[10-Q] Aclarion, Inc. Quarterly Earnings Report
Aclarion, Inc. (ACON) reported Q3 2025 results. Revenue was $18,942, up modestly from $14,407 a year ago, with gross profit of $4,386 after a loss in the prior year period. Operating expenses rose to $1.84 million, leading to a net loss of $1.71 million versus $1.37 million a year earlier. For the first nine months, revenue reached $57,251 and net loss was $5.34 million.
The balance sheet strengthened following capital raises: cash and cash equivalents were $11.34 million versus $0.45 million at year‑end 2024, total assets were $13.20 million, liabilities were $0.70 million, and stockholders’ equity improved to $12.50 million. The company disclosed it raised an additional $2.5 million in October 2025 and believes its cash will fund operations through the first quarter of 2027. During 2025, Aclarion effected 1:335 and 1:27 reverse stock splits. Shares outstanding were 582,371 as of September 30, 2025; as context, 671,371 shares were outstanding as of November 10, 2025.
- None.
- None.
Insights
Stronger liquidity from equity raises; operating losses persist.
Aclarion shows a markedly improved balance sheet, with cash and cash equivalents of
Financing activity in
Key items to track in subsequent filings include revenue traction for Nociscan, expense discipline, and any additional capital raises or warrant exercises that could influence cash and share count.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from __________ to __________
Commission File Number:
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area code: (
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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| The | ||||
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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
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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
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Indicate by check mark whether the registrant
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As of November 10, 2025, 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, 2024 (the Form 10-K) dated April 9, 2025, as filed with the Securities and Exchange Commission on April 9, 2025, 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 | 8 | ||
| Notes to Condensed Financial Statements | 9 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 36 | |
| Item 4. | Controls and Procedures | 36 | |
| PART II. | OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 37 | |
| Item 1A. | Risk Factors | 37 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 37 | |
| Item 3. | Defaults Upon Senior Securities | 37 | |
| Item 4. | Mine Safety Disclosures | 37 | |
| Item 5. | Other Information | 37 | |
| Item 6. | Exhibits | 38 | |
| Signatures | 40 |
| 3 |
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Aclarion, Inc.
Condensed Balance Sheets
| September 30, 2025 | December 31, 2024 | |||||||
| (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 | ||||||||
| Liability to issue equity | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (see Note 10) | – | – | ||||||
| Stockholders' equity: | ||||||||
| Series B preferred stock - $ | * | |||||||
| Series C preferred stock - $ | * | |||||||
| 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, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | ||||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||
| Loss on exchange of debt | ( | ) | ( | ) | ||||||||||||
| Gain (loss) on extinguishment of debt | ( | ) | ||||||||||||||
| Changes in fair value of warrant and derivative liabilities | ||||||||||||||||
| Penalties and settlements | ( | ) | ||||||||||||||
| Other, net | ||||||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax provision | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Dividends accrued for preferred stockholders | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss allocable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share allocable to common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 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 A | Series B | Series C | ||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Paid-In | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
| For the Nine Months Ended September 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | * | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Share-based compensation | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Issuance of common stock and warrants related to public offering | – | – | – | – | – | – | * | – | ||||||||||||||||||||||||||||||||||||
| Issuance of common shares - equity line of credit | – | – | – | – | – | – | * | – | ||||||||||||||||||||||||||||||||||||
| Public offering and equity line issuance costs | – | – | – | – | – | – | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||||||||
| Issuance of common shares - debt for equity exchange | – | – | – | – | – | – | * | – | ||||||||||||||||||||||||||||||||||||
| Issuance of commitment shares - note financing | – | – | – | – | – | – | * | – | ||||||||||||||||||||||||||||||||||||
| Issuance of common shares related to restricted stock units | – | – | – | – | – | – | * | * | * | – | – | |||||||||||||||||||||||||||||||||
| Cashless exercise of pre-funded warrants | – | – | – | – | – | – | * | * | – | – | – | |||||||||||||||||||||||||||||||||
| Round up convention related to reverse stock split | – | – | – | – | – | – | * | – | – | – | ||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | * | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||
| Share-based compensation | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Issuance of common shares related to restricted stock units | – | – | – | – | – | – | * | * | – | – | ||||||||||||||||||||||||||||||||||
| Issuance of common shares - equity line of credit | – | – | – | – | – | – | * | – | ||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | * | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||
| Share-based compensation | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Issuance of common shares related to restricted stock units | – | – | – | – | – | – | * | – | – | – | ||||||||||||||||||||||||||||||||||
| Issuance of common shares related to RegA+ | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||
| Issuance of B-Series preferred stock - debt for equity exchange | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| B-Series preferred stock issuance costs | – | – | – | – | – | – | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||||||||
| C-Series preferred stock issuance costs | – | – | – | – | – | – | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||||||||
| Issuance of C-Series preferred stock | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Common stock issuance costs | – | – | – | – | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||||||||||
| Issuance of C-Series warrants | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Issuance of RegA+ warrants | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Capitalization of B-Series preferred stock dividends | – | – | – | – | – | – | – | – | ( | ) | – | |||||||||||||||||||||||||||||||||
| Net income (loss) | – | – | – | – | – | – | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||
* Rounds to less than one share or $1
See accompanying notes to condensed financial statements.
| 6 |
Aclarion, Inc.
Condensed Statements of Changes in Stockholders' Equity (Deficit)
(Unaudited)
(Continued)
| Series A | Series B | Series C | ||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Paid-In | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Shares | Value | 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 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||
| * |
See accompanying notes to condensed financial statements.
| 7 |
Aclarion, Inc.
Condensed Statements of Cash Flows
(Unaudited)
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| 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 | ||||||||
| Loss on exchange of debt | ||||||||
| Loss on extinguishment of debt | ||||||||
| Amortization of deferred issuance costs | ||||||||
| Change in fair value related to warrants and derivative | ( | ) | ( | ) | ||||
| Non-cash interest related to bridge funding | ||||||||
| Change in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepaids and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued and other liabilities | ( | ) | ( | ) | ||||
| Note payable, net of discount | ( | ) | ||||||
| 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 | ||||||||
| Common stock cash issuance costs | ( | ) | ( | ) | ||||
| Exercise of Series C warrants | ||||||||
| Redemption of Series B Preferred stock | ( | ) | ||||||
| Issuance of common stock and warrants related to public offering, net deductions | ||||||||
| Proceeds from common stock and warrant RegA+ offering | ||||||||
| Proceeds from sales of C-Series preferred stock and warrants | ||||||||
| Proceeds from equity line | ||||||||
| Repayment of promissory notes | ( | ) | ||||||
| Bridge fund cash issuance costs | ( | ) | ||||||
| Preferred stock cash issuance costs | ( | ) | ||||||
| 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 | $ | $ | ||||||
| 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 | $ | $ | ||||||
| Dividends accrued on preferred shares | $ | $ | ||||||
| Exchange of indebtedness for preferred shares | $ | $ | ||||||
| Issuance of common shares in exchange for debt | $ | $ | ||||||
| Issuance of bridge fund commitment shares | $ | $ | ||||||
| Accrued issuance costs related to preferred stock | $ | $ | ||||||
| Accrued issuance costs related to common stock | $ | $ | ||||||
| Designation of prepaid expenses to common stock issuance costs | $ | $ | ||||||
| Issuance of common shares related to restricted stock units | $ | $ | ||||||
See accompanying notes to condensed financial statements.
