Aclarion nine-month loss widens to $8.22M in 2026
UK reimbursed revenue reached $50,491 for nine months, compared with $23,973 a year earlier, as NOCISCAN report volume increased after local coverage decisions.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Aclarion, Inc. (ACON) reported nine-month net revenue of $80,081 for the period ended September 30, 2026, up 39.9% from $57,251 a year earlier. Gross profit was $26,843, versus $5,037, and gross margin was 33.5%, compared with 8.8%. Third-quarter revenue was $33,733, up 78.1% from $18,942.
For the nine months ended September 30, operating expenses rose to $8,667,705 from $5,064,434, and net loss increased to $8,223,161 from $5,344,487. Operating cash used was $7,317,637, compared with $5,536,766. Cash, cash equivalents and restricted cash totaled $14,212,566 at September 30, 2026.
On January 9, 2026, Aclarion completed a registered direct offering that generated approximately $10.4 million in gross proceeds before fees and expenses, including 200,000 common shares and pre-funded warrants for up to 1,800,000 shares; all those warrants had been exercised by September 30. The board authorized repurchases of up to $2.5 million in value of common stock over 12 months, with none completed by September 30. Management believes available cash is sufficient for operating expenses and capital expenditures for at least twelve months from the statements’ issuance, based on assumptions that may prove incorrect.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month revenue rose 39.9% to $80,081.
Negative
- Major pointNine-month net loss increased to $8,223,161 from $5,344,487.
- Moderate pointOperating cash use rose to $7,317,637 from $5,536,766.
Filing Explained
The rights are conditional, not automatic: specified ownership or tender-offer triggers govern exercisability, and the agreement expires March 18, 2027.
This 10-Q describes the stockholder-rights agreement adopted March 19, 2026: the rights become exercisable and trade separately only after specified ownership or tender-offer triggers, and expire
Rights become exercisable on the tenth business day after a public announcement that a person or group owns at least
Key Figures
Key Terms
Nociscan report technical
pre-funded warrants financial
contract liability financial
beneficial ownership limitations financial
Level 3 inputs financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did ACON report for the first nine months of 2026?
How much did ACON raise in its January 2026 offering?
When can ACON stockholder rights become exercisable?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from __________ to __________
Commission File Number:
| (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area
code: (
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The | ||||
| The | ||||
| The |
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 3, 2026, there were
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.
Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. Forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those indicated (both favorably and unfavorably). These risks and uncertainties include, but are not limited to, those described in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the Form 10-K) dated March 18, 2026, as filed with the Securities and Exchange Commission on March 18, 2026, under Rule 424(b)(4). Caution should be taken not to place undue reliance on any such forward-looking statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward- looking statements in this Quarterly Report on Form 10-Q by these cautionary statements.
| 2 |
Table of Contents
| Page | |||
| PART I. | FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | 4 | |
| Condensed Balance Sheets | 4 | ||
| Condensed Statements of Operations | 5 | ||
| Condensed Statements of Changes in Stockholders’ Equity (Deficit) | 6 | ||
| Condensed Statements of Cash Flows | 7 | ||
| Notes to Condensed Financial Statements | 8 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 34 | |
| Item 4. | Controls and Procedures | 34 | |
| PART II. | OTHER INFORMATION | 35 | |
| Item 1. | Legal Proceedings | 35 | |
| Item 1A. | Risk Factors | 35 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 35 | |
| Item 3. | Defaults Upon Senior Securities | 35 | |
| Item 4. | Mine Safety Disclosures | 35 | |
| Item 5. | Other Information | 35 | |
| Item 6. | Exhibits | 36 | |
| Signatures | 38 |
| 3 |
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Aclarion, Inc.
Condensed Balance Sheets
| September 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Prepaid expense | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued and other liabilities | ||||||||
| Warrant liability | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (see Note 10) | – | |||||||
| Stockholders' equity: | ||||||||
| Common stock - $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to condensed financial statements.
| 4 |
Aclarion, Inc.
Condensed Statements of Operations
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue and cost of revenue: | ||||||||||||||||
| Net revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Gain on extinguishment of debt | ||||||||||||||||
| Changes in fair value of warrant and derivative liabilities | ||||||||||||||||
| Penalties and settlements | ( | ) | ||||||||||||||
| Interest income | ||||||||||||||||
| Other, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense) | ( | ) | ||||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax provision | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Dividends on preferred stock | ( | ) | ||||||||||||||
| Net loss allocable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share allocable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares of common stock outstanding, basic and diluted | ||||||||||||||||
See accompanying notes to condensed financial statements.
| 5 |
Aclarion, Inc.
Condensed Statements of Changes in Stockholders’ Equity (Deficit)
(Unaudited)
| Series B | Series C | |||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Common Stock | Paid-In | Accumulated | ||||||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Capital | Deficit | Total | ||||||||||||||||||||||||||||
| For the Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | * | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Share-based compensation | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||
| Registered direct offerings of common stock | – | – | – | – | * | – | ||||||||||||||||||||||||||||||
| Public offering of common stock and warrants | – | – | – | – | * | – | ||||||||||||||||||||||||||||||
| Common stock issuance costs | – | – | – | – | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||
| Redemption of Series B preferred stock | ( | ) | – | – | – | – | – | ( | ) | – | ( | ) | ||||||||||||||||||||||||
| Conversion of C-series preferred stock to common stock | – | – | ( | ) | – | * | – | – | * | |||||||||||||||||||||||||||
| Exercise of C-series warrants | – | – | – | – | * | – | ||||||||||||||||||||||||||||||
| Warrant amendment | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||
| Alternative cashless exercise of B warrants | – | – | – | – | ( | ) | – | |||||||||||||||||||||||||||||
| Round-up conversion related to reverse stock splits | – | – | – | – | * | ( | ) | – | ( | ) | ||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Share-based compensation | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||
| Round-up conversion related to reverse stock splits | – | – | – | – | * | – | – | * | ||||||||||||||||||||||||||||
| Common stock issuance costs | – | – | – | – | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Share-based compensation | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| For the Nine Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Share-based compensation | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||
| Registered direct offerings of common stock | – | – | – | – | – | |||||||||||||||||||||||||||||||
| Proceeds from direct offering of prefunded warrants | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||
| Exercise of prefunded warrants | – | – | – | – | ( | ) | – | |||||||||||||||||||||||||||||
| Common stock issuance costs | – | – | – | – | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Share-based compensation | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||
| Exercise of prefunded warrants | – | – | – | – | * | – | – | * | ||||||||||||||||||||||||||||
| Common stock issuance costs | – | – | – | – | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Share-based compensation | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||
| Exercise of prefunded warrants | – | – | – | – | ( | ) | – | |||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| * |
See accompanying notes to condensed financial statements.
| 6 |
Aclarion, Inc.
Condensed Statements of Cash Flows
(Unaudited)
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Share-based compensation | ||||||||
| Amendment of warrants | ||||||||
| Non-cash settlements | ||||||||
| Change in fair value related to warrants and derivative | ( | ) | ( | ) | ||||
| Change in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepaids and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued and other liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Intangible assets – Patents | ( | ) | ( | ) | ||||
| Fixed assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Public offering of common stock and warrants | ||||||||
| Registered direct offerings of common stock | ||||||||
| Proceeds from direct offering of prefunded warrants | ||||||||
| Common stock cash issuance costs | ( | ) | ( | ) | ||||
| Exercise of Series C warrants | ||||||||
| Redemption of Series B Preferred stock | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash, cash equivalents and restricted cash, beginning of period | ||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Non-cash activities | ||||||||
| Capitalization of Series B preferred stock dividends | $ | $ | ||||||
| Capitalization of Series C preferred stock dividends | $ | $ | ||||||
| Conversion of Series C preferred stock to common stock | $ | $ | ||||||
| Cashless exercise of B warrants to common stock | $ | $ | ||||||
See accompanying notes to condensed financial statements.
| 7 |
Aclarion, Inc.
Notes to Condensed Financial Statements
(Unaudited)
NOTE 1. THE COMPANY AND BASIS OF PRESENTATION
The Company
Aclarion, Inc., formerly Nocimed, Inc., (the “Company” or “Aclarion”) is a healthcare technology company that leverages magnetic resonance spectroscopy (“MRS”) combined with proprietary signal-processing biomarkers to optimize clinical treatments. The Company was formed in February 2015, incorporated in Delaware, and has its principal place of business in Broomfield, Colorado.
Basis of Presentation
The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements. In the opinion of management, the interim condensed financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. These condensed financial statements should be read in conjunction with the audited financial statements and related notes for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 18, 2026. The condensed balance sheet as of December 31, 2025 was derived from the audited financial statements as of that date.
Risks and Uncertainties
The Company is subject to various risks and uncertainties frequently encountered by companies in the early stages of development. Such risks and uncertainties include, but are not limited to, its limited operating history, competition from other companies, limited access to additional funds, dependence on key personnel, and management of potential rapid growth. To address these risks, the Company must, among other things, develop its customer base; implement and successfully execute its business and marketing strategy; develop follow-on products; provide superior customer service; and attract, retain, and motivate qualified personnel. There can be no guarantee that the Company will be successful in addressing these or other such risks.
