ACLARION, INC. 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-41358

ACLARION, INC.

(Exact name of registrant as specified in its charter)

Delaware		47-3324725
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)

8181 Arista Place, Suite 100

Broomfield, Colorado 80021

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (833) 275-2266

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.00001 per share	ACON	The Nasdaq Stock Market LLC
Warrants, each exercisable for one share of Common stock	ACONW	The Nasdaq Stock Market LLC
Series D Junior Participating Preferred Purchase Rights	N/A	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 04, 2026, there were 2,882,371 shares of the registrant’s common stock, $0.00001 par value per share, outstanding.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.

Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. Forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those indicated (both favorably and unfavorably). These risks and uncertainties include, but are not limited to, those described in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the Form 10-K) dated March 18, 2026, as filed with the Securities and Exchange Commission on March 18, 2026, under Rule 424(b)(4). Caution should be taken not to place undue reliance on any such forward-looking statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward- looking statements in this Quarterly Report on Form 10-Q by these cautionary statements.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	4
	Condensed Balance Sheets	4
	Condensed Statements of Operations	5
	Condensed Statements of Changes in Stockholders’ Equity (Deficit)	6
	Condensed Statements of Cash Flows	7
	Notes to Condensed Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	37
	Signatures	39

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Aclarion, Inc.

Condensed Balance Sheets


	June 30, 2026			December 31, 2025
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	16,285,462		$	12,015,789
Restricted cash		25,000			25,000
Accounts receivable, net		28,172			29,680
Prepaid expense		445,574			316,235
Other current assets		10,000			10,000
Total current assets		16,794,208			12,396,704

Non-current assets:
Property and equipment, net		23,233			24,169
Intangible assets, net		1,222,213			1,251,531
Total non-current assets		1,245,446			1,275,700

Total assets	$	18,039,654		$	13,672,404

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	704,979		$	332,962
Accrued and other liabilities		331,910			504,262
Warrant liability		45			63
Total current liabilities		1,036,934			837,287

Total liabilities		1,036,934			837,287

Commitments and contingencies (see Note 10)		–

Stockholders’ equity:
Common stock - $.00001 par value, 200,000,000 authorized,2,462,250 and 854,371 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively (See Note 11)		25			9
Additional paid-in capital		81,099,761			71,331,048
Accumulated deficit		(64,097,066	)		(58,495,940	)
Total stockholders’ equity		17,002,720			12,835,117
Total liabilities and stockholders’ equity	$	18,039,654		$	13,672,404

See accompanying notes to condensed financial statements.

Aclarion, Inc.

Condensed Statements of Operations

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Revenue:
Revenue	$	25,208		$	19,319		$	46,348		$	38,309
Cost of revenue		16,911			14,179			34,301			37,658
Gross profit		8,297			5,140			12,047			651

Operating expenses:
Sales and marketing		877,160			343,765			1,785,957			646,350
Research and development		297,070			270,434			612,487			468,622
General and administrative		1,733,789			1,127,449			3,500,266			2,114,112
Total operating expenses		2,908,019			1,741,648			5,898,710			3,229,084

Loss from operations		(2,899,722	)		(1,736,508	)		(5,886,663	)		(3,228,433	)

Other income (expense):
Gain on extinguishment of debt		–			–			–			73,272
Changes in fair value of warrant and derivative liabilities		–			45			18			11,766
Penalties and settlements		–			–			–			(672,500	)
Interest income		157,346			135,865			290,381			178,028
Other, net		(5,175	)		(159	)		(4,862	)		(326	)
Total other income (expense)		152,171			135,751			285,537			(409,760	)

Loss before income taxes		(2,747,551	)		(1,600,757	)		(5,601,126	)		(3,638,193	)
Income tax provision		–			–			–			–
Net loss	$	(2,747,551	)	$	(1,600,757	)	$	(5,601,126	)	$	(3,638,193	)

Dividends on preferred stock		–			–			–			(6,683	)
Net loss allocable to common stockholders	$	(2,747,551	)	$	(1,600,757	)	$	(5,601,126	)	$	(3,644,876	)
Net loss per share allocable to common stockholders	$	(1.12	)	$	(2.75	)	$	(2.44	)	$	(9.09	)
Weighted average shares of common stock outstanding, basic and diluted		2,462,250			582,371			2,296,061			400,868

See accompanying notes to condensed financial statements.

Aclarion, Inc.

Condensed Statements of Changes in Stockholders’ Equity (Deficit)

(Unaudited)

Series B

Preferred Stock

Series C

Preferred Stock

Common Stock

Paid-In

Accumulated

Shares

Value

Shares

Value

Shares

Value

Capital

Deficit

Total

For the Six Months Ended June 30, 2025

Balance, December 31, 2024

930

–

874

–

1,370

52,232,368

(51,262,311

)

970,057

Share-based compensation

–

55,897

–

55,897

Registered direct offerings of common stock

–

19,144

5,167,927

–

5,167,927

Public offering of common stock and warrants

–

16,048

14,554,545

–

14,554,545

Common stock issuance costs

–

(2,101,282

)

–

(2,101,282

)

Redemption of Series B preferred stock

(930

)

–

(1,213,590

)

–

(1,213,590

)

Conversion of C-series preferred stock to common stock

–

(874

)

–

687

–

Exercise of C-series warrants

–

629

336,441

–

336,441

Warrant amendment

–

48,087

–

48,087

Alternative cashless exercise of B warrants

–

544,299

)

–

Round-up conversion related to reverse stock splits

–

161

)

–

)

Net loss

–

(2,037,436

)

(2,037,436

)

Balance, March 31, 2025

–

582,338

69,080,387

(53,299,747

)

15,780,645

Share-based compensation

–

28,360

–

28,360

Round-up conversion related to reverse stock splits

–

Common stock issuance costs

–

(18,150

)

–

(18,150

)

Net loss

–

(1,600,757

)

(1,600,757

)

Balance, June 30, 2025

–

582,371

69,090,597

(54,900,504

)

14,190,098

For the Six Months Ended June 30, 2026

Balance, December 31, 2025

–

854,371

71,331,048

(58,495,940

)

12,835,117

Share-based compensation

–

4,694

–

4,694

Registered direct offerings of common stock

–

200,000

1,035,998

–

1,036,000

Proceeds from direct offering of prefunded warrants

–

9,323,982

–

9,323,982

Exercise of prefunded warrants

–

1,390,500

(14

)

–

Common stock issuance costs

–

(691,739

)

–

(691,739

)

Net loss

–

(2,853,575

)

(2,853,575

)

Balance, March 31, 2026

–

2,444,871

81,003,969

(61,349,515

)

19,654,479

Share-based compensation

–

102,117

–

102,117

Exercise of prefunded warrants

–

17,379

–

Common stock issuance costs

–

(6,325

)

–

(6,325

)

Net loss

–

(2,747,551

)

(2,747,551

)

Balance, June 30, 2026

–

2,462,250

81,099,761

(64,097,066

)

17,002,720

*	Rounds to less than one dollar

See accompanying notes to condensed financial statements.

Aclarion, Inc.

Condensed Statements of Cash Flows

(Unaudited)


	Six Months Ended June 30,
	2026			2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(5,601,126	)	$	(3,638,193	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		122,778			107,729
Share-based compensation		106,811			84,257
Amendment of warrants		–			48,087
Non-cash settlements		–			58,272
Change in fair value related to warrants and derivative		(18	)		(11,766	)
Change in operating assets and liabilities
Accounts receivable		1,508			(2,595	)
Prepaids and other current assets		(129,339	)		(232,111	)
Accounts payable		372,842			(268,237	)
Accrued and other liabilities		(172,352	)		(521,837	)
Net cash used in operating activities		(5,298,896	)		(4,376,394	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Intangible assets – Patents		(90,716	)		(121,810	)
Fixed assets		(1,808	)		(480	)
Net cash used in investing activities		(92,524	)		(122,290	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Public offering of common stock and warrants		–			14,554,545
Registered direct offerings of common stock		1,036,000			5,167,927
Proceeds from direct offering of prefunded warrants		9,323,982			–
Common stock cash issuance costs		(698,889	)		(1,959,643	)
Exercise of Series C warrants		–			336,441
Redemption of Series B Preferred stock		–			(1,213,590	)
Net cash provided by financing activities		9,661,093			16,885,680

Net increase in cash, cash equivalents and restricted cash		4,269,673			12,386,996
Cash, cash equivalents and restricted cash, beginning of period		12,040,789			463,661
Cash, cash equivalents and restricted cash, end of period	$	16,310,462		$	12,850,657

Cash paid for interest	$	–		$	–
Cash paid for income taxes	$	800		$	–

Non-cash activities
Capitalization of Series B preferred stock dividends	$	–		$	5,425
Capitalization of Series C preferred stock dividends	$	–		$	1,258
Conversion of Series C preferred stock to common stock	$	–		$	548,534
Cashless exercise of B warrants to common stock	$	–		$	9,539,081

See accompanying notes to condensed financial statements.

Aclarion, Inc.

Notes to Condensed Financial Statements

(Unaudited)

NOTE 1. THE COMPANY AND BASIS OF PRESENTATION

The Company

Aclarion, Inc., formerly Nocimed, Inc., (the “Company” or “Aclarion”) is a healthcare technology company that leverages magnetic resonance spectroscopy (“MRS”) combined with proprietary signal-processing biomarkers to optimize clinical treatments. The Company was formed in February 2015, incorporated in Delaware, and has its principal place of business in Broomfield, Colorado.

Basis of Presentation

The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements. In the opinion of management, the interim condensed financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. These condensed financial statements should be read in conjunction with the audited financial statements and related notes for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 18, 2026.

The condensed balance sheet as of June 30, 2026, was derived from the audited financial statements as of December 31, 2025. The results of operations for interim periods are not necessarily indicative of results for the full fiscal year or any future period.

Risks and Uncertainties

The Company is subject to various risks and uncertainties frequently encountered by companies in the early stages of development. Such risks and uncertainties include, but are not limited to, its limited operating history, competition from other companies, limited access to additional funds, dependence on key personnel, and management of potential rapid growth. To address these risks, the Company must, among other things, develop its customer base; implement and successfully execute its business and marketing strategy; develop follow-on products; provide superior customer service; and attract, retain, and motivate qualified personnel. There can be no guarantee that the Company will be successful in addressing these or other such risks.

2025 Reverse Stock Splits

The Company effected (i) a 1:335 reverse stock split of the Company’s common stock on January 30, 2025, and (ii) a 1:27 reverse stock split of the Company’s common stock on March 28, 2025 (together, the “2025 Stock Splits”). The 2025 Stock Splits resulted in a reduction in the number of outstanding shares of common stock, warrants, stock options, and restricted share units and a proportionate increase in the value of each share or strike price of the warrants and stock options.

Unless described otherwise, all references to common stock, share data, per share data, and related information contained in these condensed financial statements have been retrospectively adjusted to reflect the effect of the stock splits for all periods presented. In addition, any fractional shares that would otherwise be issued as a result of the stock splits were rounded up to the nearest whole share. Further, the number of shares issuable and exercise prices of stock options and warrants have been retrospectively adjusted in these condensed financial statements for all periods presented to reflect the 2025 Stock Splits.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The condensed financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to depreciation, amortization, and valuation of warrants, warrant and derivative liabilities, and options to purchase shares of the Company’s common stock. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.

Fair Value of Financial Instruments

ASC 820, Fair Value Measurements, provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:

Level 1 - Unadjusted quoted prices in active markets for identical instruments that are accessible by the Company on the measurement date.

Level 2 - Quoted prices in markets that are not active or inputs which are either directly or indirectly observable.

Level 3 - Unobservable inputs for the instrument requiring the development of assumptions by the Company.

The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The carrying values of the Company’s financial instruments including cash equivalents, restricted cash, accounts receivable, and accounts payable are approximately equal to their respective fair values due to the relatively short-term nature of these instruments. The Company’s warrant liabilities are estimated using level 3 inputs (see Note 3).

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company had $602,715 cash deposits and $15,707,747 of cash equivalents at June 30, 2026. The Company had $273,290 cash deposits and $11,767,499 of cash equivalents at December 31, 2025.

The Company maintains cash deposits and cash equivalents at three financial institutions, which are insured by the FDIC up to $250,000. The Company’s cash balance may at times exceed these limits. On June 30, 2026 and December 31, 2025, the Company had $15,810,462 and $11,540,789, respectively, in excess of federally insured limits. The Company continually monitors its positions with, and the credit quality of, the financial institutions with which it invests. The Company maintains no international bank accounts. As of June 30, 2026, $25,000 of the Company’s cash was restricted as collateral related to the credit card program offered by our bank.

Accounts Receivable, Less Allowance for Credit Losses

Accounts receivable are recorded at the invoiced amount and presented net of an allowance for expected credit losses. The allowance is based on historical loss experience, receivable aging, current economic conditions, and reasonable and supportable forecasts. The Company reassesses the allowance each reporting period. As of June 30, 2026 and December 31, 2025, the allowance for credit losses was $6,359 and $6,241, respectively.

Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the related assets. Computer and office equipment and computer software are depreciated over five years. Repairs and maintenance costs, which are not considered improvements and do not extend the useful life of the property and equipment, are expensed as incurred.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including intangible assets, property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable using pre-tax undiscounted cash flows. Impairment, if any, is measured as the amount by which the carrying value of a long-lived asset exceeds its fair value.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company applies the following five-step model in determining revenue recognition:

Step 1 – Identify The Contract With A Customer – A contract exists when there is legally enforceable agreement between the Company and the customer that defines each party’s rights regarding the Nociscan report to be transferred and the payment terms, and collection of consideration is probable.

Step 2 – Identify The Performance Obligations In The Contract – The Company contracts with customers contain a single performance obligation: the delivery of a Nociscan report. The Company does not provide ongoing services, post-delivery support, licensing arrangements, or other performance obligations after the report has been delivered.

Step 3 – Determine The Transaction Price – The transaction price is the negotiated consideration specified in the contract for the Nociscan report. Customers do not pay upfront fees, licensing fees, or other additional amounts. To date, the Company’s reports are generally not reimbursable under third-party arrangements, except for three private health insurance providers in the United Kingdom and certain third-party clinical trial users who are using Nociscan as part of their clinical trial protocols.

Step 4 – Allocate The Transaction Price To The Performance Obligations – As each contract contains a single performance obligation, the entire transaction price is allocated to the delivery of the Nociscan report.

Step 5 – Recognize Revenue When (Or As) The Entity Satisfies The Performance Obligations – Revenue is recognized at a point in time when control of the Nociscan report is transferred to the customer, which occurs upon delivery of the report. At that time, the company has fulfilled its performance obligation and has no further obligations to the customer. The Company invoices customers in accordance with the billing schedules set forth in its sales arrangements. Payment terms are generally 30 days from the invoice date.

Sales and Marketing Expenses

Sales and marketing costs are expensed as incurred. The primary drivers of these costs have been employee salaries and benefits, clinical services related to post-clearance activities (including the Clarity clinical study), product marketing consultants, travel and attendance at industry conferences, and other marketing services such as press releases and advertising.

Research and Development Costs

Costs related to the research, design, and development of products are charged to research and development costs as incurred. These costs include employee compensation and benefits, professional services (including contractors and quality system and regulatory consulting), patent maintenance activities, regulatory agency fees, and other expenses such as software subscriptions, product licensing fees, and materials used in research and development activities.

General and Administrative

General and administrative costs are expensed as incurred. These costs primarily consist of personnel and related expenses, including stock-based compensation, investor relations and corporate communications activities, accounting, audit, and other financial advisory services, legal fees relating to intellectual property and corporate matters, corporate and regulatory fees associated with operating as a public company, insurance including directors and officers coverage, information technology, depreciation and amortization, and fees for consulting, human resources, and other professional services.

Liquidity and Capital Resources

As of June 30, 2026, we had cash and cash equivalents and restricted cash of $16,310,462. We believe our existing cash and cash equivalents and restricted cash will be sufficient to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of this report. This estimate is based on assumptions that may prove to be incorrect, and actual results could differ materially. We may require additional capital to support our operations and execute our business strategy. The timing and availability of such financing are uncertain and will depend on a number of factors, including market conditions and our operating performance. If we are unable to obtain additional financing on acceptable terms, or at all, we may be required to delay, reduce, or discontinue certain operating activities, including the commercialization or further development of our SaaS platform.

Deferred Financing Costs

The Company capitalizes certain legal, accounting, and other costs directly attributable to in-process equity financings as deferred offering costs until such financings are completed. Upon completion of an equity financing, these costs are recorded as a reduction of additional paid-in capital of the related offering.

During the six months ended June 30, 2026, the Company completed a registered direct offering of common shares and pre-funded warrants, resulting in aggregate gross proceeds of approximately $10.4 million.

In connection with the closing of the offering during the six months ended June 30, 2026, $698,064 of deferred offering costs were reclassified to additional paid-in capital, of which $671,600 was offset against gross proceeds and $26,464 was paid or accrued.

Share-Based Compensation

The Company accounts for stock-based awards in accordance with provisions of ASC Topic 718, Compensation—Stock Compensation, under which the Company recognizes the grant-date fair value of stock-based awards issued to employees and nonemployee board members as compensation expense on a straight-line basis over the vesting period of the award, while awards containing a performance condition are recognized as expense when the achievement of the performance criteria is achieved. The Company uses the Black-Scholes option pricing model to determine the grant-date fair value of stock options. The Company records expense for forfeitures in the periods they occur.

The exercise or strike price of each option is not less than 100% of the fair market value of the Common Stock subject to the option on the date the option is granted.

The Company issues restricted stock unit awards to employees, nonemployee board members and non-employee consultants who are providing various services. The awards are valued at the market price on the date of the grant. The awards vest over the contract life and based on achievement of targeted performance milestones.

On occasion, the Company grants common stock to compensate vendors for services rendered.

Segment Disclosure

Operating segments are components of an enterprise about which separate financial information is available and is evaluated quarterly, by management, namely the Chief Operating Decision Maker (“CODM”) of an organization, in order to determine operating and resource allocation decisions. By the definition, the Company has identified Brent Ness, Chief Executive Officer, as the CODM.

The Company operates and reports in one segment (“Nociscan segment”) related to the delivery of Nociscan reports. The Company generates revenues, earnings, net income (loss), and cash flows through the single segment by collecting fees from our clients for providing Nociscan reports.

The Company believes that this structure reflects its current operational and financial management, and that it provides the best structure for the Company to focus on growth opportunities while maintaining financial responsibility.

The results of the reportable segment is derived directly from the Company’s management reporting system. The results are based on the Company’s method of internal reporting and are not necessarily in conformity with accounting principles generally accepted in the United States. Management measures the performance of the segment on several metrics, including contribution income (loss). Segment contribution income (loss) includes all product line segment revenue less the related costs of sales, research and development and sales and marketing costs. Contribution income (loss) is used, in part, to evaluate the performance of, and allocate resources to, the segment.

Financial information and annual operating plans and forecasts are prepared and reviewed by the CODM at a segment level. The CODM assesses performance for the Nociscan segment and decides how to better allocate resources based on the segment strategy and net income (losses) that are reported on the Statements of Operations. The Company’s objective in making resource allocation decisions is to optimize the financial results. The accounting policies of our Nociscan segment are the same as those described in the summary of significant accounting policies herein.

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period to comply with certain new or revised accounting standards that have different effective dates for public and private companies.

NOTE 3: FAIR VALUE MEASUREMENTS

The Company measures certain financial assets and liabilities at fair value on a recurring basis in accordance with ASC 820, Fair Value Measurement. ASC 820 establishes a three-level hierarchy for fair value measurements based on the transparency of inputs used in valuation techniques. The hierarchy prioritizes observable inputs and minimized the use of unobservable inputs.

	·	Level 1: Quoted prices in active markets for identical assets or liabilities
	·	Level 2: Observable inputs other than quoted prices included in Level 1
	·	Level 3: Significant unobservable inputs

The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis:


	Fair value measured as of June 30, 2026
	Fair value on		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
	June 30, 2026		(Level 1)		(Level 2)		(Level 3)
Assets
Money market funds	$	15,707,747	$	15,707,747	$	–	$	–

Liabilities
Warrant liability	$	45	$	–	$	–	$	45

There were no transfers between Level 1, 2, and 3 during the six months ended June 30, 2026.

The following table presents changes in Level 3 liabilities measures at fair value for the six months ended June 30, 2026. Both observable and unobservable inputs were used to determine the fair value positions that the Company has classified within the Level 3 category.


	Warrant Liability
Balance - January 1, 2026	$	63
Change in fair value		(18	)
Balance - June 30, 2026	$	45

The fair value of the warrants to purchase shares of common stock was estimated using the following assumptions:

As of Issuance Warrant Liability

As of June 30, 2026
Warrant Liability
(1)

As of December 31, 2025
Warrant Liability
(2)

Strike Price

10.02

–

Contractual term (years)

5.0

–

Volatility (annual)

80.0%

–

Risk-free rate

3.5%

–

Floor Financing price

8.00

–

*(1)*	The warrant liability as of June 30, 2026 was measured at fair value based on the Company’s closing market price of $2.88 per share as of that date, applied to the number of warrant shares outstanding.

*(2)*	The warrant liability as of December 31, 2025 was measured at fair value based on the Company’s closing market price of $4.60 per share as of that date, applied to the number of warrant shares outstanding.

NOTE 4. RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Recently Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances income tax disclosure requirements, including disaggregation of income taxes paid by jurisdiction. The Company adopted ASU 2023-09 effective January 1, 2025 on a retrospective basis. The adoption did not have a material impact on the Company’s condensed financial statements, as the guidance relates to disclosures only.

In January 2026, the Company adopted ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, and ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The adoption of these standards did not have a material impact on the Company’s condensed financial statements.

Accounting Pronouncements Not Yet Effective

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 expands disclosure requirements for certain expenses. In January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its condensed financial statement disclosures.

In 2025, the FASB issued ASU 2025-12, Codification Improvements, which provides technical corrections and clarifications. The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on its condensed financial statements.

In 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Improvements to Interim Disclosure Requirements, which clarifies certain interim reporting requirements. The guidance is effective for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact of this standard on its interim financial statement disclosures.

No other recently issued accounting pronouncements are expected to have a material impact on the Company’s condensed financial statements.

NOTE 5. REVENUE

Contract Balances

The timing of revenue recognition, billings, and cash collections may result in trade, unbilled receivables, and deferred revenues on the balance sheets. At times, revenue recognition may occur before the billing, resulting in an unbilled receivable, which would represent a contract asset. The contract asset would be a component of accounts receivable and other assets for the current and non-current portions, respectively. In the event the Company receives advances or deposits from customers before revenue is recognized, this would result in a contract liability.

As of June 30, 2026, the Company had no contract assets. The Company's contract liability (deferred revenue) balance was $13,597 as of June 30, 2026 and $1,900 as of December 31, 2025.

NOTE 6. SUPPLEMENTAL FINANCIAL INFORMATION

Balance Sheets

Accounts receivable, net

Schedule of accounts receivable
	June 30, 2026			December 31, 2025
Accounts receivable	$	34,531		$	35,921
Less: Allowance for credit losses		(6,359	)		(6,241	)
	$	28,172		$	29,680

Prepaids expenses:

Schedule of prepaid expenses
	June 30, 2026		December 31, 2025
Prepaid D&O Insurance	$	225,000	$	121,458
Prepaid Health Insurance		30,862		23,682
Prepaid Other Insurance		13,058		16,947
Prepaid Clinical		43,828		27,328
Prepaid Subscription Annual Fees		32,945		24,632
Prepaid NASDAQ Annual Fees		28,000		–
Prepaid Royalties		29,167		54,167
Prepaid Consulting		29,760		6,700
Prepaid – other		12,954		41,321
	$	445,574	$	316,235

Accounts payable:

Schedule of accounts payable
	June 30, 2026		December 31, 2025
Accounts payable	$	702,483	$	324,470
Credit cards payable		2,496		8,492
	$	704,979	$	332,962

Accrued and other liabilities:


	June 30, 2026		December 31, 2025
Accrued bonus	$	92,641	$	393,361
Accrued audit and legal expenses		78,559		10,000
Accrued board compensation		66,250		66,250
Accrued Delaware state taxes		50,000		–
Other accrued expenses and liabilities		44,460		34,651
	$	331,910	$	504,262

NOTE 7. LEASES

The Company did not enter into any lease arrangements during the six months ended June 30, 2026 and 2025 and had no lease liabilities as of June 30, 2026 and December 31, 2025.

NOTE 8. PROPERTY, PLANT, AND EQUIPMENT

The Company’s property and equipment are as follows:

Schedule of property and equipment
	June 30, 2026			December 31, 2025
Computer and office equipment	$	27,738		$	25,930
Less: Accumulated depreciation		(4,505	)		(1,761	)
Property and equipment, net	$	23,233		$	24,169

Depreciation expense related to property and equipment were $1,447 and $466 for the three months ended June 30, 2026 and 2025, respectively. Depreciation expense related to property and equipment were $2,744 and $871 for the six months ended June 30, 2026 and 2025, respectively.

Future depreciation and amortization of property, equipment, and software is as follows:


2026 (remainder of 2026)	$	2,894
2027		5,789
2028		5,789
2029		5,252
2030		3,509
Total	$	23,233

NOTE 9. INTANGIBLE ASSETS

The Company’s intangible assets are as follows:

Schedule of intangible assets
	June 30, 2026 (Unaudited)		December 31, 2025
Patents and licenses	$	2,857,162	$	2,766,447
Other		5,017