Financial results to be released before market open; Conference call to be conducted at 9:00 a.m. Eastern TimeCARMEL, Ind., Nov. 04, 2025 (GLOBE NEWSWIRE) -- NeurAxis, Inc. (“NeurAxis,” or the “Company”) (NYSE American: NRXS), a medical technology company commercializing neuromodulation therapies addressing chronic and debilitating conditions in children and adults, will report financial results for its third quarter 2025, for the period ended September 30, 2025, on Tuesday, November 11, 2025, before market ...

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Core Insights - NeurAxis, Inc. has received FDA 510(k) clearance for its percutaneous electrical nerve field stimulation (PENFS) technology to treat functional abdominal pain (FAP) associated with functional dyspepsia (FD) and related nausea in patients aged 8 years and older, marking a historic milestone as the first FDA clearance for a treatment specifically addressing functional dyspepsia in adults [1][2] Company Overview - NeurAxis is a medical technology company focused on neuromodulation therapies for chronic and debilitating conditions in both children and adults, with a commitment to advancing science and evidence-based medicine [3] Market Expansion - The FDA clearance significantly expands NeurAxis's total addressable market by including patients aged 8 years and older, which is expected to drive substantial revenue growth in the gastrointestinal (GI) space [2][5] - The upcoming January 1, 2026, Category I CPT Code for PENFS procedures will apply to this new adult indication, facilitating broader clinical impact [2][5] Clinical Significance - Functional dyspepsia can lead to severe abdominal pain and nausea, significantly impacting quality of life, and the approval of PENFS technology provides a new treatment option for adult patients who previously had limited options [2]

Summary of NeurAxis Conference Call Company Overview - NeurAxis is a growth-stage medtech company focused on pediatric gastrointestinal (GI) conditions, specifically functional abdominal pain and functional dyspepsia in children aged 8 to 21 years [4][9] - The company has two FDA indications: one for functional abdominal pain and another for functional dyspepsia, which includes nausea symptoms [4][9] - The technology used is a percutaneous electrical nerve field stimulator, which operates for four weeks with significant data supporting its efficacy at six and twelve months post-treatment [5][6] Unmet Medical Need - There is a significant unmet need in treating functional abdominal pain and functional dyspepsia, with no FDA-approved treatments available for 30 to 50 years [8][9] - Current treatment options include medications with FDA black box warnings, which are often undesirable for both parents and physicians [8][9] - Approximately 6 million children in the U.S. suffer from functional abdominal pain, with 600,000 being severely affected, missing three or more days of school per week [10][11] Market Opportunity - The total addressable market for NeurAxis is estimated at $5 billion, based on a treatment cost of approximately $5,000 per patient for the 1 million debilitated children [11] - The company has seen organic growth of about 40% per quarter, but penetration remains low at around 0.2% to 1% [30][31] Challenges and Solutions - Major challenges include lack of insurance coverage and reimbursement for the technology, which hampers scaling efforts [13][14] - A Category I CPT code is set to take effect on January 1, 2026, which is expected to streamline billing and improve reimbursement for physicians [17][18] - The proposed RVU for the CPT code is 1.46, which is viewed positively by physicians [17] Insurance Coverage and Guidelines - NeurAxis has made progress with insurance coverage, with approximately 55 million covered lives under various plans, including strong Blue Cross Blue Shield policies [23] - The publication of guidelines by NASPGHAN recommending IB-Stim as a treatment has bolstered the company's position in discussions with payers [25][26] Commercial Strategy - NeurAxis is building a commercial infrastructure to drive utilization, including hiring experienced personnel and leveraging key opinion leaders (KOLs) for outreach [32][33] - The company aims to establish IB-Stim clinic days in children's hospitals to facilitate treatment for multiple patients [35][36] - The focus is on increasing penetration in existing accounts and ensuring that hospitals are prepared for the launch of the CPT code [37][41] Financial Outlook - The company anticipates that the implementation of the Category I CPT code and improved insurance coverage will significantly enhance revenue potential [41][44] - There is cautious optimism regarding the speed of uptake post-launch, with expectations for a substantial increase in patient treatment [44] Conclusion - NeurAxis is positioned for growth with the upcoming CPT code and increasing insurance coverage, aiming to address a critical unmet need in pediatric GI treatment [45]

Core Viewpoint - NeurAxis, Inc. is actively engaging with investors through a webcast presentation and one-on-one meetings at the Lytham Partners Fall 2025 Investor Conference, highlighting its focus on neuromodulation therapies for chronic conditions [1][2][3]. Company Overview - NeurAxis, Inc. specializes in medical technology, particularly in neuromodulation therapies aimed at treating chronic and debilitating conditions in both children and adults [4]. - The company is advancing its proprietary IB-Stim™ therapy, which utilizes Percutaneous Electrical Nerve Field Stimulation (PENFS) technology, and is FDA cleared for treating functional abdominal pain associated with irritable bowel syndrome (IBS) in adolescents aged 8-21 years [4]. - NeurAxis is conducting additional clinical trials for PENFS targeting various pediatric and adult conditions with significant unmet healthcare needs [4].

