UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~March 31,~~September 30, 2022


☐			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 001-33351

_________________________________________________

NEUROMETRIX, INC.

(Exact name of registrant as specified in its charter)


Delaware			04-3308180
(State or other jurisdiction of			(I.R.S. Employer Identification No.)
incorporation or organization)

4B Gill Street Woburn, Massachusetts			01801
(Address of principal executive offices)			(Zip Code)

(781) 890-9989

(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 exchange on which registered
Common Stock, $0.0001 par value per share	NURO	The Nasdaq Stock Market LLC
Preferred Stock Purchase Rights

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.

Yes x 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 and post such files).

Yes x 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 definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☐

☐☒

☒

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~7,130,091~~7,757,226 shares of common stock, par value $0.0001 per share, were outstanding as of ~~April 25,~~October 19, 2022.

NeuroMetrix, Inc.

Form 10-Q

Quarterly Period Ended ~~March 31,~~September 30, 2022

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Balance Sheets as of ~~March 31,~~September 30, 2022 (unaudited) and December 31, 2021	1

	Statements of Operations (unaudited) for the Quarters and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	2

	Statements of Changes in Stockholders' Equity (unaudited) for the Quarters and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	3

	Statements of Cash Flows (unaudited) for the ~~Quarters~~Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	4

	Notes to Unaudited Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9 10

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14 15

Item 4.	Controls and Procedures	14 15

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	15 16

Item 1A.	Risk Factors	15 16

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15 16

Item 3.	Defaults Upon Senior Securities	15 16

Item 4.	Mine Safety Disclosures	15 16

Item 5.	Other Information	15 16

Item 6.	Exhibits	15 16

Signatures		16 17

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

NeuroMetrix, Inc.

Balance Sheets


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	23,769,380	$	22,572,104	Cash and cash equivalents	$	1,772,005	$	22,572,104
Held-to-maturity securities						Held-to-maturity securities	19,054,654		—
Accounts receivable, net	Accounts receivable, net	683,319		310,818		Accounts receivable, net	702,459		310,818
Inventories	Inventories	711,936		706,553		Inventories	1,057,239		706,553

Prepaid expenses and other current assets	Prepaid expenses and other current assets	422,616		598,384		Prepaid expenses and other current assets	845,649		598,384
Total current assets	Total current assets	25,587,251		24,187,859		Total current assets	23,432,006		24,187,859

Fixed assets, net	Fixed assets, net	184,346		198,703		Fixed assets, net	175,840		198,703
Right of use asset	Right of use asset	450,374		475,230		Right of use asset	398,144		475,230
Other long-term assets	Other long-term assets	26,400		26,400		Other long-term assets	26,400		26,400
Total assets	Total assets	$	26,248,371	$	24,888,192	Total assets	$	24,032,390	$	24,888,192

Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:

Accounts payable	Accounts payable	$	360,855	$	284,036	Accounts payable	$	539,379	$	284,036

Accrued expenses and compensation	Accrued expenses and compensation	1,207,008		814,155		Accrued expenses and compensation	1,134,659		814,155
Accrued product returns	Accrued product returns	11,000		39,000		Accrued product returns	10,000		39,000
Lease obligation, current	Lease obligation, current	148,391		228,506		Lease obligation, current	148,391		228,506
Total current liabilities	Total current liabilities	1,727,254		1,365,697		Total current liabilities	1,832,429		1,365,697

Lease obligation, net of current portion	Lease obligation, net of current portion	283,209		306,709		Lease obligation, net of current portion	233,693		306,709
Total liabilities	Total liabilities	2,010,463		1,672,406		Total liabilities	2,066,122		1,672,406

Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock	Preferred stock	—		—		Preferred stock	—		—
Convertible preferred stock	Convertible preferred stock	1		1		Convertible preferred stock	1		1
Common stock, $0.0001 par value; 25,000,000 shares authorized at March 31, 2022 and December 31, 2021; 7,006,055 and 6,694,296 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		701		669
Common stock, $0.0001 par value; 25,000,000 shares authorized at September 30, 2022 and December 31, 2021; 7,137,519 and 6,694,296 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively						Common stock, $0.0001 par value; 25,000,000 shares authorized at September 30, 2022 and December 31, 2021; 7,137,519 and 6,694,296 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	714		669
Additional paid-in capital	Additional paid-in capital	224,359,025		222,378,373		Additional paid-in capital	224,853,549		222,378,373
Accumulated deficit	Accumulated deficit	(200,121,819)		(199,163,257)		Accumulated deficit	(202,887,996)		(199,163,257)
Total stockholders’ equity	Total stockholders’ equity	24,237,908		23,215,786		Total stockholders’ equity	21,966,268		23,215,786
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	26,248,371	$	24,888,192	Total liabilities and stockholders’ equity	$	24,032,390	$	24,888,192

The accompanying notes are an integral part of these interim financial statements.

NeuroMetrix, Inc.

Statements of Operations

(Unaudited)


		Quarters Ended March 31,				Quarters Ended September 30,				Nine Months Ended September 30,
		2022		2021				2022		2021		2022		2021

Revenues	Revenues	$	2,302,391	$	2,155,472		Revenues	$	1,968,003	$	2,064,359	$	6,408,695	$	6,433,330

Cost of revenues	Cost of revenues	508,874		576,289			Cost of revenues	693,571		619,833		1,888,566		1,754,343

Gross profit	Gross profit	1,793,517		1,579,183			Gross profit	1,274,432		1,444,526		4,520,129		4,678,987

Operating expenses:	Operating expenses:						Operating expenses:
Research and development	Research and development	710,577		233,277			Research and development	1,074,954		724,556		2,701,330		1,599,358
Sales and marketing	Sales and marketing	858,839		393,825			Sales and marketing	810,209		442,230		2,235,646		1,105,548
General and administrative	General and administrative	1,186,091		1,012,276			General and administrative	1,102,260		965,711		3,468,452		3,254,210

Total operating expenses	Total operating expenses	2,755,507		1,639,378			Total operating expenses	2,987,423		2,132,497		8,405,428		5,959,116

Loss from operations	Loss from operations	(961,990)		(60,195)			Loss from operations	(1,712,991)		(687,971)		(3,885,299)		(1,280,129)

Other income	Other income	3,428		412			Other income	106,737		882		160,560		1,673

Net loss	Net loss	$	(958,562)	$	(59,783)		Net loss	$	(1,606,254)	$	(687,089)	$	(3,724,739)	$	(1,278,456)

Net loss per common share applicable to common stockholders, basic and diluted	Net loss per common share applicable to common stockholders, basic and diluted	$	(0.14)	$	(0.02)		Net loss per common share applicable to common stockholders, basic and diluted	$	(0.23)	$	(0.12)	$	(0.53)	$	(0.28)

The accompanying notes are an integral part of these interim financial statements.