2025 Reverse Stock Splits
The Company effected (i) a 1:335 reverse stock split of the Company’s common stock on January 30, 2025, and (ii) a 1:27 reverse stock split of the Company’s common stock on March 28, 2025 (together, the “2025 Stock Splits”). The 2025 Stock Splits resulted in a reduction in the number of outstanding shares of common stock, warrants, stock options, and restricted share units and a proportionate increase in the value of each share or strike price of the warrants and stock options.
Unless described otherwise, all references to common stock, share data, per share data, and related information contained in these condensed financial statements have been retrospectively adjusted to reflect the effect of the stock splits for all periods presented. In addition, any fractional shares that would otherwise be issued as a result of the stock splits were rounded up to the nearest whole share. Further, the number of shares issuable and exercise prices of stock options and warrants have been retrospectively adjusted in these condensed financial statements for all periods presented to reflect the 2025 Stock Splits.
| 8 |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The condensed financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to depreciation, amortization, and valuation of warrants, warrant and derivative liabilities, and options to purchase shares of the Company’s common stock. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.
Fair Value of Financial Instruments
ASC 820, Fair Value Measurements, provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:
Level 1 - Unadjusted quoted prices in active markets for identical instruments that are accessible by the Company on the measurement date.
Level 2 - Quoted prices in markets that are not active or inputs which are either directly or indirectly observable.
Level 3 - Unobservable inputs for the instrument requiring the development of assumptions by the Company.
The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The carrying values of the Company’s financial instruments including cash equivalents, restricted cash, accounts receivable, and accounts payable are approximately equal to their respective fair values due to the relatively short-term nature of these instruments. The Company’s warrant liabilities are estimated using level 3 inputs (see Note 3).
Cash and Cash Equivalents
The Company considers all highly liquid instruments
purchased with an original maturity of three months or less to be cash equivalents. The Company had $
| 9 |
The Company maintains cash deposits and cash equivalents
at three financial institutions, which are insured by the FDIC up to $250,000. The Company’s cash balance may at times exceed these
limits. On September 30, 2026 and December 31, 2025, the Company had $
Accounts Receivable, Less Allowance for Credit Losses
Accounts receivable are recorded at the invoiced amount
and presented net of an allowance for expected credit losses. The allowance is based on historical loss experience, receivable aging,
current economic conditions, and reasonable and supportable forecasts. The Company reassesses the allowance each reporting period. As
of September 30, 2026 and December 31, 2025, the allowance for credit losses was $
Property and Equipment
Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the related assets. Computer and office equipment and computer software are depreciated over five years. Repairs and maintenance costs, which are not considered improvements and do not extend the useful life of the property and equipment, are expensed as incurred.
Impairment of Long-Lived Assets
The Company reviews long-lived assets, including intangible assets, property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable using pre-tax undiscounted cash flows. Impairment, if any, is measured as the amount by which the carrying value of a long-lived asset exceeds its fair value.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company applies the following five-step model in determining revenue recognition:
Step 1 – Identify The Contract With A Customer – A contract exists when there is legally enforceable agreement between the Company and the customer that defines each party’s rights regarding the Nociscan report to be transferred and the payment terms, and collection of consideration is probable.
Step 2 – Identify The Performance Obligations In The Contract – The Company’s contracts with customers contain a single performance obligation: the delivery of a Nociscan report. The Company does not provide ongoing services, post-delivery support, licensing arrangements, or other performance obligations after the report has been delivered.
Step 3 – Determine The Transaction Price – The transaction price is the negotiated consideration specified in the contract for the Nociscan report. Customers do not pay upfront fees, licensing fees, or other additional amounts. To date, the Company’s reports are generally not reimbursable under third-party arrangements, except for three private health insurance providers in the United Kingdom and certain third-party clinical trial users who are using Nociscan as part of their clinical trial protocols.
Step 4 – Allocate The Transaction Price To The Performance Obligations – As each contract contains a single performance obligation, the entire transaction price is allocated to the delivery of the Nociscan report.
Step 5 – Recognize Revenue When (Or As) The Entity Satisfies The Performance Obligations – Revenue is recognized at a point in time when control of the Nociscan report is transferred to the customer, which occurs upon delivery of the report. At that time, the company has fulfilled its performance obligation and has no further obligations to the customer. The Company invoices customers in accordance with the billing schedules set forth in its sales arrangements. Payment terms are generally 30 days from the invoice date.
| 10 |
Sales and Marketing Expenses
Sales and marketing costs are expensed as incurred. The primary drivers of these costs have been employee salaries and benefits, clinical services related to post-clearance activities (including the Clarity clinical study), product marketing consultants, travel and attendance at industry conferences, and other marketing services such as press releases and advertising.
Research and Development Costs
Costs related to the research, design, and development of products are charged to research and development costs as incurred. These costs include employee compensation and benefits, professional services (including contractors and quality system and regulatory consulting), patent maintenance activities, regulatory agency fees, and other expenses such as software subscriptions, product licensing fees, and materials used in research and development activities.
General and Administrative
General and administrative costs are expensed as incurred. These costs primarily consist of personnel and related expenses, including stock-based compensation, investor relations and corporate communications activities, accounting, audit, and other financial advisory services, legal fees relating to intellectual property and corporate matters, corporate and regulatory fees associated with operating as a public company, insurance including directors and officers coverage, information technology, depreciation and amortization, and fees for consulting, human resources, and other professional services.
Liquidity and Capital Resources
As of September 30, 2026, we had cash and cash equivalents
and restricted cash of $
Deferred Financing Costs
The Company capitalizes certain legal, accounting, and other costs directly attributable to in-process equity financings as deferred offering costs until such financings are completed. Upon completion of an equity financing, these costs are recorded as a reduction of additional paid-in capital of the related offering.
During the nine months ended September 30, 2026, the
Company completed a registered direct offering of common shares and pre-funded warrants, resulting in aggregate gross proceeds of approximately
$
In connection with the closing of the offering during
the nine months ended September 30, 2026, offering costs of $
Share-Based Compensation
The Company accounts for stock-based awards in accordance with provisions of ASC Topic 718, Compensation—Stock Compensation, under which the Company recognizes the grant-date fair value of stock-based awards issued to employees and nonemployee board members as compensation expense on a straight-line basis over the vesting period of the award, while awards containing a performance condition are recognized as expense when the achievement of the performance criteria is achieved. The Company uses the Black-Scholes option pricing model to determine the grant-date fair value of stock options. The Company records expense for forfeitures in the periods they occur.
| 11 |
The exercise or strike price of each option is not less than 100% of the fair market value of the Common Stock subject to the option on the date the option is granted.
The Company issues restricted stock unit awards to employees, nonemployee board members and non-employee consultants who are providing various services. The awards are valued at the market price on the date of the grant. The awards vest over the contract life and based on achievement of targeted performance milestones.
On occasion, the Company grants common stock to compensate vendors for services rendered.
Segment Disclosure
Operating segments are components of an enterprise about which separate financial information is available and is evaluated quarterly, by management, namely the Chief Operating Decision Maker (“CODM”) of an organization, in order to determine operating and resource allocation decisions. By the definition, the Company has identified Brent Ness, Chief Executive Officer, as the CODM.
The Company operates and reports in one segment (“Nociscan segment”) related to the delivery of Nociscan reports. The Company generates revenues, earnings, net income (loss), and cash flows through the single segment by collecting fees from our clients for providing Nociscan reports.
The Company believes that this structure reflects its current operational and financial management, and that it provides the best structure for the Company to focus on growth opportunities while maintaining financial responsibility.
The results of the reportable segment is derived directly from the Company’s management reporting system. Management measures the performance of the segment on several metrics, including contribution income (loss). Segment contribution income (loss) includes all product line segment revenue less the related costs of sales, research and development and sales and marketing costs. Contribution income (loss) is used, in part, to evaluate the performance of, and allocate resources to, the segment.
Financial information and annual operating plans and forecasts are prepared and reviewed by the CODM at a segment level. The CODM assesses performance for the Nociscan segment and decides how to better allocate resources based on the segment strategy and net income (losses) that are reported on the Statements of Operations. The Company’s objective in making resource allocation decisions is to optimize the financial results. The accounting policies of our Nociscan segment are the same as those described in the summary of significant accounting policies herein.
Emerging Growth Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period to comply with certain new or revised accounting standards that have different effective dates for public and private companies.
NOTE 3: FAIR VALUE MEASUREMENTS
The Company measures certain financial assets and liabilities at fair value on a recurring basis in accordance with ASC 820, Fair Value Measurement. ASC 820 establishes a three-level hierarchy for fair value measurements based on the transparency of inputs used in valuation techniques. The hierarchy prioritizes observable inputs and minimizes the use of unobservable inputs.
| · | Level 1: Quoted prices in active markets for identical assets or liabilities | |
| · | Level 2: Observable inputs other than quoted prices included in Level 1 | |
| · | Level 3: Significant unobservable inputs |
| 12 |
The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis:
| Schedule of recurring basis to determine the fair value of the liability | ||||||||||||||||
| Fair Value Measured as of September 30, 2026 | ||||||||||||||||
| Fair value on | Quoted prices in active | Significant other observable | Significant unobservable s | |||||||||||||
| September 30, 2026 | markets (Level 1) | inputs (Level 2) | inputs (Level 3) | |||||||||||||
| Assets | ||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Warrant liability | $ | $ | $ | $ | ||||||||||||
There were no transfers between Level 1, 2, and 3 during the nine months ended September 30, 2026.
