UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number 001-40439
NeuroOne Medical Technologies Corporation
(Exact name of Registrant as specified in its charter)
(Address of principal executive offices) (Zip Code)
952-426-1383
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common Stock, $0.001 par value per share NMTC The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No☒
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. Yes☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
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 ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by an of the registrant’s
executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
No ☒
As of March 31, 2025, the last business day of the registrant’s
most recently completed second fiscal quarter, the aggregate market value of shares of the registrant’s common stock held by non-affiliates
of the registrant based upon the March 31, 2025 price at which the common equity was last sold was $25.5 million. The number of outstanding
shares of the registrant’s common stock as of December 12, 2025 was 50,413,148.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the Proxy Statement for the Registrant’s
2026 Annual Meeting of Stockholders to be filed subsequently are incorporated by reference into Part III of this Annual Report on Form
10-K.
NeuroOne Medical Technologies Corporation
FORM 10-K
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2025
TABLE OF CONTENTS
PART I 1
ITEM 1. BUSINESS 1
ITEM 1A. RISK FACTORS 20
ITEM 1B. UNRESOLVED STAFF COMMENTS 51
ITEM 1C. CYBERSECURITY 51
ITEM 2. PROPERTIES 52
ITEM 3. LEGAL PROCEEDINGS 52
ITEM 4. MINE SAFETY DISCLOSURES 52
ITEM 6. [RESERVED] 53
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 63
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA F-1
ITEM 9A. CONTROLS AND PROCEDURES 65
ITEM 9B. OTHER INFORMATION 66
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 66
PART III 67
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 67
ITEM 11. EXECUTIVE COMPENSATION 67
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 67
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 68
SIGNATURES 72
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FORM 10-K
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Unless the context requires otherwise, references
in this Annual Report on Form 10-K (this “Annual Report” or “Report”) to “we,” “us,” “the
Company” and “our” refer to NeuroOne Medical Technologies Corporation (the “Company”).
This Annual Report contains forward-looking statements
that involve substantial risks and uncertainties. The forward-looking statements are contained principally in the sections entitled “Risk
Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,”
but are also contained elsewhere in this Annual Report. In some cases, you can identify forward-looking statements by the words “may,”
“might,” “will,” “could,” “would,” “should,” “expect,” “intend,”
“plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,”
“project,” “potential,” “target,” “seek,” “contemplate,” “continue”
and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future.
These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity,
performance or achievements to be materially different from the information expressed or implied by these forward-looking statements.
Although we believe that we have a reasonable basis for each forward-looking statement contained in this Annual Report, we caution you
that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about
which we cannot be certain. Forward-looking statements include statements about:
● our ability to successfully commercialize our technology in the United States;
● the performance and reliability of our products;
● our ability to maintain regulatory clearance of our products and technology;
● our ability to achieve and sustain profitability;
● our ability to raise additional capital and to fund our operations;
● our ability to develop future generations of our products and technology;
● our future development priorities;
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● our ability to comply with applicable regulatory requirements;
● our ability to maintain our intellectual property position;
Forward-looking statements are based on management’s
current expectations, estimates, forecasts and projections about our business and the industry in which we operate, and management’s
beliefs and assumptions are not guarantees of future performance or development and involve known and unknown risks, uncertainties and
other factors that are in some cases beyond our control. You should refer to the “Risk Factors” section of this Annual Report
for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking
statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report will prove to
be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant
uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any
other person that we will achieve our objectives and plans in any specified time frame, or at all.
These forward-looking statements speak only as
of the date of this Annual Report. Except as required by law, we assume no obligation to update or revise these forward-looking statements
for any reason, even if new information becomes available in the future. You should, however, review the factors and risks and other information
we describe in the reports we will file from time to time with the Securities and Exchange Commission (the “SEC”) after the
date of this Annual Report.
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NeuroOne Medical Technologies Corporation
FORM 10-K
PART I
ITEM 1. BUSINESS
Overview
We are a medical technology company focused on
(i) diagnostic, ablation and deep brain stimulation technology for brain related conditions such as epilepsy and Parkinson’s disease;
(ii) ablation and stimulation for pain management throughout the body; and (iii) drug delivery including diagnostic and stimulation capabilities.