NeuroMetrix, Inc.

Statements of Changes in Stockholders' Equity

(Unaudited)


		Series B Convertible Preferred Stock			Common Stock			Additional Paid-In Capital				Accumulated Deficit					Total			Series B Convertible Preferred Stock							Common Stock						Additional Paid-In Capital		Accumulated Deficit		Total
		Number of Shares	Amount		Number of Shares	Amount										Number of Shares					Amount				Number of Shares			Amount
Balance at December 31, 2020	Balance at December 31, 2020	200	$	1	3,807,555	$	380			$	202,129,194			$	(196,881,800)					$	5,247,775	Balance at December 31, 2020	200			$	1		3,807,555			$		380	$	202,129,194	$	(196,881,800)	$	5,247,775
Stock-based compensation expense	Stock-based compensation expense	—	—		—	—		68,863				—					68,863		Stock-based compensation expense	—				—			—			—			68,863		—		68,863
Issuance of common stock under employee stock purchase plan		—	—		2,408	1		4,196				$	—				$	4,197
Issuance of common stock under at the market offering																			Issuance of common stock under at the market offering	—				—			2,408			1			4,196		—		4,197
Net loss	Net loss	—	—		—	—		—				(59,783)					(59,783)		Net loss	—				—			—			—			—		(59,783)		(59,783)
Balance at March 31, 2021	Balance at March 31, 2021	200	$	1	3,809,963	$	381	$	202,202,253			$	(196,941,583)				$	5,261,052	Balance at March 31, 2021	200				1			3,809,963			381			202,202,253		(196,941,583)		5,261,052
Stock-based compensation expense																			Stock-based compensation expense	—				—			—			—			319,863		—		319,863
Issuance of common stock under at the market offering																			Issuance of common stock under at the market offering	—				—			1,207,681			121			3,766,727		—		3,766,848
Issuance of common stock under employee stock purchase plan																			Issuance of common stock under employee stock purchase plan	—				—			7,055			1			18,949		—		18,950
Vesting of restricted stock under equity plan																			Vesting of restricted stock under equity plan	—				—			13,911			3			(3)		—		—
Net loss																			Net loss	—				—			—			—			—		(531,584)		(531,584)
Balance at June 30, 2021																			Balance at June 30, 2021	200				1			5,038,610			$	506		206,307,789		(197,473,167)		8,835,129
Stock-based compensation expense																			Stock-based compensation expense	—				—			—			—			196,361		—		196,361
Issuance of common stock under at the market offering																			Issuance of common stock under at the market offering	—				—			1,549,024			154			15,804,956		—		15,805,110
Issuance of common stock upon exercise of stock options																			Issuance of common stock upon exercise of stock options	—				—			50,000			5			78,495		—		78,500
Vesting of restricted stock under equity plan																			Vesting of restricted stock under equity plan	—				—			10,877			1			(1)		—		—
Net loss																			Net loss	—				—			—			—			—		(687,089)		(687,089)
Balance at September 30, 2021																			Balance at September 30, 2021	200				$	1		6,648,511			$	666		$	222,387,600	$	(198,160,256)	$	24,228,011

		Series B Convertible Preferred Stock			Common Stock			Additional Paid-In Capital				Accumulated Deficit					Total			Series B Convertible Preferred Stock							Common Stock						Additional Paid-In Capital		Accumulated Deficit		Total
		Number of Shares	Amount		Number of Shares	Amount										Number of Shares					Amount				Number of Shares			Amount
Balance at December 31, 2021	Balance at December 31, 2021	200	$	1	6,664,296	$	669			$	222,378,373			$	(199,163,257)					$	23,215,786	Balance at December 31, 2021	200			$	1		6,664,296			$		669	$	222,378,373	$	(199,163,257)	$	23,215,786
Stock-based compensation expense	Stock-based compensation expense	—	—		—	—		37,632				—					37,632		Stock-based compensation expense	—				—			—			—			37,632		—		37,632
Issuance of common stock under at the market offering	Issuance of common stock under at the market offering	—	—		292,500	29		1,943,023				$	—				$	1,943,052	Issuance of common stock under at the market offering	—				—			292,500			29			1,943,023		—		1,943,052

Vesting of restricted stock under option plan		—	—		1,759	3		(3)				—					—
Vesting of restricted stock under equity plan																			Vesting of restricted stock under equity plan	—				—			1,759			3			(3)		—		—
Net loss	Net loss	—	—		—	—		—				(958,562)					(958,562)		Net loss	—				—			—			—			—		(958,562)		(958,562)
Balance at March 31, 2022	Balance at March 31, 2022	200	$	1	6,958,555	$	701	$	224,359,025			$	(200,121,819)				$	24,237,908	Balance at March 31, 2022	200				1			6,958,555			701			224,359,025		(200,121,819)		24,237,908
Stock-based compensation expense																			Stock-based compensation expense	—				—			—			—			109,340		—		109,340

Issuance of common stock under employee stock purchase plan																			Issuance of common stock under employee stock purchase plan	—				—			2,503			—			7,829		—		7,829
Issuance of common stock to settle compensation obligation																			Issuance of common stock to settle compensation obligation	—				—			50,213			5			215,412		—		215,417
Vesting of restricted stock under equity plan																			Vesting of restricted stock under equity plan	—				—			3,120			7			(7)		—		—
Net loss																			Net loss	—				—			—			—			—		(1,159,923)		(1,159,923)

Balance at June 30, 2022																			Balance at June 30, 2022	200				1			7,014,391			$	713		224,691,599		(201,281,742)		23,410,571
Stock-based compensation expense																			Stock-based compensation expense	—				—			—			—			161,951		—		161,951

Vesting of restricted stock under equity plan																			Vesting of restricted stock under equity plan	—				—			16,578			1			(1)		—		—
Net loss																			Net loss	—				—			—			—			—		(1,606,254)		(1,606,254)
Balance at September 30, 2022																			Balance at September 30, 2022	200				$	1		7,030,969			$	714		$	224,853,549	$	(202,887,996)	$	21,966,268

The accompanying notes are an integral part of these interim financial statements.

NeuroMetrix, Inc.

