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Microbot Medical(MBOT) - 2024 Q1 - Quarterly Report

Part I - Financial Information Financial Statements The company reported a reduced net loss in Q1 2024, with assets decreasing but shareholders' equity increasing due to financing and a legal settlement Interim Consolidated Balance Sheets Total assets decreased to $7.37 million while liabilities significantly reduced, leading to an increase in shareholders' equity to $6.17 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Cash and cash equivalents | $1,162 | $2,468 | | Total Assets | $7,367 | $8,327 | | Total Liabilities | $1,200 | $3,826 | | Total Shareholders' Equity | $6,167 | $4,501 | - The number of common shares issued and outstanding increased to 14,398,964 as of March 31, 2024, from 11,707,317 as of December 31, 202310 Interim Consolidated Statements of Comprehensive Loss The company reported a net loss of $2.37 million for Q1 2024, an improvement from $2.85 million in Q1 2023, driven by reduced expenses Statement of Comprehensive Loss (in thousands, except per share data) | Metric | Q1 2024 (Unaudited) | Q1 2023 (Unaudited) | | :--- | :--- | :--- | | Research and development, net | $(1,169) | $(1,617) | | General and administrative | $(1,215) | $(1,302) | | Operating loss | $(2,384) | $(2,919) | | Net loss | $(2,371) | $(2,853) | | Basic and diluted net loss per share | $(0.17) | $(0.36) | Interim Consolidated Statements of Shareholders' Equity Shareholders' equity increased to $6.17 million due to common stock issuance for financing and a legal settlement, partially offset by net loss - Issued 1,685,682 shares of common stock and warrants, raising $2.397 million, net of issuance costs16 - Issued 1,005,965 shares of common stock valued at $1.111 million as part of a settlement agreement1617 - Share-based compensation for the quarter amounted to $529,00016 Interim Consolidated Statements of Cash Flows Net cash used in operations decreased to $2.42 million, while financing activities provided $2.40 million, resulting in a $1.31 million decrease in cash Cash Flow Summary (in thousands) | Activity | Q1 2024 (Unaudited) | Q1 2023 (Unaudited) | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,420) | $(3,203) | | Net cash provided by (used in) investing activities | $(1,284) | $2,883 | | Net cash provided by financing activities | $2,397 | $- | | Decrease in cash, cash equivalents and restricted cash | $(1,307) | $(320) | - A significant non-cash financing activity was the settlement of a legal liability through the issuance of common stock valued at $1.111 million20 Notes to Interim Consolidated Financial Statements Notes detail the company's pre-clinical medical device business, 'going concern' risks, royalty obligations, and a significant legal settlement - The company is a pre-clinical medical device company focused on robotic endoluminal surgery devices22 - The financial statements were prepared under the assumption of the company continuing as a 'going concern', but recurring losses and the need for future funding raise substantial doubt about this ability2627 - On January 26, 2024, the company settled a lawsuit from a 2017 financing, paying $1.1 million in cash (covered by insurance) and issuing 1,005,965 shares of restricted common stock6364 - The company has royalty obligations of 3.0%-5.0% on future sales related to grants received from the Israeli Innovation Authority (IIA)50 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the LIBERTY® Endovascular Robotic Surgical System's FDA submission, decreased Q1 2024 expenses, and ongoing 'going concern' risks due to limited liquidity - The company is developing the LIBERTY® Endovascular Robotic Surgical System, described as the world's first fully disposable robotic system for endovascular procedures8586 - An Investigational Device Exemption (IDE) application was submitted to the U.S. FDA on January 29, 2024, to begin human clinical trials93 - The company anticipates receiving 510(k) clearance from the FDA in the first half of 2025 and CE Mark approval in the second half of 202595 - Management believes current funds are sufficient for operations for less than one year, which raises substantial doubt about the company's ability to continue as a going concern121 Results of Operations Net research and development expenses decreased by $0.45 million and general and administrative expenses by $0.09 million in Q1 2024 compared to Q1 2023 Comparison of Operating Results (in thousands) | Expense Category | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Research and development expenses, net | $(1,169) | $(1,617) | $448 | | General and administrative expenses | $(1,215) | $(1,302) | $87 | - The decrease in R&D expenses was mainly due to a reduction in payroll from increased vacation utilization, government grant deductions, and lower expenses for outsourcing the manufacturing of the LIBERTY product111 - The decrease in G&A expenses was primarily due to lower travel and payroll expenses, offset by increases in stock-based compensation and professional services112 Liquidity and Capital Resources The company's liquidity relies on stock issuances and grants, with $5.8 million net working capital, but current funds are sufficient for less than one year - As of March 31, 2024, the company had a net working capital of approximately $5.8 million114 - The company raised approximately $2.7 million in gross proceeds from financing activities in January 2024120 - The company has received a total of approximately $1.9 million in grants from the Israeli Innovation Authority (IIA) through March 31, 2024116 - Management concludes that current cash is sufficient for less than one year, raising substantial doubt about the company's ability to continue as a going concern121 Quantitative and Qualitative Disclosures About Market Risk The company faces market risks primarily from foreign exchange fluctuations on operating expenses, with interest rate risk deemed low and inflation impact insignificant - Primary market exposure is to interest rate sensitivity on cash and cash equivalents, but the impact of rate changes is not expected to be material due to the short-term nature of these instruments124 - The company is exposed to foreign exchange risk because a substantial portion of its operating expenses are payable in currencies other than the U.S. dollar125 - The company does not believe inflation had a significant impact on its results of operations127 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - Management concluded that as of March 31, 2024, the company's disclosure controls and procedures were effective128 - No changes in internal control over financial reporting occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls129 Part II - Other Information Legal Proceedings A significant lawsuit related to 2017 financing was settled in January 2024 for $1.1 million cash and over 1 million shares, leading to its discontinuation - On January 26, 2024, the company entered into a settlement agreement to resolve a lawsuit related to its 2017 equity financing132 - The settlement consisted of a $1.1 million cash payment (covered by the company's insurance carrier) and the issuance of 1,005,965 shares of restricted common stock133 - The lawsuit was formally discontinued with prejudice in February 2024134 Risk Factors This section is not required for a smaller reporting company - Not required for a smaller reporting company137 Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None138 Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2024 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2024141 Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements, corporate governance documents, and officer certifications