We have received 510(k) clearance for four of
our devices from the Food and Drug Administration (“FDA”), including: (i) our Evo cortical electrode technology for temporary
(less than 30 days) recording, monitoring, and stimulation on the surface of the brain (“Evo Cortical”), (ii) our Evo sEEG
electrode technology for temporary (less than 30 days) use with recording, monitoring, and stimulation equipment for the recording, monitoring,
and stimulation of electrical signals at the subsurface level of the brain (“Evo sEEG”), (iii) our OneRF ablation system
for creation of radiofrequency lesions in nervous tissue for functional neurosurgical procedures (“OneRF Brain Ablation System”),
and (iv) our OneRF TN ablation system for use in procedures to create radiofrequency lesions for the treatment of pain, or for lesioning
nerve tissue for functional neurosurgical procedures (“OneRF TN Ablation System”). We have a distribution agreement with
Zimmer, Inc. (“Zimmer”) providing Zimmer Biomet Holdings, Inc. with a license to commercialize and distribute the Evo Cortical,
Evo sEEG, and OneRF Brain Ablation System in the brain. We initiated a limited market release of the OneRF TN Ablation System in December
2025. The Company’s other products and indications are still under development.
Products
We are focused on developing thin film electrode
technology for a variety of recording and therapeutic applications. These cortical sheet and depth electrode technologies are crucial
for diagnosing neurological disorders such as epilepsy, Parkinson’s disease, dystonia, essential tremors, and other related conditions.
Commercialized Products
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Products in Development
Drug delivery including diagnostic and stimulation
capabilities
Recording, Ablation and stimulation for pain
management throughout the body
These products in development are examples of
our interest to pursue development of less invasive “all-in-one solutions”. We believe these technologies offer both
patients and physicians better options to treat epilepsy, Parkinson’s disease, dystonia, essential tremors, chronic pain due to
failed back surgeries and other pain-related neurological disorders.
Our Market Opportunity
Epilepsy Market
Our initial disease target has included the diagnosis
and treatment of epilepsy. Epilepsy can be caused by a variety of conditions that affect a person’s brain, some of which are: genetics,
autoimmune responses, stroke, brain tumor, traumatic brain injury and central nervous system infections. According to the Centers for
Disease Control and Prevention (the “CDC”) and Citizens United for Research in Epilepsy (“CURE”), there are approximately
3,000,000 patients annually suffering with epilepsy in the United States, with an additional 200,000 diagnosed every year. The CDC and
CURE also estimate that epilepsy costs the United States $15.5 billion per year. Approximately 30-40% of these patients are not receptive
to pharmaceutical treatment and may be candidates for surgical treatment of this disorder. In addition to poor quality of life, epilepsy
also is associated with fairly high mortality rates. Sudden Unexpected Death in Epilepsy has an annual incidence of approximately 1/1000
in epilepsy patients. Despite the large market opportunity, it is estimated only about 5,000 epilepsy surgeries performed each year in
the United States.1
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These numbers represent an underpenetrated market
due to the invasiveness of diagnostic procedures. After the diagnostic procedure, a second therapeutic procedure is required and at times
even a third surgery if the seizures persist. We believe patients are unwilling to proceed due to the long diagnostic and treatment procedure
times (one to four weeks in the hospital after a potential craniotomy for diagnosis). As detailed above, after the diagnosis is completed,
if successful, the patient must undergo an additional procedure to have the affected area of brain tissue ablated or removed. The average
cost for the diagnostic technology per procedure could be over $10,000, with ablation devices costing >$15,000. We believe our technology,
once developed, will offer an all-in-one solution with diagnostic and therapeutic capabilities.
Many leading neurologists believe that the limits
of today’s current technologies are the reason the exact cause of epileptic seizures is not well-determined. We believe our technology
provides a number of advantages over other commercially available technologies, including the following:
Trigeminal Neuralgia
Trigeminal neuralgia (TN) is a sudden and
intense pain in the case that drives thousands of people to seek treatment each year. TN related pain is described as a stabbing,
shooting, sharp or piercing sensation. It can occur anywhere between the jaw and forehead, including in the mouth. Vascular
compression of the trigeminal nerve root is a typical cause for TN. Over 150,000 people live with TN in the US, and approximately
15,000 are diagnosed each year.2
Back Pain – Spinal Cord Stimulation and
BVNA
Chronic back pain is one of the most prevalent
chronic conditions in the world. According to the CDC, “in 2016, an estimated 20.4% of U.S. adults had chronic pain and 8.0% of
U.S. adults had high-impact chronic pain. Chronic pain has been linked to numerous physical and mental conditions and contributes to high
health care costs and lost productivity”. FBSS is one of leading causes for chronic lower back/leg pain due to one or more failed
back surgeries. Typically, it is related to patients that suffer with pain after surgery of the lumbar spine for degenerative disc disease.
