Full Press Release Details
to Financial Statements
| Aclarion, Inc. | Page |
| Financial Statements | |
| Report of Independent Registered Public Accounting Firm - Haynie & Company LLP (ID# 457) | F-2 |
| Report of Independent Registered Public Accounting Firm CohnReznick LLP (ID# 596) | F-3 |
| Balance Sheets at December 31, 2023 and 2022 | F-4 |
| Statements of Operations, for the Years Ended December 31, 2023 and 2022 | F-5 |
| Statements of Changes in Stockholders' Equity (deficit), for the Years Ended December 31, 2023 and 2022 | F-6 |
| Statements of Cash Flows, for the Years Ended December 31, 2023 and 2022 | F-8 |
| Notes to Financial Statements | F-9 |
Report of Independent
Registered Public Accounting Firm
To the Board of Directors and
Stockholders of Aclarion, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheet
of Aclarion, Inc. (the Company) as of December 31, 2023, and the related statements of operations, changes in stockholders' equity
(deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our
opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023,
and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted
in the United States of America.
Substantial Doubt about the Company's
Ability to Continue as a Going Concern
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the
Company has suffered recurring losses from operations and has a deficiency in shareholders' equity that raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our
audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Haynie & Company
Salt Lake City, Utah
We have served as the Company's auditor since 2023.
of Independent Registered Public Accounting Firm
To the Board of Directors and
Broomfield, Colorado
Opinion on the Financial Statements
We have audited the accompanying
balance sheet of Aclarion, Inc. (the "Company") as of December 31, 2022, and the related statements of operations, changes
in stockholders' equity (deficit) and cash flows for the year then ended, and the related notes (collectively referred to as the
financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Company at December 31, 2022, and the results of its operations and its cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.
Restatement to correct the 2022 financial statements
As discussed in Note 3 to the financial statements,
the 2022 financial statements have been restated to correct misstatements.
The financial statements of the Company as of
December 31, 2022, before the effects of the adjustments for the correction of the errors described in Note 3, were audited by Daszkal
Bolton LLP who issued an unqualified opinion on those statements in their report, containing explanatory language that substantial doubt
exists about the entity's ability to continue as a going concern, dated February 27, 2023. Effective March 1, 2023, CohnReznick
LLP acquired certain people and assets of Daszkal Bolton LLP.
Going Concern Uncertainty
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has
suffered recurring losses from operations and an accumulated deficit that raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
These financial statements
are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial
statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as the
Company's auditor from 2021 (such date takes into account the acquisition of certain people and assets of Daszkal Bolton LLP by
CohnReznick LLP effective March 1, 2023) to 2023
June 12, 2023, except for Note 1, 2024 Reverse Stock Split, Note 7
SUPPLEMENTAL FINANCIAL INFORMATION Prepaids and other current assets and Accrued and other liabilities, and Note 14, Net Loss Per Share
of Common Stock, as to which the date is February 21, 2024
December 31, 2023 and 2022
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| (restated) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,021,069 | $ | 1,472,806 | ||||
| Restricted cash | 10,000 | 10,000 | ||||||
| Accounts receivable, net | 13,270 | 18,569 | ||||||
| Prepaids & other current assets | 245,030 | 199,701 | ||||||
| Total current assets | 1,289,369 | 1,701,076 | ||||||
| Non-current assets: | ||||||||
| Property and equipment, net | 1,782 | 3,346 | ||||||