Statements of Cash Flows

(Unaudited)

Three Months Ended March 31,
2022 2021
Cash flows from operating activities:
Net loss $ (958,562) $ (59,783)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 12,877 22,182
Stock-based compensation 37,632 68,863
Impairment charge against right of use asset — 126,748
Loss on disposal of fixed assets 6,875 —
Changes in operating assets and liabilities:
Accounts receivable (372,501) (143,392)
Inventories (5,383) 71,656
Prepaid expenses and other current and long-term assets 37,009 (16,043)
Accounts payable 76,819 238,932
Accrued expenses and compensation 452,853 (332,953)
Accrued product returns (28,000) (10,000)
Net cash used in operating activities (740,381) (33,790)
Cash flows from investing activities:
Purchases of fixed assets (5,395) (21,453)
Net cash used in investing activities (5,395) (21,453)
Cash flows from financing activities:
Net proceeds from issuance of stock 1,943,052 4,197
Deferred stock issuance costs paid — $ (30,000)
Net cash provided (used in) by financing activities 1,943,052 (25,803)
Net increase (decrease) in cash and cash equivalents 1,197,276 (81,046)
Cash and cash equivalents, beginning of period 22,572,104 5,226,213
Cash and cash equivalents, end of period $ 23,769,380 $ 5,145,167


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(3,724,739)	$	(1,278,456)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	39,170		103,594
Stock-based compensation	308,923		585,087
Issuance of common stock to settle compensation obligations	26,019		—
Impairment charge against right of use asset	—		126,748
Loss on disposal of fixed assets	6,875		—
Accretion of interest income on held-to-maturity securities	(133,278)		—
Changes in operating assets and liabilities:
Accounts receivable	(391,641)		(305,469)
Inventories	(350,686)		54,331

Prepaid expenses and other current and long-term assets	(383,310)		(612,661)
Accounts payable	255,343		174,653
Accrued expenses and compensation	569,902		89,931
Accrued product returns	(29,000)		(499,000)
Net cash used in operating activities	(3,806,422)		(1,561,242)

Cash flows from investing activities:
Purchases of held-to-maturity securities	(18,921,376)		—
Purchases of fixed assets	(23,182)		(125,039)
Net cash used in investing activities	(18,944,558)		(125,039)

Cash flows from financing activities:
Net proceeds from issuance of stock	1,950,881		19,673,605


Net cash provided by financing activities	1,950,881		19,673,605

Net (decrease) increase in cash and cash equivalents	(20,800,099)		17,987,324
Cash and cash equivalents, beginning of period	22,572,104		5,226,213
Cash and cash equivalents, end of period	$	1,772,005	$	23,213,537

Supplemental disclosure of cash flow information:
Issuance of common stock to settle compensation obligation	$	189,398	$	—

The accompanying notes are an integral part of these interim financial statements.

NeuroMetrix, Inc.

Notes to Unaudited Financial Statements

~~For the Three Months Ended March 31,~~September 30, 2022

1.Business and Basis of Presentation

Our Business-An Overview

NeuroMetrix, Inc. (the "Company" or "NeuroMetrix") develops and commercializes health care products that utilize non-invasive neurostimulation. Revenues are derived from the sale of medical devices and after-market consumable products and accessories. The Company’s products are sold in the United States and select overseas markets. They are cleared by the U.S. Food and Drug Administration ("FDA") and regulators in foreign jurisdictions where appropriate. The Company has two primary products. DPNCheck® is a diagnostic device that provides rapid, point-of-care ~~test~~detection of peripheral neuropathies. Quell® is a wearable neuromodulation technology indicated for ~~diabetic peripheral neuropathy, which is the most common long-term complication~~treatment of ~~Type 2 diabetes. Quell is an app-enabled, over-the-counter wearable device for~~fibromyalgia symptoms and chronic lower extremity pain.

The Company held cash, ~~and~~ cash equivalents ~~of $23.8~~and held-to-maturity securities totaling $20.8 million as of ~~March 31,~~September 30, 2022. The Company has a history of operating losses and has financed its operations primarily from sales of equity, ~~from collaboration milestone payments, and from~~ sales of its ~~products.~~products and third party development collaboration payments. The Company believes that its present balance of cash and held-to-maturity securities resources coupled with cash inflows from product sales will enable the Company to fund its operations for at least the next twelve months from the date of issuance of the financial statements. Actual cash requirements could differ from management's projections for many reasons. These include the effects of the Covid-19 pandemic on sales, procurement of production materials, and maintenance of critical staffing. They could also include changes the Company may make to its business strategy that affect operating expenses, regulatory developments, changes to research and development spending plans; and other items affecting the Company's projected uses of cash.

Unaudited Interim Financial Statements

The accompanying unaudited balance sheet as of ~~March 31,~~September 30, 2022, unaudited statements of operations, changes in stockholders' equity for the quarters and nine months ended ~~March 31,~~September 30, 2022 and 2021 and cash flows for the ~~quarters~~nine months ended ~~March 31,~~September 30, 2022 and 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. The accompanying balance sheet as of December 31, 2021 does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, the financial statements include all normal and recurring adjustments considered necessary for a fair presentation of the Company’s financial position and operating results. Operating results for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or any other period. These financial statements and notes should be read in conjunction with the financial statements for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, or the SEC, on January 28, 2022 (File No. 001-33351).

Revenues

Revenues include product sales, net of estimated returns. Revenue is measured as the amount of consideration the Company expects to receive in exchange for product transferred. Revenue is recognized when contractual performance obligations have been satisfied and control of the product has been transferred to the customer. In most cases, the Company has a single product delivery performance obligation. Accrued product returns are estimated based on historical data and evaluation of current information.

Accounts receivable are recorded at the amount the Company expects to collect, net of the allowance for doubtful accounts receivable. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses based on customer past payment history, product usage activity, and recent communications with the customer. Individual customer balances which are over 90 days past due are reviewed individually for collectability and written-off when recovery is not probable. Allowance for doubtful accounts was $25,000 as of ~~March 31,~~September 30, 2022 and December 31, 2021.

~~One~~Two customers accounted for 32% and one customer accounted for ~~43% and 36%~~34% of total revenues in the ~~quarters~~quarter and nine months ended ~~March 31,~~September 30, 2022, respectively. One customer accounted for 25% and 29% of total revenues in the quarter and nine months ended September 30, 2021, respectively. ~~Three customers~~One customer accounted for ~~55%~~26% and two customers accounted for 35% of accounts receivable as of ~~March 31,~~September 30, 2022 and December 31, 2021, respectively.

~~Stock-based Compensation~~Held-To-Maturity Securities

~~Total compensation~~The Company's investments in held-to-maturity securities consist of investment grade U.S. Treasury obligations, commercial paper and corporate bonds with maturity dates of less than 365 days. The Company has the ability and intention to hold these securities until maturity. Accordingly, these securities are recorded in the Company's balance sheet at amortized cost ~~related to non-vested awards not yet recognized~~and interest is recorded within other income on the Company's statement of operations. The market value of the held-to-maturity securities at ~~March 31,~~September 30, 2022 was ~~$93,991. The total compensation costs are expected to be recognized over a weighted-average period of 3.4 years.~~$18,937,643.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during reporting periods. Actual results could differ from those estimates.

