What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-08 compared with 2024-08-08 · 477 added, 374 removed, 68 unchanged (93% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following

discussion and analysis of our financial condition and results of operations together with our financial statements and related notes

appearing in this Quarterly Report.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly

Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve

risks and uncertainties.

As a result of many factors, our actual results could differ materially from the results described in or implied

by the forward-looking statements contained in the following discussion and analysis.

Forward-looking statements represent our management’s

beliefs and assumptions only as of the date of this Quarterly Report.

Actual future results may be materially different from what we expect.

We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which

they are made, except as required by applicable law.

The management’s

discussion and analysis of our financial condition and results of operations are based upon our unaudited financial statements, which

have been prepared in accordance with GAAP.

We design and develop innovative neurostimulation products to uniquely and effectively help combat the ongoing global mental health epidemic.

We developed an easy-to-administer medical device — referred to as Generation 1 or Gen-1 — that utilizes bioelectronic medical technology to treat anxiety and insomnia, without the need for drugs or psychotherapy.

Our original Gen-1 devices are cranial electrotherapy stimulation (CES) devices that emit waveform at 4 milliamps during treatment and are presently classified by the U.S.

Food and Drug Administration (“FDA”) as a Class II device.

Medical professionals in the United States have utilized the Gen-1 device to administer to patients in clinical settings.

While the Gen-1 device had been cleared by the FDA to treat depression, anxiety, and insomnia, three prevalent and serious diseases, because of the FDA’s December 2019 reclassification of CES devices, the Gen-1 device was reclassified as a Class II device for the treatment of anxiety and insomnia.

We are required to file a new application under Section 510(k) of the Federal Food, Drug and Cosmetic Act (“510(k) Application”) to be approved by the FDA for the sales and marketing of our devices for the treatment of anxiety and insomnia.

In the FDA’s December 2019 reclassification ruling, the treatment of depression with our device will require a Class III certification and require a new PMA (premarket approval) application to demonstrate safety and effectiveness.

While we continue providing services to medical

professionals to support patients’ use of the Gen-1 devices which were in operation prior to December 2019, we are not

making new sales or new marketing efforts of Gen-1 devices in the United States.

We continue to derive revenue from devices which we

sold or leased prior to the FDA’s December 2019 reclassification announcements.

This revenue consists of monthly

licensing fees and payments for the sale of electrodes and patient cables.

We have suspended marketing efforts for new sales of

devices related to the Gen-1 device for treatment of anxiety and insomnia in the United States until the Nexalin regulatory team

decides on a new 510(k) application at 4 milliamps based on FDA comments expected to be received in 2024.

Our regulatory team

continues to inform the FDA of the suspension of the marketing and sale of the Gen-1 products to new providers.

We are currently

analyzing whether to proceed with an amended application with the FDA for Gen-1 devices for the treatment of insomnia and

We have designed and developed a new advanced waveform technology to be emitted at 15 milliamps through new and improved medical devices referred to as “Generation 2” or “Gen-2” and “Generation 3” or “Gen-3.” Gen-2 is a clinical use device with a modern enclosure to emit the new 15 milliamp advanced waveform.

Gen-3 is a new patient headset that is designed to be prescribed by licensed medical professionals in a virtual clinic setting similar to existing Tele-health platforms.

The Nexalin research team believes that the new 15 milliamp Gen-2 and Gen-3 devices can penetrate deeper into the brain and stimulate associated structures of mental illness, which we believe will generate enhanced patient response without any risk or unpleasant side effects.

The Nexalin regulatory team has made a strategic decision to develop strategies for pilot trials and/or pivotal trials in various mental health disease states.

In addition, a new PMA application in the United States is in development for the treatment of depression utilizing both Gen-2 and Gen-3.

The new Gen-3 device is also scheduled for additional pilot trials and/or pivotal trials for anxiety and insomnia in the United States and China beginning in the late second or early third quarter of 2024.

Preliminary data provided by The University of California, San Diego and recent published data from China supports the safety of utilizing our 15 milliamp waveform technology.

However, the determination of safety and efficacy of medical devices in the United States is subject to clearance by the FDA.

Additionally, a new pre-submission document in preparation of a new 510(k) and/or de novo for our Gen-3 Halo headset at 15 milliamps was filed with the FDA in January of 2023.

should read the following discussion and analysis of our financial condition and results of operations together with our financial statements

and related notes appearing in this Quarterly Report.

Some of the information contained in this discussion and analysis or set forth

elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking

statements that involve risks and uncertainties.

As a result of many factors, our actual results could differ materially from the results

described in or implied by the forward-looking statements contained in the following discussion and analysis.

Forward-looking statements

represent our management’s beliefs and assumptions only as of the date of this Quarterly Report.

Actual future results may be materially

different from what we expect.

We undertake no obligation to update such statements to reflect events that occur or circumstances that

exist after the date on which they are made, except as required by applicable law.

management’s discussion and analysis of our financial condition and results of operations are based upon our unaudited financial

statements, which have been prepared in accordance with GAAP.

design and develop innovative neurostimulation products to uniquely and effectively help combat the ongoing global mental health epidemic.

We developed an easy-to-administer medical device — referred to as Generation 1 or Gen-1 — that utilizes bioelectronic medical

technology to treat anxiety and insomnia, without the need for drugs or psychotherapy.

Our original Gen-1 devices are cranial electrotherapy

stimulation (CES) devices that emit waveform at 4 milliamps during treatment and are presently classified by the U.S.

Food and Drug Administration

(“FDA”) as a Class II device.

professionals in the United States have utilized the Gen-1 device to administer to patients in clinical settings.

While the Gen-1 device

had been cleared by the FDA to treat depression, anxiety, and insomnia, three prevalent and serious diseases, because of the FDA’s

December 2019 reclassification of CES devices, the Gen-1 device was reclassified as a Class II device for the treatment of anxiety

and insomnia.

We are required to file a new application under Section 510(k) of the Federal Food, Drug and Cosmetic Act (“510(k)

Application”) to be approved by the FDA for the sales and marketing of our devices for the treatment of anxiety and insomnia.

the FDA’s December 2019 reclassification ruling, the treatment of depression with our device will require a Class III certification

and require a new PMA (premarket approval) application to demonstrate safety and effectiveness.

we continue providing services to medical professionals to support patients’ use of the Gen-1 devices which were in operation prior

to December 2019, we are not making new sales or new marketing efforts of Gen-1 devices in the United States.

We continue to derive

revenue from devices which we sold or leased prior to the FDA’s December 2019 reclassification announcements.

consists of monthly licensing fees and payments for the sale of electrodes and patient cables.

We have suspended marketing efforts for

new sales of devices related to the Gen-1 device for treatment of anxiety and insomnia in the United States until the Nexalin regulatory

team decides on a new 510(k) application at 4 milliamps based on FDA comments expected to be received in 2024.

Our regulatory team continues

to inform the FDA of the suspension of the marketing and sale of the Gen-1 products to new providers.

We are currently analyzing whether

to proceed with an amended application with the FDA for Gen-1 devices for the treatment of insomnia and anxiety.