| Intangible assets, net | 1,168,623 | 1,210,207 | ||||||
| Total non-current assets | 1,170,405 | 1,213,553 | ||||||
| Total assets | $ | 2,459,774 | $ | 2,914,629 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 760,535 | $ | 462,202 | ||||
| Accrued and other liabilities | 857,722 | 226,469 | ||||||
| Note payable, net of discount | 1,125,724 | - | ||||||
| Warrant liability | 289,165 | - | ||||||
| Derivative liability | 121,326 | - | ||||||
| Liability to issue equity | 33,297 | - | ||||||
| Total current liabilities | 3,187,769 | 688,671 | ||||||
| Commitments and contingencies (See Note 12) | - | - | ||||||
| Stockholders' equity (deficit) | ||||||||
| Common stock - $0.00001 par value, 200,000,000 authorized and 825,459 and 491,345 shares issued and outstanding (see Note 13) | 8 | 5 | ||||||
| Additional paid-in capital | 43,553,523 | 41,596,106 | ||||||
| Accumulated deficit | (44,281,526 | ) | (39,370,153 | ) | ||||
| Total stockholders' equity (deficit) | (727,995 | ) | 2,225,958 | |||||
| Total liabilities and stockholders' equity (deficit) | $ | 2,459,774 | $ | 2,914,629 |
See Accompanying Notes to Financial Statements
Statements of Operations
For the Years Ended December 31, 2023, and 2022
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| (restated) | ||||||||
| Revenue | ||||||||
| Revenue | $ | 75,404 | $ | 60,444 | ||||
| Cost of revenue | 75,728 | 65,298 | ||||||
| Gross profit (loss) | (324 | ) | (4,854 | ) | ||||
| Operating expenses: | ||||||||
| Sales and marketing | 757,004 | 498,003 | ||||||
| Research and development | 873,336 | 1,067,992 | ||||||
| General and administrative | 3,245,317 | 3,990,719 | ||||||
| Total operating expenses | 4,875,657 | 5,556,714 | ||||||
| Income (loss) from operations | (4,875,981 | ) | (5,561,568 | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | (608,288 | ) | (1,507,546 | ) | ||||
| Changes in fair value of warrant and derivative liabilities | 646,319 | - | ||||||
| Loss on issuance of warrants | (72,862 | ) | - | |||||
| Other, net | (562 | ) | 521 | |||||
| Total other income (expense) | (35,393 | ) | (1,507,025 | ) | ||||
| Income (loss) before income taxes | (4,911,374 | ) | (7,068,593 | ) | ||||
| Income tax provision | - | - | ||||||
| Net income (loss) | $ | (4,911,374 | ) | $ | (7,068,593 | ) | ||
| Dividends accrued for preferred stockholders | $ | - | $ | (415,523 | ) | |||
| Net income (loss) allocable to common stockholders | $ | (4,911,374 | ) | $ | (7,484,116 | ) | ||
| Net income (loss) per share allocable to common stockholders | $ | (8.82 | ) | $ | (19.61 | ) | ||
| Weighted average shares of common stock outstanding, basic and diluted | 556,808 | 381,598 |
See Accompanying Notes to Financial Statements
Statements of Changes in Stockholders' Equity
For the Years Ended December 31, 2023
| Series A | Series A-1, A-2, A-3, A-4 | Series B, B-1 | ||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | ||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||
| Balance, December 31, 2021 | - | $ | - | 6,247,695 | $ | 62 | 12,434,500 | $ | 124 | |||||||||||||||
| Share-based compensation | - | - | - | - | - | - | ||||||||||||||||||
| Preferred stock dividend payable | - | - | - | - | - | - | ||||||||||||||||||
| Conversion of preferred stock to common stock | - | - | (6,247,695 | ) | (62 | ) | (12,434,500 | ) | (124 | ) | ||||||||||||||
| Conversion of preferred dividends payable to common stock | - | - | - | - | - | - | ||||||||||||||||||
| Conversion of accrued interest on promissory notes | - | - | - | - | - | - | ||||||||||||||||||
| Issuance of common stock and warrants related to IPO, net issuance costs | - | - | - | - | - | - | ||||||||||||||||||
| Issuance of common shares | - | - | - | - | - | - | ||||||||||||||||||
| Issuance of warrants | - | - | - | - | - | - | ||||||||||||||||||
| IPO issuance costs | - | - | - | - | - | - | ||||||||||||||||||
| Exercise of convertible note warrants | - | - | - | - | - | - | ||||||||||||||||||
| Net income (loss) | - | - | - | - | - | - | ||||||||||||||||||
| Balance, December 31, 2022 | - | $ | - | - | $ | - | - | $ | - | |||||||||||||||
| Balance, December 31, 2022 | - | $ | - | - | $ | - | - | $ | - | |||||||||||||||