The following table presents changes in Level 3 liabilities measures at fair value for the nine months ended September 30, 2026. Both observable and unobservable inputs were used to determine the fair value positions that the Company has classified within the Level 3 category.
| Schedule of liabilities measures at fair value | ||||
| Warrant Liability | ||||
| Balance - January 1, 2026 | $ | |||
| Change in fair value | ( | ) | ||
| Balance - September 30, 2026 | $ | |||
The fair value of the warrants to purchase shares of common stock was estimated using the following assumptions:
| Schedule of fair value of warrants assumptions | ||||||||||||
| As of Issuance Warrant Liability | As
of September 30, 2026 Warrant Liability (1) | As
of December 31, 2025 Warrant Liability (2) | ||||||||||
| Strike Price | $ | $ | $ | |||||||||
| Contractual term (years) | – | – | ||||||||||
| Volatility (annual) | ||||||||||||
| Risk-free rate | ||||||||||||
| Floor Financing price | $ | $ | $ | |||||||||
| (1) | |
| (2) |
NOTE 4. RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Pronouncements Recently Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances income tax disclosure requirements, including disaggregation of income taxes paid by jurisdiction. The Company adopted ASU 2023-09 effective January 1, 2025 on a retrospective basis. The adoption did not have a material impact on the Company’s condensed financial statements, as the guidance relates to disclosures only.
In January 2026, the Company adopted ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, and ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The adoption of these standards did not have a material impact on the Company’s condensed financial statements.
| 13 |
Accounting Pronouncements Not Yet Effective
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which expands disclosure requirements for certain expenses. In January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its condensed financial statement disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Improvements to Interim Disclosure Requirements, which clarifies certain interim reporting requirements. The guidance is effective for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact of this standard on its interim financial statement disclosures.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which provides technical corrections and clarifications. The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on its condensed financial statements.
No other recently issued accounting pronouncements are expected to have a material impact on the Company’s condensed financial statements.
NOTE 5. REVENUE
Contract Balances
The timing of revenue recognition, billings, and cash collections may result in trade, unbilled receivables, and deferred revenues on the balance sheets. At times, revenue recognition may occur before the billing, resulting in an unbilled receivable, which would represent a contract asset. The contract asset would be a component of accounts receivable and other assets for the current and non-current portions, respectively. In the event the Company receives advances or deposits from customers before revenue is recognized, this would result in a contract liability.
As of September 30, 2026, the Company had
NOTE 6. SUPPLEMENTAL FINANCIAL INFORMATION
Balance Sheets
Accounts receivable, net
| Schedule of accounts receivable | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| $ | $ | |||||||
| 14 |
Prepaid expenses:
| Schedule of prepaid expenses | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Prepaid D&O Insurance | $ | $ | ||||||
| Prepaid Health Insurance | ||||||||
| Prepaid Other Insurance | ||||||||
| Prepaid Clinical | ||||||||
| Prepaid Subscription Annual Fees | ||||||||
| Prepaid NASDAQ Annual Fees | ||||||||
| Prepaid Royalties | ||||||||
| Prepaid Consulting | ||||||||
| Prepaid - other | ||||||||
| $ | $ | |||||||
Accounts payable:
| Schedule of accounts payable | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Accounts payable | $ | $ | ||||||
| Credit cards payable | ||||||||
| $ | $ | |||||||
Accrued and other liabilities:
| Schedule of accrued and other liabilities | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Accrued bonus | $ | $ | ||||||
| Accrued audit and legal expenses | ||||||||
| Accrued board compensation | ||||||||
| Accrued Delaware state taxes | ||||||||
| Other accrued expenses and liabilities | ||||||||
| $ | $ | |||||||
NOTE 7. LEASES
The Company did not enter into any lease arrangements during the nine months ended September 30, 2026 and 2025 and had no lease liabilities as of September 30, 2026 and December 31, 2025.
NOTE 8. PROPERTY AND EQUIPMENT
The Company’s property and equipment are as follows:
| Schedule of property and equipment | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Computer and office equipment | $ | $ | ||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
| 15 |
Depreciation expense related to property and equipment
were $
Future depreciation and amortization of property, equipment, and software is as follows:
| Schedule of future depreciation of property and equipment | ||||
| 2026 (remainder of 2026) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Total | $ |
NOTE 9. INTANGIBLE ASSETS
The Company’s intangible assets are as follows:
| Schedule of intangible assets | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Patents and licenses | $ | $ | ||||||
| Other | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
Patents and licenses costs are accounted for as intangible assets and amortized over the life of the patent or license agreement and recorded to general and administrative expense.
Amortization expense related to purchased intangible
assets was $
Patents and trademarks are reviewed for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. No impairment was recognized for the nine months ended September 30, 2026 and 2025.
Future amortization of intangible assets is as follows:
| Schedule of future amortization of intangible assets | ||||
| 2026 (remainder of 2026) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ |
| 16 |
NOTE 10. COMMITMENTS AND CONTINGENCIES
Royalty Agreement
The Company has an exclusive license agreement with
the Regents of the University of California to make, use, sell and otherwise distribute products under certain of the Regents of the University
of California’s patents anywhere in the world. The Company is obligated to pay a minimum annual royalty of $
The Company recorded royalty costs of $
Litigation
From time to time, we are involved in various disputes, claims, suits, investigations, and legal proceedings arising in the ordinary course of business. We believe that the resolution of current pending legal matters will not have a material adverse effect on our business, financial condition, results of operations or cash flows. Nonetheless, we cannot predict the outcome of these proceedings, as legal matters are subject to inherent uncertainties, and there exists the possibility that the ultimate resolution of these matters could have a material adverse effect on our business, financial condition, results of operations or cash flows. If any legal proceeding occurs, the Company would record a provision for a loss when it believes that it is both probable that a loss has been incurred, and the amount can be reasonably estimated.
In March 2025 we paid $
NOTE 11. STOCKHOLDERS’ EQUITY
The Company is authorized to issue 220,000,000 shares
of capital stock, consisting of
2024 Public Offering
On February 27, 2024, the Company completed a public
offering for gross proceeds of approximately $
As of September 30, 2026, substantially all pre-funded warrants had been exercised, and an immaterial number remain outstanding.
All share and per share amounts have been retroactively adjusted to reflect the 2025 Stock Splits.
| 17 |
Subscription Agreements
In August 2024, the Company entered into subscription
agreements with institutional and accredited investors pursuant to which it issued an aggregate of
In connection with a portion of these agreements,
the Company issued warrants to purchase up to
Issuances of Preferred Stock
Series B Preferred Stock
In August 2024, the Company issued Series B convertible preferred stock in exchange for outstanding indebtedness. The Series B Preferred Stock was convertible into common stock at a conversion price of $2,116.53 per share and accrued dividends at 10% per annum.
On January 22, 2025, the Company redeemed all outstanding
Series B Preferred Stock and related accrued dividends for approximately $
Series C Preferred Stock Financing
In September 2024, the Company issued
During the fourth quarter of 2024 and the three months
ended March 31, 2025, all Series C Preferred Stock and related accrued dividends were converted into common stock. In addition, during
the three months ended March 31, 2025, all related warrants were exercised, resulting in proceeds of approximately $
No Series C Preferred Stock or related warrants were outstanding as of September 30, 2026 or December 31, 2025.
All share and per share amounts have been retroactively adjusted to reflect the 2025 Stock Splits.
January 2025 Registered Direct Public Offerings
In January 2025, the Company completed two registered
direct offerings of its common stock for aggregate net proceeds of approximately $
On January 3, 2025, the Company sold
All share and per share amounts have been retroactively adjusted to reflect the 2025 Stock Splits.
| 18 |
Units Offering of Common Shares and Warrants
On January 15, 2025, the Company completed an underwritten
public offering consisting of common stock, pre-funded warrants, and Series A and Series B common warrants for net proceeds of approximately
$
The Company granted the underwriter an over-allotment option to purchase additional warrants, which was exercised in full.
The pre-funded warrants were exercisable at a nominal price and were fully exercised as of March 31, 2025. The Series A and Series B common warrants are exercisable at $180.90 per share and became exercisable upon stockholder approval. The Series A common warrants expire five years from the initial exercise date, and the Series B common warrants expire two and one-half years from the initial exercise date. All share and per share amounts have been retroactively adjusted to reflect the 2025 Stock Splits.
Approval of A and B Warrant Shares
On March 5, 2025, the Company’s stockholders
approved the issuance of shares of common stock upon exercise of the Series A and Series B common warrants. Following such approval, holders
of Series B warrants exercised substantially all outstanding warrants, primarily through the alternative cashless exercise (“ACE”)
feature, resulting in the issuance of approximately
No Series A warrants had been exercised as of September 30, 2026.
October 2025 Registered Direct Public Offering
In October 2025, the Company completed a registered
direct offering consisting of
The pre-funded warrants were immediately exercisable at a nominal exercise price and were subject to customary beneficial ownership limitations.
As of December 31, 2025,
No pre-funded warrants related to this offering were outstanding as of September 30, 2026.
