NeuroMetrix(NURO) - 2022 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements Q1 2022 revenues grew 6.8% to $2.3 million, but a surge in operating expenses resulted in a $958K net loss Balance Sheets Total assets reached $26.2 million, driven by $23.8 million in cash, with stockholders' equity growing to $24.2 million Balance Sheet Summary (Unaudited) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $23,769,380 | $22,572,104 | | Total current assets | $25,587,251 | $24,187,859 | | Total assets | $26,248,371 | $24,888,192 | | Liabilities & Equity | | | | Total current liabilities | $1,727,254 | $1,365,697 | | Total liabilities | $2,010,463 | $1,672,406 | | Total stockholders' equity | $24,237,908 | $23,215,786 | Statements of Operations Q1 2022 revenues rose 6.8% to $2.3 million, but operating expenses surged 68.1%, leading to a $958K net loss Q1 2022 vs Q1 2021 Statement of Operations (Unaudited) | Metric | Q1 2022 | Q1 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $2,302,391 | $2,155,472 | +6.8% | | Gross Profit | $1,793,517 | $1,579,183 | +13.6% | | Gross Margin | 77.9% | 73.3% | +4.6 bps | | Total Operating Expenses | $2,755,507 | $1,639,378 | +68.1% | | Net Loss | ($958,562) | ($59,783) | +1,503.4% | | Net Loss per Share | ($0.14) | ($0.02) | | Statements of Cash Flows Q1 2022 net cash used in operations was $740K, offset by $1.94 million from financing, increasing cash to $23.8 million Cash Flow Summary (Unaudited) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($740,381) | ($33,790) | | Net cash used in investing activities | ($5,395) | ($21,453) | | Net cash provided by (used in) financing activities | $1,943,052 | ($25,803) | | Net increase (decrease) in cash | $1,197,276 | ($81,046) | | Cash and cash equivalents, end of period | $23,769,380 | $5,145,167 | Notes to Unaudited Financial Statements Notes detail DPNCheck® and Quell® products, $23.8 million cash sufficient for 12 months, and $1.94 million raised - The company's two primary products are DPNCheck®, a test for diabetic peripheral neuropathy, and Quell®, a wearable device for chronic pain[21] - Management believes its cash balance of $23.8 million as of March 31, 2022, is sufficient to fund operations for at least the next twelve months[22] - One customer accounted for 43% of total revenues in Q1 2022, up from 36% in Q1 2021[26] - In January 2022, the Company issued 292,500 shares of common stock under its ATM program, receiving net proceeds of $1,943,052[40] Management's Discussion and Analysis of Financial Condition and Results of Operations Q1 2022 revenue grew 6.8% from DPNCheck sales, but operating expenses surged 68.1% due to strategic investments Our Business and Recent Developments The company focuses on DPNCheck and Quell, with Quell pursuing FDA Rx indications and Breakthrough Device Designation - The company is investing to expand its DPNCheck business and is developing a next-generation version targeted for a 2022 launch[46] - The Quell fibromyalgia indication is under FDA De Novo review, with a decision expected in H2 2022. A positive outcome could lead to a commercial launch in late 2022 or early 2023[49] - In January 2022, Quell received FDA Breakthrough Device Designation for reducing symptoms of chronic chemotherapy-induced peripheral neuropathy (CIPN)[52] - The COVID-19 pandemic continues to adversely affect the business, particularly in the diagnostic testing markets for DPNCheck and ADVANCE, slowing new customer acquisition[54] Results of Operations Q1 2022 revenues grew 6.8% to $2.3 million, driven by DPNCheck sales, but operating expenses surged 68.1%, leading to a $958K net loss Q1 2022 vs Q1 2021 Performance | Metric | Q1 2022 | Q1 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $2,302,391 | $2,155,472 | +6.8% | | Gross Profit | $1,793,517 | $1,579,183 | +13.6% | | Gross Margin | 77.9% | 73.3% | +4.6 bps | | Operating Expenses | $2,755,507 | $1,639,378 | +68.1% | | Net Loss | ($958,562) | ($59,783) | +1,503.4% | - DPNCheck revenue grew 15.6% in Q1 2022, attributed to new Medicare Advantage customers and price increases[58] - The increase in operating expenses reflects investment in DPNCheck initiatives, restructuring commercial capabilities, and costs for potential Quell disease-specific indications[60] Liquidity and Capital Resources Liquidity is strong with $23.8 million in cash, supplemented by $1.94 million from ATM financing, sufficient for 12 months Key Liquidity Indicators | Indicator | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $23,769,380 | $22,572,104 | | Working capital | $23,859,997 | $22,822,162 | | Current ratio | 14.8 | 17.7 | Q1 2022 Cash Flow Summary | Activity | Amount | | :--- | :--- | | Net cash used in Operating activities | ($740,381) | | Net cash used in Investing activities | ($5,395) | | Net cash provided by Financing activities | $1,943,052 | - The company maintains an effective shelf registration statement, allowing it to raise additional funds through stock sales when considered appropriate[71] Quantitative and Qualitative Disclosures About Market Risk The company avoids derivative financial instruments, investing cash primarily for principal preservation, with minimal interest rate risk impact - The company's investment strategy for its cash and cash equivalents prioritizes principal preservation and liquidity, with investments mainly in instruments with maturities of twelve months or less[74] Controls and Procedures Disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of the end of the quarter[75] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[76] PART II – OTHER INFORMATION Legal Proceedings The company is not currently involved in any material legal proceedings, with no significant financial impact expected - As of the report date, the company is not involved in any material legal proceedings[77] Risk Factors No material changes to risk factors were reported since the last Annual Report on Form 10-K - No material changes in risk factors were reported since the last Annual Report on Form 10-K[78] Other Items (2-6) The company reported no unregistered equity sales or defaults, with mine safety disclosures not applicable, and exhibits listed - Items 2, 3, and 5 reported "None"[79][80][82] - Item 4, Mine Safety Disclosures, is not applicable[81] - Item 6 lists the exhibits filed with the 10-Q, including Sarbanes-Oxley certifications and Inline XBRL documents[83]