| Share-based compensation | - | - | - | - | - | - | ||||||||||||||||||
| Issuance of common shares | - | - | - | - | - | - | ||||||||||||||||||
| Proceeds from sale of Series A preferred stock | 1 | 1,000 | - | - | - | - | ||||||||||||||||||
| Redemption of Series A preferred stock | (1 | ) | (1,000 | ) | - | - | - | - | ||||||||||||||||
| Commitment shares - note financing | - | - | - | - | - | - | ||||||||||||||||||
| Issuance of warrants - note financing | - | - | - | - | - | - | ||||||||||||||||||
| Issuance of common shares - equity line | - | - | - | - | - | - | ||||||||||||||||||
| Commitment common shares - equity line | - | - | - | - | - | - | ||||||||||||||||||
| Common share issuance costs - equity line | - | - | - | - | - | - | ||||||||||||||||||
| Cashless exercise of pre-funded warrants | - | - | - | - | - | - | ||||||||||||||||||
| Conversion of vested restricted stock units to common shares | - | - | - | - | - | - | ||||||||||||||||||
| Common share - stock split round up | - | - | - | - | - | - | ||||||||||||||||||
| Net income (loss) | - | - | - | - | - | - | ||||||||||||||||||
| Balance, December 31, 2023 | - | $ | - | - | $ | - | - | $ | - |
| Series B-2, B-3 | Additional | |||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-In | Accumulated | |||||||||||||||||||||||||
| Shares | Value | Shares | Value | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance, December 31, 2021 | 5,812,809 | $ | - | 56,605 | $ | 1 | $ | 19,054,243 | (31,886,036 | ) | $ | (12,831,606 | ) | |||||||||||||||
| Share-based compensation | - | - | - | - | 1,186,658 | - | 1,186,658 | |||||||||||||||||||||
| Preferred stock dividend payable | - | - | - | - | - | (415,523 | ) | (415,523 | ) | |||||||||||||||||||
| Conversion of preferred stock to common stock | (5,812,809 | ) | - | 204,945 | 2 | 7,102,472 | - | 7,102,287 | ||||||||||||||||||||
| Conversion of preferred dividends payable to common stock | - | - | 61,534 | 1 | 4,272,420 | - | 4,272,421 | |||||||||||||||||||||
| Conversion of accrued interest on promissory notes | - | - | 26,673 | - | 1,855,158 | - | 1,855,158 | |||||||||||||||||||||
| Issuance of common stock and warrants related to IPO, net issuance costs | - | - | 135,313 | 1 | 8,552,338 | - | 8,552,340 | |||||||||||||||||||||
| Issuance of common shares | - | - | 2,500 | - | 102,000 | - | 102,000 | |||||||||||||||||||||
| Issuance of warrants | - | - | - | - | 1,280 | - | 1,280 | |||||||||||||||||||||
| IPO issuance costs | - | - | - | - | (530,463 | ) | - | (530,463 | ) | |||||||||||||||||||
| Exercise of convertible note warrants | - | - | 3,776 | - | - | - | - | |||||||||||||||||||||
| Net income (loss) | - | - | - | - | - | (7,068,593 | ) | (7,068,593 | ) | |||||||||||||||||||
| Balance, December 31, 2022 | - | $ | - | 491,345 | $ | 5 | $ | 41,596,106 | $ | (39,370,153 | ) | 2,225,958 | ||||||||||||||||
| Balance, December 31, 2022 | - | $ | - | 491,345 | $ | 5 | $ | 41,596,106 | $ | (39,370,153 | ) | $ | 2,225,958 | |||||||||||||||
| Share-based compensation | - | - | - | - | 456,000 | - | 456,000 | |||||||||||||||||||||
| Issuance of common shares | - | - | 1,852 | - | - | - | - | |||||||||||||||||||||
| Proceeds from sale of Series A preferred stock | - | - | - | - | - | - | 1,000 | |||||||||||||||||||||
| Redemption of Series A Preferred stock | - | - | - | - | - | - | (1,000 | ) | ||||||||||||||||||||
| Commitment shares - note financing | - | - | 21,210 | - | 175,619 | - | 175,619 | |||||||||||||||||||||
| Issuance of warrants - note financing | - | - | - | - | 67,500 | - | 67,500 | |||||||||||||||||||||
| Commitment common shares - equity line | - | - | 11,719 | - | - | - | - | |||||||||||||||||||||
| Common share issuance costs - equity line | - | - | - | - | (204,647 | ) | - | (204,647 | ) | |||||||||||||||||||
| Issuance of common shares - equity line | - | - | 285,938 | 3 | 1,462,946 | - | 1,462,949 | |||||||||||||||||||||
| Cashless exercise of pre-funded warrants | - | - | 3,396 | - | - | - | - | |||||||||||||||||||||
| Conversion of vested restricted stock units to common shares | - | - | 9,930 | - | - | - | - | |||||||||||||||||||||