January 2026 Registered Direct Public Offering
On January 9, 2026, the Company completed a registered
direct public offering of (i)
The Pre-funded Warrants are immediately exercisable. A holder of Pre-funded Warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than either 4.99% or 9.99% of the number of shares of the common stock outstanding immediately after giving effect to such exercise. A holder of Pre-funded Warrants may increase or decrease this percentage not in excess of 9.99% by providing at least 61 days’ prior notice to the Company.
The aggregate gross proceeds to the Company from this offering were approximately $10.4 million, before deducting placement agent fees of 6% of the aggregate gross proceeds and other offering expenses payable by the Company.
| 19 |
As of September 30, 2026, all
Stockholder Rights Agreement
On March 19, 2026, the Company’s board of directors adopted a stockholder rights agreement and declared a dividend of one right (each, a “Right”) for each outstanding share of our common stock to stockholders of record at the close of business on March 30, 2026. Each Right entitles its holder, subject to the terms of the Rights Agreement (as defined below), to purchase from the Company one one-thousandth of a share of Series D Junior Participating Preferred Stock, par value $0.00001 per share, of the Company at an exercise price of $14.00 per Right, subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement, dated as of March 19, 2026 (the “Rights Agreement”), by and between the Company and VStock Transfer, LLC, as rights agent. Subject to certain exceptions, Rights become exercisable and trade separately from our common stock only upon the earlier of (i) the close of business on the tenth business day following the public announcement of an Acquiring Person (as defined in the Rights Agreement) beneficially owning 10% or more of our common stock, and (ii) the close of business on the tenth business day after the commencement of a tender offer or exchange offer that, if consummated, would result in a person or group becoming an Acquiring Person. The Rights will expire on March 18, 2027, unless such Rights are earlier redeemed, exchanged or terminated, as provided in the Rights Agreement.
The Rights Agreement is intended to reduce the likelihood that any entity, person or group is able to gain control of the Company through open market accumulation without paying all stockholders an appropriate control premium or providing the board of directors sufficient opportunity to make informed judgments and take actions that are in the best interests of the Company and all stockholders. The Rights Agreement is not intended to interfere with any merger or other business combination approved by the board of directors.
2026 Stock Repurchase Program
The board of directors of the Company approved a share repurchase program in April 2026. Under the share repurchase program, the Company may repurchase up to $2.5 million in value of the Company’s outstanding shares of common stock from time to time over the next 12 months. The Company may buy back its common stock from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, pursuant to Rule 10b-18 of the Securities Exchange Act of 1934, as amended, and federal and state laws governing such transactions, through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, purchases through 10b5-1 trading plans, or by any combination of such methods. The share repurchase program does not oblige the Company to acquire any specific number of shares and may be modified, discontinued, or suspended at any time. As of September 30, 2026 the Company had not purchased any shares under this plan.
Warrants
The following table summarizes the Company’s outstanding warrants as of September 30, 2026. The warrants and related strike prices have been adjusted to reflect the 2025 Stock Splits:
| Schedule of warrants and related strike prices | ||||||||||
| Issue Date | Strike Price | Number Outstanding | Expiration | |||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| (1) | |
| (2) | |
| (3) |
| 20 |
NOTE 12. NET LOSS PER SHARE OF COMMON STOCK
Basic and diluted net loss per share is computed by dividing net loss attributable to stockholders by the weighted average number shares of common stock outstanding during the period and shares issuable for vested restricted stock units. Potentially dilutive outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share for loss periods presented because including them would have been antidilutive.
A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share attributable to stockholders follows:
| Schedule of reconciliation of basic and diluted net loss per share | ||||||||
| Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Numerator: | ||||||||
| Net (loss) allocable to common stockholders used to compute basic and diluted loss per common share | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Weighted average shares outstanding used to compute basic and dilutive loss per share | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Numerator: | ||||||||
| Net loss allocable to common stockholders used to compute basic and diluted loss per common share | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Weighted average shares outstanding used to compute basic and dilutive loss per share | ||||||||
The following weighted average outstanding potentially dilutive securities were excluded from the weighted average calculation of dilutive loss per share attributable to common stockholders because their impact would have been antidilutive for the period presented:
| Schedule of anti-dilutive securities excluded from computation of earnings per share | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Warrants | ||||||||
| Restricted stock units | ||||||||
| Stock options | ||||||||
NOTE 13. STOCK BASED COMPENSATION
2022 Aclarion Equity Incentive Plan
The Company’s 2022 Equity Incentive Plan (the “2022 Plan”) became effective on April 21, 2022. The compensation committee of the Board of Directors administers the 2022 Plan.
The 2022 Plan provides for an annual automatic increase in the number of shares available for issuance on January 1 of each year through 2032, equal to 5% of the Company’s outstanding capital stock as of the preceding December 31, unless the Board determines otherwise.
| 21 |
Pursuant to the 2022 Plan’s automatic annual
increase provision, the number of shares available for issuance increased by
On June 4, 2026, the Company’s stockholders
approved an amendment to the 2022 Plan increasing the aggregate number of shares authorized for issuance under the Plan by
Awards granted under the 2022 Plan may include incentive stock options and restricted stock awards. Stock options may be classified as either incentive stock options or nonqualified stock options, generally have contractual terms of up to ten years, and vest in accordance with the terms specified in the applicable award agreements.
On June 11, 2026, the Compensation Committee approved
grants of an aggregate of
As of September 30, 2026,
All share amounts presented herein have been retroactively adjusted to reflect the Company’s 2025 reverse stock splits.
Inducement Grants Outside the 2022 Plan
On September 2, 2025, the Company granted a stock
option to its incoming Chief Financial Officer, Gregory Gould, as an inducement award in accordance with Nasdaq Listing Rule 5635(c)(4).
The award was granted outside of the Company’s 2022 Equity Incentive Plan (the “2022 Plan”), but otherwise substantially
mirrors the terms and conditions of the 2022 Plan. The option provides for the purchase of
On May 5, 2026, the Company granted a second inducement
award to Dan Keefe, Commercial Director–West, in connection with the commencement of his employment, also in accordance with Nasdaq
Listing Rule 5635(c)(4). The award, which was granted outside of the 2022 Plan, provides for a nonqualified stock option to purchase
The Company accounts for both inducement awards in accordance with ASC 718, Compensation—Stock Compensation. Because these awards were granted outside of the 2022 Plan, they do not reduce the shares available for future issuance under the Plan.
Determining Fair Value of Stock Options
The fair value of each grant of stock options was determined by the Company using the methods and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.
Valuation and Amortization Method —The Company estimates the fair value of its stock options using the Black-Scholes-Merton option-pricing model. This fair value is then amortized over the requisite service periods of the awards.
Expected Term—The Company estimates the expected term of stock option by taking the average of the vesting term and the contractual term of the option, as illustrated by the simplified method.
| 22 |
Expected Volatility—The expected volatility is derived from the Company’s expectations of future market volatility over the expected term of the options.
Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield curve in effect on the date of grant, for a term consistent with the expected term of the award.
Dividend Yield—The dividend yield assumption is based on the Company’s history and expectation of no dividend payouts.
Stock Award Activity
A summary of option activity under the Company’s 2015 and 2022 incentive plans are as follows:
| Schedule of option activity | ||||||||||||
| Options Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (In Years) | ||||||||||
| Balance at December 31, 2025 | $ | |||||||||||
| Options granted | – | |||||||||||
| Options exercised | – | |||||||||||
| Options forfeited/expired | ( | ) | – | |||||||||
| Balance at September 30, 2026 | $ | |||||||||||
| Exercisable at December 31, 2025 | $ | |||||||||||
| Exercisable at September 30, 2026 | $ | |||||||||||
The aggregate intrinsic value of options outstanding
at September 30, 2026 is $
A summary of inducement option activity outside of the Company’s 2015 and 2022 incentive plans are as follows:
| Schedule of option activity | ||||||||||||
| Options Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (In Years) | ||||||||||
| Balance at December 31, 2025 | $ | |||||||||||
| Options granted | ||||||||||||
| Options exercised | – | |||||||||||
| Options forfeited/expired | – | |||||||||||
| Balance at September 30, 2026 | $ | |||||||||||
| Exercisable at December 31, 2025 | $ | – | ||||||||||
| Exercisable at September 30, 2026 | $ | |||||||||||
| 23 |
During the three and nine months ended September 30,
2026, the Company recognized $
As of September 30, 2026, there was $
Restricted Stock Units
On June 11, 2026, the Compensation Committee approved
grants of an aggregate of
A summary of restricted stock units activity is as follows:
| Schedule of restricted stock units activity | ||||||||
| RSU's Outstanding | Weighted-Average Grant-Date Fair Value per Unit | |||||||
| Nonvested as of December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Vested | ||||||||
| Forfeited | ||||||||
| Nonvested as of September 30, 2026 | $ | |||||||
During the three and nine months ended September 30,
2026, the Company recognized $
As of September 30, 2026, total unrecognized compensation
cost related to nonvested RSUs was $
Stock-based Compensation Expense
The following table summarizes the total stock-based compensation expense included in the Company’s statements of operations for the periods presented:
| Schedule of stock-based compensation expense | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Sales and marketing | $ | $ | $ | $ | ||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
NOTE 14. SUBSEQUENT EVENTS
The Company evaluated subsequent events through the date the condensed financial statements were issued, and concluded that no events have occurred that require adjustment to or disclosure in the accompanying condensed financial statements.
| 24 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the unaudited condensed financial statements and related notes included elsewhere in this Quarterly Report and our audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 18, 2026. This discussion and analysis and other parts of this Quarterly Report contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report. You should carefully read the “Risk Factors” section of this Quarterly Report and of our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 18, 2026, to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section entitled “Special Note Regarding Forward-Looking Statements.”