Re-operations are usually not recommended for these patients due to low success rates. These patients experience greater levels of pain,
a lower quality of life, varying levels of disability and higher rate of unemployment. Spinal cord stimulation works by placing an electrode(s)
in a targeted area of the spine which is then connected to an implantable pulse generator that sends electrical stimulation to the electrode
to block the pain signals from reaching the brain. The global market for SCS is substantial, with an estimated value of approximately
$2.5 to $3 billion.
The chronic back pain market includes the following
indications: FBSS, Ischemic Limb Pain, and Complex Regional Pain Syndrome (among others). Over half of this market is comprised of patients
with FBSS. Studies have indicated a benefit for some patients suffering from chronic back and lower limb pain when they have been treated
with electrical stimulation. Prior to the patient receiving an implant, they undergo a trial period that allows them to determine if they
are receiving relief from the therapy while preventing a surgery to implant the pulse generator that provides the stimulation. If the
trial period is successful, then the device is implanted in a follow-up procedure.
2 https://www.aans.org/patients/conditions-treatments/trigeminal-neuralgia/
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Basivertebral Nerve Ablation (BVNA) includes adults
with chronic low back pain (CLBP) (≥6 months), specifically vertebrogenic pain from inflamed vertebral endplates (Modic Type 1 or 2
changes on MRI), who haven’t found relief from at least 6 months of conservative treatments like PT, meds, or injections, targeting pain
in the vertebral bodies. We believe the total market for BVNA procedures currently performed in the United States is approximately $100
million per year (>10,000 procedures per year), and growing rapidly.
Drug Delivery
In the near term, our drug delivery system
in development has already been ordered by a large biopharmaceutical company planning to test NeuroOne’s system in preclinical
research, representing a completely new market for NeuroOne. We believe the market for the preclinical research in drug development
is greater than $50 million. Additionally, we are in early conversations with potential strategic partners related to the ongoing
development of specific drug delivery combinations. We believe the full market commercial opportunity for this type of application
to be potentially over $1 billion.
Parkinson’s Disease
The Parkinson’s Disease Foundation estimates
that as many as 1,000,000 patients in the United States live with Parkinson’s disease with an additional 60,000 patients diagnosed
per year. Over 10,000,000 patients worldwide are living with Parkinson’s disease. The average onset is over 60 years old, but some
people have been diagnosed as young as 40 years old.
Today’s primary treatment for Parkinson’s
disease involves medications that have not proven to be curative but rather ease symptoms. One of the potential treatments for Parkinson’s
patients is DBS. According to the Michael J. Fox Parkinson’s Disease Research Foundation website, patients that seem to do best
with DBS are those that have had the disease for at least four years and have benefited from taking medications prescribed to control
the disease. In addition, DBS seems to help with reducing the issues with motor functions such as tremors, stiffness and slowness but
not for balance issues.
Essential Tremors
Essential tremors are thought to be due to electrical
irregularities in the brain that send abnormal signals to the muscles. It is a progressive condition that worsens over time and is linked
to genetic disorders that typically appear in people who are over 40. Essential tremors usually occur alone and without any other neurological
symptoms or signs. The tremors usually occur when the hands are raised and primarily affect the hands. Muscles in the trunk, face and
neck may also experience symptoms. Genetics Home Reference estimates that as many as 10,000,000 people in the United States are affected
by the disease.
Dystonia
Dystonia is a neurological condition recognized
as a motion disorder that involves over activity of a variety of different muscles simultaneously that work against each other. It presents
itself in a variety of symptoms but typically involves repetitive, patterned and often twisting involuntary muscle contractions resembling
tremors. According to the Dystonia Medical Research Foundation, over 300,000 people are affected in the United States and Canada alone.
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Limitations of Other Currently Available Therapies
There are a limited number of other currently
available products for diagnosis and treatment for people with neurological disorders. Although the other currently available systems
provide diagnosis and treatment for patients, they have certain inherent limitations and shortcomings that we believe limit their use
and validate the need for improved technology in the market. These limitations include:
Our Solution
In comparison to other currently available technologies,
our existing products and products in development all have the goal of providing the following advantages (and expected advantages):
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Our Strategy
Our goal is to be the global leader in minimally
invasive all in one therapies for brain related and other neurological disorders that leverages our thin film electrode technology to
be used for recording, monitoring, deep brain and peripheral stimulation and ablation, drug delivery, owning the procedure from diagnosis
through treatment. The key elements of our strategy include:
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Clinical Development and Regulatory Pathway
for Products in Development
Clinical Experience, Future Development and
Clinical Trial Plans
Below we have summarized, for each of our products
in development, the current stage of development, our plans for further testing or clinical trials and our expectations regarding the
requirements for regulatory clearance or approval and timing of regulatory submissions.