Core Viewpoint - NeurAxis, Inc. (NRXS) reported a mixed performance in Q2 2025, with revenue growth but continued net losses and margin compression, while management anticipates improved financial health with upcoming insurance coverage changes and product approvals [1][2][5][6]. Revenue and Earnings Performance - NeurAxis reported Q2 2025 revenues of $0.9 million, a 46.2% increase from $0.6 million in Q2 2024, driven by a 58% increase in unit sales due to greater adoption of the IB-Stim device [2] - Gross margin decreased to 83.6% from 88% year-over-year, attributed to deeper discounting for uninsured patients and expired inventory [2] Expense Management - Operating expenses fell by 10.2% to $2.5 million from $2.7 million, primarily due to the absence of one-time costs and lower investor relations and insurance costs [3] - The operating loss narrowed to $1.7 million from $2.2 million a year earlier, while the net loss was $1.7 million, or $0.22 per share, compared to a $2.9 million loss, or $0.42 per share, in Q2 2024 [3] Cash and Liquidity - NeurAxis ended the quarter with $5.9 million in cash, supported by a $5 million equity financing round and $1 million from warrant exercises [4] - Cash used in operations was $3.1 million for the first half of 2025, up from $2.9 million in the same period last year [4] Future Outlook - Management expects gross margins to recover as more patients gain access through commercial reimbursement with the new permanent Category I CPT code effective January 1, 2026 [5] - CEO Brian Carrico indicated that national insurance coverage and inclusion of IB-Stim in clinical guidelines will enhance patient access and revenue growth [6] Regulatory Developments - NeurAxis received FDA clearance to extend IB-Stim's indication to treat pediatric functional dyspepsia, nearly doubling its addressable market [7] - The company also secured FDA clearance for the Rectal Expulsion Device (RED) and terminated its NSS-2 Bridge license with Masimo, regaining associated intellectual property [12][13] Guidance and Expectations - Although no explicit numerical guidance was provided, executives expressed confidence in achieving breakeven in 2026, contingent on broader payer adoption of IB-Stim [10] - Management anticipates continued revenue growth in the second half of 2025, supported by further insurance policy adoption and early traction for RED [11]

Financial Data and Key Metrics Changes - Revenues for Q2 2025 were $894,000, up 46% compared to $612,000 in Q2 2024, marking the fourth consecutive quarter of double-digit growth [27] - Revenue for the six months ended June 30, 2025, increased to $1,800,000, up 42% from $1,300,000 for the same period in 2024 [27] - Operating loss in 2025 was $1,700,000, a decrease of 22% compared to a $2,200,000 loss in 2024 [33] - Net loss in 2025 was $1,700,000, down 42% from $2,900,000 in 2024 [34] Business Line Data and Key Metrics Changes - Unit sales increased approximately 5853% for the three and six months ended June 30, 2025, due to volume growth from patients with health insurance coverage and the company's financial assistance program [27] - Average selling prices for patients receiving IV stem through financial assistance are about 65% below the list price [9] Market Data and Key Metrics Changes - Approximately 53 million covered lives have been reached for medical policy coverage, which is seen as a key driver for revenue growth [12] - The company expects revenue growth to accelerate as payer medical policy coverage increases and the new category one CPT code becomes effective on January 1, 2026 [22] Company Strategy and Development Direction - The company is focused on securing broad medical policy coverage and advancing disciplined commercial execution to drive utilization and scale [25] - The introduction of the category one CPT code is expected to facilitate easier billing and reimbursement, significantly impacting revenue potential [19] - The company is also advancing the RED product line, which is in the soft launch phase, with plans for a hard launch [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the commercialization strategies and the expected revenue growth due to recent milestones, including FDA indication expansion and published clinical practice guidelines [7][14] - The management highlighted that the guidelines published by academic societies are crucial for gaining insurance coverage and improving treatment access [16] Other Important Information - The gross margin for 2025 was 83.6%, down from 88% in 2024, primarily due to higher discounting in the financial assistance program [28] - Cash on hand as of June 30, 2025, was $6,000,000, with the company having secured $5,000,000 through an equity financing round [34] Q&A Session Summary Question: Perceptions from larger insurance plans post-guideline publishing - Management noted positive responses from insurance plans, with some agreeing to interim reviews due to the guidelines, indicating favorable perceptions [40][41] Question: Goals for coverage and prior authorization expectations - Management expects some medication requirements to be removed, allowing for earlier use of IV stem treatments, although this will be a gradual process [44][45] Question: Salesforce expansion triggers - The urgency for payer policy coverage is aligned with the urgency on the commercial side, with plans to expand the sales force as insurance coverage increases [48][49] Question: Discount rates and cash pay devices - Management clarified that 70% of patients initially face a "no auth required" response, limiting treatment options, and discussed the average selling price for patients receiving financial assistance [54][58] Question: Approval for adults to use the IV stem device - The company is in discussions with the FDA regarding adult usage and expects to have an answer by the Q4 call [65] Question: Satisfaction with RVUs and reimbursements - Management expressed satisfaction with the RVU assignment of 1.46 and noted that reimbursement values are favorable, exceeding the cost of the device [70][71] Question: General and administrative expenses and leverage - Management discussed achieving operating expense leverage while continuing to invest in growth areas such as sales and R&D [73][74] Question: Current cash balance and future outlook - The current cash position is sufficient to support operations into 2026, with expectations for improved insurance coverage positively impacting liquidity [78]