2. Comprehensive Loss

For the quarters and nine months ended ~~March 31,~~September 30, 2022 and 2021, the Company had no components of other comprehensive loss other than net loss itself.

3. Net Loss Per Common Share

Basic and dilutive net loss per common share were as follows:


		Quarters Ended March 31,				Quarters Ended September 30,		Nine Months Ended September 30,
		2022		2021				2022		2021		2022		2021
Net loss applicable to common stockholders	Net loss applicable to common stockholders	$	(958,562)	$	(59,783)		Net loss applicable to common stockholders	$	(1,606,254)	$	(687,089)	$	(3,724,739)	$	(1,278,456)

Weighted average number of common shares outstanding, basic		6,893,164		3,796,120

Weighted average number of common shares outstanding, dilutive		6,893,164		3,796,120

Weighted average number of common shares outstanding, basic and dilutive							Weighted average number of common shares outstanding, basic and dilutive	7,025,254		5,818,449		6,976,548		4,597,580

Net loss per common share applicable to common stockholders, basic and diluted	Net loss per common share applicable to common stockholders, basic and diluted	$	(0.14)	$	(0.02)		Net loss per common share applicable to common stockholders, basic and diluted	$	(0.23)	$	(0.12)	$	(0.53)	$	(0.28)

Shares underlying the following potentially dilutive weighted average number of common stock equivalents were excluded from the calculation of diluted net loss per common share because their effect was anti-dilutive for each of the periods presented:


		Quarters Ended March 31,			September 30,
		2022	2021			2022	2021
Options	Options	510,256	368,510	Options		525,468	504,045

Unvested restricted stock awards				Unvested restricted stock awards		106,550	10,702
Unvested restricted stock units				Unvested restricted stock units		207,233	—
Convertible preferred stock	Convertible preferred stock	62	62	Convertible preferred stock		62	62
Total	Total	510,318	368,572	Total		839,313	514,809

4. Inventories

Inventories consist of the following:


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Purchased components	Purchased components	$	413,653	$	422,093	Purchased components	$	461,349	$	422,093

Finished goods	Finished goods	298,283		284,460		Finished goods	595,890		284,460
		$	711,936	$	706,553		$	1,057,239	$	706,553

5. Accrued Expenses and Compensation

Accrued expenses and compensation consist of the following:


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Professional services	Professional services	$	156,000	$	109,000	Professional services	$	277,000	$	109,000
Compensation	Compensation	825,698		440,474		Compensation	522,044		440,474

Consulting						Consulting	125,000		5,000
Warranty	Warranty	24,800		28,400		Warranty	18,000		28,400

Leasehold	Leasehold	$	—	$	60,000	Leasehold	—		60,000
Sales Tax		$	139,507	$	108,788
Sales tax						Sales tax	143,136		108,788
Other	Other	61,003		67,493		Other	49,479		62,493

							$	1,134,659	$	814,155

		$	1,207,008	$	814,155

6. Operating Leases

The Company's lease on its Woburn, Massachusetts corporate office and manufacturing ~~facilities~~facility extends through September 2025 with a monthly base rent of $13,846 and a 5-year extension option.

Future minimum lease payments under this non-cancellable operating ~~leases~~lease as of ~~March 31,~~September 30, 2022 are as follows:


2022	2022	124,339		2022	$	41,446
2023	2023	165,785		2023	165,785
2024	2024	165,785		2024	165,785
2025	2025	117,431		2025	117,431
Total minimum lease payments	Total minimum lease payments	$	573,340	Total minimum lease payments	$	490,447

Discount rate, 15%	Discount rate, 15%	$	141,740	Discount rate, 15%	$	108,363
Lease obligation, current portion	Lease obligation, current portion	148,391		Lease obligation, current portion	148,391
Lease obligation, net of current portion	Lease obligation, net of current portion	283,209		Lease obligation, net of current portion	233,693
		$	573,340		$	490,447

The Company's lease on its former corporate office in Waltham, Massachusetts expired in February 2022. During the first quarter of 2021, the Company recorded an impairment charge of $126,748 on that idle facility which was being offered for sublet. In the first quarter of 2022, a $60,000 reduction in rent expense was recorded upon return of the facility to the lessor. The letter of credit issued by a bank in favor of the Waltham facility was released. For the ~~quarter~~nine months ended ~~March 31,~~September 30, 2022, the Company recorded sublet income totaling $22,795 within operating expenses on the Company's ~~Statement~~statement of ~~Operations.~~operations.

Total recorded rent expense was ~~$24,754~~$46,102 and ~~$166,904,~~$18,932, for the quarters ended ~~March 31,~~September 30, 2022 and 2021, respectively. Total recorded rent expense was $116,959 and $243,289 for the nine months ended September 30, 2022 and 2021, respectively. The Company records rent expense on its facility ~~leases~~lease on a straight-line basis over the lease term. The remaining operating lease term was ~~3.7~~3.0 years as of ~~March 31,~~September 30, 2022.

7. Fair Value Measurements

~~The following tables present information about the Company’s assets~~Assets and liabilities that are measured at fair value ~~on a recurring basis for the periods~~are presented and indicates the fair value hierarchy of the valuation techniques it utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates, and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.below. All Company assets and liabilities measured at fair value utilize Level 1 ~~inputs.~~inputs (i.e. quoted prices (unadjusted) in active markets for identical assets or liabilities).


				Fair Value Measurements at March 31, 2022 Using									Fair Value Measurements at September 30, 2022 Using
		March 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			September 30, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:	Assets:									Assets:
Cash equivalents	Cash equivalents	$	20,821,291	$	20,821,291	$	—	$	—	Cash equivalents	$	1,230,690	$	1,230,690	$	—	$	—
Total	Total	$	20,821,291	$	20,821,291	$	—	$	—	Total	$	1,230,690	$	1,230,690	$	—	$	—


			Fair Value Measurements at December 31, 2021 Using
	December 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	20,317,736	$	20,317,736	$	—	$	—
Total	$	20,317,736	$	20,317,736	$	—	$	—

The Company's cash equivalents consist of money market accounts.

