UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

			For the quarterly period ended March 31, ~~2022~~2023

Or

o			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: 001-34822

ClearPoint Neuro, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware			58-2394628
(State or Other Jurisdiction			(IRS Employer
of Incorporation or Organization)			Identification Number)


120 S. Sierra Ave., Suite 100
Solana Beach, California			92075
(Address of Principal Executive Offices)			(Zip Code)

(888) 287-9109

(Registrant’s Telephone Number, Including Area Code)

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, $0.01 par value per share	CLPT	Nasdaq Capital Market

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. þ Yes o 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.) þ Yes o 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 o			Accelerated filer ☐
Non-accelerated filer þ			Smaller reporting company þ
			Emerging growth company o

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

As of May ~~5, 2022,~~3, 2023, there were ~~23,717,281~~24,582,251 shares of common stock outstanding.

CLEARPOINT NEURO, INC.

TABLE OF CONTENTS


		Page Number
PART I – FINANCIAL INFORMATION		1

Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets as of March ~~31, 2022~~ 3 1 , 202 3 and December 31, ~~2021~~2022	1
	Condensed Consolidated Statements of Operations for the three months ended March ~~31,~~ 3 1 , 202 3 and 2022 ~~and 2021~~	2
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March ~~31, 2022~~ 3 1 , 202 3 and ~~2021~~2022	3
	Condensed Consolidated Statements of Cash Flows for the three months ended March ~~31,~~ 3 1 , 202 3 and 2022 ~~and 2021~~	4
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1618
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2224
Item 4.	Controls and Procedures	2224

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	2325
Item 1A.	Risk Factors	2325
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2325
Item 3.	Defaults Upon Senior Securities	2325
Item 4.	Mine Safety Disclosures	2325
Item 5.	Other Information	2325
Item 6.	Exhibits	2426

SIGNATURES		2528

Trademarks, Trade Names and Service Marks

ClearPoint Neuro®, ClearPoint®, ~~ClearTrace~~®, SmartFlow®, SmartFrame®, SmartGrid®, Inflexion™®, SmartTwist™®, SmartTip™~~, ClearPoint Pursuit~~®, ClearPoint Maestro™®, ClearPoint Revolution™, SmartFrame Array™®, ClearPoint Orchestra™, ClearPoint Prism™, SmartFlow Flex™, ClearPointer™, When Your Path is Unclear, We Point The Way™®, and MRI Interventions® are all trademarks of ClearPoint Neuro, Inc. Any other trademarks, trade names or service marks referred to in this Quarterly Report on Form 10-Q (this “Quarterly Report”) are the property of their respective owners.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains “forward-looking statements” as defined under the United States federal securities laws. The forward-looking statements ~~are contained principally in~~relate to our expectations for performance, revenues and costs, and the ~~section~~adequacy of ~~this Quarterly Report entitled “Management’s Discussion~~cash and ~~Analysis of Financial Condition~~cash equivalent balances and ~~Results of Operations.”~~short-term investments to support operations and meet future obligations. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements, expressed or implied by the forward-looking statements. ~~Forward-looking statements include, but are not limited to, statements about:~~

•~~the effects of the COVID-19 pandemic and measures taken or that may be taken by federal, state and local governmental authorities to combat the spread of the disease;~~

•~~future revenue from sales of ClearPoint system products and services; and~~

•~~our ability to market, commercialize and achieve broader market acceptance for our ClearPoint system products.~~

In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these words. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain.

~~You~~In evaluating forward-looking statements, you should refer to (i) the section titled “Risk Factors” ofin our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021,~~2022, which we filed with the United States Securities and Exchange Commission (“SEC”) on March ~~9, 2022~~1, 2023 (the ~~“2021~~“2022 Form 10-K”) ~~and in~~, (ii) Item 2 of this Quarterly Report, ~~for a discussion~~under the heading "Management's Discussion and Analysis of ~~important factors that may cause our actual results to differ materially from those expressed or implied by the forward-looking statements contained in~~Financial Condition and Results of Operations -- Factors Which May Influence Future Results of Operations" and (iii) Part II, Item 1.A of this Quarterly Report. As a result of these risk factors, we cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We do not undertake to update any of the forward-looking statements after the date of this Quarterly Report, except to the extent required by applicable securities laws.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CLEARPOINT NEURO, INC.

Condensed Consolidated Balance Sheets

(Dollars in thousands, except for per share data)


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	49,658	$	54,109	Cash and cash equivalents	$	21,792	$	27,615
Short-term investments, at amortized cost						Short-term investments, at amortized cost	9,943		9,874
Accounts receivable, net	Accounts receivable, net	2,243		2,337		Accounts receivable, net	2,678		2,665
Inventory, net	Inventory, net	5,732		4,938		Inventory, net	9,808		9,303
Prepaid expenses and other current assets	Prepaid expenses and other current assets	380		508		Prepaid expenses and other current assets	1,764		1,723
Total current assets	Total current assets	58,013		61,892		Total current assets	45,985		51,180
Property and equipment, net	Property and equipment, net	709		539		Property and equipment, net	949		806
Operating lease rights of use		2,116		2,241
Operating lease, right-of-use assets						Operating lease, right-of-use assets	1,762		1,895
Software license inventory	Software license inventory	484		519		Software license inventory	450		450
Licensing rights	Licensing rights	352		265		Licensing rights	970		1,028
Other assets	Other assets	94		125		Other assets	131		131
Total assets	Total assets	$	61,768	$	65,581	Total assets	$	50,247	$	55,490

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	965	$	427	Accounts payable	$	1,352	$	272
Accrued compensation	Accrued compensation	1,344		2,604		Accrued compensation	1,454		2,824
Other accrued liabilities	Other accrued liabilities	602		537		Other accrued liabilities	1,396		2,065
Operating lease liabilities, current portion	Operating lease liabilities, current portion	521		507		Operating lease liabilities, current portion	571		561
Deferred product and service revenue, current portion	Deferred product and service revenue, current portion	541		678		Deferred product and service revenue, current portion	1,281		1,066
Total current liabilities	Total current liabilities	3,973		4,753		Total current liabilities	6,054		6,788
Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion	1,806		1,939		Operating lease liabilities, net of current portion	1,386		1,532
Deferred product and service revenue, net of current portion	Deferred product and service revenue, net of current portion	408		264		Deferred product and service revenue, net of current portion	320		390
2020 senior secured convertible notes payable, net		9,851		9,838
2020 senior secured convertible note payable, net						2020 senior secured convertible note payable, net	9,907		9,893
Total liabilities	Total liabilities	16,038		16,794		Total liabilities	17,667		18,603
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued and outstanding at March 31, 2022 and December 31, 2021		—		—
Common stock, $0.01 par value; 200,000,000 shares authorized; 23,708,118 shares issued and outstanding at March 31, 2022; and 23,665,991 issued and outstanding at December 31, 2021		237		237
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued and outstanding at March 31, 2023 and December 31, 2022						Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued and outstanding at March 31, 2023 and December 31, 2022	—		—
Common stock, $0.01 par value; 200,000,000 shares authorized; 24,582,251 shares issued and outstanding at March 31, 2023; and 24,578,983 issued and outstanding at December 31, 2022						Common stock, $0.01 par value; 200,000,000 shares authorized; 24,582,251 shares issued and outstanding at March 31, 2023; and 24,578,983 issued and outstanding at December 31, 2022	246		246
Additional paid-in capital	Additional paid-in capital	183,384		182,482		Additional paid-in capital	188,310		187,008
Accumulated deficit	Accumulated deficit	(137,891)		(133,932)		Accumulated deficit	(155,976)		(150,367)
Total stockholders’ equity	Total stockholders’ equity	45,730		48,787		Total stockholders’ equity	32,580		36,887
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	61,768	$	65,581	Total liabilities and stockholders’ equity	$	50,247	$	55,490

See accompanying notes to Condensed Consolidated Financial Statements.

CLEARPOINT NEURO, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollars in thousands, except for per share data)


		For The Three Months Ended March 31,					For The Three Months Ended March 31,
		2022		2021			2023		2022
Revenue:	Revenue:					Revenue:
Product revenue	Product revenue	$	3,163	$	3,162	Product revenue	$	2,630	$	3,163
Service and other revenue	Service and other revenue	1,868		868		Service and other revenue	2,803		1,868
Total revenue	Total revenue	5,031		4,030		Total revenue	5,433		5,031
Cost of revenue	Cost of revenue	1,785		1,416		Cost of revenue	2,231		1,800
Gross profit	Gross profit	3,246		2,614		Gross profit	3,202		3,231
Research and development costs	Research and development costs	2,533		1,563		Research and development costs	3,023		2,901
Sales and marketing expenses	Sales and marketing expenses	1,845		1,575		Sales and marketing expenses	2,933		2,018
General and administrative expenses	General and administrative expenses	2,732		1,657		General and administrative expenses	2,958		2,176
Operating loss	Operating loss	(3,864)		(2,181)		Operating loss	(5,712)		(3,864)
Other expense:	Other expense:					Other expense:
Other income (expense), net		11		(25)
Interest expense, net		(106)		(332)
Other (expense) income, net						Other (expense) income, net	(11)		11
Interest income (expense), net						Interest income (expense), net	114		(106)
Net loss	Net loss	$	(3,959)	$	(2,538)	Net loss	$	(5,609)	$	(3,959)
Net loss per share attributable to common stockholders:	Net loss per share attributable to common stockholders:					Net loss per share attributable to common stockholders:
Basic and diluted	Basic and diluted	$	(0.17)	$	(0.13)	Basic and diluted	$	(0.23)	$	(0.17)
Weighted average shares used in computing net loss per share:	Weighted average shares used in computing net loss per share:					Weighted average shares used in computing net loss per share:
Basic and diluted	Basic and diluted	23,682,442		18,852,828		Basic and diluted	24,583,163		23,682,442

See accompanying notes to Condensed Consolidated Financial Statements.

CLEARPOINT NEURO, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(Dollars in thousands)

For The Three Months Ended March 31, 2022
Common Stock Additional
Paid-in
Capital Accumulated
Deficit Total
Shares Amount
Balances, January 1, 2022 23,665,991 $ 237 $ 182,482 $ (133,932) $ 48,787
Issuances of common stock:
Share-based compensation 29,916 — 899 — 899
Warrant and option exercises (cash and cashless) 12,211 — 3 — 3
Net loss for the period — — — (3,959) (3,959)
Balances, March 31, 2022 23,708,118 $ 237 $ 183,384 $ (137,891) $ 45,730


For The Three Months Ended March 31, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total
	Shares	Amount
Balances, January 1, 2023	24,578,983	$	246	$	187,008	$	(150,367)	$	36,887
Issuances of common stock:
Share-based compensation	3,782	—		1,307		—		1,307
Payments for taxes related to net share settlement of equity awards	(514)	—		(5)		—		(5)
Net loss for the period	—	—		—		(5,609)		(5,609)
Balances, March 31, 2023	24,582,251	$	246	$	188,310	$	(155,976)	$	32,580

For The Three Months Ended March 31, 2021
Common Stock Additional
Paid-in
Capital Accumulated
Deficit Total
Shares Amount
Balances, January 1, 2021 17,047,584 170 121,729 (119,522) $ 2,377
Adoption of ASU 2020-06 — — (3,107) — (3,107)
Issuances of common stock:
Public offering of common stock 2,127,660 21 46,764 — 46,785
Share-based compensation 20,709 1 319 — 320
Warrant and option exercises (cash and cashless) 1,482,327 15 130 — 145
Net loss for the period — — — (2,538) (2,538)
Balances, March 31, 2021 20,678,280 $ 207 $ 165,835 $ (122,060) $ 43,982


For The Three Months Ended March 31, 2022
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total
	Shares	Amount
Balances, January 1, 2022	23,665,991	$	237	$	182,482	$	(133,932)	$	48,787
Issuances of common stock:
Share-based compensation	29,916	—		899		—		899
Warrant and option exercises (cash and cashless)	12,211	—		3		—		3
Net loss for the period	—	—		—		(3,959)		(3,959)
Balances, March 31, 2022	23,708,118	$	237	$	183,384	$	(137,891)	$	45,730

See accompanying notes to Condensed Consolidated Financial Statements.