Overview
Corporate Information
The Company currently operates as a Delaware corporation, under the name Aclarion, Inc.
Results Of Operations:
For the Three Months Ended September 30, 2026, and 2025:
The following table summarizes our results of operations for the three months ended September 30, 2026, and 2025.
| Three Months Ended September 30, | ||||||||||||
| 2026 | 2025 | $ Change | ||||||||||
| Revenue and cost of revenue: | ||||||||||||
| Net revenue | $ | 33,733 | $ | 18,942 | $ | 14,791 | ||||||
| Cost of revenue | 18,937 | 14,556 | 4,381 | |||||||||
| Gross profit | 14,796 | 4,386 | 10,410 | |||||||||
| Operating expenses: | ||||||||||||
| Sales and marketing | 758,028 | 632,409 | 125,619 | |||||||||
| Research and development | 371,511 | 302,037 | 69,474 | |||||||||
| General and administrative | 1,639,456 | 900,904 | 738,552 | |||||||||
| Total operating expenses | 2,768,995 | 1,835,350 | 933,645 | |||||||||
| Loss from operations | (2,754,199 | ) | (1,830,964 | ) | (923,235 | ) | ||||||
| Other income (expense): | ||||||||||||
| Changes in fair value of warrant and derivative liabilities | 12 | 1 | 11 | |||||||||
| Interest income | 134,069 | 124,800 | 9,269 | |||||||||
| Other, net | (1,917 | ) | (131 | ) | (1,786 | ) | ||||||
| Total other income | 132,164 | 124,670 | 7,494 | |||||||||
| Loss before income taxes | (2,622,035 | ) | (1,706,294 | ) | (915,741 | ) | ||||||
| Income tax provision | – | – | – | |||||||||
| Net loss | $ | (2,622,035 | ) | $ | (1,706,294 | ) | $ | (915,741 | ) | |||
| Net loss per share allocable to common stockholders | $ | (0.94 | ) | $ | (2.93 | ) | $ | 1.99 | ||||
| Weighted average shares of common stock outstanding, basic and diluted | 2,778,674 | 582,371 | 2,196,303 | |||||||||
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Net Revenues.
Net revenues for the three months ended September 30, 2026 were $33,733 which was an increase of $14,791 or 78.1%, from $18,942 for the three months ended September 30, 2025. This increase in revenue was driven primarily by the growing volume of NOCISCAN® reports sold into the UK market following recent local coverage decisions. We expect this increase in revenue to continue as we bring on more insurance payors, and our scan volumes increase.
Cost of Revenue.
Direct cost of revenue is comprised of hosting and software costs, field support, UCSF royalty cost, partner fees (RadNet), and credit card fees. Total cost of revenue was $18,937 for the three months ended September 30, 2026, compared to $14,556 for the same period ended September 30, 2025, an increase of $4,381 or 30.1%. The increase was primarily attributable to the growth in our sales as well as higher hosting software costs and partner fees (RadNet). As a result, gross profit was $14,796 and a gross margin of 43.9% for the three months ended September 30, 2026, compared to $4,386 and a gross margin of 23.2% for the same period in 2025.
Sales and Marketing.
The increase in sales and marketing expenses was primarily driven by higher salaries and benefits resulting from the addition of three salespeople in the United States and the United Kingdom. Salaries and benefits were $407,234 for the three months ended September 30, 2026, compared to $168,035 for the same period in 2025, an increase of $239,199, or 142.4%, primarily due to increased salary expense and accruals for incentive-based performance payouts. We expect salaries and benefits to continue at this higher level in the fourth quarter of 2026.
Travel and entertainment expenses were $105,684 for the three months ended September 30, 2026, compared to $38,455 for the same period in 2025, an increase of $67,229, or 174.8%, primarily due to travel by newly added sales personnel supporting coverage and reimbursement efforts in the United States and United Kingdom.
Reimbursement consulting expenses were $20,458 for the three months ended September 30, 2026, compared to $5,138 for the same period in 2025, an increase of $15,320, or 298.2%. The increase was primarily attributable to the startup and implementation of the Company’s hybrid reimbursement and patient access program, as well as expanded strategic reimbursement support.
Post-market clinical expense related to the CLARITY Trial was $101,153 for the three months ended September 30, 2026, compared to $197,227 for the same period in 2025, a decrease of $96,074, or 48.7%. The prior-year period included trial start-up costs following enrollment of the first patient in June 2025, while trial activity slowed during the third quarter of 2026. We expect these expenses to increase in the fourth quarter of 2026 as enrollment is expected to increase in the coming months and years due to the expanded CLARITY enrollment criteria.
Product marketing consulting expenses were $103,277 for the three months ended September 30, 2026, compared to $190,242 for the same period in 2025, a decrease of $86,965, or 45.7%, reflecting reduced use of external marketing consultants as certain marketing activities were transitioned in-house.
Research and Development.
Research and development expenses were $371,511 for the three months ended September 30, 2026, compared to $302,037 for the same period in 2025, an increase of $69,474, or 23.0%.
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The increase was primarily driven by higher quality system and consulting expenses, which were $110,081 for the three months ended September 30, 2026, compared to $90,933 for the same period in 2025, an increase of $19,148, or 21.1%, primarily as a result of expanded regulatory compliance and documentation activities.
In addition, patent maintenance fees were $37,476 for the three months ended September 30, 2026, compared to $29,951 for the same period in 2025, an increase of $7,525, or 25.1%, reflecting the Company’s ongoing efforts to maintain and protect its intellectual property portfolio.
We expect research and development expenses to continue to increase as we continue the development of Nociscan 3.0.
General and Administrative.
General and administrative expenses were $1,639,456 for the three months ended September 30, 2026, compared to $900,904 for the same period in 2025, an increase of $738,552, or 82.0%.
The increase was primarily driven by higher salaries and benefits, which were $1,039,447 for the three months ended September 30, 2026, compared to $421,577 for the same period in 2025, an increase of $617,870, or 146.6%. Stock-based compensation expense was $299,544 for the three months ended September 30, 2026, compared to $16,746 for the same period in 2025, an increase of $282,798, primarily attributable to restricted stock unit expense recognized following equity awards granted under the Company’s 2022 Equity Incentive Plan in June 2026. Bonus expense was $435,325 for the three months ended September 30, 2026, compared to $138,739 for the same period in 2025, an increase of $296,586, primarily due to the accruals under the Company’s annual incentive bonus program.
Legal expenses were $101,662 for the three months ended September 30, 2026, compared to $29,057 for the same period in 2025, an increase of $72,605, or 249.9%, primarily due to increased legal fees associated with corporate governance and shareholder-related matters.
Investor relations expenses were $87,786 for the three months ended September 30, 2026, compared to $33,021 for the same period in 2025, an increase of $54,765, or 165.8%, primarily reflecting expanded investor outreach activities and increased use of third-party investor relations service providers.
Delaware franchise tax expense was $20,190 for the three months ended September 30, 2026, compared to a credit of $2,370 for the same period in 2025, an increase of $22,560, primarily due to changes in the Company’s capital structure and an adjustment to previously accrued franchise tax in the prior-year period.
These increases were partially offset by lower director and officer insurance expense, which was $75,000 for the three months ended September 30, 2026, compared to $99,375 for the same period in 2025, a decrease of $24,375, or 24.5%, primarily due to a reduction in our premiums following the renewal of our D&O insurance policy in fiscal 2026.
Changes in Fair Value of Warrant Liabilities.
The Company’s warrant liabilities are remeasured at fair value at each reporting date. For the three months ended September 30, 2026, remeasurement of the outstanding warrants resulted in a gain of $12, compared to a gain of $1 for the same period in 2025.
Interest Income.
Interest income was $134,069 for the three months ended September 30, 2026, compared to $124,800 for the same period in 2025, an increase of $9,269, primarily reflecting higher average cash balances following the Company’s fundraising activities and related interest earned on money market deposits.