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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 generally accepted accounting principles 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 required by U.S. GAAP for complete financial statements. The interim condensed financial statements reflect all adjustments that are of a normal recurring nature and that are considered necessary for a fair representation of the results for the periods presented and should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2024, which include a complete set of footnote disclosures, including our significant accounting policies. The December 31, 2024, condensed balance sheet was derived from the December 31, 2024, audited financial statements. They should be read in conjunction with the financial statements and notes thereto included in our Annual report on Form 10-K, filed with the SEC on April 9, 2025. The results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.
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.
| 9 |
Unless described otherwise, all references to common stock, share data, per share data and related information contained in these 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 financial statements for all periods presented to reflect the 2025 Stock Splits.
The following tables present selected share information reflecting on a retroactive basis the reverse stock splits as of and for the year ended December 31, 2024:
| Schedule of equity statement information from reverse stock split | ||||
| December 31, 2024 | ||||
| Common shares issued and outstanding - pre-2025 splits, | $ | |||
| Common shares issued and outstanding - post-2025 splits, | $ | * | ||
| Additional paid-in capital - pre-2025 splits | $ | |||
| Additional paid-in capital - post-2025 splits | $ | |||
| * |
| Schedule of share and net loss per share from reverse stock split | ||||
| Year Ended December 31, 2024 | ||||
| Weighted average shares outstanding, basic and diluted - pre-2025 splits | ||||
| Weighted average shares outstanding, basic and diluted - post-2025 splits | ||||
| Basic and diluted net loss per shares attributable to common stockholders - pre-2025 splits | $ | ( | ) | |
| Basic and diluted net loss per shares attributable to common stockholders - post-2025 splits | $ | ( | ) |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The 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.
Valuation of Derivative Instruments
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging: Contracts on an Entity’s Own Equity, addresses whether an equity-linked contract qualifies as equity in the entity’s financial statements. Agreements where an entity has insufficient authorized and unissued shares to settle the contract generally are accounted for as a liability and marked to fair value through earnings each reporting period. The Company evaluates its financial instruments to determine if such instruments are liabilities or contain features that qualify as embedded derivatives. For financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then revalued at each reporting date, with changes in the fair value reported as charges or credits to income.
| 10 |
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 and derivative liabilities are estimated using level 3 inputs (see Note 3).
Derivative Financial Instruments
The Company has derivative financial instruments that are not hedges and do not qualify for hedge accounting. Changes in the fair value of these instruments are recorded in other income (expenses), on a net basis in the Condensed Statements of Operations.
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 $
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, 2025 and December 31, 2024, the Company had $
| 11 |
Accounts Receivable, Less Allowance for Credit Losses
The Company estimates an allowance for credit
losses based upon an evaluation of the current status of receivables, historical experience, and other factors as necessary. It is reasonably
possible that the Company’s estimate of the allowance for credit losses will change. The allowance for credit losses was $
Revenue Recognition
Revenues are recognized when a contract with a customer exists, and at that point in time when we have delivered a Nociscan report to our customer. Revenue is recognized in the amount that reflects the negotiated consideration expected to be received in exchange for those reports. Following the delivery of the report, the company has no ongoing obligations or services to provide to the customer. Customers pay no other upfront, licensing, or other fees. To date, our reports are not reimbursable under any third-party payment arrangements with the exception of three private health insurance providers in the United Kingdom. The Company invoices its customers based on the billing schedules in its sales arrangements. Payment terms range generally from 30 to 90 days from the date of invoice.
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, 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. The results are based on the Company’s method of internal reporting and are not necessarily in conformity with accounting principles generally accepted in the United States. 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.
For single reportable segment-level financial information, total assets, and significant non-cash transactions, see Financial Statements.
| 12 |
Liquidity and Capital Resources
As of September 30, 2025, we had cash and
cash equivalents 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.
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 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.
Deferred Financing Costs
The Company capitalizes certain legal, accounting,
and other fees and costs that are directly attributable to in-process equity financings as deferred offering costs until such financings
are completed. Upon the completion of an equity financing, these costs are recorded as a reduction of additional paid-in capital of the
related offering. Upon the completion of the two registered direct offerings and a public offering during the nine months ended September
30, 2025, approximately $
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.
| 13 |
NOTE 3: FAIR VALUE MEASUREMENTS
In accordance with ASC 820 (Fair Value Measurements and Disclosures), the Company uses various inputs to measure the outstanding warrants on a recurring basis to determine the fair value of the liability.
| Schedule of fair value on a recurring basis | ||||||||||||||||
| Fair value measured as of September 30, 2025 | ||||||||||||||||
| Fair value on | Quoted prices in active markets | Significant other observable inputs | Significant unobservable inputs | |||||||||||||
| September 30, 2025 | (Level 1) | (Level 2) | (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, 2025.
The following table presents changes in Level 3 liabilities measures at fair value for the three months ended September 30, 2025. 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 level 3 measured at fair value | ||||||||||||
| Warrant Liability | Liability to Issue Commitment Shares | Total | ||||||||||
| Balance - December 31, 2024 | $ | $ | $ | |||||||||
| Change in fair value | ( | ) | ( | ) | ( | ) | ||||||
| Balance - September 30, 2025 | $ | $ | $ | |||||||||
NOTE 4. RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Pronouncements Recently Adopted
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for the Company for the year ended December 31, 2024 and early adoption is permitted. The company adopted the new standard effective December 31, 2024 on a retrospective basis. The adoption did not have any impact on the Company’s financial position, results of operations or cash flows. Refer to Note 2, Segment Disclosure, for details.
| 14 |
Accounting Pronouncements Not Yet Effective
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal taxes, with further disaggregation required for significant individual jurisdictions. ASU 2023-09 is effective for the Company for the year ending December 31, 2025 and early adoption is permitted. The guidance allows for adoption using either prospective or retrospective transition method. The company is evaluating the impact that the updated standard will have on its financial statement disclosures.
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 the disclosure requirements for specific costs and expenses. ASU 2024-03 is effective for the Company for the year ending December 31, 2027 and early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The company does not expect that the guidance will have material impacts on its financial position, results of operations or cash flows. The company is evaluating the impact that the updated standard will have on its financial statement disclosures.
With the exception of the new standards discussed above, there have been no other new accounting pronouncements that have significance, or potential significance, to the Company’s financial position, results of operations and cash flows.
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.
NOTE 6. SUPPLEMENTAL FINANCIAL INFORMATION
Balance Sheets
Prepaids expenses:
| Schedule of prepaid and other current assets | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Prepaid D&O Insurance | $ | $ | ||||||
| Prepaid Health Insurance | ||||||||
| Prepaid Other Insurance | ||||||||
| Prepaid Clinical | ||||||||
| Prepaid Annual Fees | ||||||||
| Prepaid NASDAQ Annual Fees | ||||||||
| Prepaid Royalties | ||||||||
| Prepaid Consulting | ||||||||
| Prepaid - other | ||||||||
| $ | $ | |||||||
| 15 |
Other current assets:
| Schedule of other current assets | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Short term deposits | $ | $ | ||||||
| Deferred offering costs | ||||||||
| $ | $ | |||||||
Accounts payable:
| Schedule of accounts payable | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Accounts payable | $ | $ | ||||||
| Credit cards payable | ||||||||
| $ | $ | |||||||
Accrued and other liabilities:
| Schedule of accrued and other liabilities | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Accrued bonus | $ | $ | ||||||
| Accrued audit and legal expenses | ||||||||
| Accrued board compensation | ||||||||
| Investment banking and related fees | ||||||||
| Other accrued expenses and liabilities | ||||||||
| $ | $ | |||||||
NOTE 7. LEASES
The Company had
NOTE 8. INTANGIBLE ASSETS
The Company’s intangible assets are as follows:
| Schedule of intangible assets | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| 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 charged to research and development.
