Neuraxis, INC

1. Basis of Presentation, Organization and Other Matters

NeurAxis, Inc. (“we,” “us,” the “Company,” or “NeurAxis”) was established in 2011 and incorporated in the state of Indiana in 2012 under the name of Innovative Health Solutions, Inc. The name was changed to NeurAxis, Inc. in 2022 when the Company filed a Certificate of Conversion and became a Delaware corporation.

The Company is headquartered in Carmel, Indiana, and specializes in the development, production, and sale of medical neuromodulation devices. The Company has developed four FDA cleared products: (i) the IB-STIM (DEN180057, 2019), (ii) the Rectal Expulsion Device (“RED”) (K242304,2024), (iii) the NSS-2 Bridge (DEN170018, 2017) and (iv) the original 510(K) clearance (K140530, 2014).

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and following the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These interim financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments which are necessary for a fair presentation of the Company’s financial information. These unaudited interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2026, or any other interim period or for any other future year. These unaudited financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2025.

2. Summary of Significant Accounting Policies

Use of Estimates and Critical Accounting Estimates and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

These significant accounting estimates or assumptions bear the risk of change due to uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. The Company uses estimates in accounting for, among other items, revenue recognition, allowance for credit losses, allowance for sales returns, warrant liabilities, stock-based compensation, income tax provisions, excess and obsolete inventory reserve, impairment of property and equipment and intellectual property. There were no material changes to the Company’s critical accounting estimates disclosed in the 2025 Form 10-K. Actual results could differ from those estimates.

Accounts Receivable and Allowance for Credit Losses

Trade accounts receivable is stated at the amount management expects to collect from outstanding balances, net of an allowance for credit losses. Management evaluates many factors when determining the collectability of specific customer accounts, including, but not limited to, creditworthiness, past transaction and payment history, current economic industry trends and changes in payment terms. Management used assumptions and judgment based on the best available facts and circumstances to estimate and record an allowance. The Company monitors accounts receivable and estimates the allowance for lifetime expected credit losses. Estimates of expected credit losses are based on historical collection experience, aging schedule and other factors, including those related to current and forecasted market conditions and events. The allowance for credit losses was $6,747 and $7,326 as of September 30, 2026 and December 31, 2025, respectively. The Company recorded $(12,255) and $2,717 in credit loss expense for the three months ended September 30, 2026 and 2025, respectively, and $781 and $2,717 in credit loss expense for the nine months ended September 30, 2026 and 2025, respectively.

Inventories

Inventories are valued at the lower of cost or net realizable value. Cost is determined using the weighted average method. The inventory is comprised of finished medical devices on hand. Certain components within the devices have an expiration date that are removed from current inventory and expensed at the date of expiration. The Company has reserved for expired inventory as charges to cost of goods sold of $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. No charges to research and development expenses to reserve for research devices were recorded for the three months ended September 30, 2026 and 2025. The Company has reserved for research devices recorded as charges to research and development expenses of $1,165 and $4,562 for the nine months ended September 30, 2026 and 2025, respectively. Inventory reserves totaled $9,965 and $34,524 as of September 30, 2026 and December 31, 2025, respectively.

Selling Expenses

Selling expenses consist primarily of advertising, marketing and promotion of the Company’s products including salaries and related personnel costs and travel expenses. Advertising costs are expensed as incurred and amounted to $21,604 and $292,678 for the three months ended September 30, 2026 and 2025, respectively, and $35,741 and $414,134 for the nine months ended September 30, 2026 and 2025, respectively.

Research and Development

Research and development expenses consist primarily of clinical research studies, new product development, costs of materials and supplies used in research and development activities and salaries and 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. Research and development costs are expensed as incurred.

Intangible Assets

Intangible assets consist of software, patents, and trademarks. Intangible assets are stated at their historical cost and amortized on a straight-line basis over their expected useful lives. Capitalized patent costs, net of accumulated amortization, includes legal costs incurred for patent applications. In accordance with ASC 350, once a patent is granted, we amortize the capitalized patent costs over the remaining life of the patent using the straight-line method. If the patent is not granted, we write off any capitalized patent costs at that time.

The Company purchased trademarks related to the Company’s name for $50,000 and a domain name for $13,800. The trademarks do not have a determinate life and therefore the cost is not being amortized. The Company tests for impairment annually or upon the occurrence of an impairment indicator.

On July 1, 2025, the Company terminated the NSS-2 Bridge license with Masimo in exchange for $200,000 of consideration paid in equal installments on December 31, 2025, and June 30, 2026. The termination agreement allowed the Company to recapture the rights to the trademark (U.S. Registration No. 7,394,465) and two patent applications (Application No. 18/821,225 and Application No. 29/960,608) that were licensed to Masimo on April 9, 2020 for use in the reduction of the symptoms of opioid withdrawal. The intellectual property is amortized over its remaining trademark life of approximately nine years.

Fair Value Measurements

The Company accounts for financial instruments in accordance with Accounting Standards Codification (“ASC”) 820,Fair Value Measurements and Disclosures, which establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described as follows:

Level 1 – Quoted prices (unadjusted) for identical unrestricted assets or liabilities in active markets that the reporting entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or financial instruments for which all significant inputs are observable or can be corroborated by observable market data, either directly or indirectly.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These unobservable inputs reflect that reporting entity’s own assumptions about what market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Management believes the estimated fair value of certain accounts including cash, accounts receivable, accounts payable and other current assets on September 30, 2026, and December 31, 2025, approximate their carrying value as reflected in the balance sheets due to the short-term nature of these instruments or the use of market interest rates for debt instruments.

