NYSE: NRXS

Our
second product, REDTM (Rectal Expulsion Device), is indicated to evaluate the neuromuscular function of a patient’s
ability to expel its contents from the rectum and as a qualitative test for rectal hypersensitivity. RED (K242304, 2024) helps identify
patients with rectal hypersensitivity who experience a desire or urge to defecate at lower volumes of distension. RED is intended to
be used in a clinical setting by trained health care providers in adult populations.

The
Company’s product portfolio has achieved several key milestones, including:

●
Academic
Society Guidelines: In May 2025, the leading pediatric academic society, NASPGHAN (North American Society of Pediatric Gastroenterology,
Hepatology, and Nutrition), published functional abdominal pain guidelines listing PENFS as the ONLY FDA-approved or FDA-cleared
treatment in the guidelines to be recommended.

●
AMA
Category I CPT Code (64567): In 2024 the AMA confirmed the assignment of a Category I CPT code for PENFS procedures, which takes
effect on January 1, 2026. This CPT code brings credibility, streamlined reporting, and relative value units (RVUs) for the physician,
allowing credit for their time.

●
Federal
Supply Schedule (FSS) Contract: In December 2025, NeurAxis was awarded a FSS contract with the United States government which includes
the 01-1020 IB-Stim to be sold for the FDA indications of Functional Abdominal Pain with IBS, Functional Dyspepsia (FD), and associated
FD Nausea Symptoms.

Our
Mission

Our
mission is to advance drug-free neuromodulation therapies that improve patient outcomes and reduce medication burden in complex disorders,
while expanding access to effective care for populations with significant unmet needs.

Our
Corporate History

Neuraxis,
Inc. was established in 2011 and incorporated in the state of Indiana in 2012, under the name of Innovative Health Solutions, Inc. The
name was changed to Neuraxis, Inc. in 2022 when the Company filed a Certificate of Conversion to become a Delaware corporation. On August
9, 2023, the Company consummated an initial public offering (“IPO”) pursuant to a registration statement on Form S-1 (File
No. 333- 269179), as amended.

In
2024, the Company’s shareholders authorized 5,000,000 shares of preferred stock of which all were designated at $0.001 par value
“Series B Preferred Stock” inclusive of cumulative dividends, due and payable quarterly at the Company’s discretion
either in cash or common stock when declared, at a rate of 8.5% per annum through December 31, 2026. The stated value of the Series B
Preferred Stock is $2.38 per share.

We
have developed four FDA cleared products: (i) IB-Stim (DEN180057, 2019), (ii) RED (K242304, 2024), (iii) NSS-2 Bridge (DEN170018, 2017),
and (iv) the original 510(k) clearance (K140530, 2014), all of which were developed internally by the Company.

●
IB-Stim
is a PENFS device that is indicated in patients 8 years and older with functional abdominal pain associated with irritable bowel
syndrome, functional dyspepsia, and associated FD nausea symptoms.

●
RED
is indicated to evaluate the neuromuscular function of a patient’s ability to expel its contents from the rectum and as a qualitative
test for rectal hypersensitivity patients who experience desire or urge to defecate at lower volumes of distention. RED is intended
to be used in a clinical setting by trained health care providers in adult populations.

●
NSS-2
Bridge is a percutaneous nerve field stimulator (PNFS) device indicated for use in the reduction of the symptoms of opioid withdrawal
and was licensed to Masimo Corporation (“Masimo”). Masimo marketed and sold this product as its Masimo Bridge. On July
1, 2025, The Company terminated the NSS-2 Bridge license with Masimo in exchange for $200,000 of consideration payable of which $100,000
was paid on December 31, 2025 and $100,000 is due on June 30, 2026. The termination agreement allowed the Company to recapture the
rights to the trademark (U.S. Registration No. 7,394,465) and two patent applications (Application No. 18/821/255 and Application
No. 29/960.608) that were originally licensed to Masimo on April 9, 2020.

●
The
original 510(k) device was the electroacupuncture device (“EAD”), now called NeuroStim. The EAD is no longer being
manufactured, sold or distributed but reserved only for research purposes.

4

Pediatrics
Industry Overview

Pediatric
providers, as a whole, expressed concern about the lack of attention given to children with functional abdominal pain disorders (including
IBS and FD) and the limited treatment options available for a population that suffers from significant disabilities. With 20% of the
United States population under age 18, our Company focus began with opportunities in the pediatrics industry. The pediatrics industry
has multi-billion-dollar market opportunities. The following points clearly outline the unmet need in children:

●
Functional
abdominal pain in children is one of the most common conditions seen by pediatricians and pediatric gastroenterologists.

●
Children
with functional abdominal pain report lower quality of life compared with their healthy peers and equal to those with inflammatory
bowel disease.

●
Overall,
40-45% of children with functional abdominal pain disorders continue to have symptoms into adulthood, which impacts quality of life
and healthcare spending.

●
A
study published in 2021 demonstrates insufficient evidence for the use of medications in pediatric functional abdominal pain disorders.
This lack of evidence for drugs has been supported in by the American Academy of Pediatrics and NASPGHAN.

●
IB-Stim
is the only medical therapy that has shown to improve pain, global symptoms, and functional disability in children with FAP and IBS.

●
IB-Stim
is the only currently used medical therapy that is better than placebo in a randomized controlled trial and received FDA clearance
for pediatric IBS.

Our
Opportunity

For
years, physicians and qualified healthcare professionals have resorted to the use of off-label medications without proper evidence of
efficacy or safety. This is despite a technical report from the American Academy of Pediatrics and NASPGHAN which found very little evidence
to endorse the use of any drugs in the treatment of FAPDs in children. Medications including tricyclic antidepressants, SSRIs and gabapentinoids
continue to be used off-label despite lack of evidence to support efficacy or safety. Not only have the most commonly used medications
(amitriptyline and citalopram) failed to beat placebo in clinical trials, but new studies also suggest significant risks with the potential
for serious side effects with these drugs. The absence of conclusive data to support treatments based on scientific evidence, and the
fact no drug therapies have been approved by the FDA for the treatment of FAPDs or IBS in children, presents a unique market opportunity
for Neuraxis. Below are the current standard treatments in children with functional abdominal pain and IBS.

Pharmacological Treatment Options for Functional Abdominal Pain Disorders

Mild
Pain (No Disability)

Pain (With Disability)

Peppermint
oil

Tricyclic
antidepressants (amitriptyline)*

Rifaximin

Iberogast

Selective
serotonin reuptake inhibitors (citalopram)*

Constipation

Probiotics

Gabapentin

Linaclotide

Acid
suppression with PPIs

Antispasmodics
(hyoscyamine, dicyclomine)*

Lubiprostone

Cyproheptadine*

Plecanatide

*
Increased risk of dementia based on anticholinergic burden

5

Our
Solutions

We
entered the pediatric market with clinical evidence, key opinion leaders and society endorsement, including a signed letter from the
American Academy of Pediatrics and NASPGHAN supporting our request for insurers to provide coverage for PENFS procedures with IB-Stim.
IB-Stim is a non-drug alternative to reduce functional abdominal pain in patients with IBS. In June 2019, the FDA cleared IB-Stim, a
non-surgical, neuromodulation device for children and adolescents who suffer from IBS, through a de novo process (DEN180057, 2019). Most
recently, FDA cleared 510(k) 252024, expanding the indications for use. The FDA created a new classification of PENFS for IB-Stim. This
is based on pre-clinical and clinical studies demonstrating the mechanism of action and efficacy. Based on this new class of devices,
IB-Stim falls under 21 CFR Part 876, Subpart F – Therapeutic Devices, 876.5340, Product Code QHH. As a PENFS device, it is non-implantable
and provides field stimulation to cranial nerves V, VII, IX and X in the ear to access the central nervous system. It stimulates remotely
from the source of pain to modulate central pain regions, such as the limbic system, and relieve functional abdominal pain associated
with IBS. Studies have demonstrated long-term benefits in functional disability, psychological co-morbidities, and pain. For example,
the table below is from a recently published study of IB-Stim in a population of patients with chronic functional abdominal pain. The
follow-up was done at 6-12 months post-treatment and shows improvements in validated questionnaires compared to baseline (API), functional
disability index (FDI), pain catastrophizing scale (PCS), Screen for Childhood Anxiety Related Disorders (SCARED) and the Promis Anxiety.

Santucci
NR, King C, El-Chammas KI, Wongteerasut A, Damrongmanee A, Graham K, Fei L, Sahay R, Jones C, Cunningham NR, Coghill RC. Effect of
percutaneous electrical nerve field stimulation on mechanosensitivity, sleep, and psychological comorbidities in adolescents with functional
abdominal pain disorders. Neurogastroenterol Motil. 2022;34:e14358.

We
have submitted one FDA De Novo request and three 510(K) submissions and plan to submit additional 510(k) premarket notifications from
our pipeline indications in the future. Most recently, FDA cleared 510(k) 252024, expanding the indications for use.

Compliance
with treatment so far has been outstanding with the four weeks of therapy required to sustain long-term benefits. Compliance has been
an issue with non-pharmacological treatment for children, particularly with some of the psychological approaches such as cognitive behavioral
therapy or guided imagery, which sometimes requires 8-12 weeks of treatment. In fact, in a survey included in the randomised, sham controlled
trial (Kovacic, K, Hainsworth, M., et al. Neurostimulation for abdominal pain-related functional gastrointestinal disorders in adolescents:
a randomised, double-blind, sham-controlled trial. Lancet Gastroenterol Hepatol. 2017 Oct;2(10):727-737), 95% of adolescents who used
IB-Stim said that they would recommend this treatment to family and friends. Many children’s hospitals and pediatric providers
across the country are currently treating children with IB-Stim due to the safety, efficacy, and patient outcomes with this non-drug
alternative.

We
have concentrated our marketing focus on the 260 children’s hospitals within the United States. To date, IB-Stim is established
in approximately 80 children’s hospitals within our target market.

6

Competition

The
competitive landscape for therapies includes off-label drugs and drugs with FDA-approved only for adults with IBS while there is no FDA
indicated treatments for patients 8-21 years of age with functional abdominal pain associated with IBS and prescriptions often contain
FDA black box labels. Psychological treatments such as cognitive behavioral therapy (CBT) or guided imagery have been shown to be some
of the most effective treatments for these conditions, however, these are limited by access to trained therapists. As a result, the Company
is addressing this challenge by providing access to guided-imagery audio with IB-Stim at a low associated cost to the patient. Competition
also includes devices that could theoretically be used, but do not have supporting data or FDA clearance for functional bowel disorders
or IBS. Digital therapeutics that offer CBT for IBS have been developed for adults with IBS with limited success in terms of reaching
large numbers of patients. Virtual reality could potentially be used in the future to also deliver CBT to patients with IBS. Our
method patents limit other devices from targeting IBS through stimulation of cranial nerve branches in the ear.

Approved
drugs for children with IBS

1.
Linzess:
a drug that stimulates fluid secretion from the intestine, approved for IBS-constipation in 7 years of age and older

Approved
drugs for adults with IBS

1.
Rifaximin:
an intraluminal antibiotic approved for IBS-diarrhea

2.
Amitiza:
a drug that stimulates fluid secretion from the intestine, approved for IBS-diarrhea

3.
Linzess:
a drug that stimulates fluid secretion from the intestine, approved for IBS-constipation

4.
Plecanatide:
a drug that stimulates fluid secretion from the intestine, approved IBS-constipation

5.
Eluxadoline:
a schedule IV-controlled substance that is a mixed opioid receptor agonist/antagonist in the intestine approved for IBS-diarrhea

Approved
drugs for children or adults with functional dyspepsia

1.
None

7

Devices

1.
gammaCore:
a transcutaneous, cervical vagal nerve stimulator cleared for cluster and migraine headaches. Recent studies using this device for
adults with gastroparesis.

2.
Transcranial
Magnetic Stimulation: Multiple devices cleared to treat major depressive disorder and obsessive-compulsive disorder. To date, no
known gastrointestinal indications.

3.
Roo
System and Sparrow therapy system: Transcutaneous auricular stimulation devices-cleared for neonatal and adult opioid withdrawal.

The
neurostimulation market is predominantly comprised of surgically implanted, invasive technologies that are not directly competitive with
our technology. Several neurostimulation companies are large, publicly traded companies that have a history in the market, have significantly
easier access to capital and other resources and have an established product pipeline. The combined clinical research and product development
done by the industry, including by us and all our competitors, is uncovering the beneficial effects of neurostimulation which now establishes
neuromodulation as a valid and scientifically supported approach to the treatment of neurological conditions, and accordingly, we expect
for competition in the non-implanted space to grow in the future.