CLEARPOINT NEURO, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)


		For The Three Months Ended March 31,					For The Three Months Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss	Net loss	$	(3,959)	$	(2,538)	Net loss	$	(5,609)	$	(3,959)
Adjustments to reconcile net loss to net cash flows from operating activities:	Adjustments to reconcile net loss to net cash flows from operating activities:					Adjustments to reconcile net loss to net cash flows from operating activities:
Allowance for doubtful accounts		(61)		3
Allowance for credit losses (recoveries)						Allowance for credit losses (recoveries)	171		(61)
Depreciation and amortization	Depreciation and amortization	86		15		Depreciation and amortization	129		86
Share-based compensation	Share-based compensation	899		320		Share-based compensation	1,307		899
Payment-in-kind interest		—		94
Amortization of debt issuance costs and original issue discounts	Amortization of debt issuance costs and original issue discounts	13		35		Amortization of debt issuance costs and original issue discounts	14		13
Amortization of lease rights of use, net of accretion in lease liabilities		133		133
Amortization of lease right-of-use, net of accretion in lease liabilities						Amortization of lease right-of-use, net of accretion in lease liabilities	142		133
Accretion of discounts on short-term investments						Accretion of discounts on short-term investments	(69)		—
Increase (decrease) in cash resulting from changes in:	Increase (decrease) in cash resulting from changes in:					Increase (decrease) in cash resulting from changes in:
Accounts receivable	Accounts receivable	155		(126)		Accounts receivable	(184)		155
Inventory, net	Inventory, net	(880)		47		Inventory, net	(578)		(880)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	128		(10)		Prepaid expenses and other current assets	(42)		128
Other assets	Other assets	30		3		Other assets	—		30
Accounts payable and accrued expenses	Accounts payable and accrued expenses	(692)		(54)		Accounts payable and accrued expenses	(959)		(692)

Lease liabilities	Lease liabilities	(128)		(94)		Lease liabilities	(146)		(128)
Deferred revenue	Deferred revenue	7		41		Deferred revenue	144		7
Net cash flows from operating activities	Net cash flows from operating activities	(4,269)		(2,131)		Net cash flows from operating activities	(5,680)		(4,269)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of property and equipment	Purchases of property and equipment	(69)		(40)		Purchases of property and equipment	(138)		(69)
Acquisition of licensing rights	Acquisition of licensing rights	(116)		—		Acquisition of licensing rights	—		(116)
Net cash flows from investing activities	Net cash flows from investing activities	(185)		(40)		Net cash flows from investing activities	(138)		(185)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Proceeds from public offering of common stock, net of offering costs		—		46,785
Proceeds from stock option and warrant exercises	Proceeds from stock option and warrant exercises	3		145		Proceeds from stock option and warrant exercises	—		3

Payments for taxes related to net share settlement of equity awards						Payments for taxes related to net share settlement of equity awards	(5)		—
Net cash flows from financing activities	Net cash flows from financing activities	3		46,930		Net cash flows from financing activities	(5)		3
Net change in cash and cash equivalents	Net change in cash and cash equivalents	(4,451)		44,759		Net change in cash and cash equivalents	(5,823)		(4,451)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	54,109		20,099		Cash and cash equivalents, beginning of period	27,615		54,109
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	49,658	$	64,858	Cash and cash equivalents, end of period	$	21,792	$	49,658

SUPPLEMENTAL CASH FLOW INFORMATION	SUPPLEMENTAL CASH FLOW INFORMATION					SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:	Cash paid for:					Cash paid for:
Income taxes	Income taxes	$	—	$	—	Income taxes	$	—	$	—
Interest	Interest	$	100	$	214	Interest	$	179	$	100

NON-CASH INVESTING AND FINANCING TRANSACTIONS:

The Company had less than $0.1 million in capital expenditures accrued but not yet paid at March 31, ~~2022.~~2023.

During the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the Company recorded net transfers of ClearPoint reusable components having an aggregate net book value of less than $0.1 million, between loaned systems, which are included in property and equipment in the accompanying condensed consolidated balance sheets, and inventory.

As discussed in Note 2, on January 1, 2021, the Company adopted the provisions of Topic 470-20 within the Accounting Standards Codification, which resulted in the elimination of a previously recorded discount in connection with the issuance of the 2020 Secured Notes and a corresponding reduction of additional paid-in capital, each in the amount of $3.1 million.

See accompanying notes to Condensed Consolidated Financial Statements.

ClearPoint Neuro, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)


1.						Description of the Business and Financial Condition

ClearPoint Neuro, Inc. (the “Company”) is a commercial-stage medical device company focused on the development and commercialization of innovative platforms for performing minimally invasive surgical procedures in the brain. From the Company’s inception in 1998, the Company has deployed significant resources to fund its efforts to develop the foundational capabilities for enabling MRI-guided interventions, building an intellectual property portfolio, and identifying and building out commercial applications for the technologies it develops. In 2021, the Company’s efforts expanded beyond the MRI suite to encompass development and commercialization of new neurosurgical device products for the operating room setting, as well as consulting services for pharmaceutical ~~companies.~~and biotech companies, academic institutions, and contract research organizations.

The Company’s initial product offering, the ClearPoint system, is an integrated system comprised of capital equipment and disposable products, designed to allow minimally invasive procedures in the brain to be performed in an MRI suite. The ClearPoint Array Neuro Navigation System and its principal disposable component, introduced in 2021, ~~can~~is designed to be deployed in an operating room setting while also being usable in an MRI suite. Both systems provide guidance for the placement and operation of instruments or devices during the planning and operation of neurosurgical procedures. The Company received 510(k) clearance from the U.S. Food and Drug Administration (“FDA”) in 2010 to market the ClearPoint system in the United States for general neurosurgical interventional procedures; in February 2011, the Company also obtained CE marking ~~approval~~ for its ClearPoint system. In 2011 and 2018, the Company received 510(k) clearance and CE marking, ~~approval,~~ respectively, for its SmartFlow cannula which is being used, or is under evaluation, along with the Company's services, by ~~approximately 45~~more than 50 pharmaceutical and biotech companies, academic institutions, or contract research organizations having a focus on biologics and drug delivery.

~~COVID-19~~

~~The extraordinary measures taken beginning in 2020 by federal, state and local governmental authorities in response to~~ In 2021, the ~~novel strain of~~Company received 510(k) clearance for the coronavirus (“COVID-19”) pandemic, including “stay-at-home” directives and mandates that substantially restricted daily activities and curtailed or ceased normal business operations, led to reduced economic activity, includingArray Neuro Navigation System. In September 2022 the ~~postponement or cancellation of elective surgical procedures,~~ClearPoint Prism™ Neuro Laser Therapy System, for which ~~historically have represented approximately 80% of~~ the ~~number of surgical procedures using~~Company has exclusive global commercialization rights, received 510(k) clearance through the Company’s ~~ClearPoint system. Although economic activity is returning~~Swedish partner Clinical Laserthermia Systems ("CLS"). The Prism laser represents the first therapy product the Company will commercialize.

Macroeconomic Trends

The Company continues to ~~normalized levels, new variants of COVID-19, such as Delta and Omicron, continue to spread in~~monitor the ~~United States and across the globe. The ultimate~~ impact of the COVID-19 pandemic cannot be predicted at this time, and could depend on numerous factors, including vaccination rates among the population, the effectiveness of vaccines against different variants and the response by governmental bodies and regulators. Management is unable to determine the timing, adoption or viability of periodic resumption, if any, of elective procedures; and the resulting length of time that the COVID-19 pandemic will adversely affect the Company’s product revenues.

Furthermore, recessionary conditions on the global economy caused by the COVID-19 pandemic could have a material adverse effect on the Company’s business. Although most segments of the United States economy have reopened, future surges of COVID-19 due to new variants could occur in the future. Accordingly, reinstatement of directives and mandates requiring businesses to again curtail or cease normal operations, including the postponement or cancellation of elective surgeries, remains a possibility. Additionally,various macroeconomic trends, such as global economic and supply chain disruptions, geopolitical instability, labor shortages, instability of financial institutions and inflationary conditions. Changes in domestic and global economic conditions, supply chain disruptions, labor shortages, as well as other stimulus and spending programs, have led to higher inflation, which is likely to lead to increased costs and may cause changes in fiscal and monetary policy. Impacts from inflationary pressures, such an increasing costs for research and development of the Company's products, administrative and other costs of doing business, the potential for instability of the financial institutions where we maintain our deposits or other assets, and the Company's access to capital markets and other sources of funding in the future could adversely affect our business, financial condition and results of operations. Additionally, these trends could adversely affect the ~~Company’s ability~~Company's customers, which could impact their willingness to ~~retain and attract new talent, and inflationary conditions caused by the COVID-19 pandemic could have a material adverse effect~~spend on the ~~Company’s business.~~Company's products and services. The rapid development and fluidity of ~~the situation~~these situations precludes any prediction as to the ultimate impact ~~COVID-19~~they will have on the ~~Company’s~~Company's business, financial condition, results of operation and cash flows, which will depend largely on future developments ~~directly or indirectly relating to the duration and scope of the COVID-19 outbreak in the United States.~~.

Liquidity

The Company has incurred net losses since its inception, which has resulted in a cumulative deficit at March 31, ~~2022~~2023 of ~~$137.9~~$156.0 million. In addition, the Company’s use of cash from operations amounted to ~~$4.3~~$5.7 million for the three months ended March 31, ~~2022~~2023, and ~~$12.7~~$16.2 million for the year ended December 31, ~~2021.~~2022. Since its inception, the Company has financed its operations principally from the sale of equity securities and the issuance of notes ~~payable.~~payable, however, there is no assurance such sale of equity securities and/or issuance of notes payable will be at terms favorable to the Company or available at all in the future. As required by generally accepted accounting principles in the U.S. ("GAAP"), the Company has evaluated its ability to continue as a going concern and has determined that based on current forecasts, existing cash and cash equivalent balances and short-term investments at March 31, 2023 are sufficient to support the Company's operations and meet its obligations for at least the next twelve months.

ClearPoint Neuro, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

In ~~January~~ 2020, pursuant to the ~~Company entered into~~terms of a Securities Purchase Agreement (the ~~“SPA”~~"SPA") ~~with two investors (each, a “2020 Convertible Noteholder,” and together, the “2020 Convertible Noteholders”) under which~~, the Company issued ~~an aggregate principal amount of $17.5 million of floating rate~~ secured convertible notes ~~with a five-year term~~to two investors which raised gross proceeds of $25 million, of which $15 million has been converted to common stock and $10 million remains outstanding (the ~~“First Closing Notes”), resulting in proceeds, net of financing costs and a commitment fee paid to one of the 2020 Convertible Noteholders, of approximately $16.8 million.~~

The SPA also gave the Company the right, but not the obligation, to request one of the 2020 Convertible Noteholders to purchase an additional $5.0 million in principal amount of a note (the “Second Closing Note”, and, together with the"Outstanding First Closing ~~Note, the “2020 Secured Notes”~~Note"). On December 29, 2020, under the terms of an amendment to the SPA (the “Amendment”) which, among other provisions, increased the principal amount of the Second Closing Note, the Company issued the Second Closing Note in the principal amount of $7.5 million to one of the 2020 Convertible Noteholders.

See Note 56 below for additional information with respect to the 2020 ~~Secured Notes.~~

~~As discussed in Note 7, on~~secured notes. In February ~~23,~~ 2021, the Company completed a public offering of 2,127,660 shares of its common ~~stock. Net~~stock from which the net proceeds ~~from the offering were~~totaled approximately $46.8 million after deducting ~~the~~ underwriting discounts and commissions, and other ~~estimated~~ offering expenses ~~payable~~paid by the Company.

