NMTC

Business Context and Reporting Period

Company: NeuroOne Medical Technologies Corp (NMTC)
Filing Type: Form 10-Q (Unaudited)
Period Ended: June 30, 2026
Business Overview: NeuroOne is a medical technology company developing thin-film electrode technology for continuous electroencephalogram (cEEG) and stereoelectrocencephalography (sEEG) recording, monitoring, ablation, and stimulation. The company holds FDA 510(k) clearance for four devices: Evo Cortical, Evo sEEG, OneRF Ablation System, and OneRF TN Ablation System. It relies on a distribution agreement with Zimmer, Inc. for the commercialization of its brain-related products.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Composition: Total revenue for the nine months ended June 30, 2026, decreased significantly compared to the prior year period due to the absence of a $3.0 million one-time license fee recognized in the prior year from the Zimmer distribution agreement. Product revenue increased by approximately 5.8% year-over-year.
• Operating Expenses: Total operating expenses increased by $801,323 (8.5%) for the nine-month period, driven by higher payroll costs, stock-based compensation, and sales/marketing expenses.
• Net Loss: The net loss for the nine months ended June 30, 2026, widened to $5.8 million from $2.0 million in the prior year, primarily due to the loss of the license revenue and increased operating costs.
• Warrant Liability: The company recorded a non-cash benefit of $620,171 from the fair value change in warrant liability for the nine months ended June 30, 2026, compared to $1.1 million in the prior year.
• Reverse Stock Split: A 1-for-6 reverse stock split was effected in April 2026. All share and per-share data have been retroactively adjusted.

Guidance, Outlook, Risks, and Unusual Items

• Going Concern: Management has raised substantial doubt about the company's ability to continue as a going concern. With approximately $2.0 million in cash, the company believes it can fund operations into January 2027, contingent on anticipated revenue increases and expense reductions. Additional capital raises are required to sustain operations beyond this period.
• Liquidity Strategy: The company plans to fund operations through existing cash, product revenues, and potential equity or debt financings. An At-The-Market (ATM) offering program was increased to $13.4 million in June 2026.
• Internal Controls: The company identified material weaknesses in internal controls over financial reporting, specifically regarding insufficient segregation of duties and ineffective controls over revenue recognition. These weaknesses remain unremediated as of June 30, 2026.
• Customer Concentration: One customer (Zimmer, Inc.) accounted for 99.8% of product revenue for the nine months ended June 30, 2026.
• Subsequent Events: On July 13, 2026, the company issued 400,346 shares under the ATM program for gross proceeds of $1.04 million. This issuance triggered a reset of the exercise price for existing PIPE warrants to $2.5227.

Investor Verification Checklist

• Cash Runway: Verify the company's ability to raise additional capital before January 2027 to avoid liquidity crises.
• Internal Control Remediation: Monitor progress on remediation plans for material weaknesses in financial reporting and revenue recognition controls.
• Zimmer Partnership: Assess the performance of the Zimmer distribution agreement and the risk of reliance on a single customer for nearly all product revenue.
• Dilution Risk: Review the impact of ongoing ATM offerings and warrant exercises on shareholder dilution.
• Regulatory Status: Confirm the status of the OneRF TN Ablation System following its limited market release completion in March 2026.