UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended
OR
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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:
(Exact name of Registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Name of each exchange on which registered |
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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.
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).
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.
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Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
As of the close of business on November 9, 2022, the registrant had
RA MEDICAL SYSTEMS, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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Item 1. |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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83 |
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Item 3. |
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84 |
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Item 4. |
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84 |
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Item 5. |
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84 |
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Item 6. |
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85 |
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87 |
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2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RA MEDICAL SYSTEMS, INC.
Condensed Balance Sheets
(in thousands, except par value data)
(Unaudited)
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September 30, 2022 |
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December 31, 2021 |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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— |
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Inventories |
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— |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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— |
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Operating lease right-of-use assets |
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Other long-term assets |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Current portion of operating lease liability |
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Total current liabilities |
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Operating lease liability |
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Total liabilities |
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Commitments and contingencies (Note 12) |
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Stockholders’ Equity |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders’ equity |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
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$ |
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$ |
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See accompanying notes to unaudited condensed financial statements.
3
RA MEDICAL SYSTEMS, INC.
Condensed Statements of Operations
(in thousands, except per share data)
(Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Revenues |
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Product sales |
$ |
— |
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$ |
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$ |
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$ |
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Cost of revenues |
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Product sales |
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— |
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Service and other |
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— |
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Total cost of revenues |
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— |
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Gross loss |
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— |
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Operating expenses |
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Selling, general and administrative |
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Research and development |
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Restructuring and impairment (Note 13) |
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— |
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— |
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Total operating expenses |
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Operating loss |
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Other income, net |
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Loss from continuing operations before income taxes |
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( |
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( |
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Income taxes |
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— |
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— |
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— |
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— |
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Loss from continuing operations |
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Discontinued operations |
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Income from discontinued operations before income taxes |
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— |
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— |
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Income taxes |
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— |
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— |
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— |
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— |
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Income from discontinued operations |
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— |
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— |
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Net loss |
$ |
( |
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$ |
( |
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$ |
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$ |
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Net (loss) income per share, basic and diluted |
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Continuing operations |
$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Discontinued operations |
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— |
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— |
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Total net loss per share, basic and diluted |
$ |
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$ |
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$ |
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$ |
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Weighted average number of shares used in computing net (loss) income per share, basic and diluted |
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See accompanying notes to unaudited condensed financial statements.
4
RA MEDICAL SYSTEMS, INC.
Condensed Statements of Cash Flows
(in thousands)
(Unaudited)
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Nine Months Ended September 30, |
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2022 |
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2021 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
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$ |
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$ |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Non-cash restructuring and impairment |
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— |
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Depreciation and amortization |
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Stock-based compensation |
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Loss (gain) on sales and disposals of property and equipment |
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Gain on sale of discontinued operations |
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— |
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( |
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Gain on extinguishment of promissory note |
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— |
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( |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Inventories |
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( |
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( |
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Prepaid expenses and other assets |
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( |
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Accounts payable |
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( |
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Accrued expenses |
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( |
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( |
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Other liabilities |
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( |
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( |
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Deferred revenue |
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— |
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( |
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Net cash used in operating activities |
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( |
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( |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Proceeds from sale of discontinued operations |
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— |
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Payment of fees related to sale of discontinued operations |
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— |
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( |
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Proceeds from sales of property and equipment |
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— |
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Purchases of property and equipment |
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— |
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( |
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Net cash provided by investing activities |
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— |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Net proceeds from issuance of common stock and warrants |
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Payments of offering costs related to the issuance of common stock and warrants |
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( |
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( |
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Net proceeds from exercise of warrants |
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— |
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Proceeds from issuance of common stock in connection with the employee stock purchase plan |
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Payments on equipment financing |
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— |
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( |
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Net cash provided by financing activities |
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NET CHANGE IN CASH AND CASH EQUIVALENTS |
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( |
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CASH AND CASH EQUIVALENTS, beginning of period |
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CASH AND CASH EQUIVALENTS, end of period |
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$ |
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$ |
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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |
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Unpaid offering costs |
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$ |
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$ |
— |
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Net proceeds receivable from sales of common stock |
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$ |
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$ |
— |
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Proceeds receivable from sales of property and equipment |
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$ |
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$ |
— |
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Amounts accrued for purchases of property and equipment |
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$ |
— |
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$ |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Cash payments for income taxes |
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$ |
— |
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$ |
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Cash payments for interest |
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$ |
— |
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$ |
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See accompanying notes to unaudited condensed financial statements.