Amortization expense related to purchased intangible
assets was $
| 16 |
Patents and trademarks are reviewed at least annually for impairment. No impairment was recorded through September 30, 2025, and December 31, 2024, respectively.
Future amortization of intangible assets is as follows:
| Schedule of future amortization of intangible assets | ||||
| 2025 (remainder of 2025) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 and beyond | ||||
| Total | $ |
NOTE 9. SHORT TERM NOTES AND CONVERTIBLE DEBT
As of December 31, 2024, there were
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 $
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 $
| 17 |
NOTE 11. STOCKHOLDERS’ EQUITY
The Company filed an Amended and Restated Certificate
of Incorporation on April 21, 2022, as part of the IPO. The Company is authorized to issue two classes of stock to be designated, respectively,
“Common Stock” and “Preferred Stock.” The total number of shares which the Company is authorized to issue is
two hundred twenty million (220,000,000) shares. Two hundred million (
2024 Public Offering
On February 27, 2024, the Company completed a
public offering of
Subscription Agreements
On August 12, 2024, we entered into a subscription
agreement with an institutional investor, pursuant to which the Company agreed to issue and sell to the investor
On August 15, 2024, we entered into a subscription
agreement with an institutional investor, pursuant to which the Company agreed to issue and sell to the investor
On August 27, 2024, we entered into a subscription
agreement with certain accredited investors to which the Company agreed to issue and sell to the investors
All of the foregoing shares were offered at-the-market under NASDAQ rules and pursuant to the Company’s Form 1-A initially filed with the SEC on June 11, 2024 and qualified on June 24, 2024.
In connection with the August 27, 2024, subscription
agreement, the Company also entered into a warrant purchase agreement with the accredited investors pursuant to which the Company issued
warrants to purchase up to
| 18 |
On September 30, 2024, as a result of the securities
purchase agreement for the Company’s Series C Preferred Stock noted below, the exercise price for the warrants was adjusted to $
White Lion Equity Line Agreement
The Company has had an
equity line common stock purchase agreement (the “Equity Line Purchase Agreement”) with White Lion Capital, LLC (“White
Lion”) since 2023. Pursuant to the Equity Line Purchase Agreement, during the year ended December 31, 2024, the Company issued to
White Lion
Pursuant to the Equity Line Agreement, the Company
has the right, but not the obligation to require White Lion to purchase, from time to time, up to $
Ascendiant Capital Markets, LLC Sales Agreement
On September 24, 2024, the Company entered into an At-The-Market Issuance Sales Agreement (the “Sales Agreement”) with Ascendiant Capital Markets, LLC, (“Ascendiant”) as sales agent, to sell shares of its common stock, par value $0.00001 per share, having an aggregate offering price of up to $10 million from time to time, through an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended. The aggregate market value of shares of the Company’s common stock eligible for sale under the Sales Agreement will be subject to the limitations of General Instruction I.B.6 of Form S-3, to the extent required under such restriction. The Company is not obligated to make any sales of shares of common stock under the Sales Agreement. The Company and Ascendiant each have the right, in its sole discretion, to terminate the Sales Agreement pursuant to the terms and subject to the conditions set forth in the Sales Agreement.
The Company is required to pay Ascendiant a commission of up to 3.0% of the gross proceeds from the sales of its common stock sold through Ascendiant under the Sales Agreement. The Company will also reimburse Ascendiant for certain expenses incurred in connection with the Sales Agreement.
During the year ended December 31, 2024, the Company
sold
On January 3, 2025, the Company terminated the Sales Agreement.
Issuances of Preferred Stock
Series B Preferred Stock
On August 14, 2024, the Company entered into an
exchange agreement (the “Exchange Agreement”) with accredited investors to exchange $
Holders of the Series B Preferred Stock are entitled to dividends in the amount of 10% per annum, payable quarterly.
| 19 |
On January 22, 2025, the Company redeemed all
Series B Preferred Stock and related accrued dividends with a cash payment of $
Series C Preferred Stock Financing
On September 30, 2024, the Company entered into
a securities purchase agreement with accredited investors for a convertible preferred stock and warrants financing. The Company received
$
During the fourth quarter of 2024, certain holders
converted
During the three months ended March 31, 2025,
certain holders converted the remaining
During the three months ended March 31, 2025,
holders of the Series C warrants exercised
January 2025 Registered Direct Public Offerings
January 3, 2025
On January 3, 2025, the Company sold in a registered
direct offering an aggregate of
January 30, 2025
On January 30, 2025, the Company sold in a registered
direct offering an aggregate of
Units Offering of Common Shares and Warrants
On January 15, 2025, the Company sold, in an underwritten
public offering, an aggregate of (i)
| 20 |
The public offering price for each Unit (consisting
of a common share (or Pre-Funded Warrant in lieu thereof) and accompanying Common Warrants was $
Warrants
The Pre-Funded Warrants had an exercise price
of $
Approval of A and B Warrant Shares
On March 5, 2025, the Company convened a Special
Meeting of Stockholders. Stockholders approved the full issuance of shares of common stock issuable by the Company upon exercise of the
Series A Common Warrants and the Series B Common Warrants. Following March 5, 2025, holders of Series B warrants have exercised substantially
all of our outstanding Series B warrants using the alternative cashless exercise (“ACE”) feature included in those warrants.
The Company has issued approximately
Warrants
The following table summarizes the Company’s outstanding warrants as of September 30, 2025. 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) |
| 21 |
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, | ||||||||
| 2025 | 2024 | |||||||
| 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 | ||||||||
| Weighted average shares issuable for vested restricted stock units and pre-funded warrants | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| 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 | ||||||||
| Weighted average shares issuable for vested restricted stock units and pre-funded warrants | ||||||||
The following 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, | ||||||||
| 2025 | 2024 | |||||||
| Preferred stock (as-converted) | ||||||||
| Warrants | ||||||||
| Restricted stock units | ||||||||
| Stock options | ||||||||
| 22 |
NOTE 13. STOCK BASED COMPENSATION
2022 Aclarion Equity Incentive Plan
On April 21, 2022, in connection with the IPO,
the Company’s 2022 Aclarion Equity Incentive Plan, or “2022 Plan”, went into effect. Our board of directors appointed
the compensation committee of our board of directors as the committee under the 2022 Plan with the authority to administer the 2022 Plan.
At the initiation of the 2022 Plan, the aggregate number of our shares of common stock were available to be issued or used for reference
purposes was
At the Annual Meeting of Stockholders held December
31, 2024, stockholders approved an amendment to the 2022 Plan to increase the number of shares reserved for issuance by 1,500,000 (166
post-2025 Stock Splits), thereby increasing the number of shares issuable under the 2022 Plan from 195,695 (22 post-2025 Stock Splits)
to
As of the year ended December 31, 2024 the aggregate
number of our shares of common stock that may be issued or used for reference purposes under the 2022 Plan was
Options granted under the 2022 Plan may be incentive stock options or non-statutory stock options, as determined by the administrator at the time of grant of an option. Restricted stock may also be granted under the 2022 Plan. The options vest in accordance with the grant terms and are exercisable for a period of up to 10 years from grant date.