We have designed and developed a new advanced

waveform technology to be emitted at 15 milliamps through new and improved medical devices referred to as “Generation 2”

or “Gen-2” and “Generation 3” or “Gen-3.” Gen-2 is a clinical use device with a modern enclosure

to emit the new 15 milliamp advanced waveform.

Gen-3 is a new patient headset that is designed to be prescribed by licensed medical professionals

in a virtual clinic setting similar to existing Tele-health platforms.

The Nexalin research team believes that the new 15 milliamp Gen-2

and Gen-3 devices can penetrate deeper into the brain and stimulate associated structures of mental illness, which we believe will generate

enhanced patient response without any risk or unpleasant side effects.

The Nexalin regulatory team has made a strategic decision to develop

strategies for pilot trials and/or pivotal trials in various mental health disease states.

In addition, a new PMA application in the

United States is in development for the treatment of depression utilizing both Gen-2 and Gen-3.

The new Gen-3 device is also scheduled

for additional pilot trials and/or pivotal trials for anxiety and insomnia in the United States and China beginning in the fourth quarter

Preliminary data provided by The University of California, San Diego and recent published data from China supports the safety

of utilizing our 15 milliamp waveform technology.

However, the determination of safety and efficacy of medical devices in the United

States is subject to clearance by the FDA.

Additionally,

a new pre-submission document in preparation of a new 510(k) and/or De Novo for our Gen-3 Halo headset at 15 milliamps was filed with

the FDA in January of 2023.

Formal comments to our pre-submission document filing were received in March of 2023.

A formal meeting to address FDA comments took place on May 9, 2023.

A formal meeting to

address FDA comments took place on May 9, 2023.

Minutes of the meeting with the FDA were filed with the FDA on May 16, 2023.

A second FDA pre-submission document was submitted on February 13, 2024.

FDA comments to this second pre-submission document were received on April 26, 2024.

second FDA pre-submission document was submitted on February 13, 2024.

FDA comments to this second pre-submission document were

received on April 26, 2024.

A formal teleconference was held with the FDA on April 30, 2024.

The Nexalin regulatory team and the FDA came to a consensus on the Anxiety and Insomnia Clinical research protocols.

In part due to increasing incidence attributed to the devastating impacts of the COVID-19 pandemic, mental health and cognitive disorders are widespread across the globe and cause substantial health, social and economic losses, and hardships accordingly.

Our focus is on the continued development of our innovative bioelectronic medical technologies and rapid regulatory approval.

We intend to help reverse these losses, and hardships of these losses, by safely and effectively treating various mental health disorders associated with post Covid and long Covid mental disease states.

All our products are non-invasive, safe,

undetectable to the human body and can provide relief to those afflicted with mental health issues without adverse side effects.

have a proprietary design that stabilizes currents, electromagnetic fields, and various frequencies — referred to collectively

as a waveform - particularly our proprietary, 15 milliamp patented waveform.

Additionally, our devices generate a high frequency

carrier wave for deeper penetration into the brain.

It is applied to the brain with an array of electrodes on the forehead and behind each ear at

The features of this proprietary waveform and the array of electrodes allow the application of the waveform to the

entire brain rather than a small, targeted area of the brain.

To ensure deeper penetration into the brain, we have created a

waveform that is undetectable to the brain which allows the increase of the power from < 4 mAmps to 15 mAmps, more than a 400%

increase without incurring any patient discomfort, risk, or adverse side effects.

The Nexalin regulatory team and

the FDA came to a consensus on the Anxiety and Insomnia Clinical research protocols.

part due to the increasing incidence attributed to the devastating impacts of the COVID-19 pandemic, mental health and cognitive

disorders are widespread across the globe and cause substantial health, social and economic losses, and hardships accordingly.

focus is on the continued development of our innovative bioelectronic medical technologies and rapid regulatory approval.

to help reverse these losses, and hardships of these losses, by safely and effectively treating various mental health disorders

associated with post Covid and long Covid mental disease states.

our products are non-invasive, safe, undetectable to the human body and can provide relief to those afflicted with mental health issues

without adverse side effects.

We have a proprietary design that stabilizes currents, electromagnetic fields, and various frequencies

— referred to collectively as a waveform - particularly our proprietary, 15 milliamp patented waveform.

Additionally, our devices

generate a high frequency carrier wave for deeper penetration into the brain.

It is applied to the brain with an array of electrodes

on the forehead and behind each ear at the mastoid.

The features of this proprietary waveform and the array of electrodes allow the application

of the waveform to the entire brain rather than a small, targeted area of the brain.

To ensure deeper penetration into the brain, we

have created a waveform that is undetectable to the brain which allows the increase of the power from < 4 mAmps to 15 mAmps, more

than a 400% increase without incurring any patient discomfort, risk, or adverse side effects.

By increasing the power, our waveform can

penetrate deeper into the brain and stimulate deep mid-brain structures associated with mental illness.

Our research and clinical

teams believe that a more powerful waveform will create a stronger response in the brain.

A stronger response creates a higher level

This entire proprietary technique allows Nexalin to provide a non-invasive and comfortable treatment that is more

powerful than any stimulation device in the market.

Current pilot study protocols and randomized clinical trials have been designed

and submitted to the FDA to provide feedback on final reports and data sets for the purpose of safety and efficacy evaluations in

Determinations of the safety and efficacy of our devices are solely within the authority of the FDA.

Currently, the waveform that comprises the basis of Gen-2 and new Gen-3 headset devices has been tested in research settings to develop safety data that has been submitted for review by the FDA for safety evaluation and eventual marketing in the United States and around the world.

Our research and clinical teams

believe that a more powerful waveform will create a stronger response in the brain.

A stronger response creates a higher level of efficacy.

This entire proprietary technique allows Nexalin to provide a non-invasive and comfortable treatment that is more powerful than any stimulation

device in the market.

Current pilot study protocols and randomized clinical trials have been designed and submitted to the FDA to provide

feedback on final reports and data sets for the purpose of safety and efficacy evaluations in the future.

Determinations of the safety

and efficacy of our devices are solely within the authority of the FDA.

the waveform that comprises the basis of Gen-2 and new Gen-3 headset devices has been tested in research settings to develop safety data

that has been submitted for review by the FDA for safety evaluation and eventual marketing in the United States and around the world.

Determinations of the safety and efficacy of our devices in the United States are solely within the authority of the FDA.

We recognize that an additional barrier to treatment in today’s mental health treatment landscape -- beyond the concerns about safety, efficacy and side-effects that have been associated with conventional mental health treatments such as ECT (shock therapy), drugs and psychotherapy is stigma.

We have received industry reports and feedback that many patients that struggle with mood disorders have the stigma of embarrassment associated with psychiatrists and psychotherapy (e.g., counselling with a therapist).

Additional stigmas and other issues are associated with the side effects of medication prescribed by psychiatrists.

When we researched the current pharmaceuticals model, public information highlighted the many side effects associated with these medications.

Frequently, patients would stop taking the medication because of the uncomfortable side effects.

Additional public information mentions dependency and withdrawal issues associated with medication for psychiatric disorders.

To address the embarrassment stigma, we are developing a new virtual clinic that will allow the physician to diagnose a mental health issue in the privacy of a tele-psychiatry virtual platform.

