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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the Quarterly Period Ended September 30, 2021

OR

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: 001-38677

 

Ra Medical Systems, Inc.

(Exact name of Registrant as specified in its charter)

 

 

Delaware

 

38-3661826

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

2070 Las Palmas Drive

Carlsbad, California

 

92011

(Address of principal executive offices)

 

(Zip Code)

 

(760) 804-1648

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, 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 $0.0001 per share

 

RMED

 

NYSE American

 

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 the close of business on November 10, 2021, the registrant had 7,029,765 shares of common stock, par value $0.0001 per share, outstanding.

 

 


 

 

RA MEDICAL SYSTEMS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

Page

 

Item 1.

  

Financial Statements:

 

3

 

 

  

Condensed Balance Sheets (Unaudited)

 

3

 

 

  

Condensed Statements of Operations (Unaudited)

 

4

 

 

 

Condensed Statements of Comprehensive Loss (Unaudited)

 

5

 

 

 

Condensed Statements of Cash Flows (Unaudited)

 

6

 

 

  

Condensed Statements of Stockholders’ Equity (Unaudited)

 

7

 

 

  

Notes to Unaudited Condensed Financial Statements

 

8

 

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

19

 

Item 3.

  

Quantitative and Qualitative Disclosures about Market Risk

 

26

 

Item 4.

  

Controls and Procedures

 

27

 

PART II. OTHER INFORMATION

 

28

 

Item 1.

  

Legal Proceedings

 

28

 

Item 1A.

  

Risk Factors

 

29

 

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

 

74

 

Item 3.

  

Defaults Upon Senior Securities

 

74

 

Item 4.

  

Mine Safety Disclosures

 

74

 

Item 5.

  

Other Information

 

74

 

Item 6.

  

Exhibits

 

75

 

SIGNATURES

 

76

 

 

 

 

2


 

 

 

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

RA MEDICAL SYSTEMS, INC.

Condensed Balance Sheets

(in thousands, except par value data)

(Unaudited)

 

 

 

September 30,

2021

 

 

December 31,

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

20,616

 

 

$

23,906

 

Accounts receivable, net

 

 

17

 

 

 

24

 

Inventories

 

 

997

 

 

 

877

 

Prepaid expenses and other current assets

 

 

1,169

 

 

 

1,100

 

Current assets of discontinued operations

 

 

 

 

 

1,713

 

Total current assets

 

 

22,799

 

 

 

27,620

 

Property and equipment, net

 

 

2,030

 

 

 

2,527

 

Operating lease right-of-use assets

 

 

2,205

 

 

 

2,484

 

Other long-term assets

 

 

45

 

 

 

45

 

Long-term assets of discontinued operations

 

 

 

 

 

762

 

TOTAL ASSETS

 

$

27,079

 

 

$

33,438

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

543

 

 

$

471

 

Accrued expenses

 

 

2,632

 

 

 

4,147

 

Current portion of operating lease liabilities

 

 

301

 

 

 

356

 

Current portion of equipment financing

 

 

 

 

 

265

 

Current portion of PPP promissory note

 

 

 

 

 

421

 

Current liabilities of discontinued operations

 

 

 

 

 

2,102

 

Total current liabilities

 

 

3,476

 

 

 

7,762

 

Operating lease liabilities

 

 

2,054

 

 

 

2,264

 

PPP promissory note

 

 

 

 

 

1,579

 

Long-term liabilities of discontinued operations

 

 

 

 

 

686

 

Total liabilities

 

 

5,530

 

 

 

12,291

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000 shares authorized; no shares issued

 

 

 

 

 

 

Common stock, $0.0001 par value; 300,000 shares authorized; 7,042 and 3,189 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

 

7

 

 

 

7

 

Additional paid-in capital

 

 

191,527

 

 

 

174,342

 

Accumulated deficit

 

 

(169,985

)

 

 

(153,202

)

Total stockholders’ equity

 

 

21,549

 

 

 

21,147

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

27,079

 

 

$

33,438

 

 

See accompanying notes to unaudited condensed financial statements.

 

3


 

 

RA MEDICAL SYSTEMS, INC.

