The significant accounting policies
applied in the annual consolidated financial statements of the Company as of December 31, 2017 are applied consistently in these
financial statements.
In August 2018, the
SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure
requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the
disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments,
an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a
note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of
each period for which a statement of comprehensive income is required to be filed. This final rule became effective on
November 5, 2018. The Company is evaluating the impact of this guidance on its condensed consolidated financial
statements.
During the nine-month period ended
September 30, 2018 and 2017, the Company recorded share-based compensation in a total amount of $666 and $683, respectively.
During the three-month period ended
September 30, 2018 and 2017, the Company recorded share-based compensation in a total amount of $498 and $147, respectively.
As of September 30, 2018, the total
unrecognized estimated compensation cost related to non-vested stock options granted prior to that date was $798, which is expected
to be recognized over a weighted average period of approximately 1.3 years.
During the nine and three month
period ended September 30, 2018 the Company received $43 and $12, respectively, on the exercise of seven-year warrants (the “Warrants”) issued in a series of bridge financings from March 2017 through September 2017, for 31,195 shares.
The Company
currently leases its office facilities on a three year lease with the right to cancel the lease with 90 days advance notice.
Future
minimum lease commitments under non-cancelable operating lease agreements as of September 30, 2018 are as follows:
Rent and
related expenses were $22 and $20 for the nine months ended September 30, 2018 and 2017, and $12 and $7 for the three months ended
September 30, 2018 and 2017 respectively.
All outstanding share options
and warrants for the nine months ended September 30, 2018 and 2017 have been excluded from the calculation of the diluted net loss
per share because all such securities are anti-dilutive for all periods presented.
The following table summarizes
the Company’s securities, in common share equivalents, which have been excluded from the calculation of dilutive loss per
share as their effect would be anti-dilutive:
The Company manages its business
on the basis of one reportable segment, and derives revenues from selling its products directly to patients as well as through
distributor agreements. The following is a summary of revenues within geographic areas:
During the nine and three
month periods ended September 30, 2018, revenues from distributors accounted for 52% and 64% of total revenues, respectively. During the
nine and three month periods ended September 30, 2017, revenues from distributors accounted for 42% and 52% of total
revenues, respectively.
On July 4, 2018, Jona Zumeris,
Vice President of Technology and member of the board of directors of NanoVibronix, Inc. and the Company’s subsidiary, submitted
his resignation as a member of the board of directors and all positions from the Company and the Company’s subsidiary, effective
as of July 4, 2018. Dr. Zumeris’s resignation was not in connection with any disagreement with the Company on any matter
relating to the Company’s operations, policies or practices, or any other matter.
On July 4, 2018, the Company
and Dr. Zumeris and his wife, Janina (Ina) Zumeris entered into a Separation and Release Agreement (the “Separation Agreement”),
providing that Dr. Zumeris shall resign from all positions at the Company and the Company’s subsidiary, effective as of the
execution of the Separation Agreement and that Dr. Zumeris and Janina Zumeris will cooperate with the Company and its officers
on meeting certain technical and administrative milestones during the transition period ending 60 days following the date of the
Separation Agreement (the “Termination Date”). If Dr. Zumeris and Janina Zumeris have met such milestones to the satisfaction
of the Company and fulfilled other obligations under the Separation Agreement, (i) Dr. Zumeris and Janina Zumeris, will be entitled
to receive as consulting payments an aggregate of approximately $18,000 per month for 12 months, commencing 30 days after the Termination
Date; (ii) the Company’s management, beginning on November 4, 2018, will use its best efforts to allow the sale of the Company’s
securities owned by Dr. Zumeris, provided that such sale would be in compliance with the applicable U.S. securities laws and regulations,
and provided further, that, if the Company’s shares of common stock held by Dr. Zumeris had not been sold at a price lower
than $4.45 during the fourteen month period from July 4, 2018, and the value of the unsold securities Dr. Zumeris owns plus the
value of cash received by Dr. Zumeris from the sale of the Company’s securities during such fourteen month period (the “Aggregate
Amount”), in aggregate, is less than $950,000, then the Company will make up the difference between $950,000 and the Aggregate
Amount by extending the term of engagement of Dr. Zumeris and Janina Zumeris’s consulting services. In addition, if the Company
(i) grants a license for the skin rejuvenation technology, then the Company will pay Dr. Zumeris 10% from the payments received
by the Company until an aggregate amount of $100,000 has been paid to Dr. Zumeris, (ii) sells the skin rejuvenation technology
and/or the rights to such as a standalone product, the Company will pay Dr. Zumeris $100,000 from the proceeds of such sale, or
(iii) sells the skin rejuvenation devices, the Company will pay Dr. Zumeris $5 per unit an aggregate amount of $100,000 has been
paid to Dr. Zumeris.