Based on the foregoing, in management’s opinion, cash and cash equivalent balances at March 31, 2022 are sufficient to support the Company’s operations and meet its obligations for at least the next twelve months.


2.						Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared on a basis consistent with the Company’s December 31, ~~2021~~2022 audited consolidated financial statements, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth therein. These condensed consolidated financial statements have been prepared in accordance with SEC rules for interim financial information, and, therefore, omit certain information and footnote disclosures necessary to present such statements in accordance with ~~generally accepted accounting principles in the U.S. (“GAAP”).~~GAAP. The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s ~~2021~~2022 Form 10-K. The accompanying condensed consolidated balance sheet as of December 31, ~~2021~~2022 has been derived from the audited consolidated financial statements at that date but does not include all information and footnotes required by GAAP for a complete set of financial statements. The results of operations for the three months ended March 31, ~~2022~~2023, may not be indicative of the results to be expected for the entire year or any future periods.

Inventory

Inventory is carried at the lower of cost (first-in, first-out method) or net realizable value. Items in inventory relate predominantly to the Company’s ClearPoint ~~system.~~system and related disposables. Software license inventory related to ClearPoint systems undergoing on-site customer evaluation is included in inventory in the accompanying condensed consolidated balance sheets. All other software license inventory is classified as a non-current asset. The Company periodically reviews its inventory for excess and obsolete items and provides a reserve upon identification of potentially excess or obsolete items.

~~ClearPoint Neuro, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Intangible Assets

The Company is a party to ~~certain~~a license ~~agreements~~agreement that ~~provide~~provides rights to the Company for the development and commercialization of products. Under the ~~terms~~term of ~~those~~the license ~~agreements,~~agreement, the Company made payments to the ~~licensors~~licensor upon execution of the license ~~agreements~~agreement for access to the underlying ~~technologies~~technology and ~~will make~~ future payments will be based ~~on the~~upon achievement of regulatory and commercialization milestones as defined in the license ~~agreements.~~agreement. In 2022, the Company made a payment to the licensor for the achievement of a regulatory milestone, which acts as a prepayment for future royalties.

In conformity with Accounting Standards Codification Section 350, “Intangibles – Goodwill and Other,” the Company amortizes its investment in the upfront license rights described above over an expected useful life of five ~~years.~~years, or as commercial sales occur for the royalty prepayment. In addition, the Company periodically evaluates the recoverability of its investment in the license rights and records an impairment charge in the event such evaluation indicates that the Company’s investment is not likely to be recovered.

Revenue Recognition

The Company’s revenue is comprised primarily of: (1) product revenue resulting from the sale of functional neurosurgery, navigation, therapy, and biologics and drug delivery disposable products; (2) product revenue resulting

ClearPoint Neuro, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

from the sale of ClearPoint capital equipment and software; (3) revenue resulting from the service, installation, training, and shipping related to ClearPoint capital equipment and software; ~~and~~ (4) consultation revenue and clinical case support revenue in connection with customer-sponsored pre-clinical and clinical ~~trials.~~trials; and (5) license revenue for the granting of licenses to develop and commercialize the Company's SmartFlow Cannula devices with our customers' proprietary biologics as a combination product. The Company recognizes revenue when control of the Company’s products ~~and services~~ is transferred to its customers or services are provided to customers in an amount that reflects the consideration the Company expects to receive from its customers in exchange for those products and services, in a process that involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that ~~are~~is readily available to the customer and is separately identified in the contract. When a contract calls for the satisfaction of multiple performance obligations for a single contract price, the Company typically allocates the contract price among the performance obligations based on the relative stand-alone prices for each such performance obligation customarily charged by the Company. The Company considers a performance obligation satisfied once it has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The Company recognizes revenue for satisfied performance obligations only when it determines there are no uncertainties regarding payment terms or transfer of control.

Lines of Business; Timing of Revenue Recognition

•Functional neurosurgery navigation product, biologics and drug delivery systems product, and therapy product sales: Revenue from the sale of functional neurosurgery navigation products (consisting of disposable products sold commercially and related to cases utilizing the ~~Company’s~~Company's ClearPoint system), biologics and drug delivery systems (consisting primarily of disposable products related to customer-sponsored clinical trials utilizing the ClearPoint system), and therapy products (consisting primarily of disposable laser-related products used in non-neurosurgical procedures), is generally based on customer purchase orders, the predominance of which require delivery within one week of the order having been placed, and are generally recognized at the point in time of shipping to the customer, which is the point at which legal title, and risks and rewards of ownership, transfer to the customer. For certain customers, legal title and risks and rewards of ownership transfer upon delivery to the customer as stated in their respective ~~contracts.~~contracts, in which case revenue is recognized upon delivery.

•Capital equipment and software ~~sales~~sales:

◦Capital equipment and software sales preceded by evaluation periods: The predominance of capital equipment and software sales (consisting of integrated computer hardware and software that are integral components of the ~~Company’s~~Company's ClearPoint system) are precededby customer evaluation periods. During these evaluation periods, installation of, and training of customer personnel on, the systems have been completed and the systems have been in operation. Accordingly, revenue from capital equipment and

~~ClearPoint Neuro, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

software sales following such evaluation periods is recognized at the point in time that the Company is in receipt of an executed purchase agreement or purchase order.

◦Capital equipment and software sales not preceded by evaluation periods:Revenue from sales of capital equipment and software not having been preceded by an evaluation period is recognized ~~at the point in time that the equipment has been delivered~~upon delivery to the ~~customer.~~customer and installation. For capital equipment that does not require installation, revenue is recognized upon shipment, however, for those customers where legal title and risks and rewards of ownership transfer upon delivery, revenue is recognized at such time.

For both types of capital equipment and software sales described above, the ~~Company’s~~ determination of the point in time at which to recognize revenue represents that point at which the customer has legal title, physical possession, and the risks and rewards of ownership, and the Company has a present right to payment.

•Functional neurosurgery navigation and therapy services:The Company recognizes revenue for such services at the point in time that the performance obligation has been satisfied.

•Biologics and drug delivery ~~services:~~services and other revenue:

ClearPoint Neuro, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

◦Consultation Services:The Company recognizes consultation revenue atover time as the ~~point in time such~~ services are ~~performed.~~delivered to the customer based on the extent of progress towards completion of the performance obligation.

◦Clinical Service Access Fees: For contracts in which the Company receives a periodic fixed fee, irrespective of the number of cases attended by ~~Company~~the Company's personnel or hours ~~of services provided to the customer~~incurred during such periods, revenue is recognized ratably over the period covered by such fees. A time-elapsed output method is used for such fees because the Company transfers control evenly by providing a stand-ready service.

◦Clinical Service Procedure-Based Fees: The Company recognizes revenue at the point in time a case is attended by Company personnel.

◦License fees: The Company has determined that license fees represent the use of functional intellectual property as it exists at the point in time at which the license is granted and does not require any significant development or customization. Therefore, the Company recognizes license revenue at the point in time in which the license becomes effective and the intellectual property is made available to the customer.

•Capital equipment-related services:

◦Equipment service: Revenue from service of ClearPoint capital equipment and software previously sold to customers is based on agreements with terms ranging from one to three years and ~~revenue~~ is recognized ratably on a monthly basis over the term of the service agreement. A time-elapsed output method is used for service revenue because the Company transfers control evenly by providing a stand-ready service.

The Company may also enter into contracts with customers who own ClearPoint capital equipment, which bundle maintenance and support services and access to software and hardware upgrades made commercially available over the term of the contract, for a single contract price, typically paid on an annual basis. The Company allocates the contract price among the performance obligations based on the relative stand-alone prices for each such performance obligation and recognizes the revenue ratably on a monthly basis. ~~In line with equipment service, a~~A time-elapsed output method is used as the Company is providing a stand-ready ~~service.~~service for each of the performance obligations.

◦Installation, training and shipping: Consistent with the Company’s recognition of revenue for capital equipment and software sales as described above, fees for installation, training and shipping in connection with sales of capital equipment and software that have been preceded by customer evaluation periods are recognized as revenue at the point in time the Company is in receipt of an executed purchase order for the equipment and software. Installation, training and shipping fees related to capital equipment and software sales not having been preceded by an evaluation period are recognized as revenue atconcurrent with the ~~point in time that~~recognition of revenue from sales of the related ~~services are performed.~~capital equipment.

The Company operates in 1one industry segment, and the ~~vast majority~~predominance of its sales are to U.S.-based customers.

Payment terms under contracts with customers generally are in a range of 30-60 days after the customers’ receipt of the Company’s invoices.

~~ClearPoint Neuro, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The Company’s terms and conditions do not provide for a right of return unless for: (a) product defects; or (b) other conditions subject to the Company’s approval.

See Note 3 for additional information regarding revenue recognition.

Net Loss Per Share

The Company computes net loss per share using the weighted-average number of common shares outstanding during the period. Basic and diluted net loss per share are the same because the conversion, exercise or issuance of all potential common stock equivalents, which comprise the entire amount of the Company’s outstanding common stock

ClearPoint Neuro, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

options and warrants, as described in Note 7,8, and the potential conversion of the Outstanding First Closing Note, as described in Note 5,6, would be anti-dilutive, due to the reporting of a net loss for each of the periods in the accompanying condensed consolidated statements of operations.

Concentration Risks and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company may at times invest its excess cash in interest bearing accounts and U.S. government debt securities. It classifies all highly liquid investments with original stated maturities of three months or less from the date of purchase as cash equivalents and all highly liquid investments with stated maturities of greater than three months but less than twelve months as short-term investments. The Company classifies the U.S. government debt securities as held-to-maturity in accordance with ASC 320, "Investments - Debt and Equity Securities." Held-to-maturity securities are those securities that the Company has the ability and intent to hold until maturity and are recorded at amortized cost on the accompanying condensed consolidated balance sheet, adjusted for the accretion of discounts using the effective interest method.

The Company holds ~~substantially all~~the remainder of its cash and cash equivalents on deposit with financial institutions in the U.S. insured by the Federal Deposit Insurance Corporation. At March 31, ~~2022,~~2023, the Company had approximately ~~$44.0~~$1.7 million in bank balances that were in excess of the insured limits.

At March 31, ~~2022,~~2023, there ~~were two customers (one of which is a related party as discussed below)~~was one customer whose accounts receivable ~~balances~~balance represented ~~13% and 11%~~23% of accounts receivable at that ~~date.~~date and two customers who each represented 10% of the balance. At December 31, ~~2021,~~2022, one customer accounted for ~~15%~~19% of accounts receivable at that date.

One pharmaceutical customer, a related party who is a stockholder, a noteholder, and who has a representative on the Company's Board of Directors (see Note 5)6), for whom the Company provides hardware, software, clinical services and market development services in support of the customer's clinical trials, and from whom the Company earns a quarterly fee, accounted for ~~19%~~13% and ~~17%~~19% of total sales in the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

Prior to granting credit to a customer, the Company performs credit evaluations of ~~its~~the customers’ financial ~~condition, and generally~~condition. In general, the Company does not require collateral from ~~its customers.~~customers in connection with an extension of credit. The ~~Company will provide~~accounts receivable balance is reduced by an allowance for ~~doubtful accounts when collections become doubtful.~~credit losses from the potential inability of the Company's customers to make required payments. The allowance for ~~doubtful accounts~~credit losses at March 31, ~~2022~~2023, and December 31, ~~2021~~2022, was ~~$0.2~~$0.3 million and ~~$0.3~~$0.1 million, respectively. The Company evaluates the historic loss experience on the accounts receivable balance and also considers separately customers with receivable balances that may be negatively impacted by current economic developments and market conditions. The estimate is a result of the Company's ongoing evaluation of collectability, customer creditworthiness, historical levels of credit losses and future expectations.