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For the Nine Months Ended September 30, 2026, and 2025:
The following table summarizes our results of operations for the nine months ended September 30, 2026, and 2025.
| Nine Months Ended September 30, | ||||||||||||
| 2026 | 2025 | $ Change | ||||||||||
| Revenue and cost of revenue: | ||||||||||||
| Net revenue | $ | 80,081 | $ | 57,251 | $ | 22,830 | ||||||
| Cost of revenue | 53,238 | 52,214 | 1,024 | |||||||||
| Gross profit | 26,843 | 5,037 | 21,806 | |||||||||
| Operating expenses: | ||||||||||||
| Sales and marketing | 2,543,985 | 1,278,759 | 1,265,226 | |||||||||
| Research and development | 983,998 | 770,659 | 213,339 | |||||||||
| General and administrative | 5,139,722 | 3,015,016 | 2,124,706 | |||||||||
| Total operating expenses | 8,667,705 | 5,064,434 | 3,603,271 | |||||||||
| Loss from operations | (8,640,862 | ) | (5,059,397 | ) | (3,581,465 | ) | ||||||
| Other income (expense): | ||||||||||||
| Gain on extinguishment of debt | – | 73,272 | (73,272 | ) | ||||||||
| Changes in fair value of warrant and derivative liabilities | 30 | 11,767 | (11,737 | ) | ||||||||
| Penalties and settlements | – | (672,500 | ) | 672,500 | ||||||||
| Interest income | 424,450 | 302,786 | 121,664 | |||||||||
| Other, net | (6,779 | ) | (415 | ) | (6,364 | ) | ||||||
| Total other income (expense) | 417,701 | (285,090 | ) | 702,791 | ||||||||
| Loss before income taxes | (8,223,161 | ) | (5,344,487 | ) | (2,878,674 | ) | ||||||
| Income tax provision | – | – | – | |||||||||
| Net loss | $ | (8,223,161 | ) | $ | (5,344,487 | ) | $ | (2,878,674 | ) | |||
| Dividends on preferred stock | $ | – | $ | (6,683 | ) | $ | 6,683 | |||||
| Net loss allocable to common stockholders | $ | (8,223,161 | ) | $ | (5,351,170 | ) | $ | (2,871,991 | ) | |||
| Net loss per share allocable to common stockholders | $ | (3.44 | ) | $ | (11.60 | ) | $ | 8.16 | ||||
| Weighted average shares of common stock outstanding, basic and diluted | 2,389,563 | 461,341 | 1,928,222 | |||||||||
Net Revenues.
Net revenues for the nine months ended September 30, 2026 were $80,081, an increase of $22,830, or 39.9%, from $57,251 for the same period in 2025. This increase in revenue was driven primarily by the growing volume of NOCISCAN® reports sold into the UK market following recent local coverage decisions, with reimbursed revenue increasing to $50,491 from $23,973 for the same period in 2025. Research revenue increased to $14,300 from $3,628, partially offset by lower patient-pay revenue, which decreased to $15,290 from $30,150. We expect revenue to continue to increase as we add insurance payors and our scan volumes increase.
Cost of Revenue.
Direct cost of revenue is comprised of hosting and software costs, field support, UCSF royalty cost, partner fees (RadNet), and credit card fees. Total cost of revenue was $53,238 for the nine months ended September 30, 2026, compared to $52,214 for the same period in 2025, an increase of $1,024, or 2.0%. Cost of revenue increased at a substantially lower rate than revenue, as a significant portion of cost of revenue consists of fixed costs, including the minimum annual royalty under the Company’s UCSF license agreement, which was $37,500 in both periods. As a result, gross profit was $26,843 and a gross margin of 33.5% for the nine months ended September 30, 2026, compared to $5,037 and a gross margin of 8.8% for the same period in 2025.
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Sales and Marketing.
Sales and marketing expenses primarily consist of salaries and benefits, post-market clinical expense related to the CLARITY Trial, product marketing consulting, travel and entertainment, and reimbursement consulting. Sales and marketing expenses were $2,543,985 for the nine months ended September 30, 2026, compared to $1,278,759 for the same period in 2025, an increase of $1,265,226, or 98.9%.
The increase in sales and marketing expenses was primarily driven by higher salaries and benefits resulting from the addition of three salespeople in the United States and the United Kingdom. Salaries and benefits were $1,093,092 for the nine months ended September 30, 2026, compared to $338,918 for the same period in 2025, an increase of $754,174, or 222.5%, primarily due to increased salary related expense of $540,399, stock-based compensation expense of $108,407 related to equity awards granted in June 2026, and accruals for incentive-based performance payouts of $105,368. We expect salaries and benefits to continue at this higher level in the fourth quarter of 2026.
Product marketing consulting expenses were $455,025 for the nine months ended September 30, 2026, compared to $213,253 for the same period in 2025, an increase of $241,772, or 113.4%, reflecting expanded use of external marketing consultants in the first half of 2026, partially offset by the transition of certain marketing activities in-house during the third quarter of 2026.
Reimbursement consulting expenses were $136,508 for the nine months ended September 30, 2026, compared to $17,138 for the same period in 2025, an increase of $119,370, or 696.5%. The increase was primarily attributable to the startup and implementation of the Company’s hybrid reimbursement and patient access program, as well as expanded strategic reimbursement support.
Travel and entertainment expenses were $246,437 for the nine months ended September 30, 2026, compared to $142,607 for the same period in 2025, an increase of $103,830, or 72.8%, primarily due to travel and business meals of newly added sales personnel supporting coverage and reimbursement efforts in the United States and United Kingdom.
Post-market clinical expense related to the CLARITY Trial was $481,898 for the nine months ended September 30, 2026, compared to $488,276 for the same period in 2025, a decrease of $6,378, or 1.3%. Higher trial activity in the first half of 2026 was offset by lower activity in the third quarter of 2026 compared to start-up costs in the prior-year period, following enrollment of the first patient in June 2025. We expect these expenses to increase in the fourth quarter of 2026 as enrollment is expected to increase in the coming months and years due to the expanded CLARITY enrollment criteria.
Research and Development.
Research and development expenses were $983,998 for the nine months ended September 30, 2026, compared to $770,659 for the same period in 2025, an increase of $213,339, or 27.7%.
The increase was primarily driven by higher quality system and consulting expenses, which were $348,188 for the nine months ended September 30, 2026, compared to $265,824 for the same period in 2025, an increase of $82,364, or 31.0%, primarily as a result of increased use of research and development contractors and expanded regulatory compliance and documentation activities.
In addition, patent maintenance fees were $97,408 for the nine months ended September 30, 2026, compared to $41,970 for the same period in 2025, an increase of $55,438, or 132.1%, primarily reflecting higher maintenance fees on the Company’s patents outside the United States.
We expect research and development expenses to continue to increase as we continue the development of Nociscan 3.0.
General and Administrative.
General and administrative expenses were $5,139,722 for the nine months ended September 30, 2026, compared to $3,015,016 for the same period in 2025, an increase of $2,124,706, or 70.5%.
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The increase was primarily driven by higher salaries and benefits, which were $2,019,566 for the nine months ended September 30, 2026, compared to $1,164,044 for the same period in 2025, an increase of $855,522, or 73.5%. Stock-based compensation expense was $377,780, compared to $101,003 for the same period in 2025, an increase of $276,777, primarily attributable to restricted stock unit expense recognized following equity awards granted under the Company’s 2022 Equity Incentive Plan in June 2026. Bonus expense was $760,325, compared to $293,427 for the same period in 2025, an increase of $466,898, or 159.1%, primarily due to the addition of new participants to the Company’s incentive bonus program.
Investor relations expenses were $653,984 for the nine months ended September 30, 2026, compared to $244,952 for the same period in 2025, an increase of $409,032, or 167.0%, primarily reflecting expanded investor outreach activities and increased use of third-party investor relations service providers.
Legal expenses were $568,025 for the nine months ended September 30, 2026, compared to $217,345 for the same period in 2025, an increase of $350,680, or 161.3%, primarily due to increased legal fees associated with corporate governance and shareholder-related matters.
Delaware franchise tax expense was $337,380 for the nine months ended September 30, 2026, compared to $16,767 for the same period in 2025, an increase of $320,613, primarily due to changes in the Company’s capital structure and the methodology used to calculate the Company’s Delaware franchise tax obligation.
Gain On Extinguishment Of Debt.
Gain on extinguishment of debt was $0 for the nine months ended September 30, 2026, compared to $73,272 for the same period in 2025, reflecting the absence of debt extinguishment activity in the current period. The prior-year gain primarily related to the retirement of an obligation associated with commitment shares.
Changes in Fair Value of Warrant Liabilities.
The Company’s warrant liabilities are remeasured at fair value at each reporting date. For the nine months ended September 30, 2026, remeasurement of the outstanding warrants resulted in a gain of $30, compared to a gain of $11,767 for the same period in 2025, a decrease of $11,737, primarily attributable to a reduction in the number of outstanding warrants subject to remeasurement.
Penalties and Settlements.
Penalties and settlements expense was $0 for the nine months ended September 30, 2026, compared to $672,500 for the same period in 2025, reflecting the absence of settlement-related charges in the current period. The prior-year expense primarily related to a payment to settle a dispute under the “fee tail” provision of a previously executed investment banking agreement, partially offset by a favorable accounts payable settlement.
Interest Income.
Interest income was $424,450 for the nine months ended September 30, 2026, compared to $302,786 for the same period in 2025, an increase of $121,664, or 40.2%, primarily reflecting higher average cash balances following the Company’s fundraising activities and related interest earned on money market deposits.
Critical Accounting Policies and Use of Estimates
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our condensed financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our condensed financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our condensed financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates.
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While our significant accounting policies are described in more detail in the notes to our condensed financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our condensed financial statements.
Revenue Recognition
The Company derives its revenues from one source, the delivery of Nociscan reports to medical professionals. Revenues are recognized when a contract with a customer exists, and the control of the promised services are transferred to our customers. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for those services. Substantially all of our revenues are generated from contracts with customers in the United Kingdom and the United States as well as revenues from certain EU countries related to clinical trials.