Inducement Grant Outside the 2022 Plan
On September 2, 2025, the Company granted a stock
option to its incoming Chief Financial Officer as an inducement award in accordance with Nasdaq Listing Rule 5635(c)(4). This award was
not granted pursuant to the 2022 Plan but was structured to mirror the terms and conditions of the 2022 Plan. The inducement grant provides
for an option to purchase
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.
| 23 |
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.
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 10-year U.S. Treasury yield curve on the date of grant.
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, 2024 | $ | |||||||||||
| Options granted | – | |||||||||||
| Options exercised | – | |||||||||||
| Options forfeited/expired | – | |||||||||||
| Balance at September 30, 2025 | $ | |||||||||||
| Exercisable at December 31, 2024 | $ | |||||||||||
| Exercisable at September 30, 2025 | $ | |||||||||||
The aggregate intrinsic value of options outstanding
at September 30, 2025 is $
As of September 30, 2025, there was approximately
$
Restricted Stock Units
As of September 30, 2025, there was
| 24 |
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, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Sales and marketing | $ | $ | $ | $ | ||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
NOTE 14. SUBSEQUENT EVENTS
October 2025 Registered Direct Public Offering
On October 14, 2025, the Company sold, in a registered direct public offering, an aggregate of (i) 64,000 shares of the Company’s common stock, and (ii) pre-funded warrants (the “Pre-funded Warrants”) to purchase up to 236,000 shares of common stock, at an offering price of $8.36 per share.
The Pre-funded Warrants were immediately exercisable, with exercise price of $.00001 per share. 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 $2.5 million, before deducting the placement agent fees of 7% of the aggregate gross proceeds and other offering expenses payable by the Company. The Company intends to use the net proceeds from the offering to fund market development and clinical evidence, product development and quality, and general and administration support, and other general corporate purposes.
As of November 10, 2025, 25,000 Pre-funded Warrants have been exercised.
| 25 |
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, 2024, which was filed with the SEC on April 9, 2025. 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, 2024, which was as filed with the SEC on April 9, 2025, 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, 2025, and 2024:
The following table summarizes our results of operations for the three months ended September 30, 2025, and 2024.
| Three Months Ended September 30, | ||||||||||||
| 2025 | 2024 | $ Change | ||||||||||
| Revenue | ||||||||||||
| Revenue | $ | 18,942 | $ | 14,407 | $ | 4,535 | ||||||
| Cost of revenue | 14,556 | 21,332 | (6,776 | ) | ||||||||
| Gross profit (loss) | 4,386 | (6,925 | ) | 11,311 | ||||||||
| Operating expenses: | ||||||||||||
| Sales and marketing | 632,409 | 232,775 | 399,634 | |||||||||
| Research and development | 302,037 | 195,797 | 106,240 | |||||||||
| General and administrative | 900,904 | 860,461 | 40,443 | |||||||||
| Total operating expenses | 1,835,350 | 1,289,033 | 546,317 | |||||||||
| Loss from operations | (1,830,964 | ) | (1,295,958 | ) | (535,006 | ) | ||||||
| Other income (expense): | ||||||||||||
| Interest expense | – | (71,527 | ) | 71,527 | ||||||||
| Loss on exchange of debt | – | (6,585 | ) | 6,585 | ||||||||
| Gain (loss) on extinguishment of debt | – | – | – | |||||||||
| Changes in fair value of warrant and derivative liabilities | 1 | 7,591 | (7,590 | ) | ||||||||
| Penalties and settlements | – | – | – | |||||||||
| Other, net | 124,669 | 303 | 124,366 | |||||||||
| Total other income (expense) | 124,670 | (70,218 | ) | 194,888 | ||||||||
| Loss before income taxes | (1,706,294 | ) | (1,366,176 | ) | (340,118 | ) | ||||||
| Income tax provision | – | – | – | |||||||||
| Net loss | $ | (1,706,294 | ) | $ | (1,366,176 | ) | $ | (340,118 | ) | |||
| Dividends accrued for preferred stockholders | – | (12,142 | ) | 12,142 | ||||||||
| Net loss allocable to common stockholders | $ | (1,706,294 | ) | $ | (1,378,318 | ) | $ | (327,976 | ) | |||
| Net loss per share allocable to common shareholders | $ | (2.93 | ) | $ | (1,321.49 | ) | $ | (0.56 | ) | |||
| Weighted average shares of common stock outstanding, basic and diluted | 582,371 | 1,043 | 581,328 | |||||||||
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Total Revenues.
Total revenues for the three months ended September 30, 2025 were $18,942, an increase of $4,535 or 31.5%, compared to $14,407 for the three months ended September 30, 2024. This increase in revenues 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 $14,556 for the three months ended September 30, 2025, compared to $21,332 for the same period ended September 30, 2024, a decrease of $6,776 or 31.8%. This decrease was primarily due to a reduced allocation of hosting fees to cost of revenue and a change in revenue mix that reduced partner fees.
Sales and Marketing.
Sales and marketing expenses include post-market clinical and reimbursement consulting, salaries, website support, press releases, conferences, travel, and shared-based compensation. Sales and marketing expenses were $632,409 for the three months ended September 30, 2025, compared to $232,775 for the same period in 2024, an increase of $399,634 or 171.7%. For the three months ended September 30, 2025, post-market clinical expenses were $197,227, compared to $78,657 for the same period in 2024, an increase of $118,570, primarily due to initiation the Clarity trial with the first patient enrolled in June 2025. Product marketing consulting expenses were $190,242 for the three months ended September 30, 2025, compared to $10,755 for the same period in 2024, an increase of $179,487, reflecting expanded use of external consultants. Bonus expense increased by $53,245 for the three months ended September 30, 2025, compared to $0 for the same period in 2024, due to accruals for incentive-based performance payouts. Travel expenses $35,087 for the three months ended September 30, 2025, compared to $13,381 for the same period in 2024, an increase $21,706, primarily to support the local coverage decisions in the UK market. These increases were partially offset by a $17,091 decrease in restricted stock vesting expense for the three months ended September 30, 2025, as no restricted stock expense was recognized, compared to $17,091 for the corresponding period in 2024, resulted from the expiration of previously granted restricted stock awards.
Research and Development.
Research and development expenses were $302,037 for the three months ended September 30, 2025, compared to $195,797 for the three months ended September 30, 2024, representing an increase of $106,240 or 54.3%. For the three months ended September 30, 2025, patent maintenance fees were $29,951, compared to $0 for the same period in 2024, an increase of $29,951, as the Company advanced protection of its intellectual property portfolio. For the three months ended September 30, 2025, bonus expense was $44,343, compared to a reversal of $1,451 for the same period in 2024, an increase of $45,794, due to accruals for incentive-based performance payouts. Quality system and regulatory consulting expenses were $45,377 for the three months ended September 30, 2025, compared to $26,229 for the same period in 2024, and increase of $19,148, driven by expanded regulatory compliance and documentation activities.
General and Administrative.
General and administrative expenses were $900,904 for the three months ended September 30, 2025, compared to $860,461 for the same period in 2024, an increase of $40,443 or 4.7%. For the three months ended September 30, 2025, the Company accrued $138,739 in bonus under its 2025 incentive program, compared to no bonus accrual for the corresponding period in 2024. In addition, for the three months ended September 30, 2025, the Company incurred $99,375 in insurance costs related to directors and officers (“D&O”) coverage, compared to $72,434 for the same period in 2024, an increase of $26,941, primarily due to expanded policy coverage and higher renewal premiums. These increases were partially offset by $141,959 decrease in investor relations expenses, which totaled $31,009 for the three months ended September 30, 2025, compared to $172,968 for the same period in 2024, primarily attributable to reduced retail marketing and external communications consulting.