After diagnosis, the physician will prescribe the Nexalin Gen-3 headset to the patient for treatment.

recognize that an additional barrier to treatment in today’s mental health treatment landscape -- beyond the concerns about safety,

efficacy and side-effects that have been associated with conventional mental health treatments such as ECT (shock therapy), drugs and

psychotherapy – is stigma.

We have received industry reports and feedback that many patients that struggle with mood disorders

have the stigma of embarrassment associated with psychiatrists and psychotherapy (e.g., counselling with a therapist).

Additional stigmas

and other issues are associated with the side effects of medication prescribed by psychiatrists.

When we researched the current pharmaceuticals

model, public information highlighted the many side effects associated with these medications.

Frequently, patients would stop taking

the medication because of the uncomfortable side effects.

Additional public information mentions dependency and withdrawal issues associated

with medication for psychiatric disorders.

address the embarrassment stigma, we are developing a new virtual clinic that will allow the physician to diagnose a mental health issue

in the privacy of a tele-psychiatry virtual platform.

After diagnosis, the physician will prescribe the Nexalin Gen-3 headset to the

patient for treatment.

Next, the Gen-3 device will be shipped to the patient’s home.

After the patient receives the device, they will pair the headset device with an app in the patient’s smart phone.

The app will communicate with the Nexalin cloud servers to authorize the device for treatment according to the protocol designed by the physician.

The physician will monitor treatment compliance and other health related issues in a private physician dashboard that connects through the Nexalin app and cloud servers.

We believe that to preserve product safety and integrity for home use, the headset device will require physician oversight that will include a prescription for use with a monthly authorization provided by the physician after a monthly virtual visit.

All appointments will be in a virtual setting to provide privacy and convenience for the physician and patient.

The Nexalin virtual clinic will be provided in a proprietary virtual platform currently in the design stage.

Our China Gen-2 15 milliamp device was approved in China by the NMPA for the treatment of insomnia and depression in China.

This device and all other clinical devices will include a single use electrode for long term revenue streams.

The USA Gen-2 device will have a fresh and modern appearance that meets the technology standards of the digital tech world of 2023.

Early adopters of the Gen-1 device will be able to access additional firmware upgrades which are planned to enhance the previously purchased devices to the new symmetric15-milliamp waveform.

After the patient receives the device, they

will pair the headset device with an app in the patient’s smart phone.

The app will communicate with the Nexalin cloud servers

to authorize the device for treatment according to the protocol designed by the physician.

The physician will monitor treatment compliance

and other health related issues in a private physician dashboard that connects through the Nexalin app and cloud servers.

that to preserve product safety and integrity for home use, the headset device will require physician oversight that will include a prescription

for use with a monthly authorization provided by the physician after a monthly virtual visit.

All appointments will be in a virtual setting

to provide privacy and convenience for the physician and patient.

The Nexalin virtual clinic will be provided in a proprietary virtual

platform currently in the design stage.

China Gen-2 15 milliamp device was approved in China by the NMPA for the treatment of insomnia and depression in China.

This device and

all other clinical devices will include a single use electrode for long term revenue streams.

The USA Gen-2 device will have a fresh

and modern appearance that meets the technology standards of the digital tech world of 2024.

Early adopters of the Gen-1 device will

be able to access additional firmware upgrades which are planned to enhance the previously purchased devices to the new symmetric15-milliamp

Our Gen-2 device will be equipped with RFID technology that exchanges electrode usage data with a reader in the main device.

The purpose of RFID is to track and maintain control of the proprietary single use electrode.

Our electrode chip will be programmed to exchange data with the device and allow activation for a single treatment with a new electrode only.

This ensures a recurring revenue stream on the device and protects against any generic knockoffs designed to avoid treatment costs.

This upgrade in technology also ensures the proprietary nature of the electrodes that support treatment outcomes are sustained.

Overall, we believe that our advanced waveform, technological upgrades and the development of a modern headset monitored with our IT management platform will position us with the opportunity to disrupt the traditional mental health treatment model.

Our mission is to remove the stigma of expensive psychotherapy or pharmaceuticals with the attendant side effects and dependency issues and replace such stigma with clinically proven and cost-effective technology that is easily accessible in the privacy of the patient’s home and monitored by licensed healthcare providers.

Since our inception, we have generated significant losses;

we expect to continue to incur significant expenses and increasing operating losses for at least the next two years.

Our net losses may fluctuate significantly from period to period, depending on the timing of our planned clinical trials and expenditures for other research and development activities.

We expect our expenses will increase substantially over time as we:

continue the ongoing and planned preclinical and clinical development of our products;

review and analyze the value of amending our previous 510(k) Application for anxiety and insomnia in accordance with the FDA and seek other regulatory approvals for any future products that successfully complete clinical trials;

arrange for an outsourced sales, marketing and distribution model and scale up external manufacturing capabilities to commercialize any product candidate for which we may obtain regulatory approval and intend to commercialize;

maintain, expand and protect our intellectual property portfolio;

engage additional clinical, scientific, manufacturing and controls personnel;

add additional information systems including personnel to support our product development;

Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company.

Recent Developments

Formalized Joint Venture;

Our electrode chip will be programmed to

exchange data with the device and allow activation for a single treatment with a new electrode only.

This ensures a recurring revenue

stream on the device and protects against any generic knockoffs designed to avoid treatment costs.

This upgrade in technology also ensures

the proprietary nature of the electrodes that support treatment outcomes are sustained.

we believe that our advanced waveform, technological upgrades and the development of a modern headset monitored with our IT management

platform will position us with the opportunity to disrupt the traditional mental health treatment model.

Our mission is to remove the

stigma of expensive psychotherapy or pharmaceuticals with the attendant side effects and dependency issues and replace such stigma with

clinically proven and cost-effective technology that is easily accessible in the privacy of the patient’s home and monitored by

licensed healthcare providers.

our inception, we have generated significant losses;

we expect to continue to incur significant expenses and increasing operating losses

for at least the next two years.

Our net losses may fluctuate significantly from period to period, depending on the timing of our planned

clinical trials and expenditures for other research and development activities.

We expect our expenses will increase substantially over

continue the ongoing and

planned preclinical and clinical development of our products;

review and analyze the

value of amending our previous 510(k) Application for anxiety and insomnia in accordance with the FDA;

arrange for an outsourced

sales, marketing and distribution model and scale up external manufacturing capabilities to commercialize any product candidate for

which we may obtain regulatory approval and intend to commercialize;

maintain, expand and protect

our intellectual property portfolio;

engage additional clinical,

scientific, manufacturing and controls personnel;

add additional information

systems including personnel to support our product development;

we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor

relations and other expenses that we did not incur as a private company.

Joint Venture;

China Related Activities;

Approvals in Oman and Brazil

On May 31, 2023, the Company formalized an agreement related to the formation of a joint venture established to engage in the clinical development, marketing, sale and distribution of Nexalin’s second generation transcranial Alternating Current Stimulation (“tACS”) devices (“Gen-2 devices”) in China and other countries in the region.

May 31, 2023, the Company formalized an agreement related to the formation of a joint venture established to engage in the clinical

development, marketing, sale and distribution of Nexilin’s second generation transcranial Alternating Current Stimulation (“tACS”)

devices (“Gen-2 devices”) in China and other countries in the region.