The Company’s Level 3 accounts include warrant liabilities and the floating lookback option provision in the NeurAxis, Inc. 2025 Employee Stock Purchase Plan. Inputs to determine fair value are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing and discounted cash flow models. The valuation techniques involve management’s estimates and judgment based on unobservable inputs. The fair value estimates may not be indicative of the amounts that would be realized in a market exchange. Additionally, there may be inherent uncertainties or changes in the underlying assumptions used, which could significantly affect the current or future fair value estimates. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities.

There were no transfers between any of the levels during the periods ended September 30, 2026 and December 31, 2025. In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company had no assets that were measured on a nonrecurring basis as of September 30, 2026 and December 31, 2025.

Basic and Diluted Net Income (Loss) per Share

Basic earnings or loss per share (“EPS”) is computed by dividing net income (loss), net of preferred stock dividends, by the weighted average number of common shares outstanding during the period. Diluted EPS is determined using the weighted average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents that were outstanding for the periods presented. In periods when losses are reported, which is the case for the three and nine month periods ended September 30, 2026 and 2025 presented in these financial statements, the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.

Pursuant to the Company’s Board of Directors declaration of dividends on Series B Preferred Stock to holders of record as of July 21, 2026 and April 21 2026, the Company issued 80,456 and 510,605 shares of common stock on July 29, 2026, and April 28, 2026, respectively, based on the 8.5% per annum cumulative dividend rate.

The Company had the following potentially dilutive common stock equivalents:

The following table presents the calculation of the basic and diluted net loss per share and the effect of preferred stock dividends:

Stock-Based Compensation

The Company accounts for all stock-based awards at fair value. The Company recognizes its stock-based compensation expense using the straight-line method. Compensation cost is not adjusted for estimated forfeitures, but instead is adjusted upon actual forfeiture.

The Company accounts for the granting of stock options and restricted stock units to employees and non-employees using the fair value method whereby all awards are measured at fair value on the date of the grant. The fair value of all employee stock options and restricted stock units is expensed over the requisite service period with a corresponding increase to additional paid-in capital. Upon exercise of stock options, the consideration paid by the option holder is recorded in additional paid-in capital, while the par value of the shares received is reclassified from additional paid-in-capital to common stock. Upon vesting of restricted stock units, the par value of the shares issued are reclassified from additional paid-in-capital to common stock.

Stock-based awards to non-employees are measured based on the fair value of the equity instrument issued. Compensation expense for non-employee stock awards is recognized over the requisite service period following the measurement of the fair value on the grant date.

The Company uses the Black-Scholes option-pricing model to calculate the fair value of stock options and the Monte Carlo simulation model to calculate the fair value of the floating lookback option with the NeurAxis, Inc. 2025 Employee Stock Purchase Plan. The use of these option-pricing models requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected term of the option, risk-free interest rates, the value of the common stock and expected dividend yield of the common stock. Changes in these assumptions can materially affect the fair value estimate.

Revenue Recognition

In accordance with ASC 606,Revenue from Contracts with Customers, the Company recognizes revenue when its customer obtains control of promised goods, in an amount that reflects the consideration which the Company expects to be entitled in exchange for those goods. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, it (i) identifies the contract(s) with a customer, (ii) identifies the performance obligations in the contract, (iii) determines the transaction price, (iv) allocates the transaction price to the performance obligations in the contract and (v) recognizes revenue when (or as) the entity satisfies a performance obligation.

The Company applies the five-step model to contracts when it determines that it is probable it will collect substantially all the consideration it is entitled to in exchange for the goods it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods promised within each contract and determines those that are performance obligations and assesses whether each promised good is distinct. The Company then recognizes as revenue the amount of the transaction price, after consideration of variability and constraints, if any, that is allocated to the respective performance obligation when the performance obligation is satisfied.

The Company offers a patient assistance program for patients without insurance coverage for IB-Stim. This program extends potential self-pay discounts for IB-Stim devices, based upon household income and size.

Certain economic factors affect the nature, amount, timing, and uncertainty of the Company’s revenue and cash flows. All of the Company’s products are sold to healthcare customers including hospitals, clinics and physician offices. Sales to healthcare customers lack seasonality and have a mild correlation with economic cycles. All of the Company’s sales are to customers located within the United States. Sales contracts consist of purchase orders that are short-term (i.e., less than or equal to one year).

The Company typically satisfies its performance obligations for goods at a point in time as they are received at the customer’s destination (rather than over time). Goods are shipped by common carriers to customers under FOB destination terms. As such, ownership of goods in transit is transferred to the customer upon receipt as the Company bears the associated risks (e.g., loss, damage or delay). Management typically relies on shipping information from common carriers to evaluate when the customer has obtained control of the goods. Shipping and handling costs are recorded as cost of goods sold in the Condensed Statements of Operations.

The Company’s contracts with customers typically do not involve variable consideration. The information that the Company uses to determine the transaction price for a contract is similar to the information that the Company’s management uses in establishing the prices of goods to be sold.

Orders may not be cancelled after shipment. Customers may return devices if the goods are found to be defective, nonconforming, or otherwise do not meet the stated technical specifications. At the option of the customer, the Company shall either:

At the time revenue is recognized, the Company estimates expected returns and excludes those amounts from revenue. The Company also maintains appropriate accounts to reflect the effects of expected returns on the Company’s financial position and periodically adjusts those accounts to reflect its actual return experience. Estimated returns totaled $18,870 and $13,824 as of September 30, 2026 and December 31, 2025, respectively.