Collaborations and Partnerships
Mayo Clinic and University of Wisconsin-Madison
Studies
In January 2020, we entered into an Amended and
Restated Exclusive Start-Up Company License Agreement, dated as of January 21, 2020, as amended on June 15, 2020 (the “WARF License”)
with WARF, which amended and restated in full the Original WARF License. Pursuant to the WARF License, WARF has granted to us an exclusive
license to make, use and sell, in the United States only, products that employ certain licensed patents for a neural probe array or thin-film
micro electrode array and method. We have agreed to pay WARF a royalty equal to a single-digit percentage of our product sales pursuant
to the WARF License, with a minimum annual royalty payment of $50,000 for calendar year 2020, $100,000 for calendar year 2021 and $150,000
for calendar year 2022 and each calendar year thereafter that the WARF License is in effect. If we or any of our sublicensees contest
the validity of any licensed patent, the royalty rate will be doubled during the pendency of such contest and, if the contested patent
is found to be valid and would be infringed by us if not for the WARF License, the royalty rate will be tripled for the remaining term
of the WARF License.
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WARF may terminate this license on 30
days’ written notice, if we default on the payments of amounts due to WARF or fail to timely submit development reports,
actively pursue our development plan or breach any other covenant in the WARF License and fail to remedy such default in 90 days or
in the event of certain bankruptcy events involving us. WARF may also terminate the WARF License (i) on 90 days’ notice if we
had failed to have commercial sales of one or more FDA-approved products under the WARF License by June 30, 2021 or (ii) if, after
royalties earned on sales begin to be paid, such earned royalties cease for more than four calendar quarters. The first commercial
sale occurred on December 7, 2020, prior to the June 30, 2021 deadline. The WARF License otherwise expires by its terms on the date
that no valid claims on the patents licensed thereunder remain. We expect the latest expiration of a licensed patent to occur in
2030.
In addition, WARF reserves the right to grant
non-profit research institutions and government agencies non-exclusive licenses to practice and use the inventions of the licensed patents
for non-commercial research purposes, and we grant WARF a non-exclusive, sub licensable, royalty-free right and license for non-commercial
research purposes to use improvements to the licensed patents. In the event that we discontinue use or commercialization of the licensed
patents or improvements thereon, we must grant WARF an option to obtain a non-exclusive, sub-licensable, royalty-bearing license to use
the improvements for commercial purposes.
See “Risk Factors-Risks Related to Our Business-We
depend on intellectual property licensed from WARF for our technology, including our technology under development, and the termination
of this license would harm our business” for additional information regarding the WARF License.
Mayo Foundation for Medical Education and Research
License and Development Agreement
In May 2017, we entered into an Amended and Restated
License and Development Agreement, dated as of May 25, 2017 (the “Mayo Development Agreement”), with Mayo Foundation for Medical
Education and Research (“Mayo”) to license worldwide (i) certain know how for the development and commercialization of products,
methods and processes related to flexible circuit thin film technology for the recording of tissue and (ii) the products developed therefrom,
and to partner with Mayo to assist the Company in the investigation, research application, development and improvement of such technology.
Mayo has agreed to assist us by providing access to certain individuals at Mayo (the “Mayo Principal Investigators”), in developing
our cortical thin film flexible circuit technology, including prototype development, animal testing, protocol development for human and
animal use, abstract development and presentation and access to and license of any intellectual property that the Mayo Principal Investigators
develop relating to the procedure.
We have agreed to pay Mayo a royalty equal to
a single-digit percentage of our product sales pursuant to the Mayo Development Agreement. Mayo may purchase any developed products licensed
under the Mayo Development Agreement at the best price offered by us to the end user in the prior year. The Mayo Development Agreement
generally will expire in October 2034, unless the Mayo know-how and improvements under the Mayo Development Agreement remain in use, and
the Mayo Development Agreement may be terminated by Mayo for cause or under certain circumstances.
For additional information regarding the Mayo
Development Agreement, see “Risk Factors-Risks Related to Our Business-We depend on our partnership with Mayo to license certain
know how for the development and commercialization of our technology. Termination of this partnership would harm our business, and even
if this partnership continues, it may not be successful.”