The Company is subject to risks common to emerging companies in the medical device industry, including, but not limited to: new technological innovations; acceptance and competitiveness of its products; dependence on key personnel; dependence on key suppliers; dependence on third-party collaboration, license and joint development partners; changes in general economic conditions and interest rates; protection of proprietary technology; compliance with changing government regulations; uncertainty of widespread market acceptance of products; access to credit for capital purchases by customers; and product liability claims. Certain components used in manufacturing have relatively few alternative sources of supply and establishing additional or replacement suppliers for such components cannot be accomplished quickly. The inability of any of these suppliers to fulfill the Company’s supply requirements may negatively impact future operating results.

Adoption of New Accounting Standard

~~Effective January 1, 2021,~~In June 2016, the ~~Company adopted,~~FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326)," which replaces the current incurred loss impairment methodology for most financial assets with the current expected credit loss, or CECL, methodology. The series of new guidance amends the impairment model by requiring entities to use a forward-looking approach based on ~~a modified retrospective method~~expected losses rather than incurred losses to estimate credit losses on certain types of transition, the provisions of Accounting Standards Update No. 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (the “ASU”). The ASU is effective for public companies, other than smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, and for smaller reporting companies, which is the Company’s current classification, for fiscal years beginning after December 31, 2023. However, the ASU permits early adoption no earlier than for fiscal years beginning after December 31,

ClearPoint Neuro, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~2020, and the Company elected such early adoption. The ASU amends prior authoritative literature to reduce the number of accounting models for, among others, convertible debt~~financial instruments, ~~for which the embedded conversion features of such instruments had previously been required to be separated from the host contract.~~including trade receivables. The Company ~~determined that~~adopted the ~~conversion feature embedded~~new standard effective January 1, 2023, which did not have a material impact to the condensed consolidated financial statements.

Reclassifications

The accompanying condensed consolidated statement of operations for the three months ended March 31, 2023 classifies share-based compensation in the ~~Second Closing Note (see Note 5) was within~~same income statement line items as the ~~scope~~cash compensation paid to recipient employees, rather than in general and administrative expense, as had been the practice in previous years. The accompanying condensed consolidated statements of operations for the ~~ASU. Accordingly,~~three months ended March 31, 2022 have been conformed to the discount originally recorded in connection with the issuance of the Second Closing Note and a corresponding amount recorded in additional paid-in capital, each in the amount of approximately $3.1 million at the date of issuance of the Second Closing Note, were reversed as of the date of adoption of the ASU.2023 presentation.


3.						Revenue Recognition

Revenue by Service Line


		Three Months Ended March 31,					Three Months Ended March 31,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Functional neurosurgery navigation and therapy	Functional neurosurgery navigation and therapy					Functional neurosurgery navigation and therapy
Disposable products	Disposable products	$	1,863	$	1,917	Disposable products	$	1,858	$	1,863
Services	Services	375		—		Services	503		375
Subtotal – Functional neurosurgery navigation and therapy	Subtotal – Functional neurosurgery navigation and therapy	2,238		1,917		Subtotal – Functional neurosurgery navigation and therapy	2,361		2,238
Biologics and drug delivery	Biologics and drug delivery					Biologics and drug delivery
Disposable products	Disposable products	850		914		Disposable products	594		850
Services		1,304		746
Services and license fees						Services and license fees	2,082		1,304
Subtotal – Biologics and drug delivery revenue	Subtotal – Biologics and drug delivery revenue	2,154		1,660		Subtotal – Biologics and drug delivery revenue	2,676		2,154
Capital equipment and software	Capital equipment and software					Capital equipment and software
Systems and software products	Systems and software products	450		331		Systems and software products	178		450
Services	Services	189		122		Services	218		189
Subtotal – Capital equipment and software revenue	Subtotal – Capital equipment and software revenue	639		453		Subtotal – Capital equipment and software revenue	396		639
Total revenue	Total revenue	$	5,031	$	4,030	Total revenue	$	5,433	$	5,031

Contract Balances

•Contract assets – Substantially all the Company’s contracts with customers are based on customer-issued purchase orders for distinct products or services. Customers are billed generally upon ~~delivery~~shipment of such products or delivery of such services, and the related contract assets comprise the accounts receivable balances included in the accompanying condensed consolidated balance sheets. At March 31, 2023, the Company also had $0.4 million in deferred contract costs related to up-front costs for direct materials incurred to fulfill a customer contract. These costs are classified as other current assets, and are expected to be recognized as cost of revenue in 2023.

•Contract liabilities – Contract liabilities consist of amounts that have been invoiced and for which the Company has the right to bill, but that have not been recognized as revenue as the related goods or services have not been transferred. The ~~Company~~Company's contract liabilities are generally ~~bills and collects~~comprised of the following (1) capital equipment and software-related service fees which are typically billed and collected at the inception of the service agreements, which have terms ranging from one to three ~~years. The Company may also enter into~~years, (2) annual fees for agreements with customers that bundle the capital equipment and software-related service fees with software and hardware upgrades that are made commercially available over the term of the ~~contract.~~contract, and (3) up-front payments from customers made in connection with consulting services. The unearned portion of all such fees is classified as deferred revenue. Additionally, at December 31, 2022, the Company had a $0.5 million refund liability resulting from an up-front customer payment which was potentially refundable if the parties did not enter into the ensuing agreement. As of

ClearPoint Neuro, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

March 31, 2023, the uncertainties underlying this amount have been resolved and the amount has been recognized as revenue.

During the three months ended March 31, ~~2022,~~2023, the Company recognized ~~capital equipment and software-related service~~approximately $0.3 million of revenue, ~~of approximately $0.1 million,~~ which was previously included in deferred revenue in the accompanying condensed consolidated balance sheet at December 31, ~~2021.~~2022.

The Company offers an upgraded version of its software at no additional charge to customers purchasing a three-year systems service agreement. The transaction prices of the software and the service agreement are determined through an allocation of the service agreementTransaction price based on the standalone prices of the software and the service agreements customarily charged by the Company. The transaction price of the software is recognized as revenue upon its installation and comprised less than $0.1 million of unbilled accounts receivable at March 31, 2022 and December 31, 2021.

~~ClearPoint Neuro, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~Revenue with respect~~allocated to remaining performance obligations ~~related~~represents contracted revenue that has not yet been recognized, which includes deferred revenue that will be recognized as revenue in future periods. The majority of the remaining performance obligations relate to capital equipment and software-related service agreements and the upfront payments discussed under the heading "Contract Balances" above, which amounted to approximately ~~$0.9~~$1.5 million at March 31, ~~2022.~~2023. The Company expects to recognize approximately ~~54%~~79% of this revenue over the next twelve months and the remainder thereafter.


4.			Fair Value Measurement

Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The fair value of cash and cash equivalents of $21.8 million and $27.6 million as of March 31, 2023, and December 31, 2022, respectively, is derived using Level 1 inputs. The cash equivalents are comprised of short-term bank deposits, money market funds, and U.S. Government debt securities with original maturities of three months or less, and the carrying value is a reasonable estimate of fair value.

The Company had $9.9 million of short-term investments on March 31, 2023 and December 31, 2022, consisting of twelve-month U.S. Government debt securities, which are classified as held to maturity and carried at amortized cost, adjusted for the accretion of discounts using the effective interest method. The carrying value of the debt securities approximates fair value based on Level 1 inputs. The Company has the intent and ability to hold these investments to maturity in order to collect interest payments over the life of the investments.


5.			Inventory

Inventory consists of the following as of March 31, ~~2022~~2023 and ~~2021:~~December 31, 2022:


(in thousands)	(in thousands)	March 31, 2022		December 31, 2021		(in thousands)	March 31, 2023		December 31, 2022
Raw materials and work in process	Raw materials and work in process	$	3,620	$	2,718	Raw materials and work in process	$	7,308	$	6,513
Software licenses	Software licenses	210		210		Software licenses	210		210
Finished goods	Finished goods	1,902		2,010		Finished goods	2,290		2,580
Inventory, net, included in current assets	Inventory, net, included in current assets	5,732		4,938		Inventory, net, included in current assets	9,808		9,303
Software licenses – non-current	Software licenses – non-current	484		519		Software licenses – non-current	450		450
Total	Total	$	6,216	$	5,457	Total	$	10,258	$	9,753


5.6.			~~Notes~~Note Payable

As a result of a note financing in 2020, the ~~transactions described below,~~Outstanding First Closing Note in an aggregate principal amount of $10 million ~~of the 2020 Secured Convertible Notes~~ was outstanding at March 31, ~~2022.~~2023. At the option of the holder ~~who is a customer and has a representative on the Company's Board of Directors,~~ at any time prior to maturity on January 29, 2025, the principal amount may be convertible to the Company’s common stock at a conversion price of $6.00, subject to adjustments as set forth in the SPA and the note agreement.

ClearPoint Neuro, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On January 29, 2020, ~~(the “Closing Date”),~~ the Company completed a financing transaction ~~(the “2020 Financing Transaction”)~~ with two investors (the "2020 Convertible Noteholders"), whereby the Company issued an aggregate principal amount of $17.5 million of ~~First~~secured convertible notes (the "First Closing ~~Notes~~Notes") pursuant to the SPA, which, unless earlier converted or redeemed, mature on the fifth anniversary of the ~~Closing Date~~issuance and bear interest at a rate equal to the sum of (i) the greater of (a) the three (3)-month London Interbank Offered Rate (“LIBOR”) and (b) two percent (2%), plus (ii) a margin of 2% on the outstanding balance of the First Closing Notes, payable quarterly on the first business day of each calendar quarter. The First Closing Notes may be converted at a price of $6.00 per share, subject to certain adjustments set forth in the SPA and the note agreement, and may not be pre-paid without the consent of the noteholder, provided that the Company must offer to pre-pay such other noteholder on the same terms and conditions.

In May 2021, one of the 2020 Convertible Noteholders (the “Converting Noteholder”) converted the entire $7.5 million principal amount of such Converting Noteholder’s First Closing Note, and related accrued interest, amounting to approximately $0.04 million, into 1,256,143 shares of the Company’s common stock.

At the Closing Date, the SPA gave the Company the right, but not the obligation, to request at any time on or prior to January 11, 2022, that one of the 2020 Convertible Noteholders purchase an additional $5.0 million in aggregate principal amount of Second Closing Note (as defined in the SPA) and an additional $10.0 million in aggregate principal amount of Third Closing Note (as defined in the SPA; together, with the Second Closing Note, the “Additional Convertible Notes”), provided that such 2020 Convertible Noteholder has the right, but not the obligation, to purchase such notes. The Additional Convertible Notes would also mature on the fifth anniversary of the Closing Date.

On December 29, 2020, the Company and the 2020 Convertible Noteholders entered into the ~~Amendment~~amendment to the SPA (the "Amendment"), the terms of which, among other provisions, provided for: (a) an increase in the principal amount of the Second Closing Note to $7.5 million; (b) a revision of the interest rate to be borne by the Second Closing Note to consist of: (i) cash interest of 2% per annum, payable quarterly; and (ii) payment-in-kind interest of 5% per annum, accruable quarterly as an addition to the unpaid principal balance of the Second Closing Note; and (c) an increase in the conversion price of the Second Closing Notes to $10.14 per share, subject to certain adjustments set forth in the ~~SPA.~~

~~ClearPoint Neuro, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

SPA and the note agreement. Upon execution of the Amendment, the Company issued the Second Closing Note to one of the 2020 Convertible Noteholders.

On November 3, 2021, the holder of the Second Closing Note converted the entire $7.5 million principal amount of such note, along with related accrued and payment in-kind interest aggregating $0.3 million, into 773,446 shares of the Company's common stock.