Payment for goods sold by the Company is typically due after an invoice is sent to the customer, within 30 days. The Company does not offer discounts if the customer pays some or all of an invoiced amount prior to the due date. None of the Company’s contracts have a significant financing component.

Customer deposits are contract liabilities under ASC 606. As of September 30, 2026 and December 31, 2025, the Company had customer deposits of $23,829 and $28,660, respectively.

Medical devices that the Company contracts to sell and transfer to customers are manufactured by two third-party manufacturers located in Indiana and Michigan. In no case does the Company act as an agent (i.e., the Company does not provide a service of arranging for another party to transfer goods to the customer).

Going Concern

As of September 30, 2026, the Company had stockholders’ equity of $3,622,411 and short-term outstanding borrowings of $207,306. Additionally, the Company had cash of $4,476,617 and a working capital surplus of $3,164,631 as of September 30, 2026. However, we have incurred losses and negative cash flows from operations since inception and have funded our operations primarily with a combination of sales, debt, and proceeds from the issuance of capital stock.

Our future capital requirements will depend upon many factors, including progress with developing, manufacturing, and marketing our technologies, the time and costs involved in preparing, filing, prosecuting, maintaining, and enforcing patent claims and other proprietary rights, our ability to establish collaborative arrangements, marketing activities and competing technological and market developments, including regulatory changes and overall economic conditions in our target markets. Our ability to generate revenue and achieve profitability requires us to successfully market and secure purchase orders for our products from customers currently identified in our sales pipeline and to new customers as well. The primary activity that will drive all customers and revenues is the adoption of insurance coverage by commercial insurance carriers nationally, which is a top priority of the Company. These activities, including our planned research and development efforts, will require significant uses of working capital through the rest of 2026 and beyond.

Management evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date the financial statements are issued.

While the Company believes in the viability of its strategy to further implement its business plan and generate sufficient revenues and in its ability to raise additional funds by way of a public or private offering of its debt or equity securities, there can be no assurance that it will be able to do so on reasonable terms, or at all. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenues and its ability to raise additional funds by way of a public or private offering. Neither future cash generated from operating activities, nor management’s contingency plans to mitigate the risk and extend cash resources through the evaluation period, are considered probable. As a result, substantial doubt is deemed to exist about the Company’s ability to continue as a going concern. As the Company continues to incur losses, the transition to profitability is dependent upon achieving a level of revenues adequate to support its cost structure. We may never achieve profitability, and unless and until doing so, we intend to fund future operations through additional dilutive or nondilutive financing. There can be no assurances, however, that additional funding will be available on terms acceptable to us, if at all.

The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Recently Adopted Accounting Standards

In July 2025, the FASB issued ASU 2025-05,Financial Instruments—Credit Losses (Topic 326), which allows registrants to elect a practical expedient when estimating expected credit losses on accounts receivable. Under the practical expedient, an entity may assume that the current conditions as of the balance sheet date persist for the remaining life of the asset, thereby removing the requirement to generate forward-looking forecasts. All entities are required to adopt the standard prospectively for fiscal years beginning after December 15, 2025, and interim periods within those annual reporting periods. The Company adopted the provisions of ASU 2025-05 as of January 1, 2026, on a prospective basis. The Company did not elect the practical expedient and the adoption of the standard did not have a material impact on the Company’s financial statements.

In December 2023, the FASB issued ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires the enhancement of income tax disclosures to provide better insight into how an entity’s operations and related tax risks, planning and opportunities affect its tax rate and prospects for future cash flows. The enhanced disclosures require (i) specific categories in a tabular rate reconciliation including both amounts and percentages and (ii) additional information for reconciling items and income tax paid that meet a quantitative threshold. Public business entities are required to adopt the standard for annual periods beginning after December 15, 2024. The Company adopted the disclosure provisions of ASU 2023-09 as of December 31, 2025, on a prospective basis. The adoption of this standard did not have a material impact on the Company’s financial statements.

Recently Issued Accounting Standards

In December 2025, the FASB issued ASU 2025-11,Interim Reporting (Topic 270), which provides a comprehensive list of interim disclosures that are required by U.S. GAAP to provide clarity on current requirements. Public business entities are required to adopt the standard for interim periods with annual reporting periods beginning after December 15, 2027. The adoption is not expected to have a material impact on the Company’s financial statements.

In September 2025, the FASB issued ASU 2025-06,Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvement to the Accounting for Internal-Use Software, which replaces project stage milestones with required capitalization when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. Depreciation expense and accumulated depreciation for internal-use software are also required to be disclosed for all periods presented. All entities are required to adopt the standard for fiscal years beginning after December 15, 2027 and interim periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The adoption is not expected to have a material impact on the Company’s financial statements.

In November 2024, the FASB issued ASU 2024-03,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic (220-40): Disaggregation of Income Statement Expenses, which requires disclosures that disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes inventory purchases, employee compensation, depreciation and intangible amortization expense. Additional disclosures are also required to provide a qualitative description of the amounts in an expense caption that are not separately disaggregated quantitatively and the total amount of selling expenses including a definition. Public business entities are required to adopt the standard for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with prospective or retrospective adoption, including disclosures, at the Company’s election. Although the standard requires enhanced disclosures, the adoption is not expected to have a material impact on the Company’s financial statements.