While
many companies have joined the neuromodulation space, there are no companies targeting the CNS or the brain-gut axis through auricular
nerves for functional bowel disorders or IBS. Currently, the Neuraxis method patents protect access to the brain, particularly the limbic
systems through branches of cranial nerves in the ear.

Our
Competitive Strengths

We
believe that the following competitive strengths will enable us to compete effectively:

●
First
to market

●
Strong
portfolio of device and method patents

●
Large
market opportunities

●
Strong
pediatric pipeline

●
Academic
Society guidelines with the only FDA-approved or FDA-cleared recommended treatment

●
Category
I CPT code (64567) effective January 1, 2026

●
Strong
clinical data carried out in leading academic institutions in the U.S.

Our
Growth Strategies

●
List
price of our product is $1,195 per device and $4,780 per patient

●
Strong
gross margin

●
Direct
sales force

●
Target
customers are children’s hospitals, adult gastroenterologists in the VA, and adult pain physicians in the VA

Our
Pipeline

IB-Stim
is to be used for the indication of functional abdominal pain associated with IBS, functional dyspepsia (FD), and associated FD nausea
symptoms. The same underlying technology will be used for the remaining pipeline indications, but we may use different branding strategies
for marketing and commercialization purposes.

With
one FDA indication—functional abdominal pain associated with IBS, functional dyspepsia (FD), and associated FD nausea symptoms
for 8 years and older—on the market, additional clinical trials of PENFS in multiple pediatric conditions are underway focused
on unmet healthcare needs in children and adults. These indications consist of post-concussion syndrome, cyclic vomiting syndrome, post-operative
pain and fibromyalgia pain.

The
chart below shows our status in the FDA review process for IB-Stim and each of the following pediatric indications:

1.
Functional dyspepsia (nausea): Sub-analysis of the RCT completed, and data was analyzed and presented to FDA. The data
looked only at those patients who met criteria for functional dyspepsia and those that improved in abdominal pain scores by 30% or more
as well as improvements in a validated measure of nausea. The sub-analysis was used for FDA purposes and there is no plan to publish
in peer reviewed journal since the entire cohort of patients with DGBIs was already published in 2017.

8

2.
Post-concussion: RCT currently enrolling patients. ClinicalTrials.gov Identifier: NCT04978571, A Prospective Study on the Effect
of Auricular Percutaneous Electrical Nerve Field Stimulation (PENFS) in Patients with Post-Concussion Syndrome (PCS). A randomized,
double blind, placebo-controlled trial to evaluate the efficacy of IB-Stim in children with post-concussion symptoms. The primary endpoint
will be to measure improvements in validated measures, including the Immediate Post-Concussion Assessment, Post-Concussion Symptom Scale,
and Balance Error Scoring Symptom compared to placebo. The study will enroll 100 participants and is being conducted at Children’s
Hospital of Orange County.

3.
Cyclic vomiting: Successful pilot study completed and published, Karrento K, et.al.. Electrical Nerve Field Stimulation
for Drug-Refractory Pediatric Cyclic Vomiting Syndrome. J Pediatr Gastroenterol Nutr. 2023;77:347-353. A new study, Auricular Neurostimulation
for Children with Cyclic Vomiting Syndrome: A randomized, placebo-controlled trial. RCT anticipated to begin enrolling patients early
in 2026. This will be a double blind, placebo-controlled trial to evaluate efficacy of IB-Stim in pediatric patients with cyclic vomiting
syndrome. The primary endpoint will be to measure decreases in the frequency and severity of cyclic vomiting episodes compared to a placebo
device. The study will include a minimum of 120 patients and is being conducted at Children’s Wisconsin/Medical College of Wisconsin.

4.
Post-operative pain (opioid sparing): RCT currently enrolling patients and plans to include almost 300 patients total. ClinicalTrials.gov
Identifier: NCT05506878. Reduction of Opioid Requirement Associated With Auriculo-Nerve Stimulation Following Open Surgery. The primary
outcome measure is opioid consumption. Assess how the use of the NSS-2 BRIDGE Device over a 5 day stimulation period affects the participant’s
total opioid consumption using morphine equivalent following an open abdominal or pelvic surgery. Other measures will include post-operative
pain ratings, sleep, somatization, as well as length of hospital stay. The study is being conducted at University of Pittsburgh Medical
Center.

5.
Fibromyalgia in adults: RCT currently enrolling patients. ClinicalTrials.gov Identifier: NCT06415591. Auricular Neuromodulation
in Veterans with Fibromyalgia: The proposed Merit, a randomized, sham-controlled trial of auricular
PENFS, evaluates the clinical utility of PENFS for fibromyalgia as compared to sham placebo control, acute and longitudinal PENFS-related
neural changes visualized on rs-fcMRI and effects of PENFS on HRV as a potential vagal mechanism of pain relief. For Aim 1, 240 total
participants meeting 2016 diagnostic criteria for fibromyalgia (male and female, age 18-60 years old) will be randomized to either true
(n=120) or sham (n=120) auricular PENFS. The study is being conducted at Emory University and VA medical center.

Each
step in the FDA review process differs in duration and cannot be predicted with accuracy. Timing of FDA review and approval, if ever
received, cannot be assured and the process and any approval is within the sole control and discretion of the FDA.

9

Products

IB-Stim
is a PENFS technology intended to be used in patients 8 years and older with functional abdominal pain associated with IBS, functional
dyspepsia (FD), and associated FD nausea symptoms. The FDA has classified the non-implanted nerve stimulator for functional abdominal
pain relief as a Class II device.

IB-Stim
is intended to be used for 120 hours per week, using one (1) device per week, for four (4) consecutive weeks, through application to
branches of Cranial Nerves V, VII, IX and X, and the occipital nerves identified by transillumination, as an aid in the reduction of
pain when combined with other therapies for IBS (DEN180057, 2019; K252024, 2025). In published studies, patients treated with IB-Stim
demonstrated significant improvement in pain, disability and global symptoms with no serious adverse events, and minimal to no side effects,
including localized skin irritation. The following table presents a summary of IB-Stim studies performed to date:

Author

DGBI

N=

Ages

#
of devices

Outcomes

Major
adverse events

Santucci
et al.,2025

Functional
Abndominal Pain

219

7-21

4

Abdominal
pain, nausea, disability

None

Dorfman
et.al.,2025

Functional
Abdominal Pain

22

11-21

4

Abdominal
pain, recurrent treatment

None

Kolacz
et.al.,2025

Chronic
Nausea

84

11-18

4

Cardiac
vagal effeciency

None

Santucci.,
et.al., 2024

Functional
Dyspepsia

84

11-21

4

Abdominal
pain and nausea

None

Castillo
et.al., 2023

Irritable
bowel syndrome

27

11-18

4

Abdominal
pain, Microbiome Metabolism

None

Karento
et al., 2023

Cyclic
Vomiting Syndrome

30

8-18

6

Abdominal
pain, nausea, disability

None

Santucci
et.al.,2023

Irritable
bowel syndrome, functional dyspepsia, FAP

101

11-21

4

Abdominal
pain, nausea, disability

None

Chogle
et.al., 2023

Irritable
bowel syndrome, functional dyspepsia

31

11-18

4

Quality
of life, disability, anxiety

None

Chogle
et.al., 2023 (Registry)

Irritable
bowel syndrome, functional dyspepsia

292

8-18

4

Abdominal
pain, nausea, disability

None

Santucci
et al., 2023

Functional
Dyspepsia

84

11-21

4

Abdominal
pain, nausea, anxiety, disability

None

Bora
et.al.,2023

Irritable
bowel syndrome

20

11-18

4

IBS
severity scale, Microbiome diversity

None

Santucci
et.al.,2021

Functional
abdominal pain

20

11-19

4

Abdominal
pain, sleep, nausea, anxiety

None

Krasaelap,
et.al., 2020

Irritable
bowel syndrome

51

11-18

4

Abdominal
pain, global symptoms, disability

None

Kovacic
et.al.,2017

IBS,
FD, FAP, abdominal migraine

115

11-18

4

Abdominal
pain, disability, global symptoms.

Syncope=1
in sham group

The
ability of IB-Stim to produce systemic effects by modulating the central nervous system has been demonstrated in a pre-clinical animal
model of IBS (see Business—Pre-Clinical Data). In patients with IBS, the largest effect on all pain measures, including
composite pain scores, worst pain, disability and global symptoms, was seen after completing three consecutive weeks of treatment (see
Business—Clinical Data). A fourth consecutive week of treatment was included in clinical testing; no safety concerns were
identified with this extra consecutive week of treatment. In the trial of 115 subjects, 10 patients reported side-effects and only three
discontinued the study because of side-effects. Of such 10 patients, six experienced ear discomfort (three in the PENFS group, three
in the sham group), three experienced adhesive allergies (one in the PENFS group, 2 in the sham group), and one experienced syncope due
to needle phobia (in the sham group). There were no serious adverse events. Since that study, numerous other studies have confirmed the
safety and efficacy in children with chronic DGBIs (see table above).

Medical
providers are trained to place IB-Stim through NeurAxis’ IB-Stim Training and Certification process. Once the provider is trained,
the device can be placed in the outpatient clinic and can be removed by the provider in the clinic or by the patient at home. IB-Stim
stays on for a total of five-days to allow delivery of gentle electrical pulses to nerves below the skin that access the central nervous
system. A study in adolescents showed greater improvement in functional abdominal pain and global symptom improvement with every week
of treatment (up to four weeks). At the end of the four-week study, 95% of adolescents stated they would recommend the treatment to family
or friends. Safety of percutaneous electrical nerve field stimulation has also been reported in a separate study of over 1200 adult patients
with no serious adverse events and minimal to no side-effects.

When
wearing IB-Stim and following an easy-to-learn and efficient procedure, patients can still attend school and extracurricular activities,
exercise or play non-contact sports, shower, wear earbuds or headphones, and travel.

IB-Stim
costs $1,195 per device, and each patient will use four (4) devices. Potential patients with other indications are expected to use six
(6) or more devices per patient.

Technology

A
maladaptive central nervous system can process pain and emotions differently. This often occurs in children following a traumatic event,
viral infections, inflammation or trauma. Changes in brain pathways are known to be involved in the pathophysiology of functional bowel
disorders and IBS. IB-Stim works by sending gentle electrical impulses into cranial nerve bundles located in the ear. This stimulation
targets brain areas that process pain and helps reduce functional abdominal pain associated with IBS. An animal model of IBS demonstrated
that the firing of neurons in the amygdala could be reduced by more than 50% in just 15 minutes of stimulation with IB-Stim. A recent
human study in adults with pain related to fibromyalgia suggested that IB-Stim exerts its effect by modulating emotional and executive
control centers related to pain processing, see Feasibility of Auricular Field Stimulation in Fibromyalgia: Evaluation by Functional
Magnetic Resonance Imaging, Randomized Trial, Woodbury et.al., Pain Med. 2021;22:715-726. The field of art pertains to an
electrical stimulation device, including a stimulator containing a generator to deliver electrical pulses with defined parameters, and
a power supply for supplying the electrical energy through four separate needles, and at least one of which is a needle array.

10

Pre-Clinical
Data

In
an animal model of IBS, extracellular, electrophysiologic recordings were performed from neurons in the rat amygdala before and 15 minutes
after PENFS treatment. There was a 65% decrease in the spontaneous firing of these neurons after 15 minutes of PENFS. This dampening
of neurons in the CNS likely accounts for the modulation of pain responses in a model of post-inflammatory visceral and somatic hyperalgesia.

11

Clinical
Data

There
are over 700 published patients specific to our first FDA indication which is functional abdominal pain associated with irritable bowel
syndrome in patients 8-21 years of age. A published patient is defined as a patient who went through a study, the study was analyzed,
and now the study has been published in a peer-reviewed journal.

A
randomized, controlled study in children 11-18 year of age used primary endpoint of improvements in abdominal pain. The Pain Frequency-Severity-Duration
(“PFSD”) questionnaires was completed at baseline by all subjects and after each week of treatment (weeks 1–3), as
well as at extended follow-up occurring in the 8–12 weeks following the end of treatment. The PFSD scale incorporates multiple
aspects of the pain experience and was administered weekly during treatment and at extended follow-up appointments. The PFSD scale validated
for chronic pain in children (aged 8–18 years). The PFSD was also used to rate weekly worst abdominal pain on a numerical rating
scale (0 for no pain, 10 for worst pain). Patients were followed up for a median of 9.2 weeks from the last week of treatment.