The Joint Venture is registered in Hong Kong.

As of the date of this Quarterly Report on Form 10-Q, (i) our operations are carried on outside of China;

and (ii) the Joint Venture does not maintain any variable interest entity structure or operate any data center in China.

Under the Joint Venture Agreement, Wider is obligated to fund all operations for the initial 12-month period of the Joint Venture, after which Nexalin and Wider plan to jointly fund the Joint Venture’s operating expenses in accordance with their pro rata ownership.

The Joint Venture is controlled by a Board of

Directors in which Wider is to have sole representation but neither the Company nor Wider has exclusive decision-making ability over day-to-day

or significant operational decisions.

Wider and Nexalin own 52% and 48% of the Joint Venture, respectively.

of the date of this Quarterly Report on Form 10-Q, (i) our operations are carried on outside of China;

and (ii) the Joint Venture

does not maintain any variable interest entity structure or operate any data center in China.

the Joint Venture Agreement, Wider is obligated to fund all operations for the initial 12-month period of the Joint Venture, after which

Nexalin and Wider plan to jointly fund the Joint Venture’s operating expenses in accordance with their pro rata ownership.

Joint Venture is controlled by a Board of Directors in which Wider is to have sole representation but neither the Company nor Wider has

exclusive decision-making ability over day-to-day or significant operational decisions.

Wider and Nexalin own 52% and 48% of the Joint

Venture, respectively.

In accordance with ASC 323 and ASC 810, the Company recognized $159 and $0 for the three months ended September 30,

2024 and 2023 and $4,651 and $0 of equity method investment income from the Joint Venture on a one-quarter reporting lag for the nine

months ended September 30, 2024 and 2023, respectively, on the condensed consolidated statements of operations and comprehensive

the nine months ended September 30, 2024, the Company issued 150,000 shares of common stock to affiliates of Wider in satisfaction

of obligations pursuant to their collaborative agreement.

A charge to research and development was recorded in 2023 at the time the Company

recognized its obligation to issue these shares.

investment in the Joint Venture is accounted for using the equity method of accounting.

As of September 30, 2024 and December 31,

2023 the Company had an Equity Method Investment of $100,651 and $96,000, respectively, recorded on the condensed consolidated balance

The Company invested $96,000 in the joint venture in September 2023 and Wider invested $104,000.

In accordance with ASC

and ASC 810, the Company recognized $(1,291) and $0 for the three months ended June 30, 2024 and 2023 and $4,492 and $0 of equity method

investment income from the Joint Venture on a one-quarter reporting lag for the six months ended June 30, 2024 and 2023, respectively,

on the condensed consolidated statements of operations and comprehensive loss.

The investment in the Joint Venture is accounted

for using the equity method of accounting.

As of June 30, 2024 and December 31, 2023 the Company had an Equity Method Investment

of $100,492 and $96,000, respectively, recorded on the condensed consolidated balance sheets.

The Company invested $96,000 in the joint

venture in September 2023 and Wider invested $104,000.

In accordance with ASC 323, Investments - Equity Method and Joint Ventures

(“ASC 323”), the Company uses the equity method of accounting for its investment in the Joint Venture, an unconsolidated entity

over which it does not have a controlling interest.

The equity method of accounting requires the investment to be initially recorded at

cost and subsequently adjusted for the Company’s share of equity in the unconsolidated entity’s earnings or losses.

evaluates the carrying amount of this investment in the Joint Venture for impairment in accordance with ASC 323.

If the Company determines

that a loss in the value of the investment is other than temporary, the Company writes down the investment to its estimated fair value.

Any such losses are recorded to equity in income of unconsolidated entities in the Company’s condensed consolidated statements of

operations and comprehensive loss.

The Company has made an election to classify distributions received from the Joint Venture using the

nature of the distribution approach.

Distributions received are classified as cash inflows from operating activities based on the nature

of the activities of the unconsolidated entity.

In September of 2021, the China National Medical Products Administration (the “NMPA”), the equivalent of the FDA, approved the Gen-2 device for marketing and sale in China for the treatment of insomnia and depression.

These treatment indications and clearances from the NMPA have allowed Wider to market and sell the Gen-2 device in China for the treatment of insomnia and depression.

Our participation in the Joint Venture with Wider in China is subject to general, as well as industry-specific, economic, political and legal developments and risks in China.

The Chinese government exercises significant control over the Chinese economy, including but not limited to controlling capital investments, allocating resources, setting monetary policy, controlling and monitoring foreign exchange rates, implementing and overseeing tax regulations, providing preferential treatment to certain industry segments or companies and issuing necessary licenses to conduct business.

In addition, we could face additional risks resulting from changes in China’s data privacy and cybersecurity requirements.

Accordingly, any adverse change in the Chinese economy, the Chinese legal system or Chinese governmental, economic or other policies could have a material adverse effect on our business and operations of the Joint Venture in China and our prospects generally.

We face additional risks in China due to China’s historically limited recognition and enforcement of contractual and intellectual property rights.

323, the Company uses the equity method of accounting for its investment in the Joint Venture, an unconsolidated entity over which it

does not have a controlling interest.

The equity method of accounting requires the investment to be initially recorded at cost and subsequently

adjusted for the Company’s share of equity in the unconsolidated entity’s earnings or losses.

The Company evaluates the carrying

amount of this investment in the Joint Venture for impairment in accordance with ASC 323.

If the Company determines that a loss in the

value of the investment is other than temporary, the Company writes down the investment to its estimated fair value.

Any such losses

are recorded to equity in income of unconsolidated entities in the Company’s condensed consolidated statements of operations and

comprehensive loss.

The Company has made an election to classify distributions received from the Joint Venture using the nature of the

distribution approach.

Distributions received are classified as cash inflows from operating activities based on the nature of the activities

of the unconsolidated entity.

September of 2021, the China National Medical Products Administration (the “NMPA”), the equivalent of the FDA, approved the

Gen-2 device for marketing and sale in China for the treatment of insomnia and depression.

These treatment indications and clearances

from the NMPA have allowed Wider to market and sell the Gen-2 device in China for the treatment of insomnia and depression.

participation in the Joint Venture with Wider in China is subject to general, as well as industry-specific, economic, political and legal

developments and risks in China.

The Chinese government exercises significant control over the Chinese economy, including but not limited

to controlling capital investments, allocating resources, setting monetary policy, controlling and monitoring foreign exchange rates,

implementing and overseeing tax regulations, providing preferential treatment to certain industry segments or companies and issuing necessary

licenses to conduct business.

In addition, we could face additional risks resulting from changes in China’s data privacy and cybersecurity

requirements.

Accordingly, any adverse change in the Chinese economy, the Chinese legal system or Chinese governmental, economic or other

policies could have a material adverse effect on our business and operations of the Joint Venture in China and our prospects generally.

face additional risks in China due to China’s historically limited recognition and enforcement of contractual and intellectual

property rights.

We may experience difficulty enforcing our intellectual property rights in China.

If we cannot adequately monitor the use of our technologies and devices or enforce intellectual property rights related to our devices in China or contractual restrictions relating to use of our intellectual property by Chinese companies, our revenue could be adversely affected.

The Joint Venture with Wider is subject to laws and regulations applicable to foreign investment in China.

