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What changed in NEUROONE MEDICAL TECHNOLOGIES Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NEUROONE MEDICAL TECHNOLOGIES Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+429 added−409 removedSource: 10-K (2024-12-17) vs 10-K (2023-12-15)

Top changes in NEUROONE MEDICAL TECHNOLOGIES Corp's 2024 10-K

429 paragraphs added · 409 removed · 304 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

121 edited+56 added−50 removed154 unchanged
Biggest changePatents As of September 30, 2023, our patent estate consists of three issued United States patents licensed from WARF covering a neural probe array and thin-film micro electrode array and method, a U.S. patent issued in October 2022 and a pending European patent application filed by us and published in 2020 relating to improved neural depth electrodes, a pending U.S. patent application filed by us and published in 2020 relating to agent-delivering neural electrodes in which a Notice of Allowance was issued in August 2023 (along with a second pending U.S. patent application filed in 2023 relating to the same technology), pending U.S. and European patent applications published in 2020 relating to minimally invasive electrodes (with a Notice of Allowance issued in September 2023 in the U.S. application), pending U.S. and European patent applications published in 2021 relating to spinal cord stimulation systems and devices (with a Notice of Allowance issued in October 2023 in the U.S. application), pending U.S. and European patent applications published in 2022 relating to methods of making electrode probes, a pending U.S. patent application (and corresponding PCT application) published in 2023 relating to devices having temperature sensors, a pending U.S. patent application (and corresponding PCT application) filed in 2023 relating to deformable spinal cord stimulation devices, a pending U.S. patent application (and corresponding PCT application) filed in 2023 relating to spinal cord stimulation device implantation methods, and a pending U.S. patent application (and corresponding PCT application) filed in 2023 relating to ablation probe and temperature sensing device systems.
Biggest changePatents As of September 30, 2024, our patent estate consists of three issued United States patents licensed from WARF covering a neural probe array and thin-film micro electrode array and method, a U.S. patent issued in October 2022 relating to improved neural depth electrodes, a U.S. patent issued in January 2024 and a pending U.S. patent application relating to agent-delivering neural electrodes, a U.S. patent issued in January 2024 and a pending European patent application published in 2020 relating to minimally invasive electrodes, a U.S. patent issued in February 2024 and a pending European patent application published in 2021 relating to spinal cord stimulation systems and devices, pending U.S. and European patent applications published in 2022 relating to methods of making electrode probes, pending U.S. and European patent applications published in 2023 relating to devices having temperature sensors, pending U.S. and PCT patent applications published in 2024 relating to deformable spinal cord stimulation devices, three pending U.S. patent applications and a PCT application filed or published in 2024 relating to spinal cord stimulation device implantation methods, and pending U.S. and PCT patent applications published in 2024 relating to ablation probe and temperature sensing device systems.
We intend to expand our product offerings to include less invasive means and all-in-one solutions, thus providing both patients and physicians better options to treat epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders.
We intend to expand our product offerings to include less invasive means and all-in-one solutions, thus providing both patients and physicians better options to treat epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other pain-related neurological disorders.
In the United States, the Federal Food, Drug and Cosmetic Act (“FDCA”), and the implementing regulations of the FDA (specifically, 21 Code of Regulations (21 CFR Parts 801- labeling, 803 - medical device reporting, 807 - registration and listing, subpart E premarket notification 510k, 812 - investigational device exemption, 814 - premarket approval and 820 - quality system regulation) and applicable FDA issued guidance’s govern product design and development, pre-clinical and clinical testing, premarket clearance or approval, risk management, product manufacturing, quality systems, import and export, product labeling, product storage, recalls and field safety corrective actions, advertising and promotion, product sales and distribution, and post-market clinical surveillance.
In the United States, the Federal Food, Drug and Cosmetic Act (“FDCA”), and the implementing regulations of the FDA (specifically, 21 Code of Federal Regulations (21 CFR Parts 801- labeling, 803 - medical device reporting, 807 - registration and listing, subpart E premarket notification 510k, 812 - investigational device exemption, 814 - premarket approval and 820 - quality system regulation) and applicable FDA issued guidance’s govern product design and development, pre-clinical and clinical testing, premarket clearance or approval, risk management, product manufacturing, quality systems, import and export, product labeling, product storage, recalls and field safety corrective actions, advertising and promotion, product sales and distribution, and post-market clinical surveillance.
WARF may terminate this license on 30 days’ written notice, if we default on the payments of amounts due to WARF or fail to timely submit development reports, actively pursue our development plan or breach any other covenant in the WARF License and fail to remedy such default in 90 days or in the event of certain bankruptcy events involving us.
ARF may terminate this license on 30 days’ written notice, if we default on the payments of amounts due to WARF or fail to timely submit development reports, actively pursue our development plan or breach any other covenant in the WARF License and fail to remedy such default in 90 days or in the event of certain bankruptcy events involving us.
As previously mentioned, we are actively evaluating the potential to offer electrodes that can be implanted for long term stimulation applications, but such use will require that we pursue additional approvals from the FDA and any international regulatory bodies where we seek to commercialize our technology. 7 NeuroOne Medical Technologies Corporation FORM 10-K ● Explore partnerships with other companies that leverage our core technology: Given that our technology enables, complements and/or competes with a number of companies that are in the market or attempting to enter the market with diagnostic or therapeutic technologies to treat brain related disorders, we believe there may be opportunities to establish mutually beneficial relationships.
As previously mentioned, we are actively evaluating the potential to offer electrodes that can be implanted for long term stimulation applications, but such use will require that we pursue additional approvals from the FDA and any international regulatory bodies where we seek to commercialize our technology. 6 NeuroOne Medical Technologies Corporation FORM 10-K ● Explore partnerships with other companies that leverage our core technology : Given that our technology enables, complements and/or competes with a number of companies that are in the market or attempting to enter the market with diagnostic or therapeutic technologies to treat brain related disorders, we believe there may be opportunities to establish mutually beneficial relationships.
In addition, our technology may have application in cardiovascular, orthopedic and pain related indications that could benefit from a high fidelity thin film electrode product that can provide stimulation and/or ablation therapies. ● Partner with biotech, pharmaceutical or biopharma companies to provide a drug delivery sEEG electrode capable of delivering the therapy and recording before, during and after the therapy is delivered for up to 30 days. ● Investigate the potential applications associated with Artificial Intelligence: We have been informed by some of our corporate advisors that the ability to offer scale-able electrode technology that can provide thousands of electrodes in the brain may be helpful in treating medical conditions that may benefit from using artificial intelligence.
In addition, our technology may have application in cardiovascular, orthopedic and pain related indications that could benefit from a high fidelity thin film electrode product that can provide stimulation and/or ablation therapies. ● Facilitating partnerships for drug delivery : Partner with biotech, pharmaceutical or biopharma companies to provide a drug delivery sEEG electrode capable of delivering the therapy and recording before, during and after the therapy is delivered for up to 30 days. ● Investigate the potential applications associated with artificial intelligence : We have been informed by some of our corporate advisors that the ability to offer scale-able electrode technology that can provide thousands of electrodes in the brain may be helpful in treating medical conditions that may benefit from using artificial intelligence.
Technology Stage of Development and Pre-Clinical Testing to Date Additional Expected Steps for Regulatory Clearance or Approval Cortical strip and grid electrodes for the diagnosis of epilepsy The Company has finalized the design for the product and there are no further expected changes to the device (“design freeze”).
Technology Stage of Development and Pre-Clinical Testing to Date Additional Expected Steps for Regulatory Clearance or Approval sEEG - Cortical strip and grid electrodes for the diagnosis of epilepsy The Company has finalized the design for the product and there are no further expected changes to the device (“design freeze”).
The commencement or completion of any clinical trial may be delayed or halted, or be inadequate to support approval of a PMA application, for numerous reasons, including, but not limited to, the following: ● the FDA or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold; ● patients do not enroll in clinical trials at the rate expected; ● patients, sponsor (NeuroOne) or study sites do not comply with trial protocols; ● patient follow-up is not at the rate expected; ● patients experience unanticipated adverse event; ● the data safety monitoring board determines the study should be placed on hold; ● patients die during a clinical trial, even though their death may not be related to the products that are part of our trial; ● institutional review boards and third-party clinical investigators may delay or reject the trial protocol; 21 NeuroOne Medical Technologies Corporation FORM 10-K ● third-party clinical investigators decline to participate in a trial or do not perform a trial on the anticipated schedule or consistent with the clinical trial protocol, good clinical practices or other FDA requirements; ● the sponsor (NeuroOne) or third-party organizations do not perform data collection, monitoring and analysis in a timely or accurate manner or consistent with the clinical trial protocol or investigational or statistical plans; ● third-party clinical investigators have significant financial interests related to the sponsor (NeuroOne) or the study that the FDA deems to make the study results unreliable, or the company or investigators fail to disclose such interests; ● regulatory inspections of our clinical trials or manufacturing facilities, which may, among other things, require us to undertake corrective action or suspend or terminate our clinical trials; ● changes in governmental regulations or administrative actions; ● the interim or final results of the clinical trial are inconclusive or unfavorable as to safety or efficacy; and ● the FDA concludes that our trial design is inadequate to demonstrate safety and efficacy.
Clinical trials must be entered into the clinical trials registry at clinicaltrials.gov. 21 NeuroOne Medical Technologies Corporation FORM 10-K The commencement or completion of any clinical trial may be delayed or halted, or be inadequate to support approval of a PMA application, for numerous reasons, including, but not limited to, the following: ● the FDA or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold; ● patients do not enroll in clinical trials at the rate expected; ● patients, sponsor (NeuroOne) or study sites do not comply with trial protocols; ● patient follow-up is not at the rate expected; ● patients experience unanticipated adverse event; ● the data safety monitoring board determines the study should be placed on hold; ● patients die during a clinical trial, even though their death may not be related to the products that are part of our trial; ● institutional review boards and third-party clinical investigators may delay or reject the trial protocol; ● third-party clinical investigators decline to participate in a trial or do not perform a trial on the anticipated schedule or consistent with the clinical trial protocol, good clinical practices or other FDA requirements; ● the sponsor (NeuroOne) or third-party organizations do not perform data collection, monitoring and analysis in a timely or accurate manner or consistent with the clinical trial protocol or investigational or statistical plans; ● third-party clinical investigators have significant financial interests related to the sponsor (NeuroOne) or the study that the FDA deems to make the study results unreliable, or the Company or investigators fail to disclose such interests; ● regulatory inspections of our clinical trials or manufacturing facilities, which may, among other things, require us to undertake corrective action or suspend or terminate our clinical trials; ● changes in governmental regulations or administrative actions; ● the interim or final results of the clinical trial are inconclusive or unfavorable as to safety or efficacy; and ● the FDA concludes that our trial design is inadequate to demonstrate safety and efficacy.
The images under “Head Box” and “Signal Monitoring and Mapping” are images of the device which processes information received through the high density interconnect, and a sample output of data acquisition, respectively, neither of which is one of the Company’s products. 8 NeuroOne Medical Technologies Corporation FORM 10-K Our technology consists of three primary types of cortical electrodes: grid electrodes, strip electrodes and dual-sided electrodes.
The images under “Head Box” and “Signal Monitoring and Mapping” are images of the device which processes information received through the high density interconnect, and a sample output of data acquisition, respectively, neither of which is one of the Company’s products. 7 NeuroOne Medical Technologies Corporation FORM 10-K Our technology consists of three primary types of cortical electrodes: grid electrodes, strip electrodes and dual-sided electrodes.
Except as otherwise provided in the Development Agreement, we are responsible for performing all development activities, including non-clinical and clinical studies directed at obtaining regulatory approval of each Product. Zimmer has agreed to use commercially reasonable efforts to promote, market and sell each Product following the “Product Availability Date” (as defined in the Development Agreement) for such Product.
Except as otherwise provided in the Zimmer Distribution Agreement, we are responsible for performing all development activities, including non-clinical and clinical studies directed at obtaining regulatory approval of each Product. Zimmer has agreed to use commercially reasonable efforts to promote, market and sell each Product following the “Product Availability Date” (as defined in the Zimmer Distribution Agreement) for such Products.
We announced in December 2020 that Mayo Clinic doctors used our technology in the first human commercial application of our Evo cortical electrode technology to perform recording, functional mapping and stimulation of the brain on a human patient. And more recently, in July 2022, we announced the first clinical case using the Evo sEEG electrode was performed by Dr.
We announced in December 2020 that Mayo Clinic doctors used our technology in the first human commercial application of our Evo cortical electrode technology to perform recording, functional mapping and stimulation of the brain on a human patient. In July 2022, we announced the first clinical case using the Evo sEEG electrode was performed by Dr.
Our cortical sheet electrode and depth electrode technology have been tested over the years by both WARF, the owners of our licensed patents, and Mayo Clinic located in Rochester, Minnesota, in both pre-clinical models as well as through an institutional review board (“IRB”) approval at Mayo Clinic for clinical research.
Over the years, our cortical sheet electrode and depth electrode technology have been tested by both WARF, the owners of our licensed patents, and Mayo Clinic located in Rochester, Minnesota, in both pre-clinical models as well as through an institutional review board (IRB) approval at Mayo Clinic for clinical research.
Mayo Clinic and University of Wisconsin-Madison Studies Our cortical technology for the diagnosis of epilepsy has been tested by doctors at Mayo Clinic in multiple pre-clinical tests conducted from 2012 to 2017. In pre-clinical models, doctors examined the biological impact on mammalian brains.
Collaborations and Partnerships Mayo Clinic and University of Wisconsin-Madison Studies Our cortical technology for the diagnosis of epilepsy has been tested by doctors at Mayo Clinic in multiple pre-clinical tests conducted from 2012 to 2017. In pre-clinical models, doctors examined the biological impact on mammalian brains.
Pursuant to the Development Agreement, Zimmer made an upfront payment of $2.0 million to the Company in August 2020. In August 2022, we entered into an amendment to the Development Agreement with Zimmer that provided us with a $3.5 million accelerated payment relating to certain milestone events.
Pursuant to the Distribution Agreement, Zimmer made an upfront payment of $2.0 million to the Company in August 2020. In August 2022, we entered into an amendment to the Distribution Agreement with Zimmer that provided us with a $3.5 million accelerated payment relating to certain milestone events.
Class II devices are subject to the same general controls but may be subject to special controls such as performance standards, post-market surveillance, FDA guidance, or particularized labeling, and may also require clinical testing prior to clearance.
Class II devices are subject to the same general controls but may be subject to special controls such as device specific performance standards, post-market surveillance, FDA guidance, or particularized labeling, and may also require clinical testing prior to clearance.
The FDA also may determine that additional tests or clinical trials are necessary, in which case the PMA approval may be delayed for several months or years while the trials are conducted and data is submitted in an amendment to the PMA.
The FDA also may determine that additional tests or clinical trials are necessary, in which case the PMA approval may be delayed for several months or years while the trials are conducted and data is submitted in an amendment to the PMA under review.
Despite the large market opportunity, it is estimated that there are only less than 5K epilepsy surgeries performed each year in the United States. 1 These numbers represent an underpenetrated market due to the invasiveness of diagnostic procedures. After the diagnostic procedure, a second therapeutic procedure is required and at times even a third surgery if the seizures persist.
Despite the large market opportunity, it is estimated that there are only less than 5,000 epilepsy surgeries performed each year in the United States. 1 These numbers represent an underpenetrated market due to the invasiveness of diagnostic procedures. After the diagnostic procedure, a second therapeutic procedure is required and at times even a third surgery if the seizures persist.
For more information regarding the Development Agreement, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Financial Overview-Collaborations Revenue” and “Note 7—Zimmer Development Agreement” included in “Item 8—Financial Statements and Supplementary Data” in this Report.
For more information regarding the Zimmer Distribution Agreement, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Financial Overview-Collaborations Revenue” and “Note 7-Zimmer Distribution Agreement” included in “Item 8-Financial Statements and Supplementary Data” in this Report.
In addition, Zimmer may terminate the Development Agreement for any reason with 90 days’ written notice, and we may terminate the Development Agreement if Zimmer acquires or directly or indirectly owns a controlling interest in certain competitors of the Company.
In addition, Zimmer may terminate the Zimmer Distribution Agreement for any reason with 90 days’ written notice, and we may terminate the Zimmer Distribution Agreement if Zimmer acquires or directly or indirectly owns a controlling interest in certain competitors of the Company.
These include: ● establishment registration and device listing; ● QSR, which requires manufacturers, including third party manufacturers, to follow stringent design, testing, risk management, production control, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures during all aspects of the manufacturing process; ● labeling regulations that prohibit the promotion of products for uncleared, unapproved or “off-label” uses, and impose other restrictions on labeling, advertising and promotion; ● MDR regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; ● voluntary and mandatory device recalls to address problems when a device is mislabeled or does not meet specifications and could be a risk to health; and ● corrections and removals reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health.
These include: ● establishment registration and device listing; ● QSR, which requires manufacturers, including third party manufacturers, to follow stringent design, testing, risk management, production control, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures during all aspects of the manufacturing process; ● labeling regulations that prohibit the promotion of products for uncleared, unapproved or “off-label” uses, and impose other restrictions on labeling, advertising and promotion; 22 NeuroOne Medical Technologies Corporation FORM 10-K ● MDR regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; ● voluntary and mandatory device recalls to address problems when a device is mislabeled or does not meet specifications and could be a risk to health; and ● corrections and removals reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health.
Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing and selling our products, which could have a significant adverse impact on our business. Trademarks We have registered U.S. trademarks for the trademarks “NEUROONE” and “EVO”. We have a pending U.S. trademark application for the trademark OneRF.
Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing and selling our products, which could have a significant adverse impact on our business. Trademarks We have registered U.S. trademarks for the trademarks “NEUROONE” and “EVO.” We have a pending U.S. trademark application for the trademark OneRF.