For
the active PENFS group, median worst pain at follow-up remained lower (baseline: 8.0 vs. follow-up: 6.0), whereas there was no difference
at follow-up in the control group (baseline: 7.5 vs. follow-up: 7.0). The between-group differences in worst pain ratings after 3 weeks
of treatment showed that the PENFS group improved to a greater extent, with the control group reporting significantly higher worst pain
(median 7.0) than the PENFS group (median 5.0).

At
long-term follow-up, median PFSD composite scores were 12.6 (IQR 3.6–22.5) in the PENFS group and 16.8 (4.8–33.6) in the
control group. A comparison of changes in PFSD composite scores (baseline to follow-up) showed that patients in the PENFS group reported
significantly greater improvement in pain (median –8.4) than those in the control group (median 0.0). This study was published
in the Lancet Gastroenterology Hepatology, (Kovacic K, et.al. Lancet Gastroenterol Hepatol. 2017;2:727-737).

12

A
secondary endpoint in the same study used the functional disability index (FDI) to assess functional disability in those treated with
PENFS and compared to sham treatment. Those treated with PENFS changed from moderate disability to minimal at the 2–3-month follow-up
while the sham device group had no change.

A
separate published paper looked at 51 pediatric patients with IBS and used the symptoms response scale (SRS) to assess global symptoms
improvement following PENFS treatment compared to sham. Global symptom improvement was assessed with a validated pediatric questionnaire,
Symptom Response Scale (SRS). Symptoms were recorded as better, worse, or no change based on a 15-point scale across individual domains
for both improvement and deterioration of overall symptoms. Findings from several studies that used the SRS have shown that using 7-point
scale response options in disease-specific measures, a change score of 0.5 represents the minimal clinically important difference (Juniper
et.al. J Clin Epidemiol 1994; 47: 81–87 and Guyatt GH et.al.1987; 42: 773–78). As previously noted, a minimum change in score
of ≥ 2 was chosen for this study as a more stringent criterion for global improvement before and after PENFS treatment and to compare
between groups. Patients and providers were blinded in terms of those who received active PENFS or sham. At the end 3 weeks of therapy
using the change of ≥ 2, 81% of the PENFS group compared with 26% of the sham group (*p≤ 0.001, #p=0.002) reported overall symptom
improvement. When applying an even more stringent criteria with a change ≥ 3 on the SRS, 67% of the PENFS group compared with 22%
of the sham group reported symptoms improvement (p=0.002) (Krasaelap A et.al. Efficacy of Auricular Neurostimulation in Adolescents With
Irritable Bowel Syndrome in a Randomized, Double-Blind Trial. Clin Gastroenterol Hepatol. 2020;18:1987-1994).

13

Recently,
the largest, prospective, multicenter registry for any drug or device in pediatric patients with pain associated DGBIs was published.
It evaluated outcomes of pediatric patients (8-18 years) following a 4-week course of IB-Stim in a real-world clinical setting. Overall,
292 patients met Rome IV Diagnostic criteria for any pain associated disorder of the gut-brain interaction (DGBIs). In this cohort, 92%
had failed medication therapy and 61% of patients had failed 4 or more medications when they entered the study. Patients were asked to
fill out several validated pediatric measures, including the abdominal pain index (API) and a validated questionnaire that assesses frequency,
duration, and intensity of abdominal pain episodes. Data were collected weekly for the first 3 weeks and at 3, 6, 9 and 12 months. Compared
to baseline scores, there were significant improvements in the API after 4 weeks of IB-Stim treatment at every time point, including
6 month (p<0.001) and 12 months (p<0.001). Although there were many dropouts by the end of the 12 months, the results were still
significant and sustained. No serious adverse effects were recorded during the entire 12 month follow-up. (Chogle, A. et. al. A multicenter
registry study on percutaneous electrical nerve field stimulation for pediatric disorders of gut-brain interaction. J Pediatr Gastroenterol
Nutr. 2024 Mar 7.).

Abdominal
Pain Index (API)

Time
point

n

Median
(IQR)

p
Value

Baseline

288

2.68(1.84,
3.58)

N/A

3
weeks

209

1.99
(1.13, 3.27)

<0.001

3
months

75

1.81
(0.85, 3.20)

<0.001

6
months

60

1.70
(0.93, 2.72)

<0.001

9
months

26

1.90
(1.33, 2.82)

0.002

12
months

22

220(0.41,
3.21)

<0.001

An
open-label study of 20 patients treated with PENFS in a “real-world” clinical setting at Cincinnati Children’s Hospital
demonstrated that after PENFS, abdominal pain (p < 0.0001), nausea (p=0.001), pain catastrophizing (p = 0.001), functional disability
(p<0.0001), and anxiety (p = 0.03) exhibited significant improvements, and were sustained 6-12 months after treatment (Santucci et.al.
Effect of percutaneous electrical nerve field stimulation on mechanosensitivity, sleep, and psychological comorbidities in adolescents
with functional abdominal pain disorders. Neurogastroenterol Motil. 2022;34:e14358). Validated questionnaires included the abdominal
pain index (API), nausea severity scale (NSS), functional disability index (FDI), as well as psychological measures of catastrophizing
(PCS-C) and anxiety (SCARED). The table below summarizes the results pre, during and post PENFS results at long-term follow-up (Santucci
et.al. Effect of percutaneous electrical nerve field stimulation on mechanosensitivity, sleep, and psychological comorbidities in adolescents
with functional abdominal pain disorders. Neurogastroenterol Motil. 2022;34:e14358).

14

PENFS
Reimbursement

Previously,
the American Medical Association (AMA) assigned a procedure-specific Category III CPT Code (0720T) to PENFS, which was published on
December 30, 2021 and became effective for utilization on July 1, 2022. Category III CPT Codes are temporary codes issued to define
and track the utilization of new procedural technology. To expand patient access to PENFS procedures and IB-Stim technology, we
launched our internal Prior Authorization team under our Guidance & Patient Support function in 2023. This continues to address
the Prior Authorization process barriers for providers and children’s hospitals and streamlines a patient’s access to
our Patient Advocacy and Financial Assistance offerings, if needed. In September of 2024, the AMA’s CPT Editorial Panel
accepted addition of Category I CPT Code (placeholder 64X11) for PENFS and deletion of Category III CPT Code 0720T. The finalized
Category I CPT Code for PENFS, 64567 and associated valuations, was publicly announced in Q4 of 2025. CPT 64567 became effective
for utilization and reporting PENFS procedures on January 1, 2026. Twenty-four (24) commercial health insurers, including certain
Blue Cross Blue Shield licensees, have instituted formal medical policy coverage for PENFS. The total membership of these health
insurers is approaching 100,000,000 covered lives. Patients who are appropriate clinical candidates may have policy-covered access
to PENFS and IB-Stim technology under their specific health plan. We continue to actively leverage clinical evidence, peer-reviewed
publications, and academic medical society clinical practice guidelines to expand patient access to IB-Stim technology. The
finalized CPT code (1/1/2026) will strengthen PENFS access as Fee Schedules and claim payments become more transparent, allowing
both commercial and Medicaid payer entities to more-effectively process covered claims.

Marketing

NeurAxis
markets its products through a direct sales team, online channels, and to clinicians via affiliated academic societies. Our main goal
is to raise educational awareness among clinicians and hospitals about the unmet needs of patients with functional abdominal pain and
NeurAxis’ FDA-cleared, drug-free product solutions. Our primary focus is with the 260 children’s hospitals within the United
States. As our FDA-indications expand, so will our outreach and education to adult gastroenterology providers. Direct-to-patient marketing
efforts will be considered in the future.

Patients/Customers

IB-Stim
is indicated for patients 8 years and older suffering from functional abdominal pain, functional dyspepsia (FD),and associated FD nausea
symptoms. Customers are currently primarily children’s hospitals who serve these patients, but is currently expanding to adult
gastroenterologists and adult pain physicians.

REDTM
(Rectal Expulsion Device)

RED
enables comprehensive constipation for every gastroenterology practice. The mission is for every gastroenterology practice to be able
to safely and confidently differentially screen root causes of chronic constipation with the patient and physician in mind. RED can be
implemented in a GI practice with minimal impact to clinical workflow and does not require a large capital expense. Eight (8) million
patients each year present with constipation. Of those eight million patients, 700,000 patients present to the Emergency Room.

Clinical
Background

Constipation
is one of the most encountered gastrointestinal complaints in clinical practice. A recent systematic review reported that the prevalence
of chronic constipation (CC) in North America is between 10-15%. This condition causes significantly reduced quality of life, reduced
work-related productivity and billions of dollars in health expenditures. Clinical practice guidelines recommend empiric treatment of
chronically constipated patients with fiber supplements or laxative therapies. Approximately 40% of patients do not adequately respond
to empiric laxative therapy. In these patients, anorectal physiology testing is essential.

There
is a clinical need for an easy-to-use, office-based, point-of-care, anorectal function test that can measure rectal sensitivity and be
used as a rectal expulsion device to assess pelvic floor dysfunction. Current testing methods typically require elaborate volumetric
testing equipment to assess sensation and expulsion, which makes them not practical in the clinical setting. The current standard is
to refer patients to specialized motility centers for evaluation, resulting in sub-optimal number of patients with constipation undergoing
anal-rectal testing. In the current clinical setting, only about 2% of all patients with constipation are referred for anal-rectal testing
and thus, a large number with pelvic floor dysfunction and rectal hypersensitivity are missed and/or fail to get proper treatment. The
design of RED allows for it to be used as a self-inflating expulsion device and as a balloon to assess patients who experience rectal
hypersensitivity. When it is opened to atmospheric pressure, RED safely self inflates and contains a proprietary foam technology that
mimics the “feel” of stool. This provides an alternative to sensation and expulsion testing in the office without affecting
clinical workflow.

15

Rectal
Sensation Testing

Rectal
sensation is an important metric to guide clinical care, particularly rectal hypersensitivity. For example, a patient that reports an
immediate perceived immediate need to defecate or discomfort (max tolerated) to low volumes of distension would have rectal hypersensitivity.
This diagnosis is important because it would impact how a patient is treated. Rectal hypersensitivity is addressed by pelvic floor physical
therapists who deliver education and re-training to help the patient align the desire to defecate according to the actual volume of stool
contained within the rectal vault. The basis of sensory re-training during physical therapy involves inflating a balloon in the rectum
until urge threshold is reached. With repeated inflations, the patient learns to associate a given sensory intensity with the inflated
volume. Over time, the balloon is inflated with decreasing volumes and the patient is asked to closely monitor and attend to sensations
experienced. Eventually, new sensory thresholds are established. Unfortunately, because of the difficulty in performing hypersensitivity
testing in routine clinical care, only a small percentage of all patients with constipation undergo anorectal testing in the clinical
setting.

In
a recent study, 60 adult patients (mean±standard deviation age of 46.4±17.6 years; 93.3% women) that underwent evaluation
with RED and answered the questions were included in the analysis. One patient did not undergo rectal sensation testing due to suspected
anal fissure and overall, 58 patients were included in the analysis.

As
outlined in the figure below, 18 of 58 patients, or 31%, had rectal hypersensitivity on RED when defined on a single yes/no question
of “do you feel you have to poop right now” that evaluates the patient perception to defecate.

These
data suggest that approximately 31% of patients with chronic constipation reported urge to defecate with RED baseline distension volume,
thus meeting the London criteria for hypersensitivity.

Balloon
Expulsion Testing

RED
can be used as a rectal expulsion device and in a recent prospective trial of 60 adults with functional constipation (defined by Rome
IV criteria), it was demonstrated to be safe in a clinical setting. It can be quickly performed in the left lateral position (i.e., the
patient lying on their left side) immediately after a rectal examination. Further, it proved to be effective for patients who fail a
trial of laxative therapy. In those patients with constipation who failed laxative treatment, RED was able to reliably identify patients
for whom pelvic floor physical therapy was unlikely to provide substantial benefit (i.e, patients who might be more likely to benefit
from intensifying medical therapy). Patients with an abnormal RED in the left lateral position or commode were likely to respond to pelvic
floor therapy (48.8% to 71.4%, respectively). Also, RED showed very high sensitivity (>95%) to broadly detect evacuation disorders
as a simple screening tool as noted in the table below.

16

RED
Benefits Over Predicates

1.
Prompt
point of care test allows assessment of patients and potentially changes clinical management.

2.
Identifies
those who would benefit from physical therapy or who would require optimization of laxatives or addition of secretagogues.

