What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-12 compared with 2025-05-12 · 132 added, 96 removed, 77 unchanged (75% of the section changed)

20 unchanged sentences

our inception, we have incurred significant operating losses.

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.

Our net loss was $1,690,418 and $2,917,710 for the three months ended June

30, 2025 and 2024, respectively, and $3,969,102 and $5,038,361 for the six months ended June 30, 2025 and 2024, respectively.

we had stockholders’ equity of $4,253,294 as of June 30, 2025, 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 of RED.

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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to use four to six or more devices per patient.

In an effort to treat all patients, the Company provides devices at a discount to lower

income patients without healthcare insurance.

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.

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

Given the current

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

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 and RED devices, production volume, order flows, change in mix of customers, third-party manufacturing

costs related to components of our devices 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 and the mix of patient healthcare coverage (e.g.

discounts are provided to lower

income patients without healthcare insurance), 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

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.

We expect production costs

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

of goods sold consist of costs paid for the IB-Stim and RED devices to our contract manufacturers along with shipping and handling

costs and expired inventory charges.

Expired inventory expense is related to the FDA clearance period from the date our devices are

manufactured, and if the device is not sold in such period, a reserve is recorded.

Expired and other inventory charges totaled

$12,174 and $12,174 for the three and six months ended June 30, 2025, respectively.

There was no expired inventory for the three and

six months ended June 30, 2024.

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

core selling expenses primarily consist of commissions.

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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 costs.

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

advertising, facility costs, utilities and travel costs.

of Operations

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

following table presents our statements of operations for the three and six months ended June 30, 2025 and 2024, respectively:

Months Ended June 30,

of goods sold

Selling expenses

Research and development

General and administrative

and administrative

Operating loss

Other (expense) income:

Financing charges

Interest expense, net

Change in fair value of warrant liability

Amortization of debt discount and issuance costs

Other expense

Total other (expense) income, net

Change in fair value of warrant

Amortization of debt discount

and issuance costs

other income (expense), net

$ (1,690,418 )

$ (2,917,710 )

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.

$ (3,969,102 )

$ (5,038,361 )

sales increased $282,586, or 46.2%, from $611,500 for the three months ended June 30, 2024, to $894,086 for the three months ended

June 30, 2025, and increased $531,606, or 42.3%, from $1,258,135 for the six months ended June 30, 2024, to $1,789,741 for the

six months ended June 30, 2025.

The increases were due to volume growth from customers with full health insurance reimbursement

coverage and those participating in our financial assistance programs that provide discounts to patients without insurance coverage

and device sales from the Company’s launch of its RED product in 2025.

Profit and Gross Margin

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.

profit increased $209,401, or 38.9%, from $538,042 for the three months ended June 30, 2024, to $747,443 for the three months ended June

30, 2025, due to higher sales volume.

Despite the increase in sales volume, the decrease in gross margin from 88.0% for the three months

ended June 30, 2024, to 83.6% for the three months ended June 30, 2025, was due to higher discounting in the Company’s financial

assistance programs provided to patients without health insurance coverage and expired RED inventory.

profit increased $394,027, or 35.5%, from $1,109,596 for the six months ended June 30, 2024, to $1,503,623 for the six months ended

June 30, 2025, due to higher sales volume.

Despite the increase in sales volume, gross margin decreased from 88.2% for the six

months ended June 30, 2024, to 84.0% for the six months ended June 30, 2025, due to higher growth of the financial assistance

programs versus the full reimbursement patients, higher discounting in the Company’s financial assistance programs provided to

patients without health insurance coverage and expired RED inventory.

expenses increased $79,979, or 128.4%, from $62,274 for the three months ended June 30, 2024, to $142,253 for the three months ended

June 30, 2025, and increased $133,902, or 94.1%, from $142,304 for the six months ended June 30, 2024, to $276,206 for the

six months ended June 30, 2025.

The increases were due to higher sales volume and a temporary commission structure to facilitate growth

and adoption in new states.

and Development

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 development expenses increased $4,007, or 7.4%, from $54,312 for the three months ended June 30, 2024, to $58,319 for the three months

ended June 30, 2025, and increased $48,130, or 80.4%, from $59,882 for the six months ended June 30, 2024

to $108,012 for the six months ended June 30, 2025.