PMA supplements often require submission of the same type of information as an initial PMA application, except that the supplement is limited to information needed to support any changes from the device covered by the approved PMA application and may or may not require as extensive technical or clinical data or the convening of an advisory panel.
PMA supplements often require submission of the same type of information as was presented in the initial PMA application, except that the supplement is limited to information needed to support any changes from the device covered by the approved PMA application and may or may not require as extensive technical or clinical data or the convening of an advisory panel.
In addition to the Development Agreement, Zimmer and the Company have entered into a Manufacturing and Supply Agreement (the “MS Agreement”) and a supplier quality agreement (the “Quality Agreement”) with respect to the manufacturing and supply of the Products.
In addition to the Distribution Agreement, Zimmer and the Company have entered into a Manufacturing and Supply Agreement (the “MS Agreement”) and a supplier quality agreement (the “Quality Agreement”) with respect to the manufacturing and supply of the Products.
WARF, Mayo Clinic (cortical electrodes) and Cleveland Clinic (sEEG electrodes) have been responsible for all pre-clinical studies of our technology under development to date. See “—WARF License” and “—Mayo Foundation for Medical Education and Research License and Development Agreement” below.
WARF, Mayo Clinic (cortical electrodes) and Cleveland Clinic (sEEG electrodes) have been responsible for all pre-clinical studies of our technology under development to date. See “WARF License” and “Mayo Foundation for Medical Education and Research License and Development Agreement” below.
NeuroOne’s platform thin film technology has the capability to increase the number of contacts in a similar footprint that has fewer contacts. ● Gain approval for other brain or motor related disorders such as Parkinson’s with the therapeutic technologies developed for epilepsy: While we are developing our technology for the diagnosis and treatment of epilepsy, we believe that our technology has strong application and utilization for other brain or motor related disorders such as Parkinson’s disease, dystonia, essential tremors and facial pain as these diseases are currently treated with DBS if medications are not effective.
NeuroOne’s platform thin film technology has the capability to increase the number of contacts in a similar footprint that has fewer contacts. ● Gain approval for other brain or motor related disorders such as Parkinson’s with the therapeutic technologies developed for epilepsy through partnership and collaborations with a strategic organizations in the field : While we are developing our technology for the diagnosis and treatment of epilepsy, we believe that our technology has strong application and utilization for other brain or motor related disorders such as Parkinson’s disease, dystonia, essential tremors and facial pain as these diseases are currently treated with DBS if medications are not effective.
Our research and development expenses were $6.9 million and $4.9 million for the years ended September 30, 2023 and 2022, respectively. Competition In the market for Epilepsy diagnosis, our cortical strip, grid and depth electrode technology will likely compete with Integra Life Science’s Integra Epilepsy Strip, Grid and depth electrodes, which provide a similar function to our diagnostic technologies.
Our research and development expenses were $5.1 million and $6.9 million for the years ended September 30, 2024 and 2023, respectively. Competition In the market for Epilepsy diagnosis, our cortical strip, grid and depth electrode technology will likely compete with Integra Life Science’s Integra Epilepsy Strip, Grid and depth electrodes, which provide a similar function to our diagnostic technologies.
Clinical Development and Regulatory Pathway Clinical Experience, Future Development and Clinical Trial Plans Our Evo cortical electrode technology has received 510(k) clearance from the FDA for recording, monitoring, and stimulating brain tissue for less than 30 days on the surface of the brain.
Clinical Development and Regulatory Pathway Clinical Experience, Future Development and Clinical Trial Plans Our sEEG Evo cortical electrode technology has received 510(k) clearance from the FDA in November 2019 for recording, monitoring, and stimulating brain tissue for less than 30 days on the surface of the brain.
However, a pre-market approval (“PMA application”) is required for devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or certain implantable devices, or those that are “not substantially equivalent” either to a device previously cleared through the 510(k) process or to a “preamendment” Class III device in commercial distribution before May 28, 1976 when PMA applications were not required.
However, a PMA application is required for devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or certain implantable devices, or those that are “not substantially equivalent” either to a device previously cleared through the 510(k) process or to a “preamendment” Class III device in commercial distribution before May 28, 1976 when PMA applications were not required.
Approximately 720,000 of these patients are not receptive to pharmaceutical treatment and therefore are appropriate for surgical treatment of this disorder. In addition to poor quality of life, epilepsy also is associated with fairly high mortality rates. Sudden Unexpected Death in Epilepsy has an annual incidence of 1.16/1000 in epilepsy patients.
Approximately 30-40% of these patients are not receptive to pharmaceutical treatment and therefore are appropriate for surgical treatment of this disorder. In addition to poor quality of life, epilepsy also is associated with fairly high mortality rates. Sudden Unexpected Death in Epilepsy has an annual incidence of approximately 1/1000 in epilepsy patients.
As described in “—Government Regulation” below, the Company will be required to perform additional testing of its technology in connection with seeking additional regulatory clearances or approvals.
As described in “Government Regulation” below, the Company will be required to perform additional testing of its technology in connection with seeking additional regulatory clearances or approvals.
These may include any of the following sanctions or consequences: ● warning letters or untitled letters that require corrective action; ● fines and civil penalties; 22 NeuroOne Medical Technologies Corporation FORM 10-K ● unanticipated expenditures; ● delays in approving or refusal to approve future products; ● FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; ● suspension or withdrawal of FDA clearance or approval; ● product recall or seizure; interruption of production; ● operating restrictions; ● injunctions; and ● criminal prosecution.
These may include any of the following sanctions or consequences: ● warning letters or untitled letters that require corrective action; ● fines and civil penalties; ● unanticipated expenditures; ● delays in approving or refusal to approve future products; ● FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; ● suspension or withdrawal of FDA clearance or approval; ● product recall or seizure; interruption of production; ● operating restrictions; ● injunctions; and ● criminal prosecution.
Regulatory control increases from Class I to Class III. The device classification regulation defines the regulatory requirements for a general device type. Most Class I devices are exempt from Premarket Notification under 510(k); most Class II devices require Premarket Notification under 510(k); and most Class III devices require Premarket Approval. Class I devices are subject to general controls including labeling.
Regulatory control increases from Class I to Class III. The device classification regulation defines the regulatory requirements for a general device type. Most Class I devices are exempt from Premarket Notification under 510(k); most Class II devices require Premarket Notification under 510(k); and most Class III devices require Premarket Approval (“PMA”).
We license three critical patents from WARF that are the foundation of the technology and we are developing and intend to commercialize and benefit from the thin film technology know-how of Mayo Clinic doctors through our license and development agreement.
We license three critical patents from Wisconsin Alumni Research Foundation (“WARF”) that are the foundation of the technology and we are developing and intend to commercialize and benefit from the thin film technology know-how of Mayo Clinic doctors through our license and development agreement.
Pre-clinical testing and clinical testing on the final design has been conducted by Mayo Clinic and WARF (as described in “Mayo Clinic and University of Wisconsin-Madison Studies” below). The product is in commercial production. The Company received FDA 510(k) clearance in the fourth calendar quarter of 2019. Commercial launch commenced utilizing Zimmer, our distribution partner.
Pre-clinical testing and clinical testing on the final design has been conducted by Mayo Clinic and WARF (as described in “Mayo Clinic and University of Wisconsin-Madison Studies” below). The product is in commercial production. The Company received FDA 510(k) clearance in the fourth calendar quarter of 2019.
Human Capital As of September 30, 2023, we had 16 employees, all of whom are full-time, eight of whom are engaged in research and development activities, and all of whom are located in the United States. As of September 30, 2023, we also retained the services of approximately 9 regular consultants.
Human Capital As of September 30, 2024, we had 17 employees, all of whom are full-time, eight of whom are engaged in research and development activities, and all of whom are located in the United States. As of September 30, 2024, we also retained the services of approximately 8 regular consultants.
There are several treatment options (including medication and Botox) for patients depending on the type of dystonia. DBS may be also an alternative for certain patient sub-types. Spinal Cord Stimulation Chronic back pain is one of the most prevalent chronic conditions in the world.
There are several treatment options (including medication and Botox) for patients depending on the type of dystonia. DBS may be also an alternative for certain patient sub-types. 3 NeuroOne Medical Technologies Corporation FORM 10-K Spinal Cord Stimulation Chronic back pain is one of the most prevalent chronic conditions in the world.
The invasiveness, procedural times and possible surgical complications have limited the growth of surgical treatment of epilepsy. ● Requirement for multiple devices for diagnostic and therapeutic procedures : Today both interventional diagnostic and treatment procedures may require different device implants, surgeries and even hospitalizations for each procedure.
The invasiveness, procedural times and possible surgical complications have limited the growth of surgical treatment of epilepsy. 4 NeuroOne Medical Technologies Corporation FORM 10-K ● Requirement for multiple devices for diagnostic and therapeutic procedures : Today both interventional diagnostic and treatment procedures may require different device implants, surgeries and even hospitalizations for each procedure.
While we expect to make modifications to our initial system, we believe that most of our future product development initiatives will involve unique and transformational next generation technology that should drive further appeal of our products with both physicians and patients. We are utilizing a number of resources to develop these technologies.
While we expect to make modifications to our initial system, we believe that most of our future product development initiatives will involve unique and transformational next generation technology that should drive further appeal of our products with both physicians and patients.
The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. A violation of this statute is a felony and may result in fines or imprisonment.
The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
We plan to continue with an outsourced manufacturing arrangement for the foreseeable future. Our third-party manufacturers are recognized in their field for their competency to manufacture the respective portions of our system and have quality systems established that meet FDA requirements. We believe at this time the manufacturers we currently utilize have sufficient capacity to meet our requirements.
Our third-party manufacturers are recognized in their field for their competency to manufacture the respective portions of our system and have quality systems established that meet FDA requirements. We believe at this time the manufacturers we currently utilize have sufficient capacity to meet our requirements.
The FDA goal is to complete its review of a 510(k) notification within 90 calendar days of receiving the 510(k) notification. As a practical matter, clearance often takes longer, and clearance is never assured.
If it is accepted for filing, the FDA begins a substantive review. The FDA goal is to complete its review of a 510(k) notification within 90 calendar days of receiving the 510(k) notification. As a practical matter, clearance often takes longer, and clearance is never assured.
Over half of this market is comprised of patients with FBSS. Studies have indicated a benefit for some patients suffering from chronic back and lower limb pain when they have been treated with electrical stimulation.
The back pain market includes the following indications: FBSS, Ischemic Limb Pain, and Complex Regional Pain Syndrome. Over half of this market is comprised of patients with FBSS. Studies have indicated a benefit for some patients suffering from chronic back and lower limb pain when they have been treated with electrical stimulation.
Once the design is finalized, we will be required to conduct additional pre-clinical testing, which may include additional benchtop or animal testing for safety and performance. Additionally, the FDA may require that we conduct human clinical studies.
Once the design is finalized, we will be required to conduct additional pre-clinical testing, which may include additional benchtop or animal testing for safety and performance. Additionally, the FDA may require that we conduct human clinical studies. As we continue to refine the product design, we will evaluate the necessary pre-clinical and clinical testing for regulatory approval.
Additionally, we are investigating the potential applications of our technology associated with artificial intelligence. Members of our management team have held senior leadership positions at a number of medical technology and biopharmaceutical companies, including Boston Scientific, St. Jude Medical, Stryker Instruments, C.R. Bard, A-Med Systems, Nuwellis, Inc., formerly known as Sunshine Heart, Empi, Don-Joy and PMT.
Members of our management team have held senior leadership positions at a number of medical technology and biopharmaceutical companies, including Boston Scientific, St. Jude Medical, Stryker Instruments, C.R. Bard, A-Med Systems, Nuwellis, Inc., formerly known as Sunshine Heart, Empi, Don-Joy and PMT.
Pre-clinical testing, including benchtop and animal testing, has been conducted on final designs. Very early testing at the Cleveland Clinic was completed in the second calendar quarter of 2020. Pre-clinical (animal) feasibility testing was conducted in September 2021 with representatives from Emory University in Atlanta, Georgia.
Very early testing at the Cleveland Clinic was completed in the second calendar quarter of 2020. Pre-clinical (animal) feasibility testing was conducted in September 2021 with representatives from Emory University in Atlanta, Georgia.
These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our development.
These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our development. Intellectual Property Protection of our intellectual property is a strategic priority for our business.
Depth electrodes for recording (diagnostic) purposes We have frozen this design and the product is in commercial production. No clinical testing was required in order to obtain FDA clearance.
Commercial launch commenced utilizing Zimmer, our distribution partner. sEEG - Depth electrodes for recording (diagnostic) purposes We have frozen this design and the product is in commercial production. No clinical testing was required in order to obtain FDA clearance.
On October 20, 2022, the Company received an FDA clearance to market its Evo sEEG Electrode technology for temporary (less than 30 days) use with recording, monitoring, and stimulation equipment for the recording, monitoring, and stimulation of electrical signals at the subsurface level of the brain.
To date, several institutions have already adopted our technology for diagnostic procedures. ● Launch electrodes for sEEG recording : On October 20, 2022, the Company received an FDA clearance to market its Evo sEEG electrode technology for temporary (less than 30 days) use with recording, monitoring, and stimulation equipment for the recording, monitoring, and stimulation of electrical signals at the subsurface level of the brain.
Nevertheless, a determination of liability under such laws could result in fines and penalties and restrictions on our ability to operate in these jurisdictions. 25 NeuroOne Medical Technologies Corporation FORM 10-K Physician Payment Sunshine Act Transparency laws regarding payments or other items of value provided to healthcare providers and teaching hospitals may also impact our business practices.
We believe that we are in conformance to such laws. Nevertheless, a determination of liability under such laws could result in fines and penalties and restrictions on our ability to operate in these jurisdictions. Physician Payment Sunshine Act Transparency laws regarding payments or other items of value provided to healthcare providers and teaching hospitals may also impact our business practices.
Minimally invasive and percutaneously placed technologies have become almost a requirement for adoption with patients and physicians. In addition, our technology in the future offers the ability to increase the number of contacts on a film that traditionally offers fewer contacts. Increasing the number of contacts may allow for more precise stimulation in the spine, potentially improving the therapeutic outcomes.
Minimally invasive and percutaneously placed technologies have become almost a requirement for adoption with patients and physicians. In addition, our technology in the future offers the ability to increase the number of contacts on a film that traditionally offers fewer contacts.
We believe our technology, which has been developed to date by physicians at WARF and Mayo Clinic, will provide a number of advantages over the current commercially available technologies, including the following: ● Our proprietary thin film technology under development has a smaller footprint with many more electrodes. ● We expect that our technology will eventually be able to be implanted using a minimally invasive procedure utilizing a dime sized burr hole rather than a full craniotomy. ● Our technology may provide more accurate detection of irregular brain activity over currently available technology.
We believe our technology provides a number of advantages over other commercially available technologies, including the following: ● Our proprietary thin film technology has a smaller footprint with many more electrodes. ● We expect that our technology will eventually be able to be implanted using a minimally invasive procedure utilizing a dime sized burr hole rather than a full craniotomy. ● Our technology provides more accurate detection of irregular brain activity over other currently available technology.
We are a medical technology company focused on the development and commercialization of thin film electrode technology for continuous electroencephalogram (“cEEG”) and stereoelectrocencephalography (“sEEG”) recording, spinal cord stimulation, brain stimulation and ablation solutions for patients suffering from epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders.
We are developing and commercializing thin film electrode technology for continuous electroencephalogram (“cEEG”) and stereoelectrocencephalography (“sEEG”), spinal cord stimulation, brain stimulation, drug delivery and ablation solutions for patients suffering from epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other pain-related neurological disorders.
Noncompliance with the Anti-Kickback Statute could result in our exclusion from Medicare, Medicaid or other governmental programs, restrictions on our ability to operate in certain jurisdictions, and civil and criminal penalties.
Outside educators are reimbursed for their services at fair market value. Noncompliance with the Anti-Kickback Statute could result in our exclusion from Medicare, Medicaid or other governmental programs, restrictions on our ability to operate in certain jurisdictions, and civil and criminal penalties.
Our Evo sEEG electrode technology has received FDA 510(k) clearance from the FDA for use (less than 30 days) with recording, monitoring, and stimulation equipment for the recording, monitoring, and stimulation of electrical signals at the subsurface level of the brain. Our other products have not received any clearance for commercialization by any U.S. or foreign regulatory body.
Our Evo sEEG electrode technology has received FDA 510(k) clearance from the FDA for use (less than 30 days) with recording, monitoring, and stimulation equipment for the recording, monitoring, and stimulation of electrical signals at the subsurface level of the brain.
Class III devices are those for which insufficient information exists to assure safety and effectiveness solely through general or special controls, including devices that support or sustain human life, are of substantial importance in preventing impairment of human health, or which present a potential, unreasonable risk of illness or injury. Premarket Approval is required for most Class III devices.
Class III devices are those for which insufficient information exists to assure safety and effectiveness solely through general or special controls, including devices that support or sustain human life, are of substantial importance in preventing impairment of human health, present an unreasonable risk of illness or injury, or are not well established and generally accepted as safe and effective.
In the neuro-ablation market, we expect to compete with Medtronic’s Visualase guided-laser ablation technology and Monteris Medical’s NeuroBlate technology, which use MRI guided laser surgical ablation for use to ablate, necrotize or coagulate soft tissue through interstitial irradiation or thermal therapy in medicine and surgery in the discipline of neurosurgery with 1064 nm lasers.
We will also compete against other companies in early stages of development of thin film technologies. 16 NeuroOne Medical Technologies Corporation FORM 10-K In the neuro-ablation market, we expect to compete with Medtronic’s Visualase guided-laser ablation technology and Monteris Medical’s NeuroBlate technology, which use MRI guided laser surgical ablation for use to ablate, necrotize or coagulate soft tissue through interstitial irradiation or thermal therapy in medicine and surgery in the discipline of neurosurgery with 1064 nm lasers.
