Aclarion, Inc.

Previous wording

We currently operate as a Delaware corporation, under the name Aclarion, Inc.

Current wording

The Company currently operates as a Delaware corporation, under the name Aclarion, Inc.

Previous wording

Cost of Revenue. Direct cost of revenue is comprised of hosting and software costs, field support, UCSF royalty cost, partner fees (Radnet), and credit card fees. Total cost of revenue was $23,479 for the quarter ended March 31, 2025, compared to $19,476 for the quarter ended March 31, 2024, an increase of 21%. This increase was volume-related and included partner fees.

Current wording

Cost of Revenue. Direct cost of revenue is comprised of hosting and software costs, field support, UCSF royalty cost, partner fees (Radnet), and credit card fees. Total cost of revenue was $14,179 for the quarter ended June 30, 2025, compared to $23,294 for the quarter ended June 30, 2024, a decrease of 39%. This decrease was primarily due to a reduced allocation of hosting fees to cost of revenue and a change in revenue mix that reduced partner fees.

Previous wording

Sales and Marketing. Sales and marketing expenses include post-market clinical and reimbursement consulting, salaries, website support, press releases, conferences, travel, and shared-based compensation for Key Opinion Leaders. Expenses were $302,584 for the quarter ended March 31, 2025, compared to $181,056 for the quarter ended March 31, 2024, an increase of $121,528, or 67%. The primary driver of this increase ($128K) was the initiation of the CLARITY trial in late 2024 with site evaluations ramping up in the three months ending March 31, 2025. Those increases were offset partially by the absence of vesting expense in this reporting period related to restricted stock units for Key Opinion Leaders that was present in 2024.

Current wording

Sales and Marketing. Marketing expenses include post-market clinical and reimbursement consulting, salaries, website support, press releases, conferences, travel, and shared-based compensation for Key Opinion Leaders. Sales and marketing expenses were $646,350 for the six months ended June 30, 2025, compared to $406,094 for the six months ended June 30, 2024, an increase of $240,256, or 59%. Increased post-market clinical expense related to the Clarity trial (approximately $180,000 increase), co-marketing expense, and a 2025 bonus accrual, was offset in part by a reduction in restricted stock vesting expense related to the Company’s engagement of Key Opinion Leaders and reduced product market consulting.

Previous wording

Interest expense was $0 for the quarter ended March 31, 2025, while interest expense for the quarter ended March 31, 2024 was $335,824. This decrease in interest expense was related to the retirement of all unsecured non-convertible notes in 2024.

Current wording

Interest expense was $0 for the six months ended June 30, 2025, while interest expense for the six months ended June 30, 2024 was $463,672. This decrease in interest expense was related to the retirement of all unsecured non-convertible notes in 2024.

Previous wording

The Company incurred losses for the quarter ended March 31, 2024, on two transactions to reduce debt. The first transaction took place between January 22 and January 29, 2024, whereby the Company entered into a series of exchange agreements with investors to issue an aggregate of 644,142 (71 adjusted for 2025 Stock Splits) shares of common stock in exchange for $1,519,779 principal and accrued interest on the notes. This transaction accelerated the recognition of the related note discounts and resulted in a $1,066,732 charge. The second transaction was on March 6, 2024, whereby the Company paid $300,974 of principal and accrued interest on the notes. This transaction accelerated the recognition of the related note discounts and resulted in a $111,928 charge.

Current wording

The Company incurred losses during the six months ended June 30, 2024, on two transactions to reduce debt. The first transaction took place between January 22 and January 29, 2024, whereby the Company entered into a series of exchange agreements with investors to issue an aggregate of 644,142 (71 adjusted for 2025 Stock Splits) shares of common stock in exchange for $1,519,779 principal and accrued interest on the notes. This transaction accelerated the recognition of the related note discounts and resulted in a $1,066,732 charge. The second transaction was on March 6, 2024, whereby the Company paid $300,974 of principal and accrued interest on the notes. This transaction accelerated the recognition of the related note discounts and resulted in a $111,928 charge.

Previous wording

The Company recognized a gain of $73,272 in the first quarter ended March 31, 2025 related to retiring an obligation for commitment shares.

Current wording

The Company recognized a gain of $73,272 in the six months ended June 30, 2025 related to retiring an obligation for commitment shares.