Commercialization, Sales and Marketing
Zimmer Biomet Distribution Agreement
Based on the size and maturity of the U.S. market
and our initial commercial focus, on July 20, 2020, we entered into an exclusive development and distribution agreement (the “Distribution
Agreement”) with Zimmer, pursuant to which we granted Zimmer exclusive global rights to distribute NeuroOne’s strip and grid
cortical electrodes (the “Strip/Grid Products”) and electrode cable assembly products (the “Electrode Cable Assembly
Products”), including to approximately 188 Level 4 epilepsy centers. Additionally, we granted Zimmer the exclusive right and license
to distribute certain depth electrodes developed by the Company (the “sEEG Products”). The parties have agreed to collaborate
with respect to development activities under the Distribution Agreement through a joint development committee composed of an equal number
of representatives of Zimmer and the Company.
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Pursuant to the Distribution Agreement, Zimmer
made an upfront payment of $2.0 million to the Company in August 2020.
In August 2022, we entered into an amendment to
the Distribution Agreement with Zimmer that provided us with a $3.5 million accelerated payment relating to certain milestone events.
In addition, Zimmer received a Warrant to purchase 350,000 shares of our common stock, $0.001 par value, with an exercise price of $3.00
per share.
In October 2024, we amended and restated our development
and distribution agreement with Zimmer to grant exclusive right and license to distribute also our OneRF Ablation System (the “OneRF
Products”) for an upfront fee of $3 million dollars and up to an additional $1 million dollars upon achievement of certain net sales
milestone by Zimmer (as amended, the “Zimmer Distribution Agreement”).
Under the terms of the Zimmer Distribution Agreement,
we are responsible for all costs and expenses related to developing the Strip/Grid Products, the Electrode Cable Assembly Products, the
sEEG Products and the OneRF Products (collectively the “Products”), and Zimmer is responsible for all costs and expenses related
to the commercialization of the Products. In addition to the Zimmer Distribution Agreement, Zimmer and the Company have entered into a
Manufacturing and Supply Agreement (the “MS Agreement”) and a supplier quality agreement (the “Quality Agreement”)
with respect to the manufacturing and supply of the Products.
Except as otherwise provided in the Zimmer Distribution
Agreement, we are responsible for performing all development activities, including non-clinical and clinical studies directed at obtaining
regulatory approval of each Product. Zimmer has agreed to use commercially reasonable efforts to promote, market and sell each Product
following the “Product Availability Date” (as defined in the Zimmer Distribution Agreement) for such Products.
The Zimmer Distribution Agreement will expire
on September 30, 2034, unless terminated earlier pursuant to its terms. Either party may terminate the Zimmer Distribution Agreement (x)
with written notice for the other party’s material breach following a cure period or (y) if the other party becomes subject to certain
insolvency proceedings. In addition, Zimmer may terminate the Zimmer Distribution Agreement for any reason with 90 days’ written
notice, and we may terminate the Zimmer Distribution Agreement if Zimmer acquires or directly or indirectly owns a controlling interest
in certain competitors of the Company. Both Zimmer and the Company have agreed to indemnify the other party against certain losses and
expenses relating to the development or commercialization of a product by the indemnifying party, the negligence or willful misconduct
of the indemnifying party or its directors, officers, employees or agents or a breach of the indemnifying party’s representations,
warranties or covenants.
We will investigate markets outside of the U.S.
with the assistance of Zimmer and formulate a plan to enter those markets with the support of Zimmer.
For more information regarding the Zimmer Distribution
Agreement, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Financial Overview-Collaborations
Revenue” and “Note 7-Zimmer Distribution Agreement” included in “Item 8-Financial Statements and Supplementary
Data” in this Report.
Financing
April
2025 Financing
On April
4, 2025, we entered into an underwriting agreement with Ladenburg Thalmann & Co. Inc. as underwriter ( “Ladenburg”), relating
to the issuance and sale of 16,000,000 shares of the Company’s common stock, at a price to the public of $0.50 per share (the “April
2025 Financing”). In addition, under the terms of the underwriting agreement, we granted Ladenburg an option, exercisable for 45
days, to purchase up to an additional 2,400,000 shares of common stock on the same terms as the offering, which was exercised in full.
Net proceeds to the Company were approximately $8.2 million.