Equity-Based Compensation
The Company accounts for stock-based awards in accordance with provisions of ASC Topic 718, Compensation—Stock Compensation, under which the Company recognizes the grant-date fair value of stock-based awards issued to employees and nonemployee board members as compensation expense on a straight-line basis over the vesting period of the award, while awards containing a performance condition are recognized as expense when the achievement of the performance criteria is achieved. The Company uses the Black-Scholes option pricing model to determine the grant-date fair value of stock options. The Company records expense for forfeitures in the periods they occur.
Liquidity and capital resources
Sources of liquidity
To date, we have financed our operations primarily through private placements and public offerings of our equity and debt securities.
As of September 30, 2026, we had cash and cash equivalents of $14,212,566 including $25,000 of restricted cash.
During the nine months ended September 30, 2026, the Company completed a registered direct public offering of (i) 200,000 shares of the Company’s common stock, and (ii) pre-funded warrants (the “Pre-funded Warrants”) to purchase up to 1,800,000 shares of common stock, at an offering price of $5.18 per share. The purchase price of each Pre-funded Warrant was $5.17999, which represents the offering price per share of common stock, minus the exercise price of $.00001 per share. The Pre-funded Warrants are immediately exercisable. The aggregate gross proceeds to the Company from this offering were approximately $10.4 million, before deducting placement agent fees of 6% of the aggregate gross proceeds and other offering expenses payable by the Company.
The Company believes its current cash resources are sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the issuance date of these condensed financial statements. Management continues to actively monitor and manage the Company’s cash position.
Cash flows
The following table summarizes our sources and uses of cash for each of the periods presented:
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities | $ | (7,317,637 | ) | $ | (5,536,766 | ) | ||
| Net cash used in investing activities | (165,354 | ) | (162,441 | ) | ||||
| Net cash provided by financing activities | 9,654,768 | 16,601,882 | ||||||
| Net increase in cash and cash equivalents | $ | 2,171,777 | $ | 10,902,675 | ||||
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Operating activities
During the nine months ended September 30, 2026, the Company used $7,317,637 in cash for operating activities, compared to $5,536,766 for the same period in 2025, representing an increase in cash used of $1,780,871. The increase was primarily driven by a higher net loss after adjusting for non-cash items, partially offset by favorable changes in working capital.
Net loss after non-cash adjustments was $7,505,206 for the nine months ended September 30, 2026, compared to $4,982,799 for the same period in 2025, an increase of $2,522,407. This increase was primarily attributable to a higher net loss of $2,878,674, partially offset by higher non-cash adjustments in the current period. Share-based compensation rose $430,629 to $531,632, and depreciation and amortization rose $20,260 to $186,353. These increases were partially offset by non-cash charges in the prior-year period that did not recur in 2026, consisting of warrant amendment costs of $48,087 and non-cash settlements of $58,272. The change in fair value related to warrants and derivative liabilities produced a smaller non-cash gain in 2026 of $30, compared to $11,767 in 2025.
Changes in working capital provided $187,569 of cash for the nine months ended September 30, 2026, compared to $553,967 used for the same period in 2025. Prepaid expenses and other current assets used $7,727 of cash, compared to a use of $164,100 for the same period in 2025. Accounts payable used $89,204 of cash, compared to a use of $214,007 in the prior-year period, primarily due to the timing of vendor payments. Accrued and other liabilities provided $288,063 of cash, compared to a use of $162,168 for the same period in 2025, primarily reflecting the accrual of 2026 incentive bonuses. Accounts receivable used $3,563 of cash, compared to a use of $13,692 in the prior-year period.
The Company expects that cash used in operating activities may increase in future periods as it continues to develop its business. Potential increases in cash usage may be driven by higher legal and professional fees, increased investor outreach programs, and expanded sales and marketing activities. In addition, as the Company advances its commercialization efforts, operating expenses may increase to support these activities, which could result in higher cash utilization.
Investing activities
Net cash used in investing activities increased to $165,354 for the nine months ended September 30, 2026, compared to $162,441 for the same period in 2025, an increase in cash used of $2,913. Investing activities in both periods consisted primarily of capitalized patent costs. The increase was primarily attributable to higher expenditures on patent and license filings, which rose $8,907 to $163,546, partially offset by a $5,994 decrease in fixed asset purchases to $1,808.
Financing activities
Net cash provided by financing activities decreased to $9,654,768 for the nine months ended September 30, 2026, compared to $16,601,882 for the nine months ended September 30, 2025, a decrease of $6,947,114.
Cash provided by financing activities for the nine months ended September 30, 2026 was primarily attributable to $10,359,982 in aggregate proceeds from a registered direct offering, consisting of $1,036,000 from common stock and $9,323,982 from pre-funded warrants, partially offset by $705,214 in issuance costs.
In comparison, cash provided by financing activities for the nine months ended September 30, 2025 was primarily driven by $19,722,472 in aggregate proceeds from public and registered direct offerings of common stock and warrants, partially offset by $2,243,441 in issuance costs and $1,213,590 related to the redemption of Series B Preferred Stock. The prior-year period also included $336,441 in proceeds from the exercise of Series C warrants.
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Funding requirements
We believe that our cash and cash equivalents of $14,212,566 as of September 30, 2026, including $25,000 of restricted cash, provide sufficient capital to fund our planned operations for at least twelve months from the date these condensed financial statements are issued without the need for additional financing. However, the development and commercialization of medical technology products is a time-consuming, costly, and uncertain process that may take years to complete, and we may never generate meaningful revenue. Accordingly, we may need to raise substantial additional capital to achieve our long-term business objectives.
Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity securities, current stockholders’ ownership interests may be diluted. Any debt or preferred equity financing, if available, may involve agreements that include restrictive covenants that may limit our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends, which could adversely impact our ability to conduct our business, and may require the issuance of warrants, which could potentially dilute existing stockholders’ ownership interests.
If we raise additional funds through licensing agreements and strategic collaborations with third parties, we may have to relinquish valuable rights to our technology, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds, we may be required to delay, limit, reduce and/or terminate development of our product candidates or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Contractual obligations and commitments
The Company does not have any contractual obligations, not otherwise on our balance sheet as of September 30, 2026.
Off-balance sheet arrangements
We did not have, during the periods presented, and we do not currently have any off-balance sheet arrangements as defined in the rules and regulations of the Securities and Exchange Commission (“SEC”).
Recently issued accounting pronouncements
We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 4 to our condensed financial statements appearing at the end of this quarterly report, such standards will not have a material impact on our condensed financial statements or do not otherwise apply to our operations.
Emerging growth company and smaller reporting company status
The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected not to “opt out” of this extended transition period and, as a result, we will not adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for public entities. Accordingly, our condensed financial statements may not be comparable to other public companies that do not elect the extended transition period.
We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO, which is December 31, 2027, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior December 31st, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
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We are also a “smaller reporting company” meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Interest rate sensitivity
We had cash and cash equivalents and restricted cash totaling $14,212,566 as of September 30, 2026. These amounts are invested primarily in demand deposit accounts and money market funds. We consider all highly liquid debt instruments purchased with a maturity of three months or less and SEC-registered money market mutual funds to be cash equivalents. The primary objectives of our investing activities are capital preservation, meeting our liquidity needs, and generating interest income while maintaining the safety of principal. We do not enter into investments for trading or speculative purposes.
Our cash equivalents are subject to market risk due to changes in interest rates. The market value of fixed rate securities may be adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates, or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate to allow timely decisions regarding required disclosure.
As required by Exchange Act Rule 13a-15, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2026. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2026.
Changes in Internal Control over Financial Reporting
During fiscal 2025, we implemented changes in our internal control over financial reporting to remediate previously identified material weaknesses related to limited segregation of duties and insufficient accounting resources to address complex accounting transactions. These changes included the engagement of external advisory firms to enhance segregation of duties, strengthen oversight of transactions and financial reporting, and provide technical accounting expertise.
In addition, we expanded our accounting and finance function and hired a new Chief Financial Officer who is a Certified Public Accountant with over 20 years of experience serving as a chief financial officer of publicly traded companies. These actions were designed to strengthen our control environment, improve segregation of duties, enhance technical accounting capabilities, and improve management oversight of our financial reporting processes. The remediation measures described above materially affected our internal control over financial reporting and were completed during the year ended December 31, 2025.
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. We are not currently a party to any material legal proceedings, the adverse outcome of which, in our management’s opinion, individually or in the aggregate, could have a material adverse effect on the results of our operations or financial position. There are no material proceedings in which any of our directors, officers or affiliates or any registered or beneficial stockholder of more than 5% of our common stock is an adverse party or has a material interest adverse to our interest.
Item 1A. Risk Factors.
In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors disclosed in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 18, 2026. There have been no material changes to our risk factors from those included in such Annual Report. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
There were no unregistered sales of equity securities of the Company during the period covered by this Quarterly Report on Form 10-Q that were not previously reported in a (i) Current Report on Form 8-K or (ii) Quarterly Report on Form 10-Q.
