Neuraxis, INC

Previous 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.

Current wording

Since our inception, we have incurred significant operating losses. Our net loss was $6,545,442 and $2,122,796 for the three months ended September 30, 2026 and 2025, respectively, and $10,392,620 and $6,091,898 for the nine months ended September 30, 2026 and 2025, respectively. Although we had stockholders’ equity of $3,622,411 as of September 30, 2026, substantial doubt is deemed to exist about the Company’s ability to continue as a going concern. 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

Our management uses gross profit and gross margin to evaluate the efficiency of operations and as a key component to determining the effectiveness and allocation of resources. We calculate gross profit as net sales less cost of goods sold, and gross margin as gross profit divided by net sales. Our gross margin has been and will continue to be affected by a variety of factors, primarily the average selling price of our IB-Stim device, production volume, order flows, change in mix of customers, third-party manufacturing costs related to components of our devices, and cost-reduction strategies. We expect our gross profit to increase for the foreseeable future as our net sales grows, both through broader insurer acceptance of our IB-Stim device in the near term and approval of our technology for the treatment of other indications over the longer term. Our gross margin may fluctuate from quarter to quarter due to changes in average selling prices and the mix of patient healthcare coverage (e.g., discounts are provided to lower income patients without healthcare insurance), particularly as we introduce enhancements to our IB-Stim device and new products to address other indications, and as we adopt new manufacturing processes and technologies.

Current wording

Our management uses gross profit and gross margin to evaluate the efficiency of operations and as a key component to determining the effectiveness and allocation of resources. We calculate gross profit as net sales less cost of goods sold, and gross margin as gross profit divided by net sales. Our gross margin has been and will continue to be affected by a variety of factors, primarily the average selling price of our IB-Stim device, production volume, order flows, change in mix of customers, third-party manufacturing costs related to components of our devices including tariffs, and cost-reduction strategies. We expect our gross profit to increase for the foreseeable future as our net sales grows, both through broader insurer acceptance of our IB-Stim device in the near term and approval of our technology for the treatment of other indications over the longer term. Our gross margin may fluctuate from quarter to quarter due to changes in average selling prices and the mix of patient healthcare coverage (e.g., discounts are provided to lower income patients without healthcare insurance), particularly as we introduce enhancements to our IB-Stim device and new products to address other indications, and as we adopt new manufacturing processes and technologies.

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 $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.

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 $1,457 and $11,598 for the three months ended September 30, 2026 and 2025, respectively, and $4,307 and $19,777 for the nine months ended September 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 $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.

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.

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 $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.

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. 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

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

Current wording

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

Previous wording

Net sales increased $1,034,609, or 115.7%, from $894,086 for the three months ended June 30, 2025, to $1,928,695 for the three months ended June 30, 2026, and increased $1,746,837 or 97.6%, from $1,789,741 for the six months ended June 30, 2025, to $3,536,578 for the six months ended June 30, 2026. The increases were due to unit volume growth from broader insurance coverage attributable to IB-Stim’s Category I CPT code effective date of January 1, 2026 and an increase in the average selling price as more units were sold to patients with full reimbursement insurance coverage compared to the Company’s discounted financial assistance program.

Current wording

Net sales increased $1,216,490, or 149.9%, from $811,414 for the three months ended September 30, 2025, to $2,027,904 for the three months ended September 30, 2026, and increased $2,963,328 or 113.9%, from $2,601,155 for the nine months ended September 30, 2025, to $5,564,483 for the nine months ended September 30, 2026. The increases were due to unit volume growth from broader insurance coverage attributable to the IB-Stim’s Category I CPT code effective date of January 1, 2026 and an increase in the average selling price to $1,045 from $775 for the three months ended September 30, 2026 and 2025, respectively, and to $1,018 from $773 for the nine months ended September 30, 2026 and 2025, respectively, as more units were sold to patients with full reimbursement insurance coverage compared to the Company’s discounted financial assistance program.

Previous 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.

