NEUROONE MEDICAL TECHNOLOGIES Corp 10-K for FY2021

NEUROONE MEDICAL TECHNOLOGIES Corp (NMTC)

10-K 2021-12-15 For: 2021-09-30

Added on April 05, 2026

About this 10-K

NEUROONE MEDICAL TECHNOLOGIES Corp filed this 10-K on December 15, 2021, covering the fiscal year ended September 30, 2021 (FY2021).

Headline figures

Fiscal year ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $178.15K
Net loss: $9.95M; compared with a net loss of $13.64M a year earlier

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Delaware		27-0863354
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

7599 Anagram Dr., Eden Prairie, MN		55344
(Address of principal executive offices)		(Zip Code)

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, $0.001 par value per share		NMTC		The Nasdaq Stock Market LLC

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

PART I		1
ITEM 1.	BUSINESS	1
ITEM 1A.	RISK FACTORS	25
ITEM 1B.	UNRESOLVED STAFF COMMENTS	58
ITEM 2.	PROPERTIES	58
ITEM 3.	LEGAL PROCEEDINGS	58
ITEM 4.	MINE SAFETY DISCLOSURES	59

PART II		60
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	60
ITEM 6.	[RESERVED]	60
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	60
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	75
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	76
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	108
ITEM 9A.	CONTROLS AND PROCEDURES	108
ITEM 9B.	OTHER INFORMATION	108
ITEM 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	108

PART III		109
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	109
ITEM 11.	EXECUTIVE COMPENSATION	114
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	120
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	122
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	123

PART IV		124
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	124
ITEM 16.	FORM 10-K SUMMARY	127

SIGNATURES		128

Technology	Stage of Development and Pre-Clinical Testing to Date	Additional Expected Steps for Regulatory Clearance or Approval

Cortical strip and grid electrodes for the diagnosis of epilepsy	The Company has finalized the design for the product and there are no further expected changes to the device (“design freeze”). Pre-clinical testing and clinical testing on the final design has been conducted by Mayo Clinic and WARF (as described in “Mayo Clinic Studies” below). The product is in commercial production.	The Company received FDA 510(k) clearance in the fourth calendar quarter of 2019. Commercial launch commenced utilizing Zimmer, our distribution partner.

Depth electrodes for recording (diagnostic) purposes	We have frozen this design and the product is in commercial production. No clinical testing was required in order to obtain FDA clearance.	The Company filed for FDA 510(k) marketing clearance for sEEG electrodes in May 2021 and received a 510(k) clearance from FDA for recording, monitoring and stimulation of brain tissue for less than 24 hours in September 2021. The Company filed for 510(k) clearance to expand the duration of use up to less than 30 days in November 2021. This submission is pending FDA review. Zimmer has indicated its desire to distribute this product once we receive FDA 510(k) clearance to market for less than 30 days use and has placed initial stocking orders.

	For the year ended September 30,
	2021			2020			Period to Period Change
Product revenue	$	178,146		$	—		$	178,146
Cost of product revenue		275,895			—			275,895
Product gross loss		(97,749	)		—			(97,749	)

Collaborations revenue		64,812			1,926,566			(1,861,754	)

Operating expenses:
Selling, general and administrative		6,260,266			4,753,036			1,507,230
Research and development		3,925,008			2,075,791			1,849,217
Total operating expenses		10,185,274			6,828,827			3,356,447
Loss from operations		(10,218,211	)		(4,902,261	)		(5,315,950	)
Interest expense		(3,053	)		(7,524,581	)		7,521,528
Net valuation change of instruments measured at fair value		1,974			804,529			(802,555	)
Loss on note extinguishment		—			(2,017,847	)		2,017,847
Other income		271,122			—			271,122
Net loss	$	(9,948,168	)	$	(13,640,160	)	$	3,691,992

	For the Year Ended
	September 30,
	2021			2020
Net cash used in operating activities	$	(8,602,826	)	$	(3,425,302	)
Net cash used in investing activities		(67,079	)		(122,427	)
Net cash provided by financing activities		11,534,854			7,323,377
Net increase in cash	$	2,864,949		$	3,775,648

