Vicarious Surgical Inc

Previous wording

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our unaudited condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto contained in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto for the year ended December 31, 2023 contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 4, 2024, and our other public reports filed with the SEC. This discussion contains forward looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. Actual results may differ materially from those contained in any forward-looking statements. Unless the context otherwise requires, references to “we”, “us”, “our”, and “the Company” are intended to mean the business and operations of Vicarious Surgical Inc. and its consolidated subsidiaries. The condensed consolidated financial statements for the three months ended March 31, 2024 and 2023, respectively, present the financial position and results of operations of Vicarious Surgical Inc. and its consolidated subsidiaries. In preparing this MD&A, the Company presumes that readers have access to and have read the MD&A in our Annual Report on Form 10-K, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K.

Current wording

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our unaudited condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto contained in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto for the year ended December 31, 2023 contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 4, 2024, and our other public reports filed with the SEC. This discussion contains forward looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 and Part II, Item 1A of this Quarterly Report on Form 10-Q. Actual results may differ materially from those contained in any forward-looking statements. Unless the context otherwise requires, references to “we”, “us”, “our”, and “the Company” are intended to mean the business and operations of Vicarious Surgical Inc. and its consolidated subsidiaries. The condensed consolidated financial statements for the three and six-month periods ended June 30, 2024 and 2023, respectively, present the financial position and results of operations of Vicarious Surgical Inc. and its consolidated subsidiaries. In preparing this MD&A, the Company presumes that readers have access to and have read the MD&A in our Annual Report on Form 10-K, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K.

Previous wording

We incurred net losses of $17,001 and $26,922 for the three months ended March 31, 2024 and March 31, 2023, respectively. These losses include losses of $1,867 and $6,079 related to the change in valuation of our warrant obligations for the three months ended March 31, 2024 and March 31, 2023, respectively. Our loss from operations prior to the warrant loss and other income and expense items was $16,109 and $22,315 for the three months ended March 31, 2024 and March 31, 2023, respectively, representing a period-over-period gain of 28%, which was primarily due to decreases of $4,174 in personnel-related expenses, $1,202 in in professional services and $514 in insurance expenses. The decrease in personnel-related expense was due primarily to a decrease in average headcount of 39%, from an average of 216 people in the three months ended March 31, 2023 to an average of 131 people in the three months ended March 31, 2024.

Current wording

We incurred net losses of $32,206 and $42,256 for the six months ended June 30, 2024 and June 30, 2023, respectively. These losses include losses of $277 and $998 related to the change in valuation of our warrant obligations for the six months ended June 30, 2024 and June 30, 2023, respectively. Our loss from operations prior to the warrant loss and other income and expense items was $33,822 and $43,773 for the six months ended June 30, 2024 and June 30, 2023, respectively, representing a period-over-period gain of 23%, which was primarily due to decreases of $7,393 in personnel-related expenses, $1,488 in supplies and materials, and $953 in insurance expenses. The decrease in personnel-related expense was due primarily to a decrease in average headcount of 37%, from an average of 205 people in the six months ended June 30, 2023 to an average of 129 people for the six months ended June 30, 2024.

Previous wording

The following table sets forth our historical operating results for the three months ended March 31, 2024 and 2023:

Current wording

The following table sets forth our historical operating results for three months ended June 30, 2024 and 2023:

Previous wording

Change in Fair Value of Warrant Liabilities. The change in fair value of warrant liabilities during the three months ended March 31, 2024 was a $1,867 loss. The change in fair value of warrant liability resulted from the remeasurement of the public and private placement warrant liabilities between December 31, 2023 and the end of the reporting period, March 31, 2024.

Current wording

Change in Fair Value of Warrant Liabilities. The change in fair value of warrant liabilities during the three months ended June 30, 2024 was a $1,590 gain. The change in fair value of the warrant liability resulted from the remeasurement of the public and private placement warrant liabilities between March 31, 2024 and the end of the reporting period, June 30, 2024.

Previous wording

Interest and Other Income. Interest and other income decreased by $498, or 34%, to $975 during the three months ended March 31, 2024, compared to $1,473 during the three months ended March 31, 2023. The decrease was primarily due to a decrease in interest income from short-term investments.

Current wording

Interest and Other Income. Interest and other income decreased by $126 to $918 during the three months ended June 30, 2024, compared to $1,044 during the three months ended June 30, 2023. The decrease was primarily due to a decrease in interest income from short-term investments.

Previous wording

Sales and Marketing Expenses. S&M expenses decreased $819, or 42%, to $1,141 during the three months ended March 31, 2024, compared to $1,960 during the three months ended March 31, 2023. This decrease was primarily due to decreases of $559 of personnel-related expenses and $147 in professional services. The decrease in personnel-related expense was due to an average headcount decrease of 44%, from an average of 18 people in the three months ended March 31, 2023 to an average of 10 people for the three months ended March 31, 2024.

Current wording

Sales and Marketing Expenses. S&M expenses decreased $1,288, or 36%, to $2,338 during the six months ended June 30, 2024, compared to $3,626 during the six months ended June 30, 2023. This decrease was primarily due to decreases of $633 in personnel-related expenses and $549 in professional services. The decrease in personnel-related expense was due primarily to an average headcount decrease of 44%, from an average of 18 people in the six months ended June 30, 2023 to an average of 10 people for the six months ended June 30, 2024.