Current wording

Gross profit increased $1,080,314, or 159.8%, from $675,927 for the three months ended September 30, 2025, to $1,756,241 for the three months ended September 30, 2026, and increased $2,621,992, or 120.3%, from $2,179,890 for the nine months ended September 30, 2025, to $4,801,882 for the nine months ended September 30, 2026. Gross margin increased from 83.3% for the three months ended September 30, 2025, to 86.6% for the three months ended September 30, 2026, and increased from 83.8% for nine months ended September 30, 2025, to 86.3% for the nine months ended September 30, 2026, and outpaced sales growth, due to higher volume 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 including tariffs.

Previous 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.

Current wording

Selling expenses increased $238,767, or 31.3%, from $762,548 for the three months ended September 30, 2025, to $1,001,315 for the three months ended September 30, 2026, and increased $992,685 or 58.6%, from $1,694,354 for the nine months ended September 30, 2025, to $2,687,039 for the nine months ended September 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 partially offset by certain marketing costs in 2025 incurred to promote awareness and accelerate patient access and physician adoption.

Previous wording

Research and development expenses increased $159,147, or 138.2%, from $115,197 for the three months ended June 30, 2025, to $274,344 for the three months ended June 30 2026, and increased $151,710, or 68.3%, from $222,201 for the six months ended June 30, 2025 to $373,911 for the six months ended June 30, 2026. The increases were due to more clinical research studies in 2026 as the Company continues its expansion of IB-Stim’s FDA indications, partially offset by non-recurring RED device development costs in 2025.

Current wording

Research and development expenses increased $157,895, or 120.7%, from $130,850 for the three months ended September 30, 2025, to $288,745 for the three months ended September 30 2026, and increased $297,690, or 85.7%, from $347,433 for the nine months ended September 30, 2025 to $645,123 for the nine months ended September 30, 2026. The increases were due to more clinical research studies in 2026 as the Company continues its expansion of IB-Stim’s FDA indications, partially offset by non-recurring RED device development costs in 2025.

Previous wording

General and administrative expenses increased $829,012, or 45.6%, from $1,816,091 for the three months ended June 30, 2025, to $2,645,103 for the three 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 and (iii) higher benefit costs.

Current wording

General and administrative expenses increased $5,162,490, or 274.2%, from $1,882,614 for the three months ended September 30, 2025, to $7,045,104 for the three months ended September 30, 2026, primarily due to (i) one-time non-recurring stock compensation charges totaling $4,298,903 related to the excess of the fair value of RSUs issued in an exchange from cancelled stock options over the fair value of the cancelled stock options and RSUs issued with immediate vesting to the Company’s Board of Directors and certain employees as a market compensation adjustment for past services, (ii) incremental stock compensation expense from the third year of a three-year vesting plan, (iii) higher market access advisory costs and additional headcount, including recruiting fees, as the Company pursues incremental insurance payor coverage and (iv) higher benefit costs.

Previous 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.

Current wording

General and administrative expenses increased $5,662,892, or 90.6%, from $6,251,143 for the nine months ended September 30, 2025, to $11,914,035 for the nine months ended September 30, 2026, primarily due to (i) one-time non-recurring stock compensation charges of $4,599,303 related to the excess of the fair value of RSUs issued in an exchange from cancelled stock options over the fair value of the cancelled stock options and RSUs issued with immediate vesting to the Company’s Board of Directors and certain employees as a market compensation adjustment for past services, (ii) incremental stock compensation expense from the third year of a three-year vesting plan, (iii) higher market access advisory costs and additional headcount, including recruiting fees, as the Company pursues incremental insurance payor coverage and (iv) higher benefit costs, partly offset by a one-time non-recurring charge in 2025 to settle a lawsuit.

Previous wording

Our operating loss increased $406,854, or 23.7%, from $1,717,858 for the three months ended June 30, 2025, to $2,124,712 for the three months ended June 30, 2026, primarily due to higher operating expenses from 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, partly offset by higher gross profit as the Company’s sales increased from the Category I CPT code and broader payor coverage.

