Autonomix Medical Inc

Previous wording

Our sensing catheter has already been developed sufficiently to demonstrate in animal models successful identification of a signal from a specific nerve before ablation and confirmation of termination of the signal from the treated nerve after ablation. We are now in the process of improving the assembly of this catheter to meet the standards required for human use. In parallel with this effort, we are preparing for a first-in-human demonstration of transvascular ablation (without the use of our sensing technology) to relieve pain associated with pancreatic cancer. Once these two efforts are completed, we plan to bring sensing and treatment together in a pivotal clinical trial to enable the commercial launch of our technology. As stated above, we are a development stage company and there is no guarantee that the results of any trials will produce positive results or that the results will support our claims.

Current wording

Our sensing catheter has already been developed sufficiently to demonstrate in animal models successful identification of a signal from a specific nerve before ablation and confirmation of termination of the signal from the treated nerve after ablation. We are now in the process of improving the assembly of this catheter to meet the standards required for human use. In parallel with this effort, we are conducting our first-in-human demonstration of transvascular ablation (without the use of our sensing technology) to relieve pain associated with pancreatic cancer. Once these two efforts are completed, we plan to bring sensing and treatment together in a pivotal clinical trial to enable the commercial launch of our technology. As stated above, we are a development stage company and there is no guarantee that the results of any trials will produce positive results or that the results will support our claims.

Previous wording

On July 10, 2024, we entered into a license agreement (the “Agreement”) with RF Innovations, Inc. (“RFI”), a privately held medical technology company, to license products utilizing RFI’s intellectual property related to its Apex 6 Radiofrequency Generator (the “Licensed Products”). The Apex 6 Generator is a United States Food and Drug Administration (“FDA”) cleared ablation technology designed to lesion neural tissue for pain management in the peripheral nervous system. Pursuant to the Agreement, RFI granted us a perpetual non-exclusive worldwide royalty free fully paid license related to the Licensed Products, provided that the license did not include the right to sell certain products to customers for the treatment of spine pain. In connection with the Agreement, we issued RFI 250,000 unregistered shares of our common stock as consideration for the license. The Agreement provides RFI the right to terminate the license if we breach any representation, warranty or covenant contained in the Agreement, subject to any relevant cure periods, or if we are subject to a bankruptcy or insolvency event.

Current wording

On July 10, 2024, we entered into a license agreement (the “Agreement”) with RF Innovations, Inc. (“RFI”), a privately held medical technology company, to license products utilizing RFI’s intellectual property related to its Apex 6 Radiofrequency Generator (the “Licensed Products”). The Apex 6 Generator is a United States Food and Drug Administration (“FDA”) cleared ablation technology designed to lesion neural tissue for pain management in the peripheral nervous system. Pursuant to the Agreement, RFI granted us a perpetual non-exclusive worldwide royalty free fully paid license related to the Licensed Products, provided that the license did not include the right to sell certain products to customers for the treatment of spine pain. The Agreement provides RFI the right to terminate the license if we breach any representation, warranty or covenant contained in the Agreement, subject to any relevant cure periods, or if we are subject to a bankruptcy or insolvency event. In connection with the Agreement, we issued RFI 12,500 unregistered shares of our common stock as consideration for the license. We determined that the fair value of the shares granted was $0.1 million, which represented our stock price on the date of the Agreement less a 25.6% of less than $0.1 million for a discount for lack of marketability (“DLOM”). We concluded a discount for lack of marketability was appropriate as the shares are subject to an initial lock-up period of six-months until they are eligible for registration pursuant to SEC Rule 144 followed by restrictions that allow for a maximum of 10% of total shares to be sold within a 30-day period. The DLOM effectively reflects the value of an average strike put option relative to our stock price and was calculated based on the Finnerty average put model. We concluded that the licensed technology qualified as a research and development expense pursuant to ASC Topic 730,Research and Development, as we do not have an alternative future use for the technology and we do not have a plan to otherwise monetize the Licensed Products. We recognized $0.1 million in Research and Development expense in our condensed consolidated statement of income for the three and six-months ended September 30, 2024. The Agreement provides RFI the right to terminate the license if we breach any representation, warranty or covenant contained in the Agreement, subject to any relevant cure periods, or if we are subject to a bankruptcy or insolvency event.