Previous wording

To date, our primary sources of capital have been private placements of preferred stock prior to the Business Combination, the recapitalization with D8 and the issuance of common stock. Net cash used in our operating activities for the three months ended March 31, 2024 and the year ended December 31, 2023 was $14,458 and $62,305, respectively. As of March 31, 2024, we held cash and cash equivalents of $38,222, short-term investments of $45,904 and had an accumulated deficit of $149,713.

Current wording

To date, our primary sources of capital have been private placements of preferred stock prior to the Business Combination, the recapitalization with D8 and the issuance of Class A common stock. Net cash used in our operating activities for the six months ended June 30, 2024 and the year ended December 31, 2023 was $25,479 and $62,305, respectively. As of June 30, 2024, we held cash and cash equivalents of $20,250, short-term investments of $52,980 and had an accumulated deficit of $164,918.

Previous wording

Excluding the non-cash impact of potential changes in the fair value of warrant liabilities, we expect net losses to continue in connection with our ongoing activities, particularly as we continue to invest in commercialization and new product development. We believe our current cash, cash equivalents and short-term investments balance of $84,126 as of March 31, 2024 will be sufficient to support our operations beyond the next twelve months from the date of issuance of these financial statements. Our future capital requirements will depend on many factors, including, but not limited to, any changes in the size, number and scope of clinical trials we may be required to conduct, the timing and conditions of market authorization (if any) for the Vicarious Surgical System, whether we are able to successfully commercialize the Vicarious Surgical System, if approved, additional product candidates we may choose to develop, fluctuations in the cost and timing of our business activities, including manufacturing, hiring and protection of our intellectual property portfolio, and the other risks and uncertainties described in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K filed with the SEC on March 4, 2024 and in other filings that we make with the Securities and Exchange Commission from time to time.

Current wording

Excluding the non-cash impact of potential changes in the fair value of warrant liabilities, we expect net losses to continue in connection with our ongoing activities, particularly as we continue to invest in commercialization and new product development. We believe our current cash, cash equivalents and short-term investments balance of $73,230 as of June 30, 2024 will be sufficient to support our operations beyond the next twelve months from the date of issuance of these financial statements. Our future capital requirements will depend on many factors, including, but not limited to, any changes in the size, number and scope of clinical trials we may be required to conduct, the timing and conditions of market authorization (if any) for the Vicarious Surgical System, whether we are able to successfully commercialize the Vicarious Surgical System, if approved, additional product candidates we may choose to develop, fluctuations in the cost and timing of our business activities, including manufacturing, hiring and protection of our intellectual property portfolio, and the other risks and uncertainties described in the “Risk Factors” sections in Part I, Item 1A in our Annual Report on Form 10-K filed with the SEC on March 4, 2024, in Part II, Item 1A in this Quarterly Report on Form 10-Q, and in other filings that we make with the Securities and Exchange Commission from time to time.

Previous wording

On October 7, 2022, we filed a universal shelf registration statement on Form S-3 (the “Form S-3”), which was declared effective by the SEC on October 27, 2022, on which we registered for sale up to $400 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, which includes up to $100 million of Class A common stock that we may issue and sell from time to time, through Cowen and Company, LLC acting as our sales agent, pursuant to the sales agreement that we entered into with Cowen and Company, LLC on October 7, 2022 for our “at-the-market” equity program. In December 2022, we issued 3,048,781 shares of Class A common stock under our sales agreement with Cowen and Company, LLC, resulting in gross proceeds of $10.0 million. We did not sell any shares of our Class A common stock under our sales agreement with Cowen and Company, LLC for the three months ended March 31, 2024.

Current wording

On October 7, 2022, we filed a universal shelf registration statement on Form S-3 (the “Form S-3”), which was declared effective by the SEC on October 27, 2022, on which we registered for sale up to $400 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, which includes up to $100 million of Class A common stock that we may issue and sell from time to time, through Cowen and Company, LLC acting as our sales agent, pursuant to the sales agreement that we entered into with Cowen and Company, LLC on October 7, 2022 for our “at-the-market” equity program. In December 2022, we issued 3,048,781 shares of Class A common stock under our sales agreement with Cowen and Company, LLC, resulting in gross proceeds of $10.0 million. We did not issue any Class A common stock under our sales agreement with Cowen and Company, LLC during the six months ended June 30, 2024.

Previous wording

Our cash and cash equivalents and short-term investments balance as of March 31, 2024 was $38,222 and $45,904, respectively. Our future capital requirements may vary from those currently planned and will depend on various factors, including the timing and extent of R&D spending and spending on other strategic business initiatives.

Current wording

Our cash and cash equivalents and short-term investments balance as of June 30, 2024 was $20,250 and $52,980, respectively. Our future capital requirements may vary from those currently planned and will depend on various factors, including the timing and extent of R&D spending and spending on other strategic business initiatives.