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Other Income (Expense).
For the three months ended September 30, 2025, the Company recognized $124,755 in interest income on money market deposits, attributable to funds raised during the first quarter ended March 31, 2025. No interest income was recognized during the comparable period in 2024.
For the three months ended September 30, 2025, the Company did not recognize any interest expense or discount amortization, compared to $11,300 and $60,277, respectively, for the same period in 2024. The decrease was primarily due to the absence of debt obligations in 2025, as the related borrowings were incurred in by the Company in 2024.
For the Nine Months Ended September 30, 2025, and 2024:
The following table summarizes our results of operations for the nine months ended September 30, 2025, and 2024.
| Nine Months Ended September 30, | ||||||||||||
| 2025 | 2024 | $ Change | ||||||||||
| Revenue | ||||||||||||
| Revenue | $ | 57,251 | $ | 35,492 | $ | 21,759 | ||||||
| Cost of revenue | 52,214 | 64,102 | (11,888 | ) | ||||||||
| Gross profit (loss) | 5,037 | (28,610 | ) | 33,647 | ||||||||
| Operating expenses: | ||||||||||||
| Sales and marketing | 1,278,759 | 638,869 | 639,890 | |||||||||
| Research and development | 770,659 | 636,940 | 133,719 | |||||||||
| General and administrative | 3,015,016 | 2,402,408 | 612,608 | |||||||||
| Total operating expenses | 5,064,434 | 3,678,217 | 1,386,217 | |||||||||
| Loss from operations | (5,059,397 | ) | (3,706,827 | ) | (1,352,570 | ) | ||||||
| Other income (expense): | ||||||||||||
| Interest expense | – | (535,199 | ) | 535,199 | ||||||||
| Loss on exchange of debt | – | (1,073,317 | ) | 1,073,317 | ||||||||
| Gain (loss) on extinguishment of debt | 73,272 | (111,928 | ) | 185,200 | ||||||||
| Changes in fair value of warrant and derivative liabilities | 11,767 | 330,632 | (318,865 | ) | ||||||||
| Penalties and settlements | (672,500 | ) | – | (672,500 | ) | |||||||
| Other, net | 302,371 | 93,284 | 209,087 | |||||||||
| Total other income (expense) | (285,090 | ) | (1,296,528 | ) | 1,011,438 | |||||||
| Loss before income taxes | (5,344,487 | ) | (5,003,355 | ) | (341,132 | ) | ||||||
| Income tax provision | – | – | – | |||||||||
| Net loss | $ | (5,344,487 | ) | $ | (5,003,355 | ) | $ | (341,132 | ) | |||
| Dividends accrued for preferred stockholders | (6,683 | ) | (12,142 | ) | 5,459 | |||||||
| Net loss allocable to common stockholders | $ | (5,351,170 | ) | $ | (5,015,497 | ) | $ | (335,673 | ) | |||
| Net loss per share allocable to common shareholders | $ | (11.60 | ) | $ | (5,893.65 | ) | $ | (0.73 | ) | |||
| Weighted average shares of common stock outstanding, basic and diluted | 461,341 | 851 | 460,490 | |||||||||
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Total revenues.
Total revenues for the nine months ended September 30, 2025, were $57,251, which was an increase of $21,759 or 61.3%, from $35,492 for the nine months ended September 30, 2024. 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 $52,214 for the nine months ended September 30, 2025, compared to $64,102 for the nine months ended September 30, 2024, a decrease of $11,888 or 18.5%. This decrease was primarily due to a reduced allocation of hosting fees to cost of revenue and a change in revenue mix that reduced partner fees.
Sales and Marketing.
Marketing expenses include post-market clinical and reimbursement consulting, salaries, website support, press releases, conferences, travel, and share-based compensation. Sales and marketing expenses totaled $1,278,759 for the nine months ended September 30, 2025, compared to $638,869 for the nine months ended September 30, 2024, representing an increase of $639,890 or 100.2%. The increase was primarily driven by higher post-market clinical expenses, which was $488,279 for the nine months ended September 30, 2025, compared to $149,882 for the same period in 2024, an increase of $338,394, primarily related to costs associated with the initiation of the Clarity trial, for which the first patient enrolled in June 2025. Product marketing consulting expenses increased by $141,718, to $213,253 for the nine months ended September 30, 2025, compared to $71,535 for the same period in 2024, reflecting expanded use of external marketing consultants. Bonus expense increased by $71,995 for the nine months ended September 30, 2025, compared to $0 for the same period in 2024, due to accruals for incentive-based performance payouts. Travel expenses increased to $103,387 for the nine months ended September 30, 2025, from $37,661 in the prior-year period, an increase of $65,726, primarily related to activities supporting local coverage determinations in the United Kingdom. These increases were partially offset by a $57,824 decrease in share-based compensation expense, due to the expiration of previously granted restricted stock awards. Share-based compensation expense was $0 for the nine months ended September 30, 2025, compared to $57,824 for the same period in 2024.
Research and Development.
Research and development expenses were $770,659 for the nine months ended September 30, 2025, compared to $636,940 for the nine months ended September 30, 2024, representing an increase of $133,719 or 21.0%. The increase was primarily attributable to higher patent maintenance fees, which totaled $41,970 for the nine months ended September 30, 2025, compared to $0 for the same period in 2024, reflecting the Company’s efforts to advance protection of its intellectual property portfolio. In addition, bonus expense increased by $71,800, to $70,349 for the nine months ended September 30, 2025, compared to a reversal of $1,451 in the corresponding period in 2024, due to accruals for incentive-based performance payouts. Quality system and regulatory consulting expenses were $158,842 for the nine months ended September 30, 2025, compared to $136,185 for the same period in 2024, an increase of $22,657, primarily resulting from expanded regulatory compliance and documentation activities. We expect to see research and development expenses to continue to increase in the coming quarters as our enrollment in the CLARITY Trial continues to expand.
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General and Administrative.
General and administrative expenses were $3,015,016 for the nine months ended September 30, 2025, compared to $2,402,408 for the nine months ended September 30, 2024, representing an increase of $612,608 or 25.5%. The increase was primarily driven by higher accruals under the Company’s 2025 incentive bonus program, which totaled $293,427 for the nine months ended September 30, 2025, compared to a reversal of $5,309 for the same period in 2024, an increase of $298,736, due to incentive-based performance payout accruals. Insurance expenses, primarily related to directors and officers (“D&O”) coverage, increased to $273,245 for the nine months ended September 30, 2025, from $217,365 in the prior-year period, an increase of $55,880, reflecting expanded policy coverage and higher renewal premiums. The Company also incurred litigation and financial accounting advisory expenses of $100,534 and $269,009, respectively, for the nine months September 30, 2025, compared to $0 and $166,142, respectively, for the same period in 2024, representing increases of $100,534 and $102,867 respectively. These increases were partially offset by a $50,570 decrease in investor relations expenses, which totaled $237,398 for the nine months ended September 30, 2025, compared to $287,968 for the same period in 2024. The decrease was primarily attributable to lower retail marketing activities and reduced use of external communications consultants.
Other Income (Expense).
Interest Expense
Interest expense was $0 for the nine months ended September 30, 2025, compared to $535,199 for the same period in 2024. The decrease was attributable to the retirement of all unsecured non-convertible notes in 2024.