Previous wording

Results of Operations for the Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023

Current wording

Results of Operations for the Three and Six Months Ended September 30, 2024 Compared to the Three and Six Months Ended September 30, 2023

Previous wording

General and administrative expense was $1.8 million for the three months ended June 30, 2024 compared to $0.5 million for the same period in 2023. This $1.3 million increase was driven primarily by increases in officer and employee compensation and benefits of $0.6 million, as we expanded our management team, stock-based compensation of $0.3 million, legal and professional fees of $0.2 million, insurance expense of $0.1 million, franchise tax of $0.1 million and other expenses of $0.1 million, offset by a decrease in advertising expense of $0.1 million.

Current wording

General and administrative expense was $3.5 million for the six months ended September 30, 2024 compared to $1.3 million for the same period in 2023. This $2.2 million increase was driven primarily by increases in officer and employee compensation and benefits of $1.0 million, as we expanded our management team, stock-based compensation of $0.6 million, legal and professional fees of $0.2 million, insurance expense of $0.2 million, franchise tax of $0.2 million, and board of directors compensation of $0.1 million, offset by a decrease in advertising expense of $0.1 million.

Previous wording

Research and development expense was $1.0 million for the three months ended June 30, 2024 compared to $0.4 million for the same period in 2023. The increase in research and development expenses during the current year was mainly attributed to clinical trial planning and development cost. We expect to incur increased research and development costs in the future as we continue our clinical trial.

Current wording

The increases in research and development expenses during the current year was mainly attributed to our clinical trial and product development costs. We expect to incur increased research and development costs in the future as we continue with our clinical trial.

Previous wording

For the three months ended June 30, 2024, we had interest expense of less than $0.1 million, related to the amortization of debt discount. Interest expense was $0 during the three months ended June 30, 2023 as there was no comparable instrument or expense in the prior period.

Current wording

For the three and six months ended September 30, 2024, we had interest expense of less than $0.1 million, respectively, related to the amortization of debt discount. Interest expense was $0 during the three and six months ended September 30, 2023 as there was no comparable expense in the prior period.

Previous wording

For the three months ended June 30, 2024, we had interest income of $0.1 million. Interest income for the three months ended June 30, 2023 was less than $0.1 million due to relatively lower cash balances.

Current wording

For the three and six months ended September 30, 2024, we had interest income of less than $0.1 million and $0.2 million, respectively. Interest income for the three and six months ended September 30, 2023 was less than $0.1 million, respectively, due to relatively lower cash balances.

Previous wording

On June 30, 2024, we had cash of $6.8 million, and working capital of $6.3 million. We have historically funded our operations from proceeds from debt and equity sales. We estimate our current cash resources are sufficient to fund our operations into but not beyond the second calendar quarter of 2025.

Current wording

On September 30, 2024, we had cash of $5.2 million, and working capital of $4.1 million. We have historically funded our operations from proceeds from debt and equity sales. We estimate our current cash resources are sufficient to fund our operations into but not beyond the second calendar quarter of 2025.

Previous wording

We will need to raise additional capital to meet our obligations and execute our business plan. We estimate that we will require additional financing of approximately $40 million to fund our operations through our clinical phase. The timing and costs of clinical trials are difficult to predict and trial plans may change in response to evolving circumstances and as such the foregoing estimates may prove to be inaccurate. If we are unable to raise sufficient funds, we will be required to develop and implement an alternative plan to further extend payables, reduce overhead or scale back our business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. The Company recognizes it will need to raise additional capital to continue to execute its business plan, including obtaining regulatory clearance for its products currently under development and commercializing and generating revenues from products under development. There is no assurance that additional financing will be available when needed or that management will be able to obtain financing on terms acceptable to the Company. A failure to raise sufficient capital, generate sufficient product revenues, control expenditures and regulatory matters, among other factors, will adversely impact the Company’s ability to meet its financial obligations as they become due and payable and to achieve its intended business objectives. If the Company is unable to raise sufficient additional funds, it will have to scale back its operations.