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NOTE 10:
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SUBSEQUENT EVENTS
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None
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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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You should read
the following discussion and analysis of financial condition and results of operations in conjunction with our consolidated financial
statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q.
Unless the context
requires otherwise, references in this Form 10-Q to the “Company,” “NanoVibronix,” “we,” “our”
and “us” refer to NanoVibronix, Inc., a Delaware corporation, and its subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report
on Form 10-Q contains “forward-looking statements,” which include information relating to future events, future financial
performance, financial projections, strategies, expectations, competitive environment and regulation. Words such as “may,”
“should,” “could,” “would,” “predicts,” “potential,” “continue,”
“expects,” “anticipates,” “future,” “intends,” “plans,” “believes,”
“estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking
statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such
performance or results will be achieved. Forward-looking statements are based on information we have when those statements are
made or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties
that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking
statements. Important factors that could cause such differences include, but are not limited to:
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Our ability to continue as a going concern.
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The timing of clinical studies and eventual U.S. Food and Drug Administration approval of WoundShield™ and our other product candidates.
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Regulatory actions that could adversely affect the price of or demand for our approved products.
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Market acceptance of existing and new products.
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Favorable or unfavorable decisions about our products from government regulators, insurance companies or other third-party payers.
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Our ability to regain compliance with the continued listing requirements of the Nasdaq Capital Market and
the risk that our common stock will be delisted if we cannot do so.
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Our intellectual property portfolio.
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Our ability to recruit and retain qualified regulatory and research and development personnel.
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Unforeseen changes in healthcare reimbursement for any of our approved products.
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Lack of financial resources to adequately support our operations.
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Difficulties in maintaining commercial scale manufacturing capacity and capability.
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Our ability to generate internal growth.
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Changes in our relationship with key collaborators.
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Changes in the market valuation or earnings of our competitors or companies viewed as similar to us.
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Our failure to comply with regulatory guidelines.
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Uncertainty in industry demand and patient wellness behavior.
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General economic conditions and market conditions in the medical device industry.
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Future sales of large blocks of our common stock, which may adversely impact our stock price.
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Depth of the trading market in our common stock.
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The foregoing does
not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors
that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. For
a discussion of these and other risks that relate to our business and financial performance, you should carefully review the risks
and uncertainties described under the heading “Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form
10-Q and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and those described from time to time in
our future reports filed with the Securities and Exchange Commission. Moreover, new risks regularly emerge and it is not possible
for us to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which
any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All
forward-looking statements included in this Form 10-Q are based on information available to us on the date of this prospectus.
Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
Overview
We are a medical device
company focusing on noninvasive biological response-activating devices that target wound healing and pain therapy and can be administered
at home, without the assistance of medical professionals. Our WoundShield, PainShield and UroShield products are backed by novel
technology which relates to ultrasound delivery through surface acoustic waves.
Recent Events
On September 14, 2018, we received a letter
from the Listing Qualifications Department of the NASDAQ Stock Market (“NASDAQ”) indicating that we no longer comply
with the minimum stockholders’ equity requirement under NASDAQ Listing Rule 5550(b)(1) for continued listing on The NASDAQ
Capital Market because our stockholders’ equity of approximately $2.2 million as reported in our Quarterly Report on Form
10-Q for the period ended June 30, 2018, is below the required minimum of $2.5 million, and as of September 14, 2018, we do not
meet the alternative compliance standards relating to the market value of listed securities of $35 million or net income from continuing
operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years.