Loss On Exchange of Debt and Gain (Loss) On Extinguishment Of Debt
During the nine months ended September 30, 2024, the Company incurred losses on two transactions undertaken to reduce outstanding debt. The first transaction occurred between January 22 and January 29, 2024, when the Company entered into a series of exchange agreements with investors to issue an aggregate of 644,142 shares of common stock (71 adjusted for 2025 Stock Splits) in exchange for $1,519,779 of principal and accrued interest on the notes. This transaction accelerated the recognition of the related note discounts, resulting in a charge of $1,073,317. The second transaction occurred on March 6, 2024, when the Company repaid $300,974 of principal and accrued interest on the notes. This transaction also accelerated the recognition of the related note discounts and resulted in a charge $111,928.
The Company recognized a gain of $73,272 during the nine months ended September 30, 2025, in connection with the retirement of an obligation associated with commitment shares.
Changes In Fair Value Of Warrant And Derivative Liabilities
The Company’s warrant and derivative liabilities are measured at fair value at each reporting date. For the nine months ended September 30, 2025, the Company recorded a favorable fair value adjustment of $11,766, compared to a favorable adjustment of $330,632 for the nine months ended September 30, 2024. The derivative liability was fully retired in 2024 in connection upon the settlement of all unsecured non-convertible notes.
Penalties And Settlements
In the nine months ended September 30, 2025, the Company recorded $672,500 in Penalties and Settlements. In March 2025 the Company paid $687,500 to settle a dispute under the "fee tail" provision of an investment banking agreement that the Company had previously entered into. This was netted against a $15,000 favorable accounts payable settlement.
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Other, Net
Other net income was $302,371 for the nine months ended September 30, 2025, primarily reflecting interest income on money market deposits following the Company’s fundraising activities in the first quarter of 2025. In comparison, other net income of $92,985 for the nine months ended September 30, 2024, primarily reflected $117,985 favorable discounts on accounts payable, partially offset by a $25,000 penalty paid to investors related to the untimely registration of certain commitment shares.
Critical Accounting Policies and Use of Estimates
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our 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 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.
While our significant accounting policies are described in more detail in the notes to our financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our 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.
Equity-Based Compensation
Certain of our employees and consultants have received grants of common stock options and RSUs in our company. These awards are accounted for in accordance with guidance prescribed for accounting for equity-based compensation. Based on this guidance and the terms of the awards, the awards are equity classified.
Until our April 2022 initial public offering, we were a private company with no active public market for our common equity. Therefore, we had periodically determined the overall value of our company and the estimated per share fair value of our common equity at their various dates using contemporaneous valuations performed in accordance with the guidance outlined in the American Institute of CPA’s Practice Aid. Since a public trading market for our common stock has been established in connection with the completion of our initial public offering, it will no longer be necessary for us to estimate the fair value of our common stock in connection with our accounting for equity awards we may grant, as the fair value of our common stock will be its public market trading price.
For financial reporting purposes, we performed common stock valuations as a private company with the assistance of a third-party specialist. Subsequent to the initial public offering, the fair value of the Company’s common stock underlying its equity awards is based on the quoted market price of the Company’s common stock on the grant date.
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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, 2025, we had cash and cash equivalents of $11,366,336, including $25,000 of restricted cash.
During the nine months ended September 30, 2025, the Company raised an aggregate of $20,058,913 of gross proceeds through a combination of a public offering of units ($14,554,545) consisting of common shares, A warrants, and B warrants, two registered direct offerings ($5,167,927) of common stock, and the exercise of Series C Preferred warrants ($336,441).
On October 14, 2025, the Company sold, in a registered direct public offering, an aggregate of (i) 64,000 shares of the Company’s common stock, and (ii) pre-funded warrants (the “Pre-funded Warrants”) to purchase up to 236,000 shares of common stock, at an offering price of $8.36 per share. The Pre-funded Warrants were immediately exercisable, with exercise price of $.00001 per share.
The aggregate gross proceeds to the Company from this offering were approximately $2.5 million, before deducting the placement agent fees of 7% of the aggregate gross proceeds and other offering expenses payable by the Company.
We believe our current cash will fund our operating expenses and capital expenditure requirements through the first quarter of 2027. Management is actively managing our cash position and continually working to secure additional long-term funding.
Cash flows
The following table summarizes our sources and uses of cash for each of the periods presented:
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (5,536,766 | ) | $ | (4,348,747 | ) | ||
| Net cash used in investing activities | (162,441 | ) | (261,220 | ) | ||||
| Net cash provided by financing activities | 16,601,882 | 4,900,996 | ||||||
| Net increase in cash and cash equivalents | $ | 10,902,675 | $ | 291,029 | ||||
Operating activities
During the nine months ended September 30, 2025, the Company used $5,536,766 in cash for operating activities, representing an increase in cash use of $1,188,019, compared to $4,348,747 used during the same period in 2024. The increase in cash used in operating activities was primarily attributable to a higher net loss after adjustments for non-cash items. For the nine months ended September 30, 2025, the Company recognized a net loss after non-cash adjustments of $4,982,799, representing an increase of $1,766,305, compared to an adjusted net loss of $3,216,494 for the same period in 2024. The year-over-year increase in adjusted net loss was primarily due to the absence of non-cash adjustment related to loss on exchange of debt in 2025, compared to non-cash addback of $1,073,317 recorded in 2024.
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During the nine months ended September 30, 2025, the Company used $164,100 in cash related to prepaid and other current assets, representing a decrease in cash used of $165,206, compared to $329,306 used during the same period in 2024. The decrease was primarily attributable to lower advance payments made to vendors and service providers, as well as a reduction in clinical prepayments, compared to the same period in 2024.
During the nine months ended September 30, 2025, the Company used $214,007 in cash related to accounts payable, representing a decrease in cash used of $229,061 compared to $443,068 used during the same period in 2024. This decrease was primarily due to the timing of vendor payments and lower outstanding payables balances compared to the prior-year period.
Investing activities
During the nine months ended September 30, 2025, cash used in investing activities was $162,441, a decrease in cash used of $98,779, compared to cash used of $261,220 during the same period in 2024, mainly due to lower expenditures related to patent and license filings, partially offset by purchases of computer equipment.
Financing activities
During the nine months ended September 30, 2025, the Company raised an aggregate of $20,058,913 of gross proceeds through a combination of a public offering of units ($14,554,545) consisting of common shares, A warrants, and B warrants, two registered direct offerings ($5,167,927) of common stock, and the exercise of Series C Preferred warrants ($336,441).
January 2025 Registered Direct Public Offerings
On January 3, 2025, the Company sold in a registered direct offering an aggregate of 3,380,276 shares (374 shares post-2025 Stock Splits) of its common stock at a price of $0.142 per share ($1,284.39 post-2025 Stock Splits). The net proceeds to the Company of this offering were approximately $450,000.
On January 30, 2025, the Company sold in a registered direct offering an aggregate of 506,803 shares (18,770 shares post-Second 2025 Stock Split) of its common stock at a price of $9.25 per share ($249.75 post-March 2025 stock split). The net proceeds to the Company of this offering were $4.4 million.
October 2025 Registered Direct Public Offering
On October 14, 2025, the Company sold, in a registered direct public offering, an aggregate of (i) 64,000 shares of the Company’s common stock, and (ii) pre-funded warrants (the “Pre-funded Warrants”) to purchase up to 236,000 shares of common stock, at an offering price of $8.36 per share.