Condensed Statements of Operations

(in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

$

5

 

 

$

66

 

 

$

17

 

 

$

254

 

Service and other

 

 

 

 

 

2

 

 

 

 

 

 

5

 

Total net revenues

 

 

5

 

 

 

68

 

 

 

17

 

 

 

259

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

 

68

 

 

 

323

 

 

 

676

 

 

 

1,131

 

Service and other

 

 

178

 

 

 

245

 

 

 

537

 

 

 

615

 

Total cost of revenues

 

 

246

 

 

 

568

 

 

 

1,213

 

 

 

1,746

 

Gross loss

 

 

(241

)

 

 

(500

)

 

 

(1,196

)

 

 

(1,487

)

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

4,211

 

 

 

4,695

 

 

 

11,285

 

 

 

18,154

 

Research and development

 

 

2,942

 

 

 

2,312

 

 

 

8,521

 

 

 

5,534

 

Total operating expenses

 

 

7,153

 

 

 

7,007

 

 

 

19,806

 

 

 

23,688

 

Operating loss

 

 

(7,394

)

 

 

(7,507

)

 

 

(21,002

)

 

 

(25,175

)

Other income (expense), net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense), net

 

 

16

 

 

 

(8

)

 

 

5

 

 

 

97

 

Gain on extinguishment of PPP promissory note

 

 

 

 

 

 

 

 

2,023

 

 

 

 

Total other income (expense), net

 

 

16

 

 

 

(8

)

 

 

2,028

 

 

 

97

 

Loss from continuing operations before income taxes

 

 

(7,378

)

 

 

(7,515

)

 

 

(18,974

)

 

 

(25,078

)

Income taxes

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

 

(7,378

)

 

 

(7,515

)

 

 

(18,974

)

 

 

(25,078

)

Discontinued operations (Note 3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations (including gain on sale of $3,500 in 2021) before income taxes

 

 

3,080

 

 

 

(264

)

 

 

2,191

 

 

 

(523

)

Income taxes

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations

 

 

3,080

 

 

 

(264

)

 

 

2,191

 

 

 

(523

)

Net loss

 

$

(4,298

)

 

$

(7,779

)

 

$

(16,783

)

 

$

(25,601

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share, basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(1.15

)

 

$

(3.15

)

 

$

(4.23

)

 

$

(19.32

)

Discontinued operations

 

 

0.48

 

 

 

(0.11

)

 

 

0.49

 

 

 

(0.40

)

Total net loss per share, basic and diluted

 

$

(0.67

)

 

$

(3.26

)

 

$

(3.74

)

 

$

(19.72

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares used in computing net income (loss) per share, basic and diluted

 

 

6,415

 

 

 

2,386

 

 

 

4,487

 

 

 

1,298

 

 

See accompanying notes to unaudited condensed financial statements.

 

 


4


 

 

RA MEDICAL SYSTEMS, INC.

Condensed Statements of Comprehensive Loss

(in thousands)

(Unaudited)

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

(4,298

)

 

$

(7,779

)

 

$

(16,783

)

 

$

(25,601

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses related to short-term investments

 

 

 

 

 

 

 

 

 

 

 

(26

)

Comprehensive loss

 

$

(4,298

)

 

$

(7,779

)

 

$

(16,783

)

 

$

(25,627

)

 

 

See accompanying notes to unaudited condensed financial statements.

 

5


 

 

RA MEDICAL SYSTEMS, INC.

Condensed Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net loss

 

$

(16,783

)

 

$

(25,601

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Gain on sale of discontinued operations

 

 

(3,473

)

 

 

 

Gain on extinguishment of PPP promissory note

 

 

(2,023

)

 

 

 

Stock-based compensation

 

 

1,967

 

 

 

3,044

 

Depreciation and amortization

 

 

1,250

 

 

 

1,845

 

(Gain) loss on sales and disposals of property and equipment

 

 

(489

)

 

 

64

 

Provision for doubtful accounts

 

 

 

 

 

25

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

93

 

 

 

286

 

Inventories

 

 

(262

)

 

 

78

 

Prepaid expenses and other assets

 

 

9

 

 

 

1,437

 

Accounts payable

 

 

171

 

 

 

(633

)