The aggregate carrying ~~amounts~~amount of the Outstanding First Closing ~~Notes~~Note in the accompanying March 31, ~~2022~~2023 and December 31, ~~2021~~2022 condensed consolidated balance sheets ~~are~~is presented net of financing costs, comprised of commissions and legal expenses, having an unamortized balance of $0.1 million ~~and $0.2 million~~ at each of those respective dates. ~~Prior to the conversion of the~~

The Outstanding First Closing Note the aggregate carrying amount was presented net of a discount, comprised of a commitment fee paid to the Converting Noteholder, amounting to $0.2 million. Upon conversion of the related note, the discount was reversed, with a corresponding amount being recorded as a reduction of additional paid-in capital. The unamortized balances of the financing costs and the discount, during the period prior to the conversion of the related First Closing Note, were charged to interest expense over the respective terms of the First Closing Notes under the effective interest method.

Upon issuance of the Second Closing Note, the carrying amount was presented net of a discount, amounting to approximately $3.1 million, which represented the value of the deemed beneficial conversion feature embedded in the Second Closing Note. A conversion feature is deemed to be beneficial when the conversion price, discussed above, is lower than the closing price per share of the Company’s common stock, which was $14.34 on the date of issuance of the Second Closing Note. As discussed in Note 2, effective January 1, 2021, the Company adopted the provisions of ASU 2020-06 which no longer required such beneficial conversion features to be separately accounted for, and as a result, the accompanying December 31, 2021 condensed consolidated balance sheet reflects the elimination of both the discount and a corresponding increase to additional paid-in capital.

Under the terms of the SPA, as amended, the Company had the right, but not the obligation, to request a 2020 Convertible Noteholder to purchase the Third Closing Note, and the 2020 Convertible Noteholder had the right, but not the obligation, to purchase such note. As of January 11, 2022, the Company's right expired.

~~The 2020 Secured Notes are~~ secured by all the assets of the Company.

AnThe holder of the Outstanding First Closing Note is a significant customer of the Company, whose chief executive officer ~~of one of the 2020 Convertible Noteholders~~ is a member of the Company’s Board of Directors. ~~Pursuant to the terms of the SPA~~See Note 2, Concentration Risks and ~~a Board Observer Agreement entered into by the other 2020 Convertible Noteholder~~Other Risks and the Company, the other 2020 Convertible Noteholder appointed a representative to attend and observe meetings of the Company’s Board of Directors. On February 25, 2021, such 2020 Convertible Noteholder terminated the Board Observer Agreement, thus precluding its representative from attending future meetings of the Company’s Board of Directors.

~~Scheduled Notes Payable Maturities~~

~~Scheduled principal payments as of March 31, 2022 with respect to notes payable are summarized as follows:~~

Year ending December 31, (in thousands)
2025 $ 10,000
Total scheduled principal payments 10,000
Less: Unamortized financing costs (149)
Total 9,851


6.Uncertainties.			~~Leases~~

The Company leases space in Irvine, California that houses office space and a manufacturing facility under a non-cancellable lease. The lease term commenced on October 1, 2018 and expires in September 2023. The Company has the option to renew the lease for two additional periods of five years each. The Company also leases office space in

ClearPoint Neuro, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Scheduled Note Payable Maturity

Scheduled principal payment as of March 31, 2023 with respect to the remaining note payable is summarized as follows:


Year ending December 31,	(in thousands)
2025	$	10,000
Total scheduled principal payment	10,000
Less: Unamortized financing costs	(93)
Total	$	9,907


7.			Leases

The Company subleases office space in Solana Beach, California, that serves as its corporate headquarters and houses certain management and research and development personnel. The ~~lease~~sublease term commenced on December 15, 2020, is set to expire on December 31, 2026, and is renewable for an additional five-year period, at the Company’s option, provided that the Company’s landlord has entered into an extension of its prime lease for the office space that encompasses the Company’s office space for at least five years.

In November 2022, the Company entered into a lease agreement to lease a 19,462 square foot industrial building in Carlsbad, California to use as an office and manufacturing facility. Under the agreement, the lease term commences on June 1, 2023 and ends on May 31, 2033. The base rent payable under the lease agreement is $36,977.80 per month, which is subject to annual increases of 3.5% during the lease term. The Company has two options to extend the lease term for thirty-six or sixty months, at the fair market rental value. The total minimum lease payments related to this lease are $5.1 million.

The Company leases space in Irvine, California, that houses office space and a manufacturing facility under a lease that commenced on October 1, 2018 and expires in September 2024.

Both the Solana Beach and Irvine leases are classified as operating leases in conformity with GAAP.

No lease liability has been recorded for the Carlsbad lease, given that the lease term has not yet commenced. The aggregate lease costs, included in general and administrative expense, were $0.3 million and $0.1 million for ~~each of~~ the three months ended March 31, 2023 and 2022, ~~and 2021.~~respectively.


7.8.			Stockholders’ Equity

~~2021 Public Offering~~We maintain the Fourth Amended and Restated 2013 Incentive Compensation Plan which became effective in 2022. The plan permits the issuance of options, restricted stock, restricted stock units and other awards to selected

~~On February 23, 2021,~~

ClearPoint Neuro, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

employees, directors and consultants of the Company completed a public offering of 2,127,660 shares of its common stock, composed of 1,850,140 shares of common stock initially offered at a public offering price of $23.50 per share and an additional 277,520 shares of common stock sold pursuantCompany.The equity incentive plans are more fully described in Note 9 to the ~~exercise of~~consolidated financial statements in our Annual Report on Form 10-K for the ~~underwriters’ option to purchase additional shares at the price of $22.09 per share.~~

~~Net proceeds from the offering totaled approximately $46.8 million after deducting underwriting discounts and commissions, and other offering expenses paid by the Company.~~

~~The underwriting agreement contains representations, warranties, agreements and indemnification obligations by the Company that are customary for this type of transaction.~~year ended December 31, 2022.

Share-Based Compensation Expense

The Company records share-based compensation expense on a straight-line basis over the vesting periods of the related ~~vesting period~~grants and recognizes forfeitures as they occur. The following table sets forth share-based compensation expense included in ~~selling, general and administrative expense in~~ the condensed consolidated statements of operations:

Three Months Ended March 31,
(in thousands)
2022 2021
$899 $320


	Three Months Ended March 31,
	(in thousands)
	2023		2022
Cost of revenue	21		10
Research and development	282		361
Sales and marketing	362		150
General and administrative	642		378
Share-based compensation expense	$	1,307	$	899

AsShare-based compensation expense by type of ~~March 31, 2022, there was $0.9 million and $2.7 million of total~~share-based award:


	Three Months Ended March 31,
	(in thousands)
	2023		2022
Stock options	248		318
RSAs and RSUs	992		525
ESPP	67		56
	$	1,307	$	899

Total unrecognized compensation expense ~~related to stock options~~by type of award and ~~restricted stock, respectively,~~the weighted-average remaining requisite period over which such expense is expected to be recognized ~~over a weighted-average period of 1.8 years and 2.1 years, respectively.~~(in thousands, unless otherwise noted):

~~Stock Option Activity~~

~~Stock option activity under all of the Company’s Plans during the three months ended March 31, 2022 is summarized below:~~

Stock Options Weighted-average
Exercise price
per share Weighted-average
Remaining Contractual Life (in years)
Intrinsic
Value(1)
(in thousands)
Outstanding at December 31, 2021 1,350,473 $ 10.10
Granted — —
Exercised (1,000) $ 2.60
Forfeited or expired (24,933) $ 37.68
Outstanding at March 31, 2022 1,324,540 $ 9.59 6.25 $ 7,499


	March 31, 2023
	Unrecognized Expense		Remaining Weighted-Average Recognition Period (in years)
Stock options	$	1,708	2.15
RSAs and RSUs	$	9,803	2.45

1415

ClearPoint Neuro, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Stock Option Activity

Stock option activity under all of the Company’s plans during the three months ended March 31, 2023 is summarized below:


	Stock Options	Weighted-average Exercise price per share		Weighted-average Remaining Contractual Life (in years)	Intrinsic Value(1) (in thousands)
Outstanding at December 31, 2022	1,398,286	$	8.69
Granted	111,107	$	8.10
Outstanding at March 31, 2023	1,509,393	$	8.65	6.17	$	5,336
Exercisable at March 31, 2023	1,134,204	$	8.12	5.23	$	5,087
Vested and expected to vest at March 31, 2023	1,509,393	$	8.65	6.17	$	5,336


(1)			Intrinsic value is calculated as the estimated fair value of the Company’s stock at the end of the related period less the option exercise price of in-the-money options.

Restricted Stock Award Activity

Restricted stock award ("RSA") activity for the three months ended March 31, ~~2022~~2023 is summarized below:

Restricted Stock Award Weighted - Average
Grant
Date Fair Value
Outstanding at December 31, 2021 380,105 $ 10.41
Granted 39,916 $ 8.63
Vested (10,089) $ 9.77
Forfeited or expired (10,000) $ 20.45
Outstanding at March 31, 2022 399,932 $ 9.79


	Restricted Stock Awards	Weighted - Average Grant Date Fair Value
Outstanding at December 31, 2022	684,389	$	11.10
Vested	(15,036)	$	14.17
Forfeited	(1,064)	$	9.40
Outstanding at March 31, 2023	668,289	$	11.04

Restricted Stock Unit Activity

Restricted stock unit ("RSU") activity for the three months ended March 31, 2023 is summarized below:


	Restricted Stock Units	Weighted - Average Grant Date Fair Value
Outstanding at December 31, 2022	13,146	$	11.41
Granted	630,922	$	8.17
Vested	(4,846)	$	8.32
Outstanding at March 31, 2023	639,222	$	8.24

ESPP

On June 3, 2021, the Company’s stockholders adopted and approved the ClearPoint Neuro, Inc. Employee Stock Purchase Plan (the “ESPP”), which allows eligible employees to acquire shares of the Company’s common stock through payroll deductions at a discount to market price. A total of 400,000 shares of the Company’s common stock ~~are~~were made available for issuance pursuant to the terms of the ESPP. ~~During~~Each offering period is for six months, and the ~~year ended December 31, 2021, 22,918 shares were purchased at an average per share price of $9.78. As of~~

ClearPoint Neuro, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

first offering period commenced on July 1, 2021. On March 31, ~~2022, 377,082~~2023, 320,521 shares of common stock were available for issuance under the ~~Purchase Plan.~~ESPP.

Warrants

Warrants to purchase shares of the Company's common stock were issued in connection with financing transactions in 2015 and ~~2017, and are for a term of generally five years.~~2017. These warrants contain net exercise provisions giving the holder the option of acquiring a number of shares having a value equal to the difference between the exercise price and the current stock price, in lieu of paying the exercise price to acquire the full number of stated shares. ~~All of the warrants outstanding at March 31, 2022 will terminate in 2022 and 2023.~~

~~Common~~There was no common stock warrant activity for the three months ended March 31, ~~2022 is as follows:~~2023. There were a total of 36,554 warrant shares outstanding at March 31, 2023 with a weighted-average exercise price of $16.23. All of the warrants outstanding at March 31, 2023 will expire in 2023.

Warrant
Shares Weighted-average
Exercise price
per share
Intrinsic
Value(1)
(in thousands)
Outstanding at December 31, 2021 668,907 $ 2.97
Exercised (14,728) $ 2.20
Outstanding at March 31, 2022 654,179 $ 2.98 $ 5,071


~~(1)~~			~~Intrinsic value is calculated as the estimated fair value of the Company’s stock at the end of the related period less the warrant exercise price of in-the-money warrants.~~

1517

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and the related notes thereto appearing in Part I, Item 1 of this Quarterly Report. This discussion and analysis contains forward-looking statements that are based upon current expectations and involve risks, assumptions and uncertainties. You should review the section titled “Risk Factors” appearing in our ~~2021~~2022 Form 10-K and in Part II, Item 1.A of this Quarterly Report for a discussion of important risk factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements described in the following discussion and analysis. In addition, historical results and trends that might appear in this Quarterly Report should not be interpreted as being indicative of future operations.