We intend to develop our Evo sEEG electrode technology for drug delivery applications in the next 12 months. This device is intended to deliver neurological drugs or gene therapy that are FDA approved or that are currently planned for clinical trials or in development to allow for monitoring, recording and stimulation and drug delivery for less than 30 days.
This future device is intended to deliver neurological drugs or gene therapy that are FDA approved or that are currently planned for clinical trials or in development to allow for monitoring, recording and stimulation and drug delivery for less than 30 days.
In 2023, we will continue to refine our chronic spinal cord electrode design based on SCS customer feedback and do additional pre-clinical bench and/or animal tests to further validate our value proposition. This device is in early stages of development.
In 2023, we continued to refine our chronic spinal cord electrode design based on SCS customer feedback and completed additional pre-clinical bench and/or animal tests to further validate our value proposition.
Gross selected the Evo sEEG electrode for intraoperative brain mapping at the subsurface level of the brain. 9 NeuroOne Medical Technologies Corporation FORM 10-K Below we have summarized, for each component of our technology, the current stage of development or commercial production, the pre-clinical testing done to date by WARF, the Cleveland Clinic or Mayo Clinic on such component, if any, our plans for further testing or clinical trials and our expectations regarding the requirements for regulatory clearance or approval and timing of regulatory submissions.
Below we have summarized, for each component of our technology, the current stage of development or commercial production, the pre-clinical testing done to date by WARF, the Cleveland Clinic or Mayo Clinic on such component, if any, our plans for further testing or clinical trials and our expectations regarding the requirements for regulatory clearance or approval and timing of regulatory submissions.
Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process.
Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process. If the FDA agrees that the device is substantially equivalent, it will grant clearance to commercially market the device.
Civil Monetary Penalties Law In addition to the Anti-Kickback Statute and the False Claims Act, the federal government has the authority to seek civil monetary penalties, or CMPs, assessments, and exclusion against an individual or entity based on a wide variety of prohibited conduct.
A violation of this statute is a felony and may result in fines or imprisonment. 25 NeuroOne Medical Technologies Corporation Form 10-K Civil Monetary Penalties Law In addition to the Anti-Kickback Statute and the False Claims Act, the federal government has the authority to seek civil monetary penalties, or CMPs, assessments, and exclusion against an individual or entity based on a wide variety of prohibited conduct.
Mayo has agreed to assist us by providing access to certain individuals at Mayo (the “Mayo Principal Investigators”), in developing our cortical thin film flexible circuit technology, including prototype development, animal testing, protocol development for human and animal use, abstract development and presentation and access to and license of any intellectual property that the Mayo Principal Investigators develop relating to the procedure. 16 NeuroOne Medical Technologies Corporation FORM 10-K We have agreed to pay Mayo a royalty equal to a single-digit percentage of our product sales pursuant to the Mayo Development Agreement.
Mayo has agreed to assist us by providing access to certain individuals at Mayo (the “Mayo Principal Investigators”), in developing our cortical thin film flexible circuit technology, including prototype development, animal testing, protocol development for human and animal use, abstract development and presentation and access to and license of any intellectual property that the Mayo Principal Investigators develop relating to the procedure.
We believe, due to physician feedback, that our technology represents a major improvement over existing cortical electrodes for the recording of brain activity. We are initially targeting epilepsy as we believe this is a clinical area of great need and a market that is underserved with a quick path to commercialization.
Based on physician feedback, we believe our technology is seen as a significant improvement for recording brain activity, particularly in epilepsy, an underserved market with a quick commercialization path. We are initially targeting epilepsy as we believe this is a clinical area of great need and a market that is underserved with a quick path to commercialization.
Violations of these laws are punishable by criminal and civil sanctions, including, in some instances, imprisonment and exclusion from participation in federal and state healthcare programs, including the Medicare, Medicaid and Veterans Administration health programs. 23 NeuroOne Medical Technologies Corporation FORM 10-K Federal Anti-Kickback and Self-Referral Laws The federal Anti-Kickback Statute (the “Anti-Kickback Statute”) prohibits persons from knowingly and willfully soliciting, receiving, offering or providing remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, to induce either the referral of an individual, or the furnishing, recommending, or arranging of a good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid or other federal healthcare programs.
Federal Anti-Kickback and Self-Referral Laws The federal Anti-Kickback Statute (the “Anti-Kickback Statute”) prohibits persons from knowingly and willfully soliciting, receiving, offering or providing remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, to induce either the referral of an individual, or the furnishing, recommending, or arranging of a good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid or other federal healthcare programs.
Required records and reports are subject to inspection by the FDA. The results of clinical testing may be unfavorable or, even if the intended safety and efficacy success criteria are achieved, may not be considered sufficient for the FDA to grant approval or clearance of a product. Clinical trials must be entered into the clinical trials registry at clinicaltrials.gov.
The results of clinical testing may be unfavorable or, even if the intended safety and efficacy success criteria are achieved, may not be considered sufficient for the FDA to grant approval or clearance of a product.
If the FDA agrees that the device is substantially equivalent, it will grant clearance to commercially market the device. 19 NeuroOne Medical Technologies Corporation FORM 10-K If the FDA determines that the device is not “substantially equivalent” to a predicate device, or if the device is automatically classified into Class III, the device sponsor must then fulfill the more rigorous premarketing requirements of the PMA approval process, or seek reclassification of the device through the De Novo process.
If the FDA determines that the device is not “substantially equivalent” to a predicate device, or if the device is automatically classified into Class III, the device sponsor must then fulfill the more rigorous premarketing requirements of the PMA approval process, or seek reclassification of the device through the De Novo process.
All clinical trials must be conducted in accordance with the FDA’s IDE regulations that govern investigational device labeling, prohibit promotion, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. Clinical trials must further comply with the FDA’s regulations for institutional review board approval and for informed consent and other human subject protections.
All clinical trials performed in the United States must be conducted in accordance with the FDA’s IDE regulations that govern investigational device labeling, prohibit promotion, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators.
We believe our technology offers advantages compared to current depth electrode technology in the market and will also enable us to offer a therapeutic solution using this same technology in the future.
We believe our technology offers advantages compared to current depth electrode technology in the market and will also enable us to offer a therapeutic solution using this same technology in the future. As we continue to develop our technology, we plan to release further information about the expected advantages of our technology over currently available therapies.
Current Procedural Terminology, or CPT, is a medical code set that is used to report medical, surgical and diagnostic procedures and services to entities such as physicians, health insurance companies and accreditation organizations. 13 NeuroOne Medical Technologies Corporation FORM 10-K Applicable diagnostic CPT codes for mapping (diagnosing) the brain for diagnostic procedures are as follows: ● 61531 Subdural implantation of strip electrodes through one or more burr or trephine (saw) hole(s) for long-term seizure monitoring; ● 61533 Craniotomy with elevation of bone flap: for subdural implantation of an electrode array, for long term seizure monitoring; ● 61535 Craniotomy with elevation of bone flap; for removal of epidural or subdural electrode array, without excision of cerebral tissue (separate procedure); and ● 61760 Stereotactic implantation of depth electrodes into the cerebrum for long term seizure monitoring.
Applicable diagnostic CPT codes for mapping (diagnosing) the brain for diagnostic procedures are as follows: ● 61531 Subdural implantation of strip electrodes through one or more burr or trephine (saw) hole(s) for long term seizure monitoring; ● 61533 Craniotomy with elevation of bone flap: for subdural implantation of an electrode array, for long term seizure monitoring; ● 61535 Craniotomy with elevation of bone flap; for removal of epidural or subdural electrode array, without excision of cerebral tissue (separate procedure); and ● 61760 Stereotactic implantation of depth electro1des into the cerebrum for long term seizure monitoring.
In July 2020, we entered into a development relationship with Zimmer, pursuant to which we granted Zimmer exclusive global rights to distribute the cortical strip and grid electrodes, and Zimmer will use commercially reasonable efforts to promote, market and sell the strip and grid electrodes.
In July 2020, we entered into a development relationship with Zimmer, pursuant to which we granted Zimmer exclusive global rights to distribute the cortical strip and grid electrodes (the “ Zimmer Distribution Agreement ”). Zimmer actively promotes and sell these products.
We will engage the FDA at the proper time to determine the most efficient regulatory path. ● Develop percutaneous placed electrodes for spinal cord stimulation with scalable contact configurations: Given that many surgically placed technologies have become less invasive due to patient and physician demands, we believe that our flexible thin film technology will allow for percutaneous placement of “paddle” shaped electrodes, thus potentially eliminating the need to make a more invasive surgical procedure.
We intend to submit a new 510(k) application for a facial pain ablation system which leverages the existing RF ablation generator. ● Develop percutaneous placed electrodes for spinal cord and peripheral stimulation for pain management with scalable contact configurations : Given that many surgically placed technologies have become less invasive due to patient and physician demands, we believe that our flexible thin film technology will allow for percutaneous placement of “paddle” shaped electrodes, thus potentially eliminating the need to make a more invasive surgical procedure.
Under the terms of the Development Agreement, we are responsible for all costs and expenses related to developing the Products, and Zimmer is responsible for all costs and expenses related to the commercialization of the Products.
Under the terms of the Distribution Agreement, we are responsible for all costs and expenses related to developing the Strip/Grid Products, the Electrode Cable Assembly Products, the sEEG Products and the OneRF Products (collectively the “Products”), and Zimmer is responsible for all costs and expenses related to the commercialization of the Products.
As a result, our provider and training arrangements may ultimately be found to be not in compliance with applicable federal law. 24 NeuroOne Medical Technologies Corporation FORM 10-K False Claims Act The False Claims Act provides, in part, that the federal government may bring a lawsuit against any person whom it believes has knowingly presented, or caused to be presented, a false or fraudulent request for payment from the federal government, or who has made a false statement or used a false record to get a claim approved.
False Claims Act The False Claims Act provides, in part, that the federal government may bring a lawsuit against any person whom it believes has knowingly presented, or caused to be presented, a false or fraudulent request for payment from the federal government, or who has made a false statement or used a false record to get a claim approved.
Notwithstanding the foregoing, there can be no assurance that our employees and third parties that have access to our confidential proprietary information will abide by the terms of their agreements. Despite the measures that we take to protect our intellectual property and confidential information, unauthorized third parties may copy aspects of our products or obtain and use our proprietary information.
Notwithstanding the foregoing, there can be no assurance that our employees and third parties that have access to our confidential proprietary information will abide by the terms of their agreements.
However, there currently is no commercially available manufacturing platform capable of making thousands of wires that can be placed within or on the brain and work reliably for the lifetime of a subject, and are soft enough to match the tissue of the brain, that avoid damage to the brain. 4 NeuroOne Medical Technologies Corporation FORM 10-K Limitations of Currently Available Therapies There are a limited number of currently available products for diagnosis and treatment for people with neurological disorders such as epilepsy.
However, there currently is no commercially available manufacturing platform capable of making thousands of wires that can be placed within or on the brain and work reliably for the lifetime of a subject, and are soft enough to match the tissue of the brain, that avoid damage to the brain.
The FDA can delay, limit or deny approval of a PMA application for many reasons, including: ● the device may not be safe, effective, reliable or accurate to the FDA’s satisfaction; ● the data from pre-clinical studies and clinical trials may be insufficient to support approval; ● the manufacturing process or facilities may not meet applicable requirements; and ● changes in FDA approval policies or adoption of new regulations may require additional data. 20 NeuroOne Medical Technologies Corporation FORM 10-K If an FDA evaluation of a PMA application is favorable, the FDA will either issue an approval letter, or approvable letter, which usually contains a number of conditions that must be met in order to secure final approval of the PMA.
The FDA can delay, limit or deny approval of a PMA application for many reasons, including: ● the device may not be safe, effective, reliable or accurate to the FDA’s satisfaction; ● the data from pre-clinical studies and clinical trials may be insufficient to support approval; ● the manufacturing process or facilities may not meet applicable requirements; and ● changes in FDA approval policies or adoption of new regulations may require additional data.
ICD-10 codes for epilepsy are as follows: ● G40.0 Localization-related (focal) (partial) idiopathic epilepsy and epileptic syndromes with seizures of localized onset; ● G40.1 Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with simple partial seizures; ● G40.2 Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with complex partial seizures; ● G40.3 Generalized idiopathic epilepsy and epileptic syndromes; ● G40.A Absence epileptic syndrome; ● G40.4 Other generalized epilepsy and epileptic syndromes; ● G40.50 Epileptic seizures related to external causes, not intractable; ● G40.80 Other epilepsy; and ● G40.82 Epileptic spasms.
ICD-10 codes for epilepsy are as follows: ● G40.0 Localization-related (focal) (partial) idiopathic epilepsy and epileptic syndromes with seizures of localized onset; ● G40.1 Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with simple partial seizures; ● G40.2 Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with complex partial seizures; ● G40.3 Generalized idiopathic epilepsy and epileptic syndromes; ● G40.A Absence epileptic syndrome; ● G40.4 Other generalized epilepsy and epileptic syndromes; ● G40.50 Epileptic seizures related to external causes, not intractable; ● G40.80 Other epilepsy; and ● G40.82 Epileptic spasms. 15 NeuroOne Medical Technologies Corporation FORM 10-K We believe that many of the indications we are pursuing with our technologies are currently reimbursed on a widespread basis by Medicare, Medicaid and private insurance companies.
The parties have agreed to collaborate with respect to development activities under the Development Agreement through a joint development committee composed of an equal number of representatives of Zimmer and the Company.
Additionally, we granted Zimmer the exclusive right and license to distribute certain depth electrodes developed by the Company (the “sEEG Products”). The parties have agreed to collaborate with respect to development activities under the Distribution Agreement through a joint development committee composed of an equal number of representatives of Zimmer and the Company.
As a medical device developer, the facilities of our sterilization and other critical suppliers are subject to periodic inspection by the FDA and corresponding state and foreign agencies. We believe that our quality systems and those of our suppliers are robust and achieve high product quality.
We believe that as we increase our demand in the future, our per-unit costs will decrease materially. As a medical device developer, the facilities of our sterilization and other critical suppliers are subject to periodic inspection by the FDA and corresponding state and foreign agencies.
As discussed under “Our Strategy” below, our technology has been and will be implanted via a full craniotomy until such time, if ever, as we are able to develop our minimally invasive procedure. ● All-in-one diagnostic and therapeutic technology solution: Due to the expected recording and treatment capabilities of some of our technology under development, we have received feedback from physicians that they will attempt to perform the diagnosis and treatment in a single procedure, thereby potentially eliminating the need for a second surgical procedure, reducing the likelihood of patient infection, risks associated with surgical procedures and minimizing the diagnostic, procedural and hospital costs.
In comparison to other currently available technologies, we are continuing to develop applications of our strip, grid and depth electrodes with the goal of providing the following expected advantages: ● All-in-one diagnostic and therapeutic technology solution : Due to the expected recording and treatment capabilities of some of our technology under development, we have received feedback from physicians that they will attempt to perform the diagnosis and treatment in a single procedure, thereby potentially eliminating the need for a second surgical procedure, reducing the likelihood of patient infection, risks associated with surgical procedures and minimizing the diagnostic, procedural and hospital costs.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may experience numerous unforeseen events during or as a result of clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our products, including: ● regulators may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● the failure to successfully complete pre-clinical testing requirements required by the FDA; ● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts with third parties or clinical trial protocols with prospective trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different trial sites; ● clinical trials of our cortical strip, grid electrode and depth electrode technology may produce negative or inconclusive results, including failure to demonstrate statistical significance, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon our development programs; ● the number of people with brain related disorders required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or people may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate; 31 NeuroOne Medical Technologies Corporation FORM 10-K ● our products may have unanticipated adverse events, undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate the trials; ● our third-party contractors conducting the clinical trials may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● regulators may require that we or our investigators suspend or terminate clinical development for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; ● the cost of clinical trials of our products may be greater than we anticipate; ● the supply or quality of our products or other materials necessary to conduct clinical trials of our products may be insufficient or inadequate; and ● delays from our suppliers and manufacturers could impact clinical trial completion and impact revenue.
Biggest changeWe may experience numerous unforeseen events during or as a result of clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our products, including: ● regulators may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● the failure to successfully complete pre-clinical testing requirements required by the FDA; ● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts with third parties or clinical trial protocols with prospective trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different trial sites; ● clinical trials of our technology under development may produce negative or inconclusive results, including failure to demonstrate statistical significance, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon our development programs; ● the number of people with brain related disorders required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or people may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate; ● our products may have unanticipated adverse events, undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate the trials; ● our third-party contractors conducting the clinical trials may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● regulators may require that we or our investigators suspend or terminate clinical development for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; ● the cost of clinical trials of our products may be greater than we anticipate; ● the supply or quality of our products or other materials necessary to conduct clinical trials of our products may be insufficient or inadequate; and ● delays from our suppliers and manufacturers could impact clinical trial completion and impact revenue. 33 NeuroOne Medical Technologies Corporation Form 10-K If we are required to conduct additional clinical trials or other testing of our cortical strip, grid electrode and depth electrode technology under development beyond those that we contemplate, if we are unable to successfully complete clinical trials, if the results of these trials or tests are not favorable or if there are safety concerns, we may: ● not obtain marketing approval at all; ● be delayed in obtaining marketing approval for our cortical strip, grid electrode and depth electrode technology under development in a jurisdiction; ● be subject to additional post-marketing testing requirements; or ● have our cortical strip, grid electrode and depth electrode technology removed from the market after obtaining marketing approval.
The following examples are illustrative: ● others may be able to make devices that are the same as or similar to our cortical strip, grid electrode and depth electrode technology but that are not covered by the claims of the patents that we own; ● we or any collaborators might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own; ● we might not have been the first to file patent applications covering certain of our inventions; ● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● it is possible that our pending patent applications will not lead to issued patents; ● issued patents that we own may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; ● we might enforce our patent rights or defend a challenge to our issued patents or pending application, putting the patents and patent applications at risk of being invalidated or interpreted narrowly; ● our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; and ● we may not develop additional proprietary technologies that are patentable. 47 NeuroOne Medical Technologies Corporation FORM 10-K Risks Related to our Legal and Regulatory Environment Our products and operations are subject to extensive governmental regulation, and any adverse regulatory action may materially adversely affect our financial condition and business operations.