3.
Identifies
many patients with rectal hypersensitivity that otherwise would never get tested.

4.
Easily
integrates with clinical workflow

There
is an urgent need to better identify patients with pelvic floor abnormalities and/or rectal hypersensitivity. Making the right diagnosis
can impact care and ensure that patients are properly assessed and treated. The figure below demonstrates how RED can impact clinical
decision making.

Overall,
RED is a point-of-care device designed to be used in the office. Rectal sensation is an important component of evaluating pelvic floor
function among patients with chronic constipation. Currently, 98% of clinically appropriate patients do not receive anorectal testing.
The study findings demonstrate that RED impacts clinical decision making by identifying patients who would benefit from physical
therapy or who would require optimization of laxatives. Shah et.al., An Office-Based, Point-of-Care Test Predicts Treatment Outcomes
With Community-Based Pelvic Floor Physical Therapy in Patients With Chronic Constipation. Clin Gastroenterol Hepatol. 2023;21:1082-1090.It
is also sufficient to qualitatively assess for rectal hypersensitivity which was evident in almost one-third of patients with chronic
constipation failing a trial of fiber/laxatives. It is critical to assess rectal sensation and balloon expulsion in patients with constipation
and/or fecal incontinence.

RED
Safety

●
The
tube for RED remains open to room air as the patient defecates. The pressure is therefore never greater than room air.

●
The
predicate device uses manual inflation with a syringe against resistance. The predicate device is re-capped so that the patient must
defecate an air-filled balloon with low compliance. The resistance with defecating the predicate is therefore greater than RED, because
RED is more compliant than an air-filled balloon. RED is therefore safer with regard to patients with decreased compliance.

●
There
have been no safety events reported to compliance in MAUDE with the predicate in the last 10 years.

●
RED
is more compliant than air or water based on balloon compression data as demonstrated in the graph below.

● RED CPT coding
changed effective January 1, 2026, and we are currently waiting on the AMA CPT Knowledge Base to give an opinion on the coding going
forward.

Intellectual
Property

Our
intellectual property consists of patents, trademarks, and trade secrets. Our trade secrets consist of product formulas, research, and
development, and unpatentable know-how, all of which we seek to protect, in part, by confidentiality agreements. To protect our intellectual
property, we rely on a combination of laws and regulations, as well as contractual restrictions. Federal trademark law protects our registered
trademarks. We also rely on the protection of laws regarding unregistered copyrights for certain content we create and trade secret laws
to protect our proprietary technology. To further protect our intellectual property, we enter into confidentiality agreements with our
executive officers and directors.

17

Trademarks

The
Company has nine (9) registered trademarks, and three (3) pending applications for registration:

Country

Trademark

Reg.
No.

Reg.
Date

Class/Goods

Status

US

NEURO-STIM
and Design

5105257

20-Dec-2016

10
Int. nerve stimulator apparatus

Registered

US

NSS
THE NEUROSTIM SYSTEM and Design

4905470

23-Feb-2016

10
Int. nerve stimulator apparatus

Registered

US

NSS

4852008

10-Nov-2015

10
Int. medical apparatus, namely, electrical nerve stimulators; medical device, namely, a non- implantable neurological pain management
generator, with percutaneously-implantable needle arrays; medical system and apparatus consisting of a non-implantable modulating
frequency generator, providing neuromodulation therapy to cranial and peripheral nerves; medical system and apparatus consisting
of implantable arrays for transmitting current into auricular and peri-auricular tissue; medical device for peripheral nerve and
nerve field stimulation; medical system and apparatus consisting of a non-implantable modulating frequency generator and implantable
needle arrays for transmitting current into auricular and peri-auricular tissue for use in pain management, namely, patient stimulators
for auricular and peri-auricular peripheral nerve field neuromodulation therapy; medical apparatus, appliances and instruments for
peripheral nerve field stimulation in cranial and peripheral nerves and occipital nerve branches, for pain control, headache control,
control of phantom limb pain, stump pain, reflex sympathetic dystrophy (RSD), peripheral neuropathies and other types of sympathetically
mediated pain

Registered

US

IB-STIM

5926831

03-Dec-2019

10
Int. medical apparatus, namely, electrical nerve stimulators; medical device, namely, a non- implantable modulating frequency generator,
providing neuromodulation therapy to cranial and peripheral nerves; medical apparatus consisting of percutaneously implantable arrays
for transmitting current into auricular and peri-auricular tissue; medical device for peripheral nerve and nerve field stimulation;
medical device consisting of a non-implantable modulating frequency generator and percutaneously implantable needle arrays for transmitting
current into auricular and peri-auricular tissue for use in pain management and FGID (functional gastrointestinal disorders), namely,
patient stimulator for auricular and peri-auricular peripheral nerve field neuromodulation therapy; medical apparatus, for peripheral
nerve field stimulation in cranial and peripheral nerves and occipital nerve branches, for pain control, FGID, irritable bowel, functional
dyspepsia, functional abdominal pain, nausea, functional nausea, abdominal migraine, Crohn’s Disease, visceral hypersensitivity,
chronic inflammatory bowel disease, changes in FGID co-morbidities, sleep disturbances, psychological disorders, including mood and
anxiety, satiety and changes in autonomic nervous system and other types of sympathetically mediated pain

Registered

18

US

IB-STIM
and Design

5926832

03-Dec-2019

10
Int. medical apparatus, namely, electrical nerve stimulators; medical device, namely, a non- implantable modulating frequency generator,
providing neuromodulation therapy to cranial and peripheral nerves; medical apparatus consisting of percutaneously implantable arrays
for transmitting current into auricular and peri-auricular tissue; medical device for peripheral nerve and nerve field stimulation;
medical device consisting of a non-implantable modulating frequency generator and percutaneously implantable needle arrays for transmitting
current into auricular and peri-auricular tissue for use in pain management and FGID (functional gastrointestinal disorders), namely,
patient stimulator for auricular and peri-auricular peripheral nerve field neuromodulation therapy; Medical apparatus, for peripheral
nerve field stimulation in cranial and peripheral nerves and occipital nerve branches, for pain control, FGID, irritable bowel, functional
dyspepsia, functional abdominal pain, nausea, functional nausea, abdominal migraine, Crohn’s Disease, visceral hypersensitivity,
chronic inflammatory bowel disease, changes in FGID co-morbidities, sleep disturbances, psychological disorders, including mood and
anxiety, satiety and changes in autonomic nervous system and other types of sympathetically mediated pain

Registered

US

IB-STIM
AURICULAR STIMULATOR

5978411

04-Feb-2020

10
Int. medical apparatus, namely, electrical nerve stimulators; Medical device, namely, a non- implantable modulating frequency generator,
providing neuromodulation therapy to cranial and peripheral nerves; Medical apparatus consisting of percutaneously implantable arrays
for transmitting current into auricular and peri-auricular tissue; Medical device for peripheral nerve and nerve field stimulation;
Medical device consisting of a non-implantable modulating frequency generator and percutaneously implantable needle arrays for transmitting
current into auricular and peri-auricular tissue for use in pain management and FGID (functional gastrointestinal disorders), namely,
patient stimulator for auricular and peri-auricular peripheral nerve field neuromodulation therapy; Medical apparatus, for peripheral
nerve field stimulation in cranial and peripheral nerves and occipital nerve branches, for pain control, FGID, irritable bowel, functional
dyspepsia, functional abdominal pain, nausea, functional nausea, abdominal migraine, Crohn’s Disease, visceral hypersensitivity,
chronic inflammatory bowel disease, changes in FGID co-morbidities, sleep disturbances, psychological disorders, including mood and
anxiety, satiety and changes in autonomic nervous system and other types of sympathetically mediated pain

Registered

US

IB-STIM
AURICULAR STIMULATOR and Design

5978412

04-Feb-2020

10
Int. medical apparatus, namely, electrical nerve stimulators; medical device, namely, a non- implantable modulating frequency generator,
providing neuromodulation therapy to cranial and peripheral nerves; medical apparatus consisting of percutaneously implantable arrays
for transmitting current into auricular and peri-auricular tissue; medical device for peripheral nerve and nerve field stimulation;
medical device consisting of a non-implantable modulating frequency generator and percutaneously implantable needle arrays for transmitting
current into auricular and peri-auricular tissue for use in pain management and FGID (functional gastrointestinal disorders), namely,
patient stimulator for auricular and peri-auricular peripheral nerve field neuromodulation therapy; medical apparatus, for peripheral
nerve field stimulation in cranial and peripheral nerves and occipital nerve branches, for pain control, FGID, irritable bowel, functional
dyspepsia, functional abdominal pain, nausea, functional nausea, abdominal migraine, Crohn’s Disease, visceral hypersensitivity,
chronic inflammatory bowel disease, changes in FGID co-morbidities, sleep disturbances, psychological disorders, including mood and
anxiety, satiety and changes in autonomic nervous system and other types of sympathetically mediated pain

Registered

19

Country

Trademark

App.
No.

App.
Date

Class/Goods

Status

US

NEURAXIS

97/327951

24-Mar-2022

10
Int. nerve stimulator apparatus; nerve stimulator apparatus for FGID, irritable bowel, functional dyspepsia, functional abdominal
pain, nausea, functional nausea, abdominal migraine, Crohn’s Disease, visceral hypersensitivity, chronic inflammatory bowel
disease, changes in FGID co- morbidities, sleep disturbances, psychological disorders, including mood, anxiety, and satiety, pain
control, headache control, control of phantom limb pain, stump pain, reflex sympathetic dystrophy (RSD), peripheral neuropathies
and other types of sympathetically mediated pain

Registered

US

NEURAXIS
(STYLIZED)

97/356330

11-Apr-2022

10
Int. nerve stimulator apparatus; nerve stimulator apparatus for FGID, irritable bowel, functional dyspepsia, functional abdominal
pain, nausea, functional nausea, abdominal migraine, Crohn’s Disease, visceral hypersensitivity, chronic inflammatory bowel
disease, changes in FGID co- morbidities, sleep disturbances, psychological disorders, including mood, anxiety, and satiety, pain
control, headache control, control of phantom limb pain, stump pain, reflex sympathetic dystrophy (RSD), peripheral neuropathies
and other types of sympathetically mediated pain

Registered

US

RECTAL
EXPULSION DEVICE

99/249573

24-Jun-2025

10
Int. medical devices, namely, devices for measuring pelvic floor dysfunction and rectal hypersensitivity for use in the diagnosis
and treatment of chronic constipation; medical diagnostic apparatus for testing pelvic floor dysfunction and rectal hypersensitivity
in the field of chronic constipation; medical devices and apparatus for medical screening testing of individuals with chronic
constipation; medical apparatus and instrument for diagnostic use, namely, apparatus for medical diagnostic testing in the field
of chronic constipation; disposable medical devices for diagnosing and treating constipation

Filed

US

RED
– RECTAL EXPULSION DEVICE (word)

99/249859

24-Jun-2025

10
Int. medical devices, namely, devices for measuring pelvic floor dysfunction and rectal hypersensitivity for use in the diagnosis
and treatment of chronic constipation; medical diagnostic apparatus for testing pelvic floor dysfunction and rectal hypersensitivity
in the field of chronic constipation; medical devices and apparatus for medical screening testing of individuals with chronic
constipation; medical apparatus and instrument for diagnostic use, namely, apparatus for medical diagnostic testing in the field
of chronic constipation; disposable medical devices for diagnosing and treating constipation

Filed

US

RED
& Design

99/249570

24-Jun-2025

10
Int. medical devices, namely, devices for measuring pelvic floor dysfunction and rectal hypersensitivity for use in the diagnosis
and treatment of chronic constipation; medical diagnostic apparatus for testing pelvic floor dysfunction and rectal hypersensitivity
in the field of chronic constipation; medical devices and apparatus for medical screening testing of individuals with chronic
constipation; medical apparatus and instrument for diagnostic use, namely, apparatus for medical diagnostic testing in the field
of chronic constipation; disposable medical devices for diagnosing and treating constipation

Filed

US

AXI-STIM

99/507683

20-Nov-2025

10
Int. Medical apparatus, namely, electrical nerve stimulators; medical device, namely, a non-implantable modulating frequency generator,
providing neuromodulation therapy to cranial and peripheral nerves; medical apparatus consisting of percutaneously implantable arrays
for transmitting current into auricular and per-auricular tissue; medical device for peripheral nerve and nerve field stimulation;
medical device consisting of a non-implantable modulating frequency generator and percutaneously implantable needle arrays for transmitting
current into auricular and per-auricular tissue for us in pain management and FGID (functional gastrointestinal disorders), namely,
patient stimulator for auricular and peri-auricular peripheral nerve filed neuromodulation therapy; medical apparatus, for peripheral
never field stimulation in cranial and peripheral nerves and occipital nerve branches, for pain control, FGID, irritable bowel, functional
dyspepsia, functional abdominal pain, nausea, functional nausea, abdominal migraine, Crohn’s Disease, visceral hypersensitivity,
chronic inflammatory bowel disease, change in FGID co-morbidities, sleep disturbances, psychological disorders, including mood and
anxiety, satiety and changes in autonomic nervous system and other types of sympathetically mediated pain.