Financial Performance - Itaúsa achieved a net income of R$ 8.0 billion in 1H25, a 10% increase compared to 1H24[14] - Recurring net income reached R$ 7.9 billion in 1H25, also a 10% increase year-over-year[14] - Shareholders' equity increased by 7% to R$ 89.6 billion as of June 30, 2025, compared to June 30, 2024[16] - Portfolio market value grew by 24% to R$ 159.3 billion as of June 30, 2025, compared to June 30, 2024[16] - Recurring and Adjusted EBITDA increased 31% to R$ 1.0 billion[31] Dividends - Itaúsa declared R$ 2.7 billion of dividends in 1H25 (net)[70] - Payment of R$ 2.3 billion in Interest on Capital (IOC) (net)[65] Macroeconomic Context - Brazilian GDP is projected to grow by 2.2% in 2025[10] - The Selic rate is expected to be 15.00% p.y. in 2025[10] - IPCA is forecasted at 5.2% in 2025[10] Liability Management - Gross debt reduced to R$ 3.6 billion[52] - Net Debt R$ 587 million[58]

Core Insights - NeurAxis, Inc. reported strong revenue growth in Q2 2025, with revenues increasing 46% year-over-year to $894 thousand, compared to $612 thousand in Q2 2024 [8][9] - The company achieved significant operational milestones, including FDA clearance for expanded indications and a new CPT code for reimbursement, which are expected to drive future revenue growth [6][7] Financial Highlights - Revenues for Q2 2025 were $894 thousand, a 46% increase from $612 thousand in Q2 2024 [8][9] - Operating expenses decreased by 10% year-over-year to $2.5 million in Q2 2025 from $2.7 million in Q2 2024 [11] - Operating loss improved by 22% to $1.7 million in Q2 2025 from $2.2 million in Q2 2024 [12] - Net loss decreased by 42% to $1.7 million in Q2 2025 from $2.9 million in Q2 2024 [13] - Cash balance as of June 30, 2025, was $6 million, bolstered by a $5 million equity financing round [14] Operational Highlights - The company is approaching a major inflection point with national insurance coverage, as a new CPT code for IB-Stim is set to take effect on January 1, 2026 [6] - NeurAxis secured FDA clearance to expand IB-Stim's indication to include pediatric Functional Dyspepsia, significantly increasing its total addressable market [7] - The company expanded its total covered lives to approximately 53 million [8] Management Commentary - CEO Brian Carrico expressed optimism about the company's trajectory, highlighting strong revenue growth and the focus on expanding insurance coverage and commercializing IB-Stim [4] - The company is confident in achieving breakeven in 2026 based on strong top-line momentum and strategic positioning [9]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I) This section presents NeurAxis, Inc.'s unaudited condensed financial statements and management's discussion for H1 2025 [ITEM 1: FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201%3A%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed financial statements of NeurAxis, Inc. and related notes for H1 2025 and FY 2024 [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20%28Unaudited%29%20and%20December%2031%2C%202024) This section details the company's financial position, including assets, liabilities, and equity, for H1 2025 and FY 2024 Condensed Balance Sheet Highlights | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | Change (USD) | % Change | | :-------------------------- | :-------------- | :---------------- | :----- | :------- | | Total Assets | $7,087,999 | $4,757,572 | $2,330,427 | 49.0% | | Total Liabilities | $2,834,705 | $2,689,824 | $144,881 | 5.4% | | Total Stockholders' Equity | $4,253,294 | $2,067,748 | $2,185,546 | 105.7% | | Cash and cash equivalents | $5,988,456 | $3,696,870 | $2,291,586 | 62.0% | [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20%28Unaudited%29) This section outlines the company's financial performance, including net sales, gross profit, and net loss for Q2 and H1 2025 and 2024 Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | Change (USD) | % Change | | :-------------------------- | :------------ | :------------ | :------------ | :------- | | Net Sales | $894,086 | $611,500 | $282,586 | 46.2% | | Gross Profit | $747,443 | $538,042 | $209,401 | 38.9% | | Operating Loss | $(1,717,858) | $(2,206,832) | $488,974 | -22.2% | | Net Loss | $(1,690,418) | $(2,917,710) | $1,227,292 | -42.1% | | Basic and diluted loss per share | $(0.22) | $(0.42) | $0.20 | -47.6% | Statements of Operations Highlights (Six Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | Change (USD) | % Change | | :-------------------------- | :------------ | :------------ | :------------ | :------- | | Net Sales | $1,789,741 | $1,258,135 | $531,606 | 42.3% | | Gross Profit | $1,503,623 | $1,109,596 | $394,027 | 35.5% | | Operating Loss | $(4,012,955) | $(4,038,952) | $25,997 | -0.6% | | Net Loss | $(3,969,102) | $(5,038,361) | $1,069,259 | -21.2% | | Basic and diluted loss per share | $(0.56) | $(0.73) | $0.17 | -23.3% | [Condensed Statements of Stockholders' Equity (Deficit)](index=5&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity%20(Deficit)%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20%28Unaudited%29) This section details changes in stockholders' equity, including common stock issuances, warrant exercises, and net loss for H1 2025 and 2024 Stockholders' Equity (Deficit) Changes (Six Months Ended June 30, 2025) | Item | Amount (USD) | | :------------------------------------------------ | :------------- | | Balances at January 1, 2025 | $2,067,748 | | Warrants exercised | $1,002,991 | | Common stock issued from agreements | $112,493 | | Vesting of restricted stock awards | $529,964 | | Issuance of common stock pursuant to shelf registration statement | $4,999,999 | | Offering costs | $(490,799) | | Net loss | $(3,969,102) | | Balances at June 30, 2025 | $4,253,294 | - The number of common shares outstanding increased significantly from **6,990,227** as of December 31, 2024, to **9,858,716** as of June 30, 2025, primarily due to the issuance of common stock through a shelf registration statement and warrant exercises[7](index=7&type=chunk)[12](index=12&type=chunk) [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20%28Unaudited%29) This section summarizes cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 (USD) | 2024 (USD) | Change (USD) | % Change | | :-------------------------- | :------------ | :------------ | :------------ | :------- | | Net cash used in operating activities | $(3,071,145) | $(2,947,295) | $(123,850) | 4.2% | | Net cash used in investing activities | $(25,288) | $(23,408) | $(1,880) | 8.0% | | Net cash provided by financing activities | $5,388,019 | $4,657,417 | $730,602 | 15.7% | | Net Increase in Cash and Cash Equivalents | $2,291,586 | $1,686,714 | $604,872 | 35.9% | | Cash and Cash Equivalents at End of Period | $5,988,456 | $1,765,274 | $4,223,182 | 239.2% | - The increase in cash from financing activities in 2025 was primarily driven by proceeds from the issuance of common stock (**$4,999,999**) and exercised warrants (**$1,002,991**), contrasting with 2024's primary source being convertible notes[13](index=13&type=chunk)[151](index=151&type=chunk) [Notes to Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements%20%28Unaudited%29) This section provides detailed explanations and disclosures supporting the condensed financial statements [1. Basis of Presentation, Organization and Other Matters](index=10&type=section&id=1.%20Basis%20of%20Presentation%2C%20Organization%20and%20Other%20Matters) This note describes the company's business, medical devices, and the basis for preparing interim financial statements - NeurAxis, Inc. specializes in medical neuromodulation devices, with four FDA-cleared products: IB-STIM, Rectal Expulsion Device (RED), NSS-2 Bridge (license terminated July 1, 2025), and the original 510(K) Electroacupuncture Device (NeuroStim, now for research only)[15](index=15&type=chunk)[17](index=17&type=chunk)[116](index=116&type=chunk) - The company's financial statements are prepared in accordance with U.S. GAAP for interim reporting, and the unaudited interim results are not necessarily indicative of future performance[16](index=16&type=chunk) [2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines key accounting principles, estimates, and judgments, including revenue recognition and going concern - Management makes estimates for revenue recognition, credit losses, stock-based compensation, income tax, inventory reserves, and impairment, which are subject to change[18](index=18&type=chunk)[21](index=21&type=chunk) Allowance for Credit Losses and Inventory Reserves | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------- | :-------------- | :---------------- | | Allowance for credit losses | $5,000 | $5,000 | | Inventory reserves | $17,195 | $4,454 | - The company's Level 3 financial instruments, warrant liabilities, are valued using model-based techniques with unobservable inputs, reflecting management's estimates and judgment[29](index=29&type=chunk) - Revenue is recognized when customers obtain control of goods, typically at the point of receipt, with provisions for patient assistance programs and provider rebates/credits[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk) - Substantial doubt exists about the Company's ability to continue as a going concern due to accumulated losses and negative cash flows, with future viability dependent on generating sufficient revenue and raising additional funds[48](index=48&type=chunk)[51](index=51&type=chunk) - Recently issued accounting pronouncements (ASU 2024-03 and ASU 2023-09) are not expected to have a material impact on the Company's financial statements, though they require enhanced disclosures[53](index=53&type=chunk)[54](index=54&type=chunk) [3. Related Party Transactions](index=17&type=section&id=3.%20Related%20Party%20Transactions) This note discloses transactions with related parties, including demand notes, licensing, and services - The Company has two demand notes receivable from shareholders totaling **$1,012,800** in principal, with an allowance for the entire balance due to repayment uncertainty[55](index=55&type=chunk) - An exclusive, royalty-free license for auricular patent portions is held from an LLC co-owned by the CEO and Chief Regulatory Officer, with license costs of **$1,317** incurred in H1 2025[55](index=55&type=chunk) - Sales of IB-STIM devices to a Board member for R&D totaled **$6,351** for the six months ended June 30, 2025[56](index=56&type=chunk) - Accounting and tax services from a firm previously managed by the former CFO amounted to **$31,679** for H1 2025, a decrease from **$91,168** in H1 2024[57](index=57&type=chunk) [4. Prepaids and Other Current Assets](index=18&type=section&id=4.