The following examples are illustrative: ● others may be able to make devices that are the same as or similar to our cortical strip, grid electrode and depth electrode technology but that are not covered by the claims of the patents that we own; ● we or any collaborators might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own; ● we might not have been the first to file patent applications covering certain of our inventions; ● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● it is possible that our pending patent applications will not lead to issued patents; ● issued patents that we own may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; ● we might enforce our patent rights or defend a challenge to our issued patents or pending application, putting the patents and patent applications at risk of being invalidated or interpreted narrowly; ● our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; and ● we may not develop additional proprietary technologies that are patentable. 46 NeuroOne Medical Technologies Corporation Form 10-K Risks Related to our Legal and Regulatory Environment Our products and operations are subject to extensive governmental regulation, and any adverse regulatory action may materially adversely affect our financial condition and business operations.
Our medical devices and technologies and business activities, including marketing, manufacturing, sales and development processes, are subject to regulation by the FDA, U.S. Department of Justice, Health and Human Services - Office of Inspector General, and other federal and state, governmental authorities.
Our medical devices and technologies and business activities, including marketing, manufacturing, sales and development processes, are subject to regulation by the FDA, U.S. Department of Justice (“DOJ”), Health and Human Services - Office of Inspector General, and other federal and state, governmental authorities.
Further, these transactions and arrangements will be contractual in nature and will generally be terminable under the terms of the applicable agreements and, in such event, we may not continue to have rights to the products relating to such transaction or arrangement or may need to purchase such rights at a premium. 44 NeuroOne Medical Technologies Corporation FORM 10-K If we enter into in-bound intellectual property license agreements, we may not be able to fully protect the licensed intellectual property rights or maintain those licenses.
Further, these transactions and arrangements will be contractual in nature and will generally be terminable under the terms of the applicable agreements and, in such event, we may not continue to have rights to the products relating to such transaction or arrangement or may need to purchase such rights at a premium. 43 NeuroOne Medical Technologies Corporation Form 10-K If we enter into in-bound intellectual property license agreements, we may not be able to fully protect the licensed intellectual property rights or maintain those licenses.
See “Note 4 — Commitments and Contingencies” included in “Item 8 — Financial Statements and Supplementary Data” in this Report. 38 NeuroOne Medical Technologies Corporation FORM 10-K Termination of our license could result in the loss of significant rights and would harm our ability to further develop our cortical strip, grid electrode and depth electrode technology.
See “Note 4 - Commitments and Contingencies” included in “Item 8 - Financial Statements and Supplementary Data” in this Report. 39 NeuroOne Medical Technologies Corporation Form 10-K Termination of our license could result in the loss of significant rights and would harm our ability to further develop our cortical strip, grid electrode and depth electrode technology.
Further, we cannot assure you that competitors will not infringe upon our trademarks, or that we will have adequate resources to enforce our trademarks. 45 NeuroOne Medical Technologies Corporation FORM 10-K We also rely on trade secrets, know-how and technology, which are not protectable by patents, to maintain our competitive position.
Further, we cannot assure you that competitors will not infringe upon our trademarks, or that we will have adequate resources to enforce our trademarks. 44 NeuroOne Medical Technologies Corporation Form 10-K We also rely on trade secrets, know-how and technology, which are not protectable by patents, to maintain our competitive position.
These provisions could limit the price that investors might be willing to pay in the future for shares of the Common Stock. 53 NeuroOne Medical Technologies Corporation FORM 10-K We are a smaller reporting company, and the reduced reporting requirements applicable to smaller reporting companies may make our Common Stock less attractive to investors.
These provisions could limit the price that investors might be willing to pay in the future for shares of the Common Stock. 52 NeuroOne Medical Technologies Corporation Form 10-K We are a smaller reporting company, and the reduced reporting requirements applicable to smaller reporting companies may make our Common Stock less attractive to investors.
The IRA includes a 15% corporate alternative minimum tax and a 1% excise tax on share repurchases. 55 NeuroOne Medical Technologies Corporation FORM 10-K We urge investors to consult with their legal and tax advisers regarding the implications of potential changes in tax laws on an investment in our common stock.
The IRA includes a 15% corporate alternative minimum tax and a 1% excise tax on share repurchases. 54 NeuroOne Medical Technologies Corporation Form 10-K We urge investors to consult with their legal and tax advisers regarding the implications of potential changes in tax laws on an investment in our Common Stock.
The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our Board, on committees of our Board or as members of senior management. 57 NeuroOne Medical Technologies Corporation FORM 10-K ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our Board, on committees of our Board or as members of senior management. 56 NeuroOne Medical Technologies Corporation FORM 10-K ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
We expect to continue to incur significant expenses and increasing operating costs resulting in net losses for the foreseeable future, and management has raised substantial doubt about our ability to continue as a going concern. There was also substantial doubt about the Company’s ability to continue as a going concern as of and for the year ended September 30, 2022.
We expect to continue to incur significant expenses and increasing operating costs resulting in net losses for the foreseeable future, and management has raised substantial doubt about our ability to continue as a going concern. There was also substantial doubt about the Company’s ability to continue as a going concern as of and for the year ended September 30, 2023.
From our inception through September 30, 2023, we have generated limited revenue from the commercial sales of our products. Because we have generated very limited revenues from commercialization, our operations to date have been principally financed through public and private offerings of our Common Stock and convertible debt and exercises of options and warrants.
From our inception through September 30, 2024, we have generated limited revenue from the commercial sales of our products. Because we have generated very limited revenues from commercialization, our operations to date have been principally financed through public and private offerings of our Common Stock and convertible debt and exercises of options and warrants.
Our independent registered public accounting firm included an explanatory paragraph in the report on our financial statements as of and for the years ended September 30, 2023 and 2022, respectively, noting the existence of substantial doubt about our ability to continue as a going concern.
Our independent registered public accounting firm included an explanatory paragraph in the report on our financial statements as of and for the years ended September 30, 2024 and 2023, respectively, noting the existence of substantial doubt about our ability to continue as a going concern.
Further, these outcomes could damage investor confidence in the accuracy and reliability of our financial statements. Our management has concluded that our internal controls over financial reporting were, and continue to be, effective as of September 30, 2023.
Further, these outcomes could damage investor confidence in the accuracy and reliability of our financial statements. Our management has concluded that our internal controls over financial reporting were, and continue to be, effective as of September 30, 2024.
We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product; ● changes in the configuration of our cortical strip, grid electrode and depth electrode technology under development may result in additional costs or delay; ● if we are unable to successfully develop, receive regulatory clearance/approval for and commercialize our technology and other products under development, or if we experience significant delays in doing so, our business will be harmed; ● failure to secure or retain coverage or adequate reimbursement for our cortical strip, grid electrode and depth electrode technology or future versions thereof, including the implantation procedures, by third-party payors could adversely affect our business, financial condition and operating results; 26 NeuroOne Medical Technologies Corporation FORM 10-K ● if our competitors are better able to develop and market products for the diagnosis and treatment of epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders that are safer, more effective, less costly, easier to use or otherwise more attractive than our cortical strip, grid electrode and depth electrode technology, our business will be adversely impacted; ● the size and future growth in the market for our cortical strip, grid electrode and depth electrode technology under development has not been established with precision and may be smaller than we estimate, possibly materially; ● we depend on intellectual property licensed from WARF for our technology under development, and the termination of this license would harm our business; ● we depend on our partnership with Mayo to license certain know how for the development and commercialization of our technology.
We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product; ● changes in the configuration of our cortical strip, grid electrode and depth electrode technology under development may result in additional costs or delay; ● if we are unable to successfully develop, receive regulatory clearance/approval for and commercialize our technology and other products under development, or if we experience significant delays in doing so, our business will be harmed; ● failure to secure or retain coverage or adequate reimbursement for our cortical strip, grid electrode and depth electrode technology or future versions thereof, including the implantation procedures, by third-party payors could adversely affect our business, financial condition and operating results; ● if our competitors are better able to develop and market products for the diagnosis and treatment of epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders that are safer, more effective, less costly, easier to use or otherwise more attractive than our cortical strip, grid electrode and depth electrode technology, our business will be adversely impacted; ● the size and future growth in the market for our cortical strip, grid electrode and depth electrode technology or our future neurological drugs delivery under development has not been established with precision and may be smaller than we estimate, possibly materially; ● we depend on intellectual property licensed from WARF for our technology under development, and the termination of this license would harm our business; ● we depend on our partnership with Mayo to license certain know how for the development and commercialization of our technology.
The trading price of our Common Stock may be volatile and subject to wide price fluctuations in response to various factors, including: ● actual or anticipated fluctuations in our quarterly financial and operating results; ● our progress toward developing our cortical strip and sheet electrode technology; ● the commencement, enrollment and results of our future clinical trials; ● adverse results from, delays in or termination of our clinical trials; ● adverse regulatory decisions, including failure to receive regulatory approval; ● publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts, if any; ● perceptions about the market acceptance of our products and the recognition of our brand; ● adverse publicity about our products or industry in general; ● overall performance of the equity markets; ● introduction of products, or announcements of significant contracts, licenses or acquisitions, by us or our competitors; ● legislative, political or regulatory developments; ● additions or departures of key personnel; ● threatened or actual litigation and government investigations; ● third-party promotional activities, which are subject to ongoing regulatory obligations; ● sale of shares of our Common Stock by us or members of our management; and ● general economic conditions.
The trading price of our Common Stock may be volatile and subject to wide price fluctuations in response to various factors, including: ● actual or anticipated fluctuations in our quarterly financial and operating results; ● our progress toward developing our cortical strip and sheet electrode technology; ● the commencement, enrollment and results of our future clinical trials; ● adverse results from, delays in or termination of our clinical trials; ● adverse regulatory decisions, including failure to receive regulatory approval; ● publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts, if any; ● perceptions about the market acceptance of our products and the recognition of our brand; ● adverse publicity about our products or industry in general; ● overall performance of the equity markets; ● introduction of products, or announcements of significant contracts, licenses or acquisitions, by us or our competitors; ● legislative, political or regulatory developments; 50 NeuroOne Medical Technologies Corporation Form 10-K ● additions or departures of key personnel; ● threatened or actual litigation and government investigations; ● third-party promotional activities, which are subject to ongoing regulatory obligations; ● sale of shares of our Common Stock by us or members of our management; and ● general economic conditions.
The success of our strategy relating to future acquisitions, investments or alliances will depend on a number of factors, including our ability to: ● identify suitable opportunities for acquisition, investment or alliance, if at all; ● manage acquisition, investment or alliance opportunities within our capital capacity and prioritize those investments to execute on our strategy; ● manage our due diligence process to uncover potential issues and liabilities with targets; ● finance any future acquisition, investment or alliance on terms acceptable to us, if at all; ● complete acquisitions, investments or alliances in a timely manner on terms that are satisfactory to us, if at all; ● successfully integrate and operate acquired businesses; ● successfully identify and retain key target employees; ● comply with applicable laws and regulations; ● protect intellectual property and to prevail in litigation related to newly acquired technologies; ● assimilate the acquired products or technologies; ● maintain uniform standards, procedures, controls and policies; ● anticipate costs associated with acquisitions; ● avoid the diversion of management’s attention from our existing business; ● manage risks associated with entering new markets in which we have limited or no experience; and ● manage legal and accounting costs relating to the acquisitions or compliance with regulatory matters. 56 NeuroOne Medical Technologies Corporation FORM 10-K We have no current commitments with respect to any acquisition.
The success of our strategy relating to future acquisitions, investments or alliances will depend on a number of factors, including our ability to: ● identify suitable opportunities for acquisition, investment or alliance, if at all; ● manage acquisition, investment or alliance opportunities within our capital capacity and prioritize those investments to execute on our strategy; ● manage our due diligence process to uncover potential issues and liabilities with targets; ● finance any future acquisition, investment or alliance on terms acceptable to us, if at all; ● complete acquisitions, investments or alliances in a timely manner on terms that are satisfactory to us, if at all; ● successfully integrate and operate acquired businesses; ● successfully identify and retain key target employees; ● comply with applicable laws and regulations; ● protect intellectual property and to prevail in litigation related to newly acquired technologies; ● assimilate the acquired products or technologies; ● maintain uniform standards, procedures, controls and policies; ● anticipate costs associated with acquisitions; ● avoid the diversion of management’s attention from our existing business; ● manage risks associated with entering new markets in which we have limited or no experience; and ● manage legal and accounting costs relating to the acquisitions or compliance with regulatory matters.
At September 30, 2023, we had cash and cash equivalents in the aggregate of approximately $5.3 million. Our existing cash, cash equivalents and short-term investments will not be sufficient to fund our operating expenses. To continue to fund operations, we will need to secure additional funding.
At September 30, 2024, we had cash and cash equivalents in the aggregate of approximately $1.5 million. Our existing cash, cash equivalents and short-term investments will not be sufficient to fund our operating expenses. To continue to fund operations, we will need to secure additional funding.
We are an early-stage medical technology company developing comprehensive neuromodulation cEEG and sEEG monitoring, ablation, and brain stimulation solutions to diagnose and treat patients with epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders.
We are an early-stage medical technology company which continues to develop and commercialize comprehensive neuromodulation cEEG and sEEG monitoring, ablation, and brain stimulation solutions to diagnose and treat patients with epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders.
A person or entity does not need to have actual knowledge of these statutes or specific intent to violate them; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their implementing regulations, also imposes certain regulatory and contractual requirements regarding the privacy, security and transmission of individually identifiable health information; 49 NeuroOne Medical Technologies Corporation FORM 10-K ● federal “sunshine” requirements imposed by the ACA on device manufacturers regarding any “transfer of value” made or distributed to physicians and teaching hospitals.
A person or entity does not need to have actual knowledge of these statutes or specific intent to violate them; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their implementing regulations, also imposes certain regulatory and contractual requirements regarding the privacy, security and transmission of individually identifiable health information; ● federal “sunshine” requirements imposed by the ACA on device manufacturers regarding any “transfer of value” made or distributed to physicians and teaching hospitals.
We may obtain additional financing in the future through the issuance of our Common Stock, through other equity or debt financings or through collaborations or partnerships with other companies. We may not be able to raise additional capital on terms acceptable to us, or at all.
We may obtain additional financing in the future through the issuance of our Common Stock, through other equity or debt financings or through collaborations or partnerships with other companies. We may not be able to raise additional capital on terms acceptable to us, or at all. We may be adversely affected by the effects of inflation.
The success of any products that we develop will depend on several factors, including: ● receipt of timely commercialization approvals from applicable regulatory authorities; ● our ability to procure and maintain suppliers and manufacturers of the components of our current cortical strip, grid electrode and depth electrode technology and future versions; ● market acceptance of our cortical strip, grid electrode and depth electrode technology by people with epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders, the medical community and third-party payors; ● our success in educating healthcare providers and people with epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders about the benefits, administration and use of our cortical strip, grid electrode and depth electrode technology and future versions; ● the prevalence and severity of adverse events and public health emergencies such as the COVID-19 pandemic; ● the perceived advantages, cost, safety, convenience and accuracy of alternative therapies; ● obtaining and maintaining patent, trademark and trade secret protection and regulatory exclusivity for our cortical strip, grid electrode and depth electrode technology and otherwise protecting our rights in our intellectual property portfolio; ● maintaining compliance with regulatory requirements, including current good manufacturing practices; and ● obtaining and maintaining a continued acceptable performance and safety profile of our cortical strip, grid electrode and depth electrode technology. 33 NeuroOne Medical Technologies Corporation FORM 10-K The continuing development and commercialization of our products depends upon us maintaining strong relationships with academic and healthcare institutions and professionals.
The success of any products that we develop will depend on several factors, including: ● receipt of timely commercialization approvals from applicable regulatory authorities; ● our ability to procure and maintain suppliers and manufacturers of the components of our current cortical strip, grid electrode and depth electrode technology and future versions; ● market acceptance of our cortical strip, grid electrode and depth electrode technology by people with epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders, the medical community and third-party payors; ● our success in educating healthcare providers and people with epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders about the benefits, administration and use of our cortical strip, grid electrode and depth electrode technology and future versions; ● the prevalence and severity of adverse events and public health emergencies such as the COVID-19 pandemic; ● the perceived advantages, cost, safety, convenience and accuracy of alternative therapies; ● obtaining and maintaining patent, trademark and trade secret protection and regulatory exclusivity for our cortical strip, grid electrode and depth electrode technology and otherwise protecting our rights in our intellectual property portfolio; ● maintaining compliance with regulatory requirements, including current good manufacturing practices; and ● obtaining and maintaining a continued acceptable performance and safety profile of our cortical strip, grid electrode and depth electrode technology.
Risks associated with the manufacturing of our products could reduce our gross margins and negatively affect our operating results; ● if we or our third-party suppliers or manufacturers fail to comply with the FDA’s good manufacturing practice regulations, this could impair our ability to market our products in a cost-effective and timely manner; ● potential complications from our cortical strip, grid electrode and depth electrode technology that are currently unknown may come to light; ● if there are significant disruptions in our information technology systems, our business, financial condition and operating results could be adversely affected; ● we have entered into, and may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third-parties that may not result in the development of commercially viable products or the generation of significant future revenues; ● our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel; ● we have been the victim of a cyber-related crime and our controls may not be successful in avoiding further cyber-related crimes in the future; ● our ability to protect our intellectual property and proprietary technology is uncertain; ● we may be subject to damages resulting from claims that we, or our employees, have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors; ● our products and operations are subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer; ● the price of our Common Stock might fluctuate significantly, and you could lose all or part of your investment; and ● we intend to issue more shares to raise capital, which will result in substantial dilution. 27 NeuroOne Medical Technologies Corporation FORM 10-K Risks Related to Our Business We have incurred significant operating losses since inception and cannot assure you that we will ever achieve or sustain profitability.