Patents

The
Company has fifteen (15) granted patents in the United States and one (1) applied for patent application in the United States and one
(1) granted foreign patent and two (2) applied for foreign patent applications.

Country

Owner

Serial
No.

Actual
Filing Date

Patent
No.

Issue
Date

Anticipated
Expiration Date

Title

Application
Status

Licensing
Status

CA

Neuraxis,
Inc.

3096494

25-Apr-2019

AURICULAR
NERVE FIELD STIMULATION DEVICE

Applied
for

JP

Neuraxis,
Inc.

2021-509961

23-Oct-2020

7252319

27-Mar-2023

25-Apr-2039

AURICULAR
NERVE FIELD STIMULATION DEVICE

Granted

US

Neuraxis,
Inc.

17/040766

23-Sep-2020

11369791

28-Jun-2022

21-Jun-2039

AURICULAR
NERVE FIELD STIMULATION DEVICE

Granted

US

Neuraxis,
Inc.

17/715121

07-Apr-2022

12097371

24-Sep-2024

04-Jan-2040

AURICULAR
NERVE FIELD STIMULATION DEVICE

Granted

US

Neuraxis,
Inc.

16/014169

21-Jun-2018

10322062

18-Jun-2019

14-May-2034

AURICULAR
PERIPHERAL NERVE FIELD STIMULATOR AND METHOD OF OPERATING SAME

Granted

US

Neuraxis,
Inc.

16/408004

09-May-2019

11077019

03-Aug-2021

16-Jul-2034

AURICULAR
PERIPHERAL NERVE FIELD STIMULATOR AND METHOD OF OPERATING SAME

Granted

US

Neuraxis,
Inc.

17/363620

30-Jun-2021

11654082

23-May-2023

29-Jul-2034

AURICULAR
PERIPHERAL NERVE FIELD STIMULATOR AND METHOD OF OPERATING SAME

Granted

US

Neuraxis,
Inc.

17/830411

02-Jun-2022

DEVICE
AND METHOD FOR ERADICATING PATHOGENS IN NASAL PASSAGES

Applied
for

US

Neuraxis,
Inc.

17/589082

31-Jan-2022

EXTERNAL
AUDITORY CANAL PHOTOBIOMODULATION AND AUDIO THERAPY DEVICE

Applied
for

20

US

Neuraxis,
Inc.

17/861646

11-Jul-2022

EXTERNAL
AUDITORY CANAL THERAPY DEVICE

Applied
for

US

Neuraxis,
Inc.

17/617364

08-Dec-2021

EXTERNAL
AUDITORY CANAL PHOTOBIOMODULATION DEVICE

Applied
for

US

Neuraxis,
Inc.

15/488416

14-Apr-2017

10413719

17-Sep-2019

14-Apr-2037

METHODS
OF TREATING DISEASE USING AURICULAR PERIPHERAL NERVE FIELD STIMULATION

Granted

US

Neuraxis,
Inc.

16/534159

07-Aug-2019

11331473

17-May-2022

14-Apr-2037

METHODS
OF TREATING DISEASE USING AURICULAR PERIPHERAL NERVE FIELD STIMULATION

Granted

US

Neuraxis,
Inc.

15/595185

15-May-2017

9839577

12-Dec-2017

14-May-2034

SYSTEM
AND METHOD FOR AURICULAR PERIPHERAL NERVE FIELD STIMULATION

Granted

US

Neuraxis,
Inc.

15/811278

13-Nov-2017

10010479

03-Jul-2018

14-May-2034

SYSTEM
AND METHOD FOR AURICULAR PERIPHERAL NERVE FIELD STIMULATION

Granted

US

Neuraxis,
Inc.

14/277158

14-May-2014

9662269

30-May-2017

14-May-2034

SYSTEMS
AND METHODS FOR AURICULAR PERIPHERAL NERVE FIELD STIMULATION

Granted

US

Neuraxis,
Inc.

17/725,761

21-Apr-2022

11813448

14-Nov-2023

14-Apr-2037

AURICULAR
NERVE FIELD STIMULATION DEVICE AND METHODS FOR USING THE SAME

Granted

US

Neuraxis,
Inc.

18/154,375

13-Jan-2023

12029701

09-Jul-2024

14-May-2034

AURICULAR
PERIPHERAL NERVE FIELD STIMULATOR AND METHOD OF OPERATING SAME

Granted

US

Neuraxis,
Inc.

18/736,834

07-June-2024

12383461

12-Aug-2025

14-May-2034

AURICULAR
PERIPHERAL NERVE FIELD STIMULATOR AND METHOD OF OPERATING SAME

Granted

US

Neuraxis,
Inc.

18/173,893

24-Feb-2023

12447332

21-Oct-2025

01-May-2035

AURICULAR
NERVE FIELD STIMULATION DEVICE AND METHODS FOR USING THE SAME

Granted

US

Neuraxis,
Inc.

18/377,968

09-Oct-2023

12285602

24-Apr-2025

14-Apr-2037

AURICULAR
NERVE FIELD STIMULATION DEVICE AND METHODS FOR USING THE SAME

Granted

US

Neuraxis,
Inc.

19173434

08-Apr-2025

AURICULAR
NERVE FIELD STIMULATION DEVICE AND METHODS FOR USING THE SAME

Applied
for

CA

Neuraxis,
Inc.

3243826

07-Aug-2024

AURICULAR
NERVE FIELD STIMULATION DEVICE AND METHODS FOR USING THE SAME

Applied
for

21

License
Agreements

TKBMN
Exclusive License Agreement

On
May 7, 2020, the Company entered into an exclusive license agreement with TKBMN, LLC to obtain an exclusive license under certain patent
rights (the “Patent Rights”) owned by TKBMN. Dr. Thomas Carrico, our Chief Regulatory Officer, is the manager of TKBMN. Brian
Carrico, our Chief Executive Officer, and Matt Carrico, our National Sales Director, are members of TKBMN. TKBMN owns the Patent Rights
set forth in the patents listed in the following table (the “TKBMN Patents”) by virtue of an assignment from Dr. Carrico,
who is the sole inventor listed on the TKBMN Patents. TKBMN has assigned the auricular portion of the TKBMN Patent Rights to the Company.

Licensed
TKBMN Patents

Country

Owner

Application
No.

Patent
No.

Issue
Date

Anticipated

Expiration

Date*

Title

US

TKBMN,
LLC

15/981,082

10,792,500

October
2, 2020

October
18, 2037

Systems
and methods for electro-therapy treatment

US

TKBMN,
LLC

17/014,450

11,684,782

June
7, 2023

October
18, 2037

Systems
and methods for electro-therapy treatment

*
If all maintenance fees remain paid

Pursuant
to the exclusive license agreement, TKBMN agreed to grant an exclusive, worldwide, non-transferable, royalty-free license under Patent
Rights, which including three patents applications filed by TKBMN in connection with systems and methods for elector-therapy treatment,
to the Company to develop, market, and sell licensed products, in the field of electro-therapy treatment by stimulation of cranial nerves,
cranial nerve branches, auricular nerves, auricular nerve branches, auricular nerve bundles, and/or auricular anatomical structures in
human patients (the “Field”), in consideration of a one-time license fee of $1.00. The Company has the right to grant sublicenses
to the Patents Rights in the Field. The exclusive license agreement expires upon the expiration of the last to expire valid claim within
the Patent Rights and may be terminated by the Company upon 60 days prior written notice. Upon expiration or termination of the exclusive
license agreement, all rights in the Patent Rights will revert to TKBMN. There are no royalties or any other form of committed revenue
to TKBMN or any of its members Under the agreement, the Company has agreed to cover fees and expenses associated with maintenance, prosecution,
and additional associated/continuation patent filings for the TKBMN Patents.

Masimo
License and Collaboration Agreement

On
April 9, 2020, the Company entered into a license and collaboration agreement with Masimo. As consideration, in part, Masimo entered
into a Series A Preferred Stock purchase agreement with the Company. Under the license and collaboration agreement, the Company grants
an exclusive, fully paid-up, royalty-free license to specifically identified patents and trademarks in a limited Field of use. At all
times, the Company remains the owner of all licensed intellectual property rights, and there is a possibility of joint ownership of collaboratively
developed products and methods. The licensed patents are generally directed to a device and the treatment of opioid withdrawal symptoms.
The licensed trademarks are generally directed to the NSS-2 Bridge mark. The license agreement includes a collaboration component to
efficiently develop, obtain regulatory approval, and commercialize products for the limited field of use. The term of the agreement is
in effect until the expiration or lapse of the last intellectual property rights. Masimo paid a one-time fee of $250,000. The license
and collaboration agreement may not be terminated by the Company for any reason, and the sole remedy for any breach or default by Masimo
shall be to seek monetary damages and equitable remedies. The license and collaboration agreement may be terminated by Masimo if there
is material breach by the Company that remain uncured for thirty (30) days or without cause by providing thirty (30) days prior written
notice.

On
July 1, 2025, The Company terminated the NSS-2 Bridge license with Masimo in exchange for $200,000 of consideration payable in equal
installments on December 31, 2025 and June 30, 2026. The termination agreement allowed the Company to recapture the rights to the trademark
(U.S. Registration No. 7,394,465) and two patent applications (Application No. 18/821/255 and Application No. 29/960.608) that
were originally licensed to Masimo on April 9, 2020. See”—Our Corporate History” for more information.

Implications
of Being a Smaller Reporting Company

We
are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage
of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We
will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our shares held by non-affiliates
equals or exceeds $250 million as of the prior June 30th, or (2) our annual revenues equal or exceed $100 million during such
completed fiscal year and the market value of our shares held by non-affiliates equals or exceeds $700 million as of the prior June 30th.
Such reduced disclosure and corporate governance obligations may make it more challenging for investors to analyze our results of operations
and financial prospects.

For
additional information, see “Risk Factors – Because the Company is a ‘smaller reporting company,’ we may take
advantage of certain scaled disclosures available to us, resulting in holders of our securities receiving less Company information than
they would receive from a public company that is not a smaller reporting company” and “As a smaller reporting company,”
we may at some time in the future choose to exempt our Company from certain corporate governance requirements that could have an adverse
effect on our public stockholders.”

22

Implications
of Being an Emerging Growth Company

We
are an “emerging growth company” as defined in the JOBS Act. We will remain an emerging growth company until the earlier
of (1) December 31, 2028, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion,
(3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under
the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur on the date on which we have issued more than
$1.0 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of
specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable
to public companies. As an emerging growth company, we may:

●
present
only two years of audited financial statements, plus unaudited condensed financial statements for any interim period, and related
management’s discussion and analysis of financial condition and results of operations in this prospectus;

●
avail
ourselves of the exemption from the requirement to obtain an attestation and report from our auditors on the assessment of our internal
control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

●
provide
reduced disclosure about our executive compensation arrangements; and

●
not
require stockholder non-binding advisory votes on executive compensation or golden parachute arrangements.

In
addition, under the JOBS Act, an emerging growth company can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We have elected not to take advantage of the extended transition period for complying with
new or revised accounting standards provided to emerging growth companies under the JOBS Act.

Government
Regulation

Our
products and our operations are subject to extensive regulation by the U.S. Food and Drug Administration, or FDA, and other federal,
state, and local authorities in the United States, as well as comparable authorities in foreign jurisdictions. Our products are subject
to regulation as medical devices in the United States under the Federal Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations.

United
States Regulation

The
FDA regulates, among other things, the development, design, non-clinical and clinical testing, manufacturing, safety, effectiveness,
labeling, packaging, storage, installation, servicing, recordkeeping, premarket clearance or approval, adverse event reporting, advertising,
promotion, marketing and distribution, and import and export and post-marketing surveillance of medical devices in the United States
to ensure that medical devices distributed domestically are safe and effective for their intended uses and otherwise meet the requirements
of the FDCA.

23

FDA
Premarket Clearance and Approval Requirements

Unless
an exemption applies, each new or significantly modified medical device commercially distributed in the United States requires FDA clearance
of a 510(k) premarket notification. The 510(k) clearance can be resource intensive, expensive, and lengthy.

