased $682,947, or 10.8%, from $6,316,411 for the nine months ended September 30, 2023, to $6,999,358

for the nine months ended September 30, 2024 primarily due to (i) higher legal, insurance, investor relation, board of director and exchange

listing costs as a publicly held entity that the Company did not incur prior to its IPO, (ii) incremental headcount to build out the

market access, sales and finance teams, (iii) severance charges related to the Company’s prior Chief Operating Officer, (iv) one-time

non-cash advisory costs, (v) a one-time non-cash stock compensation charge of $227,000 as a hiring grant, (vi) expenses related to the

introduction of an annual short-term incentive bonus program, and (vii) higher advertising costs in order to expand market awareness,

partially offset by non-recurrence of 2023 post-IPO consulting and recruiting services and the payment of incentive bonuses relating

to the 2023 IPO.

operating loss decreased $1,371,066, or 45.4%, from $3,022,339 for the three months ended September 30, 2023, to $1,651,273 for the three

months ended September 30, 2024 primarily due to the absence of 2023 post-IPO consulting and recruiting services, 2023 incentive bonuses

relating to the IPO and higher sales and gross profit in 2024, partially offset by incremental headcount, advisory costs, a new annual

short-term incentive bonus plan and higher advertising costs in 2024.

Our operating loss increased $648,935, or 12.9%, from $5,041,290

for the nine months ended September 30, 2023, to $5,690,225 for the nine months ended September 30, 2024 primarily due to new costs as a publicly

held company that were not incurred prior to the 2023 IPO.

and administrative expenses increased $538,694, or 23.2%, from $2,318,074 for the three months ended March 31, 2024, to $2,856,768

for the three months ended March 31, 2025, primarily due to (i) expenses related to the introduction of annual short-term and

long-term incentive plans that did not exist in 2024, (ii) higher advertising costs in order to expand market awareness, (iii) third

party costs incurred to enhance the Company’s internal control environment and (iv) the settlement of a lawsuit, partially

offset by a one-time hiring grant in 2024 to the Company’s Chief Financial Officer that did not recur in 2025 and lower legal,

accounting, consulting, investor relations and insurance costs as new hires in 2024 have internally absorbed certain

operating loss increased $462,978, or 25.3%, from $1,832,120 for the three months ended March 31, 2024, to $2,295,098 for the three

months ended March 31, 2025, primarily due to higher general and administrative expenses as a result of the settlement of a lawsuit partially offset by higher sales volume.

(Expense) Income, Net

expense decreased $5,499,063, or 98.1%, from $5,603,024 for the three months ended September 30, 2023, to $103,961 for the three months

ended September 30, 2024 primarily due to the full conversion of the convertible notes upon the IPO on August 9, 2023, that eliminated

any further debt discount, issuance cost and fair value derivative valuation net charges and lower interest expense and issuance cost

amortization from a lower debt burden in 2024.

expense decreased $6,889,724, or 86.2%, from $7,993,095 for the nine months ended September 30, 2023, to $1,103,371 for the nine months

ended September 30, 2024 primarily due to the full conversion of the convertible notes upon the IPO on August 9, 2023, that eliminated

any further debt discount, issuance cost, debt extinguishment and fair value derivative valuation net charges and lower interest expense

and issuance cost amortization from a lower debt burden in 2024, partially offset by financing charges incurred to settle a 2023 convertible

note dispute and other expense to settle certain claims of pre-IPO Series A Preferred Stock shareholders.

net loss decreased $6,870,129, or 79.7%, from $8,625,363 for the three months ended September 30, 2023, to $1,755,234 for the three

months ended September 30, 2024.

Our net loss decreased $6,240,789, or 47.9%, from $13,034,385 for the nine months ended September

30, 2023, to $6,793,596 for the nine months ended September 30, 2024.