3. Related Party Transactions

The Company has two demand notes receivable from shareholders related to the sale of common stock on January 1, 2016. The total note principal balance is $1,012,800 as of September 30, 2026, and December 31, 2025, respectively, with interest calculated monthly based on applicable federal rates. The total interest receivable balance is $257,350 and $228,759 as of September 30, 2026, and December 31, 2025, respectively. No payments have been received on the notes. Since repayment is not assured, the Company has fully reserved for the entire balance of principal and interest. The current allowance is $1,270,150 and $1,241,559 as of September 30, 2026, and December 31, 2025, respectively.

The Company also has interest payable to certain shareholders related to the issuance of convertible notes in 2017, which have since been converted into common stock. During the three months ended September 30, 2026, the Company repaid $39,703 of the interest to certain shareholders. The interest payable totaled $26,945 and $66,648 as of September 30, 2026, and December 31, 2025, respectively, and is included in accrued expenses in the Condensed Balance Sheets.

The Company was granted an exclusive, worldwide non-transferable, royalty-free license for the auricular portion of certain patents owned by a limited liability company in which the Company’s President and Chief Executive Officer and Chief Regulatory, Compliance and Privacy Officer both maintain an ownership interest. The license allows for the development, marketing and sales of electro-therapy treatments by stimulation of cranial nerves, cranial nerve branches, auricular nerves, auricular nerve branches, auricular nerve bundles and auricular anatomical structures in human patients. The exclusive license agreement expires on October 18, 2037, may be terminated by either party upon 60 days prior written notice and requires the Company to pay costs associated with the maintenance, prosecution and continuation of patent filings. The Company’s Board of Directors pre-approved the reimbursement of up to $20,000 for the year ending December 31, 2026. License costs totaled $1,343 and $118 for the three months ended September 30, 2026 and 2025, respectively, and $4,725 and $1,435 for the nine months ended September 30, 2026 and 2025, respectively. No amounts were owed to the limited liability company as of September 30, 2026 and December 31, 2025, respectively.

From time to time, a member of the Company’s Board of Directors purchases NeuroStim devices from the Company at cost to conduct research and development activities. The Company’s Board of Directors pre-approved the sale of these NeuroStim devices up to $20,000 for the year ended December 31, 2026. The Company sold NeuroStim devices totaling $1,515 and $1,515 for the three months ended September 30, 2026 and 2025, respectively, and $6,060 and $7,865 for the nine months ended September 30, 2026 and 2025, respectively, under this program.

4. Prepaids and Other Current Assets

Prepaids and other current assets consisted of the following:

5. Other Non-Current Assets

Other non-current assets consisted of the following:

6. Accrued Expenses

Accrued expenses consisted of the following:

7. Notes Payable

On August 9, 2026, the Company entered into a $231,033 note payable to finance the premiums of a business insurance policy, bearing interest at an annual interest rate of 6.70% and maturing on June 9, 2027, to replace the $170,000 note payable entered into on August 9, 2025, with an annual interest rate of 7.45% that matured on June 9, 2026, in conjunction with the annual renewal period.

On August 9, 2025, the Company entered into a $170,000 note payable to finance the premiums of a business insurance policy, bearing interest at an annual interest rate of 7.45% with a maturity date of June 9, 2026, to replace the $210,000 note payable entered into on August 9, 2024, with an annual interest rate of 7.40% that matured on June 9, 2025, in conjunction with the annual renewal period. On May 26, 2025, the Company also entered into a note payable with a principal balance of $122,253 to finance subscription fees on certain software arrangements maturing on March 1, 2027. The total outstanding principal of these agreements was $207,306 and $158,292, of which $0 and $9,999 is included in other non-current liabilities in the Condensed Balance Sheets, as of September 30, 2026 and December 31, 2025, respectively.

Interest expense totaled $20,126 and $29,661 for the three months ended September 30, 2026 and 2025, respectively, and $66,109 and $45,333 for the nine months ended September 30, 2026 and 2025, respectively. The Company’s accrued interest totaled $26,945 and $66,648 as of September 30, 2026 and December 31, 2025, respectively.

8. Leases

The Company’s leases are comprised of operating leases for office space. At the inception of the lease, the Company determines whether the lease contract conveys the right to control the use of identified property for a period of time in exchange for consideration. Leases are classified as operating or finance leases at the commencement date of the lease. Operating leases are recorded as operating lease right-of-use assets, other current liabilities, and operating lease liabilities in the Condensed Balance Sheets. The Company did not have any finance leases as of September 30, 2026 and December 31, 2025.

The Company has two leases consisting of office space in Batesville and Carmel, Indiana. The lease in Batesville, Indiana commenced on August 1, 2025, and has an initial term of three years, with automatic one-year renewals subject to an annual 4% rent escalation, unless 60-day notice of vacating is given. On May 19, 2025, the Company terminated its prior lease in Versailles, Indiana, with a monthly lease payment of $1,800, effective July 31, 2025, without penalty due to the relocation of the office space to Batesville, Indiana, with the same landlord. The current monthly lease payment is $2,000 with no escalations during the initial lease term. On September 13, 2025, the Company prepaid $25,200 towards the monthly lease payments which will be amortized over the initial lease term. On August 11, 2026, the Company amended its lease to increase the square footage of its Batesville, Indiana office and prepaid $7,500 toward the construction. The monthly lease payment will increase to $2,250 upon completion of the construction which occur after September 30,2026. The lease in Carmel, Indiana commenced January 1, 2024, with an initial term of five years and five months. The monthly lease payment started at $6,721 with an annual increase of 2.5%. The Company was only obligated to pay an amount equal to 50% of the monthly base rent for the first 10 months of the term.