Under
the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree
of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness.
Class I devices are those for which safety and effectiveness can be assured by adherence to the FDA’s general controls for medical
devices, which include compliance with the applicable portions of FDA’s current good manufacturing practices for devices, as reflected
in the Quality System Regulation, or QSR, establishment registration and device listing, reporting of adverse medical events, and truthful
and non-misleading labeling, advertising, and promotional materials. Some Class I devices, also called Class I reserved devices, also
require premarket clearance by the FDA through the 510(k) premarket notification process described below. Most Class I devices are exempt
from the premarket notification requirements.

Class
II devices are subject to the FDA’s general controls, and any other special controls deemed necessary by the FDA to ensure the
safety and effectiveness of the device. These special controls can include performance standards, special labeling requirements, post-market
surveillance, patient registries and FDA guidance documents.

Most
Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDCA requesting permission to
commercially distribute the device. The FDA’s permission to commercially distribute a device subject to a 510(k) premarket notification
is generally known as 510(k) clearance.

If
a new medical device does not qualify for the 510(k) premarket notification process because no predicate device to which it is substantially
equivalent can be identified, the device is automatically classified into Class III. The Food and Drug Administration Modernization Act
of 1997 established a new route to market for low to moderate risk medical devices that are automatically placed into Class III due to
the absence of a predicate device, called the “Request for Evaluation of Automatic Class III Designation,” or the de novo
classification process. This process allows a manufacturer whose novel device is automatically classified into Class III to request down-classification
of its medical device into Class I or Class II on the basis that the device presents low or moderate risk. If the manufacturer seeks
reclassification into Class II, the manufacturer must include a draft proposal for special controls that are necessary to provide a reasonable
assurance of the safety and effectiveness of the medical device. The FDA may reject the reclassification petition if it identifies a
legally marketed predicate device that would be appropriate for a 510(k) or that general controls would be inadequate to control the
risks and special controls cannot be developed.

Obtaining
FDA marketing authorization, de novo down-classification, or approval for medical devices is expensive and uncertain, and may take several
years, and generally requires significant scientific and clinical data.

Some
pre-amendment devices are unclassified, but are subject to FDA’s premarket notification and clearance process in order to be commercially
distributed.

Investigational
Device Process

Clinical
trials are sometimes required to support a 510(k) submission. In the United States, absent certain limited exceptions, human clinical
trials intended to support medical device clearance or approval or to determine safety and effectiveness of a device for an investigational
use must be conducted in accordance with the FDA’s investigational device exemption, or IDE, regulations which govern investigational
device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities
of study sponsors and study investigators. If the device presents a “significant risk,” to human health, as defined by the
FDA, the FDA requires the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human
clinical trials. The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that
it is safe to test the device in humans and that the testing protocol is scientifically sound. The IDE application must be approved in
advance by the FDA for a specified number of subjects. Generally, clinical trials for a significant risk device may begin once the IDE
application is approved by the FDA and the study protocol and informed consent are approved by appropriate institutional review boards
at the clinical trial sites. There can be no assurance that submission of an IDE will result in the ability to commence clinical trials,
and although the FDA’s approval of an IDE allows clinical testing to go forward for a specified number of subjects, it does not
bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and effectiveness, even if the trial
meets its intended success criteria.

24

If
the device under evaluation does not present a significant risk to human health, then the device sponsor is not required to submit an
IDE application to the FDA before initiating human clinical trials, but must still comply with abbreviated IDE requirements when conducting
such trials. A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient
and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating
disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject. An IDE application
must be supported by appropriate data, such as animal and laboratory test results, showing that it is safe to test the device in humans
and that the testing protocol is scientifically sound. The IDE will automatically become effective thirty (30) days after receipt by
the FDA unless the FDA notifies the company that the investigation may not begin. If the FDA determines that there are deficiencies or
other concerns with an IDE for which it requires modification, the FDA may permit a clinical trial to proceed under a conditional approval.

Regardless
of the degree of risk presented by the medical device, clinical studies must be approved by, and conducted under the oversight of, an
Institutional Review Board, or IRB, for each clinical site. The IRB is responsible for the initial and continuing review of the IDE,
and may pose additional requirements for the conduct of the study. If an IDE application is approved by the FDA and one or more IRBs,
human clinical trials may begin at a specific number of investigational sites with a specific number of patients, as approved by the
FDA. If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for
the trial by one or more IRBs without separate approval from the FDA, but must still follow abbreviated IDE requirements, such as monitoring
the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements. Acceptance
of an IDE application for review does not guarantee that the FDA will allow the IDE to become effective and, if it does become effective,
the FDA may or may not determine that the data derived from the trials support the safety and effectiveness of the device or warrant
the continuation of clinical trials. An IDE supplement must be submitted to, and approved by, the FDA before a sponsor or investigator
may make a change to the investigational plan that may affect its scientific soundness, study plan or the rights, safety or welfare of
human subjects.

During
a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting
clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping
and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them. The clinical investigators
in the clinical study are also subject to FDA’s regulations and must obtain patient informed consent, rigorously follow the investigational
plan and study protocol, control the disposition of the investigational device, and comply with all reporting and recordkeeping requirements.
Additionally, after a trial begins, we, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons,
including 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
do not comply with trial protocols;

●
Patient
follow-up is not at the rate expected;

●
Patients
experience serious adverse events;

●
Patients
die during a clinical trial, even though their death may not be related to the products that are part of the trial;

●
Device
malfunctions occur with unexpected frequency or potential adverse consequences;

●
Side
effects or device malfunctions of similar products already in the market that change the FDA’s view toward approval of result
in the imposition of new requirements or testing;

25

●
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, investigator agreement, investigational plan, good clinical practices, the IDE regulations, or other
FDA or IRB requirements;

●
Third-party
investigators are disqualified by the FDA;

●
We
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, or otherwise fail to comply with the IDE regulations governing
responsibilities, records, and reports of sponsors of clinical investigations;

●
Third-party
clinical investigators have significant financial interests related to us or our study such that the FDA deems 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 government regulations or administrative actions;

●
The
interim or final results of the clinical trial are inconclusive or unfavorable as to safety or effectiveness; or

●
The
FDA concludes that our trial design is unreliable or inadequate to demonstrate safety and effectiveness.

510(k)
Clearance Process

Under
the 510(k) process, the manufacturer must submit to the FDA a premarket notification submission demonstrating that the proposed device
is “substantially equivalent,” as defined in the FDCA, to a legally marketed predicate device.

A
predicate device is a legally marketed device that is not subject to premarket approval, i.e., a device that was legally marketed prior
to May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class III to Class
II or I, or a device that was found substantially equivalent through the 510(k) process. A device is considered to be substantially equivalent
if, with respect to the predicate device, it has the same intended use and has either (i) the same technological characteristics; or
(ii) different technological characteristics, but the information provided in the 510(k) submission demonstrates that the device does
not raise different questions of safety or effectiveness than the predicate device.

Before
the FDA will accept a 510(k) premarket notification for substantive review, the FDA will first assess whether the submission satisfies
a minimum threshold of acceptability. If the FDA determines that the 510(k) submission lacks necessary information for substantive review,
the FDA will issue a “Refuse to Accept” letter which generally outlines the information the FDA believes is necessary to
permit a substantive review and to reach a determination regarding substantial equivalence. An applicant must submit the requested information
before the FDA will proceed with additional review of the submission. If a 510(k) submission is accepted for substantive review, the
Medical Device User Fee Amendments sets a performance goal of 90 days for FDA review of a 510(k) submission, but the review time can
be delayed if FDA raises questions or requests additional information during the review process. As a practical matter, clearance often
takes longer, and clearance is never assured. Thus, as a practical matter, clearance often takes longer than 90 days. 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.

26

If
the FDA determines that the device is substantially equivalent to a predicate device, it will grant 510(k) clearance to commercially
market the device. If the FDA determines that the device is “not substantially equivalent” to a previously cleared device,
the device is automatically designated as a Class III device. The device sponsor must then fulfill more rigorous requirements of the
PMA approval process, or can request a risk-based classification determination for the device in accordance with the “de novo”
process, which is a route to market for certain novel medical devices that are low to moderate risk and are not substantially equivalent
to a predicate device.

Medical
devices can only be marketed for the indications for use for which they are cleared or approved. After a device receives 510(k) clearance,
any modification that could significantly affect its safety or effectiveness, or that would constitute a major change or modification
in its intended use, will require a new 510(k) clearance or, depending on the modification, PMA approval or de novo reclassification.
The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k), de novo request or
a PMA in the first instance, but the FDA may review this determination to evaluate the regulatory status of the modified product at any
time and may require the manufacturer to cease marketing and/or request the recall of the modified device until 510(k) marketing clearance
or PMA approval is obtained or a de novo request is granted. Also, in these circumstances, the manufacturer may be subject to
significant regulatory fines or penalties.

Over
the last several years, the FDA has proposed reforms to its 510(k) clearance process, and such proposals could include increased requirements
for clinical data and a longer review period, or could make it more difficult for manufacturers to utilize the 510(k) clearance process
for their products. For example, in November 2018, FDA officials announced steps that the FDA intended to take to modernize the premarket
notification pathway under Section 510(k) of the FDCA. Among other things, the FDA announced that it planned to develop proposals to
drive manufacturers utilizing the 510(k) pathway toward the use of newer predicates. These proposals included plans to potentially sunset
certain older devices that were used as predicates under the 510(k) clearance pathway, and to potentially publish a list of devices that
have been cleared on the basis of demonstrated substantial equivalence to predicate devices that are more than 10 years old. These proposals
have not yet been finalized or adopted, although the FDA may work with Congress to implement such proposals through legislation.

In
September 2019, the FDA issued revised final guidance describing an optional “safety and performance based” premarket review
pathway for manufacturers of “certain, well-understood device types” to demonstrate substantial equivalence under the 510(k)
clearance pathway by showing that such device meets objective safety and performance criteria established by the FDA, thereby obviating
the need for manufacturers to compare the safety and performance of their medical devices to specific predicate devices in the clearance
process. The FDA has developed and maintains a list device types appropriate for the “safety and performance based” pathway
and continues to develop product-specific guidance documents that identify the performance criteria for each such device type, as well
as recommended testing methods, where feasible.

PMA
Approval Process

Class
III devices require PMA approval before they can be marketed, although some pre-amendment Class III devices for which FDA has not yet
required a PMA are cleared through the 510(k) process. The PMA process is more demanding than the 510(k) premarket notification process.
In a PMA, the manufacturer must demonstrate that the device is safe and effective for its intended use, and the PMA must be supported
by extensive data, including data from preclinical studies and human clinical trials. The PMA must also contain a full description of
the device and its components, a full description of the methods, facilities, and controls used for manufacturing, and proposed labeling.
Following receipt of a PMA, the FDA conducts an administrative review to determine whether the application is sufficiently complete to
permit a substantive review. If it is not, the agency will refuse to file the PMA. If FDA accepts the application for substantive review,
it has 180 days under the FDCA to complete its review of a filed PMA application, although in practice, the FDA’s review often
takes significantly longer, and can take up to several years. During this review period, the FDA may request additional information or
clarification of information already provided, and the FDA may issue a major deficiency letter to the applicant, requesting the applicant’s
response to deficiencies communicated by the FDA. The FDA considers a PMA or PMA supplement to have been voluntarily withdrawn if an
applicant fails to respond to an FDA request for information (e.g., major deficiency letter) within a total of 360 days. Before approving
or denying a PMA application, an advisory panel of experts from outside the FDA may be convened to review and evaluate the application
and provide recommendations to the FDA as to whether the FDA should approve the submission, approve it with specific conditions, or not
approve it. The FDA may or may not accept the panel’s recommendation. Prior to approval of a PMA, the FDA may conduct inspections
of the clinical trial data and clinical trial sites, as well as conduct inspections of the applicant or its third-party manufacturers’
or suppliers’ manufacturing facility or facilities to, among other things, ensure compliance with the QSR. NeurAxis, Inc. is a designated small business with the FDA and enjoys
discounted fees. NeurAxis, Inc. PENFS technology is a Class II medical device and typically pursues De Novo or 510K clearances.

●
Overall,
the FDA review of a PMA application generally takes between one and three years, but may take significantly longer. The FDA can delay,
limit or deny approval of a PMA application for many reasons, including:

●
The
device may not be shown safe or effective to the FDA’s satisfaction;

27

●
The
data from pre-clinical studies and/or clinical trials may be found unreliable or 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.