Current wording

Our operating loss increased $4,478,838, or 213.3%, from $2,100,085 for the three months ended September 30, 2025, to $6,578,923 for the three months ended September 30, 2026, primarily due to (i) one-time non-recurring stock compensation charges of $4,298,903 related to the excess of the fair value of RSUs issued in an exchange from cancelled stock options over the fair value of the cancelled stock options and RSUs issued with immediate vesting to the Company’s Board of Directors and certain employees as a market compensation adjustment for past services, (ii) selling costs that are a function of the higher sales, (iii) research and development costs as the Company continues its pursuit of additional IB-Stim FDA indications and (iv) market access advisory costs as the Company pursues incremental insurance payor coverage, partly offset by higher gross profit as the Company’s sales increased from the Category I CPT code and broader payor coverage.

Previous 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.

Current wording

Our operating loss increased $4,331,275, or 70.9%, from $6,113,040 for the nine months ended September 30, 2025, to $10,444,315 for the nine months ended September 30, 2026, primarily due to (i) one-time non-recurring stock compensation charges of $4,599,303 related to the excess of the fair value of RSUs issued in an exchange from cancelled stock options over the fair value of the cancelled stock options and RSUs issued with immediate vesting to the Company’s Board of Directors and certain employees as a market compensation adjustment for past services, (ii) higher operating expenses due to selling costs that are a function of the higher sales, (iii) research and development costs as the Company continues its pursuit of additional IB-Stim FDA indications and (iv) market access advisory costs as the Company pursues incremental insurance payor coverage, partly offset by higher gross profit as the Company’s sales increased as a result of 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.

Previous 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.

Current wording

Other income increased $30,553, or 144.5%, from $21,142 for the nine months ended September 30, 2025, to $51,695 for the nine months ended September 30, 2026, primarily due to higher interest income on the Company’s cash balances and the absence of a non-recurring finance charge in 2025, partially offset by higher interest expense related to the settlement of a lawsuit in 2025 and the change in fair value of warrants.

Previous 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.

Current wording

We had cash on hand of $4,476,617 and $4,965,072 as of September 30, 2026, and December 31, 2025, respectively. We maintained a working capital surplus of $3,164,631 and $2,941,091 as of September 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 2025 ATM Agreement and the exercise of warrants and (ii) higher accounts receivable driven by IB-Stim device sales, partly offset by payment of employee withholding taxes related to the exchange of the cancelled stock options to RSUs with immediate vesting.

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 June 30, 2026, we had stockholders’ equity of $6,735,053 and short-term borrowings of $42,726.

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 September 30, 2026, we had stockholders’ equity of $3,622,411 and short-term borrowings of $207,306.

Previous wording

Additionally, we have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company. Our management will have to spend additional time on policies and procedures to make sure it is compliant with various regulatory requirements, especially that of Section 404 of the Sarbanes-Oxley Act. This additional corporate governance time required of management could limit the amount of time our management has to implement our business plan and may delay our anticipated growth plans.

Current wording

Additionally, we have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company. Our management will spend additional time on policies and procedures to ensure we are compliant with various regulatory requirements, especially that of Section 404 of the Sarbanes-Oxley Act. This additional corporate governance time required of management could limit the amount of time our management has to implement our business plan and may delay our anticipated growth plans.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Investing Activities– Net cash used in investing activities decreased $5,185 or 20.5%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, due to non-recurring capital expenditures to manufacture the RED device in 2025 partly offset by capital expenditures in 2026 related to security and domain purchases.

Previous 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.

Current wording

Financing Activities– Net cash provided by financing activities decreased $1,144,919, or 22.0%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to the payment of employee withholding taxes related to the net settlement of RSUs, partly offset by higher proceeds from the 2026 issuance of common stock pursuant to the 2025 ATM Agreement and proceeds from the issuance of common stock subject to the Employee Stock Purchase Plan.