8. Stockholders’ Equity

Preferred stock and convertible preferred stock consist of the following:

March 31, 2022 December 31, 2021
Preferred stock, $0.001 par value; 5,000,000 shares authorized at March 31, 2022 and December 31, 2021; no shares issued and outstanding at March 31, 2022 and December 31, 2021 $ — $ —
Series B convertible preferred stock, $0.001 par value; 147,000 shares designated at March 31, 2022 and December 31, 2021; 200 shares issued and outstanding at March 31, 2022 and December 31, 2021 $ 1 $ 1


	September 30, 2022		December 31, 2021
Preferred stock, $0.001 par value; 5,000,000 shares authorized at September 30, 2022 and December 31, 2021; no shares issued and outstanding at September 30, 2022 and December 31, 2021	$	—	$	—
Series B convertible preferred stock, $0.001 par value; 147,000 shares designated at September 30, 2022 and December 31, 2021; 200 shares issued and outstanding at September 30, 2022 and December 31, 2021	$	1	$	1

2022 equity activity

In January 2022, the Company issued 292,500 shares of common stock under ~~its ATM~~an at-the-market (ATM) equity offering program with net proceeds of $1,943,052 and issued 20,000 restricted stock awards under its 2004 Stock Option Plan with a value of $104,200.

~~As of March 31,~~ In April 2022, the Company ~~has~~ issued ~~47,500~~76,000 shares of restricted common stock under its 2022 Equity Incentive Plan with a value of $326,000 to employees as long term incentives (LTI) and issued 50,213 shares of fully vested common stock with a value of $215,417 in settlement of management incentive compensation. In May 2022, the Company issued 161,764 restricted stock ~~awards that remain unvested. At December 31, 2021 the Company had 30,000 restricted stock awards that were unvested.~~

units with a value of $550,000 as LTI to its management and directors under its 2022 Equity

~~Subsequent to March 31,~~Incentive Plan. In June 2022, ~~under its 2004 Stock Option Plan,~~ the Company issued ~~76,000 restricted stock awards with a value of $326,040 to employees as long term incentives (LTI) and 49,084~~2,503 shares of fully vested common stock with a value of ~~$210,567 in settlement~~$7,829 pursuant to the Company's Employee Stock Purchase Plan. For the quarter ended September 30, 2022, the Company issued 57,972 restricted stock units with a value of ~~management incentive compensation.~~$202,008 under its 2022 Equity Incentive Plan. As of September 30, 2022, the Company had 106,550 unvested shares of restricted common stock and 207,233 unvested restricted stock units. Total compensation cost related to non-vested awards not yet recognized at September 30, 2022 was $1,224,278. These unrecognized costs are expected to be recognized over a weighted-average period of 2.3 years. Subsequently from October 1, 2022 to October 19, 2022 the Company issued 623,834 shares of Common Stock under its ATM program with net proceeds of $1,890,721.

2021 equity activity

In January 2021, the Company issued 2,408 shares of fully vested common stock with a value of $4,197 pursuant to the Company's ~~2010~~ Employee Stock Purchase Plan.

In May 2021, the Company issued 42,808 shares of restricted common stock with a value of $125,000 under its 2004 Stock Option Plan. As of September 30, 2021, 24,788 of these shares were vested, 7,318 shares were forfeited to settle withholding taxes on the vesting and 10,702 remain restricted. In June 2021, the Company issued 7,055 shares of fully vested common stock with a value of $18,950 pursuant to the Company's Employee Stock Purchase Plan. In August 2021, the Company issued 50,000 shares of fully vested common stock with a value of $78,500 upon the exercise of stock options pursuant to the Company's 2004 Stock Option Plan. During the nine months ended September 30, 2021, the Company issued 2,756,705 shares of its common stock, under the ATM for net proceeds of $19,571,958.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our financial condition and results of operations in conjunction with our financial statements and the accompanying notes to those financial statements included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. For a description of factors that may cause our actual results to differ materially from those anticipated in these forward-looking statements, please refer to the below section of this Quarterly Report on Form 10-Q titled “Cautionary Note Regarding Forward-Looking Statements.” Unless the context otherwise requires, all references to “we”, “us”, the “Company”, or “NeuroMetrix” in this Quarterly Report on Form 10-Q refer to NeuroMetrix, Inc.

Our Business

Our mission is to reduce the impact of neurological disorders and pain syndromes on individuals and on population health through innovative non-invasive medical devices.

Our business is fully integrated with in-house capabilities spanning research and development, manufacturing, regulatory affairs and compliance, sales and marketing, product fulfillment and customer support. We derive revenues from the sale of medical devices and after-market consumable products and accessories. Our products are proprietary and encompass point-of-care neuropathy diagnostic tests and wearable neurotherapeutic devices.

DPNCheck is our testing technology for peripheral neuropathies. It is designed to address unmet physician needs in the assessment of peripheral neuropathy risk, particularly in value-based care models such as Medicare Advantage. The technology is well-suited to this task given its ease of use, rapid testing, quantitative results, and overall high sensitivity and specificity. DPNCheck has been evaluated in numerous clinical studies. It contributes attractive gross margins and has posted average revenue growth exceeding 20% over the past five years through December 31, 2021. We believe there is significant, accessible opportunity to expand DPNCheck usage. Towards that goal, we are investing in commercial resources and in the technology itself. Our next generation DPNCheck technology, targeted for commercial launch in late 2022, will further enhance the user experience and improve our manufacturing efficiency.

Quell is our wearable neuromodulation technology for chronic pain and associated syndromes. Patients control and personalize the technology via a mobile phone app and their utilization and certain clinical metrics may be tracked in the Quell Health Cloud. Quell ~~is currently~~has been sold over-the-counter (OTC) for the management of lower extremity chronic pain. Its technological sophistication, combined with our extensive consumer experience and the compelling results of recent clinical studies provide the opportunity to leverage the technology platform into a portfolio of Quell-based prescription (Rx) wearable neurotherapeutics. The first product in that portfolio ~~will be~~is a Quell fibromyalgia indication which ~~is currently under FDA regulatory review as a~~received De Novo ~~request.~~authorization for marketing from the FDA in May 2022.

ADVANCE is our legacy neurodiagnostic technology primarily used for the diagnosis and screening of Carpal Tunnel Syndrome (CTS). The technology has been marketed since 2008. While we no longer market ADVANCE devices, we continue to provide disposable electrodes to a loyal base of hand surgeons and manufacturers for industrial health use.

