IR-MED INC. The following Management's Discussion and Analysis of Financial Condition and
Results of Operations is intended to provide information necessary to understand
our audited consolidated financial statements for the fiscal years ended
45
Key Financial Terms and Metrics
The following discussion summarizes the key factors our management believes are necessary for an understanding of our consolidated financial statements.
Revenues
We have not generated any revenues from product sales to date.
Research and Development Expenses
The process of researching and developing our product candidates is lengthy, unpredictable, and subject to many risks. We expect to continue incurring substantial expenses for the next several years as we continue to develop our product candidates. We are unable, with any certainty, to estimate either the costs or the timelines in which those expenses will be incurred. Our current development plans focus on the development of our PressureSafe and Nobiotics diagnostic devices. The design and development of these devices will consume a large proportion of our current, as well as projected, resources.
Our research and development costs include costs are comprised of:
? internal recurring costs, such as personnel-related costs (salaries, employee benefits, equity compensation and other costs), materials and supplies, facilities and maintenance costs attributable to research and development functions; and
? fees paid to external parties who provide us with contract services, such as preclinical testing, manufacturing and related testing and clinical trial activities.
Marketing
Marketing expenses consist primarily of salaries, employee benefits, equity compensation, and other personnel-related costs associated with executive and other support staff. Other significant marketing expenses include the costs associated with professional fees to develop our marketing strategy.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, employee benefits, equity compensation, and other personnel-related costs associated with executive, administrative and other support staff. Other significant general and administrative expenses include the costs associated with professional fees for accounting, auditing, insurance costs, consulting and legal services, along with facility and maintenance costs attributable to general and administrative functions.
Financial Expenses
Financial expenses consist primarily impact of exchange rate derived from re-measurement of monetary balance sheet items denominated in non-dollar currencies. Other financial expenses include bank's fees and interest on long term loans.
Comparison of the Year Ended
Our financial results for the year ended
Year Ended
December 31, 2022 December 31, 2021
Operating Expenses
Research and Development $ 1,885,000 $ 1,419,000
Marketing 759,000 888,000General and Administrative $ 2,118,000 $ 1,368,000 Financing expenses (income), net $
(28,000 ) $ 41,000
Loss for the year $ 4,734,000 $ 3,716,000
46
Revenues. We have not recorded any revenues to date.
Research and Development Expenses, Research and development expenses increased
from
Marketing Expenses -Marketing expenses decreased from
General and Administrative Expenses. General and expenses increased from
Loss. Loss for the year ended
Liquidity and Capital Resources
We are subject to risks common to companies in the medical device industry, including but not limited to, the need for additional capital, the need to obtain marketing approval and reimbursement for any product candidate that we may identify and develop, the need to successfully commercialize and gain market acceptance of our product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development of technological innovations by competitors, reliance on third-party manufacturers and the ability to transition from pilot-scale production to large-scale manufacturing of products.
From inception, we have funded our operations from a combination of loans and
sales of equity instruments. Between
As of
The following table provides a summary of operating, investing, and financing cash flows for the years endedDecember 31, 2022 and 2021 respectively (in thousands): For the year ended December 31, 2022 December 31, 2021 US Dollars (In thousands) Net cash used in operating activities (3,375 ) (2482 ) Net cash used in investment activities (59 ) (61 ) Net cash provided by Financing Activities 3,625 3,491 47
We have experienced operating losses since its inception and had a total
accumulated deficit of
Under the private placement of our securities that we undertook between
Under the private placement of our securities which we commenced in
We will need to obtain additional funding in order to pursue our business plans. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.
We expect that our existing cash and cash equivalents will enable us to fund our operations and capital expenditure requirements through the fourth quarter of 2023. Our requirements for additional capital during this period will depend on many factors, including the following:
? the scope, rate of progress, results and cost of our development and
engineering efforts to develop the PressureSafe and Nobiotics devices,
clinical studies (to the extent necessary), preliminary testing activities and
other related activities;
? the cost, timing and outcomes of regulatory related efforts for commercial
sales approvals;
? the cost and timing of establishing sales, marketing and distribution
capabilities;
? the terms and timing of any collaborative, licensing and other arrangements
that we may establish;
? the timing, receipt and amount of sales, profit sharing or royalties, if any,
from our potential products;
? the cost of preparing, filing, prosecuting, defending and enforcing any patent
claims and other intellectual property rights; and
? the extent to which we acquire or invest in businesses, products or
technologies, although we currently have no commitments or agreements relating
to any of these types of transactions.
For the year ended
48
We may seek to raise any necessary additional capital through a combination of private or public equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. To the extent that we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights, future revenue streams, or product candidates or to grant licenses on terms that may not be favorable to us. If we raise additional capital through private or public equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders' rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Accounting for share-based compensation
Until
In
Smaller Reporting Company Status
Currently, we qualify as a smaller reporting company.
As a smaller reporting company, we are eligible and have taken advantage of certain exemptions from various reporting requirements that are not available to public reporting companies that do not qualify for this classification, including, but not limited to:
? An opportunity for reduced disclosure obligations regarding executive compensation in our periodic and annual reports, including without limitation exemption from the requirement to provide a compensation discussion and analysis describing compensation practices and procedures,
? An opportunity for reduced financial statement disclosure in registration statements and in annual reports on Form 10-K, which only requires two years of audited financial statements rather than the three years of audited financial statements that are required for other public companies,
? An opportunity for reduced audit and other compliance expenses as we are not subject to the requirement to obtain an auditor's report on internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002, and
? An opportunity to utilize the non-accelerated filer time-line requirements
beginning with our annual report for the year ending
49
For as long as we continue to be a smaller reporting company, we expect that we will take advantage of both the reduced internal control audit requirements and the disclosure obligations available to us as a result of this classification.
© Edgar Online, source