%20Prepaids%20and%20Other%20Current%20Assets) This note details the composition of prepaid expenses and other current assets Prepaids and Other Current Assets | Item | June 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------- | :-------------- | :---------------- | | Prepaid insurance | $44,985 | $186,028 | | Prepaid software subscriptions | $176,940 | $39,834 | | Other | $148,400 | $54,505 | | Total | $370,325 | $280,367 | [5. Accrued Expenses](index=19&type=section&id=5.%20Accrued%20Expenses) This note itemizes accrued liabilities, such as compensation, litigation settlements, and legal fees Accrued Expenses | Item | June 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------- | :-------------- | :---------------- | | Compensation and benefits | $1,040,099 | $1,261,317 | | Settled litigation | $375,000 | - | | Legal fees | $107,045 | $43,891 | | Interest | $66,648 | $66,648 | | Advisory fees | - | $176,750 | | Other | $63,996 | $29,174 | | Total | $1,652,788 | $1,577,780 | [6. Notes Payable](index=19&type=section&id=6.%20Notes%20Payable) This note describes outstanding promissory notes and the conversion of convertible notes into Series B Preferred Shares - The Company had outstanding promissory notes of **$121,433** as of June 30, 2025, down from **$154,152** at December 31, 2024, including a new note for software subscription fees[60](index=60&type=chunk) - In 2024, the Company issued convertible promissory notes totaling **$4,935,000**, which mandatorily converted into **2,073,524 Series B Preferred Shares** on August 15, 2024, at a conversion price of **$2.38 per share**[61](index=61&type=chunk)[62](index=62&type=chunk)[64](index=64&type=chunk)[66](index=66&type=chunk) Interest Expense | Period | 2025 (USD) | 2024 (USD) | | :-------------------------- | :------------ | :------------ | | Three Months Ended June 30 | $(13,434) | $(80,697) | | Six Months Ended June 30 | $(15,672) | $(107,257) | [7. Leases](index=20&type=section&id=7.%20Leases) This note details the company's operating lease arrangements for office space - The Company holds operating leases for office space in Indiana, with a new lease in Carmel commencing January 1, 2024, and the Versailles lease terminated effective July 31, 2025, due to relocation[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) Operating Lease Liabilities | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Operating lease right-of-use assets | $256,656 | $284,656 | | Operating lease liabilities | $219,880 | $256,499 | | Weighted-average remaining lease term | 3.66 years | 2.75 years | [8. Common Stock and Warrants](index=21&type=section&id=8.%20Common%20Stock%20and%20Warrants) This note provides information on changes in common stock outstanding and warrant activity - Common stock outstanding increased from **6,990,227 shares** at December 31, 2024, to **9,858,716 shares** at June 30, 2025[72](index=72&type=chunk) - Key issuances in H1 2025 include **1,538,461 shares** for **$4,999,999** via a shelf registration statement, **720,359 shares** from warrant exercises, and **426,048 shares** from Series B Preferred Stock conversions[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) Warrant Activity Summary | Metric | Outstanding as of Jan 1, 2024 | Outstanding as of Dec 31, 2024 | Outstanding as of June 30, 2025 | | :-------------------------- | :---------------------------- | :----------------------------- | :------------------------------ | | Number of Warrants for Common Stock | 1,822,358 | 2,642,530 | 1,419,524 | | Weighted-Avg. Exercise Price | $4.69 | $2.41 | $2.44 | [9. Preferred Stock](index=24&type=section&id=9.%20Preferred%20Stock) This note describes Series B Preferred Stock, including its authorization, outstanding shares, and dividend rights - As of June 30, 2025, **3,896,907 shares of Series B Preferred Stock** were issued and outstanding, authorized with **5,000,000 shares**, carrying an **8.5% cumulative dividend** and **1:1 convertibility** to common stock[81](index=81&type=chunk)[84](index=84&type=chunk) - Series B Preferred Stock maintains priority preference over other capital stock classes upon liquidation, dissolution, or winding up of the Company[86](index=86&type=chunk) Undeclared Cumulative Series B Preferred Stock Dividends | Period | Amount (USD) | Per Share (USD) | | :-------------------------- | :----------- | :-------------- | | Three Months Ended June 30, 2025 | $207,465 | $0.02 | | Six Months Ended June 30, 2025 | $421,008 | $0.05 | [10. Stock-Based Compensation](index=25&type=section&id=10.%20Stock-Based%20Compensation) This note details stock-based compensation arrangements, including RSUs and stock options - The Company granted **852,214 Restricted Stock Units (RSUs)** in H1 2025, subject to a three-year cliff-vesting period, with total stock-based compensation expense related to RSUs amounting to **$278,854** for the six months ended June 30, 2025[88](index=88&type=chunk)[89](index=89&type=chunk) - As of June 30, 2025, **1,319,394 stock options** were outstanding and fully vested/exercisable, with a weighted-average exercise price of **$6.94**, and no related compensation expense recorded in H1 2025[90](index=90&type=chunk) [11. Warrant Liabilities](index=26&type=section&id=11.%20Warrant%20Liabilities) This note explains the valuation and changes in warrant liabilities using a Black-Scholes model - Warrant liabilities decreased from **$9,166** at December 31, 2024, to **$7,454** at June 30, 2025, primarily due to changes in fair value[93](index=93&type=chunk) - The fair value of warrant liabilities is computed using a Black-Scholes option-pricing model, with inputs including an exercise price of **$8.76**, expected remaining term, estimated volatility (**75.0% to 89.9%**), and risk-free interest rates (**3.80% to 4.38%**)[92](index=92&type=chunk) [12. Segment Information](index=26&type=section&id=12.