Previous wording

The Company’s warrant and derivative liabilities are recorded at fair value as of each reporting date (see Note 3 to the condensed financial statements). For the quarter ended March 31, 2025, the Company recorded a favorable adjustment in fair value of $11,721. For the quarter ended March 31, 2024, the Company recorded a favorable adjustment in fair value of $297,684. The derivative liability was retired in 2024 along with the retirement of all unsecured non-convertible notes.

Current wording

The Company’s warrant and derivative liabilities are recorded at fair value as of each reporting date. For the six months ended June 30, 2025, the Company recorded a favorable adjustment in fair value of $11,766. For the six months ended June 30, 2024, the Company recorded a favorable adjustment in fair value of $323,041. The derivative liability was retired in 2024 along with the retirement of all unsecured non-convertible notes.

Previous wording

The Company recorded $672,500 in Penalties and Settlements. In March 2025 we paid $687,500 to settle a dispute under the "fee tail" provision of an investment banking agreement that the Company had previously entered into. This was netted against a $15,000 favorable accounts payable settlement.

Current wording

In the six months ended June 30, 2025, the Company recorded $672,500 in Penalties and Settlements. In March 2025 the Company paid $687,500 to settle a dispute under the "fee tail" provision of an investment banking agreement that the Company had previously entered into. This was netted against a $15,000 favorable accounts payable settlement.

Previous wording

Other net income of $41,996 for the quarter ended March 31, 2025, was primarily interest earned on cash and cash equivalents. Other net income of $93,005 for the quarter ended March 31, 2024, included a favorable discount to accounts payable of $117,985, offset in part by a $25,000 penalty paid to investors related to a failure to timely register certain commitment shares.

Current wording

Other net income of $177,702 for the six months ended June 30, 2025, was primarily interest on money market deposits following the fundraising activity in the first quarter of 2025. Other net income of $92,980 for the six months ended June 30, 2024, included a favorable discount to accounts payable of $117,985, offset in part by a $25,000 penalty paid to investors related to a failure to timely register certain commitment shares.

Previous wording

The Company derives its revenues from one source, the delivery of Nociscan reports to medical professionals. Revenues are recognized when a contract with a customer exists, and the control of the promised services are transferred to our customers. The amount of revenue recognized reflects the consideration we expect to receive in exchange for those services. Substantially all of our revenues are generated from contracts with customers in the United States and United Kingdom.

Current wording

The Company derives its revenues from one source, the delivery of Nociscan reports to medical professionals. Revenues are recognized when a contract with a customer exists, and the control of the promised services are transferred to our customers. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for those services. Substantially all of our revenues are generated from contracts with customers in the United States and United Kingdom.

Previous wording

As of March 31, 2025, we had cash and cash equivalents of $14,760,272, including $10,000 of restricted cash.

Current wording

As of June 30, 2025, we had cash and cash equivalents of $12,850,657, including $25,000 of restricted cash.

Previous wording

During the three months ended March 31, 2025, the Company raised an aggregate of $20.1 million of gross proceeds through a combination of a public offering of units ($14.6 million) consisting of common shares, A warrants, and B warrants, two registered direct offerings ($5.2 million) of common stock, and the exercise of Series C Preferred warrants ($0.3 million).

Current wording

During the six months ended June 30, 2025, the Company raised an aggregate of $20.1 million of gross proceeds through a combination of a public offering of units ($14.6 million) consisting of common shares, A warrants, and B warrants, two registered direct offerings ($5.2 million) of common stock, and the exercise of Series C Preferred warrants ($0.3 million).

Previous wording

During the three months ended March 31, 2025, operating activities used $2,510,782 of cash. This use of cash consisted primarily of employee compensation and benefit expense, general liability insurance, CLARITY study expenses, and audit and legal fees. During the three months ended March 31, 2024, operating activities used $2,238,557 of cash. The Company significantly reduced accounts payable, primarily legal expenses that had accrued over time, and significantly reduced accrued expenses including payroll, bonuses, board compensation, and audit fees.

Current wording

During the six months ended June 30, 2025, operating activities used $4,376,394 of cash. This use of cash consisted primarily of employee compensation and benefit expense, general liability insurance, CLARITY study expenses, and audit and legal fees. During the six months ended June 30, 2024, operating activities used $3,293,096 of cash. During the six months ended June 30, 2025, the Company reduced accounts payable, primarily legal expenses that had accumulated over time, and reduced accrued expenses including payroll, bonuses, board compensation, and audit fees. In addition, prepaid expenses increased primarily due to D&O insurance.