The Pre-funded Warrants were immediately exercisable, with exercise price of $.00001 per share. 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 $2.5 million, before deducting the placement agent fees of 7% of the aggregate gross proceeds and other offering expenses payable by the Company. The Company intends to use the net proceeds from the offering to fund market development and clinical evidence, product development and quality, and general and administration support, and other general corporate purposes.
As of November 10, 2025, 25,000 Pre-funded Warrants have been exercised.
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Units Offering Of Common Stock And Warrants
On January 15, 2025, the Company sold, in an underwritten public offering, an aggregate of (i) 100,000 shares (11 shares post-2025 Stock Splits) of the Company’s common stock, (ii) 143,900,000 pre-funded warrants (the “Pre-Funded Warrants) (15,909 pre-funded warrants post-2025 Stock Splits) to purchase up to an aggregate of 143,900,000 common shares (15,909 shares post-2025 Stock Splits), (iii) 144,000,000 Series A Common Warrants (the “Series A Common Warrants”) (15,920 warrants post-2025 Stock Splits), and (iv) 144,000,000 Series B Common Warrants (the “Series B Common Warrants” and, together with the Series A Common Warrants, the “Common Warrants”) Each share or Pre-Funded Warrant, as applicable, was sold together with one Series A Common Warrant to purchase one share of Common Stock and one Series B Common Warrant to purchase one share of Common Stock.
The public offering price for each Unit (consisting of a common share (or Pre-Funded Warrant in lieu thereof) and accompanying Common Warrants was $0.10 ($904.50 post-2025 Stock Splits). In addition, the Company granted the underwriter an option to purchase up to an additional 21,000,000 shares (2,322 shares post-2025 Stock Splits) of our common stock (or Pre-Funded Warrants in lieu of shares of Common Stock), at the public offering price, less underwriting discounts and commissions, and up to an additional 21,000,000 (2,322 shares post-2025 Stock Splits) Series A Common Warrants and up to an additional 21,000,000 (2,322 post-2025 Stock Splits) Series B Common Warrants at a nominal price within 45 days from January 15, 2025, to cover over-allotment sales. The underwriter exercised its option to purchase 21,000,000 (2,322 post-2025 Stock Splits) Series A Common Warrants and 21,000,000 (2,322 post-2025 Stock Splits) Series B Common Warrants. The net proceeds to the Company of this offering were $13.4 million.
The Pre-Funded Warrants had an exercise price of $0.00001 ($.09 post-2025 Stock Splits) per share, were immediately exercisable and expired when exercised in full. All Pre-Funded Warrants have been exercised as of March 31, 2025. Each Series A Common Warrant will have an exercise price per share of $0.20 ($1,809.00 post-2025 Stock Splits) and will be exercisable beginning on the first trading day following the date on which Stockholder Approval is received and deemed effective (the “Initial Exercise Date” or the “Stockholder Approval Date”). The Series A Common Warrants will expire on the five-year anniversary of the Initial Exercise Date. The Series B Common Warrants will have an exercise price per share of $0.20 ($1,809.00 post-2025 Stock Splits) and will be exercisable beginning on the Initial Exercise Date. The Series B Common Warrants will expire on the two and one-half year anniversary of the Initial Exercise Date.
On March 5, 2025, the Company convened a Special Meeting of Stockholders. Stockholders approved the full issuance of shares of common stock issuable by the Company upon exercise of the Series A Common Warrants and the Series B Common Warrants. Following March 5, 2025, holders of Series B warrants have exercised substantially all of our outstanding Series B warrants using the alternative cashless exercise ("ACE") feature included in those warrants. The Company has issued approximately 14.7 million common shares (544 thousand shares adjusted for the Second 2025 Stock Split) in such Series B warrant exercises. No Series A warrants have been exercised as of September 30, 2025.
Redemption Of Series B Preferred Stock
On January 22, 2025, the Company redeemed all Series B Preferred Stock and related accrued dividends with a cash payment of $1,213,590.
Series C Preferred Stock and Warrants
During the fourth quarter of 2024, certain holders converted 126 shares of C Preferred Stock and related accrued dividends into 739,050 shares of common stock (equivalent to 82 common shares following the 2025 Stock Splits). There were 874 C Preferred shares remaining at December 31, 2024.
During the nine months ended September 30, 2025, certain holders converted the remaining 874 shares of C Preferred Stock and related accrued dividends into 6,211,618 shares of common stock (equivalent to 687 common shares following the 2025 Stock Splits).
During the nine months ended September 30, 2025, holders of the Series C warrants exercised 5,685,049 warrants (629 post-2025 Stock Splits). 4,548,039 (503 post-2025 Stock Splits) warrants were exercised at $0.03 per share ($271.35 post-2025 Stock Splits), and 1,137,010 (126 post-2025 Stock Splits) warrants were exercised at $0.1759 per share ($1,591.02 post-2025 Stock Splits). The Company received payments of $336,411 as part of the warrant exercises.
During the nine months ended September 30, 2024, net cash provided by financing activities was $4,900,996 which included gross proceeds of $1,754,032 from our equity line, $2,691,391 from a February 27, 2024 public offering, $1,000,000 from sales of C-series preferred stock and warrants, and $529,254 from common stock and warrant RegA+ offering. Cash issuance costs related to all financing activities totaled $772,707. The Company used cash in the year 2024 to retire $300,974 of outstanding promissory debt.
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Funding requirements
Developing medical technology products is a time-consuming, expensive and uncertain process that takes years to complete, and the Company may never generate meaningful revenues. Accordingly, we may need to obtain substantial additional funds to achieve our business objectives.
Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that the Company raises additional capital through the sale of equity securities, the ownership interest of existing stockholders 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, 2025.
Off-balance sheet arrangements
The Company 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 SEC.
Recently issued accounting pronouncements
The Company reviewed all recently issued standards and has determined that, other than the two new standards as disclosed in Note 4 to our condensed financial statements appearing in this quarterly report, there have been no other recent accounting pronouncements not yet effective that have significance, or potential significance, to our Condensed Financial Statements.
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 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 financial statements may not be comparable to other public companies that do not elect the extended transition period.
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.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the Exchange Act), that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), to allow for timely decisions regarding required disclosure.
As required by Exchange Act Rule 13a-15, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 as of the end of the period covered by this report. Based on the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer concluded that due to our limited resources our disclosure controls and procedures are not effective in providing material information required to be included in our periodic SEC filings on a timely basis and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure about our internal control over financial reporting discussed below.
During the nine months ended September 30, 2025, the Company continued to work with an outside firm to establish best practices to improve our required disclosure about our internal control over financial reporting.
Changes in Internal Control over Financial Reporting
Our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was not effective as of December 31, 2024, due to material weaknesses related to (1) a limited segregation of duties due to our lack of formal control documentation, limited resources, and the small number of employees, and (2) a lack of adequate accounting resources to properly account for complex accounting transactions. Management determined that these control deficiencies constitute material weaknesses, which could result in material misstatements of significant accounts and disclosures that could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected. In addition, due to limited staffing, we are not always able to detect minor errors or omissions in reporting.
The Company did engage an outside firm in the third quarter of 2023 to provide accounting support and increased segregation of duties. During the nine months ended September 30, 2025, the Company continued to work with the outside firm to establish best practices over time that enhance internal control over financial reporting.