Current wording

We will need to raise additional capital to meet our obligations and execute our business plan. We estimate that we will require additional financing of approximately $40 million to fund our operations to commercialization of our first indication. The timing and costs of clinical trials are difficult to predict and trial plans may change in response to evolving circumstances and as such the foregoing estimates may prove to be inaccurate. If we are unable to raise sufficient funds, we will be required to develop and implement an alternative plan to further extend payables, reduce overhead or scale back our business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. The Company recognizes it will need to raise additional capital to continue to execute its business plan, including obtaining regulatory clearance for its products currently under development and commercializing and generating revenues from products under development. There is no assurance that additional financing will be available when needed or that management will be able to obtain financing on terms acceptable to the Company. A failure to raise sufficient capital, generate sufficient product revenues, control expenditures and regulatory matters, among other factors, will adversely impact the Company’s ability to meet its financial obligations as they become due and payable and to achieve its intended business objectives. If the Company is unable to raise sufficient additional funds, it will have to scale back its operations.

Previous wording

Net cash used in operating activities was $1.9 million during the three months ended June 30, 2024, consisting of a net loss of $2.7 million and a decrease in operating assets and liabilities of $0.5 million. The change in operating assets and liabilities included sources of cash from a decrease in other current assets of $0.5 million and an increase in accrued expenses of $0.2 million offset by a use of cash decrease for accounts payable of $0.2 million. The decrease in other current assets was driven primarily by the receipt of funds from our marketing partner that were a holdback from our IPO and the amortization of prepaid insurance costs. The increase in accrued expenses and the decrease in accounts payable are offsetting and are driven primarily by the timing of receipt of vendor invoices. Non-cash items consisted of stock-based compensation of $0.4 million.

Current wording

Net cash used in operating activities was $3.4 million during the six months ended September 30, 2024, consisting of a net loss of $5.5 million and a decrease in operating assets of $0.6 million and an increase in operating liabilities of $0.5 million. The change in operating assets and liabilities included sources of cash from a decrease in other current assets of $0.6 million and an increase in accounts payable and accrued expenses of $0.1 million and $0.4 million, respectively. The decrease in other current assets was driven primarily by the receipt of funds from our marketing partner that were a holdback from our IPO and the amortization of prepaid insurance costs. The increases in accounts payable and accrued expenses were driven primarily by increases in research and development expenses and accruing for franchise tax. Non-cash items consisted of stock-based compensation of $0.8 million, depreciation and amortization of $0.1 million and issuance of common stock, net of discount for lack of marketability of $0.1 million.

Previous wording

Net cash used in investing activities was $5 thousand for the three months ended June 30, 2024 related to the purchase of computer hardware and software.

Current wording

Net cash used in investing activities was $5 thousand for the six months ended September 30, 2024 related to the purchase of computer hardware and software.

Previous wording

Net cash provided by financing activities was $0 for the three months ended June 30, 2024.

Current wording

Net cash provided by financing activities was $0 for the six months ended September 30, 2024.

Previous wording

Net cash provided by financing activities was $2.7 million for the three months ended June 30, 2023 consisting of $2.8 million from the sale of common stock. We also paid $0.1 million in offering costs related to our IPO.

Current wording

Net cash provided by financing activities was $3.1 million for the six months ended September 30, 2023 consisting of $2.8 million from the sale of common stock and $0.4 million from the issuance of convertible debt. We also paid $0.1 million in offering costs related to our IPO.

Previous wording

The financial statements in this quarterly report have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements, including the notes thereto. We consider critical accounting policies to be those that require more significant judgments and estimates in the preparation of our financial statements, including the following: research and development expenses, accrued liabilities, income tax valuations, warrants, and stock-based compensation. Management relies on historical experience and other assumptions believed to be reasonable in making its judgments and estimates. Actual results could differ materially from those estimates.

Current wording

The financial statements in this quarterly report have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements, including the notes thereto. We consider critical accounting policies to be those that require more significant judgments and estimates in the preparation of our financial statements, including the following: work performed but not yet billed by contract manufacturers, engineers and research organizations, warrant liability and the valuation of equity related instruments. Management relies on historical experience and other assumptions believed to be reasonable in making its judgments and estimates. Actual results could differ materially from those estimates.