%20Segment%20Information) This note clarifies the company operates as a single reportable segment, IB-STIM, and its performance evaluation - The Company operates as a single reportable segment, IB-STIM, focusing on a PENFS device for functional abdominal pain associated with irritable bowel syndrome in patients aged 8-21[94](index=94&type=chunk) - The CEO, as the Chief Operating Decision Maker (CODM), evaluates segment performance based on net sales and operating loss to allocate resources and monitor cost structure[94](index=94&type=chunk) Segment Operating Loss (Six Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | Change (USD) | % Change | | :-------------------------- | :------------ | :------------ | :------------ | :------- | | Net Revenue | $1,789,741 | $1,258,135 | $531,606 | 42.3% | | Gross Profit | $1,503,623 | $1,109,596 | $394,027 | 35.5% | | Segment Operating Loss | $(4,012,955) | $(4,038,952) | $25,997 | -0.6% | [13. Settled Litigation](index=27&type=section&id=13.%20Settled%20Litigation) This note provides details on a settled lawsuit, including the settlement amount and financial impact - A lawsuit initiated in 2019 by Ritu Bhambhani, M.D., against the Company was dismissed by the Court in 2022, and the plaintiff's appeal was denied by the Fourth Circuit in June 2024[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - A related 2022 lawsuit by business entities owned by the same plaintiffs, alleging RICO Act violations and misrepresentation regarding NeuroStim device billing, resulted in a tentative **$750,000 settlement** executed on May 15, 2025, payable in 12 monthly installments starting January 2026[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) - The Company recorded a charge of **$630,568** for the six months ended June 30, 2025, related to the settlement, with **$375,000** accrued as current expenses and **$267,540** as non-current liabilities[103](index=103&type=chunk) [14. Commitments and Contingencies](index=28&type=section&id=14.%20Commitments%20and%20Contingencies) This note outlines the company's various contractual commitments and potential litigation - The Company has a manufacturing services agreement for its IB-STIM device, which automatically renews annually[104](index=104&type=chunk) - An advisory agreement for debt, equity, and public securities market services was terminated on December 31, 2024, with a payment of **$180,000** for services rendered in Q1 2025[105](index=105&type=chunk) - Settlement agreements in 2024 included resolving a convertible note dispute for **$230,824** (paid in common shares) and settling claims with pre-IPO Series A Preferred Stock shareholders for **$286,458** (paid in common shares) and an additional **$290,171** accrued[106](index=106&type=chunk)[107](index=107&type=chunk) - Executive employment agreements include provisions for special bonuses contingent on stock option exercise and a successful IPO, totaling **$14,821,830**, to be recorded when paid[109](index=109&type=chunk)[110](index=110&type=chunk)[112](index=112&type=chunk) - The Company is involved in threatened litigation regarding a patent interest claim valued at **$2,000,000**, which it intends to vigorously defend[115](index=115&type=chunk) [15. Subsequent Events](index=30&type=section&id=15.%20Subsequent%20Events) This note discloses significant events occurring after the reporting period, such as license terminations and an ESPP - On July 1, 2025, the NSS-2 Bridge license with Masimo was terminated, allowing NeurAxis to recapture trademark and patent application rights in exchange for **$200,000** payable in two installments[116](index=116&type=chunk) - The NeurAxis, Inc. 2025 Employee Stock Purchase Plan (ESPP) was adopted on July 1, 2025, offering eligible employees a **15% discount** on common stock purchases via payroll deductions, subject to shareholder approval[117](index=117&type=chunk) [ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION](index=31&type=section&id=ITEM%202%3A%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATION) This section analyzes NeurAxis's financial performance, liquidity, and capital resources for H1 2025 compared to 2024 [Overview](index=31&type=section&id=Overview) This section introduces NeurAxis as a growth-stage neuromodulation therapy company, highlighting its financial performance and outlook - NeurAxis is a growth-stage company developing neuromodulation therapies for chronic conditions in children, with FDA-cleared IB-Stim (for IBS in children) and RED (for chronic constipation in adults) devices[120](index=120&type=chunk) - The Company incurred net losses of **$1.69 million** (Q2 2025) and **$3.97 million** (H1 2025), and expects continued losses as it pursues widespread insurance coverage for IB-Stim and FDA clearance for new indications[121](index=121&type=chunk) [Factors Affecting our Business and Results of Operations](index=31&type=section&id=Factors%20Affecting%20our%20Business%20and%20Results%20of%20Operations) This section discusses key drivers influencing revenue, gross margin, and operating expenses - Revenue is primarily from IB-Stim device sales to healthcare providers, with sales generally non-seasonal and mildly correlated with economic cycles, and the IB-Stim device sells for **$1,195**, with **3-4 devices** used per patient[122](index=122&type=chunk) - Gross margin is influenced by average selling prices, production volume, customer mix, third-party manufacturing costs, and cost-reduction strategies, with expected increases in gross profit driven by broader insurer acceptance and new product approvals[125](index=125&type=chunk) - Expenses