Accrued expenses

 

 

(1,875

)

 

 

1,678

 

Deferred revenue

 

 

(234

)

 

 

(876

)

Other liabilities

 

 

(265

)

 

 

(237

)

Net cash used in operating activities

 

 

(21,914

)

 

 

(18,890

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from sale of discontinued operations

 

 

3,700

 

 

 

 

Payment of fees related to sale of discontinued operations

 

 

(227

)

 

 

 

Proceeds from sales of property and equipment

 

 

554

 

 

 

 

Purchases of property and equipment

 

 

(224

)

 

 

(72

)

Proceeds from maturities of available-for-sale securities

 

 

 

 

 

16,000

 

Net cash provided by investing activities

 

 

3,803

 

 

 

15,928

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock and warrants, net

 

 

15,430

 

 

 

19,887

 

Payments of offering costs related to the issuance of common stock and warrants

 

 

(370

)

 

 

(499

)

Payments on equipment financing

 

 

(265

)

 

 

(218

)

Proceeds from purchases under employee stock purchase plan

 

 

26

 

 

 

27

 

Proceeds from PPP promissory note

 

 

 

 

 

2,000

 

Proceeds from issuance of common stock in connection with the exercise of warrants

 

 

 

 

 

827

 

Net cash provided by financing activities

 

 

14,821

 

 

 

22,024

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

(3,290

)

 

 

19,062

 

CASH AND CASH EQUIVALENTS, beginning of period

 

 

23,906

 

 

 

14,584

 

CASH AND CASH EQUIVALENTS, end of period

 

$

20,616

 

 

$

33,646

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND

   FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Unpaid property and equipment

 

$

26

 

 

$

 

Unpaid offering costs

 

$

 

 

$

281

 

Transfer of lasers from inventories to property and equipment

 

$

 

 

$

107

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash payments for interest

 

$

2

 

 

$

23

 

Cash payments for taxes

 

$

2

 

 

$

 

 

See accompanying notes to unaudited condensed financial statements.

6


 

 

RA MEDICAL SYSTEMS, INC.

Condensed Statements of Stockholders’ Equity  

(in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2020

 

 

3,189

 

 

$

7

 

 

$

174,342

 

 

$

 

 

$

(153,202

)

 

$

21,147

 

Common stock issued, net

 

 

35

 

 

 

 

 

 

65

 

 

 

 

 

 

 

 

 

65

 

Stock-based compensation

 

 

35

 

 

 

 

 

 

1,169

 

 

 

 

 

 

 

 

 

1,169

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,236

)

 

 

(7,236

)

Balances at March 31, 2021

 

 

3,259

 

 

 

7

 

 

 

175,576

 

 

 

 

 

 

(160,438

)

 

 

15,145

 

Common stock issued, net

 

 

2,582

 

 

 

 

 

 

10,645

 

 

 

 

 

 

 

 

 

10,645

 

Common stock issued pursuant to the vesting of restricted stock units and employee stock purchase plan

 

 

6

 

 

 

 

 

 

26

 

 

 

 

 

 

 

 

 

26

 

Stock-based compensation

 

 

56

 

 

 

 

 

 

696

 

 

 

 

 

 

 

 

 

696

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,249

)

 

 

(5,249

)

Balances at June 30, 2021

 

 

5,903

 

 

 

7

 

 

 

186,943

 

 

 

 

 

 

(165,687

)

 

 

21,263

 

Common stock issued, net

 

 

1,139

 

 

 

 

 

 

4,350

 

 

 

 

 

 

 

 

 

4,350

 

Warrant issued

 

 

 

 

 

 

 

 

132

 

 

 

 

 

 

 

 

 

132

 

Stock-based compensation

 

 

 

 

 

 

 

 

102

 

 

 

 

 

 

 

 

 

102

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,298

)

 

 

(4,298

)

Balances at September 30, 2021

 

 

7,042

 

 

$

7

 

 

$

191,527

 

 

$

 

 

$

(169,985

)

 

$

21,549

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2019

 

 

551

 

 

$

1

 

 

$

150,280

 

 

$

26

 

 

$

(117,157

)

 

$

33,150

 

Common stock issued

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,047