There are uncertainties regarding the interpretation and enforcement of laws, regulations and policies in China.

Because many of the laws, regulations and policies applicable to our operations in China are relatively new, the interpretations of such laws, regulations and policies are not always uniform.

Moreover, the interpretation of statutes and regulations may be subject to government policies reflecting domestic political agendas.

Enforcement of existing laws or contracts may be uncertain.

As a result of the foregoing, it may be difficult for us to obtain timely or equitable enforcement of laws ostensibly designed to protect companies like ours, which could have a material adverse effect on our business and results of operations.

Our ability to monetize the Joint Venture in China may also be limited.

The Sultanate of Oman’s Ministry of Health

granted conditional approval for use of our Gen-2 device on June 16, 2022, effective upon the end user of our device opening and operating

a mental health care clinic being constructed in Oman.

The Company’s first shipment of a device to Oman was made on January 30,

2024 and received in Oman on February 5, 2024 in connection with the opening of the end user’s clinic, rendering the approval effective.

Two additional devices were shipped to Oman on February 29, 2024 and were received by the end user on March 6, 2024.

Upon receipt of the

two additional devices, the end user’s clinic was operational, and the use of the device to treat patients commenced pursuant to

the approval.

On June 13, 2024, the “Company announced that

our Gen-2 device had been granted regulatory approval by the Brazilian Health Regulatory Agency, a regulatory body of the Brazilian government

responsible for approving new drugs and medical devices.

If we cannot adequately monitor the

use of our technologies and devices or enforce intellectual property rights related to our devices in China or contractual restrictions

relating to use of our intellectual property by Chinese companies, our revenue could be adversely affected.

Joint Venture with Wider is subject to laws and regulations applicable to foreign investment in China.

There are uncertainties regarding

the interpretation and enforcement of laws, regulations and policies in China.

Because many of the laws, regulations and policies applicable

to our operations in China are relatively new, the interpretations of such laws, regulations and policies are not always uniform.

the interpretation of statutes and regulations may be subject to government policies reflecting domestic political agendas.

of existing laws or contracts may be uncertain.

As a result of the foregoing, it may be difficult for us to obtain timely or equitable

enforcement of laws ostensibly designed to protect companies like ours, which could have a material adverse effect on our business and

results of operations.

Comparison of the three months ended June 30,

2024 and 2023

Our financial results for the three months ended

June 30, 2024 and 2023 are summarized as follows:

Our ability to monetize the Joint Venture in China may also be limited.

Sultanate of Oman’s Ministry of Health granted conditional approval for use of our Gen-2 device on June 16, 2022, effective

upon the end user of our device opening and operating a mental health care clinic being constructed in Oman.

The Company’s first

shipment of a device to Oman was made on January 30, 2024 and received in Oman on February 5, 2024 in connection with the opening

of the end user’s clinic, rendering the approval effective.

Two additional devices were shipped to Oman on February 29, 2024

and were received by the end user on March 6, 2024.

Upon receipt of the two additional devices, the end user’s clinic was

operational, and the use of the device to treat patients commenced pursuant to the approval.

June 13, 2024, the “Company announced that our Gen-2 device had been granted regulatory approval by the Brazilian Health Regulatory

Agency, a regulatory body of the Brazilian government responsible for approving new drugs and medical devices.

of Operations

of the three months ended September 30, 2024 and 2023

financial results for the three months ended September 30, 2024 and 2023 are summarized as follows:

Three Months Ended

September 30,

Revenues, net

13 unchanged sentences

$ (2,448,257 )

$ (2,297,189 )

Other comprehensive income (loss):

Unrealized gain (loss) from short-term investments

Unrealized loss from short-term investments

Comprehensive loss

$ (2,448,582 )

$ (2,329,478 )

(1) Percentages may not foot due to rounding.

For the three months ended June, 2024 and 2023,

we generated $26,840 and $35,540 respectively, of revenue primarily from the sale of devices, supplies and from licensing and treatment

fee agreements with our customers for which we charge a monthly licensing fee for the duration of the agreement.

We also generated revenue

from treatment fee agreements by collecting fees based on the number of treatments per month the customer performs.

In addition, we derived

revenue from equipment by selling electrodes and patient cables to customers for use with our device.

The decrease in revenue for the

three months ended June 2024 compared to 2023 was primarily due to a device related sale in 2023.

There were no device sales in during

the three months ended June 30, 2024.

the three months ended September 30, 2024 and 2023, we generated $36,031 and $24,113 respectively, of revenue primarily from the

sale of devices, supplies and from licensing and treatment fee agreements with our customers for which we charge a monthly licensing

fee for the duration of the agreement.

We also generated revenue from treatment fee agreements by collecting fees based on the number

of treatments per month the customer performs.

In addition, we derived revenue from equipment by selling electrodes and patient cables

to customers for use with our device.

The increase in revenue for the three months ended September 30 2024 compared to 2023 was

primarily due to sales of supplies and parts.

of Revenues and Gross Profit

For the three months ended June 30, 2024 and 2023,

cost of revenues was $7,427 and $9,374, respectively, yielding a gross profit of $19,593 and $26,166, respectively, or 73.0% and 73.6%,

respectively.

Such decrease in gross margin was negligible.

Total operating expenses for the three months

ended June 30, 2024 and 2023 were $1,316,614 and $903,026, respectively.

The increase in selling, general and administrative expenses

was due primarily to an increase in travel of approximately $43,000, an increase in research and development costs of approximately $23,000

and an increase in stock compensation of approximately $220,000.

The increase in professional fees is primarily related to costs associated

with investor relations.

Salaries and benefits remained consistent.

The increase in travel is primarily due to costs associated with meetings

with our joint venture partners, staff visits to our Houston office and travel related to investor relations.

The increases in research

and development costs are attributable to the development of our Gen-2 and Gen-3 devices.

The increase in stock compensation is primarily

related to compensating consultants with stock.

the three months ended September 30, 2024 and 2023, cost of revenues was $12,694 and $3,973, respectively, yielding a gross profit

of $23,337 and $20,140, respectively, or 64.77% and 83.52%, respectively.

Such decrease in gross margin was due to the lower margins

on supplies and parts.

operating expenses for the three months ended September 30, 2024 and 2023 were $2,531,854 and $2,435,677, respectively.

in selling, general and administrative expenses was due primarily to an increase in shareholder related expenses of approximately $56,000,

an increase in professional fees of approximately $79,000, an increase in travel of approximately $34,000, and an increase in stock compensation

of approximately $1,466,000.

These amounts were offset by a decrease in salaries and benefits of approximately $69,000 a decrease

in research and development costs of approximately $1,452,000 and a decrease in insurance of approximately $17,000.

increase in shareholder related expenses was due to costs associated with investor relations.

The increase in professional fees is due

to an increase in legal fees and an executive search professional fee of $60,000.

The increase in travel is primarily due to costs associated

with meetings with our joint venture partners, staff visits to our Houston office and travel related to investor relations.

in stock compensation is primarily related to compensating consultants with stock compensation upon shareholder approval of amending

the Company Equity Plan.

The decrease in salaries is primary due to a bonus recorded in 2023.

The decrease in research and development

costs are primarily related to costs associated with clinical trials not incurred in 2024.