Risks associated with the manufacturing of our products could reduce our gross margins and negatively affect our operating results; ● if we or our third-party suppliers or manufacturers fail to comply with the FDA’s good manufacturing practice regulations, this could impair our ability to market our products in a cost-effective and timely manner; ● potential complications from our products and technology that are currently unknown may come to light; ● if there are significant disruptions in our information technology systems, our business, financial condition and operating results could be adversely affected; ● we have entered into, and may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable products or the generation of significant future revenues; ● our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel; ● we have been the victim of a cyber-related crime and our controls may not be successful in avoiding further cyber-related crimes in the future; ● our ability to protect our intellectual property and proprietary technology is uncertain; ● we may be subject to damages resulting from claims that we, or our employees, have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors; ● our products and operations are subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer; ● the price of our Common Stock might fluctuate significantly, and you could lose all or part of your investment; and ● we intend to issue more shares to raise capital, which will result in substantial dilution.
Medicare program is administered by the Centers for Medicare and Medicaid Services, or CMS, which imposes extensive and detailed requirements on medical services providers, including, but not limited to, rules that govern how we structure our relationships with physicians, and how and where we provide our solutions.
Medicare program is administered by CMS, which imposes extensive and detailed requirements on medical services providers, including, but not limited to, rules that govern how we structure our relationships with physicians, and how and where we provide our solutions.
Our limited experience in medical device development may make it more difficult for us to complete these tasks. Even if we successfully develop and market such technology, we may not generate sufficient or sustainable revenue to achieve or sustain profitability, which could cause us to cease operations and cause you to lose all of your investment.
Our limited experience in medical device development may make it more difficult for us to complete these tasks. 29 NeuroOne Medical Technologies Corporation Form 10-K Even if we successfully develop and market such technology, we may not generate sufficient or sustainable revenue to achieve or sustain profitability, which could cause us to cease operations and cause you to lose all of your investment.
In addition, regardless of merit or eventual outcome, product liability claims may result in: ● litigation; ● distraction of management’s attention from our primary business; ● the inability to commercialize our cortical strip, grid electrode and depth electrode technology; 42 NeuroOne Medical Technologies Corporation FORM 10-K ● decreased demand; ● damage to our business reputation; ● product recalls or withdrawals from the market; ● withdrawal of clinical trial participants; ● substantial monetary awards or settlements to patients or other claimants; or ● loss of revenue.
In addition, regardless of merit or eventual outcome, product liability claims may result in: ● litigation; ● distraction of management’s attention from our primary business; ● the inability to commercialize our cortical strip, grid electrode and depth electrode technology; ● decreased demand; ● damage to our business reputation; ● product recalls or withdrawals from the market; ● withdrawal of clinical trial participants; ● substantial monetary awards or settlements to patients or other claimants; or ● loss of revenue.
The collaboration with Zimmer may not be successful due to several factors, including the following: ● Zimmer may not be able to obtain from us or manufacture our products in a timely or cost-effective manner; ● Zimmer may not timely perform its obligations under the Zimmer Development Agreement; ● Zimmer may fail to effectively commercialize our products; or ● contractual disputes or other disagreements between us and Zimmer, including those regarding the development, manufacture, and commercialization of our products, interpretation of the Zimmer Development Agreement, and ownership of proprietary rights.
The collaboration with Zimmer may not be successful due to several factors, including the following: ● Zimmer may not be able to obtain from us or manufacture our products in a timely or cost-effective manner; ● Zimmer may not timely perform its obligations under the Zimmer Amended and Restated Distribution Agreement or to achieve certain net sales milestones; ● Zimmer may fail to effectively commercialize our products; or ● contractual disputes or other disagreements between us and Zimmer, including those regarding the development, manufacture, and commercialization of our products, interpretation of the Zimmer Amended and Restated Distribution Agreement, and ownership of proprietary rights.
Adverse global economic conditions could have a negative effect on our business, results of operations and financial condition and liquidity.
General Risk Factors Adverse global economic conditions could have a negative effect on our business, results of operations and financial condition and liquidity.
Any potential intellectual property litigation could force us to do one or more of the following: ● stop selling our products or using technology that contains the allegedly infringing intellectual property; ● incur significant legal expenses; 46 NeuroOne Medical Technologies Corporation FORM 10-K ● pay substantial damages to the party whose intellectual property rights we are allegedly infringing; ● redesign those products that contain the allegedly infringing intellectual property; or ● attempt to obtain a license to the relevant intellectual property from third-parties, which may not be available on reasonable terms or at all, and if available, may be non-exclusive, thereby giving our competitors access to the same technology.
Any potential intellectual property litigation could force us to do one or more of the following: ● stop selling our products or using technology that contains the allegedly infringing intellectual property; ● incur significant legal expenses; ● pay substantial damages to the party whose intellectual property rights we are allegedly infringing; ● redesign those products that contain the allegedly infringing intellectual property; or ● attempt to obtain a license to the relevant intellectual property from third-parties, which may not be available on reasonable terms or at all, and if available, may be non-exclusive, thereby giving our competitors access to the same technology. 45 NeuroOne Medical Technologies Corporation Form 10-K Patent litigation can involve complex factual and legal questions, and its outcome is uncertain.
If our competitors are more successful than us in these matters, our business may be harmed. 37 NeuroOne Medical Technologies Corporation FORM 10-K The size and future growth in the market for our cortical strip, grid electrode and depth electrode technology has not been established with precision and may be smaller than we estimate, possibly materially.
If our competitors are more successful than us in these matters, our business may be harmed. 38 NeuroOne Medical Technologies Corporation Form 10-K The size and future growth in the market for our cortical strip, grid electrode and depth electrode technology and for other future products and technology under development have not been established with precision and may be smaller than we estimate, possibly materially.
However, we identified material weaknesses in our internal control over financial reporting in 2018, and we cannot assure you that material weaknesses or significant deficiencies will not occur in the future and that we will be able to remediate such weaknesses or deficiencies in a timely manner, which could impair our ability to accurately and timely report our financial position, results of operations or cash flows.
We cannot assure you that material weaknesses or significant deficiencies will not occur in the future and that we will be able to remediate such weaknesses or deficiencies in a timely manner, which could impair our ability to accurately and timely report our financial position, results of operations or cash flows.
It may not be possible for us to manufacture these products at a cost or in quantities sufficient to make any future versions of our cortical strip, grid electrode and depth electrode technology commercially viable. 41 NeuroOne Medical Technologies Corporation FORM 10-K Potential complications from our cortical strip, grid electrode and depth electrode technology that are currently unknown may come to light.
It may not be possible for us to manufacture these products at a cost or in quantities sufficient to make any future versions of our cortical strip, grid electrode and depth electrode technology commercially viable. Potential complications from our cortical strip, grid electrode and depth electrode technology that are currently unknown may come to light.
Treasury Department, and state/local taxing authorities. The tax laws in the U.S. could change on a prospective or retroactive basis, and any such changes could materially adversely affect our business, our results of operations, our effective tax rate, and holders of our common stock.
The tax laws in the U.S. could change on a prospective or retroactive basis, and any such changes could materially adversely affect our business, our results of operations, our effective tax rate, and holders of our Common Stock.
We have incurred losses since inception, and as of September 30, 2023, we had an accumulated deficit of $62.7 million primarily as a result of expenses incurred in connection with our operations and from our research and development programs.
We have incurred losses since inception, and as of September 30, 2024, we had an accumulated deficit of $75.0 million primarily as a result of expenses incurred in connection with our operations and from our research and development programs.
If we fail to comply with the continued listing standards of the Nasdaq Capital Market, our Common Stock could be delisted. If it is delisted, our Common Stock and the liquidity of our Common Stock would be impacted. The continued listing of our Common Stock on Nasdaq is contingent on NeuroOne’s continued compliance with a number of listing standards.
If we fail to comply with the continued listing standards of the Nasdaq Capital Market, our Common Stock could be delisted. If it is delisted, our Common Stock and the liquidity of our Common Stock would be impacted.
Although we have an employment agreement with our Chief Executive Officer, David Rosa, he (and each of our other key employees) may terminate his employment with us at any time and will continue to be able to do so. We do not maintain “key person” insurance for any of our executives or employees.
Although we have an employment agreement with our Chief Executive Officer, David Rosa, he (and each of our other key employees) may terminate his employment with us at any time and will continue to be able to do so.
Clinical testing is expensive, difficult to design and implement, can take many years to complete and is inherently uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing.
For our current products under continued development, clinical testing is expensive, difficult to design and implement, can take many years to complete and is inherently uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing.
We do not know if we will be able to identify acquisitions we deem suitable, whether we will be able to successfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully integrate any acquired products or technologies.
We have no current commitments with respect to any acquisition. We do not know if we will be able to identify acquisitions we deem suitable, whether we will be able to successfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully integrate any acquired products or technologies.
Termination of this partnership would harm our business, and even if this partnership continues, it may not be successful; ● even if we have our cortical strip, grid electrode and depth electrode technology approved for commercial sale, if we are unable to expand our sales and marketing infrastructure, we may not be successful in commercializing our cortical strip, grid electrode and depth electrode technology in the United States; ● we contract with third parties for the manufacture of our cortical strip, grid electrode and depth electrode technology under development and expect to continue to do so for clinical trials and commercialization.
Termination of this partnership would harm our business, and even if this partnership continues, it may not be successful; 27 NeuroOne Medical Technologies Corporation Form 10-K ● if we are unable to expand our sales and marketing infrastructure, we may not be successful in commercializing our cortical strip, grid electrode and depth electrode technology in the United States; ● we contract with third parties for the manufacture of our products and technology under development and expect to continue to do so for clinical trials and commercialization.
Department of Justice, or DOJ, has recently increased its scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Dealing with investigations can be time and resource consuming and can divert management’s attention from our core business.
For example, to enforce compliance with the federal laws, the DOJ, has increased its scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Dealing with investigations can be time and resource consuming and can divert management’s attention from our core business.
In order for us to sell cortical strip, grid electrode and depth electrode technology to people with epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders, we must convince them, their caregivers and healthcare providers that cortical strip, grid electrode and depth electrode technology is an attractive alternative to competitive products for neuromodulation cEEG and sEEG recording, ablation, and brain stimulation.
In order for us to sell cortical strip, grid electrode and depth electrode technology to people with epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders, we must convince them, their caregivers and healthcare providers that our technology offers meaningful advantages over existing solutions for neuromodulation, cEEG and sEEG recording, ablation, and brain stimulation.
Patent litigation can involve complex factual and legal questions, and its outcome is uncertain. Any litigation or claim against us, even those without merit, may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation.
Any litigation or claim against us, even those without merit, may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation.
If we are unable to successfully develop, and receive regulatory clearance/approval for our other products under development, or if we experience significant delays in doing so, our business will be harmed. Three of our products have received 510(k) clearance from the FDA.
If we are unable to successfully develop, and receive regulatory clearance/approval for our other products under development, or if we experience significant delays in doing so, our business will be harmed.
Healthcare providers may choose not to order a product unless third-party payors pay a substantial portion of the product. Within and outside the United States, reimbursement is obtained from a variety of sources, including government-sponsored and private health insurance plans. These third-party payors determine whether to provide coverage and reimbursement for specific products and procedures.
Within and outside the United States, reimbursement is obtained from a variety of sources, including government-sponsored and private health insurance plans. These third-party payors determine whether to provide coverage and reimbursement for specific products and procedures.
We have entered into, and may enter into additional collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third-parties that may not result in the development of commercially viable products or the generation of significant future revenues.
Any of these results could negatively affect our business, financial condition and operating results. We have entered into, and may enter into additional collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third-parties that may not result in the development of commercially viable products or the generation of significant future revenues.
We may not be successful in commercializing our cortical strip, grid electrode and depth electrode. We anticipate that we will derive nearly all of our U.S. revenue from the sales of our cortical strip, grid electrode and depth electrode technology or future versions thereof.
We anticipate that we will derive nearly all of our revenue from the sales of our cortical strip, grid electrode and depth electrode technology or future versions thereof.
In addition, adverse economic conditions, such as recent supply chain disruptions and labor shortages and persistent inflation, have affected, and may continue to adversely affect our suppliers’ ability to provide our manufacturers with materials and components, which may negatively impact our business.
In addition, adverse economic conditions, such as recent supply chain disruptions and labor shortages and persistent inflation, have affected, and may continue to adversely affect our suppliers’ ability to provide our manufacturers with materials and components, which may negatively impact our business. These economic conditions make it more difficult for us to accurately forecast and plan our future business activities.
Any federal, state or foreign regulatory review to which we may become subject, regardless of the outcome, would be costly and time-consuming. For example, to enforce compliance with the federal laws, the U.S.
Any federal, state or foreign regulatory review to which we may become subject, regardless of the outcome, would be costly and time-consuming.
Manufacturers must submit reports by the 90th day of each subsequent calendar year; ● federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and ● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of certain health information, many of which differ from each other in significant ways and often are not preempted by HIPAA.
Manufacturers must submit reports by the 90th day of each subsequent calendar year; ● federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and ● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of certain health information, many of which differ from each other in significant ways and often are not preempted by HIPAA. 48 NeuroOne Medical Technologies Corporation Form 10-K The risk of our being found in violation of these laws and regulations is increased by the fact that the scope and enforcement of these laws is uncertain, many of them have not been fully interpreted by the regulatory authorities or the courts, their provisions are open to a variety of interpretations, or they vary country by country.
Additionally, if we settle an investigation with law enforcement or other regulatory agencies, we may be forced to agree to additional onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement.
Additionally, if we settle an investigation with law enforcement or other regulatory agencies, we may be forced to agree to additional onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.
Recruiting and retaining qualified scientific and clinical personnel will also be critical to our success. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy.
The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy.
In addition, negative publicity and product liability claims resulting from any adverse regulatory action could have a material adverse effect on our business, financial condition, and operating results. 32 NeuroOne Medical Technologies Corporation FORM 10-K In addition, even though we have obtained FDA clearance to market two of our products, and even if we obtain the proper regulatory approval or clearance to market any additional products under development, the FDA has the power to require us to conduct post-market surveillance studies, which are designed to identify adverse events, device malfunctions or complaints from patients implanted with the device during a specified period after the commencement of commercial use in the U.S.
In addition, even though we have obtained FDA clearance to market two of our products, and even if we obtain the proper regulatory approval or clearance to market any additional products under development, the FDA has the power to require us to conduct post-market surveillance studies, which are designed to identify adverse events, device malfunctions or complaints from patients implanted with the device during a specified period after the commencement of commercial use in the U.S.
If Zimmer does not perform its obligations under the Zimmer Development Agreement, we may be forced to incur material expenses to build a sales organization and infrastructure to market our products which sales would be substantially delayed and could result in a material adverse effect on our business, results of operations and prospects and would likely cause our stock price to decline.
If Zimmer does not perform its obligations under the Zimmer Amended and Restated Distribution Agreement, sales would be substantially delayed and could result in a material adverse effect on our business, results of operations and prospects and would likely cause our stock price to decline.
Our Evo cortical electrode technology has received 510(k) clearance from the FDA for recording, monitoring, and stimulating brain tissue on the surface of the brain for less than 30 days, and our Evo sEEG electrode technology has received 510(k) clearance from the FDA for use (less than 30 days) with recording, monitoring, and stimulation equipment for recording, monitoring, and stimulation of electrical signals at the subsurface level of the brain.
Three of our products have received 510(k) clearance from the FDA: (i) our Evo cortical electrode technology has received 510(k) clearance from the FDA for recording, monitoring, and stimulating brain tissue on the surface of the brain for less than 30 days; (ii) our Evo sEEG electrode technology has received 510(k) clearance from the FDA for use (less than 30 days) with recording, monitoring, and stimulation equipment for recording, monitoring, and stimulation of electrical signals at the subsurface level of the brain; and our OneRF ablation system has received 510(k) clearance from the FDA for creation of radiofrequency lesions in nervous tissue for functional neurosurgical procedures.
Failure to conduct required surveillance or studies in a timely manner could result in the revocation of the approved PMA product that is subject to such a requirement and could also result in the recall or withdrawal of the product, which would prevent us from generating sales from that product in the United States.
Failure to conduct required surveillance or studies in a timely manner could result in the revocation of the approved PMA product that is subject to such a requirement and could also result in the recall or withdrawal of the product, which would prevent us from generating sales from that product in the United States. 34 NeuroOne Medical Technologies Corporation Form 10-K We may not be successful in commercializing our technology.
In the future, we may rely on our information technology systems for inventory management and technical support functions. Our information technology systems are vulnerable to damage or interruption from earthquakes, fires, floods, other natural disasters, terrorist attacks, attacks by computer viruses or hackers, power losses, and computer system or data network failures.
Our information technology systems are vulnerable to damage or interruption from earthquakes, fires, floods, other natural disasters, terrorist attacks, attacks by computer viruses or hackers, power losses, and computer system or data network failures.
There is no assurance that NeuroOne will remain in compliance with these standards. Delisting from Nasdaq would adversely affect our ability to raise additional financing through the public or private sale of equity securities, significantly affect the ability of investors to trade our securities and negatively affect the value and liquidity of our Common Stock.
Delisting from Nasdaq would adversely affect our ability to raise additional financing through the public or private sale of equity securities, significantly affect the ability of investors to trade our securities and negatively affect the value and liquidity of our Common Stock.
This could delay completion of pre-clinical testing or clinical trials, increase costs, delay approval of our future products and jeopardize our ability to commence sales and generate revenue. We have two products, our cortical strip and grid electrodes and our sEEG electrode technology, which have each received 510(k) clearance from the FDA.