Overview

We are a commercial-stage medical device company that develops and commercializes innovative platforms for performing minimally invasive surgical procedures in the brain. We have deployed significant resources to fund our efforts to develop the foundational capabilities for enabling MRI-guided interventions, building an intellectual property portfolio, and identifying and building out commercial applications for the technologies developed by our company. InBeginning in 2021, our efforts have expanded beyond the MRI suite to encompass development and commercialization of new neurosurgical device products for the operating room, as well as clinical and pre-clinical consulting services for pharmaceutical ~~companies.~~and biotech companies, academic institutions, and contract research organizations.

Since 2020, we have evolved to become a company comprised of two parts. The first foundational part is a medical device company providing medical devices for neurosurgery applications. The second part is focused on ~~collaborating with pharmaceutical companies~~partnerships in the ~~biologics~~drug and ~~drug~~ delivery ~~space to develop delivery methodologies for neurological drugs.~~space. Currently, ~~approximately 45 of whom~~we have more than 50 partners who are ~~either~~pharmaceutical/biotech companies, academic institutions, and contract research organizations, who are evaluating or using our ~~SmartFlow cannula~~products and services in ~~certain cases,~~trials (or in ~~conjunction with our full ClearPoint Neuro Navigation platform.~~a preclinical setting) to inject gene and cell therapies directly into the brain.

In ~~2010,~~2022, we ~~received regulatory clearance from~~commenced the ~~FDA~~limited market commercialization of the ClearPoint Prism Neuro Laser Therapy System. The laser system was developed by CLS, and is indicated for use to ~~market our ClearPoint~~necrotize or coagulate soft tissue through interstitial irradiation or thermal therapy under 3.0T magnetic resonance imaging ("MRI") guidance. We have exclusive global rights to commercialize the CLS magnetic resonance ("MR") guided laser interstitial thermal therapy ("MRgLITT") system ~~in the U.S.~~ for ~~general neurosurgery procedures. In 2011, we also obtained CE marking approval for our ClearPoint system, which enables us to sell our ClearPoint system in the European Union.~~ neuro applications.

Substantially all our product revenue for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 relates to sales of our ClearPoint system products and related services. We have financed our operations and internal growth primarily through the sale of equity securities and the issuance of convertible and other secured notes. We have incurred significant losses since our inception in 1998 as we have devoted substantial efforts to research and development. As of March 31, ~~2022,~~2023, we had accumulated losses of ~~$137.9~~$156.0 million. We may continue to incur operating losses as we expand our ClearPoint system platform and our business generally.

Factors Which May Influence Future Results of Operations

The following is a description of factors that may influence our future results of operations, and that we believe are important to an understanding of our business and results of operations.

~~COVID-19~~Macroeconomic Trends

~~The extraordinary measures taken beginning~~We continue to monitor the impact of various macroeconomic trends, such as global economic and supply chain disruptions, geopolitical instability, labor shortages, instability of financial institutions and inflationary conditions. Changes in ~~2020 by federal, state~~domestic and ~~local governmental authorities~~global economic conditions, supply chain disruptions, labor shortages, as well as other stimulus and spending programs, have led to higher inflation, which is likely to lead to increased costs and may cause changes in ~~response to~~fiscal and monetary policy. Impacts from inflationary pressures, such an increasing costs for research and development of our products, administrative and other costs of doing business, the ~~novel strain~~potential for instability of the ~~coronavirus (“COVID-19”) pandemic,including “stay-at-home” directives~~financial institutions where we maintain our deposits or other assets, and ~~mandates that substantially restricted daily activities~~our availability to access capital markets and ~~curtailed or ceased normal business operations, led to reduced economic activity, including the postponement or cancellation~~other sources of elective surgical procedures, which historically have represented approximately 80% of the number of surgical procedures using our ClearPoint system. Although economic activity is returning to normalized levels, new variants of COVID-19, such as Delta and Omicron, continue to spreadfunding in the ~~United States and across the globe. The ultimate impact of the COVID-19 pandemic cannot be predicted at this time, and~~future could depend on numerous factors, including vaccination rates among the population, the effectiveness of vaccines against different variants and the response by governmental bodies and regulators. We are unable to determine the timing, adoption or viability of periodic resumption, if any, of elective procedures; and the resulting length of time that the COVID-19 pandemic will adversely affect our ~~product revenues.~~

~~Furthermore, the recessionary conditions on the global economy caused by the COVID-19 pandemic~~business, financial condition and results of operations. Additionally, these trends could ~~have a material adverse effect~~adversely affect our customers, which could impact their willingness to spend on our ~~business. Although most segments of the United States economy have reopened, future surges of COVID-19 due to new variants could occur in the future. Accordingly, reinstatement of directives~~products and ~~mandates requiring~~services. The rapid

1618

businesses to again curtail or cease normal operations, including the postponement or cancellation of elective surgeries, remains a possibility. Additionally, global economic and supply chain disruptions, labor shortages, which may affect our ability to retain and attract new talent, and inflationary conditions caused by the COVID-19 pandemic could have a material adverse effect on our business. The rapid development and fluidity of ~~the situation~~these situations precludes any prediction as to the ultimate impact ~~COVID-19~~they will have on our business, financial condition, results of operation and cash flows, which will depend largely on future ~~developments directly or indirectly relating~~developments.

Revenue

In 2010, we received 510(k) clearance from the FDA to ~~the duration and scope of the COVID-19 outbreak in the United States.~~

~~Key Performance Indicators~~

~~The key performance indicators we utilize to monitor our progress against our strategic plan are:~~

•~~Functional neurosurgery navigation~~

◦Number of “Active Surgery Centers” – For purposes of analyzing this performance indicator, an Active Surgery Center is a hospital or customer-sponsored contract research organization that has purchased products from us or has performed procedures utilizingmarket our ClearPoint system ~~within a rolling 24-month period,~~in the U.S. for general neurosurgery procedures; in February 2011 and ~~includes hospital sites having purchased the~~May 2018, we also obtained CE marking for our ClearPoint system ~~as well as sites~~and SmartFlow cannula, respectively; and in ~~which the ClearPoint system is being used on an evaluation basis. The justification~~June 2020 we obtained CE marking for including “evaluation sites” is that our disposable neurosurgery product is sold to such hospitals for their use in cases. In addition to signifying growth, the number of Active Surgery Centers, when analyzed in conjunction with case volume data, further informs targeted sales and marketing activities and confirms where these activities have led to increased penetrationversion 2.0 of our ~~product lines. As of March 31,~~ClearPoint software and our Inflexion head fixation frame. In January 2021, we received 510(k) clearance for the SmartFrame Array Neuro Navigation System. In September 2022 the ClearPoint ~~system~~Prism™ Neuro Laser Therapy System, for which we have exclusive global right to commercialize, received 510(k) clearance through CLS. The Prism laser represents the first therapy product we will commercialize. Future revenue from sales of our ClearPoint platform products and services is difficult to predict and may not be sufficient to offset our continuing research and development expenses and our increasing selling, general and administrative expenses.

Generating recurring revenue from the sale of products is an important part of our business model for our ClearPoint system. Our product revenue was ~~used in~~ approximately ~~60 Active Surgery Centers,~~$2.6 million for the three months ended March 31, 2023, and was almost entirely related to our ClearPoint system. Our service revenue was approximately $2.8 million for the three months ended March 31, 2023, of which ~~is comparable~~74% related to the ~~number of such centers of the same date in 2021.~~

•~~Biologics~~biologics and drug delivery service line.

◦~~Number of “Partners” –~~ Our revenue recognition policies are more fully described in Note 2 to the Condensed Consolidated Financial Statements included above in Part I, Item 1 in this Quarterly Report.

Underlying the revenue from sales of products and services to our biologics and drug delivery customers is the number of direct customers and end users of our products and/or ~~“Partners.”~~services (“Partners”). Our Partners consist of pharmaceutical and biotech companies, academic institutions, or customer-sponsored contract research organizations that are developing methods to deliver a wide variety of molecules, genes or proteins to targeted brain tissue or structures that would need to bypass the blood-brain barrier for the treatment of a variety of disorders. This is a novel area in which commercialization must be preceded by FDA-mandated clinical trials, which are expensive and time consuming to conduct, and for which the commercial success is uncertain, pending, in part, on the outcome of those trials. While our revenue from sales of products and services to ~~these Partners in support of their clinical trials~~our biologics and drug delivery customers is indicative of growth, the number of ~~such~~Partner relationships is also of importance as we recognize the possibility that some Partners’ research will reach commercial success, and others may not. To the extent our Partners achieve commercial success, our expectation is that we will share in such success through our Partners’ use of our products and services in their delivery of therapies. At March 31, ~~2022,~~2023, we had ~~commercial relationships with approximately 45~~over 50 Partners, as compared with approximately 2545 Partners as of the same date in ~~2021.~~

~~Revenue~~

In 2010, we received 510(k) clearance from the FDA to market our ClearPoint system in the U.S. for general neurosurgery procedures; in February 2011 and May 2018, we also obtained CE marketing approval for our ClearPoint system and SmartFlow cannula, respectively; and in June 2020 we obtained CE marking approval for version 2.0 of our ClearPoint software and our Inflexion head fixation frame. In January 2021, we received 510(k) clearance for the SmartFrame Array Neuro Navigation System. Future revenue from sales of our ClearPoint platform products and services is difficult to predict and may not be sufficient to offset our continuing research and development expenses and our increasing selling, general and administrative expenses.

Generating recurring revenue from the sale of products is an important part of our business model for our ClearPoint system. Our product revenue was approximately $3.2 million for the three months ended March 31, 2022, and was almost entirely related to our ClearPoint system. Our service revenue was approximately $1.9 million for the three months ended March 31, 2022, of which 70% related to the biologics and drug delivery service line.

~~Our revenue recognition policies are more fully described in Note 2 to the Condensed Consolidated Financial Statements included above in Part I, Item 1 in this Quarterly Report.~~2022.

Cost of Revenue

Cost of revenue includes the direct costs associated with the assembly and purchase of components for functional neurosurgery navigation products, biologics and drug delivery products, non-neurosurgery therapy products, and ClearPoint capital equipment and software ~~which~~that we have sold, and for which we have recognized the revenue in accordance with our revenue recognition policy, as well as labor hours and materials for the cost of providing consulting and service revenue. Cost of revenue also includes the allocation of manufacturing overhead costs and depreciation of loaned systems installed under our ClearPoint placement program, as well as provisions for obsolete, impaired, or excess inventory.

Research and Development Costs

Our research and development costs consist primarily of costs associated with the conceptualization, design, testing, and prototyping of our ClearPoint system products and enhancements. Such costs include salaries, travel, and benefits for research and development personnel; materials and laboratory supplies in research and development activities; outside consultant costs; and licensing costs related to technology not yet commercialized. We anticipate that, over time, our research and development costs may increase as we: (i) continue to develop enhancements to our ClearPoint system and SmartFlow cannula; and (ii) seek to expand the application of our technological platforms. From our inception through March 31, ~~2022,~~2023, we have incurred approximately ~~$73~~$84 million in research and development expenses.

Product development timelines, likelihood of success, and total costs can vary widely by product candidate. There are also risks inherent in the regulatory clearance and approval process. At this time, we are unable to estimate with any certainty the costs that we will incur in our efforts to expand the application of our technological platforms.

Sales and Marketing, and General and Administrative Expenses

Our sales and marketing, and general and administrative expenses consist primarily of salaries, incentive-based compensation, travel and benefits, including ~~related~~ share-based compensation; marketing costs; professional fees, including fees ~~for~~or outside attorneys and accountants; occupancy costs; insurance; and other general and administrative expenses, which include, but are not limited to, corporate licenses, director fees, hiring costs, taxes, postage, office supplies, information technology and meeting costs. Our sales and marketing expenses are expected to increase due to costs associated with the continued commercialization of our ClearPoint system and the increased headcount necessary to support growth in operations.

Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, ~~2022~~2023, as compared to the critical accounting policies and estimates described in our ~~2021~~2022 Form 10-K.