The decrease in insurance is due to a reduction

in our insurance premiums.

Income (Expense), Net

Other income (expense), net for the three months

ended June 30, 2024 and 2023 was $13,819 and $54,423, respectively, consisting of interest and dividend income, gain on the sale of short-term

investments offset by interest expense.

Comparison of the six months ended June 30,

2024 and 2023

Our financial results for the six months ended

June 30, 2024 and 2023 are summarized as follows:

Six Months Ended

income (expense), net for the three months ended September 30, 2024 and 2023 was $60,101 and $118,348, respectively, consisting

of interest and dividend income, gain on the sale of short-term investments offset by interest expense.

The decrease in other income

was due to a decrease in the amount available for investment.

of the nine months ended September 30, 2024 and 2023

financial results for the nine months ended September 30, 2024 and 2023 are summarized as follows:

Nine Months Ended

September 30,

Revenues, net

15 unchanged sentences

Other comprehensive income (loss):

Unrealized gain

(loss) from short-term investments

Unrealized gain (loss) from short-term investments

Comprehensive loss

2 unchanged sentences

(1) Percentages may not foot due to rounding.

For the six months ended June, 2024 and 2023,

we generated $105,511 and $66,100 respectively, of revenue primarily from the sale of devices, supplies and from licensing and treatment

fee agreements with our customers for which we charge a monthly licensing fee for the duration of the agreement.

We also generated revenue

from treatment fee agreements by collecting fees based on the number of treatments per month the customer performs.

In addition, we derived

revenue from equipment by selling electrodes and patient cables to customers for use with our device.

The increase in revenue for the

six months ended June 2024 compared to 2023 was primarily due to the sales of devices to a new overseas customer.

the nine months ended September 30, 2024 and 2023, we generated $141,542 and $90,212 respectively, of revenue primarily from the

sale of devices, supplies and from licensing and treatment fee agreements with our customers for which we charge a monthly licensing

fee for the duration of the agreement.

We also generated revenue from treatment fee agreements by collecting fees based on the number

of treatments per month the customer performs.

In addition, we derived revenue from equipment by selling electrodes and patient cables

to customers for use with our device.

The increase in revenue for the nine months ended September 30, 2024 compared to 2023 was

primarily due to the sales of devices to a new overseas customer.

of Revenues and Gross Profit

For the six months ended June 30, 2024 and 2023,

cost of revenues was $16,403 and 16,484, respectively, yielding a gross profit of $89,108 and $49,616, respectively, or 84.5% and 75.1%,

respectively.

Such increase in gross margin was primarily due to device revenue having a higher gross profit margin than that of other

sources of revenue.

Total operating expenses for the six months ended

June 30, 2024 and 2023 were $2,459,841 and $1,705,902, respectively.

The increase in selling, general and administrative expenses was

due primarily to an increase in travel of approximately $81,000, an increase in research and development costs of approximately $63,000

and an increase in stock compensation of approximately $381,000.

The increase in professional fees is primarily related to costs associated

with investor relations.

The increase in travel is primarily due to costs associated with meetings with our joint venture partners, staff

visits to our Houston office and travel related to investor relations.

The increases in research and development costs are attributable

to the development of our Gen-2 and Gen-3 devices.

The increase in stock compensation is primarily related to compensating consultants

the nine months ended September 30, 2024 and 2023, cost of revenues was $29,097 and $20,457, respectively, yielding a gross profit

of $112,455 and $69,755, respectively, or 79.44% and 77.32%, respectively.

Such increase in gross margin was primarily due to device

revenue having a higher gross profit margin than that of other sources of revenue.

operating expenses for the nine months ended September 30, 2024 and 2023 were $4,991,695 and $4,141,578, respectively.

in selling, general and administrative expenses was due primarily to an increase in shareholder related expenses of approximately $271,000,

an executive search professional fee of $60,000, an increase in travel of approximately $115,000, and an increase

in stock compensation of approximately $1,847,000.

These amounts were offset by a decrease in research and development costs of

approximately $1,389,000, a decrease in taxes of approximately $21,000, and a decrease in insurance of approximately $57,000.

increase in shareholder related expenses was due to costs associated with investor relations.

The increase in stock compensation is primarily

related to compensating consultants with stock compensation upon shareholder approval of amending the Company Equity Plan.

in travel is primarily due to costs associated with meetings with our joint venture partners, staff visits to our Houston office and

travel related to investor relations.

The decrease in research and development costs are primarily related to costs associated with clinical

trials not incurred in 2024.

The decrease in taxes is due to a reduction in our Delaware Franchise tax.

The decrease in insurance is

due to a reduction in our insurance premiums.

Income (Expense), Net

Other income (expense), net for the three months

ended June 30, 2024 and 2023 was $40,591 and $85,435, respectively, consisting of interest and dividend income, gain on the sale of short-term

investments offset by interest expense.

The decrease is primarily due to a decrease in gain on short term investments resulting from decreased

short term investments.

The following table summarizes our consolidated

cash flows for the six months ended June 30, 2024 and 2023:

income (expense), net for the nine months ended September 30, 2024 and 2023 was $100,692 and $203,753, respectively, consisting

of interest and dividend income, gain on the sale of short-term investments offset by interest expense.

The decrease is primarily due

to a decrease in gain on short term investments resulting from decreased short term investments.

following table summarizes our consolidated cash flows for the nine months ended September 30, 2024 and 2023:

September 30,

Net cash used in operating activities

1 unchanged sentence

$ (2,831,354 )

Net cash provided by investing activities

Net cash used in financing activities

Used In Operating Activities

Net cash used in operating activities was $2,009,704

for the six months ended June 30, 2024, as compared to $2,130,260 for the respective period in 2023, was primarily due to the net loss

of $2,325,650, as well as a combined decrease in accounts payable and accounts payable-related party of approximately $537,000 and accrued

expenses of approximately $200,000, offset by increases in stock compensation of approximately $381,000.

Provided By Investing Activities

Net cash provided by investing activities during

the six months ended June 30, 2024, and 2023 was $2,278,270 and $2,399,239, respectively, which was due to short-term investment sales

approximately $9.2 million offset by purchases of approximately $6.8 million of short-term investments and the purchase of patents and

trademarks of approximately $127,000 for the six months ended June 30, 2024.

Net cash provided by investing activities as during

the six months ended June 30, 2023 was due to the short-term investment sales of approximately $21.2 million offset by short-term investment

purchases of approximately $18.7 million and the purchase of patents of approximately $61,000.

Used In Financing Activities

Net cash used in financing activities during the

six months ended June 30, 2024 and 2023 was $0 and $200,000, respectively, which was due to payment of note payable to an officer of the

Company in the prior period.

Uses and Availability of Additional Funds

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, manufacturing development costs, legal and other regulatory expenses, and general administrative costs.

Although we have produced Gen-2, which is selling in China where it is approved for certain utilizations by medical practitioners, the successful development of our future products is highly uncertain.

At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the clinical development of Gen-3 and obtain regulatory approvals.

We are also unable to predict when, if ever, net cash inflows from revenues will enable us to be cash flow positive.