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Nasdaq
Nasdaq Minimum Bid Price Notification
On May 6, 2025, we received a letter from the
Listing Qualifications Department of Nasdaq Stock Market (“Nasdaq”) notifying that because the closing bid price of our common
stock was below $1.00 per share for the prior 30 consecutive business days, we are not in compliance with the minimum bid price requirement
for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Marketplace Rule 5550(a)(2) (the “Minimum Bid Price
Requirement”). In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), we had a period of 180 calendar days, or until November
3, 2025, to regain compliance with the Minimum Bid Price Requirement.
On November 4, 2025, we received a letter from
Nasdaq notifying us that we have been granted a 180-day extension, until May 4, 2026, to regain compliance with the Minimum Bid Price
Requirement. We will continue to monitor the closing bid price of our common stock and seek to regain compliance with the Minimum Bid
Price Requirement within the extension period. If we do not regain compliance with the Minimum Bid Price Requirement within the extension
period, Nasdaq will provide written notification to us that our common stock will be subject to delisting, at which time we may appeal
Nasdaq’s delisting determination to a Nasdaq Hearing Panel. There can be no assurance that, if we do need to appeal a Nasdaq delisting
determination to the Nasdaq Hearings Panel, that such appeal would be successful.
Reimbursement
Coverage in the United States
Reimbursement from private third-party healthcare
payors and, to a lesser extent, Medicare will be an important element of our success. Although the Centers for Medicare and Medicaid Services
(“CMS”) and third-party payors have adopted coverage policies for our targeted indications, there is no guarantee this will
continue at the same levels or at all in the future. Current Procedural Terminology, or CPT, is a medical code set that is used to report
medical, surgical and diagnostic procedures and services to entities such as physicians, health insurance companies and accreditation
organizations.
Applicable diagnostic CPT codes for mapping (diagnosing)
the brain for diagnostic procedures are as follows:
Regarding ICD-10 codes, the International Classification
of Diseases, Tenth Edition (ICD-10) is a clinical cataloging system that went into effect for the U.S. healthcare industry on October
1, 2015, after a series of lengthy delays. Accounting for modern advances in clinical treatment and medical devices, ICD-10 codes offer
many more classification options compared to those found in its predecessor, ICD-9. Within the healthcare industry, providers, coders,
IT professionals, insurance carriers, government agencies and others use ICD codes to properly note diseases on health records, to track
epidemiological trends and to assist in medical reimbursement decisions.
ICD-10 codes for epilepsy are as follows:
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● G40.3 Generalized idiopathic epilepsy and epileptic syndromes;
● G40.A Absence epileptic syndrome;
● G40.4 Other generalized epilepsy and epileptic syndromes;
● G40.50 Epileptic seizures related to external causes, not intractable;
● G40.80 Other epilepsy; and
● G40.82 Epileptic spasms.
For our OneRF Ablation System, we use ICD-10-PCScode
00503Z4 Destruction of Brain Using Stereoelectroencephalographic Radiofrequency Ablation, Percutaneous Approach. This code allows hospital
reporting of inpatient procedures that are performed using the OneRF Ablation system,
For our OneRF TN Ablation System, the following
CPT Codes are available:
Medicare, Medicaid, health maintenance organizations
and other third-party payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement
of new medical devices, and, as a result, their coverage policies may be restrictive, or they may not cover or provide adequate payment
for our products. In order to obtain reimbursement arrangements, we may have to agree to a net sales price lower than the net sales price
we might charge in other sales channels. Our revenue may be limited by the continuing efforts of government and third-party payors to
contain or reduce the costs of healthcare through various increasingly sophisticated means, such as requiring prospective reimbursement
and second opinions, purchasing in groups, or redesigning benefits. Our future dependence on the commercial success of our technologies
makes us particularly susceptible to any cost containment or reduction efforts. Accordingly, if government and other third-party payors
do not provide adequate coverage and reimbursement for our products and the related insertion and removal procedures, our financial performance
will be negatively impacted.
Manufacturing, Supply and Quality Assurance
We currently outsource the supply and manufacture
of all components of our prototypes of our technology under development. We plan to continue with an outsourced manufacturing arrangement
for the foreseeable future. Our third-party manufacturers are recognized in their field for their competency to manufacture the respective
portions of our system and have quality systems established that meet FDA requirements. We believe at this time the manufacturers we currently
utilize have sufficient capacity to meet our requirements. We believe that as we increase our demand in the future, our per-unit costs
will decrease materially.
As a medical device developer, the facilities
of our sterilization and other critical suppliers are subject to periodic inspection by the FDA and corresponding state and foreign agencies.