In accordance with Nasdaq Listing Rules, we had 45 calendar days, or until October 29, 2018, to submit a plan to regain compliance.
On October 26, 2018, we submitted a plan of
compliance to the NASDAQ, addressing how we intend to regain compliance with the continued listing standards by June 2019. We
subsequently received oral comments from NASDAQ which will require us to amend the plan that was submitted including, among other
things, accelerating our plan to regain compliance to the first quarter of 2019. We received an extended deadline of November 19,
2018, to submit the amended plan, addressing how we intend to regain compliance with the continued listing standards by March 2019.
We intend to timely submit an amended plan to NASDAQ by the extended deadline. However, there can be no assurance that our plan
will be accepted or that if it is, we will be able to regain compliance.
If our amended plan, once submitted, is accepted,
we will be subject to periodic review by the NASDAQ staff during the period covered by the compliance plan. Failure to make progress
consistent with the plan or to regain compliance with the continued listing standards by the end of the plan period could result
in our common stock being delisted from the NASDAQ.
Critical Accounting Policies
A critical accounting
policy is one that is both important to the portrayal of our financial condition and results of operation and requires management’s
most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that
are inherently uncertain. Our critical accounting policies are more fully described in both (i) “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and (ii) Note 2 of the Notes to the Consolidated
Financial Statements included in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2017. There have not been
any material changes to such critical accounting policies since December 31, 2017.
The currency of the
primary economic environment in which our operations are conducted is the U.S. dollar (“$” or “dollar”).
Accordingly, our functional currency is the dollar.
Results of Operations
Nine months Ended
September 30, 2018 Compared to Nine months Ended September 30, 2017
Revenues
. For
the nine months ended September 30, 2018 and 2017, our revenues were approximately $264,000 and $169,000, respectively, an increase
of approximately 56%, or $95,000, between the periods. The increase was mainly attributable to increased sales to distributors
in the nine months ended September 30, 2018 as well as increased sales of our Uroshield product. Our revenues may fluctuate as
we add new consumers or when existing distributors or consumers make large purchases of our products during one period and no purchases
during another period. Our revenues may fluctuate from quarter-to-quarter and any growth or decrease in revenues by quarter may
not be linear or consistent.
For the nine months
ended September 30, 2018, the percentage of revenues attributable to our products was: PainShield - 75% and UroShield - 25%. For
the nine months ended September 30, 2017, the percentage of revenues attributable to our products was: PainShield - 81% and UroShield
- 19%. For the nine months ended September 30, 2018 and 2017, the percentage of revenues attributable to our disposable products
was 26% and 53%, respectively. For the nine months ended September 30, 2018 and 2017, the portion of our revenues that was derived
from distributors was 52% and 53%, respectively.
Gross
Profit
. For the nine months ended September 30, 2018 and 2017, gross profit was approximately $141,000 and $113,000,
respectively, an increase of approximately 25%, or $28,000, mainly due to the increase of revenues and slightly offset by the
increased sales to distributors that typically are sold at a lower margins than sales that are direct to consumer, as well as
extra costs that were incurred in the third quarter of 2018 to correct defective products.
Gross profit as a percentage
of revenues was approximately 53% and 67% for the nine months ended September 30, 2018 and 2017, respectively. The decrease in
gross profit as a percentage is mainly due to the aforementioned increase in sales to distributors as well as extra costs incurred
in the third quarter of 2018 that were incurred to correct defective products.
Research and Development
Expenses
. For the nine months ended September 30, 2018 and 2017, research and development expenses were approximately $408,000
and $474,000, respectively, a decrease of approximately 14%, or $66,000, between the periods. The decrease was primarily due to
a decrease in expenses related to our clinical trials.
Research and development
expenses as a percentage of total revenues were approximately 155% and 280% for the nine months ended September 30, 2018 and 2017,
respectively. The decrease was due primarily to the increase in sales as well as the decrease in expenses described above.
