What changed in this filing

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Item 1. Financial Statements

2025-08-12 compared with 2025-05-12 · 443 added, 387 removed, 547 unchanged (60% of the section changed)

2 unchanged sentences

Current Assets:

Cash and cash

Accounts receivable, net

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

Cash and cash equivalents

Accounts receivable, net of credit losses of $ 5,000 and $ 5,000 as of June 30, 2025 and December 31, 2024, respectively

Inventories, net of reserves of $ 17,195 and $ 4,454 as of June 30, 2025 and December 31, 2024, respectively

Prepaids and other current assets

Total current assets

Property and Equipment, at Cost:

- accumulated depreciation

and equipment, net

Less - accumulated depreciation

Property 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

current liabilities

Warrant liabilities

Total current liabilities

Non-Current Liabilities:

lease payable, net of current portion

Operating lease payable, net of current portion

Other non-current liabilities

non-current liabilities

Total non-current liabilities

Total liabilities

Commitments and Contingencies (see note 14)

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

Convertible Series B Preferred stock, $ 0.01 par value;

5,000,000 shares authorized;

3,896,907 and 4,280,939 shares issued and outstanding as of June 30, 2025 and December 31, 2024

Common stock, $ 0.001 par value;

100,000,000 shares authorized;

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

9,858,716 and 6,990,227 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

Additional paid in capital

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( 56,799,612 )

stockholders’ equity

Liabilities and Stockholders’ Equity

Total stockholders’ equity

Total Liabilities and Stockholders’ Equity

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

Statements of Operations (Unaudited)

the Three Months Ended

For the Three Months Ended

For the Six Months Ended

Cost of Goods Sold

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General and Administrative

Operating Loss

( 1,717,858 )

( 2,206,832 )

( 4,012,955 )

( 4,038,952 )

Other Income (Expense):

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Interest expense

Change in fair value of

warrant liability

Amortization of debt discount

and issuance cost

other income (expense), net

Change in fair value of warrant liability

Amortization of debt discount and issuance cost

Other expense

Total other income (expense), net

( 1,690,418 )

( 2,917,710 )

stock dividends

Net loss available to common

( 3,969,102 )

( 5,038,361 )

Preferred stock dividends

Net Loss Available to Common Stockholders

$ ( 1,897,883 )

$ ( 2,917,710 )

$ ( 4,390,110 )

$ ( 5,038,361 )

Per-Share Data

Basic and diluted loss

Weighted Average Common Shares Outstanding

Basic and diluted loss per share

Weighted Average Shares Outstanding

Basic and diluted

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Statements of Stockholders’ Equity (Deficit) (Unaudited)

Preferred Stock

Stockholder’s

Balances at January 1, 2024

For the Three and Six Months Ended June 30, 2024

Series B Preferred Stock

Stockholders’

at January 1, 2024

$ ( 48,558,111 )

$ ( 1,403,241 )

Warrants exercised

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

paid in capital from warrants issued under advisory agreement

paid in capital from warrants issued as debt discount

stock issued from agreements

( 2,120,651 )

Balances at March 31,

at March 31, 2024

$ ( 50,678,762 )

$ ( 3,184,454 )

Balances at January 1, 2025

paid in capital from warrants issued under consulting agreement

stock issued from agreements

( 2,917,710 )

Warrants exercised

Common stock issued from agreements

Issuance of restricted stock awards

at June 30, 2024

$ ( 53,596,472 )

$ ( 5,258,382 )

Balances at March 31,

NeurAxis, Inc.

Condensed Statements of Stockholders’ Equity (Deficit) (Unaudited)

For the Three and Six Months Ended June 30, 2025

Series B Preferred Stock

Stockholders’

at January 1, 2025

$ ( 56,799,612 )

stock issued from agreements

of restricted stock awards

( 2,278,684 )

at March 31, 2025

$ ( 59,078,296 )

of Series B Preferred Stock to common stock

of common stock pursuant to shelf registration statement

Vesting of restricted stock awards

( 1,690,418 )

at June 30, 2025

$ ( 60,768,714 )

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

Statements of Cash Flows (Unaudited)

the Three Months Ended

Cash Flows from Operating

the Six Months Ended

from Operating Activities

$ ( 3,969,102 )