We believe that our quality systems and those of our suppliers are robust and achieve high product quality. We plan to audit our suppliers
periodically to ensure conformity with the specifications, policies and procedures for our devices.
Research and Development
Our research and development team, which includes
our Vice President of Engineering, utilizes advice from leading experts in the neurotech field on our scientific advisory board and is
focused on the development of thin film cortical grid and strip electrodes and depth electrodes for recording, ablation and chronic stimulation
for brain related disorders as well as stimulation for spinal cord stimulation for back related pain. Our research and development expenses
were $5.0 million and $5.1 million for the years ended September 30, 2025 and 2024, respectively.
Competition
Epilepsy
In the market for epilepsy diagnosis, our Evo
Cortical and Evo sEEG compete with Ad-Tech Medical Instrument Corporation, PMT Corporation and Dixi Medical seizure diagnostic products.
We will also compete against other companies in early stages of development of thin film technologies.
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In the neuro-ablation market, our OneRF Brain
Ablation System competes with Medtronic, Monteris Medical and Clearpoint’s LITT technology, which use MRI guided laser surgical
ablation for use to ablate, necrotize or coagulate soft tissue. There may be other products in development that will compete with us as
well.
Trigeminal Neuralgia
In the market for treating trigeminal neuralgia,
we expect to compete with Boston Scientific and Avanos RF ablation systems, and various companies that use balloon compression for the
treatment of trigeminal neuralgia.
BVNA
In BVNA, we expect to compete with Boston Scientific
and Stryker’s BVNA Systems.
Spinal Cord Stimulation
In spinal cord stimulation, we expect to compete
with Medtronic, Boston Scientific, Abbott, Globus, and Biotronik spinal cord stimulator leads and systems.
Drug Delivery
In Drug Delivery, we expect to compete primarily
with Clearpoint and Sophysa’s (CED) drug delivery system.
Although we will face potential competition from
many different sources, we believe that our technology, knowledge, experience and scientific resources will provide us with competitive
advantages. For a discussion of the key competitive factors that we believe will impact the success of our cortical strip, grid electrodes
under development, if successfully developed and approved, see “—Our Solution” above.
Many of the companies against which we compete
have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting
clinical trials, obtaining regulatory approvals and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical,
biotechnology and diagnostic industries may result in even more resources being concentrated among a smaller number of our competitors.
Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large
and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel
and establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary
to, or necessary for, our development.
Intellectual Property
Protection of our intellectual property is a strategic
priority for our business. We rely on a combination of patents, trademarks, copyrights, and trade secrets as well as nondisclosure and
assignment of invention agreements, material transfer agreements, confidentiality agreements and other measures to protect our intellectual
property and other proprietary rights.
Patents
As of December 17, 2025, our patent estate consists
of two issued United States patents licensed from WARF covering a neural probe array and thin-film micro electrode array and method,
a U.S. patent issued in October 2022 relating to improved neural depth electrodes, a U.S. patent issued in January 2024 and a pending
U.S. patent application relating to agent-delivering neural electrodes, a U.S. patent issued in January 2024 relating to minimally invasive
electrodes, a U.S. patent issued in February 2024 and a European patent issued in October 2025 relating to spinal cord stimulation systems
and devices, a U.S. patent issued in October 2025 and a pending European patent application published in 2022 relating to methods of
making electrode probes, pending U.S. and European patent applications published in 2023 relating to devices having temperature sensors,
pending U.S. and PCT patent applications published in 2024 relating to deformable spinal cord stimulation devices, three pending U.S.
patent applications, a pending European application and two pending PCT applications filed or published in 2024 or 2025 relating to spinal
cord stimulation device implantation methods, pending U.S. and European patent applications published in 2024 relating to ablation probe
and temperature sensing device systems, and pending U.S. and PCT patent applications filed in 2025 relating to proximal connectors of
probe devices and related manufacturing methods. The licensed issued patents expire between 2028 and 2030, subject to any patent extensions
that may be available for such patents. The issued patents owned by NeuroOne expire between 2039 and 2041. If a patent or patents are
issued on our additional pending patent applications, the resulting patents are projected to expire between 2040 and 2045.
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Our patent applications may not result in issued
patents, and any patents that have been issued or may issue in the future may not protect the commercially important aspects of our technology.
Furthermore, the validity and enforceability of our issued patents may be challenged by third parties and our patents could be invalidated
or modified by the issuing governmental authority. Third parties may independently develop technology that is not covered by our patents
that is similar to, or competes with, our technology. In addition, our intellectual property may be infringed or misappropriated by third
parties, particularly in foreign countries where the laws and governmental authorities may not protect our proprietary rights as effectively
as those in the United States.