The Company recognized operating lease expense of $26,116 and $24,193 for the three months ended September 30, 2026 and 2025, respectively, and $78,347 and $75,275 for the nine months ended September 30, 2026 and 2025, respectively, including short-term lease expense and variable lease costs.

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

As of September 30, 2026, the maturities of the Company’s operating lease liabilities were as follows:

9. Common Stock and Warrants

The Company has authorized 100,000,000 shares of common stock, of which 13,808,061 and 10,652,812 shares were issued and outstanding as of September 30, 2026 and December 31, 2025, respectively.

On January 22, 2026, the Company issued 43,196 shares of common stock with a fair value of $199,995 to its Board of Directors for their services for the year ending December 31, 2026. The Company recorded $50,000 and $149,998 as general and administrative expense in the Condensed Statements of Operations for the three and nine months ended September 30, 2026, respectively, and $49,997 as prepaids and other current assets in the Condensed Balance Sheets as of September 30, 2026.

On January 22, 2026, the Company issued another 43,196 shares of common stock with a fair value of $200,000 to its Board of Directors for their service during the year ended December 31, 2025. The Company recorded $50,000 and $150,000 as general and administrative expense in the Condensed Statements of Operations for the three and nine months ended September 30, 2025, respectively.

During the three months ended March 31, 2026, the Company issued (i)495,456 shares of common stock to investors pursuant to the 2025 At The Market Offering Agreement with Craig-Hallum Capital Group, LLC with such shares registered in accordance with the Company’s effective Registration Statement on Form S-3 (File No. 333-283798), previously filed with the Securities and Exchange Commission (“SEC”) on December 13, 2024, and declared effective on February 11, 2025, and the related prospectus supplements with the SEC on August 29, 2025, October 23, 2025, and April 21, 2026, (collectively, the “2025 ATM Agreement”) for gross proceeds of $2,990,361, (ii)213,040 common shares upon the exercise of warrants for gross proceeds of $507,035 and (iii)2,345 common shares, net of shares withheld to cover payroll taxes, pursuant to the vesting of Restricted Stock Units (“RSUs”) under the 2022 Omnibus Securities and Incentive Plan.

On April 1, 2026, the Company issued 43,885 shares of common stock to eligible employees pursuant to the NeurAxis, Inc. 2025 Employee Stock Plan for gross proceeds of $86,015.

On April 10, 2026, and July 9, 2026, the Company’s Board of Directors declared a dividend on the Series B Preferred Stock. Holders of record of the Company’s Series B Preferred Stock as of the record date of April 21, 2026, and July 21, 2026, received a stock dividend on April 28, 2026, and July 29, 2026, of the Company’s par value $0.001 common stock for every share of Series B Preferred Stock. The Company issued 510,605 and 80,456 shares of common stock on April 28, 2026, and July 29, 2026, respectively, based on the 8.5% per annum cumulative dividend rate on the principal balance from the convertible notes issued in 2024, divided by $2.38.

During the three months ended June 30, 2026, the Company issued (i)252,455 shares of common stock to investors pursuant to the 2025 ATM Agreement for gross proceeds of $2,070,657, (ii)183,586 common shares upon the exercise of warrants for gross proceeds of $436,935 and (iii)27,483 common shares, net of shares withheld to cover payroll taxes, pursuant to the vesting of RSUs under the 2022 Omnibus Securities and Incentive Plan.

On August 14, 2026, the Company issued 127,210 shares of common stock to its Board of Directors as a market compensation adjustment for their past service as approved by the Board of Directors on August 6, 2026. The Company recorded the fair value of $798,879 as general and administrative expense in the Condensed Statements of Operations for the three and nine months ended September 30, 2026, respectively.

On August 24, 2026, the Company issued 863,169 shares of common stock, net of shares withheld to cover payroll taxes, with a fair value of $8,878,284 to certain employees and shareholders upon the cancelation of 1,305,630 stock options under the 2017 Innovative Health Solutions, Inc. Stock Compensation Plan and the grant of an equivalent amount of RSUs with immediate vesting under the NeurAxis, Inc. 2022 Omnibus Securities and Incentive Plan as approved by the Company’s Board of Directors and shareholders on April 9, 2026, and June 10, 2026, respectively. The stock option cancelation and RSU grants were executed on July 24, 2026 and treated as a modification under ASC 718,Compensation—Stock Compensation, whereby the Company recorded $3,286,171 in incremental compensation cost classified as general and administrative expenses in the Condensed Statements of Operations for the three and nine months ended September 30, 2026, which represents the excess of the fair value of the granted RSUs over the fair value of the stock options upon the exchange.

During the three months ended September 30, 2026, the Company issued (i)218,864 shares of common stock to investors pursuant to the ATM Agreement for proceeds of $1,635,257, (ii)16,250 common shares upon the exercise of warrants for gross proceeds of $38,675 and (iii)34,053 common shares pursuant to the vesting of RSUs under the 2022 Omnibus Securities and Incentive Plan.