This could delay completion of pre-clinical testing or clinical trials, increase costs, delay approval of our future products and jeopardize our ability to commence sales and generate revenue. 32 NeuroOne Medical Technologies Corporation Form 10-K We have three products which have each received 510(k) clearance from the FDA.
Volatility in the market price of our Common Stock may prevent you from being able to sell your shares of our Common Stock at or above the price you paid for your shares.
Risks Related to our Common Stock The price of our Common Stock might fluctuate significantly, and you could lose all or part of your investment. Volatility in the market price of our Common Stock may prevent you from being able to sell your shares of our Common Stock at or above the price you paid for your shares.
We depend on intellectual property licensed from WARF for our technology, including our technology under development, and the termination of this license would harm our business.
Any overestimation of the market opportunity could adversely impact our projected sales growth and overall business performance. We depend on intellectual property licensed from WARF for our technology, including our technology under development, and the termination of this license would harm our business.
These and other factors might cause the market price of our Common Stock to fluctuate substantially, which may negatively affect the liquidity of our Common Stock. In addition, in recent years, the stock market has experienced significant price and volume fluctuations.
These and other factors might cause the market price of our Common Stock to fluctuate substantially, which may negatively affect the liquidity of our Common Stock. In addition, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies across many industries.
However, any changes that lower reimbursements for either our products or procedures using our products, reduce medical procedure volumes, increase cost containment pressures on us or others in the healthcare sector, or impose additional or heightened regulatory requirements could adversely affect our business and results of operations. 51 NeuroOne Medical Technologies Corporation FORM 10-K Risks Related to our Common Stock The price of our Common Stock might fluctuate significantly, and you could lose all or part of your investment.
However, any changes that lower reimbursements for either our products or procedures using our products, reduce medical procedure volumes, increase cost containment pressures on us or others in the healthcare sector, or impose additional or heightened regulatory requirements could adversely affect our business and results of operations.
If we are unable to maintain strong relationships with these institutions and professionals, the development and marketing of our products could suffer, which could have a material adverse effect on our business, results of operations, financial condition, and cash flows.
If we are unable to maintain strong relationships with these institutions and professionals, the development and marketing of our products could suffer, which could have a material adverse effect on our business, results of operations, financial condition, and cash flows. 35 NeuroOne Medical Technologies Corporation Form 10-K Our success depends on our ability to continue to develop, commercialize and gain market acceptance for our products and technology.
In addition, if we raise additional funds through collaborations, licensing, joint ventures, strategic alliances, partnership arrangements or other similar arrangements, it may be necessary to relinquish valuable rights to our potential future products or proprietary technologies or grant licenses on terms that are not favorable to us. 30 NeuroOne Medical Technologies Corporation FORM 10-K Changes in the configuration of our cortical strip, grid electrode and depth electrode technology under development may result in additional costs or delay.
In addition, if we raise additional funds through collaborations, licensing, joint ventures, strategic alliances, partnership arrangements or other similar arrangements, it may be necessary to relinquish valuable rights to our potential future products or proprietary technologies or grant licenses on terms that are not favorable to us.
Repeated product malfunctions may result in a voluntary or involuntary product recall, which could divert managerial and financial resources, impair our ability to manufacture our products in a cost-effective and timely manner and have an adverse effect on our reputation, financial condition and operating results.
Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our reputation, financial condition and operating results, which could impair our ability to produce our products in a cost-effective and timely manner.
Our OneRF ablation system has received 510(k) clearance from the FDA for creation of radiofrequency lesions in nervous tissue for functional neurosurgical procedures. None of our other products have received clearance or approval for commercial sale. Our ability to generate revenue from our developed products, if any, will depend heavily on their successful development and regulatory approval.
None of our other products have received clearance or approval for commercial sale. Our ability to generate revenue from our developed products, if any, will depend heavily on their successful development and regulatory approval.
For example, the ACA and Health Care and Education Affordability Reconciliation Act of 2010 were enacted into law in the U.S. in March 2010. Certain provisions of this law, including comparative effectiveness research, pilot programs to evaluate alternative payment methodologies and other changes to the payment systems, have started changing the way healthcare is delivered, reimbursed and funded.
Certain provisions of this law, including comparative effectiveness research, pilot programs to evaluate alternative payment methodologies and other changes to the payment systems, have started changing the way healthcare is delivered, reimbursed and funded.
Our promotional materials and training methods must comply with FDA and other applicable laws and regulations, including the prohibition of the promotion of the off-label use of our products. Healthcare providers may use our products, if approved, off-label, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine.
Healthcare providers may use our products, if approved, off-label, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine.
Termination of the Mayo Development Agreement could result in the loss of significant rights and would harm our ability to further develop our technology. 39 NeuroOne Medical Technologies Corporation FORM 10-K We depend on a limited number of third-party suppliers for the components of our cortical strip, grid electrode and depth electrode technology, and the loss of any of these suppliers, or their inability to provide us with an adequate supply of materials, could harm our business.
An inability to obtain such components and raw material products could have a material adverse impact on our business, financial condition and results of operations. 31 NeuroOne Medical Technologies Corporation Form 10-K We depend on a limited number of third-party suppliers for the components of our cortical strip, grid electrode and depth electrode technology, and the loss of any of these suppliers, or their inability to provide us with an adequate supply of materials, could harm our business.
Access to adequate coverage and reimbursement for our cortical strip, grid electrode and depth electrode technology by third-party payors is essential to the acceptance of our products by people with epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders.
Access to adequate coverage and reimbursement for our cortical strip, grid electrode and depth electrode technology by third-party payors is essential to the acceptance of our products by people with epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders. 36 NeuroOne Medical Technologies Corporation Form 10-K In the United States, a third-party payor’s decision to provide coverage for our products does not imply that an adequate reimbursement rate will be obtained.
In the United States, a third-party payor’s decision to provide coverage for our products does not imply that an adequate reimbursement rate will be obtained. Further, one third-party payor’s decision to cover our products does not assure that other payors will also provide coverage for the products or will provide coverage at an adequate reimbursement rate.
Further, one third-party payor’s decision to cover our products does not assure that other payors will also provide coverage for the products or will provide coverage at an adequate reimbursement rate. Healthcare providers may choose not to order a product unless third-party payors pay a substantial portion of the product.
It could also require us to cease using the components, seek alternative components or technologies and modify our products to incorporate alternative components or technologies, which could result in a requirement to seek additional regulatory approvals.
It could also require us to cease using the components, seek alternative components or technologies and modify our products to incorporate alternative components or technologies, which could result in a requirement to seek additional regulatory approvals. Any disruption of this nature or increased expenses could harm our development, approval or commercialization efforts and adversely affect our operating results.
Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. 28 NeuroOne Medical Technologies Corporation FORM 10-K Our Company has limited experience in medical device development and may not be able to successfully develop any device or therapy.
However, the factors included above raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our Company has limited experience in medical device development and may not be able to successfully develop any device or therapy.
Our ability to purchase adequate quantities of components or our products may be limited and we may not be able to convince suppliers to make components and products available to us.
We may not have long term supply agreements with our suppliers and, in many cases, we may make our purchases on a purchase order basis. Our ability to purchase adequate quantities of components or our products may be limited and we may not be able to convince suppliers to make components and products available to us.
In addition, our internal estimates are based in large part on current treatment patterns by healthcare providers using current generation technology and our belief is that the incidence of epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to failed back surgeries and other related neurological disorders in the United States and worldwide is increasing.
Our market projections are based on internal and third-party studies, current treatment patterns, and our belief that the incidence of targeted neurological disorders (including epilepsy, Parkinson’s disease, dystonia, essential tremors, and chronic pain from failed back surgeries) is increasing in the United States and worldwide.
This litigation, if instituted against us, could result in substantial costs, divert our management’s attention and resources, and harm our business, operating results and financial condition. 52 NeuroOne Medical Technologies Corporation FORM 10-K Any failure to maintain an effective system of internal controls over our financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations or fail to prevent fraud in which case, our stockholders could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our stock.
Moreover, we have committed in connection with the sale of securities to use commercially reasonable efforts to maintain the listing of its Common Stock during such time that certain warrants are outstanding. 51 NeuroOne Medical Technologies Corporation Form 10-K Any failure to maintain an effective system of internal controls over our financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations or fail to prevent fraud in which case, our stockholders could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our stock.
In addition, to maintain a listing on Nasdaq, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’ equity, and certain corporate governance requirements.
If a listed stock trades below one dollar for more than 30 consecutive trading days, then it is subject to delisting from Nasdaq. In addition, to maintain a listing on Nasdaq, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’ equity, and certain corporate governance requirements.
Any of the foregoing could adversely impact the likelihood and timing of any payments we are eligible to receive under the Zimmer Development Agreement. The Company is reliant on Zimmer to drive the commercialization and sales of our products.
Any of the foregoing could adversely impact the likelihood and timing of any payments we are eligible to receive under the Zimmer Amended and Restated Distribution Agreement.
This could harm our ability to market our products and generate sales. In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of our products.
This could harm our ability to market our products and generate sales. 49 NeuroOne Medical Technologies Corporation Form 10-K In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products.
Undetected errors or defects in our cortical strip, grid electrode and depth electrode technology under development or future versions thereof could harm our reputation, decrease the market acceptance of our cortical strip, grid electrode and depth electrode technology or expose us to product liability claims adversely affecting our financial condition and results of operations or liquidity.
We cannot assure you that use, even for a limited time, would not result in unanticipated complications, even after the device is removed. 41 NeuroOne Medical Technologies Corporation Form 10-K Undetected errors or defects in our cortical strip, grid electrode and depth electrode technology under development or future versions thereof could harm our reputation, decrease the market acceptance of our cortical strip, grid electrode and depth electrode technology or expose us to product liability claims adversely affecting our financial condition and results of operations or liquidity.
We are subject to income and other non-income-based taxes and tariffs in the U.S., and our operations, plans and results are affected by tax and other initiatives. The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service, the U.S.
The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service, the U.S. Treasury Department, and state/local taxing authorities.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table summarizes the share repurchase activity: Total number of Maximum number shares purchased of shares that may as part of publicly yet be purchased Total number of Average price announced plans under the plans Purchase period shares purchased paid per share or programs or programs July 1 – July 31, 2023 2,794 $ 1.20 - - August 1 – August 31, 2023 2,794 $ 1.02 - - September 1 – September 30, 2023 2,794 $ 0.85 - - ITEM 6. [RESERVED]
Biggest changeThe following table summarizes our share repurchase activity during the fourth quarter of 2024: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs July 1 - July 31, 2024 6,879 $ 0.80 - - August 1 - August 31, 2024 2,794 $ 0.75 - - September 1 - September 30, 2024 2,794 $ 0.80 - - TOTAL 12,467 - -
The transfer agent and registrar for our Common Stock is Equiniti Trust Company. Share Repurchases During the three months ended September 30, 2023, we repurchased 8,382 common shares surrendered by employees to satisfy income tax withholding obligations of employees in connection with the administration of employee share-based compensation plans.
The transfer agent and registrar for our Common Stock is Equiniti Trust Company LLC. Share Repurchases During the three months ended September 30, 2024, we repurchased 12,467 common shares surrendered by employees to satisfy income tax withholding obligations of employees in connection with the administration of employee share-based compensation plans.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Common Stock commenced trading on the Nasdaq Capital Market on May 26, 2021 under the ticker symbol “NMTC.” Previously, our Common Stock was traded on the OTC Markets quotation system on the OTCQB administered by the Financial Industry Regulatory Authority under the symbol “NMTC” since December 19, 2017.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Common Stock commenced trading on the Nasdaq Capital Market on May 26, 2021 under the ticker symbol “NMTC.” Stockholders On December 13, 2024, there were 116 record holders of our Common Stock.
Removed
Prior to December 19, 2017, our Common Stock had been quoted on the OTC Pink Sheets under the symbol “OSOK” from November 2012 to August 4, 2017 and under the symbol “NMTC” from August 4, 2017 to December 19, 2017. Stockholders On December 13, 2023, there were 103 record holders of our Common Stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFor the years ended September 30, 2023 2022 Period to Period Change Product revenue $ 1,952,441 $ 171,169 $ 1,781.272 Cost of product revenue 1,495,924 241,963 1,253,961 Product gross profit (loss) 456,517 (70,794 ) 527,311 Collaborations revenue 1,455,188 1,948,872 (493,684 ) Operating expenses: Selling, general and administrative 6.926,269 6,979,416 (53,147 ) Research and development 6,940,686 4,929,427 2,011,259 Total operating expenses 13,866,955 11,908,843 1,958,112 Loss from operations (11,955,250 ) (10,030,765 ) (1,924,485 ) Other income, net 95,759 31,152 64,607 Loss before income taxes (11,859,491 ) (9,999,613 ) (1,859,878 ) Provision for income taxes — — — Net loss $ (11,859,491 ) $ (9,999,613 ) $ (1,859,878 ) 63 NeuroOne Medical Technologies Corporation FORM 10-K Product Revenue and Product Gross Profit (Loss) Product revenue and product gross profit were $2.0 million and $0.5 million, respectively, during the year ended September 30, 2023.
Biggest changeFor the years ended September 30, 2024 2023 Period to Period Change Product revenue $ 3,453,003 $ 1,952,441 $ 1,500,562 Cost of product revenue 2,373,336 1,495,924 877,412 Product gross profit 1,079,667 456,517 623,150 Collaborations revenue — 1,455,188 (1,455,188 ) Operating expenses: Selling, general and administrative 7,901,695 6,926,269 975,426 Research and development 5,065,181 6,940,686 (1,875,505 ) Total operating expenses 12,966,876 13,866,955 (900,079 ) Loss from operations (11,887,209 ) (11,955,250 ) 68,041 Fair value change in warrant liability (327,092 ) — (327,092 ) Financing costs (228,988 ) — (228,988 ) Other income, net 125,179 95,759 29,420 Loss before income taxes (12,318,110 ) (11,859,491 ) (458,619 ) Provision for income taxes — — — Net loss $ (12,318,110 ) $ (11,859,491 ) $ (458,619 ) 63 NeuroOne Medical Technologies Corporation FORM 10-K Product Revenue and Product Gross Profit Product revenue was $3.5 million during the year ended September 30, 2024 with a gross profit and gross profit percentage of $1.1 million and 31.3%, respectively.
In addition, in connection with the Amendment, we issued to Zimmer a warrant to purchase common stock (the “2022 Zimmer Warrant”). The 2022 Zimmer Warrant is exercisable for up to an aggregate of 350,000 shares of our Common Stock.
In addition, in connection with the Zimmer Amendment, we issued to Zimmer a warrant to purchase common stock (the “2022 Zimmer Warrant”). The 2022 Zimmer Warrant is exercisable for up to an aggregate of 350,000 shares of our common stock.
Other Income, net Other income, net during the year ended September 30, 2023 related to interest income attributed to our cash, cash equivalents and short-term investments in the amount of $0.2 million, while outstanding, which was partially offset by an exploit loss of $94,000 and a loss on disposal of equipment in the amount of $32,000.
Other income, net during the year ended September 30, 2023 related to interest income attributed to our cash, cash equivalents and short-term investments in the amount of $0.2 million, while outstanding, which was partially offset by an exploit loss of $94,000 and a loss on disposal of equipment in the amount of $32,000.
On July 24, 2023, we decreased the amount of common stock that can be sold pursuant to the Sales Agreement, such that we were offering up to an aggregate of $2.6 million of our common stock for sale under the Sales Agreement, including the shares of common stock previously sold.
On July 24, 2023, we decreased the amount of common stock that can be sold pursuant to the Sales Agreement, such that we were offering up to an aggregate of $2.6 million of our common stock for sale under the Sales Agreement, including the shares of our common stock previously sold.
See “Item 1—Business—Clinical Development and Regulatory Pathway—Clinical Experience, Future Development and Clinical Trial Plans” in this Report for a discussion of design, development, pre-clinical and clinical activities that we may conduct in the future, including expected cash expenditures required for some of those activities, to the extent we are able to estimate such costs.
See “Item 1—Business—Clinical Development and Regulatory Pathway—Clinical Experience, Future Development and Clinical Trial Plans” of this Report for a discussion of design, development, pre-clinical and clinical activities that we may conduct in the future, including expected cash expenditures required for some of those activities, to the extent we are able to estimate such costs.
Net cash provided by financing activities Net cash provided by financing activities was $7.4 million for the year ended September 30, 2023, which consisted of net proceeds from the July 2023 Public Offering of $5.2 million and from the ATM of $2.3 million, offset partially by repurchases of common stock for the payment of employee taxes in the amount of $0.1 million.
Net cash provided by financing activities was $7.4 million for the year ended September 30, 2023, which consisted of net proceeds from the July 2023 Public Offering of $5.2 million and from the ATM of $2.3 million, offset partially by repurchases of common stock for the payment of employee taxes in the amount of $0.1 million.
In accordance with the provisions under ASC 606, we identified five performance obligations under the Zimmer Development Agreement and Amendment: (1) our obligation to grant Zimmer access to our intellectual property; (2) completion of sEEG Product development; (3) completion of Strip/Grid Product development; (4) the provision of sEEG exclusivity maintenance; and (5) sEEG design modifications as requested by Zimmer.
In accordance with the provisions under ASC 606, we identified five performance obligations under the Zimmer Distribution Agreement and Zimmer Amendment: (1) our obligation to grant Zimmer access to our intellectual property; (2) completion of sEEG Product development; (3) completion of Strip/Grid Product development; (4) the provision of sEEG exclusivity maintenance; and (5) sEEG design modifications as requested by Zimmer.
While we have begun to generate revenue from the sale of products based on our cEEG and sEEG technology and through milestone and other payments from our current collaboration with Zimmer, we expect to continue to incur significant expenses and increasing operating and net losses for the foreseeable future until and unless we generate a higher level of revenue from commercial sales, and we will need to obtain substantial additional funding in connection with our continuing operations through public or private equity or debt financings, through collaborations or partnerships with other companies or other sources.