$ ( 5,038,361 )

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

Loss on disposal of property and equipment

Non-cash lease expense

Stock-based compensation

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

Accounts payable

Accrued expenses

Customer deposits

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

of debt discount and issuance cost

for losses on inventory

and amortization

for losses on accounts receivable

disposal of property and equipment

lease expense

of common stock for non-cash consideration

of warrants for non-cash consideration

in fair value of warrant liabilities

in operating assets and liabilities:

and other current assets

lease liability

Other non-current liabilities

non-current liabilities

cash used in operating activities

1 unchanged sentence

( 2,947,295 )

Cash Flows from Investing

from Investing Activities

to property and equipment

cash used in investing activities

Cash Flows from Financing

Proceeds from exercised warrants

from Financing Activities

from issuance of common shares

from exercised warrants

payments on notes payable

Proceeds from convertible notes, net of fees

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

from convertible notes, net of fees

cash provided by financing activities

Increase in Cash and Cash Equivalents

and Cash Equivalents at Beginning of Period

and Cash Equivalents at End of Period

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

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

Disclosure of Operating Activities

Cash refunded

for income taxes

Schedule of Non-Cash Investing and Financing Activities

of right of use asset

stock issued upon cashless exercise of warrants

stock issued upon cashless conversion of Series B Preferred Stock

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

of note payable to financing company for software subscription

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

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(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.

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 syndrome.

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

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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 is licensed to Masimo Corporation.

Masimo markets and sells this product as its Masimo Bridge.

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

Masimo marketed and sold this product as its Masimo Bridge.

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

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

The termination agreement allowed the Company to recapture the rights

to the trademark (U.S.

Registration No.

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

18/821,225 and Application No.

that were licensed to Masimo on April 9, 2020.

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

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of America (“U.S.

GAAP”) and following the requirements of the U.S.

GAAP”) and follow the requirements of the U.S.

Securities and Exchange Commission (“SEC”)

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of Estimates and Critical Accounting Estimates and Assumptions

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.

preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure

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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.

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

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

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

Management used assumptions and

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

The Company estimates credit losses

on accounts receivable by utilizing an aging schedule.

The allowance for credit losses was $ 5,000 and

of June 30, 2025 and December 31, 2024, respectively.

The Company recorded credit losses of $ 20,324

for the three and six months ended June 30, 2024, respectively.

There were no credit losses for the three and six months ended June 30, 2025.

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.

The inventory is

comprised of finished medical devices on hand.

Certain components within the devices have an expiration date that are removed from

current inventory and expensed at the date of expiration.

The Company recorded expired and other inventory charges of $ 12,174 and

the three and six months ended June 30, 2025, respectively.

There were no expired inventory charges recorded for the three and six

months ended June 30, 2024.

Inventory reserves totaled $ 17,195 and

of June 30, 2025 and December 31, 2024, respectively.

Value Measurements

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the ability to access as of the measurement date.

2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities:

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities:

prices in markets that are not active;

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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 March 31, 2025 approximate their carrying value as reflected in the balance sheets

believes the estimated fair value of these accounts on June 30, 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.

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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.

were no transfers between any of the levels during the periods ended June 30, 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 June

30, 2025 and December 31, 2024.

and Diluted Net Income (Loss) per Share

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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.

In periods when losses are reported, which is the case for the three and six month periods ended June 30, 2025 and 2024, respectively,

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

Pre-Funded Warrants for Common

Restricted Stock Units

Series B Preferred Stock

Undeclared Cumulative Series B Preferred Stock Dividends

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:

2 unchanged sentences

$ ( 2,917,710 )

$ ( 3,969,102 )

$ ( 5,038,361 )

stock dividends

2 unchanged sentences

( 2,917,710 )

( 4,390,110 )

( 5,038,361 )

average shares of common stock outstanding - basic and diluted

Basic and diluted net

loss per share

and diluted net loss per share

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

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

Sales to healthcare

customers generally 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

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the time revenue is recognized, the Company estimates expected returns and excludes those amounts from revenue.

The Company also maintains

appropriate accounts to reflect the effects of expected returns on the Company’s financial position and periodically adjusts those

accounts to reflect its actual return experience.

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

respectively.

