ACLARION, INC. Form 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ 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: 001-41358

ACLARION, INC.

(Exact name of registrant as specified in its charter)

Delaware		47-3324725
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)

8181 Arista Place, Suite 100

Broomfield, Colorado 80021

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (833) 275-2266

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.00001 per share	ACON	The Nasdaq Stock Market LLC
Warrants, each exercisable for one share of Common stock	ACONW	The Nasdaq Stock Market LLC

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 14, 2024, there were 10,431,159 shares of the registrant's common stock, $0.00001 par value per share, outstanding.

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, 2023 (the Form 10-K) dated March 28, 2024, as filed with the Securities and Exchange Commission on March 28, 2024, 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.

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	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	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
	Signatures	37

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Aclarion, Inc.

Condensed Balance Sheets


	September 30, 2024			December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,312,098		$	1,021,069
Restricted cash		10,000			10,000
Accounts receivable, net		16,951			13,270
Prepaids and other current assets		558,272			245,030
Total current assets		1,897,321			1,289,369

Non-current assets:
Property and equipment, net		892			1,782
Intangible assets, net		1,289,839			1,168,623
Total non-current assets		1,290,731			1,170,405

Total assets	$	3,188,052		$	2,459,774

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable	$	331,765		$	760,535
Accrued and other liabilities		330,232			857,722
Note payable, net of discount		–			1,125,724
Warrant liability		16,270			289,165
Derivative liability		–			121,326
Liability to issue equity		–			33,297
Total current liabilities		678,267			3,187,769

Total liabilities		678,267			3,187,769

Stockholders' equity (deficit)
Common stock - $0.00001 par value, 200,000,000 authorized and 10,044,728 and 825,459 shares issued and outstanding (see Note 11)		100			8
Series B preferred stock - $0.00001 par value, 20,000,000 authorized and 930 and 0 shares issued and outstanding (see Note 11)		–			–
Series C preferred stock - $0.00001 par value, 20,000,000 authorized and 1,000 and 0 shares issued and outstanding (see Note 11)		–			–
Additional paid-in capital		51,782,424			43,553,523
Accumulated deficit		(49,272,739	)		(44,281,526	)
Total stockholders’ equity (deficit)		2,509,785			(727,995	)

Total liabilities and stockholders’ equity (deficit)	$	3,188,052		$	2,459,774

See accompanying notes to condensed financial statements.

Aclarion, Inc.

Condensed Statements of Operations

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023

Revenue
Revenue	$	14,407		$	19,065		$	35,492		$	61,607
Cost of revenue		21,332			19,558			64,102			56,312
Gross profit (loss)		(6,925	)		(493	)		(28,610	)		5,295

Operating expenses:
Sales and marketing		232,775			192,896			638,869			577,969
Research and development		195,797			198,252			636,940			652,657
General and administrative		860,461			770,534			2,402,408			2,524,308
Total operating expenses		1,289,033			1,161,682			3,678,217			3,754,934

(Loss) from operations		(1,295,958	)		(1,162,175	)		(3,706,827	)		(3,749,640	)

Other income (expense):
Interest expense		(71,527	)		(166,332	)		(535,199	)		(214,850	)
Loss on exchange of debt		(6,585	)		–			(1,073,317	)		–
Loss on extinguishment of debt		–			–			(111,928	)		–
Changes in fair value of warrant and derivative liabilities		7,591			330,252			330,632			318,452
Other, net		303			245			93,284			11
Total other income (expense)		(70,218	)		164,165			(1,296,528	)		103,613

Income (loss) before income taxes		(1,366,176	)		(998,010	)		(5,003,355	)		(3,646,027	)
Income tax provision		–			–			–			–
Net income (loss)	$	(1,366,176	)	$	(998,010	)	$	(5,003,355	)	$	(3,646,027	)

Dividends accrued for preferred stockholders		(12,142	)		–			(12,142	)		–
Net income (loss) allocable to common stockholders	$	(1,378,318	)	$	(998,010	)	$	(5,015,497	)	$	(3,646,027	)
Net income (loss) per share allocable to common shareholders	$	(0.15	)	$	(1.87	)	$	(0.65	)	$	(7.07	)
Weighted average shares of common stock outstanding, basic and diluted		9,437,871			532,928			7,699,173			515,975

See accompanying notes to condensed financial statements.

Aclarion, Inc.

Condensed Statements of Changes in Stockholders' Equity (Deficit)

(Unaudited)

Series A

Series B

Series C

Preferred Stock

Value

Value*

Balance, December 31, 2022

–

Share-based compensation

–

Proceeds from sale of Series A preferred stock

1,000

–

Redemption of Series A Preferred stock

)

(1,000

)

–

Net income (loss)

–

Balance, March 31, 2023

–

Share-based compensation

–

Commitment shares - note financing

–

Issuance of warrants - note financing

–

Net income (loss)

–

Balance, June 30, 2023

–

Share-based compensation

–

Issuance of common shares

–

SEC Form 10-Q filed by Aclarion Inc.