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Restatement of Interim Financial Statements (Unaudited) | 12 Months Ended
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Dec. 31, 2023
Accounting Changes and Error Corrections [Abstract] |
Restatement of Interim Financial Statements (Unaudited) | 19. Restatement of Interim Financial Statements (Unaudited) In connection with the preparation of the Company’s financial statements as of and for the year ended December 31, 2023, management identified a material accounting error in the unaudited interim financial statements as of and for the three and nine month periods ended September 30, 2023 relating to the improper classification of the reduction of the fair value of warrant liabilities as a reduction to the extinguishment of debt charge on the Statement of Operations rather than an increase to additional paid in capital on the Balance Sheet. Upon the consummation of the Company’s IPO, the exercise price of certain warrants issued prior to the IPO became known. As a result of the exercise price becoming known, our warrant liability was reduced by $3,721,007. This warrant liability reduction should have triggered a reclassification to additional paid in capital instead of an extinguishment of debt charge. This accounting error resulted in a (i) $3,721,007 understatement of the extinguishment of debt expense on the Statement of Operations, (ii) $3,721,007 understatement of the net loss on the Statement of Operations, and (iii) $3,721,007 understatement of additional paid in capital on the Balance Sheet as of and for the three and nine month periods ended September 30, 2023. The Board of Directors of the Company, upon the recommendation of the Audit Committee and after discussion with management, concluded that the Company’s previously issued unaudited financial statements as of and for the three and nine month periods ended September 30, 2023 should no longer be relied upon and should be restated due to identification of the material accounting error. The following tables present the amounts previously reported, the restatement impact and the restated amount in the respective unaudited financial statements. NeurAxis, Inc. Balance Sheet Schedule of Restatement of Interim Financial Statements (Unaudited)
|  | (Unaudited) |
|  | As of September 30, |
|  | As Reported |  |  | Adjustments |  |  | As Restated |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 761,249 |  |  | $ | - |  |  | $ | 761,249 |
Accounts receivable, net |  |  | 132,382 |  |  |  | - |  |  |  | 132,382 |
Inventories |  |  | 34,530 |  |  |  | - |  |  |  | 34,530 |
Prepaid and other current assets |  |  | 38,693 |  |  |  | - |  |  |  | 38,693 |
Total current assets |  |  | 966,854 |  |  |  | - |  |  |  | 966,854 |
Property and equipment, at cost |  |  | 420,586 |  |  |  | - |  |  |  | 420,586 |
Less - accumulated depreciation |  |  | (340,260 | ) |  |  | - |  |  |  | (340,260 | )
Property and equipment, net |  |  | 80,326 |  |  |  | - |  |  |  | 80,326 |
Operating lease right of use asset, net |  |  | 78,043 |  |  |  | - |  |  |  | 78,043 |
Intangible assets |  |  | 110,695 |  |  |  | - |  |  |  | 110,695 |
Total assets |  | $ | 1,235,918 |  |  | $ | - |  |  | $ | 1,235,918 |
Liabilities and Stockholders’ Deficit |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  | $ | 566,649 |  |  | $ | - |  |  | $ | 566,649 |
Accrued expenses |  |  | 280,063 |  |  |  | - |  |  |  | 280,063 |
Notes payable |  |  | 194,249 |  |  |  | - |  |  |  | 194,249 |
Current portion of operating lease payable |  |  | 45,194 |  |  |  | - |  |  |  | 45,194 |