The Company also

maintains appropriate accounts to reflect the effects of expected returns on the Company’s financial position and periodically

adjusts those accounts to reflect its actual return experience.

The estimated returns reserve totaled $ 5,000

as of June 30, 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.

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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.

of June 30, 2025, we had stockholders’ equity of $ 4,253,294 and short-term outstanding borrowings of $ 121,433 .

Additionally, we

had cash of $ 5,988,456 and a working capital surplus of $ 4,271,446 as of June 30, 2025.

However, we 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,

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December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires the enhancement

of income tax disclosures to provide better insight into how an entity’s operations and related tax risks, planning and opportunities

affect its tax rate and prospects for future cash flows.

The enhanced disclosures require (i) specific categories in a tabular rate reconciliation

including both amounts and percentages and (ii) additional information for reconciling items and income tax paid that meet a quantitative

Public business entities are required to adopt the standard for annual periods beginning after December 15, 2024.

entities are required to adopt the standard for annual periods beginning after December 15, 2025.

The adoption of the standard is not

expected to have a material impact on the Company’s financial statements.

Improvements to Income Tax Disclosures, which requires the

enhancement of income tax disclosures to provide better insight into how an entity’s operations and related tax risks, planning

and opportunities affect its tax rate and prospects for future cash flows.

The enhanced disclosures require (i) specific categories in

a tabular rate reconciliation including both amounts and percentages and (ii) additional information for reconciling items and income

tax paid that meet a quantitative threshold.

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

after December 15, 2024.

All other entities are required to adopt the standard for annual periods beginning after December 15, 2025.

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

Related Party Transactions

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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 March 31, 2025.

The current allowance is $ 1,012,800 as of June 30, 2025.

The current loan balances are as follows:

Schedule of Related Party Transactions

March 31, 2025

Shareholder 1

Shareholder 2

Principal Balance

Allowance for Collection

( 1,012,800 )

December 31, 2024

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Principal balance

Allowance for Collection

for collection risk

( 1,012,800 )

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for the year ending December 31, 2025.

license costs were incurred for the three months ended June 30, 2025 and 2024, respectively.

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.

and $ 0 for the six months

ended June 30, 2025 and 2024, respectively.

amounts were owed to the limited liability company as of June 30, 2025 and December 31, 2024, respectively.

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

for the year ended December 31, 2025.

The Company sold IB-STIM devices for a total of $ 4,394

for the three months ended June 30, 2025 and 2024, respectively, and $ 6,351

for the six months ended June 30, 2025 and 2024, respectively.

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

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.

firm’s managing partner and majority shareholder.

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

a continuous basis.

The services totaled $ 9,808

for the three months ended June 30, 2025 and 2024, respectively, and $ 31,679

for the six months ended June 30, 2025 and 2024, respectively.

The Company owed the firm $ 2,596

as of June 30, 2025 and December 31, 2024, respectively, that is included in accounts payable in the Condensed Balance Sheets.

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:

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

prepaids and other current assets

Accrued Expenses

Accrued expenses consisted of the following:

expenses consisted of the following:

Schedule of Accrued Expenses

March 31, 2025

December 31, 2024

Compensation and benefits

Compensation and

Settled litigation

Advisory fees

Total accrued expenses

accrued expenses

Notes Payable

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 .

at a rate of 7.40 % per annum that matured 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.

and maturing on September 1, 2025 .

On May 26, 2025, the Company entered into a third promissory note with a principal balance of $ 122,253

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

The outstanding principal was $ 121,433 and $ 154,152

as of June 30, 2025 and December 31, 2024, respectively.

Convertible Notes

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

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

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

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

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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.

on the Amended 2024 Convertible Notes totaled $ 63,817 and $ 85,500 for the three and six months ended June 30, 2024.

There was no amortization

of the debt discount for the three and six months ended June 30, 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 $ 13,434 and $ 80,697 for the three months ended June 30, 2025 and 2024, respectively, and $ 15,672 and $ 107,257 for the

six months ended June 30, 2025 and 2024, respectively.

The Company’s accrued interest totaled $ 66,648 as of June 30, 2025 and December

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

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The Company did not have any finance

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

leases as of June 30, 2025 and December 31, 2024.