include cost of goods sold (contract manufacturing, shipping, expired inventory), selling expenses (commissions), research and development (clinical trials for new indications), and general and administrative (wages, professional fees, facility costs)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section provides a detailed comparative analysis of net sales, gross profit, and expenses for Q2 and H1 2025 and 2024 Net Sales Performance | Period | 2025 (USD) | 2024 (USD) | Change (USD) | % Change | | :-------------------------- | :------------ | :------------ | :------------ | :------- | | Three Months Ended June 30 | $894,086 | $611,500 | $282,586 | 46.2% | | Six Months Ended June 30 | $1,789,741 | $1,258,135 | $531,606 | 42.3% | - Net sales increases were driven by volume growth from fully insured customers, financial assistance programs, and sales from the RED product launch in 2025[131](index=131&type=chunk) Gross Profit and Gross Margin Performance | Period | Gross Profit 2025 (USD) | Gross Profit 2024 (USD) | % Change Gross Profit | Gross Margin 2025 (%) | Gross Margin 2024 (%) | Change in Margin (pp) | | :-------------------------- | :---------------- | :---------------- | :-------------------- | :---------------- | :---------------- | :--------------- | | Three Months Ended June 30 | $747,443 | $538,042 | 38.9% | 83.6% | 88.0% | -4.4 pp | | Six Months Ended June 30 | $1,503,623 | $1,109,596 | 35.5% | 84.0% | 88.2% | -4.2 pp | - Gross margin decreased due to higher discounting in financial assistance programs and expired RED inventory, despite increased sales volume[132](index=132&type=chunk)[133](index=133&type=chunk) Expense Performance (Three Months Ended June 30) | Expense Category | 2025 (USD) | 2024 (USD) | Change (USD) | % Change | | :-------------------------- | :------------ | :------------ | :------------ | :------- | | Selling Expenses | $142,253 | $62,274 | $79,979 | 128.4% | | Research and Development | $58,319 | $54,312 | $4,007 | 7.4% | | General and Administrative | $2,264,729 | $2,628,288 | $(363,559) | -13.8% | Expense Performance (Six Months Ended June 30) | Expense Category | 2025 (USD) | 2024 (USD) | Change (USD) | % Change | | :-------------------------- | :------------ | :------------ | :------------ | :------- | | Selling Expenses | $276,206 | $142,304 | $133,902 | 94.1% | | Research and Development | $108,012 | $59,882 | $48,130 | 80.4% | | General and Administrative | $5,132,360 | $4,946,362 | $185,998 | 3.8% | - Selling expenses increased due to higher sales volume and a temporary commission structure[134](index=134&type=chunk) - R&D expenses rose due to medical research and RED device development[135](index=135&type=chunk) - G&A expenses decreased in Q2 2025 due to the absence of one-time costs in 2024 but increased in H1 2025 due to a lawsuit settlement and internal control enhancements[136](index=136&type=chunk)[137](index=137&type=chunk) Operating Loss and Net Loss Performance | Period | Operating Loss 2025 (USD) | Operating Loss 2024 (USD) | % Change Operating Loss | Net Loss 2025 (USD) | Net Loss 2024 (USD) | % Change Net Loss | | :-------------------------- | :------------------ | :------------------ | :---------------------- | :------------ | :------------ | :---------------- | | Three Months Ended June 30 | $(1,717,858) | $(2,206,832) | -22.2% | $(1,690,418) | $(2,917,710) | -42.1% | | Six Months Ended June 30 | $(4,012,955) | $(4,038,952) | -0.6% | $(3,969,102) | $(5,038,361) | -21.2% | - Operating loss decreased in both periods due to higher sales volume and lower G&A (Q2 2025), partially offset by lower gross margin and higher selling/R&D costs (H1 2025)[138](index=138&type=chunk)[139](index=139&type=chunk) - Net loss decreased significantly due to higher sales and the absence of one-time 2024 settlements[142](index=142&type=chunk)[143](index=143&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet financial obligations, focusing on cash, working capital, and future capital needs Liquidity and Working Capital | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------- | :-------------- | :---------------- | | Cash on hand | $5,988,456 | $3,696,870 | | Working capital surplus | $4,271,446 | $1,832,858 | - The increase in working capital was primarily due to proceeds from common stock issuance and warrant exercises in H1 2025[145](index=145&type=chunk) - Future capital requirements depend on technology development, manufacturing, marketing, patent enforcement, collaborative arrangements, and achieving widespread insurance coverage for IB-Stim[147](index=147&type=chunk) Cash Flow Activities (Six Months Ended June 30) | Activity | 2025 (USD) | 2024 (USD) | Change (USD) | % Change | | :-------------------------- | :------------ | :------------ | :------------ | :------- | | Net cash used in operating activities | $(3,071,145) | $(2,947,295) | $(123,850) | 4.2% | | Net cash used in investing activities | $(25,288) | $(23,408) | $(1,880) | 8.0% | | Net cash provided by financing activities | $5,388,019 | $4,657,417 | $730,602 | 15.7% | - Operating cash outflow increased due to higher inventory purchases and 2024 incentive program payments, partially offset by increased cash collections[149](index=149&type=chunk)[150](index=150&type=chunk) - Investing cash outflow increased due to capital expenditures for the RED device[149](index=149&type=chunk) - Financing cash inflow increased significantly from common stock issuance and warrant exercises[151](index=151&type=chunk) [ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK](index=26&type=section&id=ITEM%203%3A%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURE%20ABOUT%20MARKET%20RISK) This section states that no quantitative and qualitative