We did not repurchase any of our equity securities during the quarter ended September 30, 2026.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
Rule 10b5-1 Plans
During our last fiscal quarter no director or officer
(as defined in Rule 16a-1(f) under the Exchange Act)
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Item 6. Exhibits.
The exhibits required by Item 601 of Regulation S-K and Item 15(b) of this Quarterly Report are listed in the Exhibit Index below. The exhibits listed in the Exhibit Index are incorporated by reference herein.
| Exhibit Number | Description of Document | Incorporated by reference from Form |
Filing Date |
Exhibit Number | Filed Herewith | |||||
| 1.1 | Underwriting Agreement, dated January 15, 2025, between the Company and Dawson James Securities, Inc. | 8-K | 01/17/2025 | 10.1 | ||||||
| 3.1 | Amended and Restated Certificate of Incorporation of the Company | 8-K | 04/27/2022 | 3.1 | ||||||
| 3.2 | Certificate of Amendment dated January 3, 2024 to the Amended and Restated Certificate of Incorporation | 8-K | 01/04/2024 | 3.1 | ||||||
| 3.3 | Certificate of Amendment dated January 29, 2025 to the Amended and Restated Certificate of Incorporation | 8-K | 01/30/2025 | 3.1 | ||||||
| 3.4 | Certificate of Amendment dated March 26, 2025 to the Amended and Restated Certificate of Incorporation | 8-K | 03/28/2025 | 3.1 | ||||||
| 3.5 | Bylaws of the Company | 8-K | 04/27/2022 | 3.2 | ||||||
| 3.6 | Amendment to Bylaws dated June 12, 2024 | 8-K | 06/18/2024 | 3.1 | ||||||
| 3.7 | Series B Convertible Preferred Stock Certificate of Designations dated August 14, 2024 | 8-K | 08/16/2024 | 3.1 | ||||||
| 3.8 | Series C Convertible Preferred Stock Certificate of Designations dated September 30, 2024 | 8-K | 10/01/2024 | 3.1 | ||||||
| 3.9 | Certificate of Designation of Series D Junior Participating Preferred Stock of Aclarion, Inc., dated March 19, 2026 | 8-A | 03/19/2026 | 3.1 | ||||||
| 4.1 | Form of Common Stock Certificate | 10-Q | 06/06/2022 | 4.1 | ||||||
| 4.2 | Form of 2022 IPO Public Warrant | 8-K | 04/27/2022 | 4.1 | ||||||
| 4.3 | Form of 2022 IPO Representative’s Common Stock Purchase Warrant | 8-K | 04/27/2022 | 4.2 | ||||||
| 4.4 | Form of May 2023 Common Stock Warrant | 8-K | 05/17/2023 | 10.3 | ||||||
| 4.5 | Form of Common Stock Warrant dated November 21, 2023 | 8-K | 11/22/2023 | 10.3 | ||||||
| 4.6 | Form of Common Stock Warrant dated September 30, 2024 | 8-K | 10/01/2024 | 10.2 | ||||||
| 4.7 | February 2024 Form of Common Warrant | S-1/A | 02/06/2024 | 4.5 | ||||||
| 4.8 | February 2024 Form of Prefunded Warrant | S-1/A | 02/06/2024 | 4.6 | ||||||
| 4.9 | January 2025 Form of Series A Warrant | 8-K | 01/17/2025 | 4.1 | ||||||
| 4.10 | January 2025 Form of Series B Warrant | 8-K | 01/17/2025 | 4.2 | ||||||
| 4.11 | January 2025 Form of Pre-Funded Warrant | 8-K | 01/17/2025 | 4.3 | ||||||
| 4.12 | October 2025 Form Pre-Funded Warrant | 8-K | 10/14/2025 | 10.2 | ||||||
| 4.13 | January 2026 Form of Pre-Funded Warrant | 8-K | 01/09/2026 | 4.1 | ||||||
| 4.14 | Description of Securities | 10-K | 04/09/2025 | 4.12 | ||||||
| 4.15 | Stockholder Rights Agreement, dated as of March 19, 2026, by and between Aclarion, Inc. and VStock Transfer, LLC, as rights agent (which includes the Form of Rights Certificate as Exhibit B thereto) | 8-A | 03/19/2026 | 4.1 | ||||||
| 10.1 | # | Employment Agreement of Jeff Thramann | S-1/A | 03/23/2022 | 10.1 | |||||
| 10.2 | # | Employment Agreement of Brent Ness | S-1/A | 03/23/2022 | 10.2 | |||||
| 10.3 | # | Form of Aclarion, Inc. 2022 Equity Incentive Plan | S-1 | 01/06/2022 | 10.4 | |||||
| 10.4 | License Agreement with UCSF the Regents of the University of California | S-1 | 01/06/2022 | 10.6 | ||||||
| 10.5 | Amendment to UC License Agreement | S-1/A | 03/04/2022 | 10.7 | ||||||
| 10.6 | ** | NuVasive Amended and Restated Commission Agreement dated February 28, 2020 | S-1/A | 03/23/2022 | 10.8 | |||||
| 10.7 | ** | Right of First Offer Agreement | S-1/A | 03/23/2022 | 10.12 |
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| 10.8 | First Amendment to Right of First Offer Agreement | S-1/A | 03/23/2022 | 10.13 | ||||||
| 10.9 | Second Amendment to Right of First Offer Agreement | S-1/A | 03/23/2022 | 10.14 | ||||||
| 10.10 | Warrant Agent Agreement dated April 21, 2022 | 8-K | 04/27/2022 | 10.1 | ||||||
| 10.11 | Siemens Strategic Collaboration Agreement | S-1 | 01/06/2022 | 10.17 | ||||||
| 10.12 | # | Aclarion, Inc. 2022 Equity Incentive Plan – Form of Option Grant Notice and Stock Option Agreement | S-1 | 01/06/2022 | 10.20 | |||||
| 10.13 | # | Aclarion, Inc. 2022 Equity Incentive Plan – Form of RSU Grant Notice and RSU Agreement | S-1 | 01/06/2022 | 10.21 | |||||
| 10.14 | # | Nocimed, Inc. 2015 Stock Plan | S-8 | 05/26/2022 | 99.4 | |||||
| 14.15 | # | Nocimed, Inc. 2015 Stock Plan – Form of Option Grant Notice and Stock Option Agreement | S-8 | 05/26/2022 | 99.5 | |||||
| 10.16 | Form of 2023 Registration Rights Agreement | 8-K | 05/17/2023 | 10.4 | ||||||
| 10.17 | February 2024 Form of Warrant Agency Agreement | S-1/A | 02/23/2024 | 4.7 | ||||||
| 10.18 | White Lion Equity Line Common Stock Purchase Agreement dated October 9, 2023 | 8-K | 10/10/2023 | 10.1 | ||||||
| 10.19 | Amendment dated as of November 27, 2024 to Common Stock Purchase Agreement, dated as of October 9, 2023, by and between White Lion Capital, LLC and Aclarion, Inc. | 8-K | 11/27/2024 | 10.1 | ||||||
| 10.20 | White Lion Equity Line Registration Rights Agreement | 8-K | 10/10/2023 | 10.2 | ||||||
| 10.21 | At-The-Market Issuance Sales Agreement with Ascendiant Capital Markets, LLC dated September 24, 2024 | 8-K | 09/24/2024 | 1.1 | ||||||
| 10.22 | Form of Registration Rights Agreement dated November 21, 2023 | 8-K | 11/22/2023 | 10.4 | ||||||
| 10.23 | Form of Registration Rights Agreement dated September 30, 2024 | 8-K | 10/01/2024 | 10.3 | ||||||
| 10.24 | # | Employment Agreement of Gregory Gould | 8-K | 09/03/2025 | 10.1 | |||||
| 10.25 | # | Form of Inducement Stock Option Grant Notice and Inducement Stock Option Agreement | 10-Q | 11/12/2025 | 10.26 | |||||
| 10.26 | October 2025 Form of Securities Purchase Agreement | 8-K | 10/14/2025 | 10.1 | ||||||
| 10.27 | January 2026 Form of Securities Purchase Agreement | 8-K | 01/09/2026 | 10.1 | ||||||
| 10.28 | # | Amendment dated June 4, 2026 to Aclarion, Inc. 2022 Equity Incentive Plan | S-8 | 07/09/2026 | 99.2 | |||||
| 19.1 | Insider Trading Policy | 10-K | 04/09/2025 | 19.1 | ||||||
| 31.1 | Section 302 Certification by the Corporation’s Chief Executive Officer | X | ||||||||
| 31.2 | Section 302 Certification by the Corporation’s Chief Financial Officer | X | ||||||||
| 32.1 | Section 906 3 Certification by the Corporation’s Chief Executive Officer | X | ||||||||
| 32.2 | Section 906 3 Certification by the Corporation’s Chief Fnancial Officer | X | ||||||||
| 97.1 | Aclarion Clawback Policy | 10-K | 03/28/2024 | 97.1 |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101). |
___________________________
| # | Indicates management contract or compensatory plan. |
| ** | Certain portions of the exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ACLARION, INC. | ||
| By: | /s/ Brent Ness | |
| Brent Ness Chief Executive Officer | ||
| By: | /s/ Gregory A. Gould | |
| Gregory A. Gould Chief Financial Officer | ||
Date: November 5, 2026
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