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

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.

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 31st of each year.

The current monthly lease

payment for this lease is $ 1,800

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.

monthly lease payment started at $ 6,721

with an annual increase of 2.5 %.

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

Company recognized operating lease expense of $ 25,558 and $ 20,667 for the three months ended June 30, 2025 and 2024, respectively, and

$ 51,082 and $ 46,423 for the six months ended June 30, 2025 and 2024, respectively, including short-term lease expense and variable lease

May 19, 2025, the Company terminated its lease in Versailles, Indiana, effective July 31, 2025, without penalty due to relocation of

the office space to Batesville, Indiana, with the same landlord effective August 1, 2025.

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

Schedule of Operating Leases

Operating lease right-of-use assets

lease right-of-use assets

Other current liabilities

Operating lease liabilities

Weighted-average remaining lease term (in years)

Weighted-average discount rate

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

lease liabilities

Weighted-average remaining

lease term (in years)

Weighted-average discount

of June 30, 2025, the maturities of the Company’s operating lease liabilities were as follows:

Schedule of Maturities Operating Lease Liabilities

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imputed interest

Total present value of lease payments

present value of lease payments

Common Stock and Warrants

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

Company authorized 100,000,000 shares of common stock, of which 9,858,716 and 6,990,227 shares were issued and outstanding as of June

30, 2025 and December 31, 2024, respectively.

June 30, 2025, the Company issued 289,779 shares of common stock to an investor upon the exercise of an equivalent amount of common stock

warrants for gross proceeds of $ 29 .

June 9, 2025, the Company issued 42,016 shares of common stock to an investor upon conversion of an equivalent amount of Series B Preferred

May 22, 2025, the Company issued 1,538,461 shares of common stock for gross proceeds totaling $ 4,999,999 pursuant to a securities purchase

agreement with certain institutional investors at a purchase price of $ 3.25 per share of common stock.

The common shares were offered

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

333-283798) which was declared effective by the Securities

and Exchange Commission on February 11, 2025, a base prospectus dated February 11, 2025 and a prospectus supplement dated May 20, 2025.

The placement agent fees and other offering expenses totaled $ 490,799 for the three and six months ended June 30, 2025.

May 21, 2025, the Company issued 430,580 shares of common stock to certain investors upon the exercise of an equivalent amount of common

stock warrants for gross proceeds of $ 1,002,962 .

May 20, 2025, the Company issued 342,016 shares of common stock to certain investors upon conversion of an equivalent amount of Series

B Preferred Stock.

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

2 unchanged sentences

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,

the three months ended June 30, 2024, the Company issued (i) 53,063 shares of common stock to an existing shareholder to settle a convertible

note dispute with a fair value of $ 230,823 , (ii) 90,032 shares of common stock to pre-IPO Series A Preferred Stock shareholders to settle

certain claims with a fair value of $ 286,458 , (iii) 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, (iv) 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 with a fair value of $ 67,672 , (v) 25,832 shares

of common stock to its previous Chief Financial Officer in accordance with a severance agreement at a fair value of $ 78,788 and (vi)

20,000 shares of common stock to it previous Chief Financial Officer for services provided during the IPO with a fair value of $ 55,600 .

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

(ii) 75,000 shares of common stock as payment to a vendor for services with a fair value of $ 200,250 pursuant to a consulting agreement

related to the Company’s transition to a public company.

following is a summary of warrant activity for common stock during the six months ended June 30, 2025 and year ended December 31, 2024:

Schedule of Warrant Activity for Common Stock

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Weighted-Avg.

Contractual Life

Outstanding as of January 1, 2024

Outstanding as of December 31, 2024

Outstanding as of March 31, 2025

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

Outstanding as

of January 1, 2024

as of December 31, 2024

( 1,223,006 )

as of June 30, 2025

following table summarizes the Company’s warrants outstanding and exercisable as of June 30, 2025:

Schedule of Warrants outstanding and Exercisable

1 unchanged sentence

September 18,

Investor Warrant

2022 Convertible Notes

4 unchanged sentences

August 8, 2028

Advisory Agreement Warrants

Various in 2029

Agreement Warrants

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 4,280,939 shares issued and outstanding as of March 31, 2025.