| Common share - stock split round up | - | - | 70 | - | - | - | - | |||||||||||||||||||||
| Net income (loss) | - | - | - | - | - | (4,911,374 | ) | (4,911,374 | ) | |||||||||||||||||||
| Balance, December 31, 2023 | - | $ | - | 825,459 | $ | 8 | $ | 43,553,523 | $ | (44,281,526 | ) | (727,995 | ) |
See Accompanying Notes to Financial Statements
Statements of Cash Flows
For the Years Ended December 31, 2023, and 2022
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| (restated) | ||||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) | $ | (4,911,374 | ) | $ | (7,068,593 | ) | ||
| Adjustments to reconcile net income (loss) to net cash used in operation activities: | ||||||||
| Depreciation and amortization | 162,670 | 143,622 | ||||||
| Share-based compensation | 456,001 | 1,186,658 | ||||||
| Amortization of deferred issuance costs | 497,656 | - | ||||||
| Changes in fair value of warrants and derivative | (646,319 | ) | - | |||||
| Non-cash interest related to bridge funding | 98,685 | - | ||||||
| Warrants issued as non- cash finance charge | 72,862 | - | ||||||
| Share-based vendor payments | - | 102,000 | ||||||
| Loss on disposal of furniture and equipment | - | 3,789 | ||||||
| Interest conversion discount settled in equity | - | 1,299,507 | ||||||
| - | ||||||||
| Change in assets and liabilities | ||||||||
| Accounts receivable | (1,491 | ) | (12,290 | ) | ||||
| Prepaids and other current assets | (38,539 | ) | (87,522 | ) | ||||
| Accounts payable | 220,633 | (603,102 | ) | |||||
| Accrued and other liabilities | 448,459 | (113,893 | ) | |||||
| Accrued interest on promissory and convertible notes | (6,190 | ) | 200,712 | |||||
| Net cash (used in) operations | (3,646,947 | ) | (4,949,112 | ) | ||||
| Investing Activities | ||||||||
| Proceeds from sale of furniture | - | 1,000 | ||||||
| Intangible assets - Patents | (119,522 | ) | (208,870 | ) | ||||
| Net cash (used in) investing activities | (119,522 | ) | (207,870 | ) | ||||
| Financing Activities | ||||||||
| Bridge funding issuance costs | (323,301 | ) | - | |||||
| Equity line issuance costs | (74,916 | ) | - | |||||
| Proceeds from equity line | 1,462,949 | - | ||||||
| Proceeds from issuance of promissory notes | 2,250,000 | - | ||||||
| Proceeds from sale of Series A preferred stock | 1,000 | - | ||||||
| Redemption of Series A Preferred stock | (1,000 | ) | - | |||||
| IPO cash issuance costs | - | (365,060 | ) | |||||
| Repayment of promissory notes | - | (2,000,000 | ) | |||||
| Issuance of common stock and warrants related to IPO, net deductions | - | 8,552,318 | ||||||
| Net cash provided by financing activities | 3,314,732 | 6,187,258 | ||||||
| Net increase (decrease) in cash and cash equivalents | (451,737 | ) | 1,030,276 | |||||
| Cash, cash equivalents, and restricted cash, beginning of period | 1,482,806 | 452,530 | ||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 1,031,069 | $ | 1,482,806 | ||||
| Non- cash activities | ||||||||
| Accrued debt issuance costs related to bridge funding | 22,150 | - | ||||||
| Accrued debt issuance costs related to equity line | 129,731 | - | ||||||
| Issuance of warrants related to bridge funding | 67,500 | - | ||||||
| Original issuance discount (15%) related to bridge funding | 344,118 | - | ||||||
| Liability to issue common shares | 33,297 | - | ||||||
| Issuance of commitment shares related to bridge funding | 175,619 | - | ||||||
| Fair value of warrants and derivative related to first tranche bridge funding | 742,988 | - | ||||||
| Fair value of warrants and derivative related to second tranche bridge funding | 153,810 | - | ||||||
| Fair value of warrants and derivative related to third tranche bridge funding | 160,012 | - | ||||||
| Dividends accrued on preferred shares | - | 415,523 | ||||||
| Conversion of preferred stock to common stock | - | 25,754,379 | ||||||
| Conversion of preferred stock dividends to common stock | - | 4,272,421 | ||||||
| Conversion of accrued interest on promissory notes to common stock and warrants | - | 1,856,438 | ||||||
| Issuance of underwriter's warrants related to IPO | - | 199,246 | ||||||
| Designation of prepaid expenses to IPO issuance costs | - | 165,403 |