This is due to the numerous risks and uncertainties associated with developing products, including, among others, the uncertainty of:

successful enrolment in, and completion of clinical trials;

performing preclinical studies and clinical trials in compliance with the FDA or any comparable regulatory authority requirements;

the ability to outsource the manufacture of our products for development, clinical trials and/ or potential commercialization;

obtaining and maintaining patent, trademark and trade secret protection for our products;

scaling the commercial sales of products, if and when approved, whether alone or in collaboration with others;

acceptance of existing therapies, and future therapies, if and when approved, by healthcare providers, physicians, clinicians, patients and third-party payors;

competing effectively with other therapies;

obtaining and maintaining healthcare coverage and adequate reimbursement;

protecting our rights in our intellectual property portfolio;

maintaining a continued acceptable safety profile of our products following approval.

Liquidity and Capital Resources

As of June 30, 2024, the Company had a significant

accumulated deficit of $79.4 million.

For the six months ended June 30, 2024, the Company had a loss from operations of $2.4 million and

negative cash flows from operations of $2.0 million.

The Company’s operating activities consume the majority of its cash resources.

The Company will continue to service existing customers in the United States.

The Company sold devices overseas.

The Company anticipates

that it will continue to incur operating losses as it executes its development plans through 2024, as well as other potential strategic

and business development initiatives.

In addition, the Company has had and expects to have negative cash flows from operations, at least

into the near future.

Net cash provided by (used in) investing activities

$ (2,205,079 )

Net cash provided by (used in) financing activities

Cash Used In Operating Activities

cash used in operating activities was $(2,809,914) for the nine months ended September 30, 2024, as compared to $(2,831,554) for

the respective period in 2023, was primarily due to the net loss of $4,773,907, as well as a combined decrease in accrued expenses of

approximately $196,000, offset by increases in stock compensation of approximately $347,000 and accounts payable and accounts payable-related

party of approximately $593,000.

Cash Provided By (Used In) Investing Activities

cash provided by (used in) investing activities during the nine months ended September 30, 2024, and 2023 was $(2,205,079) and $3,230,008,

respectively, which was due to short-term investment sales approximately $22.3 million offset by purchases of approximately $24.4 million

of short-term investments for the nine months ended September 30, 2024.

Compared to short-term investment sales of approximately

$32.7 million offset by purchases of $29.3 million of short-term investments during the nine months ended September 30,

Cash Provided By (Used In) Financing Activities

cash provided by (used in) financing activities during the nine months ended September 30, 2024 and 2023 was $4,516,184 and

$(200,000), respectively, which was due to the issuance of common stock for approximately $4.5 million from the July 1, 2024

The September 30, 2023 use of cash was for a payment of note payable to an officer of the

and Availability of Additional Funds

primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and

development services, manufacturing development costs, legal and other regulatory expenses, and general administrative costs.

we have produced Gen-2, which is selling in China where it is approved for certain utilizations by medical practitioners, the successful

development of our future products is highly uncertain.

At this time, we cannot reasonably estimate or know the nature, timing and estimated

costs of the efforts that will be necessary to complete the clinical development of Gen-3 and obtain regulatory approvals.

unable to predict when, if ever, net cash inflows from revenues will enable us to be cash flow positive.

This is due to the numerous

risks and uncertainties associated with developing products, including, among others, the uncertainty of:

successful enrolment in,

and completion of clinical trials;

performing preclinical

studies and clinical trials in compliance with the FDA or any comparable regulatory authority requirements;

the ability to outsource

the manufacture of our products for development, clinical trials and/ or potential commercialization;

obtaining and maintaining

patent, trademark and trade secret protection for our products;

scaling the commercial

sales of products, if and when approved, whether alone or in collaboration with others;

acceptance of existing

therapies, and future therapies, if and when approved, by healthcare providers, physicians, clinicians, patients and third-party

competing effectively with

other therapies;

obtaining and maintaining

healthcare coverage and adequate reimbursement;

protecting our rights in

our intellectual property portfolio;

maintaining a continued

acceptable safety profile of our products following approval.

and Capital Resources

of September 30, 2024, the Company had a significant accumulated deficit of $81.8 million.

For the nine months ended September 30,

2024, the Company had a loss from operations of $4.9 million and negative cash flows from operations of $2.8 million.

The Company’s

operating activities consume the majority of its cash resources.

The Company will continue to service existing customers in the United

The Company anticipates that it will continue to incur operating losses as it executes its development plans through 2024, as

well as other potential strategic and business development initiatives.

In addition, the Company has had and expects to have negative

cash flows from operations, at least into the near future.

The Company previously funded these losses primarily through the sale of equity.

As of June 30, 2024, the Company

had cash and cash equivalents on hand of approximately $0.8 million.

Our ability to continue as a going concern

will be dependent upon our ability to execute on our business plan, including the ability to generate revenue from the joint venture

and obtain U.S.

approval for the sale of our devices in the United States, and, if necessary, our ability to raise additional

On July 1, 2024, the Company consummated the public offering of an aggregate of 3,000,000 shares of the Company’s

common stock resulting in aggregate gross proceeds of approximately $5.25 million.

The proceeds from the offering increased the

Company’s stockholders’ equity by approximately $4.55 million, making the Company’s stockholders’ equity

approximately $6.9 million as of July 1, 2024.

Although no assurances can be given as to our ability to deliver on our revenue plans

or that unforeseen expenses may arise, management has evaluated the significance of the conditions as of June 30, 2024 and have

concluded that we have sufficient cash and short-term investments in the amount of approximately $5.2 million on hand on August 6,

2024 to satisfy our anticipated cash requirements for the next twelve months from the issuance of these financial statements.

Critical Accounting Estimates

The preparation of financial statements and

related disclosures in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating

results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported.

3, “Summary of Significant Accounting Policies and New Accounting Standards” of the Notes to Condensed Consolidated Financial Statements in Part I,

Item 1 of this Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of the 2023 Form 10-K describe the

significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial

There have been no material changes to the Company’s critical accounting estimates since the 2023 Form 10-K.

Recent Accounting Pronouncements

In August of 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture (“JV”) Formations:

Recognition and Initial Measurement.

The guidance requires newly formed JVs to apply a new basis of accounting to all of its contributed net assets, which results in the JV initially measuring its contributed net assets under ASC 805-20, Business Combinations.

The new guidance would be applied prospectively and is effective for all newly formed joint venture entities with a formation date on or after January 1, 2025, with early adoption permitted.

The Company is evaluating the accounting and disclosure requirements of this update and does not expect them to have a material effect on the consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment

Reporting (Topic 280):

As of September 30, 2024, the Company had cash and cash equivalents on hand of approximately $4.6 million.

ability to continue as a going concern will be dependent upon our ability to execute on our business plan, including the ability to generate

revenue from the joint venture and obtain U.S.

approval for the sale of our devices in the United States, and, if necessary, our ability

to raise additional capital.

Although no assurances can be given as to our ability to deliver on our revenue plans or that unforeseen

expenses may arise, management has evaluated the significance of the conditions as of September 30, 2024 and have concluded that

we will not have sufficient cash and short-term investments to satisfy our anticipated cash requirements for the next twelve months from

the issuance of these financial statements.

Accounting Estimates

preparation of financial statements and related disclosures in conformity with GAAP and the Company’s discussion and analysis of

its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that

affect the amounts reported.

