SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
3 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Accounting Policies [Abstract] | |
| Use of Estimates | Use of Estimates
The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The condensed financial statements include some amounts that are based on management's best estimates and judgments. The most significant estimates relate to depreciation, amortization, and valuation of warrants, warrant and derivative liabilities, and options to purchase shares of the Company's common stock. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.
|
| Fair Value of Financial Instruments | Fair Value of Financial Instruments
ASC 820, Fair Value Measurements, provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:
Level 1 - Unadjusted quoted prices in active markets for identical instruments that are accessible by the Company on the measurement date.
Level 2 - Quoted prices in markets that are not active or inputs which are either directly or indirectly observable.
Level 3 - Unobservable inputs for the instrument requiring the development of assumptions by the Company.
The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The carrying values of the Company’s financial instruments including cash equivalents, restricted cash, accounts receivable, and accounts payable are approximately equal to their respective fair values due to the relatively short-term nature of these instruments. The Company’s warrant liabilities are estimated using level 3 inputs (see Note 3).
|
| Cash and Cash Equivalents | 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 $279,568 cash deposits and $18,750,408 of cash equivalents at March 31, 2026. The Company had $273,290 cash deposits and $11,767,499 of cash equivalents at December 31, 2025.
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 March 31, 2026 and December 31, 2025, the Company had $18,529,976 and $11,540,789, respectively, in excess of federally insured limits. The Company continually monitors its positions with, and the credit quality of, the financial institutions with which it invests. The Company maintains no international bank accounts. As of March 31, 2026, $25,000 of the Company’s cash was restricted as collateral related to the credit card program offered by our bank.
|
| Accounts Receivable, Less Allowance for Credit Losses | Accounts Receivable, Less Allowance for Credit Losses
Accounts receivable are recorded at the invoiced amount and presented net of an allowance for expected credit losses. The allowance is based on historical loss experience, receivable aging, current economic conditions, and reasonable and supportable forecasts. The Company reassesses the allowance each reporting period. As of March 31, 2026 and December 31, 2025, the allowance for credit losses was $11,914 and $6,241, respectively.
|
| Property and Equipment | Property and Equipment
Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the related assets. Computer and office equipment and computer software are depreciated over five years. Repairs and maintenance costs, which are not considered improvements and do not extend the useful life of the property and equipment, are expensed as incurred.
|
| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets
The Company reviews long-lived assets, including intangible assets, property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable using pre-tax undiscounted cash flows. Impairment, if any, is measured as the amount by which the carrying value of a long-lived asset exceeds its fair value.
|
| Revenue Recognition | Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company applies the following five-step model in determining revenue recognition:
Step 1 – Identify The Contract With A Customer – A contract exists when there is legally enforceable agreement between the Company and the customer that defines each party’s rights regarding the Nociscan report to be transferred and the payment terms, and collection of consideration is probable.
Step 2 – Identify The Performance Obligations In The Contract – The Company contracts with customers contain a single performance obligation: the delivery of a Nociscan report. The Company does not provide ongoing services, post-delivery support, licensing arrangements, or other performance obligations after the report has been delivered.
Step 3 – Determine The Transaction Price – The transaction price is the negotiated consideration specified in the contract for the Nociscan report. Customers do not pay upfront fees, licensing fees, or other additional amounts. To date, the Company’s reports are generally not reimbursable under third-party arrangements, except for three private health insurance providers in the United Kingdom and certain third-party clinical trial users who are using Nociscan as part of their clinical trial protocols.
Step 4 – Allocate The Transaction Price To The Performance Obligations – As each contract contains a single performance obligation, the entire transaction price is allocated to the delivery of the Nociscan report.
Step 5 – Recognize Revenue When (Or As) The Entity Satisfies A Performance Obligations – Revenue is recognized at a point in time when control of the Nociscan report is transferred to the customer, which occurs upon delivery of the report. At that time, the company has fulfilled its performance obligation and has no further obligations to the customer. The Company invoices customers in accordance with the billing schedules set forth in its sales arrangements. Payment terms generally range from 30 to 90 days from the invoice date.
|
| Sales and Marketing Expenses | Sales and Marketing Expenses
Sales and marketing costs are expensed as incurred. The primary drivers of these costs have been employee salaries and benefits, clinical services related to post-clearance activities (including the Clarity clinical study), product marketing consultants, travel and attendance at industry conferences, and other marketing services such as press releases and advertising.
|
| Research and Development Costs | Research and Development Costs
Costs related to the research, design, and development of products are charged to research and development costs as incurred. These costs include employee compensation and benefits, professional services (including contractors and quality system and regulatory consulting), patent maintenance activities, regulatory agency fees, and other expenses such as software subscriptions, product licensing fees, and materials used in research and development activities.
|
| General and Administrative | General and Administrative
General and administrative costs are expensed as incurred. These costs primarily consist of personnel and related expenses, including stock-based compensation, investor relations and corporate communications activities, accounting, audit, and other financial advisory services, legal fees relating to intellectual property and corporate matters, corporate and regulatory fees associated with operating as a public company, insurance including directors and officers coverage, information technology, depreciation and amortization, and fees for consulting, human resources, and other professional services.
|
| Liquidity and Capital Resources | Liquidity and Capital Resources
As of March 31, 2026, we had cash and cash equivalents and restricted cash of $19,029,976. We believe our existing cash and cash equivalents and restricted cash will be sufficient to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of this report. This estimate is based on assumptions that may prove to be incorrect, and actual results could differ materially. We may require additional capital to support our operations and execute our business strategy. The timing and availability of such financing are uncertain and will depend on a number of factors, including market conditions and our operating performance. If we are unable to obtain additional financing on acceptable terms, or at all, we may be required to delay, reduce, or discontinue certain operating activities, including the commercialization or further development of our SaaS platform.
|
| Deferred Financing Costs | Deferred Financing Costs
The Company capitalizes certain legal, accounting, and other costs directly attributable to in-process equity financings as deferred offering costs until such financings are completed. Upon completion of an equity financing, these costs are recorded as a reduction of additional paid-in capital of the related offering.
During the three months ended March 31, 2026, the Company completed a registered direct offering of common shares and pre-funded warrants, resulting in aggregate gross proceeds of approximately $10.4 million.
In connection with the closing of the offering during the three months ended March 31, 2026, $691,739 of deferred offering costs were reclassified to additional paid-in capital, of which $671,600 was offset against gross proceeds and $20,139 was paid or accrued.
|
| Share-Based Compensation | 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.
|
| Segment Disclosure | 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 segment (“Nociscan segment”) related to the delivery of Nociscan reports. The Company generates revenues, earnings, net income (loss), and cash flows through the single segment by collecting fees from our clients for providing Nociscan reports.
The Company believes that this structure reflects its current operational and financial management, and that it provides the best structure for the Company to focus on growth opportunities while maintaining financial responsibility.
The results of the reportable segment is derived directly from the Company’s management reporting system. 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.
|
| Emerging Growth Company Status | 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.
|