Series B Preferred Stock

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

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 3,896,907

shares issued and outstanding as of June 30, 2025.

Series B Preferred Stock shareholders vote with Common Stock shareholders on an

as-converted basis and not as a separate class.

Cumulative dividends accrue at 8.5 %

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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 .

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 $ 154,500 .

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

5,000,000 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 .

May 20, 2025, the Company issued 342,016 shares of common stock to certain investors upon conversion of an equivalent amount of Series

B Preferred Stock.

June 9, 2025, the Company issued 42,016 shares of common stock to an investor upon conversion of an equivalent amount of Series B Preferred

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

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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.

of June 30, 2025 and December 31, 2024, preferred stock dividends were neither declared nor paid.

Series B Preferred Stock

undeclared cumulative dividends totaled $ 207,465 , or

$ 0.02 per share, and $ 421,008 , or $ 0.05 per share, for the three and six months ended June 30, 2025,

respectively.

Series B Preferred Stock did not exist before August 15, 2024.

Stock-Based Compensation

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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

on January 3, 2025, March 4, 2025 and May 15, 2025 to certain employees as follows:

of Restricted Stock Units

Average Fair Value

Outstanding as of December 31, 2024

Outstanding as of March 31, 2025

Vested as of March 31, 2025

as of June 30, 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.

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.

there were no

accrued dividends on unvested RSUs as of June 30, 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

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 $ 173,043 and $ 0 for the three months ended June 30, 2025 and 2024, respectively, and $ 278,854

and $ 227,000 for the six months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, total unrecognized stock-compensation

expense relating to unvested stock awards granted under the Company’s share-based compensation plans amounted to $ 1,443,287 .

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

following is a summary of the Company’s outstanding stock options as of June 30, 2025 and December 31, 2024:

Schedule of Stock Option Activity

Number of Options

Weighted Avg.

Remaining Contractual Life (in years)

Weighted Avg.

Exercise Price

Aggregate Intrinsic Value

Outstanding as of December 31, 2024

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.

as of December 31, 2024

as of June 30, 2025

and Exercisable as of June 30, 2025

was no stock-based compensation expense related to stock options recorded for the three and six months ended June 30, 2025 and 2024.

Warrant Liabilities

Company has evaluated financial instruments arising from warrants that are issued and outstanding as of March 31, 2025 and December 31,

Company has evaluated financial instruments arising from warrants that are issued and outstanding as of June 30, 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

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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:

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

Schedule of Changes in Warrant Liabilities

Warrant liabilities as of January 1, 2024

Changes in fair value of warrant liabilities

Warrant liabilities as of December 31, 2024

Changes in fair value of warrant liabilities

Warrant liabilities as of March 31, 2025

Warrant liabilities

as of January 1, 2024

in fair value of warrant liabilities

Warrant liabilities as of

December 31, 2024

in fair value of warrant liabilities

Warrant liabilities as of

June 30, 2025

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.

(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

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 Condensed Statements of Operations.

The CODM uses

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

As NeurAxis is an emerging

growth company, operating loss is used to monitor the Company’s cost structure in order to achieve future segment

profitability.

Both net sales and operating loss are measured against the budget on a periodic basis to assess achievement toward

annual compensation incentive targets.

The Company’s CODM is its Chief Executive Officer.

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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

months ended June 30,

Selling Expenses

& Development (a)

and Benefits (a)

Operating Expenses (a) (b)

Segment Operating

( 1,717,858 )

( 2,206,832 )

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

( 4,012,955 )

( 4,038,952 )

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.

Fair Value of Warrant Liability

of Debt Discount and Issuance Cost

Other (Expense) Income, Net

$ ( 1,690,418 )

$ ( 2,917,710 )

$ ( 3,969,102 )

$ ( 5,038,361 )

The significant expense

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

Other 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 $ 7,087,999 and $ 4,757,572 as of June 30, 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.

capital expenditures for IB-STIM amounted to $ 7,288 and $ 8,686 for the three months ended June 30, 2025 and 2024, respectively, and $ 25,288

and $ 23,408 for the six months ended June 30, 2025 and 2024, respectively.

