NeuroOne Medical Technologies (NMTC) - 2025 Q2 - Quarterly Report

PART 1 – FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed financial statements for Q1 2025, highlighting a significant reduction in net loss and improved liquidity Condensed Balance Sheets The condensed balance sheet as of March 31, 2025, shows decreased assets and liabilities, primarily due to reduced inventory and warrant liability Condensed Balance Sheet Comparison (in thousands) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,320 | $1,460 | | Total current assets | $3,754 | $4,631 | | Total assets | $4,457 | $5,370 | | Liabilities & Equity | | | | Total current liabilities | $1,763 | $2,213 | | Warrant liability | $1,361 | $2,140 | | Total liabilities | $3,331 | $4,548 | | Total stockholders' equity | $1,126 | $822 | Condensed Statements of Operations Net loss for the six months ended March 31, 2025, significantly improved, driven by new license revenue and higher product gross profit Statement of Operations Summary (Six Months Ended March 31) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Product Revenue | $4,660,717 | $2,354,943 | | Product Gross Profit | $2,697,950 | $656,733 | | License Revenue | $3,000,000 | $0 | | Loss from Operations | ($968,809) | ($6,276,573) | | Net Loss | ($485,285) | ($6,199,990) | | Net Loss Per Share | ($0.02) | ($0.25) | Condensed Statements of Changes in Stockholders' Equity Stockholders' equity increased from September 30, 2024, to March 31, 2025, driven by stock-based compensation and equity financings - Total stockholders' equity increased from $822,013 on September 30, 2024, to $1,125,858 on March 31, 2025[12] Condensed Statements of Cash Flows Net cash provided by operating activities significantly improved for the six months ended March 31, 2025, driven by a smaller net loss and working capital changes Cash Flow Summary (Six Months Ended March 31) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $151,905 | ($5,984,554) | | Net cash used in investing activities | ($27,587) | ($68,491) | | Net cash (used in) provided by financing activities | ($264,109) | $3,165,207 | | Net decrease in cash | ($139,791) | ($2,887,838) | Notes to Condensed Financial Statements The notes provide critical context, detailing business focus, improved liquidity from recent financing, the Zimmer agreement, and revenue concentration - The company is focused on developing and commercializing thin film electrode technology for diagnosing and treating neurological disorders. It has received FDA 510(k) clearance for three devices: Evo cortical electrode, Evo sEEG electrode, and the OneRF ablation system[16][17] - As of March 31, 2025, the company had $1.3 million in cash. Subsequent to the quarter end, it received net proceeds of approximately $8.2 million from the April 2025 Financing. Management believes this is sufficient to fund operations for at least twelve months[24][125] - In October 2024, the company amended its distribution agreement with Zimmer, granting an exclusive license for its OneRF Ablation System for an upfront payment of $3.0 million. This amount was recognized as license revenue in the period[82][89] - For the three and six months ended March 31, 2025, one customer (Zimmer) accounted for 100% and 94% of product revenue, respectively[109] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting improved revenue and profitability for the six months ended March 31, 2025, attributing changes to the Zimmer agreement and recent financing Overview NeuroOne is a medical technology company focused on thin film electrode technology, with FDA-cleared devices and an accumulated deficit of $75.5 million - The company develops and commercializes thin film electrode technology for cEEG, sEEG, spinal cord stimulation, and other neurological applications[133] - Three devices have received FDA 510(k) clearance: Evo cortical electrode, Evo sEEG electrode, and the OneRF ablation system[134] - As of March 31, 2025, the company had an accumulated deficit of $75.5 million[135] Recent Developments Recent developments include an April 2025 FDA 510(k) submission, an $8.2 million financing, and the October 2024 Zimmer agreement with a $3.0 million upfront payment - On April 22, 2025, the company filed a 510(k) submission to the FDA for its OneRF® Trigeminal Nerve Ablation System[139] - In April 2025, the company raised approximately $8.2 million in net proceeds from an underwritten public offering[140] - The amended distribution agreement with Zimmer in October 2024 included a $3.0 million upfront payment for the OneRF license and potential for a $1.0 million sales milestone[141][143] Results of Operations This section provides a comparative analysis of financial results, showing increased product revenue, improved gross margin, and a reduced net loss for the six months ended March 31, 2025 Comparison of Three Months Ended March 31 | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Product Revenue | $1,386,550 | $1,377,294 | $9,256 | | Product Gross Profit | $771,061 | $390,419 | $380,642 | | Loss from Operations | ($2,680,016) | ($2,886,098) | $206,082 | | Net Loss | ($2,270,607) | ($2,855,090) | $584,483 | Comparison of Six Months Ended March 31 | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Product Revenue | $4,660,717 | $2,354,943 | $2,305,774 | | License Revenue | $3,000,000 | $0 | $3,000,000 | | Loss from Operations | ($968,809) | ($6,276,573) | $5,307,764 | | Net Loss | ($485,285) | ($6,199,990) | $5,714,705 | - The increase in gross profit percentage for both the three and six-month periods was largely due to higher-margin OneRF Products being sold under the amended Zimmer agreement[160][168] Liquidity and Capital Resources Liquidity, primarily from equity financings and revenues, was significantly bolstered by an April 2025 financing of $8.2 million, expected to fund operations for at least twelve months - As of March 31, 2025, cash and cash equivalents were $1.3 million. In April 2025, the company received net proceeds of approximately $8.2 million from a financing[176][179] - Management believes current cash, anticipated revenues, and forecasted operating expense reductions will be sufficient to fund planned expenditures for at least twelve months from the issuance date of the financial statements[191] Cash Flow Summary (Six Months Ended March 31) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $151,905 | ($5,984,554) | | Net cash used in investing activities | ($27,587) | ($68,491) | | Net cash (used in) provided by financing activities | ($264,109) | $3,165,207 | Critical Accounting Estimates Management identifies critical accounting estimates requiring subjective judgments, including revenue recognition, stock-based compensation, warrant liability, income tax assets, and contingencies - Critical accounting estimates include Revenue Recognition, Stock-based Compensation, Fair Value of Warrant Liability, Income Tax Assets and Liabilities, and Contingencies[204][205][207][208][209] Item 3. Quantitative and Qualitative Disclosures About Market Risk This item is not applicable as the company qualifies as a smaller reporting company - Not applicable for smaller reporting companies[211] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective as of the end of the period covered by the report[212] - There were no material changes in internal control over financial reporting during the quarter[213] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any legal proceedings likely to have a material adverse effect on its business - The company is not currently a party to any legal proceedings that are likely to have a material adverse effect on its business[215] Item 1A. Risk Factors This section refers to the comprehensive risk factors detailed in the company's Annual Report on Form 10-K for FY2024 - The report refers to the risk factors detailed in the Company's Annual Report on Form 10-K for the year ended September 30, 2024[216] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None[217] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[218] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable to our Company[219] Item 5. Other Information No Rule 10b5-1 trading plans were adopted or terminated by directors or Section 16 officers during the three months ended March 31, 2025 - During the three months ended March 31, 2025, none of the Company's directors or Section 16 officers adopted or terminated any Rule 10b5-1 trading plan[222] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, incentive plans, and officer certifications - A list of exhibits filed with the report is provided, including corporate governance documents, incentive plans, and officer certifications[223]