Results of Operations

Three Months Ended March 31, ~~2022~~2023, Compared to the Three Months Ended March 31, ~~2021~~2022


		Three Months Ended March 31,							Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2022		2021		Percentage Change		(Dollars in thousands)	2023		2022		Percentage Change
Product revenue	Product revenue	$	3,163	$	3,162	—	%	Product revenue	$	2,630	$	3,163	(17)	%
Service and other revenue	Service and other revenue	1,868		868		115	%	Service and other revenue	2,803		1,868		50	%
Total revenue	Total revenue	5,031		4,030		25	%	Total revenue	5,433		5,031		8	%
Cost of revenue	Cost of revenue	1,785		1,416		26	%	Cost of revenue	2,231		1,800		24	%
Gross profit	Gross profit	3,246		2,614		24	%	Gross profit	3,202		3,231		(1)	%
Research and development costs	Research and development costs	2,533		1,563		62	%	Research and development costs	3,023		2,901		4	%
Sales and marketing expenses	Sales and marketing expenses	1,845		1,575		17	%	Sales and marketing expenses	2,933		2,018		45	%
General and administrative expenses	General and administrative expenses	2,732		1,657		65	%	General and administrative expenses	2,958		2,176		36	%
Other expense:	Other expense:							Other expense:
Other income (expense), net		11		(25)		NM%
Interest expense, net		(106)		(332)		(68)	%
Other (expense) income, net								Other (expense) income, net	(11)		11		NM%
Interest income (expense), net								Interest income (expense), net	114		(106)		(207)	%
Net loss	Net loss	$	(3,959)	$	(2,538)	56	%	Net loss	$	(5,609)	$	(3,959)	42	%

NM – The percentage change is not meaningful.

Revenue. Total revenue was $5.4 million for the three months ended March 31, 2023, and $5.0 million for the three months ended March 31, 2022, ~~and $4.0 million for the three months ended March 31, 2021,~~ which represents an increase of ~~$1.0~~$0.4 million, or ~~25%~~8%.


	Three Months Ended March 31,
(Dollars in thousands)	2023		2022		Percentage Change
Functional neurosurgery navigation and therapy
Disposable products	$	1,858	$	1,863	—	%
Services	503		375		34	%
Subtotal – Functional neurosurgery navigation and therapy	2,361		2,238		5	%
Biologics and drug delivery
Disposable products	594		850		(30)	%
Services and license fees	2,082		1,304		60	%
Subtotal – Biologics and drug delivery revenue	2,676		2,154		24	%
Capital equipment and software
Systems and software products	178		450		(60)	%
Services	218		189		15	%
Subtotal – Capital equipment and software revenue	396		639		(38)	%
Total revenue	$	5,433	$	5,031	8	%

Functional neurosurgery navigation and therapy revenue, which primarily consists of disposable product commercial sales related to cases utilizing the ClearPoint system, increased ~~17%~~5% to ~~$2.2~~$2.4 million for the three months ended March 31, ~~2022,~~2023, from ~~$1.9~~$2.2 million for the same period in ~~2021.~~2022. This increase reflects ~~$0.4~~additional $0.1 million ofin service revenue related to ~~development~~new pre-clinical services for brain computer interface during the three months ended March 31, ~~2022~~2023, compared to ~~no service revenue for~~ the same period in 2021, partially offset by a $0.1 million decrease in product revenue. There were no increases in functional neurosurgery product prices during the period between the three months ended March 31, 2021 and the same period in 2021 that would be reasonably expected to affect a typical customer order.2022.

Biologics and drug delivery revenue, which includes sales of disposable products and services related to customer-sponsored pre-clinical and clinical trials, ~~utilizing our products,~~ increased ~~30%~~24% to ~~$2.2~~$2.7 million for the three months ended March 31, ~~2022,~~2023, from ~~$1.7~~$2.2 million for the same period in ~~2021.~~2022. This increase is attributable to a ~~$0.6~~$0.8 million increase in service revenue related to new pre-clinical trials entered into with our partners and ~~continued partnerships with pharmaceutical companies and research organizations~~the recognition of license fees during the three months ended March 31, ~~2022~~2023, compared to the same period in ~~2021. This is~~2022, partially offset by a ~~$0.1~~$0.3 million decrease in product revenue. There were no increases in biologics and drug delivery product prices during the period between the three months ended March 31, 2021 and the same period in 2021 that would be reasonably expected to affect a typical customer order.

Capital equipment and software revenue, consisting of sales of ClearPoint reusable hardware and software and of related services, ~~increased 41%~~decreased 38% to ~~$0.6~~$0.4 million for the three months ended March 31, ~~2022,~~2023, from ~~$0.5~~$0.6 million for the same period in ~~2021. Revenue from this product line historically has varied from quarter~~2022 due primarily to ~~quarter,~~a decrease in the placements of ClearPoint capital and overall, we believe that hospitals’ capital equipment acquisition activities remain at a low level, relative to the acquisition activity prior to the onset of the COVID-19 pandemic. There were no increases in capital equipment product prices during the period between the three months ended March 31, 2022 and the same period in 2021 that would be reasonably expected to affect a typical customer order.software.

Cost of Revenue and Gross Profit. Cost of revenue was ~~$1.8~~$2.2 million, resulting in gross profit of $3.2 million and gross margin of ~~65%~~59%, for the three months ended March 31, ~~2022,~~2023, and was ~~$1.4~~$1.8 million, resulting in gross profit of ~~$2.6~~$3.2 million and representing a gross margin of ~~65%~~64%, for the three months ended March 31, ~~2021. Gross~~2022. The decrease in gross margin was ~~consistent for the three months ended March 31, 2022~~primarily due to ~~an increased contribution of service revenue, which carries a~~changes in overhead costs and other inventory costs as well as higher ~~gross~~

~~margin relative to our product lines as compared to the same period in 2021, which was fully offset by an increase in the excess~~costs for biologics and ~~obsolete inventory reserve.~~drug delivery services.

Research and Development Costs. Research and development costs were ~~$2.5~~$3.0 million for the three months ended March 31, ~~2022,~~2023, compared to ~~$1.6~~$2.9 million for the same period in ~~2021,~~2022, an increase of ~~$1.0~~$0.1 million, or ~~62%~~4%. The increase was due primarily to increases in personnel costs, including share-based compensation, of $0.4 million, offset by lower product development costs of $0.3 million ~~due to growth in headcount,~~as a result of reprioritization of certain research and ~~product~~ development ~~of $0.7 million, both resulting from our efforts to expand the applications of our technological platforms.~~initiatives.

Sales and Marketing Expenses. Sales and marketing expenses were ~~$1.8~~$2.9 million for the three months ended March 31, ~~2022,~~2023, compared to ~~$1.6~~$2.0 million for the same period in ~~2021,~~2022, an increase of ~~$0.3~~$0.9 million, or ~~17%~~45%. This increase was due primarily to ~~increases in~~additional personnel costs, including share-based compensation, resulting from increases in headcount of ~~$0.2~~$0.8 million, ~~and marketing activities~~as well as increases in travel costs of $0.1 million.

General and Administrative Expenses. General and administrative expenses were ~~$2.7~~$3.0 million for the three months ended March 31, ~~2022,~~2023, compared to ~~$1.7~~$2.2 million for the same period in ~~2021,~~2022, an increase of $1$0.8 million, or ~~65%~~36%. This increase was due primarily to ~~increased~~increases in personnel costs, including share-based compensation of ~~$0.6~~$0.4 million, and ~~personnel costs~~an increase in the allowance for credit losses of ~~$0.3 million, both attributed to increases in headcount, and $0.1 million as a result of increased insurance costs.~~$0.2 million.

Interest ~~Expense.~~Income (Expense). Net interest ~~expense~~income for the three months ended March 31, ~~2022~~2023 was $0.1 million, compared to ~~$0.3~~$0.1 million net interest expense for the same period in ~~2021,~~2022. The increase in interest income was due to higher interest rates and the ~~conversion of a portion of~~Company's investment in U.S. Government debt securities, offset partially by the interest paid on the 2020 Secured Convertible ~~Notes in May and November 2021.~~Note. Additional information with respect to the Secured ~~Notes~~Note is in Note 56 to the Condensed Consolidated Financial Statements included ~~elsewhere~~above in Part I, Item 1 in this Quarterly Report.

Liquidity and Capital Resources

We have incurred net losses since our inception, which has resulted in a cumulative deficit at March 31, ~~2022~~2023 of ~~$137.9~~$156.0 million. In addition, our use of cash from operations amounted to ~~$4.3~~$5.7 million for the three months ended March 31, ~~2022~~2023, and ~~$12.7~~$16.2 million for the year ended December 31, ~~2021.~~ 2022.

Since inception, we have financed our operations principally from the sale of equity securities and the issuance of notes payable.

In ~~January~~ 2020, we ~~entered into the SPA with the 2020 Convertible Noteholders under~~issued secured convertible notes to two investors which ~~we issued the First Closing Notes having an aggregate principal amount~~raised gross proceeds of ~~$17.5~~$25 million, ~~resulting in proceeds, net~~ of ~~financing costs~~which $15 million has been converted to common stock and ~~a commitment fee paid to one of the 2020 Convertible Noteholders, of approximately $16.8 million.~~

~~The SPA also gave us the right, but not the obligation, to request one of the 2020 Convertible Noteholders to purchase an additional $5.0~~$10 million in principal amount of the Second Closing Note. On December 29, 2020, under the terms of the Amendment to the SPA which, among other provisions, increased the principal amount of the Second Closing Note, we issued the Second Closing Note to one of the 2020 Convertible Noteholders in the principal amount of $7.5 million.remains outstanding.

See Note 56 to the Condensed Consolidation Financial Statements included above in Part I, Item 1 in this Quarterly Report for additional information with respect to the 2020 ~~Secured Notes.~~secured notes.

~~As discussed in Note 7, on~~In February ~~23,~~ 2021, we completed a public offering of 2,127,660 shares of our common ~~stock. Net~~stock from which the net proceeds ~~from the offering were~~totaled approximately $46.8 million after deducting ~~the~~ underwriting discounts and commissions, and other ~~estimated~~ offering expenses ~~payable~~paid by us.

~~Based~~As a result of these transactions and our business operations, our cash, cash equivalents, and short-term investments totaled $31.7 million at March 31, 2023. In management’s opinion, based on ~~the foregoing, in management’s opinion,~~our current forecasts for revenue, expense and cash flows, our existing cash and cash equivalent balances and short-term investments at March 31, ~~2022,~~2023, are sufficient to support our operations and meet our obligations for at least the next twelve months.

Cash Flows

Cash activity for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 is summarized as follows:


		Three months ended March 31,					Three months ended March 31,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Cash used in operating activities	Cash used in operating activities	$	(4,269)	$	(2,131)	Cash used in operating activities	(5,680)		$	(4,269)
Cash used in investing activities	Cash used in investing activities	(185)		(40)		Cash used in investing activities	(138)		(185)
Cash provided by financing activities		3		46,930
Cash (used in) provided by financing activities						Cash (used in) provided by financing activities	(5)		3
Net change in cash and cash equivalents	Net change in cash and cash equivalents	$	(4,451)	$	44,759	Net change in cash and cash equivalents	$	(5,823)	$	(4,451)

Net Cash Flows from Operating Activities. Net cash flows used in operating activities for the three months ended March 31, ~~2022~~2023, were ~~$4.3~~$5.7 million, an increase of ~~$2.1~~$1.4 million from the three months ended March 31, ~~2021.~~2022. This increase consisted of a higher net loss of ~~$1.4~~$1.7 million and ~~increased~~the effects of net changes of operating assets and liabilities of ~~$1.2~~$0.4 million, partially offset by a change in non-cash items of ~~$0.5~~$0.6 million. The change in operating assets and liabilities is primarily due to ~~the use of cash for increases in inventory~~lower account receivable collections and the change in the non-cash items results primarily from increases in ~~shared-based compensation.~~share-based compensation and allowance for credit losses.

Net Cash Flows from Investing Activities. Net cash flows used in investing activities for the three months ended March 31, 2023, were $0.1 million and consisted of equipment acquisitions and investments related to our new manufacturing site in Carlsbad, CA.