Total segment depreciation and amortization amounted to $ 12,885

and $ 10,970 for the three months ended June 30, 2025 and 2024, respectively, and $ 19,241 and $ 21,707 for the six months ended June 30,

2025 and 2024, respectively.

segment non-cash charges settled in common stock include consulting and advisory fees totaling $ 0 and $ 85,731 for the three months ended

June 30, 2025, and 2024, respectively, and $ 112,493 and $ 285,981 for the six months ended June 30, 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.

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

and others in the United

States District Court for the District of Maryland.

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

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

The Complaint asserted claims under

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

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

of the case as a class action.

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

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

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

Plaintiffs claim

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

February 11, 2022, the Company filed a motion for summary judgment based upon the plaintiffs not being proper parties to assert claims

against the Company.

On June 14, 2022, the Court granted the Company’s motion for summary judgment and dismissed the Complaint.

July 14, 2022, plaintiffs Ritu Bhambhani and Sudhir Rao filed a notice of appeal with the Fourth Circuit Court of Appeals.

25 unchanged sentences

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.

April 25, 2025, the parties reached a tentative $ 750,000 settlement payable in 12 equal monthly installments beginning in January of

2026 as filed with the United States District Court for the District of Maryland with the settlement agreement duly executed on May 15,

The Company recorded a charge of $ 11,471 and $ 630,568 for the three and six months ended June 30, 2025, respectively, in the Condensed

Statements of Operations classified as general and administrative expense, while interest expense will be recorded as incurred.

June 30, 2025, the Company accrued $ 375,000 as accrued expenses and $ 267,540 as other non-current liabilities in the Condensed Balance

Commitments and Contingencies

14 unchanged sentences

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

terminated the advisory agreement subject to the cancelation of 30,252 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.

Company settled a 2023 convertible note dispute with an existing shareholder for $ 230,824 during the six months ended June 30, 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 $ 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.

June 28, 2024, the Company issued 90,032 shares of common stock to various pre-IPO Series A Preferred Stock shareholders to settle certain

The Company recorded the fair value of the settlements totaling $ 286,458 for the three and six months ended June 30, 2024, as

Other Expense in the Condensed Statements of Operations.

Furthermore, the Company authorized the issuance of 104,378 shares of its common

stock to settle the remaining claims with pre-IPO Series A Preferred Stock shareholders recorded at a fair value of $ 290,171 for the

three and six months ended June 30, 2024, as Other Expense in the Condensed Statements of Operations and Accrued Expenses in the Condensed

Balance Sheets as of June 30, 2024.

As of June 30, 2025, 1,518 shares of common stock authorized to settle these claims with a fair value

of $ 4,220 have not yet been issued as of the reporting date as the Company awaits execution of the settlement agreement by one counterparty.

There were no shares of common stock issued to settle any claims during the three and six

months ended June 30, 2025.

Employment Agreements

1 unchanged sentence

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

years and optional

one-year renewals .

The agreements had an employment start

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

to five years and optional one-year renewals .

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.

special options bonuses of $ 14,821,830

were contingent upon a successful initial public

offering and 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.

4 unchanged sentences

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

obligation totaling $ 10,281 and $ 21,418 classified as Accrued Expenses in the Condensed Balance Sheets as of June 30, 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.

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

As of the date of issuance, other than those described above (see Footnote 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.

There are 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.

2 unchanged sentences

10,413,719 valued at $ 2,000,000

$ 2,000,000 based

on his own work in neurostimulation.

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.

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

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.

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

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

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

Registration No.

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

18/821,225 and Application No.

29/960,608) that were licensed

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

On July 1, 2025, the Compensation Committee of

the Board of Directors (“Board”) of the Company adopted the NeurAxis, Inc.

2025 Employee Stock Purchase Plan (the “ESPP”),

effective as of the same date and subject to Shareholder approval by July 1, 2026.

The purpose of the ESPP is to provide eligible employees

an opportunity to acquire common stock of the Company at a 15 % discount using payroll deductions.

The maximum number of shares

of the Company’s common stock that may be issued under the ESPP is 100,000, subject to an annual increase on January 1st of each year

from 2026 through 2035 by the lesser of (i) 1% of the Company’s outstanding capital stock as of the prior December 31st or (ii) 100,000

The Board may reduce or eliminate this annual increase before February 1st of any given year.

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

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

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

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