During the nine months ended September 30, 2025, the Company issued (i)39,471 shares of common stock with a fair value of $112,493 to its Board of Directors for their service from April 1, 2024 through December 31, 2024 (ii)186,166 shares of common stock to an investor in exchange for 502,647 warrants in a cashless exercise transaction with $186 reclassified from additional paid in capital to common stock in the Condensed Statements of Stockholders’ Equity (iii)720,359 common shares upon the exercise of warrants for gross proceeds of $1,002,991 (iv)384,032 common shares to certain investors upon conversion of an equivalent amount of Series B Preferred Stock (v)1,538,461 common shares pursuant to a securities purchase agreement with certain institutional investors for gross proceeds of $4,999,999 offered by the Company pursuant to its shelf registration statement on Form S-3 (File No. 333-283798) which was declared effective by the Securities and Exchange Commission on February 11, 2025, a base prospectus dated February 11, 2025 and a prospectus supplement dated May 20, 2025 (vi)14,060 common shares, net of shares withheld to cover payroll taxes, pursuant to the vesting of RSUs under the 2022 Omnibus Securities and Incentive Plan and (vii)13,518 common shares to certain shareholders to settle certain claims with a fair value of $33,913.

The following table presents a summary of common stock warrant activity for the three months ended September 30, 2026 and 2025:

The following table presents a summary of common stock warrant activity for the nine months ended September 30, 2026 and 2025:

The following table summarizes the Company’s warrants outstanding and exercisable as of September 30, 2026:

10. Preferred Stock

The Company’s shareholders authorized 5,000,000 shares of preferred stock of which 5,000,000 shares were designated as $0.001 par value Series B Preferred Stock with 3,796,907 shares issued and outstanding as of September 30, 2026 and December 31, 2025, respectively. Series B Preferred Stock shareholders vote with Common Stock shareholders on an as-converted basis and not as a separate class. Cumulative dividends accrue at 8.5% per annum and are due and payable in either cash or common shares at the Company’s discretion on a quarterly basis through December 31, 2026. Series B Preferred Stock converts to common stock on a 1:1 basis, subject to adjustments for stock dividends, splits, combinations and similar events as well as unpaid dividends thereon, solely at the election of the holder at any time.

Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the Series B Preferred Stock shareholders maintain priority preference over all other classes of capital stock. A merger or consolidation (other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation) and a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the Company will be treated as a liquidation event, thereby triggering payment of the liquidation preferences.

Preferred stock dividends of $1,406,767 and $0 were declared and issued as common stock as of September 30, 2026, and December 31, 2025, respectively. Series B Preferred Stock undeclared cumulative dividends totaled $193,607 and $1,025,865 as of September 30, 2026, and December 31, 2025, respectively.

Pursuant to the Company’s Board of Directors declaration of dividends on Series B Preferred Stock to holders of record as of July 21, 2026 and April 21 2026, the Company issued 80,456 and 510,605 shares of common stock on July 29, 2026 and April 28, 2026, respectively, based on the 8.5% per annum cumulative dividend rate.

11. Stock-Based Compensation

Restricted Stock Units

Pursuant to the NeurAxis, Inc. 2022 Omnibus Securities and Incentive Plan, the Company initiated grants of restricted stock units (“RSUs”) as follows:

Of the RSUs granted during the nine months ended September 30, 2026,1,277,470 are subject to a pro rata annual vesting period over three years and 1,379,683 immediately vested whereas the RSUs granted during the nine months ended September 30, 2025 are subject to a three-year cliff vesting period. The RSUs are payable in shares of the Company’s common stock and fully vest upon (i) death or disability or (ii) change of control. Dividend equivalents accrue on RSUs and are paid upon vesting; there were no accrued dividends on unvested RSUs as of September 30, 2026. As of September 30, 2026,3,333 RSUs are pending issuance and 2,209 common shares were subsequently issued, net of shares withheld to cover payroll taxes, on October 6, 2026 in accordance with the normal vesting schedule. As of September 30, 2025,3,334 RSUs are pending issuance and were subsequently issued on October 29, 2025 in accordance with the normal vesting schedule.

Total stock-based compensation expense related to RSUs is classified in the Company’s Condensed Statements of Operations as (i) selling expenses totaling $102,687 and $40,311 for the three months ended September 30, 2026 and 2025, respectively, and $231,709 and $91,454 for the nine months ended September 30, 2026 and 2025, respectively, and (ii) general and administrative expense totaling $3,934,257 and $120,554 for the three months ended September 30, 2026 and 2025, respectively, and $4,717,210 and $348,264 for the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, total unrecognized stock-compensation expense relating to unvested stock awards granted under the Company’s share-based compensation plans amounted to $7,276,729.

Stock Options

The following is a summary of the Company’s outstanding stock options as of September 30, 2026 and December 31, 2025:

On April 9, 2026, the Company’s Board of Directors approved the cancelation of 1,305,630 stock options issued under the 2017 Innovative Health Solutions, Inc. Stock Compensation Plan and the grant of an equivalent amount of RSUs with immediate vesting under the NeurAxis, Inc. 2022 Omnibus Securities and Incentive Plan which was approved by the Company’s shareholders on June 10, 2026. The stock option cancelation and RSU grants were executed on July 24, 2026 and treated as a modification under ASC 718,Compensation—Stock Compensation, whereby the Company recognized incremental compensation cost of $3,286,171 classified as general and administrative expense in the Condensed Statements of Operations for the three and nine months ended September 30, 2026 which represented the excess of the fair value of the granted RSUs over the fair value of the stock options upon the exchange. On August 24, 2026, the Company issued 863,169 shares of common stock, net of shares withheld to cover payroll taxes, and paid $3,008,735, in payroll taxes which is included in payments of employee payroll taxes withheld upon net settlement of restricted stock units as cash flows from financing activities in the Condensed Statement of Cash Flows for the nine months ended September 30, 2026.

