Aclarion, Inc.

Previous wording

Total revenues for the three months ended March 31, 2026 were $21,140, which was an increase of $2,149 or 11.3%, from $18,991 for the three months ended March 31, 2025. This increase in revenue was driven primarily by the growing volume of NOCISCAN® reports sold into the UK market following recent local coverage decisions. We expect this increase in revenue to continue as we bring on more insurance payors, and our scan volumes increase.

Current wording

Total revenues for the three months ended June 30, 2026 were $25,208, which was an increase of $5,889 or 30.5%, from $19,319 for the three months ended June 30, 2025. This increase in revenue was driven primarily by the growing volume of NOCISCAN® reports sold into the UK market following recent local coverage decisions. We expect this increase in revenue to continue as we bring on more insurance payors, and our scan volumes increase.

Previous wording

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 $17,390 for the three months ended March 31, 2026, compared to $23,479 for the same period ended March 31, 2025, a decrease of $6,089 or 25.9%. The gross margin increased to 17.7% in 2026 as compared to (23.6%) in 2025. This increase was primarily due to a reduced allocation of hosting fees to cost of revenue and a change in revenue mix that reduced partner fees.

Current wording

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 $16,911 for the three months ended June 30, 2026, compared to $14,179 for the same period ended June 30, 2025, an increase of $2,732 or 19.3%. The increase was primarily attributable to the growth in our sales as well as higher hosting software costs, partially offset by a reduction in partner fees.

Previous wording

Sales and marketing expenses primarily consist of post-clearance clinical services related to the CLARITY Trial, product marketing consulting, travel and entertainment costs, and salaries and benefits. Sales and marketing expenses totaled $908,797 for the three months ended March 31, 2026, compared to $302,584 for the three months ended March 31, 2025, representing an increase of $606,213 or 200.3%.

Current wording

Sales and marketing expenses primarily consist of post-clearance clinical services related to the CLARITY Trial, product marketing consulting, travel and entertainment costs, and salaries and benefits. Sales and marketing expenses totaled $877,160 for the three months ended June 30, 2026, compared to $343,765 for the three months ended June 30, 2025, representing an increase of $533,395 or 155.2%.

Previous wording

The increase in sales and marketing expenses was primarily driven by higher post-clearance clinical services, which was $191,021 for the three months ended March 31, 2026, compared to $150,532 for the same period in 2025, an increase of $40,489, reflecting costs associated with the initiation of the CLARITY Trial, for which the first patient enrolled in June 2025. With continued enrollment in the CLARITY Trial in 2026, we expect these expenses will continue to increase for the remainder of 2026.

Current wording

Sales and Marketing expense also increased due to higher post-clearance clinical services, which was $189,724 for the three months ended June 30, 2026, compared to $140,517 for the same period in 2025, an increase of $49,207, reflecting costs associated with the initiation of the CLARITY Trial, for which the first patient enrolled in June 2025. With continued enrollment in the CLARITY Trial in 2026, we expect these expenses will continue to increase for the remainder of 2026.

Previous wording

Product marketing consulting expenses increased by $239,401 to $250,374 for the three months ended March 31, 2026, compared to $10,973 for the same period in 2025, reflecting expanded use of external marketing consultants.

Current wording

Product marketing consulting expenses increased by $89,336 to $101,374 for the three months ended June 30, 2026, compared to $12,038 for the same period in 2025, reflecting expanded use of external marketing consultants.

Previous wording

Travel and entertainment expenses increased by $23,982 to $65,595 for the three months ended March 31, 2026, compared to $41,613 for the same period in 2025, primarily due to activities supporting local coverage determinations in the United Kingdom and increased travel by salespeople.

Current wording

Travel and entertainment expenses increased by $12,619 to $75,158 for the three months ended June 30, 2026, compared to $62,539 for the same period in 2025, primarily due to the new sales personnel activities supporting local coverage determinations in the United States and United Kingdom.

Previous wording

In addition, quality system and regulatory consulting expenses increased by $16,109 to $60,681 for the three months ended March 31, 2026, compared to $44,572 for the same period in 2025, primarily as a result of expanded regulatory compliance and documentation activities. We expect research and development expenses to continue to increase as we continue the development of the Nociscan 3.0 product.

Current wording

The increase was primarily driven by higher quality system and consulting expenses increased by $26,516 to $130,640 for the three months ended June 30, 2026, compared to $104,124 for the same period in 2025, primarily as a result of expanded regulatory compliance and documentation activities. We expect research and development expenses to continue to increase as we continue the development of the Nociscan 3.0 product.

Previous wording

The increase was primarily driven by higher patent maintenance fees, which totaled $40,879 for the three months ended March 31, 2026, compared to $314 for the same period in 2025, an increase of $40,565. This rise reflects the Company’s ongoing efforts to strengthen and expand protection of its intellectual property portfolio.

Current wording

In addition, patent maintenance fees, which totaled $19,053 for the three months ended June 30, 2026, compared to $11,705 for the same period in 2025, an increase of $7,348. This rise reflects the Company’s ongoing efforts to strengthen and expand protection of its intellectual property portfolio.

Previous wording

General and administrative expenses were $1,766,477 for the three months ended March 31, 2026, compared to $986,663 for the three months ended March 31, 2025, representing an increase of $779,814 or 79.0%.

Current wording

General and administrative expenses were $1,733,789 for the three months ended June 30, 2026, compared to $1,127,449 for the three months ended June 30, 2025, representing an increase of $606,340 or 53.8%.

Previous wording

The Company recorded accruals under its 2026 incentive bonus program totaling $111,875 for the three months ended March 31, 2026, compared to the absence of any bonus accruals in the corresponding prior-year period.

Current wording

For the three months ended June 30, 2026, salaries and benefits increased by $131,784 to $562,605 for the three months ended June 30, 2026, compared to $430,821 for the same period in 2025, primarily due to accruals for incentive-based performance and stock-based compensation. The Company recorded accruals under its 2026 incentive bonus program totaling $213,125 for the three months ended June 30, 2026, compared to $154,688 for the same period in 2025, an increase of $58,437, primarily due to the addition of new participants to the program. Stock-based compensation expense was $73,542 for the three months ended June 30, 2026, compared to $28,360 for the same period in 2025, an increase of $45,182, primarily attributable to restricted stock unit expense recognized following the equity awards granted under the Company’s 2022 Equity Incentive Plan in June 2026.

Previous wording

Delaware franchise tax expense increased to $237,000 for the three months ended March 31, 2026, from $8,947 in the prior-year period, an increase of $228,053, primarily due to changes in the Company’s capital structure and the methodology used to calculate the Company’s Delaware franchise tax obligation.

Current wording

Delaware franchise tax expense increased to $80,190 for the three months ended June 30, 2026, from $10,190 in the prior-year period, an increase of $70,000, primarily due to changes in the Company’s capital structure and the methodology used to calculate the Company’s Delaware franchise tax obligation.

Previous wording

The Company’s warrant liabilities are measured at fair value at each reporting date. For the three months ended March 31, 2026, the Company recorded a favorable fair value adjustment of $18, compared to $11,721 in the corresponding prior-year period, representing a decrease of $11,703, primarily due to the settlement of warrants in the prior period, resulting in fewer outstanding warrant liabilities subject to remeasurement in the current period.

Current wording

The Company’s warrant liabilities are measured at fair value at each reporting date. For the three months ended June 30, 2026, remeasurement of the outstanding warrants resulted in no material fair value adjustment, compared to a favorable adjustment of $45 recognized in the same period of the prior year.

Previous wording

Interest income was $133,035 for the three months ended March 31, 2026, compared to $42,163 in the corresponding prior-year period, representing an increase of $90,872, primarily reflecting higher average cash balances following the Company’s fundraising activities and related interest earned on money market deposits.

Current wording

Interest income was $157,346 for the three months ended June 30, 2026, compared to $135,865 for the same period in 2025, an increase of $21,481, primarily reflecting higher average cash balances following the Company’s fundraising activities and related interest earned on money market deposits.

Previous wording

The increase was primarily driven by investor relations expenses of $360,550 for the three months ended March 31, 2026, compared to $37,358 in the corresponding prior-year period, representing an increase of $323,192, primarily reflecting expanded investor outreach activities and increased use of third-party investor relations service providers.

Current wording

The increase was primarily driven by investor relations expenses of $566,198 for the six months ended June 30, 2026, compared to $211,931 in the corresponding prior-year period, representing an increase of $354,267 primarily reflecting expanded investor outreach activities and increased use of third-party investor relations service providers.

Previous wording

For the three months ended March 31, 2026, legal expenses were $215,492 compared to $88,805 in the same period in 2025, an increase of $126,687 primarily due to increased legal and advisory fees associated with corporate governance and shareholder-related matters.

Current wording

For the six months ended June 30, 2026, legal expenses were $466,363 compared to $188,288 in the same period in 2025, an increase of $278,075 primarily due to increased legal and advisory fees associated with corporate governance and shareholder-related matters.

Previous wording

Gain on extinguishment of debt was $0 for the three months ended March 31, 2026, compared to $73,272 in the corresponding prior-year period, reflecting the absence of debt extinguishment activity in the current period. The prior-year gain primarily related to the retirement of an obligation associated with commitment shares.

Current wording

Gain on extinguishment of debt was $0 for the six months ended June 30, 2026, compared to $73,272 in the corresponding prior-year period, reflecting the absence of debt extinguishment activity in the current period. The prior-year gain primarily related to the retirement of an obligation associated with commitment shares.

Previous wording

Penalties and settlements expense were $0 for the three months ended March 31, 2026, compared to $672,500 in the corresponding prior-year period, reflecting the absence of settlement-related charges in the current period. The prior-year expense primarily related to a payment to settle a dispute under the “fee tail” provision of a previously executed investment banking agreement, partially offset by a favorable accounts payable settlement.

Current wording

Penalties and settlements expense were $0 for the six months ended June 30, 2026, compared to $672,500 for the same period in 2025, reflecting the absence of settlement-related charges in the current period. The prior-year expense primarily related to a payment to settle a dispute under the “fee tail” provision of a previously executed investment banking agreement, partially offset by a favorable accounts payable settlement.

Previous wording

As of March 31, 2026, we had cash and cash equivalents of $19,029,976, including $25,000 of restricted cash.

Current wording

As of June 30, 2026, we had cash and cash equivalents of $16,310,462, including $25,000 of restricted cash.

Previous wording

During the three months ended March 31, 2026, the Company completed a registered direct public offering of (i) 200,000 shares of the Company’s common stock, and (ii) pre-funded warrants (the “Pre-funded Warrants”) to purchase up to 1,800,000 shares of common stock, at an offering price of $5.18 per share. The purchase price of each Pre-funded Warrant was $5.17999, which represents the offering price per share of common stock, minus the exercise price of $.00001 per share. The Pre-funded Warrants are immediately exercisable. The aggregate gross proceeds to the Company from this offering were approximately $10.4 million, before deducting placement agent fees of 6% of the aggregate gross proceeds and other offering expenses payable by the Company.

Current wording

During the six months ended June 30, 2026, the Company completed a registered direct public offering of (i) 200,000 shares of the Company’s common stock, and (ii) pre-funded warrants (the “Pre-funded Warrants”) to purchase up to 1,800,000 shares of common stock, at an offering price of $5.18 per share. The purchase price of each Pre-funded Warrant was $5.17999, which represents the offering price per share of common stock, minus the exercise price of $.00001 per share. The Pre-funded Warrants are immediately exercisable. The aggregate gross proceeds to the Company from this offering were approximately $10.4 million, before deducting placement agent fees of 6% of the aggregate gross proceeds and other offering expenses payable by the Company.

Previous wording

During the three months ended March 31, 2026, the Company used $2,641,845 in cash for operating activities, compared to $2,510,782 for the same period in 2025, representing an increase in cash used of $131,063. The increase was primarily driven by a higher net loss after adjusting for non-cash items, partially offset by favorable changes in working capital.

Current wording

During the six months ended June 30, 2026, the Company used $5,298,896 in cash for operating activities, compared to $4,376,394 for the same period in 2025, representing an increase in cash used of $922,502. The increase was primarily driven by a higher net loss after adjusting for non-cash items, partially offset by favorable changes in working capital.

Previous wording

Net loss after non-cash adjustments was $2,787,990 for the three months ended March 31, 2026, compared to $1,831,734 for the same period in 2025, an increase of $956,256. This increase was primarily attributable to a higher net loss of $816,139 and lower non-cash adjustments in the current period. The prior-year period included higher non-cash charges, including share-based compensation of $55,897, non-cash settlements of $58,272, and warrant amendment costs of $48,087, which did not recur in the current period. In addition, the change in fair value of warrants and derivative liabilities resulted in a smaller non-cash gain in 2026 compared to 2025. These factors were partially offset by a modest increase in depreciation and amortization.

Current wording

Net loss after non-cash adjustments was $5,371,555 for the six months ended June 30, 2026, compared to $3,351,614 for the same period in 2025, an increase of $2,019,941. This increase was primarily attributable to a higher net loss of $1,962,933, together with lower non-cash adjustments in the current period. The prior-year period included non-cash charges that did not recur in 2026, consisting of warrant amendment costs of $48,087 and non-cash settlements of $58,272. The change in fair value related to warrants and derivative liabilities produced a smaller non-cash gain in 2026 of $18, compared to $11,766 in 2025. These factors were partially offset by increases in share-based compensation, which rose $22,554 to $106,811, and depreciation and amortization, which rose $15,049 to $122,778.

Previous wording

Net cash used in investing activities decreased to $49,345 for the three months ended March 31, 2026, compared to $78,288 for the same period in 2025, representing a decrease in cash used of $28,943. Cash used in investing activities in both periods related to capitalized patent costs. The decrease was primarily due to lower expenditures related to patent and license filings in the current period compared to the prior-year period.

Current wording

Net cash used in investing activities decreased to $92,524 for the six months ended June 30, 2026, compared to $122,290 for the same period in 2025, a decrease in cash used of $29,766. Investing activities in both periods consisted primarily of capitalized patent costs. The decrease was primarily attributable to lower expenditures on patent and license filings, which fell $31,094 to $90,716, partially offset by a $1,328 increase in fixed asset purchases.

Previous wording

Net cash provided by financing activities decreased to $9,680,377 for the three months ended March 31, 2026, compared to $16,885,681 for the three months ended March 31, 2025, representing a decrease of $7,205,304.

Current wording

Net cash provided by financing activities decreased to $9,661,093 for the six months ended June 30, 2026, compared to $16,885,680 for the six months ended June 30, 2025, a decrease of $7,224,587.

Previous wording

Cash provided by financing activities for the three months ended March 31, 2026, was primarily attributable to $10,359,982 in aggregate proceeds from a registered direct public offering of common stock and prefunded warrants, partially offset by $679,605 in offering-related issuance costs.

Current wording

Cash provided by financing activities for the six months ended June 30, 2026, was primarily attributable to $10,359,982 in aggregate proceeds from a registered direct offering, consisting of $1,036,000 from common stock and $9,323,982 from prefunded warrants, partially offset by $698,889 in issuance costs.

Previous wording

In comparison, cash provided by financing activities for the three months ended March 31, 2025, was primarily driven by $19,722,472 in aggregate proceeds from public and registered direct offerings of common stock and warrants, partially offset by $1,959,642 in issuance costs and $1,213,590 related to the redemption of Series B Preferred Stock. In addition, the prior-year period included $336,441 in proceeds from the exercise of Series C warrants.

Current wording

In comparison, cash provided by financing activities for the six months ended June 30, 2025, was primarily driven by $19,722,472 in aggregate proceeds from public and registered direct offerings of common stock and warrants, partially offset by $1,959,643 in issuance costs and $1,213,590 related to the redemption of Series B Preferred Stock. The prior-year period also included $336,441 in proceeds from the exercise of Series C warrants.

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

We believe that our cash and cash equivalents of $16,310,462 as of June 30, 2026, including $25,000 of restricted cash, provide sufficient capital to fund our planned operations into the second half of 2027 without the need for additional financing. However, the development and commercialization of medical technology products is a time-consuming, costly, and uncertain process that may take years to complete, and we may never generate meaningful revenue. Accordingly, we may need to raise substantial additional capital to achieve our long-term business objectives.

Previous wording

We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 4 to our condensed financial statements appearing at the end of this annual report, such standards will not have a material impact on our condensed financial statements or do not otherwise apply to our operations.

Current wording

We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 4 to our condensed financial statements appearing at the end of this quarterly report, such standards will not have a material impact on our condensed financial statements or do not otherwise apply to our operations.

Previous wording

We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior December 31st, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Current wording

We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO, which is January 1, 2028, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior December 31st, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.