While we have begun to generate revenue from the sale of products based on our cEEG and sEEG technology, and OneRF System, and through milestone and other payments from our current collaboration with Zimmer, we expect to continue to incur significant expenses and increasing operating and net losses for the foreseeable future until and unless we generate a higher level of revenue from commercial sales, and we will need to obtain substantial additional funding in connection with our continuing operations through public or private equity or debt financings, through collaborations or partnerships with other companies or other sources.
Cost of product revenue consisted of the manufacturing and materials costs incurred by our third-party contract manufacturer in connection with our Strip/Grid Products, sEEG Products and outside supplier materials costs in connection with the Electrode Cable Assembly Products.
Cost of product revenue consisted of the manufacturing and materials costs incurred by our third-party contract manufacturer in connection with our Strip/Grid Products, sEEG Products and OneRF Products, and outside supplier materials costs in connection with the Electrode Cable Assembly Products.
On January 21, 2020, we entered into an Amended and Restated License Agreement (the “WARF License”) with WARF, which amended and restated in full our prior license agreement with WARF, dated October 1, 2014 (the “Original WARF License”).
On January 21, 2020, we entered into an Amended and Restated License Agreement (the “WARF License”) with WARF, which amended and restated in full our prior license agreement with WARF, dated October 1, 2014.
In consideration of the mutual covenants and agreements contained in the Zimmer Development Agreement, certain fee and milestone payment provisions in the Zimmer Development Agreement were replaced with the following below: ● $1.5 million for the sEEG exclusivity maintenance fee; and ● $2.0 million for satisfaction of each of the milestone events related to the design of sEEG Products set forth in the Zimmer Development Agreement, even though the satisfaction was after the deadlines originally identified.
In consideration of the mutual covenants and agreements contained in the Zimmer Distribution Agreement, certain fee and milestone payment provisions in the Zimmer Distribution Agreement were replaced with the following below: ● $1.5 million for the sEEG exclusivity maintenance fee; and ● $2.0 million for satisfaction of each of the milestone events related to the design of sEEG Products set forth in the Zimmer Distribution Agreement, even though the satisfaction was after the deadlines originally identified.
The net cash use stemming from the change in operating assets and liabilities was primarily attributable to both a decrease in deferred revenue in connection with the completion of the remaining milestone performance obligation under the Zimmer Development Agreement and to an increase in inventory purchases, attributed to the timing of payments.
The net cash use stemming from the change in operating assets and liabilities was primarily attributable to both a decrease in deferred revenue in connection with the completion of the remaining milestone performance obligation under the Zimmer Distribution Agreement and to an increase in inventory purchases, attributed to the timing of payments.
Additionally, our independent registered public accounting firm included an explanatory paragraph in the report on our financial statements as of and for the years ended September 30, 2023 and 2022, respectively, noting the existence of substantial doubt about our ability to continue as a going concern.
Additionally, our independent registered public accounting firm included an explanatory paragraph in the report on our financial statements as of and for the years ended September 30, 2024 and 2023, respectively, noting the existence of substantial doubt about our ability to continue as a going concern.
We anticipate that our selling, general and administrative expenses will increase in the future to support our continued research and development activities, further commercialization of our cortical strip and grid technology, and our depth electrode technology, and the increased costs of operating as a public company.
We anticipate that our selling, general and administrative expenses will increase in the future to support our continued research and development activities, further commercialization of our cortical strip and grid technology, ablation system and our depth electrode technology, and the increased costs of operating as a public company.
Capital Resources Our sources of cash, cash equivalents and short-term investments to date have been limited to collaboration and product revenues, along with proceeds from the issuances of notes with warrants, common stock with and without warrants and unsecured loans with the terms of our financings described below.
Capital Resources Our sources of cash, cash equivalents and short-term investments to date have been limited to collaboration and product revenues, along with proceeds from the issuances of notes with warrants, common stock with and without warrants and unsecured loans with the terms of our more recent financings described below.
Other Income, net Other income, net primarily consists of interest income related to our cash, cash equivalents, investment income or loss from short-term investments and other income or expense outside of normal operating activity relating to legal settlements, sales of non-commercial supplies and other items as applicable.
Other Income, net Other income, net primarily consists of interest income related to our cash, cash equivalents, investment income or loss from short-term investments, while outstanding, and other income or expense outside of normal operating activity relating to legal settlements, sales of non-commercial supplies and other items as applicable.
For additional information, see “Note 11 — Income Taxes” included in “Item 8 — Financial Statements and Supplementary Data” in this Report. Contingencies We are subject to numerous contingencies arising in the ordinary course of business, including legal contingencies.
For additional information, see “Note 12 — Income Taxes” included in “Item 8 — Financial Statements and Supplementary Data” in this Report. Contingencies We are subject to numerous contingencies arising in the ordinary course of business, including legal contingencies.
Refer to “Note 4 – Commitments and Contingencies” included in our financial statements included in “Item 8 — Financial Statements and Supplementary Data” in this Report for more information about the WARF License and the Mayo Development Agreement. Our other cash requirements within the next twelve months include accounts payable, accrued expenses, purchase commitments and other current liabilities.
See “Note 4 – Commitments and Contingencies” included in our financial statements included in “Item 8 — Financial Statements and Supplementary Data” in this Report. for more information about the WARF License and the Mayo Development Agreement. Our other cash requirements within the next twelve months include accounts payable, accrued expenses, purchase commitments and other current liabilities.
Contracted services include agreements with third-party service providers for clinical research, product development, manufacturing, supplies, payroll services, equipment maintenance services, and audits for periods up to fiscal year 2025.
Contracted services include agreements with third-party service providers for clinical research, product development, manufacturing, supplies, payroll services, equipment maintenance services, and audits for periods up to fiscal year 2028.
Other significant costs include legal and litigation costs relating to corporate matters, intellectual property costs, professional fees for consultants assisting with financial and administrative matters, and sales and marketing in connection with the commercial sale of cEEG strip/grid, sEEG depth electrode and electrode cable assembly products.
Other significant costs include legal and litigation costs relating to corporate matters, intellectual property costs, professional fees for consultants assisting with financial and administrative matters, and sales and marketing in connection with the commercial sale of cEEG strip/grid, sEEG depth electrode, OneRF ablation system and electrode cable assembly products.
Even though we have received regulatory clearance to expand the use of our Evo sEEG electrode technology for up to 30 days, commercial sales of the sEEG electrodes are expected to take some time to be a significant source of liquidity.
Even though we have received regulatory clearance to expand the use of our Evo sEEG electrode technology for up to 30 days, commercial sales of the sEEG electrodes and OneRF Products are expected to take some time to be a significant source of liquidity.
Our most significant cash requirements relate to the funding of our ongoing product development and commercialization operations and our royalty obligations under our intellectual property licenses with the Wisconsin Alumni Research Foundation (“WARF”) and the Mayo Foundation for Medical Education and Research (“Mayo”). Our additional material cash needs include commitments under operating leases and other administrative services.
Our most significant cash requirements relate to the funding of our ongoing product development and commercialization operations. Our additional material cash needs include commitments under operating leases, royalty obligations under our intellectual property licenses with the Wisconsin Alumni Research Foundation and the Mayo Foundation for Medical Education and Research as well as other administrative services.
Results of Operations Comparison of the Fiscal Years Ended September 30, 2023 and 2022 The following table sets forth our results of operations for the fiscal years ended September 30, 2023 and 2022.
Results of Operations Comparison of the Fiscal Years Ended September 30, 2024 and 2023 The following table sets forth our results of operations for the fiscal years ended September 30, 2024 and 2023.
The license rights granted to Zimmer under the Zimmer Development Agreement shall be exclusive from the effective date of the Amendment until the end of the Zimmer Term. All payments attributed to the Initial Exclusivity Fee, the sEEG exclusivity maintenance fee and sEEG design milestone payment are non-refundable.
The license rights granted to Zimmer under the Zimmer Amended and Restated Distribution Agreement shall be exclusive from the effective date of the Zimmer Amendment until the end of the Zimmer Term. All payments attributed to the Initial Exclusivity Fee, the sEEG exclusivity maintenance fee and sEEG design milestone payment are non-refundable.
All performance obligations under the Zimmer Development Agreement and Amendment were met as of December 31, 2022.
All performance obligations under the Zimmer Distribution Agreement and Zimmer Amendment were met as of December 31, 2022.
As of September 30, 2023, we had an accumulated deficit of $62.7 million, primarily as a result of expenses incurred in connection with our research and development, selling, general and administrative expenses associated with our operations and interest expense, fair value adjustments and loss on extinguishments related to our debt, offset in part by collaborations and product revenues.
As of September 30, 2024, we had an accumulated deficit of $75.0 million, primarily as a result of expenses incurred in connection with our research and development, selling, general and administrative expenses associated with our operations and interest expense, fair value adjustments and loss on extinguishments related to our debt, offset in part by collaborations and product revenues.
In addition, Zimmer may terminate the Zimmer Development Agreement for any reason with 90 days’ written notice, and the Company may terminate the Zimmer Development Agreement if Zimmer acquires or directly or indirectly owns a controlling interest in certain competitors of the Company.
In addition, Zimmer may terminate the Zimmer Amended and Restated Distribution Agreement for any reason with 90 days’ written notice, and the Company may terminate the Zimmer Amended and Restated Distribution Agreement if Zimmer acquires or directly or indirectly owns a controlling interest in certain competitors of the Company.
These increases will include increased costs related to the hiring of additional personnel and fees for legal and professional services, as well as other public company related costs. Research and Development Research and development expenses consist of expenses incurred in performing research and development activities in developing our cortical strip and grid electrode and depth electrode technology.
These increases will include increased costs related to the hiring of additional personnel and fees for legal and professional services, as well as other public company related costs. Research and Development Research and development expenses consist of expenses incurred in performing research and development activities in developing our technology.
The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described in “Note 3 — Summary of Significant Accounting Policies” to our financial statements included in “Item 8 — Financial Statements and Supplementary Data” in this Report. 68 NeuroOne Medical Technologies Corporation FORM 10-K Of these policies, the following are considered critical to an understanding of our financial statements included in “Item 8 — Financial Statements and Supplementary Data” in this Report that require the application of the most subjective and the most complex judgments: Revenues: For discussion about the determination of collaborations revenue, product revenue and cost of product revenue, see “Note 7 — Zimmer Development Agreement” included in “Item 8 — Financial Statements and Supplementary Data” in this Report.
The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described in “Note 3 — Summary of Significant Accounting Policies” to our financial statements included in “Item 8 — Financial Statements and Supplementary Data” in this Report. 69 NeuroOne Medical Technologies Corporation FORM 10-K Of these policies, the following are considered critical to an understanding of our financial statements included in “Item 8 — Financial Statements and Supplementary Data” in this Report that require the application of the most subjective and the most complex judgments: Revenues: For discussion about the determination of collaborations revenue, product revenue and cost of product revenue, see “Note 7 — Zimmer Amended and Restated Distribution Agreement and Other Product Revenue” included in “Item 8 — Financial Statements and Supplementary Data” in this Report.
In addition, on August 2, 2022, we entered into a Third Amendment to the Zimmer Development Agreement (the “Amendment”) with Zimmer. Pursuant to the terms and conditions of the Amendment, Zimmer made a $3.5 million payment to us in August 2022.
In addition, on August 2, 2022, we entered into a Third Amendment to the Zimmer Distribution Agreement (the “Zimmer Amendment”) with Zimmer. Pursuant to the terms and conditions of the Zimmer Amendment, Zimmer made a $3.5 million payment to us in August 2022.
The net change in our net operating assets and liabilities associated with fluctuations in our operating activities resulted in a cash source of approximately $1.2 million.
The net change in our net operating assets and liabilities associated with fluctuations in our operating activities resulted in a cash use of approximately $1.0 million.
Accordingly, we recognized revenue in the amount of $1.5 million during the year ended September 30, 2023 related to the completion of the sEEG exclusivity maintenance milestone.
Accordingly, we recognized revenue in the amount of $1.5 million during the year ended September 30, 2023 related to the completion of the sEEG exclusivity maintenance milestone. There was no collaboration revenue during the year ended September 30, 2024.
Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, the conflicts in Ukraine and the Middle East, disruptions in the banking system and financial markets, and steps taken by governments and central banks, particularly in response to the COVID-19 pandemic as well as other stimulus and spending programs, have led to higher inflation, which has led to an increase in costs and has caused changes in fiscal and monetary policy, including increased interest rates.
Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, increased inflation, the conflicts in Ukraine and the Middle East, disruptions in the banking system and financial markets, and steps taken by governments and central banks, have led to higher inflation, which has led to an increase in costs and has caused changes in fiscal and monetary policy, including increased interest rates.
Under the terms of the Zimmer Development Agreement, we are responsible for all costs and expenses related to developing the Products, and Zimmer is responsible for all costs and expenses related to the commercialization of the Products.
Under the terms of the Zimmer Distribution Agreement, we are responsible for all costs and expenses related to developing the Products (as defined therein), and Zimmer is responsible for all costs and expenses related to the commercialization of the Products.
Collaborations Revenue On July 20, 2020, we entered into an exclusive development and distribution agreement (the “Zimmer Development Agreement”) with Zimmer, pursuant to which we granted Zimmer exclusive global rights to distribute the Strip/Grid Products and electrode cable assembly products (the “Electrode Cable Assembly Products”).
Collaborations Revenue On July 20, 2020, we entered into an exclusive development and distribution agreement (the “Zimmer Distribution Agreement”) with Zimmer, pursuant to which we granted Zimmer exclusive global rights to distribute the Strip/Grid Products and Electrode Cable Assembly Products. Additionally, we granted Zimmer the exclusive right and license to distribute certain sEEG Products developed by the Company.
Research and development expenses Research and development expenses were $6.9 million for the year ended September 30, 2023, compared to $4.9 million for the year ended September 30, 2022.
Research and Development Expenses Research and development expenses were approximately $5.1 million for the year ended September 30, 2024, compared to $6.9 million for the year ended September 30, 2023.
Stock-based Compensation For discussions about the application of grant date fair value associated with our stock-based compensation, see “Note 8 — Stock-Based Compensation” included in “Item 8 — Financial Statements and Supplementary Data” in this Report. Income Tax Assets and Liabilities Income tax assets and liabilities include income tax valuation allowances.
For discussions about the application of fair value associated with the warrants, see “Note 9 – Stockholders’ Equity” included in “Item 8 — Financial Statements and Supplementary Data” in this Report. Income Tax Assets and Liabilities Income tax assets and liabilities include income tax valuation allowances.
The parties have agreed to collaborate with respect to development activities under the Zimmer Development Agreement through a joint development committee composed of an equal number of representatives of Zimmer and the Company.
The OneRF ablation system is not covered by the Zimmer Distribution Agreement. The parties agreed to collaborate with respect to development activities under the Zimmer Distribution Agreement through a joint development committee composed of an equal number of representatives of Zimmer and the Company.
Product Gross Profit (Loss) Product gross profit (loss) represents our product revenue less our cost of product revenue. Our cost of product revenue consists of the manufacturing and materials costs incurred by our third-party contract manufacturer in connection with our Strip/Grid Products, sEEG Products and outside supplier materials costs of producing the Electrode Cable Assembly Products.
Our cost of product revenue consists of the manufacturing and materials costs incurred by our third-party contract manufacturer in connection with our Strip/Grid Products, sEEG Products, OneRF Products and outside supplier materials costs of producing the Electrode Cable Assembly Products. In addition, cost of product revenue includes royalty fees incurred in connection with our license agreements.
In addition, cost of product revenue included royalty fees incurred of approximately $0.2 million and $0.1 million in connection with our license agreements during the years ended September 30, 2023 and 2022, respectively. Collaborations Revenue Collaborations revenue was $1.5 million and $1.9 million during the years ended September 30, 2023 and 2022, respectively.
In addition, cost of product revenue included royalty fees incurred of approximately $157,000 in connection with our license agreements during each of the years ended September 30, 2024 and 2023. Collaborations Revenue There was no collaborations revenue during the year ended September 30, 2024. Collaborations revenue was approximately $1.5 million during the year ended September 30, 2023.
July 2023 Public Offering On July 24, 2023, we entered into an underwriting agreement with The Benchmark Company, LLC, as underwriter (“Benchmark”), relating to the issuance and sale of 5,250,000 shares of our common stock, par value $0.001 per share, at a price to the public of $1.00 per share (the “July 2023 Public Offering”).
The Debt Facility Agreement included other customary representations and warranties, conditions, affirmative and negative covenants, and events of default. 66 NeuroOne Medical Technologies Corporation FORM 10-K July 2023 Public Offering On July 24, 2023, we entered into an underwriting agreement with The Benchmark Company, LLC, as underwriter (“Benchmark”), relating to the issuance and sale of 5,250,000 shares of our common stock, par value $0.001 per share, at a price to the public of $1.00 per share (the “July 2023 Public Offering”).
Net cash used in operating activities was $7.5 million for the year ended September 30, 2022, which consisted of a net loss of $10.0 million partially offset primarily by stock-based compensation, depreciation, amortization related to intangible assets and to short-term investment discounts and premiums, non-cash lease expense and non-cash consideration associated with the Zimmer Development Agreement, totaling approximately $1.3 million in the aggregate.
Net cash used in operating activities was $12.9 million for the year ended September 30, 2023, which consisted of a net loss of $11.9 million partially offset by non-cash stock-based compensation, depreciation, amortization related to intangible assets and short term investment premiums and discounts, operating lease expense and loss on disposal of fixed assets, totaling approximately $1.4 million in the aggregate.
Net cash used by investing activities for the year ended September 30, 2022 was $3.2 million and consisted of purchases of short-term investments consisting of treasury and corporate notes of approximately $3.5 million and outlays for purchases of property and equipment of $0.3 million which were partially offset by maturities of short-term investments in the amount of $0.5 million.