Previous wording

During the three months ended March 31, 2025, and 2024, investing activities used $78,288 and $63,657 of cash, respectively. These investing activities consisted almost entirely of patent and license maintenance.

Current wording

During the six months ended June 30, 2025, and 2024, investing activities used $122,290 and $157,523 of cash, respectively. These investing activities consisted almost entirely of patent and license filings.

Previous wording

During the three months ended March 31, 2025, the Company raised an aggregate of $20.1 million of gross proceeds through a combination of a public offering of units ($14.6 million) consisting of common shares, A warrants, and B warrants, two registered direct offerings ($5.2 million) of common stock, and the exercise of Series C Preferred warrants ($0.3 million).

Current wording

During the six months ended June 30, 2025, the Company raised an aggregate of $20.1 million of gross proceeds through a combination of a public offering of units ($14.6 million) consisting of common shares, A warrants, and B warrants, two registered direct offerings ($5.2 million) of common stock, and the exercise of Series C Preferred warrants ($0.3 million).

Previous wording

During the three months ended March 31, 2025, certain holders converted the remaining 874 shares of C Preferred Stock and related accrued dividends into 6,211,618 shares of common stock (equivalent to 687 common shares following the 2025 Stock Splits).

Current wording

During the six months ended June 30, 2025, certain holders converted the remaining 874 shares of C Preferred Stock and related accrued dividends into 6,211,618 shares of common stock (equivalent to 687 common shares following the 2025 Stock Splits).

Previous wording

During the three months ended March 31, 2025, holders of the Series C warrants exercised 5,685,049 warrants (629 post-2025 Stock Splits). 4,548,039 (503 post-2025 Stock Splits) warrants were exercised at $0.03 per share ($271.35 post-2025 Stock Splits), and 1,137,010 (126 post-2025 Stock Splits) warrants were exercised at $0.1759 per share ($1,591.02 post-2025 Stock Splits). The Company received payments of $336,411 as part of the warrant exercises.

Current wording

During the six months ended June 30, 2025, holders of the Series C warrants exercised 5,685,049 warrants (629 post-2025 Stock Splits). 4,548,039 (503 post-2025 Stock Splits) warrants were exercised at $0.03 per share ($271.35 post-2025 Stock Splits), and 1,137,010 (126 post-2025 Stock Splits) warrants were exercised at $0.1759 per share ($1,591.02 post-2025 Stock Splits). The Company received payments of $336,411 as part of the warrant exercises.

Previous wording

Developing medical technology products is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate meaningful revenues. Accordingly, we may need to obtain substantial additional funds to achieve our business objectives.

Current wording

Developing medical technology products is a time-consuming, expensive and uncertain process that takes years to complete, and the Company may never generate meaningful revenues. Accordingly, we may need to obtain substantial additional funds to achieve our business objectives.

Previous wording

Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity securities, the ownership interest of existing stockholders may be diluted. Any debt or preferred equity financing, if available, may involve agreements that include restrictive covenants that may limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business, and may require the issuance of warrants, which could potentially dilute existing stockholders’ ownership interests.

Current wording

Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that the Company raises additional capital through the sale of equity securities, the ownership interest of existing stockholders may be diluted. Any debt or preferred equity financing, if available, may involve agreements that include restrictive covenants that may limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business, and may require the issuance of warrants, which could potentially dilute existing stockholders’ ownership interests.

Previous wording

We did not have, during the periods presented, and we do not currently have any off-balance sheet arrangements as defined in the rules and regulations of the SEC.

Current wording

The Company did not have, during the periods presented, and we do not currently have any off-balance sheet arrangements as defined in the rules and regulations of the SEC.

Previous wording

We have reviewed all recently issued standards and have determined that, as disclosed in Note 4 to our condensed financial statements appearing in this quarterly report, there have been no recent accounting pronouncements not yet effective that have significance, or potential significance, to our Consolidated Financial Statements.

Current wording

The Company reviewed all recently issued standards and has determined that, as disclosed in Note 4 to our condensed financial statements appearing in this quarterly report, there have been no recent accounting pronouncements not yet effective that have significance, or potential significance, to our Consolidated Financial Statements.