Our research and development
expenses consist mainly of payroll expenses to employees involved in research and development activities, stock-based compensation
expenses, expenses related to subcontracting, patents application and registration, clinical trial and facilities expenses associated
with and allocated to research and development activities.
Selling and Marketing
Expenses
. For the nine months ended September 30, 2018 and 2017, selling and marketing expenses were approximately $871,000
and $309,000, respectively, an increase of approximately 182%, or $562,000, between the periods. The increase was mainly due to
an increase in our sales staff, sales consultants, and marketing activities which were limited in 2017 because of cash restraints.
Selling and marketing
expenses as a percentage of total revenues were approximately 330% and 183% for the nine months ended September 30, 2018 and 2017,
respectively. The increase was due primarily to the increase in expenses described above partially offset by the increase in revenues.
Selling and marketing
expenses consist mainly of payroll expenses to direct sales and marketing employees, stock-based compensation expenses, travel
expenses, advertising and marketing expenses, rent and facilities expenses associated with and allocated to selling and marketing
activities.
General and Administrative
Expenses
. For the nine months ended September 30, 2018 and 2017, general and administrative expenses were approximately $1,802,000
and $1,404,000, respectively, an increase of approximately 28%, or $398,000, between the periods. The increase was mainly due to
increased compensation costs and public company expenses.
General and administrative
expenses as a percentage of total revenues were approximately 683% and 831% for the nine months ended September 30, 2018 and 2017,
respectively. The decrease was due primarily to the increase in revenues described above offset somewhat by the decrease in expenses
described above.
Our general and administrative
expenses consist mainly of payroll expenses for management and administrative employees, share-based compensation expenses, accounting,
legal and facilities expenses associated with general and administrative activities and costs associated with being a publicly
traded company.
Financial
Expenses, net
. For the nine months ended September 30, 2018 and 2017, financial income (expenses), net were approximately
$16,000 compared to a loss of $(1,217,000), respectively, an increase of approximately $1,233,000, between the periods. The
income in 2018 was derived primarily from gains on its foreign currency transactions. The expense in 2017 was derived
primarily from an expense of approximately $865,000 related to the issuance of the Warrants amortized over the life of the
convertible promissory notes issued in the first two quarters of 2017 in a series of bridge financings (the “2017
Notes”), and redeemed in November 2017, and by a $293,000 expense due to a higher valuation adjustment of our
warrants that were issued with our 2013 and 2015 convertible promissory notes and exercised in full in October 2017.
Tax expenses.
For the nine months ended September 30, 2018 and 2017, tax expenses remained the same at $33,000. The tax expense is computed by
multiplying income before taxes at our Israeli subsidiary by the appropriate tax rate.
Net
loss.
Our net loss decreased by approximately $367,000, or 11%, to approximately $2,957,000 for the nine months ended
September 30, 2018 from approximately $3,324,000 in the same period of 2017. The decrease in net loss resulted primarily from
the factors described above.
Three months
Ended September 30, 2018 Compared to Three months Ended September 30, 2017
Revenues
For the three months ended September 30, 2018 and 2017, our revenues were approximately $54,000 and $65,000, respectively, a
decrease of approximately 17%, or $11,000, between the periods. The decrease was mainly attributable to a delay in our
marketing of products to our largest distributors while we corrected quality control issues in our manufacturing process
in the third quarter of 2018, which we believe has been resolved as of the date of this filing. Our revenues may fluctuate as we add new consumers or when existing distributors or consumers
make large purchases of our products during one period and no purchases during another period. Our revenues may fluctuate
from quarter-to-quarter and any growth or decrease in revenues by quarter may not be linear or consistent.
For the three months
ended September 30, 2018, the percentage of revenues attributable to our products was: PainShield - 72% and UroShield - 28%. For
the three months ended September 30, 2017, the percentage of revenues attributable to our products was: PainShield - 92% and UroShield
- 8%. For the three months ended September 30, 2018 and 2017, the percentage of revenues attributable to our disposable products
was 23% and 45%, respectively. For the three months ended September 30, 2018 and 2017, the portion of our revenues that was derived
from distributors was 64% and 52%, respectively.