disclosures about market risk are applicable to the Company - The Company has no applicable quantitative and qualitative disclosures about market risk[152](index=152&type=chunk) [ITEM 4: CONTROLS AND PROCEDURES](index=27&type=section&id=ITEM%204%3A%20CONTROLS%20AND%20PROCEDURES) This section details management's evaluation of internal control effectiveness, material weaknesses, and remediation efforts [Evaluation of Internal Control Over Financial Reporting](index=36&type=section&id=Evaluation%20Of%20Internal%20Control%20Over%20Financial%20Reporting) This section discusses management's assessment of internal controls, highlighting identified material weaknesses and remediation - Management identified material weaknesses in internal control over financial reporting as of June 30, 2025, including ineffective approval processes, inadequate contract management, misapplication of U.S. GAAP, and ineffective disclosure controls[155](index=155&type=chunk)[158](index=158&type=chunk) - Remediation efforts are underway, including hiring accounting personnel, implementing a documented internal control framework, documenting business policies, completing a formal monthly close process, and engaging a third-party firm for segregation of duties[155](index=155&type=chunk) - Remediation efforts are expected to continue through fiscal year 2025, with management committed to maintaining a strong internal control program[155](index=155&type=chunk)[156](index=156&type=chunk) [Changes in Internal Control Over Financial Reporting](index=36&type=section&id=Changes%20In%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes in internal controls over financial reporting during the quarter - Other than the described remediation efforts, there were no material changes in internal controls over financial reporting during the quarter ended June 30, 2025[157](index=157&type=chunk) [PART II - OTHER INFORMATION](index=28&type=section&id=PART%20II) This section provides additional information including legal proceedings, risk factors, equity sales, and other disclosures [ITEM 1: LEGAL PROCEEDINGS](index=28&type=section&id=ITEM%201%3A%20LEGAL%20PROCEEDINGS) This section updates on legal proceedings, including a dismissed lawsuit, a settled lawsuit, and threatened patent litigation - A lawsuit initiated by Ritu Bhambhani, M.D., against the Company was dismissed by the Court in 2022, and the plaintiff's appeal was denied by the Fourth Circuit in June 2024[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) - A related 2022 lawsuit by business entities, alleging RICO Act violations and misrepresentation, was tentatively settled for **$750,000** on May 15, 2025, payable in 12 equal monthly installments starting January 2026[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - Dr. Arturo Taca asserted a **$2,000,000** interest in the Company's U.S. Patent No. 10,413,719 in January 2024, which the Company denies and intends to vigorously defend[166](index=166&type=chunk) [ITEM 1A: RISK FACTORS](index=28&type=section&id=ITEM%201A%3A%20RISK%20FACTORS) This section refers to previously disclosed risk factors, noting no material changes since December 31, 2024 - There have been no material changes to the risk factors previously disclosed in the Form 10-K for the period ended December 31, 2024[167](index=167&type=chunk) [ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=29&type=section&id=ITEM%202%3A%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details unregistered equity sales during Q2 2025, including warrant exercises and Series B conversions - On June 30, 2025, **289,779 common shares** were issued upon warrant exercise for **$29**[168](index=168&type=chunk) - On June 9, 2025, **42,016 common shares** were issued upon conversion of Series B Preferred Stock[168](index=168&type=chunk) - On May 21, 2025, **430,580 common shares** were issued upon warrant exercise for **$1,002,963**[169](index=169&type=chunk) - On May 20, 2025, **342,016 common shares** were issued upon conversion of Series B Preferred Stock[169](index=169&type=chunk) - On May 15, 2025, **10,000 restricted stock units (RSUs)** were issued to an employee at a fair value of **$2.36 per RSU**, subject to three-year pro rata annual vesting[170](index=170&type=chunk) - These issuances were made in reliance upon exemptions provided by Section 4(a)(2) of the Securities Act, Regulation D, or Securities Act Rule 701[171](index=171&type=chunk) [ITEM 3: DEFAULTS UPON SENIOR SECURITIES](index=29&type=section&id=ITEM%203%3A%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[172](index=172&type=chunk) [ITEM 5: OTHER INFORMATION](index=29&type=section&id=ITEM%205%3A%20OTHER%20INFORMATION) This section confirms no director or officer adopted or terminated Rule 10b5-1 trading arrangements in Q2 2025 - No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[174](index=174&type=chunk) [ITEM 6: EXHIBITS](index=30&type=section&id=ITEM%206%3A%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including various agreements and certifications - Exhibits include the Settlement Agreement and Mutual Release (May 15, 2025), Form of Securities Purchase Agreement (May 22, 2025), Termination Agreement with Masimo Corporation (July 1, 2025), and the Neuraxis, Inc. 2025 Employee Stock Purchase Plan[175](index=175&type=chunk) - Certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 from the Chief Executive Officer and Chief Financial Officer are filed/furnished[175](index=175&type=chunk) [SIGNATURES](index=31&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q by authorized officers - The report is signed by Brian Carrico, Chief Executive Officer, and Timothy Henrichs, Chief Financial Officer, on August 12, 2025[178](index=178&type=chunk)