The medical device industry in general, and the
recording, ablation and neurostimulation sector of this industry in particular, are characterized by the existence of a large number of
patents and frequent litigation based on assertions of patent infringement. We are aware of numerous patents issued to third parties that
may relate to the technology used in our business, including the design and manufacture of electrodes and pulse generators, as well as
methods for device placement. Each of these patents contains multiple claims, any one of which may be independently asserted against us.
The owners of these patents may assert that the manufacture, use, sale or offer for sale of our cortical strip and grid electrodes infringe
one or more claims of their patents. Furthermore, there may be additional patents issued to third parties of which we are presently unaware
that may relate to aspects of our technology that such third parties could assert against us and materially and adversely affect our business.
In addition, because patent applications can take many years to issue, there may be patent applications that are currently pending and
unknown to us, which may later result in issued patents that third parties could assert against us and materially and adversely affect
our business.
Any adverse determination in litigations or post
grant trial proceedings at the Patent Office relating to intellectual property to which we are or may become a party could subject us
to significant liabilities to third parties or require us to seek licenses from third parties, and could result in the cancellation and/or
invalidation of our intellectual property. Furthermore, if a court finds that we have willfully infringed a third party’s intellectual
property, we could be required to pay treble damages and/or attorney fees for the prevailing party, in addition to other penalties. Although
intellectual property disputes in the medical device area are often settled through licensing or similar arrangements, costs associated
with such arrangements can be substantial and often require ongoing royalty payments. We may be unable to obtain necessary licenses on
satisfactory terms, if at all. If we do not obtain necessary licenses, we may not be able to redesign our products to avoid infringement;
if we are able to redesign our products to avoid infringement, we may not receive FDA approval in a timely manner. Adverse determinations
in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing and selling our
products, which could have a significant adverse impact on our business.
Trademarks
We have registered U.S. trademarks for the trademarks
“NEUROONE,” “EVO,” and “OneRF.” We also have registered trademarks in the United Kingdom and the European
Union for the trademark OneRF.
Trade Secrets
We also rely on trade secrets, technical
know-how and continuing innovation to develop and maintain our competitive position. We seek to protect such intellectual property
and proprietary information by generally requiring our employees, consultants, contractors, scientific collaborators and other
advisors to execute non-disclosure and assignment of invention agreements upon the commencement of their employment or engagement as
the case may be. Our agreements with our employees prohibit them from providing us with any intellectual property or proprietary
information of third parties. We also generally require confidentiality agreements or material transfer agreements with third
parties that receive or have access to our confidential information, data or other materials. Notwithstanding the foregoing, there
can be no assurance that our employees and third parties that have access to our confidential proprietary information will abide by
the terms of their agreements. Despite the measures that we take to protect our intellectual property and confidential information,
unauthorized third parties may copy aspects of our products or obtain and use our proprietary information.
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Government Regulation (US)
Our cortical strip/grid electrode system, depth
electrode system and radiofrequency (RF) probes and RF generator ablation system are medical devices subject to extensive and ongoing
regulation by the Food and Drug Administration (FDA) and the U.S. Centers for Medicare and Medicaid Services (CMS). Regulations cover
virtually every critical aspect of a medical device company’s business operations, including management responsibility, research
activities, product design and development, quality management system, manufacturing, supplier management, risk management, contracting,
reimbursement, medical communications, sales and marketing. In the United States, the Federal Food, Drug and Cosmetic Act (“FDCA”),
and the implementing regulations of the FDA (specifically, 21 Code of Federal Regulations (21 CFR Parts 801- labeling, 803 - medical device
reporting, 807 - registration and listing, subpart E premarket notification 510k, 812 - investigational device exemption, 814 - premarket
approval and 820 - quality system regulation) and applicable FDA issued guidance’s and regulations govern product design and development,
pre-clinical and clinical testing, premarket clearance or approval, risk management, electrical safety, cybersecurity, software, sterilization,
biocompatibility, product manufacturing, quality systems, import and export, product labeling, product storage, recalls and field safety
corrective actions, advertising and promotion, product sales and distribution, and post-market clinical surveillance. Our business is
subject to federal, state, local and harmonized standards, such as ISO 13485, ISO 14971, and FDA’s Quality System Regulation (“QSR”)
contained in 21 CFR Part 820.
Regulatory Framework in the United States