Recent Developments

Breakthrough Device Designation for Quell fibromyalgia indication - In 2021, Quell received Breakthrough Device Designation (BDD) from the FDA for a fibromyalgia indication. A pivotal clinical study of Quell for fibromyalgia was completed, and the indication ~~is currently~~was authorized for marketing by the ~~subject of an~~ FDA under a De Novo ~~request, the outcome of which is expected during the second half of 2022. A positive FDA decision could lead to~~regulatory filing. We plan a limited commercial launch in late 2022 ~~or early 2023.~~to guide our marketing approach. We plan a similar

approach with other disease indications involving chronic pain and associated syndromes. These include chemotherapy induced peripheral neuropathy (CIPN) and, potentially, chronic overlapping pain conditions (COPC) and restless leg syndrome (RLS). ~~We intend to end sales~~ Sales of the current OTC version of Quell to new customers ended in October 2022 in advance of the launch of the Quell fibromyalgia indication. Our focus ~~would then~~continues to be on the development of a Quell prescription portfolio for disease-specific indications where we ~~would~~ have unique product offerings without direct, non-pharmaceutical competition.

Breakthrough Device Designation for Chronic Chemotherapy CIPN indication - In January 2022, Quell received BDD from the FDA for reducing moderate to severe symptoms of chemotherapy induced peripheral neuropathy that have persisted for at least six months following the end of chemotherapy. A National Cancer Institute (NCI) funded, multi-center, double blind, randomized, sham-controlled trial of Quell in CIPN is currently ongoing. The study is expected to complete by the end of 2022. Depending on the outcome of the trial, we hope to be positioned for an FDA filing in 2023.

Equity sales – We secured ~~$1.94~~$1.95 million in net proceeds from equity sales in the first ~~quarter~~half of 2022. We maintain a debt-free, primarily common stock ~~only~~ equity capital structure, and adequate ~~cash~~funding resources to support operations and our growth initiatives.

COVID-19 - The ~~ongoing~~ COVID-19 pandemic ~~continues to~~ adversely ~~affect~~affected our business. It is difficult to quantify the disruption to our markets and customers; however, we believe the effects ~~have been~~were more pronounced in the diagnostic testing markets for DPNCheck and ADVANCE, and less pronounced in the consumer retail markets for Quell. Generally, we see continued purchases of testing consumables by existing diagnostic customers but with less predictability than in the past. Also, our growth via new customer acquisition has been lower due to ~~the~~ marketing challenges resulting from COVID-19 restrictions.

We have been able to maintain our business operations during the past two years while prioritizing employee safety. On-premises staffing in production and fulfillment has successfully met our business requirements. Other functional areas including R&D, sales and marketing, and administration have been a blend of on-premises and remote work. These functional areas have been disadvantaged to a degree by the pandemic.

We plan to continue with our present blend of staff activity until we have greater clarity on the opportunities and risks of a more personally interactive business model. The extent to which COVID-19 affects future operations will depend on new developments, which are uncertain and cannot be predicted with confidence, including the pandemic duration and potential new strains of the virus, severity, vaccination effectiveness, and treatments available to those with severe COVID-19 symptoms. Also uncertain are the potential effects on our business of the ~~eventual~~ economic ~~recovery~~impacts from the pandemic recovery including inflation, electronic parts and components availability, labor availability and costs, and other issues.

Results of Operations

Comparison of Quarters Ended ~~March 31,~~September 30, 2022 and ~~March 31,~~ 2021


		Three months ended March 31,						Increase (Decrease)					Quarter ended September 30,						Increase (Decrease)
		2022			2021			Amount		Percent			2022			2021			Amount		Percent

Revenues	Revenues	$	2,302,391		$	2,155,472		$	146,919	6.8	%	Revenues	$	1,968,003		$	2,064,359		$	(96,356)	(4.7)	%
Gross profit	Gross profit	1,793,517			1,579,183			$	214,334	13.6	%	Gross profit	$	1,274,432		$	1,444,526		$	(170,094)	(11.8)	%
–% of revenues	–% of revenues	77.9		%	73.3		%			4.6	%	–% of revenues	64.8		%	70.0		%			(5.2)	%
Operating expenses	Operating expenses	2,755,507			1,639,378			$	1,116,129	68.1	%	Operating expenses	$	2,987,423		$	2,132,497		$	854,926	40.1	%
Other income, net	Other income, net	3,428			412			$	3,016	732.0	%	Other income, net	$	106,737		$	882		$	105,855	12,001.7	%
Net loss	Net loss	$	(958,562)		$	(59,783)		$	898,779	1,503.4	%	Net loss	$	(1,606,254)		$	(687,089)		$	919,165	133.8	%
Net loss per common share	Net loss per common share	$	(0.14)		$	(0.02)		$	0.12	600.0	%	Net loss per common share	$	(0.23)		$	(0.12)		$	0.11	91.7	%

Revenues

Revenues for the ~~first~~third quarter of 2022 ~~increased~~decreased by ~~$147~~$96 thousand or ~~6.8%~~4.7% from the ~~first~~third quarter of 2021. DPNCheck contributed the majority of revenues in both quarters. It posted a revenue ~~growth~~reduction of ~~15.6%~~6% in the ~~first~~third quarter of 2022, attributable to ~~new Medicare Advantage customers~~lower biosensor shipments. Quell revenue increased in the third quarter of 2022. Our legacy ADVANCE revenues also declined due to continuing erosion of the customer base.

Gross Profit

Gross profit for the third quarter of 2022 decreased by $170 thousand or 11.8% from the third quarter of 2021. The decrease reflected the decline in revenues exacerbated by increases in cost of goods sold to secure essential electronic components for the manufacture of our devices.

Operating Expenses

Operating expenses increased in the third quarter of 2022 by $855 thousand or 40.1% from the third quarter of 2021. The increase reflects investment in our DPNCheck initiatives to drive future growth, including the expansion of our commercial capabilities and bringing to ~~sales price increases.~~ market our next generation testing technology. The increase also includes regulatory and development costs related to the Quell disease-specific indications portfolio.

Research and development spending in the third quarter of 2022 of $1,075 thousand was $350 thousand higher than the third quarter of 2021 attributable to expanded outside engineering services. Sales and marketing spending of $810 thousand increased by $368 thousand over the third quarter of 2021. The increase was mainly attributable to personnel costs of $247 thousand greater than the prior year quarter reflecting costs of both the DPNCheck and Quell Fibromyalgia commercial teams. General and administrative costs of $1.1 million in the third quarter of 2022 increased by $137 thousand primarily due to higher personnel costs.

Net loss

The net loss in the third quarter of 2022 increased by $919 thousand from the third quarter of 2021. Similarly, net loss per common share increased to $0.23 per common share in the third quarter of 2022 from $0.12 per common share in the third quarter of 2021. The increase in the number of our common shares outstanding in the third quarter of 2022 partially offset the per share effect of a greater net loss in that period.

Comparison of Nine Months Ended September 30, 2022 and 2021


	Nine months ended September 30,						Increase (Decrease)
	2022			2021			Amount		Percent

Revenues	$	6,408,695		$	6,433,330		$	(24,635)	(0.4)	%
Gross profit	$	4,520,129		$	4,678,987		$	(158,858)	(3.4)	%
–% of revenues	70.5		%	72.7		%			(2.2)	%
Operating expenses	$	8,405,428		$	5,959,116		$	2,446,312	41.1	%
Other income, net	$	160,560		$	1,673		$	158,887	9,497.1	%
Net loss	$	(3,724,739)		$	(1,278,456)		$	2,446,283	191.3	%
Net loss per common share	$	(0.53)		$	(0.28)		$	0.25	89.3	%

Revenues

Revenues for the nine months ended September 30, 2022 decreased by $25 thousand or 0.4% from the nine months ended September 30, 2021. DPNCheck contributed the majority of revenues in both periods. It posted revenue growth of 7.6% in the nine months ended September 30, 2022, primarily attributable to increased biosensor shipments both domestic and international. Quell revenue declined in the ~~first quarter of~~nine months ended September 30, 2022 with lower advertising spending and an emphasis on product line profitability. Our legacy ADVANCE revenues also declined with the continuing erosion of the customer base.

Gross Profit

Gross profit for the ~~first quarter of~~nine months ended September 30, 2022 ~~increased~~decreased by ~~$214~~$159 thousand or ~~13.6%~~3.4% from the ~~first quarter~~nine months ended September 30, 2021. Gross profit as a percent of ~~2021. The increase reflected growth in revenues plus increased weighting~~revenue decreased by 2.2 percentage points between the comparable periods primarily due to incremental costs to secure essential electronic components for the manufacture of our ~~higher margin DPNCheck business within total revenues, which expanded by 460 basis points to 77.9% in comparison with the first quarter of 2021.~~devices.

Operating Expenses

Operating expenses increased in the ~~first quarter of~~nine months ended September 30, 2022 by ~~$1,116 thousand~~$2.5 million or ~~68.1%~~41.1% from the ~~first quarter of~~nine months ended September 30, 2021. The increase includes a research and development benefit in 2021 of $450 thousand from reversal of previously accrued technology fees upon the expiry of the relevant statute of limitations. Excluding the one-time research and development benefit in 2021, the increase in operating expenses between the periods was $1.9 million or 33%. The increase in spending reflects investment in ~~our~~ DPNCheck initiatives to drive future growth, including the ~~restructuring and~~ expansion of ~~our~~DPNCheck commercial capabilities and ~~bringing to market our next generation testing technology.~~ product initiatives for the Medicare Advantage market. The increase also ~~includes early~~reflects regulatory ~~costs~~ and ~~a market analysis~~product development investments related to ~~potential~~the emerging Quell portfolio for disease-specific indications.

Research and development spending in the ~~first quarter of~~nine months ended September 30, 2022 of ~~$711 thousand~~$2.7 million was ~~$477 thousand~~$1.1 million higher than the ~~first quarter~~nine months ended September 30, 2021. Adjusting for the one-time technology credit in 2021, the research and development spending increase of ~~2021 which benefited from a $450~~$650 thousand ~~reversal of previously accrued technology costs upon the expiry of the relevant statute of limitations.~~or 40% encompasses product development efforts for both DPNCheck and Quell. Sales and marketing spending of ~~$859 thousand~~$2.2 million increased by ~~$465 thousand over~~$1.1 million due to the ~~first quarter~~addition of ~~2021. The increase was attributable~~a new commercial team for DPNCheck and pre-launch spending related to ~~personnel costs of $393 thousand greater than the prior year quarter reflecting new employee hires, employee severance costs and an increase in advertising and consulting costs of $61 thousand.~~Quell Fibromyalgia. General and administrative costs of ~~$1,186~~$3.5 million increased by $214 thousand ~~included an increase of $147 thousand in personnel costs related~~or 6.6% primarily due to employee severance costs and the restoration of previously reduced executive compensation. Professional costs in the first quarter of 2022 were greater than the first quarter of 2021 by $58 thousand offset by a savings of $60 thousand upon vacating a previously leased facility. inflation.

Net loss

The net loss infor the nine months ended September 30, 2022 increased by ~~$899~~$2,446 thousand from 2021. Similarly, net loss per common share increased to ($~~0.14)~~0.53) per common share in the ~~first quarter of~~nine months ended September 30, 2022 from ($~~0.02)~~0.28) per common share in the ~~first quarter~~nine months ended September 30, 2021. The increase in the number of ~~2021. Increased~~ common shares outstanding in the ~~first quarter of~~nine months ended September 30, 2022 partially offset the effect of a greater net loss in that period.

1112

Liquidity and Capital Resources

The following table contains certain key performance indicators we believe depict our liquidity and cash flow position:


		Three months ended March 31,				December 31,			September 30,				December 31,
		2022		2021		2021			2022		2021		2021

Cash and cash equivalents		$	23,769,380	$	5,145,167	$	22,572,104
Cash, cash equivalents and held-to-maturity securities								Cash, cash equivalents and held-to-maturity securities	$	20,826,659	$	23,213,537	$	22,572,104
Working capital	Working capital	$	23,859,997	$	4,877,410	$	22,822,162	Working capital	$	21,599,577	$	23,823,901	$	22,822,162
Current ratio	Current ratio	14.8		3.3		17.7		Current ratio	12.8		14.7		17.7
Net debt position		$	(21,758,917)	$	(2,685,347)	$	(20,899,698)

Days sales outstanding	Days sales outstanding	19.4		17.0		14.1		Days sales outstanding	28.6		24.0		14.1
Inventory turnover	Inventory turnover	2.9		2.3		2.2		Inventory turnover	2.9		2.4		2.7

Our primary sources of liquidity are cash, ~~and~~ cash equivalents, held-to-maturity securities, revenues from the sales of our products, and net proceeds from equity sales. Our expected cash outlays relate to funding operations. We believe that our resources are sufficient to fund our cash requirements over at least the next twelve months from the date of issuance of the financial statements.

As of ~~March 31,~~September 30, 2022, we ~~had $23.8~~held $20.8 million in cash, ~~and~~ cash equivalents, ~~working~~and held-to-maturity securities. Working capital ~~of $23.9~~was $21.5 million, and athe current ratio ~~of 14.8. We~~was 12.8. The Company had no term debt or ~~borrowings which contributes to negative net debt positions at the end of the quarter.~~borrowings.

Days sales outstanding (DSO) reflect our customer payment terms which vary from payment on order to 60 days from shipment date. The increase in DSO at ~~March 31,~~September 30, 2022 in comparison with December 31, 2021 reflects the timing of shipments during the ~~first quarter of~~nine months ended September 30, 2022. ~~Inventory~~The inventory turnover rate ~~has improved slightly during~~reflects changes in stocking levels relative to cost of revenues in the prior year quarter ~~ended March 31, 2022, reflecting the timing effects on inventory receipts rather than a change in inventory management.~~

and prior year-end.

Cash Flows

Three months ended March 31,
2022 2021 Change

Net cash provided by (used in):
–Operating activities
$ (740,381) $ (33,790) $ (706,591)
–Investing activities
(5,395) (21,453) 16,058
–Financing activities
1,943,052 (25,803) 1,968,855
Net change in cash and cash equivalents $ 1,197,276 $ (81,046)


	Nine months ended September 30,
	2022		2021		Change

Net cash provided by (used in):
Operating activities	$	(3,806,422)	$	(1,561,242)	$	2,245,180
Investing activities	(18,944,558)		(125,039)		18,819,519
Financing activities	1,950,881		19,673,605		(17,722,724)
Net change in cash and cash equivalents	$	(20,800,099)	$	17,987,324

Operating activities

Operations cash usage in the ~~first quarter of~~nine months ended September 30, 2022 increased by ~~$707 thousand~~$2.2 million from the ~~prior year quarter reflecting~~comparable period in 2021. This reflects the increased net loss and ~~non-cash adjustments~~variances in the components of working capital.

Investing activities

Investing activities ~~reflect our purchases of fixed assets for use in production and in research and development. There were $5 thousand of capitalized costs~~ in the ~~first quarter~~nine months ended September 30, 2022 primarily reflect the deployment of ~~2022.~~cash to purchase investment grade, held-to-maturity securities in the amount of $18.9 million. The cash deployed is invested short term, and while it is not forecasted to be essential to the Company’s near-term operations requirements, provides a cushion if necessary.

Financing activities

Equity sales in the ~~first quarter of~~nine months ended September 30, 2022 contributed ~~$1.94~~$1.95 million. Common shares were sold to investors utilizing the Company's at-the-market (ATM) facility.

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We ~~continue to~~ maintain ~~an effective~~a shelf registration statement covering the sales of shares of our common stock and other securities, and giving us the opportunity to raise funding when needed or otherwise considered appropriate at prices and on terms to be determined at the time of any such offerings. Pursuant to the instructions to Form S-3, we have the ability to sell shares under the shelf registration statement, during any 12-month period, in an amount less than or equal to one-third of the aggregate market value of our common stock held by non-affiliates. If we raise additional funds by issuing equity or debt securities, either through the sale of securities pursuant to a registration statement or by other means, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders.

Critical Accounting Polices and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our unaudited financial statements, which have been prepared in accordance with generally accepted accounting principles for interim financial information. The preparation of these unaudited financial statements requires us to make estimates and assumptions about future events that affect the amounts reported in our financial statements. Actual results may differ from these estimates. The critical accounting policies and the significant judgments and estimates used in the preparation of our unaudited financial statements for the three and nine months ended September 30, 2022, were consistent with those discussed in our Annual Report on Form 10-K for the year ended December 31, 2021.

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Cautionary Note Regarding Forward-Looking Statements

The statements contained in this Quarterly Report on Form 10-Q, including under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Quarterly Report, include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, including, without limitation, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future, such as our estimates regarding anticipated operating losses, future revenues and projected expenses, the effect of the COVID-19 pandemic on our operating capabilities, our future liquidity and our expectations regarding our needs for and ability to raise additional capital; our ability to manage our expenses effectively and raise the funds needed to continue our business; our belief that there are unmet needs for the management of chronic pain and in the diagnosis and treatment of diabetic neuropathy; our expectations surrounding our commercialized neurostimulation and neuropathy diagnostic products; our expected timing and our plans to develop and commercialize our products; our ability to meet our proposed timelines for the commercial availability of our products; our ability to obtain and maintain regulatory approval of our existing products and any future products we may develop; regulatory and legislative developments in the United States and foreign countries; the performance of our third-party manufacturers; our ability to obtain and maintain intellectual property protection for our products; the successful development of our sales and marketing capabilities; the size and growth of the potential markets for our products and our ability to serve those markets; our estimate of our customer returns of our products; the rate and degree of market acceptance of any future products; our reliance on key scientific management or personnel; the payment and reimbursement methods used by private or government third party payers; and other factors discussed elsewhere in this Quarterly Report on Form 10-Q. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this quarterly report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section titled “Risk Factors” in our Annual Report on Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We do not use derivative financial instruments in our investment portfolio and have no foreign exchange contracts. Our financial instruments consist of cash and cash equivalents. We consider investments that, when purchased, have a remaining maturity of 90 days or less to be cash equivalents. The primary objectives of our investment strategy are to preserve principal, maintain proper liquidity to meet operating needs, and maximize yields. To minimize our exposure to an adverse shift in interest rates, we invest mainly in cash equivalents and short-term investments with a maturity of twelve months or less and maintain an average maturity of twelve months or less. We do not believe that a notional or hypothetical 10% change in interest rate percentages would have a material impact on the fair value of our investment portfolio or our interest income.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~March 31,~~September 30, 2022, have concluded that, based on such evaluation, our disclosure controls and procedures were effective to ensure that 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, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Controls. There were no changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control that occurred during the quarter ended ~~March 31,~~September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

While we are not currently a party to any material legal proceedings, we could become subject to legal proceedings in the ordinary course of business. We do not expect any such potential items to have a significant impact on our financial position.

Item 1A. Risk Factors

There have been no material changes in the risk factors described in “Item 1A. Risk Factors” of our Annual Report on F ~~orm~~Form 10-K for the year ended December 31, ~~202~~12021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits


Exhibit No.						Description

31.1						Certification of Principal Executive Officer Under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, and pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002. Filed herewith.

31.2						Certification of Principal Financial Officer Required Under Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

32						Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350. Furnished herewith.

101.INS						Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). Filed herewith.

101.SCH						Inline XBRL Taxonomy Extension Schema Document. Filed herewith.

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document. Filed herewith.

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document. Filed herewith.

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document. Filed herewith.

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document. Filed herewith.

104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). Filed herewith.

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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.


		NEUROMETRIX, INC.

~~April 26,~~October 20, 2022	/s/	SHAI N. GOZANI, M.D., PH. D.
		Shai N. Gozani, M.D., Ph. D.
		Chairman, President and Chief Executive Officer

~~April 26,~~October 20, 2022	/s/	THOMAS T. HIGGINS
		Thomas T. Higgins
		Senior Vice President, Chief Financial Officer and Treasurer

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