Gross Profit
.
For the three months ended September 30, 2018 and 2017, gross profit was approximately $8,000 and $43,000, respectively, a decrease
of approximately 81%, or $35,000, mainly due to the decrease of revenues described above as well as extra costs in the
third quarter of 2018 that were incurred to correct defective products.
Gross profit as a percentage
of revenues was approximately 15% and 66% for the three months ended September 30, 2018 and 2017, respectively. The decrease in
gross profit as a percentage is mainly due to the aforementioned extra costs incurred in the third quarter of 2018 that were incurred
to correct defective products.
Research and Development
Expenses
. For the three months ended September 30, 2018 and 2017, research and development expenses were approximately $121,000
and $160,000, respectively, a decrease of approximately 24%, or $39,000, between the periods. The decrease was primarily due to
a decrease in expenses related to our clinical trials.
Research and development
expenses as a percentage of total revenues were approximately 224% and 246% for the three months ended September 30, 2018 and 2017,
respectively. The decrease was due primarily to the increase in sales as well as the decrease in expenses described above.
Our research and development
expenses consist mainly of payroll expenses to employees involved in research and development activities, stock-based compensation
expenses, expenses related to subcontracting, patents application and registration, clinical trial and facilities expenses associated
with and allocated to research and development activities.
Selling and Marketing
Expenses
. For the three months ended September 30, 2018 and 2017, selling and marketing expenses were approximately $345,000
and $109,000, respectively, an increase of approximately 217%, or $236,000, between the periods. The increase was mainly due to
an increase in our sales staff, sales consultants, and marketing activities which were limited in 2017 because of cash restraints.
Selling and marketing
expenses as a percentage of total revenues were approximately 639% and 168% for the three months ended September 30, 2018 and 2017,
respectively. The increase was due primarily to the increase in expenses described above partially offset by the increase in revenues.
Selling and marketing
expenses consist mainly of payroll expenses to direct sales and marketing employees, stock-based compensation expenses, travel
expenses, advertising and marketing expenses, rent and facilities expenses associated with and allocated to selling and marketing
activities.
General and Administrative
Expenses
. For the three months ended September 30, 2018 and 2017, general and administrative expenses were approximately $868,000
and $387,000, respectively, an increase of approximately 124%, or $481,000, between the periods. The increase was mainly due to
a $351,000 increase in stock based compensation as well as an increase of compensation costs and public company expenses.
General and administrative
expenses as a percentage of total revenues were approximately 1,607% and 595% for the three months ended September 30, 2018 and
2017, respectively. The increase was due primarily to the increase in expenses described above.
Our general and administrative
expenses consist mainly of payroll expenses for management and administrative employees, share-based compensation expenses, accounting,
legal and facilities expenses associated with general and administrative activities and costs associated with being a publicly
traded company.
Financial Expenses,
net
. For the three months ended September 30, 2018 and 2017, financial expenses, net were approximately $7,000 and $975,000,
respectively, an increase of approximately $968,000, between the periods. The expense in 2018 was derived primarily from losses
on its foreign currency transactions. The expense in 2017 resulted from expenses incurred from the issuance of the Warrants amortized
over the life of the 2017 Notes issued in the first two quarters of 2017 offset by a reduction derived by a lower valuation adjustment
of our warrants that were issued with our 2013 and 2015 convertible promissory notes.
Tax expenses.
For the three months ended September 30, 2018 and 2017, tax expenses were $11,000. The tax expense is computed by
multiplying income before taxes at our Israeli subsidiary by the appropriate tax rate.
Net l
oss.
Our net loss decreased by approximately $255,000, or 16%, to approximately $1,344,000 for the three months ended September
30, 2018 from approximately $1,599,000 in the same period of 2017. The decrease in net loss resulted primarily from the
factors described above.