If
the FDA evaluation of a PMA is favorable, the FDA will issue either an approval letter, or an approvable letter, the latter of which
usually contains a number of conditions that must be met in order to secure final approval of the PMA. When and if those conditions have
been fulfilled to the satisfaction of the FDA, the agency will issue a PMA approval letter authorizing commercial marketing of the device,
subject to the conditions of approval and the limitations established in the approval letter. The FDA may approve a PMA with post-approval
conditions intended to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion,
sale and distribution, and collection of long-term follow-up data from patients in the clinical study that supported PMA approval or
requirements to conduct additional clinical studies post-approval. The FDA may condition PMA approval on some form of post-market surveillance
when deemed necessary to protect the public health or to provide additional safety and effectiveness data for the device in a larger
population or for a longer period of use. In such cases, the manufacturer might be required to follow certain patient groups for a number
of years and to make periodic reports to the FDA on the clinical status of those patients. Failure to comply with the conditions of approval
can result in material adverse enforcement action, including withdrawal of the approval. If the FDA’s evaluation of a PMA application
or manufacturing facilities is not favorable, the FDA will deny approval of the PMA or issue a not approvable letter. 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, or the PMA is withdrawn and resubmitted when the
data are available. The PMA process can be expensive, uncertain and lengthy and a number of devices for which the FDA approval has been
sought by other companies have never been approved by the FDA for marketing.

Certain
changes to an approved medical device, such as changes in manufacturing facilities, methods, quality control procedures, sterilization
(if applicable), packaging, expiration date, labeling, device specifications, materials, or design of a device, or other changes which
affect the safety or effectiveness of the device that has been approved through the PMA process require submission of a new PMA or PMA
supplement. PMA supplements often require submission of the same type of information as a PMA, except that the supplement is limited
to information needed to support any changes from the device covered by the original, approved PMA and may not require as extensive clinical
data or the convening of an advisory panel, depending on the nature of the proposed change. Certain other changes to an approved device
require the submission of a new PMA, such as when the design change causes a different intended use, mode of operation, and technical
basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the data that
were submitted with the original PMA are not applicable for the change in demonstrating a reasonable assurance of safety and effectiveness.

28

Ongoing
Regulation by the FDA

Even
after the FDA permits a device to be marketed, numerous and pervasive regulatory requirements continue to apply. These include:

●
Establishment
registration and device listing with the FDA;

●
QSR
requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, supplier/contractor
selection, compliant handling, documentation and other quality assurance procedures during all aspects of the design and manufacturing
process;

●
Labeling
regulations, advertising and promotion requirements, restrictions on sale, distribution or sale of a device, each including the FDA
prohibition against the promotion of products for any uses other than those authorized by the FDA, which are commonly known as “off-label”
uses;

●
The
Medical Device Reporting, or MDR, regulations, which require that a manufacturer report to the FDA if a device it markets may have
caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would
be likely to cause or contribute to a death or serious injury, if the malfunction were to recur;

●
Medical
device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections 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;

●
Recall
requirements, including a mandatory recall if there is a reasonable probability that the device would cause serious adverse health
consequences or death;

●
An
order of repair, replacement, or refund;

●
Device
tracking requirements; and

●
Post-market
study and surveillance requirements.

After
a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute
a major change in its intended use, will require a new 510(k). The FDA requires each manufacturer to make this determination initially,
but the FDA can review any such decision and can disagree with a manufacturer’s determination. If the FDA disagrees with a manufacturer’s
determination not to seek a new 510(k) clearance, the FDA may retroactively require it to seek 510(k) clearance. The FDA could also require
the manufacturer to cease marketing and distribution and/or recall the modified device until 510(k) clearance is obtained. Also, in these
circumstances, the manufacturer may be subject to significant regulatory fines and penalties.

FDA
regulations require us to register as a medical device manufacturer with the FDA. Additionally, some states also require medical device
manufacturers and/or distributors doing business within the state to register with the state or apply for a state license, which could
subject our facility to state inspection as well as FDA inspection on a routine basis for compliance with the QSR and any applicable
state requirements. These regulations require that we manufacture our products and maintain related documentation in a prescribed manner
with respect to manufacturing, testing and control activities.

Manufacturing
processes for medical devices are required to comply with the applicable portions of the QSR, which cover the methods and the facilities
and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution,
installation and servicing of finished devices intended for human use. The QSR also requires, among other things, maintenance of a device
master file, device history file, and complaint files. As a manufacturer, we are subject to periodic scheduled or unscheduled inspections
by the FDA. Failure to maintain compliance with the QSR requirements could result in the shutdown of, or restrictions on, manufacturing
operations and the recall or seizure of marketed products, which would have a material adverse effect on our business. The discovery
of previously unknown problems with any of our products, including unanticipated adverse events or adverse events of increasing severity
or frequency, whether resulting from the use of the device within the scope of its clearance or off-label by a physician in the practice
of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory
device recalls.

29

The
FDA has broad regulatory compliance and enforcement powers. If the FDA determines that a manufacturer has failed to comply with applicable
regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions:

●
Warning
letters, untitled letters, fines, injunctions, consent decrees and civil penalties;

●
Recalls,
withdrawals, or administrative detention or seizure of our products;

●
Operating
restrictions or partial suspension or total shutdown of production;

●
Refusing
or delays in processing, clearing, or approving submissions or applications for new products or modifications to existing products;

●
Suspension
or withdrawal of 510(k) clearances or PMA approvals that have already been granted;

●
FDA
refusal to issue certification to foreign governments needed to export our products for sale in other countries; or

●
Criminal
prosecution.

Our
facilities, records and manufacturing processes are subject to periodic unscheduled inspections by the FDA. Failure to comply with the
applicable United States medical device regulatory requirements could result in, among other things, warning letters, untitled letters,
fines, injunctions, consent decrees, civil penalties, unanticipated expenditures, repairs, replacements, refunds, recalls or seizures
of products, operating restrictions, total or partial suspension of production, the FDA’s refusal to issue certificates to foreign
governments needed to export products for sale in other countries, the FDA’s refusal to grant future premarket clearances or approvals,
withdrawals or suspensions of current product clearances or approvals and criminal prosecution.

Regulation
of Medical Devices in the European Union

The
European Union, or EU, has adopted specific directives regulating the design, manufacture, clinical investigations, conformity assessment,
labeling and adverse event reporting for medical devices. EU directives must be implemented into the national laws of the EU member states
and national laws may vary from one member state to another.

In
the EU, there is currently no premarket government review of medical devices. However, the EU requires that all medical devices placed
on the market in the EU must meet the relevant essential requirements laid down in the Council Directive 93/42/EEC, or the Medical Devices
Directive, and the Council Directive 90/385/EEC, or the Active Implantable Medical Devices Directive. The most fundamental essential
requirement is that a medical device must be designed and manufactured in such a way that it will not compromise the clinical condition
or safety of patients, or the safety and health of users and others. In addition, the device must achieve the performances intended by
the manufacturer and be designed, manufactured, and packaged in a suitable manner. The European Commission has adopted various standards
applicable to medical devices. These include standards governing common requirements, such as sterilization and safety of medical electrical
equipment and product standards for certain types of medical devices. There are also harmonized standards relating to design and manufacture.
While not mandatory, compliance with these standards is viewed as the easiest way to satisfy the essential requirements as a practical
matter. Compliance with a standard developed to implement an essential requirement also creates a rebuttable presumption that the device
satisfies that essential requirement.

To
demonstrate compliance with the essential requirements laid down in Annex I to the Medical Devices Directive, medical device manufacturers
must undergo a conformity assessment procedure, which varies according to the type of medical device and its (risk) classification. Conformity
assessment procedures require an assessment of available clinical evidence, literature data for the product, and post-market experience
in respect of similar products already marketed. Except for low-risk medical devices (Class I non-sterile, non-measuring devices), where
the manufacturer can self-declare the conformity of its products with the essential requirements (except for any parts which relate to
sterility or metrology), a conformity assessment procedure requires the intervention of a Notified Body. Notified Bodies are independent
organizations designated by EU countries to assess the conformity of devices before being placed on the market. A Notified Body would
typically audit and examine a product’s technical dossiers and the manufacturers’ quality system (which must, in particular,
comply with ISO 13485:2016 related to Medical Devices Quality Management Systems). If satisfied that the relevant product conforms to
the relevant essential requirements, the Notified Body issues a certificate of conformity, which the manufacturer uses as a basis for
its own declaration of conformity. The manufacturer may then apply the CE Mark to the device, which allows the device to be placed on
the market throughout the EU.

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Notified
Body certificates of conformity are valid for a fixed duration (which shall not exceed five years). Throughout the term of the certificate,
the manufacturer will be subject to periodic surveillance audits to verify continued compliance with the applicable requirements. In
particular, there will be a new audit by the Notified Body before it will renew the relevant certificate(s).

As
a general rule, demonstration of conformity of medical devices and their manufacturers with the essential requirements must be based,
among other things, on the evaluation of clinical data supporting the safety and performance of the products during normal conditions
of use. Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use,
that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended
performance, and that any claims made about the performance and safety of the device are supported by suitable evidence. All manufacturers
placing medical devices into the market in the EU must comply with the EU medical device vigilance system. Under this system, incidents
must be reported to the relevant authorities of the EU member states, and manufacturers are required to take Field Safety Corrective
Actions, or FSCAs, to reduce a risk of death or serious deterioration in the state of health associated with the use of a medical device
that is already placed on the market. An incident is defined as any malfunction or deterioration in the characteristics and/or performance
of a device, as well as any inadequacy in the labeling or the instructions for use which, directly or indirectly, might lead to or might
have led to the death of a patient or user or of other persons or to a serious deterioration in their state of health. An FSCA may include
the recall, modification, exchange, destruction or retrofitting of the device. FSCAs must be communicated by the manufacturer or its
legal representative to its customers and/or to the end users of the device through Field Safety Notices.

The
advertising and promotion of medical devices is subject to some general principles set forth by EU directives. According to the Medical
Devices Directive, only devices that are CE-marked may be marketed and advertised in the EU in accordance with their intended purpose.
Directive 2006/114/EC concerning misleading and comparative advertising and Directive 2005/29/EC on unfair commercial practices, while
not specific to the advertising of medical devices, also apply to the advertising thereof and contain general rules, for example requiring
that advertisements are evidenced, balanced and not misleading. Specific requirements are defined at national level. EU member states
laws related to the advertising and promotion of medical devices, which vary between jurisdictions, may limit or restrict the advertising
and promotion of products to the general public and may impose limitations on promotional activities with healthcare professionals.

Many
EU member states have adopted specific anti-gift statutes that further limit commercial practices for medical devices, in particular
vis-à -vis healthcare professionals and organizations. Additionally, there has been a recent trend of increased regulation of
payments and transfers of value provided to healthcare professionals or entities. In addition, many EU member states have adopted national
“Sunshine Acts” which impose reporting and transparency requirements (often on an annual basis), similar to the requirements
in the United States, on medical device manufacturers. Certain countries also mandate implementation of commercial compliance programs.

On
May 25, 2017, Regulation 2017/745, or the EU Medical Devices Regulation, entered into force, which repeals and replaces the Medical Devices
Directive and the Active Implantable Medical Devices Directive. Unlike directives, which must be implemented into the national laws of
the EU member states, regulations are directly applicable, without the need for adoption of EU member state laws implementing them, in
all EU member states and are intended to eliminate current differences in the regulation of medical devices among EU member states. The
Medical Devices Regulation, among other things, is intended to establish a uniform, transparent, predictable and sustainable regulatory
framework across the EU for medical devices and ensure a high level of safety and health while supporting innovation.

The
Medical Devices Regulation was originally intended to become applicable three years after publication, but in April 2020 the transition
period was extended by the European Parliament and the Council of the EU by an additional year – until May 26, 2021. Devices lawfully
placed on the market pursuant to the Medical Devices Directive and the Active Implantable Medical Devices Directive prior to May 26,
2021 may generally continue to be made available on the market or put into service until May 26, 2025. Once applicable, the new regulations
will among other things:

●
Strengthen
the rules on placing devices on the market and reinforce surveillance once they are available;

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●
Establish
explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices
placed on the market;

●
Improve
the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number;

●
Set
up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available
in the European Union, or EU; and

●
Strengthen
the rules for the assessment of certain high-risk devices, which may have to undergo an additional check by experts before they are
placed on the market.

The
aforementioned EU rules are generally applicable in the European Economic Area, or EEA, which consists of the 27 EU member states plus
Norway, Liechtenstein and Iceland. Other countries, such as Switzerland, have entered into Mutual Recognition Agreements and allow the
marketing of medical devices that meet EU requirements.