Net cash provided by investing activities was $2.6 million for the year ended September 30, 2023 and consisted of maturities of short-term investments in the amount of $4.5 million, offset by purchases of short term investments of $1.5 million, consisting of treasury and corporate notes.
We anticipate that our expenses will increase substantially as we develop and commercialize our cortical strip, grid electrode and depth electrode technology and pursue pre-clinical and clinical trials, seek regulatory approvals, manufacture products, establish our own sales, marketing and distribution infrastructure to commercialize our ablation electrode technology, hire additional staff, add operational, financial and management systems and continue to operate as a public company.
See “Funding Requirements” below for more information. We anticipate that our expenses will increase substantially as we continue to develop and commercialize our electrode technology and pursue pre-clinical and clinical trials, seek regulatory approvals, manufacture products, market and distribute our OneRF Products, hire additional staff, add operational, financial and management systems and continue to operate as a public company.
In November 2019, our Evo cortical electrode technology received 510(k) clearance from the FDA for recording, monitoring, and stimulating brain tissue for up to 30 days, and in October 2022, we received FDA clearance for our Evo sEEG electrode technology for temporary (less than 30 days) use with recording, monitoring, and stimulation equipment for the recording, monitoring, and stimulation of electrical signals at the subsurface level of the brain.
We have 510(k) clearance for three of our devices from the FDA, including: (i) our Evo cortical electrode technology for recording, monitoring, and stimulating brain tissue for up to 30 days, (ii) our Evo sEEG electrode technology for temporary (less than 30 days) use with recording, monitoring, and stimulation equipment for the recording, monitoring, and stimulation of electrical signals at the subsurface level of the brain, and (iii) our OneRF ablation system for creation of radiofrequency lesions in nervous tissue for functional neurosurgical procedures.
In November 2019, we received FDA 510(k) clearance for our cortical strip electrode for temporary (less than 30 days) recording, monitoring, and stimulation on the surface of the brain.
We anticipate that we will generate additional revenue from the sale of products based on Evo cortical electrode technology and our OneRF Ablation System. In November 2019, we received FDA 510(k) clearance for our cortical electrode for temporary (less than 30 days) recording, monitoring, and stimulation on the surface of the brain.
The increase in gross profit during the current period was largely due to the higher sales volume that exceeded fixed royalty and other overhead costs in the current year resulting in a positive gross margin of 23.4% for the first time in our history. Product revenue consisted of Strip/Grid Products, sEEG Products and Electrode Cable Assembly Products sales.
The increase in gross profit percentage during the current period was largely due to the higher sales volume that exceeded fixed royalty and overhead period costs and due to slightly lower overall material supply costs. Product revenue consisted of Strip/Grid Products, sEEG Products, OneRF Products and Electrode Cable Assembly Products sales.
Either party may terminate the Zimmer Development Agreement (x) with written notice for the other party’s material breach following a cure period or (y) if the other party becomes subject to certain insolvency proceedings.
The Zimmer Amended and Restated Distribution Agreement will expire on September 30, 2034 (the “Zimmer Term”), unless terminated earlier pursuant to its terms. Either party may terminate the Zimmer Amended and Restated Distribution Agreement (x) with written notice for the other party’s material breach following a cure period or (y) if the other party becomes subject to certain insolvency proceedings.
At-The-Market Offering On December 21, 2022, we entered into a Capital on Demand TM Sales Agreement (“Sales Agreement”) with JonesTrading Institutional Services LLC (“JonesTrading”) to create an at-the-market offering program (“ATM”) under which we may offer and sell shares having an aggregate offering price of up to $14.5 million.
In connection with the 2024 Private Placement, we agreed to file a registration statement with the SEC covering the resale of the Shares and the shares of common stock issuable upon exercise of the PIPE Warrants which became effective on September 13, 2024. 65 NeuroOne Medical Technologies Corporation FORM 10-K At-The-Market Offering On December 21, 2022, we entered into a Capital on Demand TM Sales Agreement (“Sales Agreement”) with JonesTrading Institutional Services LLC (“JonesTrading”) to create an at-the-market offering program (“ATM”) under which we may offer and sell shares having an aggregate offering price of up to $14.5 million.
The negligible change period over period was composed primarily due to an increase in payroll related costs of approximately $0.3 million offset by a reduction in professional service and marketing related costs of $0.4 million.
The $1.0 increase period over period was primarily due to an increase in payroll related costs of approximately $0.4 million, stock-based compensation of $0.2 million, professional and board fees of $0.3 million and marketing and sales costs of $0.2 million, offset slightly by a reduction in general operating costs of $0.1 million on a net basis.
The development and commercialization of our cortical strip, grid electrode and depth electrode technology is subject to numerous uncertainties, and we could use our cash and cash equivalent resources sooner than we expect. Additionally, the process of developing medical devices is costly, and the timing of progress in pre-clinical tests and clinical trials is uncertain.
The development and commercialization of our cortical strip, grid electrode, depth electrode, ablation system technology and future products and technology is subject to numerous uncertainties, and we could use our cash and cash equivalent resources sooner than we expect.
Financial Overview Product Revenue Our product revenue was derived from the sale of our Strip/Grid Products, depth electrodes (“sEEG Products”) and electrode cable assembly products (“Electrode Cable Assembly Products”) based on Evo cortical electrode technology. We anticipate that we will generate additional revenue from the sale of products based on Evo cortical electrode technology.
Financial Overview Product Revenue Our product revenue was derived from the sale of our Strip/Grid Products, the sEEG Products and the Electrode Cable Assembly Products based on Evo cortical electrode technology and the OneRF Products, which are products based on our OneRF Ablation System.
For further discussion about the determination of collaborations revenue, product revenue and cost of product revenue, and for a discussion of milestones and royalty payments under the Zimmer Development Agreement, see “—Liquidity and Capital Resources—Liquidity Outlook” below and see “Note 7 — Zimmer Development Agreement” included in our financial statements included in “Item 8 — Financial Statements and Supplementary Data” in this Report.
For further discussion about the determination of collaborations revenue, product revenue and cost of product revenue, and for a discussion of milestones and royalty payments under the Zimmer Distribution Agreement, see “—Liquidity and Capital Resources—Liquidity Outlook” below and see “Note 7 — Zimmer Distribution Agreement” included in our financial statements included in Item 8 — Financial Statements and Supplementary Data” in this Report. 62 NeuroOne Medical Technologies Corporation FORM 10-K Selling, General and Administrative Selling, general and administrative expenses consist primarily of personnel-related costs including stock-based compensation for personnel in functions not directly associated with research and development activities.
The 2022 Zimmer Warrant has an exercise price of $3.00 per share, will be exercisable commencing six months from the issuance date, and will expire on August 2, 2027.
The 2022 Zimmer Warrant has an exercise price of $3.00 per share, is exercisable commencing six months from the issuance date, and will expire on August 2, 2027. The Zimmer Distribution Agreement and Zimmer Amendment were accounted for under the provisions of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”) .
Management has noted the existence of substantial doubt about our ability to continue as a going concern.
As of September 30, 2024, we had cash and cash equivalents in the aggregate of approximately $1.5 million. Management has noted the existence of substantial doubt about our ability to continue as a going concern.
A percutaneous (through a needle) delivery system for paddle leads is also under development and has been successfully bench-tested. 60 NeuroOne Medical Technologies Corporation FORM 10-K Global Economic Conditions Generally, worldwide economic conditions remain uncertain, particularly due to the conflicts between Russia and Ukraine and the Middle East, disruptions in the banking system and financial markets, lingering effects of the COVID-19 pandemic and increased inflation.
One of the Purchasers in the 2024 Private Placement included Paul Buckman, a director on the Company’s Board of Directors. 60 NeuroOne Medical Technologies Corporation FORM 10-K Global Economic Conditions Generally, worldwide economic conditions remain uncertain, particularly due to the conflicts between Russia and Ukraine and in the Middle East, disruptions in the banking system and financial markets, and increased inflation.
Additionally, our operating results could be materially impacted by changes in the overall macroeconomic environment and other economic factors.
If economic conditions continue to decline, our future cost of equity or debt capital and access to the capital markets could be adversely affected. Our operating results could be materially impacted by changes in the overall macroeconomic environment and other economic factors.
Zimmer has exclusive global rights to distribute our strip and grid cortical electrodes, depth electrodes and electrode cable assembly products.
Zimmer has exclusive global rights to distribute our strip and grid cortical electrodes, depth electrodes and electrode cable assembly products. Zimmer’s failure to timely develop or commercialize these products would have a material adverse effect on our business and operating results.
Other income, net during the year ended September 30, 2022 consisted principally of interest income attributed to our cash, cash equivalents and short-term investments, while outstanding. 64 NeuroOne Medical Technologies Corporation FORM 10-K Liquidity and Capital Resources Overview As of September 30, 2023, our principal source of liquidity consisted of cash and cash equivalents in the aggregate of approximately $5.3 million.
We did not incur any financing costs during the year ended September 30, 2023. 64 NeuroOne Medical Technologies Corporation FORM 10-K Other Income, net Other income, net during the year ended September 30, 2024 consisted principally of interest income attributed to our cash and cash equivalents.
For the Years Ended September 30, 2023 2022 Net cash used in operating activities $ (12,886,874 ) $ (7,519,534 ) Net cash provided by (used in) investing activities 2,649,964 (3,244,765 ) Net cash provided by financing activities 7,399,074 12,023,282 Net (decrease) increase in cash $ (2,837,836 ) $ 1,258,983 Net cash used in operating activities Net cash used in operating activities was $12.9 million for the year ended September 30, 2023, which consisted of a net loss of $11.9 million partially offset by non-cash stock-based compensation, depreciation, amortization related to intangible assets and short term investment premiums and discounts, operating lease expense and loss on disposal of fixed assets, totaling approximately $1.4 million in the aggregate.
For the Years Ended September 30, 2024 2023 Net cash used in operating activities $ (11,011,840 ) $ (12,886,874 ) Net cash (used in) provided by investing activities (120,197 ) 2,649,964 Net cash provided by financing activities 7,269,586 7,399,074 Net decrease in cash and cash equivalents $ (3,862,451 ) $ (2,837,836 ) 68 NeuroOne Medical Technologies Corporation FORM 10-K Net cash used in operating activities Net cash used in operating activities was $11.0 million for the year ended September 30, 2024, which consisted of a net loss of $12.3 million partially offset by non-cash stock-based compensation, depreciation, amortization related to intangible assets and deferred financing costs, operating lease expense, fair value change in warrant liability and the proceeds from the issuance of warrants in connection with the 2024 Private Placement totaling approximately $2.3 million in the aggregate.
Product revenue and product gross loss were $0.2 million and $0.1 million, respectively, during the year ended September 30, 2022.
Product revenue was $2.0 million during the year ended September 30, 2023 with a gross profit and gross profit percentage of $0.5 million and 23.4%, respectively.
On December 1, 2023, we increased the amount of common stock that can be sold pursuant to the Sales Agreement, such that we are offering up to an aggregate of $4.8 million of our common stock for sale under the Sales Agreement, including the shares of common stock previously sold. 65 NeuroOne Medical Technologies Corporation FORM 10-K October 2021 Underwritten Public Offering On October 13, 2021, we entered into an underwriting agreement relating to the issuance and sale of 3,750,000 shares of our common stock at a price to the public of $3.20 per share (the “October 2021 Underwritten Public Offering”).
Subsequently, on December 1, 2023, however, we increased the amount of common stock that can be sold pursuant to the Sales Agreement, such that we were offering up to an aggregate of $4.8 million of our common stock for sale under the Sales Agreement, including the shares of our common stock previously sold.
Cash Flows The following is a summary of cash flows for each of the periods set forth below.
We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities. Cash Flows The following is a summary of cash flows for each of the periods set forth below.
We expect to satisfy our short-term and long-term obligations through cash on hand and, until we generate an adequate level of revenue from commercial sales to cover expenses, if ever, from future equity and debt financings.
We expect to satisfy our short term and long term obligations through cash on hand and, until we generate an adequate level of revenue from commercial sales to cover expenses, if ever, from future equity and debt financings. 67 NeuroOne Medical Technologies Corporation FORM 10-K Liquidity Outlook For a discussion of potential fee payments under the Zimmer Distribution Agreement, see “Note 7 — Zimmer Distribution Agreement and Other Product Revenue” included in our financial statements included in “Item 8 — Financial Statements and Supplementary Data” in this Report.
Our ability to successfully transition to profitability will be dependent upon achieving further regulatory approvals and achieving a level of product sales adequate to support our cost structure. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.
Additionally, the process of developing medical devices is costly, and the timing of progress in pre-clinical tests and clinical trials is uncertain. Our ability to successfully transition to profitability will be dependent upon achieving further regulatory approvals and achieving a level of product sales adequate to support our cost structure.
In addition to the Zimmer Development Agreement, Zimmer and the Company have entered into an MS Agreement and a Quality Agreement with respect to the manufacturing and supply of the Products. 61 NeuroOne Medical Technologies Corporation FORM 10-K Except as otherwise provided in the Zimmer Development Agreement, we are responsible for performing all development activities, including non-clinical and clinical studies directed at obtaining regulatory approval of each Product.
In addition to the Zimmer Distribution Agreement, Zimmer and the Company have entered into a MS Agreement and a Quality Agreement with respect to the manufacturing and supply of the Products. 61 NeuroOne Medical Technologies Corporation FORM 10-K Pursuant to the Zimmer Distribution Agreement, Zimmer made an upfront initial exclusivity fee payment of $2.0 million (the “Initial Exclusivity Fee”) to the Company in fiscal year 2020.
Net cash provided by financing activities was $12.0 million for the year ended September 30, 2022, which consisted of net proceeds from the October 2021 Underwritten Public Offering. Critical Accounting Policies and Significant Judgments and Estimates Our financial statements are prepared in accordance with U.S. generally accepted accounting principles.
Critical Accounting Policies and Significant Judgments and Estimates Our financial statements are prepared in accordance with U.S. generally accepted accounting principles.
JonesTrading is entitled to a commission at a fixed commission rate equal to up to 3% of the gross proceeds. Through September 30, 2023, we have issued 1,439,677 shares of common stock under the ATM for gross proceeds in the amount of $2.6 million.
JonesTrading is entitled to a commission at a fixed commission rate of up to 3% of the gross proceeds.
Selling, general and administrative expenses Selling, general and administrative expenses were $6.9 million and $7.0 million for the years ended September 30, 2023 and 2022, respectively.
Revenue during the prior year period was derived from the Zimmer Distribution Agreement in connection with the completion of the sEEG maintenance fee obligation as a result of securing FDA approval. Selling, General and Administrative Expenses Selling, general and administrative expenses were $7.9 million and $6.9 million for the years ended September 30, 2024 and 2023, respectively.
Research and development costs are expensed as incurred and costs incurred by third parties are expensed as the contracted work is performed. Lastly, de minimis income from the sale of prototype products and related materials are offset against research and development expenses.
Research and development costs are expensed as incurred and costs incurred by third parties are expensed as the contracted work is performed. Fair Value Change in Warrant Liability The net change in fair value line item is attributed to the warrant liability while outstanding.
Our other products are still under development. 59 NeuroOne Medical Technologies Corporation FORM 10-K We have incurred losses since inception.
Our other products are still under development. We distribute our cEEG strip/grid electrodes, cable assembly products and our OneRF Ablation System with Zimmer Biomet. We have incurred losses since inception.
During the year ended September 30, 2022, we recognized revenue in the amount of $1.9 million related to sEEG Product development. 62 NeuroOne Medical Technologies Corporation FORM 10-K The achievement of the level of sales required to earn royalty payments from Zimmer is uncertain.
The achievement of the level of sales required to earn royalty payments from Zimmer is uncertain.
The $2.0 million increase during fiscal 2023 over the comparable prior year period was attributed to supporting development activities, which primarily included salary-related expenses and costs related to consulting services, materials and supplies associated with the development of future sEEG product applications and other products utilizing new technologies.
Development activities primarily included salary-related expenses and costs related to consulting services, materials and supplies. Fair Value Change in Warrant Liability The net change in fair value of the warrant liability during the year ended September 30, 2024 was $0.3 million. The change was due primarily to fluctuations in our common stock fair value.
Removed
We completed feasibility bench top testing with a new design of our diagnostic and ablation depth electrode in the first calendar quarter of 2021 and signed a contract with RBC Medical Innovations to develop hardware for the system in the third calendar quarter of 2021. We completed design verification of such hardware early in the second calendar quarter of 2023.
Added
Recent Developments Corporate Updates OneRF Ablation System In March 2024, we announced a limited commercial launch of our OneRF ablation system.
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We also completed an animal feasibility study at Emory University in September 2021. We completed additional animal studies early in the second quarter of calendar 2023 and received 510(k) clearance in December 2023 for creation of radiofrequency lesions in nervous tissue for functional neurosurgical procedures. Our other products are still under development.
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In October 2024, we amended and restated our Distribution Agreement with Zimmer to provide exclusive right and license to distribute also our OneRF Ablation System. 59 NeuroOne Medical Technologies Corporation FORM 10-K Nasdaq Notice Since May 28, 2024, the closing price of our common stock has been below $1.00.
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We commenced commercial sales of cEEG strip/grid and electrode cable assembly products beginning in the first quarter of fiscal year 2021. We sold, on a limited application basis for design verification, sEEG depth electrode products for non-human use beginning in late fiscal year 2021, and we commenced commercial sales of our sEEG depth electrode products in late calendar 2022.
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On July 11, 2024, we received a letter from the Listing Qualifications Department of the Nasdaq informing us that because the closing bid price for our common stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, the Company was not in compliance with the Minimum Bid Price Requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Marketplace Rule 5550(a)(2).
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Recent Developments and Upcoming Milestones Corporate Updates Appointment of COO On November 14, 2023, we announced the appointment of Christopher R.

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