Previous wording

Net cash used in operating activities during the three months ended March 31, 2024 was $14,458, attributable to net loss of $17,001 and a net change in our net operating assets and liabilities of $2,686 and non-cash items of $5,229. Non-cash items consisted of a loss of $1,867 due to the change in fair value of our warrant liabilities, $3,091 in stock-based compensation, $521 of depreciation and amortization, $216 for non-cash lease expense and partially offset by a $466 change in accrued interest and net accretion of discounts on marketable securities. The $2,686 change in our net operating assets and liabilities was primarily due to decreases of $2,259 in accrued expenses, $241 in lease liabilities, $14 in accounts payable, $9 in other noncurrent assets, and partially offset by a $209 increase in prepaid expenses.

Current wording

Net cash used in operating activities during the six months ended June 30, 2024 was $25,479, attributable to a net loss of $32,206 offset by a $631 net change in our net operating assets and liabilities and non-cash items of $7,358. Non-cash items consisted of $6,157 in stock-based compensation, a loss of $277 due to the change in fair value of our warrant liabilities, $1,058 of depreciation and amortization, $438 for non-cash lease expense, a $35 loss on disposal of property and equipment and partially offset by a $607 change in accrued interest and net accretion of discounts on marketable securities. The $631 change in our net operating assets and liabilities was due to a $280 decrease in accrued expenses, a $503 decrease in lease liabilities, and a $18 decrease in other noncurrent assets and was partially offset by a $73 increase in prepaid and other current assets a $97 increase in accounts payable.

Previous wording

Net cash used in operating activities during the three months ended March 31, 2023 was $18,570, attributable to net loss of $26,922 and a net change in our net operating assets and liabilities of $1,449 and non-cash items of $9,801. Non-cash items consisted of a loss of $6,079 due to the change in fair value of our warrant liabilities, $3,254 in stock-based compensation, $441 of depreciation and amortization, $196 for non-cash lease expense and partially offset by a $169 change in accrued interest and net accretion of discounts on marketable securities. The $1,449 change in our net operating assets and liabilities was primarily due to a $1,979 increase in accrued expenses, $150 in lease liabilities, and $113 in other noncurrent assets, partially offset by a $170 increase in accounts payable.

Current wording

Net cash used in operating activities during the six months ended June 30, 2023 was $33,652, attributable to a net loss of $42,256 offset by a $183 net change in our net operating assets and liabilities and non-cash items of $8,421. Non-cash items consisted of $6,578 in stock-based compensation, a loss of $998 due to the change in fair value of our warrant liabilities, $882 of depreciation and amortization, $397 for non-cash lease expense and partially offset by a $434 change in accrued interest and net accretion of discounts on marketable securities. The $183 change in our net operating assets and liabilities was due to a $1,698 increase in prepaid and other current assets and was partially offset by a $872 decrease in accrued expenses, a $374 decrease in lease liabilities, a $181 decrease in accounts payable, and a $88 decrease in other noncurrent assets.

Previous wording

Net cash used by investing activities for the three months ended March 31, 2024 was $144 consisting of $19,493 for purchases of available-for-sale investments, $10 for fixed asset purchases consisting mainly of leasehold improvements and partially offset by $19,359 in proceeds from sales and maturities of available-for-sale investments.

Current wording

Net cash used by investing activities for the six months ended June 30, 2024 was $7,095 consisting of $38,892 used for purchases of available-for-sale investments and $16 for fixed asset purchases, and partially offset by $31,813 in proceeds from sales and maturities of available-for-sale investments.

Previous wording

Net cash used by investing activities for the three months ended March 31, 2023 was $43,828 consisting of $43,522 for available-for-sale investments and $306 for fixed asset purchases consisting mainly of R&D equipment and leasehold improvements.

Current wording

Net cash used by investing activities for the six months ended June 30, 2023 was $50,184 consisting of $62,205 used for purchases of available-for-sale investments and $514 for fixed asset purchases, and partially offset by $12,535 in proceeds from sales and maturities of available-for-sale investments.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2024 was $2 that was received for stock option exercises.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2024 was $2 that was received for stock option exercises.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2023 was $273 consisting of $200 in proceeds from the short swing rule, $85 received for stock option exercises and partially offset by $12 of equipment loan repayments.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2023 was $435 consisting of $251 received for stock option exercises, $200 in proceeds from a stockholder of the Company pursuant to the application of the Section 16 short swing profit rules and partially offset by $16 of equipment loan repayments.

Previous wording

While our significant accounting policies are described in the notes to our historical condensed consolidated financial statements (see Note 2 of the accompanying condensed consolidated financial statements), we believe the following critical accounting policy requires significant judgment and estimates in the preparation of our condensed consolidated financial statements:

Current wording

While our significant accounting policies are described in the notes to our historical condensed consolidated financial statements (see Note 2 of the accompanying unaudited condensed consolidated financial statements), we believe the following critical accounting policy requires significant judgment and estimates in the preparation of our condensed consolidated financial statements:

Previous wording

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 “Summary of Significant Accounting Policies – Recently Issued Accounting Pronouncements” in our condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q.

Current wording

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 “Summary of Significant Accounting Policies – Recently Issued Accounting Pronouncements” in our unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q.