The Company utilized a Black-Scholes option-pricing model to compute the fair value of the stock options upon cancelation on July 24, 2026, in order to determine the incremental compensation cost. The inputs utilized in the application of the Black-Scholes option-pricing model included (i) an exercise price of $6.94 per share, (ii) an expected remaining term of 3.1 years for each stock option, (iii) estimated volatility of 96.4% based on historical stock prices of comparable companies with a look back period commensurate with the remaining contract term, (iv) a risk-free interest rate of 4.37% based on the interest rates of U.S. Treasury Notes consistent with the remaining contract term and (v) a 0% expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring dividends in the near future. There was no unrecognized compensation cost upon cancelation of the stock options due to their immediate vesting on the original grant date of September 9, 2021.

Employee Stock Purchase Plan

On July 1, 2025, the Compensation Committee of the Board of Directors (“Board”) of the Company adopted the NeurAxis, Inc. 2025 Employee Stock Purchase Plan (the “ESPP”) subsequently approved by the Shareholders on June 10, 2026. The purpose of the ESPP is to provide eligible employees an opportunity to acquire common stock of the Company at a 15% discount using payroll deductions. The maximum number of shares of the Company’s common stock that may be issued under the ESPP is 100,000, subject to an annual increase on January 1st of each year from 2026 through 2035 by the lesser of (i) 1% of the Company’s outstanding capital stock as of the prior December 31st or (ii) 100,000 shares. The Board may reduce or eliminate this annual increase before February 1st of any given year. Total stock-based compensation expense related to the ESPP is classified in the Company’s Condensed Statements of Operations as (i) selling expenses totaling $7,911 and $0 for the three months ended September 30, 2026 and 2025, respectively, and $23,332 and $0 for the nine months ended September 30, 2026 and 2025, respectively, and (ii) general and administrative expense totaling $12,022 and $0 for the three months ended September 30, 2026 and 2025, respectively, and $53,863 and $0 for the nine months ended September 30, 2026 and 2025, respectively. Employee withholdings of $92,600 and $13,611 are included in accrued expenses in the Condensed Balance Sheets as of September 30, 2026 and December 31, 2025, respectively.

12. Fair Value Measurement of Financial Instruments

Warrants

The Company utilizes a Black-Scholes option-pricing model to compute the fair value of the warrant liability and to mark to market the fair value of the warrant at each balance sheet date. The inputs utilized in the application of the Black-Scholes option-pricing model included (i) an exercise price of $8.76 per share, (ii) an expected remaining term of each warrant based on the remaining contractual maturity of each warrant, (iii) estimated volatility ranging from 89.1% to 101.1% based on historical stock prices of comparable companies with a look back period commensurate with the period to maturity, (iv) a risk-free interest rate ranging from 3.72% to 4.89% based on the interest rates of U.S. Treasury Notes consistent with the expected remaining contract term and (v) a 0% expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring dividends in the near future.

The following are the changes in the warrant liabilities during the nine months ended September 30, 2026 and year ended December 31, 2025:

ESPP Floating Lookback Option

The Company utilizes a Monte Carlo simulation model to compute the fair value of the ESPP floating lookback option which is expensed pro rata over each six-month offering period. The inputs utilized in the application of the Monte Carlo simulation model included (i) a stock price ranging from $2.72 to $7.40 subject to a 15% discount, (ii) an expected remaining term of 6 months, (iii) estimated volatility ranging from 89.1% to 90.9% based on historical stock prices of comparable companies with a lookback period commensurate with the offering period, (iv) a risk-free interest rate ranging from 3.69% to 3.94% based on interest rates of U.S. Treasury Notes consistent with the offering period and (v) a 0% expected dividend yield as the Company has not paid dividends and does not anticipate declaring dividends in the near future.

The Company recorded the fair value of the ESPP floating lookback option as stock-based compensation expense totaling $19,933 and $0 for the three months ended September 30, 2026 and 2025, respectively, and $77,195 and $0 for the nine months ended September 30, 2026 and 2025, respectively.

13.Segment Information

The Company evaluates the following factors to identify its reportable segments: (i) nature of products and services, (ii) type of customer for the products and services, (iii) sales, production and distribution methods of the products and services and (iv) the nature of the regulatory environment, if applicable. Based on an evaluation of these factors, management concluded that the Company’s operations are managed throughone reportable segment, IB-STIM, that derives its revenues in the United States from a PENFS device that is used to treat patients 8 years of age and older with functional abdominal pain associated with irritable bowel syndrome and with functional abdominal pain associated with functional dyspepsia and related nausea symptoms. The accounting policies of the IB-STIM segment are the same as those described in the Summary of Significant Accounting Policies (see Footnote 2). The Chief Operating Decision Maker (“CODM”) regularly evaluates the performance of the IB-STIM segment for the purpose of allocating resources based on net sales and operating loss, both of which are reported in the Condensed Statements of Operations. The CODM uses net sales to evaluate IB-STIM’s adoption and utilization by insurance carriers and physicians. As NeurAxis is an emerging growth company, operating loss is used to monitor the Company’s cost structure in order to achieve future segment profitability. Both net sales and operating loss are measured against the budget on a periodic basis to assess achievement toward annual compensation incentive targets. The Company’s CODM is its Chief Executive Officer.

The following reconciles the reportable segment net sales and operating loss to the Company’s reported net loss:

Total segment assets for IB-STIM amounted to $6,655,045 and $6,404,036 as of September 30, 2026 and December 31, 2025, respectively. Total segment capital expenditures for IB-STIM amounted to $13,800 and $0 for the three months ended September 30, 2026 and 2025, respectively, and $20,103 and $25,288 for the nine months ended September 30, 2026 and 2025, respectively. Total segment depreciation and amortization amounted to $16,821 and $16,205 for the three months ended September 30, 2026 and 2025, respectively, and $49,789 and $35,446 for the nine months ended September 30, 2026 and 2025, respectively.