Liquidity and Capital Resources
We incurred losses in the
amount of $2,957,000 during the nine month period ended September 30, 2018, and accumulated negative cash flow from operating activities
of $2,669,000 for the nine month period ended September 30, 2018. We expect to continue to incur losses and negative cash flows
from operating activities and as a result, we will not have sufficient resources to fund our operation for the next twelve months
from the date of this filing. These conditions raise substantial doubt about our ability to continue as a going concern. During
the next twelve months management expects that we will need to raise additional capital to finance its losses and negative cash
flows from operations for the next twelve months and may continue to be dependent on additional capital raising as long as our
products do not reach commercial profitability.
During the nine months
ended September 30, 2018, and through November 14, 2018, we met our short-term liquidity requirements from our existing cash reserves
which includes the proceeds from the sales of the 2017 Notes between March and September 2017 in an aggregate amount of $1,380,000,
as well as the net proceeds of $5,056,000 from our underwritten public offering of common stock and warrants which closed on November
6, 2017. Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability
to successfully commercialize our products, our development of future products and competing technological and market developments.
We have been using these proceeds to meet our short-term liquidity requirements but may need to sell additional securities to advance
our long-term plans. It is our current belief that if we do not continue to see significant increases in revenues, or if we are
unable to raise additional capital at a later time in the next twelve months, we may need to reduce our operating budget as well
as sales and marketing expenses which may impair our ability to execute our business objectives. However, we may be unable to raise
sufficient additional capital when we require it or upon terms favorable to us. Delisting from NASDAQ would adversely affect our
ability to raise additional financing through the public or private sale of equity securities, would significantly affect the ability
of investors to trade our securities and would negatively affect the value and liquidity of our common stock. In addition, the
terms of any securities we issue in future financings may be more favorable to new investors and may include preferences, superior
voting rights and the issuance of warrants or other derivative securities, which may have a further dilutive effect on the holders
of any of our securities then outstanding. If we are unable to obtain adequate funds on reasonable terms, we may need to curtail
operations significantly, including possibly postponing anticipated clinical trials or entering into financing agreements with
unattractive terms.
We do not have any material commitments
to capital expenditures as of September 30, 2018, and we are not aware of any material trends in capital resources that would impact
our business.
Nine months Ended September 30, 2018
Compared to Nine months Ended September 30, 2017
General
. As
of September 30, 2018, we had cash and cash equivalents of approximately $1,727,000, compared to approximately $4,360,000 as of
December 31, 2017. The decrease is attributable to our net cash used in operating activities. We have historically met our cash
needs through a combination of issuance of equity, borrowing activities and sales. Our cash requirements are generally for product
development, research and development cost, marketing and sales activities, finance and administrative cost, capital expenditures
and general working capital.
Cash used in our operating
activities was approximately $2,669,000 for the nine months ended September 30, 2018 and $1,402,000 for the same period in 2017.
The increase in our cash usage was mainly associated with the increase in our net operating loss, excluding non-cash items such
as stock-based compensation, for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017,
for the reasons described above.
Cash used in investing
activities was $8,000 and $2,000 for the nine month periods ended September 30, 2018 and 2017, respectively, and was related to
purchases of fixed assets.
Cash provided by financing
activities was approximately $44,000 for the nine months ended September 30, 2018 derived from proceeds received from the exercise
of warrants, compared to $1,380,000 for the nine months ended September 30, 2017 derived from proceeds received from the issuance
of 2017 Notes.
Off Balance Sheet Arrangements
As of September 30,
2018, we have no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships
with unconsolidated entities or other persons that have, or may have, a material effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Factors That May Affect Future Operations
We believe that our
future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the
ordering patterns of our distributors, timing of regulatory approvals, the implementation of various phases of our clinical trials
and manufacturing efficiencies due to the learning curve of utilizing new materials and equipment. Our operating results could
also be impacted by a weakening of the Euro and strengthening of the New Israeli Shekel, or NIS, both against the U.S. dollar.
Lastly, other economic conditions we cannot foresee may affect customer demand, such as individual country reimbursement policies
pertaining to our products.