Other than the applicable remediation efforts described above, there were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2025 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, 2024, which was filed with the SEC on April 9, 2025. There have been no material changes to our risk factors from those included in such Annual Report except as noted below. 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 which 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, 2025.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the quarter ended September 30, 2025, no
director or officer of the Company
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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 | 1/17/2025 | 10.1 | |||||||
| 3.1 | Amended and Restated Certificate of Incorporation of the Company | 8-K | 4/27/2022 | 3.1 | |||||||
| 3.2 | Certificate of Amendment dated January 3, 2024 to the Amended and Restated Certificate of Incorporation | 8-K | 1/4/2024 | 3.1 | |||||||
| 3.3 | Certificate of Amendment dated January 29, 2025 to the Amended and Restated Certificate of Incorporation | 8-K | 1/30/2025 | 3.1 | |||||||
| 3.4 | Certificate of Amendment dated March 26, 2025 to the Amended and Restated Certificate of Incorporation | 8-K | 3/28/2025 | 3.1 | |||||||
| 3.5 | Bylaws of the Company | 8-K | 4/27/2022 | 3.2 | |||||||
| 3.6 | Amendment to Bylaws dated June 12, 2024 | 8-K | 6/18/2024 | 3.1 | |||||||
| 3.7 | Series B Convertible Preferred Stock Certificate of Designations dated August 14, 2024 | 8-K | 8/16/2024 | 3.1 | |||||||
| 3.8 | Series C Convertible Preferred Stock Certificate of Designations dated September 30, 2024 | 8-K | 10/1/2024 | 3.1 | |||||||
| 4.1 | Form of Common Stock Certificate | 10-Q | 6/6/2022 | 4.1 | |||||||
| 4.2 | Form of 2022 IPO Public Warrant | 8-K | 4/27/2022 | 4.1 | |||||||
| 4.3 | Form of 2022 IPO Representative’s Common Stock Purchase Warrant | 8-K | 4/27/2022 | 4.2 | |||||||
| 4.4 | Form of May 2023 Common Stock Warrant | 8-K | 5/17/2023 | 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 | 10/1/2024 | 10.2 | |||||||
| 4.7 | February 2024 Form of Common Warrant | S-1/A | 2/6/2024 | 4.5 | |||||||
| 4.8 | February 2024 Form of Prefunded Warrant | S-1/A | 2/6/2024 | 4.6 | |||||||
| 4.9 | January 2025 Form of Series A Warrant | 8-K | 1/17/2025 | 4.1 | |||||||
| 4.10 | January 2025 Form of Series B Warrant | 8-K | 1/17/2025 | 4.2 | |||||||
| 4.11 | January 2025 Form of Pre-Funded Warrant | 8-K | 1/17/2025 | 4.3 | |||||||
| 4.12 | October 2025 Form of Pre-Funded Warrant | 8-K | 10/14/2025 | 10.2 | |||||||
| 4.13 | Description of Securities | 10-K | 4/9/2025 | 4.12 | |||||||
| 10.1 | # | Employment Agreement of Jeff Thramann | S-1/A | 3/23/2022 | 10.1 | ||||||
| 10.2 | # | Employment Agreement of Brent Ness | S-1/A | 3/23/2022 | 10.2 | ||||||
| 10.3 | # | Employment Agreement of John Lorbiecki | S-1/A | 3/23/2022 | 10.3 | ||||||
| 10.4 | # | Form of Aclarion, Inc. 2022 Equity Incentive Plan | S-1 | 1/6/2022 | 10.4 | ||||||
| 10.5 | License Agreement with UCSF the Regents of the University of California | S-1 | 1/6/2022 | 10.6 | |||||||
| 10.6 | Amendment to UC License Agreement | S-1/A | 3/4/2022 | 10.7 | |||||||
| 10.7 | ** | NuVasive Amended and Restated Commission Agreement dated February 28, 2020 | S-1/A | 3/23/2022 | 10.8 | ||||||
| 10.8 | ** | Right of First Offer Agreement | S-1/A | 3/23/2022 | 10.12 | ||||||
| 10.9 | First Amendment to Right of First Offer Agreement | S-1/A | 3/23/2022 | 10.13 |
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| 10.10 | Second Amendment to Right of First Offer Agreement | S-1/A | 3/23/2022 | 10.14 | |||||||
| 10.11 | Warrant Agent Agreement dated April 21, 2022 | 8-K | 4/27/2022 | 10.1 | |||||||
| 10.12 | Siemens Strategic Collaboration Agreement | S-1 | 1/6/2022 | 10.17 | |||||||
| 10.13 | # | Aclarion, Inc. 2022 Equity Incentive Plan – Form of Option Grant Notice and Stock Option Agreement | S-1 | 1/6/2022 | 10.20 | ||||||
| 10.14 | # | Aclarion, Inc. 2022 Equity Incentive Plan – Form of RSU Grant Notice and RSU Agreement | S-1 | 1/6/2022 | 10.21 | ||||||
| 10.15 | # | Nocimed, Inc. 2015 Stock Plan | S-8 | 5/26/2022 | 99.4 | ||||||
| 10.16 | # | Nocimed, Inc. 2015 Stock Plan – Form of Option Grant Notice and Stock Option Agreement | S-8 | 5/26/2022 | 99.5 | ||||||
| 10.17 | Form of 2023 Registration Rights Agreement | 8-K | 5/17/2023 | 10.4 | |||||||
| 10.18 | February 2024 Form of Warrant Agency Agreement | S-1/A | 2/23/2024 | 4.7 | |||||||
| 10.19 | White Lion White Lion Equity Line Common Stock Purchase Agreement dated October 9, 2023 | 8-K | 10/10/2023 | 10.1 | |||||||
| 10.20 | 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 | |||||||
| 10.21 | White Lion Equity Line Registration Rights Agreement | 8-K | 10/10/2023 | 10.2 | |||||||
| 10.22 | At-The-Market Issuance Sales Agreement with Ascendiant Capital Markets, LLC dated September 24, 2024 | 8-K | 9/24/2024 | 1.1 | |||||||
| 10.23 | Form of Registration Rights Agreement dated November 21, 2023 | 8-K | 11/22/2023 | 10.4 | |||||||
| 10.24 | Form of Registration Rights Agreement dated September 30, 2024 | 8-K | 10/1/2024 | 10.3 | |||||||
| 10.25 | # | Employment Agreement of Gregory Gould | 8-K | 9/3/2025 | 10.1 | ||||||
| 10.26 | # | Form of Inducement Stock Option Grant Notice and Inducement Stock Option Agreement | X | ||||||||
| 10.27 | October 2025 Form of Securities Purchase Agreement | 8-K | 10/14/2025 | 10.1 | |||||||
| 19.1 | Insider Trading Policy | 10-K | 4/9/2025 | 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 Certification by the Corporation’s Chief Executive Officer | X | |||||||||
| 32.2 | Section 906 Certification by the Corporation’s Chief Financial Officer | X | |||||||||
| 97.1 | Aclarion Clawback Policy | 10-K | 3/28/2024 | 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/ Gregory A Gould | ||
| Gregory A Gould | |||
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
|||
| Date: November 12, 2025 | |||
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FAQ
What were Aclarion (ACON) Q3 2025 revenues and net loss?
How much cash did Aclarion hold at quarter end?
What is Aclarion’s stated cash runway?
What were total assets, liabilities, and equity at September 30, 2025?
How many Aclarion shares were outstanding?
Did Aclarion complete reverse stock splits in 2025?
Did Aclarion raise additional capital after quarter end?