Customer deposits |  |  | 68,972 |  |  |  | - |  |  |  | 68,972 |
Share liabilities |  |  | 934,256 |  |  |  | - |  |  |  | 934,256 |
Warrant liabilities |  |  | 168,269 |  |  |  | - |  |  |  | 168,269 |
Total current liabilities |  |  | 2,257,652 |  |  |  | - |  |  |  | 2,257,652 |
Operating lease payable, net of current portion |  |  | 39,353 |  |  |  | - |  |  |  | 39,353 |
Total liabilities |  |  | 2,297,005 |  |  |  | - |  |  |  | 2,297,005 |
Stockholders’ deficit: |  |  |  |  |  |  |  |  |  |  |  |
Convertible Series A preferred stock |  |  | - |  |  |  | - |  |  |  | - |
Convertible Series Seed preferred stock |  |  | - |  |  |  | - |  |  |  | - |
Common stock |  |  | 5,149 |  |  |  | - |  |  |  | 5,149 |
Additional paid in capital |  |  | 42,178,570 |  |  |  | 3,721,007 |  |  |  | 45,899,577 |
Accumulated deficit |  |  | (43,244,806 | ) |  |  | (3,721,007 | ) |  |  | (46,965,813 | )
Total stockholders’ deficit |  |  | (1,061,087 | ) |  |  | - |  |  |  | (1,061,087 | )
Total liabilities and stockholders’ deficit |  | $ | 1,235,918 |  |  | $ | - |  |  | $ | 1,235,918 |
NeurAxis, Inc. Statements of Operations
|  | (Unaudited) |  |  | (Unaudited) |
|  | For the Three Months Ended September 30, 2023 |  |  | For the Nine Months Ended September 30, 2023 |
|  | As Reported |  |  | Adjustments |  |  | As Restated |  |  | As Reported |  |  | Adjustments |  |  | As Restated |
Net sales |  | $ | 477,460 |  |  | $ | - |  |  | $ | 477,460 |  |  | $ | 1,928,590 |  |  | $ | - |  |  | $ | 1,928,590 |
Cost of goods sold |  |  | 67,287 |  |  |  | - |  |  |  | 67,287 |  |  |  | 231,000 |  |  |  | - |  |  |  | 231,000 |
Gross profit |  |  | 410,173 |  |  |  | - |  |  |  | 410,173 |  |  |  | 1,697,590 |  |  |  | - |  |  |  | 1,697,590 |
Selling expenses |  |  | 64,210 |  |  |  | - |  |  |  | 64,210 |  |  |  | 250,933 |  |  |  | - |  |  |  | 250,933 |
Research and development |  |  | 44,950 |  |  |  | - |  |  |  | 44,950 |  |  |  | 171,536 |  |  |  | - |  |  |  | 171,536 |
General and administrative |  |  | 3,323,352 |  |  |  | - |  |  |  | 3,323,352 |  |  |  | 6,316,411 |  |  |  | - |  |  |  | 6,316,411 |
Operating loss |  |  | (3,022,339 | ) |  |  | - |  |  |  | (3,022,339 | ) |  |  | (5,041,290 | ) |  |  | - |  |  |  | (5,041,290 | )
Other (expense) income, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financing charges |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,772 | ) |  |  | - |  |  |  | (2,772 | )
Interest expense |  |  | (102,628 | ) |  |  | - |  |  |  | (102,628 | ) |  |  | (453,869 | ) |  |  | - |  |  |  | (453,869 | )
Interest income |  |  | 2,103 |  |  |  | - |  |  |  | 2,103 |  |  |  | 2,103 |  |  |  | - |  |  |  | 2,103 |
Change in fair value of warrant liability |  |  | 592,853 |  |  |  | - |  |  |  | 592,853 |  |  |  | 791,610 |  |  |  | - |  |  |  | 791,610 |
Change in fair value of derivative financial instruments |  |  | 6,394 |  |  |  | - |  |  |  | 6,394 |  |  |  | 198,551 |  |  |  | - |  |  |  | 198,551 |
Amortization of debt discount and issuance cost |  |  | (1,331,030 | ) |  |  | - |  |  |  | (1,331,030 | ) |  |  | (4,881,622 | ) |  |  | - |  |  |  | (4,881,622 | )
Extinguishment of debt liabilities |  |  | (1,058,062 | ) |  |  | (3,721,007 | ) |  |  | (4,779,069 | ) |  |  | 71,436 |  |  |  | (3,721,007 | ) |  |  | (3,649,571 | )
Other income |  |  | 9,931 |  |  |  | - |  |  |  | 9,931 |  |  |  | 11,483 |  |  |  | - |  |  |  | 11,483 |
Other expense |  |  | (1,578 | ) |  |  | - |  |  |  | (1,578 | ) |  |  | (9,008 | ) |  |  | - |  |  |  | (9,008 | )