Net cash flows used in investing activities for the three months ended March 31, 2022, were $0.2 million and consisted of equipment acquisitions and licensing rights.

Net Cash Flows from Financing Activities.Net cash flows used in ~~investing~~financing activities for the three months ended March 31, ~~2021, were $0.04 million and~~2023, consisted of ~~an acquisition~~payments for taxes related to shares withheld in connection with the vesting of ~~medical device license rights.~~restricted stock awards.

~~Net Cash Flows from Financing Activities.~~

Net cash flows from financing activities for the three months ended March 31, 2022, consisted of the proceeds from the exercise of common stock options.

Net cash flows from financing activities for the three months ended March 31, 2021 consisted of the proceeds, net offering costs, of $46.8 million received from the public offering of our common stock, and proceeds from the exercise of common stock options and warrants aggregating $0.1 million.

Operating Capital and Capital Expenditure Requirements

To date, we have not achieved profitability. We could continue to incur net losses as we continue our efforts to expand the commercialization of our ClearPoint system products and pursue additional applications for our technology platforms. Our cash balances are primarily held in a variety of demand accounts with a view to liquidity and capital preservation.

Because of the numerous risks and uncertainties associated with the development and commercialization of medical devices, we are unable to estimate the exact amounts of capital outlays and operating expenditures necessary to successfully continue to commercialize our ClearPoint system products and pursue additional applications for our technology platforms. Our future capital requirements will depend on many factors, including, but not limited to, the following:

•the ultimate duration and impact of ~~the COVID-19 pandemic;~~macroeconomic trends, including inflationary pressures, supply chain disruptions, geopolitical instability, and instability of financial institutions;

•the timing of broader market acceptance and adoption of our ~~ClearPoint system~~ products;

•the scope, rate of progress and cost of our ongoing product development activities relating to our ~~ClearPoint system;~~products;

•the ability of our Partners to achieve commercial success, including their use of our products and services in their clinical trials and delivery of therapies;

•the cost and timing of expanding our sales, clinical support, marketing and distribution capabilities, and other corporate infrastructure;

•the cost and timing of establishing inventories at levels sufficient to support our sales;

•the effect of competing technological and market developments;

•the cost of pursuing additional applications of our technology platforms under current collaborative arrangements, and the terms and timing of any future collaborative, licensing or other arrangements that we may establish;

•the cost and timing of any clinical trials;

•the cost and timing of regulatory filings, clearances and approvals; and

•the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.

2123

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Interest Rate Risk

Our exposure to market risk is limited primarily to interest income and expense sensitivity, which is affected by changes in the general level of U.S. interest rates.

Our investments are in short-term bank deposits, three-to-twelve month U.S. Government debt securities, and institutional money market funds. The primary objective of our investment activities is to preserve principal while at the same time maximizing income we receive without significantly increasing risk. Due to the nature of our short-term investments and the Company's intent to hold such debt securities to maturity, we believe that we are not subject to any material market risk exposure.

At March 31, ~~2022,~~2023, we had $10 million of principal outstanding under athe Outstanding First Closing Note, which is subject to interest rate fluctuations. AThe Outstanding First Closing Note bears interest at a rate equal to the sum of (i) the greater of (a) the three (3)-month LIBOR and (b) two percent (2%), plus (ii) a margin of 2% on the outstanding balance of the Outstanding First Closing Note. At March 31, 2023, the three-month LIBOR was greater than the 2% floor as a result of rising interest rates, and the rate paid on the Outstanding First Closing Note was 7.1%. If the LIBOR continues to increase, a one-percent to two-percent increase ~~in one-month LIBOR~~ would result in ~~no net increase in~~additional annual interest expense ~~on an annualized basis due~~of $0.4 million to ~~the fact that the First Closing Note is subject to a LIBOR floor of 2.00% and one-month LIBOR was below~~$0.5 million above the floor, ~~as of March 31, 2022.~~respectively. The reference to LIBOR will need to be replaced by June 30, 2023. Information with respect to the Outstanding First Closing ~~Notes~~Note may be found in Note 56 to the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements included ~~elsewhere~~above in Part I, Item 1 in this Quarterly Report.

Foreign Currency Risk

To date, we have not recorded a significant amount of sales in currencies other than U.S. dollars, and have only limited business transactions in foreign currencies. We do not currently engage in hedging or similar transactions to reduce our foreign currency risks, which at present, are not material. We believe we have no material exposure to risk from changes in foreign currency exchange rates at this time. We will continue to monitor and evaluate our internal processes relating to foreign currency exchange, including the potential use of hedging strategies.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We have established disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Our disclosure controls and procedures are designed to ensure that material information relating to us is made known to our principal executive officer and principal financial officer by others within our organization. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of March 31, ~~2022~~2023 to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, ~~2022.~~2023.

Changes in Internal Control Over Financial Reporting

During the quarter ended March 31, ~~2022,~~2023, there were no changes in our internal control over financial reporting that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

2224

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

~~None.~~We are involved from time-to-time with various legal matters arising in the ordinary course of business. These claims and legal proceedings are of a nature we believe are normal and incidental to a medical device company, and may include product liability, intellectual property, employment matters, and other general claims.

We make provisions for liabilities when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Such provisions are assessed at least quarterly and adjusted to reflect the impact of any settlement negotiations, judicial and administrative rulings, advice of legal counsel, and other information and events pertaining to a particular case. We are currently not aware of any such legal proceedings or claim that we believe will have, individually or in the aggregate, a material adverse effect on our consolidated results of operations, cash flows, or financial condition.

ITEM 1A. RISK FACTORS.

There have been no material changes to the risk factors disclosed in our ~~2021~~2022 Form 10-K, except as set forth ~~below.~~

~~Our business, financial condition, and results of operations may be adversely affected by the current military conflict between Russia and Ukraine and other future social and geopolitical instability.~~below:

We ~~are exposed to the risk of changes in social, geopolitical, legal, and economic conditions. The global economy has been,~~currently, and may ~~continue~~in the future, have assets held at financial institutions that may exceed the insurance coverage offered by the Federal Deposit Insurance Corporation ("FDIC"), and the loss of such assets could have a negative effect on our operations and liquidity.

On March 10, 2023, Silicon Valley Bank ("SVB") was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. On March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. Similarly, on May 1, 2023, First Republic Bank was swept into receivership. A statement by the Department of the Treasury, the Federal Reserve and the FDIC stated that all depositors of SVB would have access to ~~be, negatively impacted~~all of their money after only one business day of closure, including funds held in uninsured deposit accounts. Although we do not have any funds deposited with SVB, Signature Bank, Silvergate Capital Corp., or First Republic Bank, we currently have our cash and cash equivalents held in deposit in accounts at certain FDIC-insured financial institutions, some of which include amounts in excess of the insurance coverage offered by ~~Russia’s invasion of Ukraine~~the FDIC. In the future, we may maintain our cash assets at financial institutions in ~~2022. As a result of Russia's invasion of Ukraine,~~ the United States in amounts that may be in excess of the ~~European Union,~~FDIC insurance limit of $250,000. In the ~~United Kingdom, and~~event of a failure of any of these financial institutions where we maintain our deposits or other ~~G7 countries, among other countries, have imposed substantial financial and economic sanctions on certain industry sectors and parties in Russia. Broad restrictions on exports~~assets, we may incur a loss to Russia have also been imposed. These measures include: (i) comprehensive financial sanctions against major Russian banks; (ii) additional designations of Russian individuals with significant business interests and government connections; (iii) designations of individuals and entities involved in Russian military activities; and (iv) enhanced export controls and trade sanctions limiting Russia's ability to import various goods. The negative impacts arising from the conflict and these sanctions and export restrictions may include reduced consumer demand, supply chain disruptions, increased cybersecurity risks, and increased costs for transportation, energy, and raw materials. Although none of our operations are in Russiaextent such deposits or ~~Ukraine, further escalation of geopolitical tensions~~assets exceeds the FDIC insurance limitation, which could have a ~~broader impact that expands into other markets where we do business, which may adversely affect~~material adverse effect upon our ~~business,~~liquidity, financial condition and our results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

None.

ITEM 5. OTHER INFORMATION.

None.

2325

ITEM 6. EXHIBITS.

The exhibits listed below are filed, furnished, or incorporated by reference as part of this Quarterly Report.


Exhibit Number						Exhibit Description

~~10.1~~3.1						~~Confidential Resignation Agreement, dated as~~Amended and Restated Certificate of ~~February 14, 2022, by and between the Company and Peter G. Piferi~~Incorporation of MRI Interventions, Inc. (incorporated by reference to Exhibit ~~10.1~~3.1 to the ~~Company’s~~Company's Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2012).
3.2						Certificate of Amendment to the Amended and Restated Certificate of Incorporation of MRI Interventions, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed with the SEC on June 8, 2015).
3.3						Certificate of Amendment to the Amended and Restated Certificate of Incorporation of MRI Interventions, Inc. (incorporated by reference to Exhibit 3.3 to the Company's Registration Statement on Form S-1, filed with the SEC on August 2, 2016).
3.4						Certificate of Amendment to the Amended and Restated Certificate of Incorporation of ClearPoint Neuro, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed with the SEC on February 12, 2020).
3.5						Fourth Amended and Restated Bylaws of ClearPoint Neuro, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on December 14, 2022).
~~10.2~~10.1						~~Independent Consultant~~Amendment No. 1 to Employment Agreement, dated ~~as of dated as of February 14, 2022,~~March 3, 2023 by and between the Company and ~~Peter G. Piferi~~Joseph M. Burnett, amending the Employment Agreement dated October 6, 2017 (incorporated by reference to Exhibit ~~10.2~~10.1 to the ~~Company’s~~Company's Current Report on Form 8-K, filed with the SEC on ~~February~~March 3, 2023).
10.2						Amendment No. 1 to Employment Agreement, dated March 3, 2023 by and between the Company and Danilo D’Alessandro, amending the Employment Agreement dated September 14, ~~2022)~~2020 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed with the SEC on March 3, 2023).
10.3						Amendment No. 1 to Employment Agreement, dated March 3, 2023 by and between the Company and Mazin Sabra, amending the Employment Agreement dated September 20, 2022 (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K, filed with the SEC on March 3, 2023).
10.4*						Employment Agreement, dated May 31, 2022, by and between the Company and Jeremy Stigall.
10.5*						Amendment No. 1 to Employment Agreement, dated March 3, 2023 by and between the Company and Jeremy Stigall, amending the Employment Agreement dated May 31, 2022.
31.1*						Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934
31.2*						Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934
32+						Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 60 of Title 18 of the United States Code
101.INS*						XBRL Instance
101.SCH*						XBRL Taxonomy Extension Schema
101.CAL*						XBRL Taxonomy Extension Calculation
101.DEF*						XBRL Taxonomy Extension Definition
101.LAB*						XBRL Taxonomy Extension Labels
101.PRE*						XBRL Taxonomy Extension Presentation

104*						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Filed herewith.

+ This certification is being furnished solely to accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, and it is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not to be incorporated

by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

2427

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: May 11, ~~2022~~2023

	CLEARPOINT NEURO, INC.

	By:	/s/ Joseph M. Burnett
		Joseph M. Burnett
		Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Danilo D’Alessandro
		Danilo D’Alessandro
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

2528


	Restricted Stock Award	Weighted - Average Grant Date Fair Value
Outstanding at December 31, 2021	380,105	$	10.41
Granted	39,916	$	8.63
Vested	(10,089)	$	9.77
Forfeited or expired	(10,000)	$	20.45
Outstanding at March 31, 2022	399,932	$	9.79


	Warrant Shares	Weighted-average Exercise price per share		Intrinsic Value(1) (in thousands)
Outstanding at December 31, 2021	668,907	$	2.97
Exercised	(14,728)	$	2.20
Outstanding at March 31, 2022	654,179	$	2.98	$	5,071