The decreases were primarily due to (i) higher sales for the

three months ended September 30, 2024 compared to the three months ended September 30, 2023, (ii) lower general and administrative

expenses due to the absence of 2023 post-IPO consulting and recruiting services and the payment of incentive bonuses relating to the

2023 IPO, (iii) the elimination of debt discount, issuance cost and fair value derivative valuation net charges as a result of the

conversion of notes upon the 2023 IPO and (iv) lower interest expense and issuance cost amortization from a lower debt burden in

2024, partially offset by financing charges incurred to settle a 2023 convertible note dispute and other expense to settle certain

claims of pre-IPO Series A Preferred Stock shareholders.

expense, net improved $304,945, or 105.7%, from $288,531 of expense for the three months ended March 31, 2024, to $16,414 of income for

the three months ended March 31, 2025, primarily due to the absence of finance charges incurred in 2024 to settle a 2023 convertible

note dispute and the full conversation of convertible notes to Series B Preferred Stock that eliminated any further interest expense

and amortization of issuance costs.

net loss increased $158,033, or 7.5%, from $2,120,651 for the three months ended March 31, 2024, to $2,278,684 for the three months

ended March 31, 2025, due to higher general and administrative expenses as a result of the settlement of a lawsuit partially offset by higher sales volume and the

absence of financing charges, interest expense and issuance costs incurred on convertible notes.

and Capital Resources

had cash on hand of $260,885 and $761,249 as of September 30, 2024 and 2023, respectively.

We maintained a working capital deficit of

$2,032,284 and $1,643,058 as of September 30, 2024 and December 31, 2023, respectively.

had cash on hand of $2,005,370 and $3,696,870 as of March 31, 2025, and December 31, 2024, respectively.

We maintained a working capital

surplus of $439,823 and $1,832,858 as of March 31, 2025, and December 31, 2024, respectively.

The decrease in working capital was primarily

due to the unpaid severance, annual bonus and consulting fees that were not incurred in 2023.

due to the utilization of cash to fund the Company’s net loss during the three months ended March 31, 2025.

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 an accumulated deficit of $1,793,932 and short-term borrowings of $147,688.

As of March 31, 2025, we had stockholders’ equity of $258,479 and short-term borrowings of $84,307.

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

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we have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company.

management will have to spend additional time on policies and procedures to make sure it is compliant with various regulatory requirements,

especially that of Section 404 of the Sarbanes-Oxley Act.

This additional corporate governance time required of management could limit

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

following table summarizes our cash flow from operating, investing and financing activities for the nine months ended September 30, 2024

Nine Months Ended September 30,

Net cash used in operating activites

Our management

will have to spend additional time on policies and procedures to make sure it is compliant with various regulatory requirements, especially

that of Section 404 of the Sarbanes-Oxley Act.

This additional corporate governance time required of management could limit the amount

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

following table summarizes our cash flow from operating, investing and financing activities for the three months ended March 31, 2025

Three Months Ended March 31,

Net cash used in operating activities

$ (1,603,655 )

1 unchanged sentence

Net cash used in investing activities

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Activities – Net cash used in operating activities increased $275,678, or 6.8% for the nine months ended September 30, 2024

compared to the nine months ended September 30, 2023 primarily due to a higher operating loss.

Activities – Net cash used in investing activities decreased $27,965, or 50.2%, for the nine months ended September 30, 2024

compared to the nine months ended September 30, 2023 due to lower capital expenditures.

Activities – Net cash provided by financing activities decreased $77,512, or 1.7%, for the nine months ended September 30,

2024 compared to the nine months ended September 30, 2023 primarily due to lower proceeds from the issuance of convertible notes in

2024 compared to the net IPO and notes payable proceeds in 2023.

Activities – Net cash used in operating activities increased 271,495, or 20.4%, for the three months ended March 31, 2025,

compared to the three months ended March 31, 2024, primarily due to delayed vendor payments during the three months ended March 31, 2024

as a result of the Company’s liquidity position at that time.

Activities – Net cash used in investing activities increased $3,278, or 22.3%, for the three months ended March 31, 2025 compared

to the three months ended March 31, 2024, due to capital expenditures to manufacture the RED device.

Activities – Net cash (used in) provided by financing activities decreased $1,419,919, or 105.2%, for the three months

ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to the issuance of convertible notes in 2024

that did not recur in 2025.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis