Neuraxis, INC

Previous wording

Since our inception, we have incurred significant operating losses. Our net loss was $1,761,432 and $2,278,684 for the three months ended March 31, 2026 and 2025, respectively. Although we had stockholders’ equity of $5,747,550 as of March 31, 2026, 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 and RED devices and seek FDA clearance of our device for other indications. There are a number of milestones and conditions that we must satisfy before we are able to generate sufficient revenue to fund our operations, including FDA clearance of our IB-Stim device to treat future indications.

Current wording

Since our inception, we have incurred significant operating losses. Our net loss was $2,085,746 and $1,690,418 for the three months ended June 30, 2026 and 2025, respectively, and $3,847,178 and $3,969,102 for the six months ended June 30, 2026 and 2025, respectively. Although we had stockholders’ equity of $6,735,053 as of June 30, 2026, 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 and RED devices and seek FDA clearance of our device for other indications. There are a number of milestones and conditions that we must satisfy before we are able to generate sufficient revenue to fund our operations, including FDA clearance of our IB-Stim device to treat future indications and incremental payor coverage.

Previous wording

Costs 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 charge is recorded. Expired inventory charges totaled $758 and $0 for the three months March 31, 2026 and 2025, respectively. We have fixed-priced contracts with the manufacturers of our devices.

Current wording

Costs 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 charge is recorded. Expired inventory charges totaled $2,092 and $6,633 for the three months ended June 30, 2026 and 2025, respectively, and $2,850 and $6,633 for the six months ended June 30, 2026 and 2025, respectively. We have fixed-priced contracts with the manufacturers of our devices.

Previous wording

Our selling expenses primarily consist of advertising, marketing and promotion of the Company’s products including salaries, commissions and other related personnel costs including travel expenses. The Company reclassified $366,165 of general and administrative expenses to selling expenses in the Condensed Statements of Operations for the three months ended March 31, 2025, to conform to current year presentation.

Current wording

Our selling expenses primarily consist of advertising, marketing and promotion of the Company’s products including salaries, commissions and other related personnel costs including travel expenses. The Company reclassified $391,760 and $757,925 of general and administrative expenses to selling expenses in the Condensed Statements of Operations for the three and six months ended June 30, 2025, respectively, to conform to current year presentation.

Previous wording

Our research and development expenses primarily consist of clinical research studies, new product development, costs of materials and supplies used in research and development activities and salaries and other related personnel costs for employees engaged in research and development activities to have our IB-Stim and RED devices cleared by the FDA for other indications. The Company reclassified $57,311 of general and administrative expenses to research and development expenses in the Condensed Statements of Operations for the three months ended March 31, 2025, to conform to current year presentation. We expect future R&D expenses for other indications, such as post-concussion syndrome, cyclic vomiting syndrome, post-operative pain and fibromyalgia pain.

Current wording

Our research and development expenses primarily consist of clinical research studies, new product development, costs of materials and supplies used in research and development activities and salaries and other related personnel costs for employees engaged in research and development activities to have our IB-Stim and RED devices cleared by the FDA for other indications. The Company reclassified $56,878 and $114,189 of general and administrative expenses to research and development expenses in the Condensed Statements of Operations for the three and six months ended June 30, 2025, respectively, to conform to current year presentation. We expect future R&D expenses for other indications, such as post-concussion syndrome, cyclic vomiting syndrome, post-operative pain and fibromyalgia pain.

Previous wording

General and administrative expense primarily consists of wages and benefits, professional fees including legal and audit, insurance, investor relations, facility costs, utilities and travel.

Current wording

General and administrative expense primarily consists of wages and benefits, professional fees including legal and audit, insurance, investor relations, market access, facility costs, utilities and travel.

Previous wording

The following table presents our statements of operations for the three months ended March 31, 2026 and 2025, respectively:

Current wording

The following table presents our statements of operations for the three and six months ended June 30, 2026 and 2025, respectively:

Previous wording

Gross profit increased $633,337, or 83.8%, from $756,180 for the three months ended March 31, 2025, to $1,389,517 for the three months ended March 31, 2026, due to higher unit volume from customers with full insurance reimbursement coverage. The increase in gross margin from 84.4% for the three months ended March 31, 2025, to 86.4% for the three months ended March 31, 2026, was due to higher growth from the Company’s undiscounted full reimbursement customers compared to the Company’s financial assistance programs that are discounted to patients without insurance coverage, partially offset by higher device manufacturing costs.

Current wording

Gross profit increased $908,679, or 121.6%, from $747,443 for the three months ended June 30, 2025, to $1,656,122 for the three months ended June 30, 2026, and increased $1,542,016, or 102.6%, from $1,503,623 for the six months ended June 30, 2025, to $3,045,639 for the six months ended June 30, 2026. The increases were due to higher unit volume from more customers with full reimbursement insurance coverage. Gross margin increased from 83.6% for the three months ended June 30, 2025, to 85.9% for the three months ended June 30, 2026, and increased from 84.0% for six months ended June 30, 2025, to 86.1% for the six months ended June 30, 2026, due to higher growth from the Company’s patients with full reimbursement insurance coverage compared to patients that pay through the Company’s discounted financial assistance program, partially offset by higher device manufacturing costs.

Previous wording

Selling expenses increased $324,217, or 64.8%, from $500,119 for the three months ended March 31, 2025, to $824,336 for the three months ended March 31, 2026, due to commission from higher sales volume and additional sales reps and marketing personnel to facilitate growth resulting from the IB-Stim Category I CPT code and broader insurance coverage.

Current wording

Selling expenses increased $327,374, or 61.3%, from $534,013 for the three months ended June 30, 2025, to $861,387 for the three months ended June 30, 2026, and increased $651,593 or 63.0%, from $1,034,131 for the six months ended June 30, 2025, to $1,685,724 for the six months ended June 30, 2026. The increases were due to commissions from higher sales volume, additional sales reps and marketing personnel including recruiting fees and higher travel expenses to facilitate growth resulting from the IB-Stim Category I CPT code and broader insurance coverage.

Previous wording

General and administrative expenses declined $226,999, or 9.3%, from $2,433,292 for the three months ended March 31, 2025, to $2,206,293 for the three months ended March 31, 2026, primarily due to a one-time, non-recurring charge in 2025 to settle a lawsuit partially offset by incremental stock compensation expense from the third year of a three-year vesting plan, higher benefit costs and consulting fees incurred to secure a Federal Supply Schedule agreement with the Veterans Administration.

Current wording

General and administrative expenses increased $591,149, or 13.9%, from $4,260,246 for the six months ended June 30, 2025, to $4,851,395 for the six months ended June 30, 2026, primarily due to (i) incremental stock compensation expense from the third year of a three-year vesting plan, (ii) higher market access advisory costs and additional headcount, including recruiting fees, as the Company pursues incremental insurance payor coverage, (iii) higher benefit costs and (iv) consulting fees incurred to secure a Federal Supply Schedule agreement with the Veterans Administration, partly offset by a one-time non-recurring charge in 2025 to settle a lawsuit.

Previous wording

Our operating loss improved $554,419, or 24.2%, from $2,295,098 for the three months ended March 31, 2025, to $1,740,679 for the three months ended March 31, 2026, primarily due to higher sales volume and the corresponding gross profit and the absence of a one-time, non-recurring charge in 2025 to settle a lawsuit, partly offset by higher selling expenses.

Current wording

Our operating loss decreased $147,564, or 3.7%, from $4,012,955 for the six months ended June 30, 2025, to $3,865,391 for the six months ended June 30, 2026, primarily due to higher gross profit as the Company’s sales increased due to the Category I CPT code and broader payor coverage and the absence of a one-time non-recurring charge in 2025 to settle a lawsuit, partly offset by higher operating expenses due to selling costs that are a function of the higher sales, research and development costs as the Company continues its pursuit of additional IB-Stim FDA indications and stock compensation expense.

Previous wording

Other expense increased $37,167, or 226.4%, from $16,414 of income for the three months ended March 31, 2025, to $20,753 of expense for the three months ended March 31, 2026, primarily due to the change in fair value of warrants and interest expense associated with the settlement of the lawsuit.

Current wording

Other income decreased $25,640, or 58.5%, from $43,853 for the six months ended June 30, 2025, to $18,213 for the six months ended June 30, 2026, primarily due to the change in fair value of warrants and higher interest expense associated with the settlement of the lawsuit, partly offset by higher interest income on the Company’s cash balances.

Previous wording

We had cash on hand of $7,078,659 and $4,965,072 as of March 31, 2026, and December 31, 2025, respectively. We maintained a working capital surplus of $5,328,867 and $2,941,091 as of March 31, 2026, and December 31, 2025, respectively. The increase in working capital was primarily due to (i) proceeds from the issuance of common stock pursuant to the At The Market capital facility and the exercise of warrants and (ii) higher accounts receivable driven by IB-Stim device sales.

Current wording

We had cash on hand of $8,322,258 and $4,965,072 as of June 30, 2026, and December 31, 2025, respectively. We maintained a working capital surplus of $6,317,762 and $2,941,091 as of June 30, 2026, and December 31, 2025, respectively. The increase in working capital was primarily due to (i) proceeds from the issuance of common stock pursuant to the At The Market capital facility and the exercise of warrants and (ii) higher accounts receivable driven by IB-Stim device sales, partly offset by higher accounts payable related market access and clinical research study costs incurred.

Previous wording

We have incurred losses since inception and have funded our operations primarily with a combination of sales, debt, and the sale of capital stock. As of March 31, 2026, we had stockholders’ equity of $5,747,550 and short-term borrowings of $100,735.

Current wording

We have incurred losses since inception and have funded our operations primarily with a combination of sales, debt, and the sale of capital stock. As of June 30, 2026, we had stockholders’ equity of $6,735,053 and short-term borrowings of $42,726.

Previous wording

The following table summarizes our cash flow from operating, investing and financing activities for the three months ended March 31, 2026 and 2025:

Current wording

The following table summarizes our cash flow from operating, investing and financing activities for the six months ended June 30, 2026 and 2025:

Previous wording

Operating Activities– Net cash used in operating activities decreased $373,898, or 23.3%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to a lower operating loss attributable to growth from the Category I CPT code and increased payor coverage as well as more efficient working capital utilization during the three months ended March 31, 2026.

Current wording

Operating Activities– Net cash used in operating activities decreased $811,840 or 26.4%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to (i) a lower operating loss excluding non-cash stock compensation expense and (ii) inventory purchased and market access advisory services rendered and accrued in June, partly offset by higher accounts receivable resulting from sales growth due the Category I CPT code and increased payor coverage.

Previous wording

Investing Activities– Net cash used in investing activities decreased $18,000, or 100.0%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, due to capital expenditures to manufacture the RED device in 2025 that did not recur in 2026 once the device was launched.

Current wording

Investing Activities– Net cash used in investing activities decreased $18,985 or 75.1%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, due to nonrecurring capital expenditures to manufacture the RED device in 2025.

Previous wording

Financing Activities– Net cash provided by (used in) financing activities increased $3,413,189, or 4,886.8%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to proceeds from the issuance of common stock pursuant to the At The Market capital facility and the exercise of warrants during the three months ended March 31, 2026.

Current wording

Financing Activities– Net cash provided by financing activities increased $234,775, or 4.4%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to lower offering costs from the issuance of common stock pursuant to the At The Market capital facility and proceeds from the issuance of common stock subject to the Employee Stock Purchase Plan.