The
EU-UK Trade and Cooperation Agreement, or TCA, came into effect on January 1, 2021. The TCA does not specifically refer to medical devices.
However, as a result of Brexit, the Medical Devices Regulation will not be implemented in the UK, and previous legislation that mirrored
the Medical Devices Regulation in the UK law has been revoked. The regulatory regime for medical devices in the UK will continue to be
based on the requirements derived from current EU legislation, and the UK may choose to retain regulatory flexibility or align with the
Medical Devices Regulation going forward. CE markings will continue to be recognized in the UK, and certificates issued by EU recognized
Notified Bodies will be valid in the UK, until June 30, 2023. For medical devices placed on the UK market after this period, the UK Conformity
Assessment, or UKCA, marking will be mandatory. In contrast, UKCA marking and certificates issued by UK Notified Bodies will not be recognized
on the EU market. The TCA does provide for cooperation and exchange of information in the area of product safety and compliance, including
market surveillance, enforcement activities and measures, standardization related activities, exchanges of officials, and coordinated
product recalls (or other similar actions). For medical devices that are locally manufactured but use components from other countries,
the “rules of origin” criteria will need to be reviewed. Depending on which countries products will ultimately be sold in,
manufacturers may start seeking alternative sources for components if this would allow them to benefit from no tariffs. The rules for
placing medical devices on the Northern Ireland market will differ from those in the UK.

Healthcare
Fraud and Abuse Laws

In
the United States, we are subject to a number of federal and state healthcare regulatory laws that restrict business practices in the
healthcare industry. These laws include, but are not limited to, federal and state anti-kickback, false claims, transparency and other
healthcare fraud and abuse laws.

The
U.S. federal Anti-Kickback Statute prohibits, among other things, any person or entity from knowingly and willfully offering, paying,
soliciting, receiving or providing any remuneration, directly or indirectly, overtly or covertly, to induce or in return for purchasing,
leasing, ordering, or arranging for or recommending the purchase, lease, or order of any good, facility, item or service reimbursable,
in whole or in part, under Medicare, Medicaid or other federal healthcare programs. The term “remuneration” has been broadly
interpreted to include anything of value, including cash, improper discounts, and free or reduced-price items and services. Among other
things, the Anti-Kickback Statute has been interpreted to apply to arrangements between medical device manufacturers on the one hand
and prescribers and purchasers on the other. Although there are a number of statutory exceptions and regulatory safe harbors protecting
some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. The government can exercise enforcement
discretion in taking action against unprotected activities. Further, a person or entity does not need to have actual knowledge of the
statute or specific intent to violate it in order to have committed a violation. The majority of states also have anti-kickback laws,
which establish similar prohibitions, and in some cases may apply to items or services reimbursed by any third-party payor, including
commercial insurers and self-pay patients.

The
federal false claims, including the civil False Claims Act, prohibit, among other things, any person or entity from knowingly presenting,
or causing to be presented, a false, fictitious or fraudulent claim for payment to, or approval by, the federal government, knowingly
making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government,
or knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government. A claim
includes “any request or demand” for money or property presented to the U.S. government. Actions under the civil False Claims
Act may be brought by the Attorney General or as a qui tam action by a private individual in the name of the government. Moreover, a
claim including items or services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent
claim for purposes of the federal civil False Claims Act. In addition, various states have enacted false claim laws analogous to the
federal False Claims Act, although many of these state laws apply where a claim is submitted to any third-party payor and not merely
a federal healthcare program.

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The
federal Health Insurance Portability and Accountability Act of 1996 created additional federal criminal statutes that prohibit, among
other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including
private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a
criminal investigation of a healthcare offense, and 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. Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the
statute or specific intent to violate it in order to have committed a violation.

The
federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment
is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually
to CMS, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists,
podiatrists and chiropractors), and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to
report annually to CMS ownership and investment interests held by physicians and their immediate family members. Beginning in 2022, such
obligations will include payments and other transfers of value provided in the previous year to additional healthcare professionals,
including physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants
and certified nurse midwives.

Violations
of fraud and abuse laws, including federal and state anti-kickback and false claims laws, may be punishable by criminal and civil sanctions,
including fines and civil monetary penalties, the possibility of exclusion from federal healthcare programs (including Medicare and Medicaid),
disgorgement and corporate integrity agreements, which impose, among other things, rigorous operational and monitoring requirements on
companies. Similar sanctions and penalties, as well as imprisonment, also can be imposed upon executive officers and employees of such
companies.

Coverage
and Reimbursement

In
the United States, our currently cleared products are not separately reimbursed by any third-party payors and if covered, are paid for
as part of the procedure in which the product is used. Outside of the United States, there are many reimbursement programs through private
payors as well as government programs. In some countries, government reimbursement is the predominant program available to patients and
hospitals. Our commercial success depends in part on the extent to which governmental authorities, private health insurers and other
third-party payors provide coverage for and establish adequate reimbursement levels for the procedures in which our products are used.
Failure by physicians, hospitals, ambulatory surgery centers and other users of our products to obtain coverage and adequate reimbursement
from third-party payors for procedures in which our products are used, or adverse changes in government and private third-party payors’
coverage and reimbursement policies, may adversely impact demand for our products.

Based
on our experience to date, third-party payors generally reimburse for the procedures in which our products are used if medical necessity
is met and a prior approval is completed with a favorable response. Some payors are moving toward a managed care system and control their
healthcare costs by establishing coverage policies that categorically restrict coverage of certain procedures, or by limiting authorization
for procedures, including elective procedures using our devices. No uniform policy of coverage and reimbursement among payors in the
United States exists and coverage and reimbursement for procedures can differ significantly from payor to payor. Third-party payors are
increasingly auditing and challenging the prices charged for medical products and services with concern for upcoding, miscoding, using
inappropriate modifiers, or billing for inappropriate care settings. Some third-party payors must approve coverage for new or innovative
devices or procedures before they will reimburse healthcare providers who use the products or therapies. Even though a new product may
have been cleared for commercial distribution by the FDA, we may find limited demand for our product unless reimbursement approval can
be obtained and/or maintained from governmental and private third-party payors.

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In
addition to uncertainties surrounding coverage policies, there are periodic changes to reimbursement levels. Third-party payors regularly
update reimbursement amounts and also from time to time revise the methodologies used to determine reimbursement amounts. This includes
routine updates to payments to physicians, hospitals and ambulatory surgery centers for procedures during which our products are used.
These updates could directly impact the demand for our products.

We
believe the overall escalating cost of medical products and services being paid for by the government and private health insurance has
led to, and will continue to lead to, increased pressures on the healthcare and medical device industry to reduce the costs of products
and services. Third-party payors are developing increasingly sophisticated methods of controlling healthcare costs through prospective
reimbursement and capitation programs, group purchasing, redesign of benefits, and exploration of more cost-effective methods of delivering
healthcare. In the United States, some insured individuals enroll in managed care programs, which monitor and often require pre-approval
of the services that a member will receive. Some managed care programs pay their providers on a per capita (patient) basis, which puts
the providers at financial risk for the services provided to their patients by paying these providers a predetermined payment per member
per month and, consequently, may limit the willingness of these providers to use our products.

In
international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted
price ceilings on specific product lines and procedures. In the European Union, member states are facing increased pressure to limit
public healthcare spending. There can be no assurance that procedures using our products will be covered for a specific indication, that
our products will be considered cost-effective by third-party payors, that an adequate level of reimbursement will be available or that
the third-party payors’ reimbursement policies will not adversely affect our ability to sell our products profitably. More and
more, local, product specific reimbursement law is applied as an overlay to medical device regulation, which has provided an additional
layer of clearance requirement.

Healthcare
Reform

The
United States and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals to change
the healthcare system in ways that could affect our ability to sell our products profitably. Among policy makers and payors in the United
States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare
costs, improving quality or expanding access. Current and future legislative proposals to further reform healthcare or reduce healthcare
costs may limit coverage of or lower reimbursement for the procedures associated with the use of our products. The cost containment measures
that payors and providers are instituting and the effect of any healthcare reform initiative implemented in the future could impact our
revenue from the sale of our products.

The
implementation of the Affordable Care Act (the “ACA”) in the United States, for example, has changed healthcare financing
and delivery by both governmental and private insurers substantially, and affected medical device manufacturers significantly. The ACA,
among other things, provided incentives to programs that increase the federal government’s comparative effectiveness research,
and implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and
other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models. Additionally,
the ACA expanded eligibility criteria for Medicaid programs and created a new Patient-Centered Outcomes Research Institute to oversee,
identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research. Since its enactment,
there have been judicial, executive and political challenges to certain aspects of the ACA. On June 17, 2021, the U.S. Supreme Court
dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality
of the ACA. It is unclear how healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal or
replace the ACA will impact the law or our business.

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In
addition, other legislative changes have been proposed and adopted since the ACA was enacted. For example, the Budget Control Act of
2011, among other things, reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 and, due to subsequent
legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020
through March 31, 2021, unless additional Congressional action is taken. Additionally, the American Taxpayer Relief Act of 2012, among
other things, further reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period
for the government to recover overpayments to providers from three to five years. The Medicare Access and CHIP Reauthorization Act of
2015 repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed
annual updates and a new system of incentive payments that began in 2019 that are based on various performance measures and physicians’
participation in alternative payment models, such as accountable care organizations.

We
expect additional state and federal healthcare reform measures to be adopted in the future, any of which could limit the amounts that
federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products or
additional pricing pressure.

Data
Privacy and Security Laws

Numerous
state, federal and foreign laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access
to, confidentiality and security of personal information, including health-related information. In the United States, numerous federal
and state laws and regulations, including data breach notification laws, health information privacy and security laws, including HIPAA,
and federal and state consumer protection laws and regulations (e.g., Section 5 of the FTC Act), that govern the collection, use, disclosure,
and protection of health-related and other personal information could apply to our operations or the operations of our partners. In addition,
certain state and non-U.S. laws, such as the CCPA, the CPRA and the GDPR, govern the privacy and security of personal information, including
health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other
in significant ways and may not have the same effect, thus complicating compliance efforts. Failure to comply with these laws, where
applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation. Privacy and security
laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and
can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data
processing.

In
Europe, the GDPR went into effect on May 25, 2018 and introduces strict requirements for processing the personal data of European Union
data subjects. Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory
enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the annual global
revenues of the preceding financial year of the noncompliant company, whichever is greater.

Among
other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to
provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms
between the EU and the United States remains uncertain. For example, in 2016, the EU and United States agreed to a transfer framework
for data transferred from the EU to the United States, called the Privacy Shield, but the Privacy Shield was invalidated in July 2020
by the Court of Justice of the European Union.

Further,
from January 1, 2021, companies have to comply with the GDPR and also the United Kingdom General Data Protection Regulation, or the UK
GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. The UK GDPR mirrors the fines
under the GDPR, i.e., fines up to the greater of €20 million (£17.5 million) or 4% of global turnover. The relationship between
the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, and it is also unclear
how United Kingdom data protection laws and regulations will develop in the medium to longer term, and how data transfers to and from
the United Kingdom will be regulated in the long term. Currently there is a four- to six-month grace period agreed in the EU and United
Kingdom Trade and Cooperation Agreement, ending June 30, 2021 at the latest, while the parties discuss an adequacy decision. The European
Commission published a draft adequacy decision on February 19, 2021. If adopted, the decision will enable data transfers from EU member
states to the United Kingdom for a four-year period, subject to subsequent extensions.

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Environmental
Matters

Based
on our current operations, environmental protection requirements do not have a significant financial and operational effect on the capital
expenditures, earnings and competitive position of our Company in the current financial year and are not expected to have a significant
effect in the reasonably foreseeable future.

Manufacturing
Services Agreements

The Company is party to two separate manufacturing services agreements
for the manufacture and supply of the Company’s IB-Stim and RED devices based on the Company’s product specifications that
automatically renew annually unless either party provides a written termination notice to the other party within 180 days prior to the
end of the then-current term. The Company’s IB-Stim and RED devices are manufactured in Indiana and Michigan, respectively. The Company
provides the necessary equipment to the manufacturers and retains ownership. The manufacturers bear the risk of loss of and damage to
the equipment and consigned materials. Performance under the agreement is initiated by orders issued by the Company and accepted by the
manufacturers. The Company also entered into quality agreements with the manufacturers to perform quality assurance services on product
provided by the Company.

Employees

As
of December 31, 2025, we had 24 full-time employees.