The increases were due to higher year-over-year spending on a medical research project

and costs to develop the RED device.

and Administrative

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, 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 administrative expenses decreased $363,559, or 13.8%, from $2,628,288 for the three months ended June 30, 2024, to $2,264,729

for the three months ended June 30, 2025, primarily due to the absence of certain one-time, non-recurring severance, consulting and

advisory costs incurred in 2024 and lower accounting, investor relations, insurance and advertising costs as new hires in 2024

have internally absorbed certain services, partially offset by third party costs incurred to enhance the Company’s internal

control environment.

and administrative expenses increased $185,998, or 3.8%, from $4,946,362 for the six months ended June 30, 2024, to $5,132,360 for

the six months ended June 30, 2025, primarily due to a one-time, non-recurring charge to settle a lawsuit, third party costs

incurred to enhance the Company’s internal control environment and the introduction of annual short-term and long-term

incentive plans in 2024 that were not outstanding for the full fiscal year, partially offset by the absence of certain one-time,

non-recurring severance, hiring, consulting and advisory costs incurred in 2024 and lower legal, accounting, investor relations and

insurance costs as new hires in 2024 have internally absorbed certain services.

operating loss decreased $488,974, or 22.2%, from $2,206,832 for the three months ended June 30, 2024, to $1,717,858 for the three months

ended June 30, 2025, primarily due to higher sales volume and lower general and administrative expenses, partially offset by a lower

gross margin and higher selling costs that are a function of revenue.

operating loss decreased $25,997, or 0.6%, from $4,038,952 for the six months ended June 30, 2024, to $4,012,955 for the six months ended

June 30, 2025, primarily due to higher sales volume, partially offset by a lower gross margin, higher general and administrative costs

primarily due to a one-time, non-recurring settlement of a lawsuit, higher research and development costs and higher selling costs that

are a function of revenue.

Income (Expense), Net

income increased $738,318, or 103.9%, from $710,878 of expenses for the three months ended June 30, 2024, to $27,440 of income for the

three months ended June 30, 2025, primarily due to the absence of a one-time, non-recurring 2024 settlement of certain claims relating

to pre-IPO Series A Preferred Stock shareholders.

income increased $1,043,262, or 104.4% from $999,409 of expense for the six months ended June 30, 2024, to $43,853 of income for the

six months ended June 30, 2025, primarily due the absence of one-time, non-recurring 2024 settlements relating to a 2023 convertible

note dispute and certain pre-IPO Series A Preferred Stock shareholder claims.

net loss decreased $1,227,292, or 42.1%, from $2,917,710 for the three months ended June 30, 2024, to $1,690,418 for the three months

ended June 30, 2025, due to higher sales volume, lower general and administrative expenses and the absence of a one-time, non-recurring

2024 settlement of certain claims relating to pre-IPO Series A Preferred Stock shareholders.

net loss decreased $1,069,259 from $5,038,361 for the six months ended June 30, 2024, to $3,969,102 for the six months ended June 30,

2025, primarily due to higher sales volume and the absence of one-time, non-recurring 2024 settlements relating to a 2023 convertible

note dispute and certain pre-IPO Series A Preferred Stock shareholder claims, partially offset by the one-time, non-recurring settlement

of a lawsuit in 2025.

and Capital Resources

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

had cash on hand of $5,988,456 and $3,696,870 as of June 30, 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 utilization of cash to fund the Company’s net loss during the three months ended March 31, 2025.

surplus of $4,271,446 and $1,832,858 as of June 30, 2025, and December 31, 2024, respectively.

The increase in working capital was primarily

due to proceeds from the issuance of common stock and the exercise of common stock warrants during the six months ended June 30, 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 March 31, 2025, we had stockholders’ equity of $258,479 and short-term borrowings of $84,307.

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

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

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

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

Three Months Ended March 31,

Net cash used in operating activities

following table summarizes our cash flow from operating, investing and financing activities for the six months ended June 30, 2025 and

Months Ended June 30,

Net cash used

in operating activities

$ (3,071,145 )

$ (2,947,295 )

Net cash used in investing activities

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 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.

Net cash used in investing

provided by financing activities

Net increase in cash and cash

and cash equivalents at beginning of period

and cash equivalents at end of period

Activities – Net cash used in operating activities increased $123,850, or 4.2%, for the six months ended June 30, 2025, compared

to the six months ended June 30, 2024, primarily due to higher inventory purchases to support sales growth and the 2025 payment of the

2024 short-term incentive program, partially offset by increased cash collections.

Activities – Net cash used in investing activities increased $1,880, or 8.0%, for the six months ended June 30, 2025, compared

to the six months ended June 30, 2024, due to capital expenditures to manufacture the RED device.

Activities – Net cash provided by financing activities increased $730,602, or 15.7%, for the six months ended June 30, 2025, compared

to the six months ended June 30, 2024, primarily due to proceeds received from the issuance of common stock and the exercise of common

stock warrants in 2025 compared to the issuance of convertible notes in 2024.

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