Note 3, “Summary of Significant Accounting Policies and New Accounting Standards” of the Notes

to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q and in the Notes to Consolidated Financial

Statements in Part II, Item 8 of the 2023 Form 10-K describe the significant accounting policies and methods used in the preparation

of the Company’s condensed consolidated financial statements.

There have been no material changes to the Company’s critical

accounting estimates since the 2023 Form 10-K.

Accounting Pronouncements

August of 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture (“JV”) Formations:

Recognition and

Initial Measurement.

The guidance requires newly formed JVs to apply a new basis of accounting to all of its contributed net assets,

which results in the JV initially measuring its contributed net assets under ASC 805-20, Business Combinations.

The new guidance would

be applied prospectively and is effective for all newly formed joint venture entities with a formation date on or after January 1,

2025, with early adoption permitted.

The Company is evaluating the accounting and disclosure requirements of this update and does not

expect them to have a material effect on the consolidated financial statements.

November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The ASU expands public entities’ segment disclosures

by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included

within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim

disclosures of a reportable segment’s profit or loss and assets.

All disclosure requirements under ASU 2023-07 are also required

for public entities with a single reportable segment.

The ASU is effective on a retrospective basis for fiscal years beginning after

December 15, 2024, and interim periods within fiscal years beginning after December 15, 2024.

The Company is currently evaluating the

impact of adopting this ASU on its consolidated financial statements and disclosures.

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

Improvements to Income Tax Disclosures, establishes incremental disaggregation of income tax disclosures pertaining to the effective tax rate reconciliation and income taxes paid.

This standard is effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively.

ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided

to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description

of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.

All disclosure

requirements under ASU 2023-07 are also required for public entities with a single reportable segment.

The ASU is effective on a retrospective

basis for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15,

The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

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

Improvements to Income Tax Disclosures, establishes incremental

disaggregation of income tax disclosures pertaining to the effective tax rate reconciliation and income taxes paid.

This standard is

effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively.

Early adoption is permitted.

The Company is currently evaluating the potential impact of adopting this standard on our disclosures.

All other newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

Contractual Obligations

See Note 7 – Commitments and Contingencies in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a summary of our contractual obligations.

Continued Nasdaq Listing

Minimum Bid Price Requirement

On May 10, 2023, the Company received written

notice from The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was no longer in compliance with the minimum

bid price requirement for continued listing on Nasdaq, as the closing bid price for the Company’s common stock was below $1.00 per

share as set forth in the Nasdaq listing rules.

The Company was afforded 180 calendar days, or until November 6, 2023, to regain

compliance with the Nasdaq listing rules.

The Company was unable to regain compliance with the bid price requirement by November 6,

The Company requested a second 180-day period

in order to regain compliance with Nasdaq Rule 5550(a)(2).

On January 18, 2024, the Nasdaq Hearing Panel granted the Company

a temporary exception to regain compliance with the Minimum Bid Price Rule until March 27, 2024, which date was further extended

by the Panel until April 25, 2024.

On April 23, 2024, the Company received notice

from Nasdaq notifying the Company that it has regained compliance with Nasdaq’s minimum bid price requirement under Nasdaq Rule 5550(a)(2).

Minimum Stockholder Equity

Under the Nasdaq listing rules, we are also required

to maintain stockholders’ equity of at least $2,500,000 (the “Minimum Stockholder Equity Rule”).

In our Form 10-Q for

the period ending March 31, 2024, we reported stockholders’ equity of $2,326,987.

On May 16, 2024, we received a letter from the

Listing Qualifications Department of Nasdaq notifying the Company that its stockholders’ equity as reported in such Quarterly Report

did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1) for the Nasdaq Capital Market.

Pursuant to the Notice, the Company had 45 calendar

days from the date of the Notice to submit a plan to regain compliance.

On July 1, 2024, the Company submitted a plan to Nasdaq.

in the Company’s submission to Nasdaq, and as set forth in the Current Report on Form

8-K filed by the Company on July 3, 2024 , the Company consummated the public offering of 3 million shares of the Company’s

Common Stock for total aggregate gross proceeds of approximately $5,250,000.

On July 23, 2024, the Company received written notification

from the Listing Qualifications Department of NASDAQ, confirming that, based on the information contained in the Company’s Form

8-K, filed with the SEC on July 16, 2024, the Company is now in compliance with the Minimum Stockholder Equity Rule.

other newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

Note 7 – Commitments and Contingencies in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1

of this Form 10-Q for a summary of our contractual obligations.

Nasdaq Listing

Bid Price Requirement

May 10, 2023, the Company received written notice from The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company

that it was no longer in compliance with the minimum bid price requirement for continued listing on Nasdaq, as the closing bid price

for the Company’s common stock was below $1.00 per share as set forth in the Nasdaq listing rules.

The Company was afforded 180

calendar days, or until November 6, 2023, to regain compliance with the Nasdaq listing rules.

The Company was unable to regain compliance

with the bid price requirement by November 6, 2023.

Company requested a second 180-day period in order to regain compliance with Nasdaq Rule 5550(a)(2).

On January 18, 2024,

the Nasdaq Hearing Panel granted the Company a temporary exception to regain compliance with the Minimum Bid Price Rule until

March 27, 2024, which date was further extended by the Panel until April 25, 2024.

On April 23, 2024, the Company

received notice from Nasdaq notifying the Company that it has regained compliance with Nasdaq’s minimum bid price requirement

under Nasdaq Rule 5550(a)(2).

September 23, 2024, we received a notice from Nasdaq notifying us that we were not in compliance with the Minimum Bid Price Rule.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we had 180 calendar days, or until March 24, 2025, to regain compliance

with Nasdaq Listing Rule 5450(a)(1).

To regain compliance, the closing bid price of our common stock must be at least $1.00 per

share for a minimum of 10 consecutive business days.

On October 31, 2024, the Company received notice from Nasdaq notifying the

Company that it has regained compliance with Nasdaq’s minimum bid price requirement under Nasdaq Rule 5550(a)(2).

Stockholder Equity Requirement

the Nasdaq listing rules, we are also required to maintain stockholders’ equity of at least $2,500,000 (the “Minimum Stockholder

Equity Rule”).

In our Form 10-Q for the period ending March 31, 2024, we reported stockholders’ equity of $2,326,987.

On May 16, 2024, we received a letter from the Listing Qualifications Department of Nasdaq notifying the Company that its stockholders’

equity as reported in such Quarterly Report did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1)

for the Nasdaq Capital Market.

to the Notice, the Company had 45 calendar days from the date of the Notice to submit a plan to regain compliance.

On July 1, 2024,

the Company submitted a plan to Nasdaq.

As described in the Company’s submission to Nasdaq, and as set forth in

the Current Report on Form 8-K filed by the Company on July 3, 2024 , the Company consummated the public offering of

3 million shares of the Company’s Common Stock for total aggregate gross proceeds of approximately $5,250,000.

2024, the Company received written notification from the Listing Qualifications Department of Nasdaq, confirming that, based on the information

contained in the Company’s Form 8-K, filed with the SEC on July 16, 2024, the Company is now in compliance with the Minimum

Stockholder Equity Rule.

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