Significant segment non-cash charges settled in common stock include (i) consulting and advisory fees totaling $798,879 and $33,913 for the three months ended September 30, 2026 and 2025, respectively, and $948,877 and $146,406 for the nine months ended September 30, 2026 and 2025, respectively, and (ii) RSU grants totaling $3,500,023 and $0 for the three months ended September 30, 2026 and 2025, respectively, and $3,800,424 and $0 for the nine months ended September 30, 2026 and 2025, respectively.

14. Settled Litigation

On February 6, 2019, plaintiffs Ritu Bhambhani, M.D. and Sudhir Rao initiated a lawsuit against Innovative Health Solutions, Inc. and others in the United States District Court for the District of Maryland, later as amended as the Third Amended Complaint (“Complaint”), asserting claims under the RICO Act, as well as of fraudulent misrepresentation, intentional misrepresentation by concealment, and civil conspiracy related to Medicare and insurance reimbursement of the Company’s NeuroStim device, seeking damages in excess of $5 million. The Court granted the Company’s motion for summary judgment and dismissed the Complaint on September 14, 2022, and the Fourth Circuit Court of Appeals affirmed the dismissal on September 3, 2024, with no further appeal sought by the plaintiffs.

On July 14, 2022, related entities owned or partially owned by the same plaintiffs Ritu Bhambhani, LLC; Box Hill Surgery Center, LLC; Pain and Spine Specialists of Maryland, LLC; and SimCare ASC, LLC initiated a lawsuit against the Company and others in the United States District Court for the District of Maryland (the “2022 Lawsuit”), asserting the same claims and seeking damages in excess of $75,000. The Court dismissed the RICO claims on May 25, 2023, and the parties subsequently pursued mediation of the remaining claims. On April 25, 2025, the parties reached a $750,000 settlement payable in 12 equal monthly installments beginning in January 2026, with $187,500 remaining as of September 30, 2026. The Company recorded a charge of $0 and $630,568 classified as general and administrative expense in the Condensed Statements of Operations during the three and nine months ended September 30, 2025, respectively, while interest expense was recorded as incurred. As of September 30, 2026, the Company maintained a liability of $182,871 classified as accrued expenses in the Condensed Balance Sheets.

15.Commitments and Contingencies

Manufacturing Services Agreement

The Company is party to two separate manufacturing services agreements for the manufacture and supply of the Company’s IB-Stim and RED devices based on the Company’s product specifications that expire in March and August, 2027, respectively, and automatically renew annually unless either party provides a written termination notice to the other party within 180 days prior to the end of the then-current term. The Company’s IB-Stim and RED devices are manufactured in Indiana and Michigan, respectively. The Company provides the necessary equipment to the manufacturers and retains ownership. The manufacturers bear the risk of loss of and damage to the equipment and consigned materials. Performance under the agreement is initiated by orders issued by the Company and accepted by the manufacturers. The Company also entered into quality agreements with the manufacturers to perform quality assurance services on product provided by the Company.

Threatened Litigation

From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of the date of issuance, other than those described below and in note 14, there were no pending or threatened legal proceedings that could reasonably be expected to have a material effect on the results of the Company’s operations. There are also no proceedings in which any of the Company’s directors, officers or affiliates is an adverse party to the Company or has a material interest adverse to the Company’s interest. Legal fees are expensed as incurred.

In January 2024, Dr. Arturo Taca served notice to the Company of claims asserting an interest in U.S. Patent No. 10,413,719 and seeking compensation of approximately $2,000,000 based on his alleged contributions to certain neurostimulation technology. The Company disputes both the asserted ownership interest and the related compensation claim and intends to defend the matter vigorously. The Company does not believe that a material loss is probable, and accordingly, no liability has been recorded as of September 30, 2026. Because the matter remains in its early stages, the ultimate outcome cannot be predicted.

16. Subsequent Events

On October 6, 2026 the Company issued 2,209 shares of common stock, net of shares withheld to cover payroll taxes, to an employee pursuant to the vesting of RSUs under the 2022 Omnibus Securities and Incentive Plan.

On October 7, 2026, the Company issued 19,100 shares of common stock to eligible employees pursuant to the NeurAxis, Inc. 2025 Employee Stock Purchase Plan effective as of July 1, 2025 and subsequently approved by the Shareholders on June 10, 2026, for gross proceeds of $92,444.

On October 14, 2026, the Company’s Board of Directors declared a dividend on the Series B Preferred Stock. Holders of record of the Company’s Series B Preferred Stock as of the record date of October 26, 2026, received a stock dividend on October 30, 2026, of the Company’s par value $0.001 common stock for every share of Series B Preferred Stock. The Company issued 81,339 shares of common stock based on the 8.5% per annum cumulative dividend rate.

In October of 2026, the Company issued 221,000 shares of common stock to investors for gross proceeds of $1,659,953 pursuant to the 2025 ATM Agreement.

On October 19, 2026, the Company issued 11,500 shares of common stock upon exercise of an equivalent amount of common stock warrants for gross proceeds of $27,370.

On November 3, 2026, the Company issued 50,000 shares of common stock to an investor upon conversion of an equivalent amount of Series B Preferred Stock.

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have been no other events that have occurred that would require adjustments to our disclosures in the condensed financial statements.