Total other (expense) income, net |  |  | (1,882,017 | ) |  |  | (3,721,007 | ) |  |  | (5,603,024 | ) |  |  | (4,272,088 | ) |  |  | (3,721,007 | ) |  |  | (7,993,095 | )
Net loss |  | $ | (4,904,356 | ) |  | $ | (3,721,007 | ) |  | $ | (8,625,363 | ) |  | $ | (9,313,378 | ) |  | $ | (3,721,007 | ) |  | $ | (13,034,385 | )
NeurAxis, Inc. Statements of Cash Flows
|  | (Unaudited) |
|  | For the Nine Months Ended September 30, 2023 |
|  | As Reported |  |  | Adjustments |  |  | As Restated |
Cash flows from operating activities |  |  |  |  |  |  |  |  |  |  |  |
Net loss |  | $ | (9,313,378 | ) |  | $ | (3,721,007 | ) |  | $ | (13,034,385 | )
Adjustments to reconcile net loss to net cash used by operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Amortization of debt discount and issuance cost |  |  | 4,881,622 |  |  |  | - |  |  |  | 4,881,622 |
Depreciation and amortization |  |  | 30,290 |  |  |  | - |  |  |  | 30,290 |
Provision for losses on accounts receivable |  |  | 6,380 |  |  |  | - |  |  |  | 6,380 |
Non-cash lease expense |  |  | 23,339 |  |  |  | - |  |  |  | 23,339 |
Non-cash interest expense |  |  | 260,777 |  |  |  | - |  |  |  | 260,777 |
Stock based compensation |  |  | - |  |  |  | - |  |  |  | - |
Extinguishment of derivative liability |  |  | (71,436 | ) |  |  | 3,721,007 |  |  |  | 3,649,571 |
Issuance of common stock for non-cash consideration |  |  | 2,550,000 |  |  |  | - |  |  |  | 2,550,000 |
Finance charges |  |  | 2,772 |  |  |  | - |  |  |  | 2,772 |
Change in fair value of derivative liabilities |  |  | (198,551 | ) |  |  | - |  |  |  | (198,551 | )
Change in fair value of warrant liabilities |  |  | (791,610 | ) |  |  | - |  |  |  | (791,610 | )
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable |  |  | 35,637 |  |  |  | - |  |  |  | 35,637 |
Inventory |  |  | 13,603 |  |  |  | - |  |  |  | 13,603 |
Prepaids and other current assets |  |  | (37,967 | ) |  |  | - |  |  |  | (37,967 | )
Accounts payable |  |  | (1,025,467 | ) |  |  | - |  |  |  | (1,025,467 | )
Accrued expenses |  |  | (415,181 | ) |  |  | - |  |  |  | (415,181 | )
Customer deposits |  |  | 9,798 |  |  |  | - |  |  |  | 9,798 |
Operating lease liability |  |  | (25,047 | ) |  |  | - |  |  |  | (25,047 | )
Net cash used by operating activities |  |  | (4,064,419 | ) |  |  | - |  |  |  | (4,064,419 | )
Cash flows from investing activities |  |  |  |  |  |  |  |  |  |  |  |
Additions to property and equipment |  |  | (14,741 | ) |  |  | - |  |  |  | (14,741 | )
Additions to intangible assets |  |  | (41,000 | ) |  |  | - |  |  |  | (41,000 | )
Net cash used by investing activities |  |  | (55,741 | ) |  |  | - |  |  |  | (55,741 | )
Cash flows from financing activities |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from issuance of common stock, net of issuance costs |  |  | 5,464,642 |  |  |  | - |  |  |  | 5,464,642 |
Offering costs in advance of sale of common stock |  |  | (2,417,185 | ) |  |  | - |  |  |  | (2,417,185 | )
Principal payments on notes payable |  |  | (3,487,578 | ) |  |  | - |  |  |  | (3,487,578 | )
Proceeds from notes payable |  |  | 159,831 |  |  |  | - |  |  |  | 159,831 |
Proceeds from convertible notes, net of fees |  |  | 4,908,000 |  |  |  | - |  |  |  | 4,908,000 |
Net cash provided by financing activities |  |  | 4,627,710 |  |  |  | - |  |  |  | 4,627,710 |
Net decrease in cash and cash equivalents |  |  | 507,550 |  |  |  | - |  |  |  | 507,550 |
Cash and cash equivalents at beginning of period |  |  | 253,699 |  |  |  | - |  |  |  | 253,699 |
Cash and cash equivalents at end of period |  | $ | 761,249 |  |  | $ | - |  |  | $ | 761,249 |

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