5
RA MEDICAL SYSTEMS, INC.
Condensed Statements of Stockholders’ Equity
(in thousands)
(Unaudited)
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Additional |
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Total |
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Common Stock |
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Paid-In |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balances at December 31, 2021 |
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$ |
— |
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$ |
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$ |
( |
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$ |
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Common stock and warrants issued, net |
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— |
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— |
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Warrants exercised |
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— |
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— |
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Restricted stock awards cancelled |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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( |
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Balances at March 31, 2022 |
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— |
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( |
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Common stock issued pursuant to the vesting of restricted stock units and purchases under the employee stock purchase plan |
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— |
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— |
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— |
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Restricted stock awards cancelled |
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( |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
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Balances at June 30, 2022 |
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— |
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( |
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Warrants exercised |
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— |
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— |
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Common stock and warrants issued, net |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
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Balances at September 30, 2022 |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
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Additional |
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Total |
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Common Stock |
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Paid-In |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balances at December 31, 2020 |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
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Common stock issued, net |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
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Balances at March 31, 2021 |
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— |
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( |
) |
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Common stock issued, net |
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— |
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— |
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Common stock issued pursuant to the vesting of restricted stock units and purchases under the employee stock purchase plan |
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— |
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— |
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|
|
|
|
— |
|
|
|
|
|
|
Stock-based compensation |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
Balances at June 30, 2021 |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
Common stock issued, net |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Warrant issued |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
Balances at September 30, 2021 |
|
|
|
|
|
$ |
— |
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
See accompanying notes to unaudited condensed financial statements.
6
RA MEDICAL SYSTEMS, INC.
Notes to Unaudited Condensed Financial Statements
Note 1. Organization
The Company
Ra Medical Systems, Inc. (the “Company”) is a medical device company that owns intellectual property related to an advanced excimer laser-based platform for use in the treatment of vascular immune-mediated inflammatory diseases. Its excimer laser and single-use catheter system, together referred to as the DABRA Excimer Laser System, (“DABRA”), is used as a tool in the treatment of peripheral artery disease. The Company was formed on September 4, 2002 in the state of California and reincorporated in Delaware on July 14, 2018.
Pending Merger
On September 12, 2022, the Company announced entering into an Agreement and Plan of Merger (the “Merger Agreement”) with a privately-held Delaware corporation, Catheter Precision, Inc. (“Catheter”), a medical device and technology company focused in the field of cardiac electrophysiology. Under the terms of the Merger Agreement, Catheter will become a wholly owned subsidiary of the Company in a stock-for-stock reverse merger transaction (the “Merger”). If completed, the Merger will result in a combined publicly traded company that will focus on the cardiac electrophysiology market. The Company’s board of directors and the board of directors of Catheter have approved the Merger, which is currently expected to close before the end of 2022 or early 2023, subject to satisfying certain closing conditions, including the receipt of shareholder approval by both companies.
The Company expects that it will need to raise additional financing in an amount of between $
Reverse Stock Split
NYSE American
On August 31, 2022, the Company received a deficiency letter (the “Letter”) from NYSE American indicating that it was not in compliance with NYSE American continued listing standards as set forth in Section 1003(f)(v) of the NYSE American Company Guide because its shares of common stock had been selling for a substantial period of time at a low price per share, which NYSE American determined to be a 30 trading day average price of less than $
Reduction in Force and Operations
As previously reported, the Company’s board of directors approved a reduction in force (“RIF”) under which approximately
As a result of the RIF, the discontinuation of enrollment in the clinical study and the board of directors’ review of strategic alternatives, the Company has paused all engineering and manufacturing activities, including the development of a
7
version of the DABRA catheter that is compatible with a standard interventional guidewire. The Company has also paused research to prove the feasibility of using a DABRA-derived catheter technology to fracture calcium in arteries in a procedure known as lithotripsy. On July 5, 2022, the Company announced the receipt of FDA 510(k) clearance for the DABRA 2.0 catheter as part of the DABRA Excimer Laser System. This catheter includes a braided over jacket to make the catheter more robust and more kink-resistant when navigating tortuous anatomy. This catheter also has a six-month shelf life as a result of multiple design and manufacturing remediations implemented to address prior limitations. The Company has suspended sales of DABRA and currently has no plans to commercialize the DABRA 2.0, pending the closing of the Merger.