Report of Independent Registered Public Accounting Firm – Baker Tilly US, LLP		77
Report of Independent Registered Public Accounting Firm – BDO USA, LLP		79
Balance Sheets		80
Statements of Operations		81
Statements of Changes in Stockholders’ Equity		82
Statements of Cash Flows		83
Notes to Financial Statements		84 to 107

	As of September 30,
	2021			2020
Assets
Current assets:
Cash	$	6,901,346		$	4,036,397
Accounts receivable		48,336			—
Inventory		98,287			—
Prepaid and other assets		244,043			118,611
Total current assets		7,292,012			4,155,008
Intangible assets, net		134,207			156,523
Right-of-use asset		288,948			282,211
Property and equipment, net		223,329			166,031
Total assets	$	7,938,496		$	4,759,773

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	528,829		$	762,538
Accrued expenses		644,249			512,762
Convertible promissory notes (Note 8)		—			1,007,206
Deferred revenue		8,622			73,434
Total current liabilities		1,181,700			2,355,940
Operating lease liability, long term		202,895			254,328
Other liabilities		—			83,333
Total liabilities		1,384,595			2,693,601

Commitments and contingencies (Note 4)

Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized as of September 30, 2021 and 2020; no shares issued or outstanding as of September 30, 2021 and 2020.		—			—
Common stock, $0.001 par value; 100,000,000 shares authorized as of September 30, 2021 and 2020; 12,010,019 and 7,393,637 shares issued and outstanding as of September 30, 2021 and 2020, respectively.		35,834			22,181
Additional paid–in capital		47,345,266			32,923,022
Accumulated deficit		(40,827,199	)		(30,879,031	)
Total stockholders’ equity		6,553,901			2,066,172
Total liabilities and stockholders’ equity	$	7,938,496		$	4,759,773

	Year ended September 30,
	2021			2020
Product revenue	$	178,146		$	—
Cost of product revenue		275,895			—
Product gross loss		(97,749	)		—

Collaborations revenue		64,812			1,926,566

Operating expenses:
Selling, general and administrative		6,260,266			4,753,036
Research and development		3,925,008			2,075,791
Total operating expenses		10,185,274			6,828,827
Loss from operations		(10,218,211	)		(4,902,261	)
Interest expense		(3,053	)		(7,524,581	)
Net valuation change of instruments measured at fair value		1,974			804,529
Loss on note extinguishment		—			(2,017,847	)
Other income		271,122			—
Net loss	$	(9,948,168	)	$	(13,640,160	)

Net loss per share:
Basic and diluted	$	(0.93	)	$	(2.52	)

Number of shares used in per share calculations:
Basic and diluted		10,696,799			5,415,424


	Common Stock				Additional Paid–In			Accumulated			Total Stockholders’ Equity
	Shares		Amount		Capital			Deficit			(Deficit)
Balance at September 30, 2019		4,497,930	$	13,494	$	15,987,799		$	(17,238,871	)	$	(1,237,578	)
Issuance of common stock under securities purchase agreement		72,223		217		389,783			—			390,000
Issuance of warrants in connection with convertible notes offering		—		—		696,672			—			696,672
Conversion of convertible notes into common stock		2,598,025		7,794		14,172,676			—			14,180,470
Issuance costs in connection with conversion of convertible notes into common stock		—		—		(161,881	)		—			(161,881	)
Stock-based compensation		—		—		798,242			—			798,242
Issuance of common stock for consulting services		142,200		427		641,289			—			641,716
Issuance of common stock upon vesting of restricted stock units		57,744		173		395,839			—			396,012
Exercise of stock options		25,515		76		2,603			—			2,679
Net loss		—		—		—			(13,640,160	)		(13,640,160	)
Balance at September 30, 2020		7,393,637		22,181		32,923,022			(30,879,031	)		2,066,172
Issuance of common stock and warrants under securities purchase agreement		4,166,682		12,500		12,487,500			—			12,500,000
Conversion of convertible notes into common stock		292,754		878		1,004,354			—			1,005,232
Issuance costs in connection with securities issuances		—		—		(1,198,080	)		—			(1,198,080	)
Issuance cost adjustment related to private placement		—		—		50,400			—			50,400
Stock-based compensation		—		—		1,793,199			—			1,793,199
Issuance of common stock for consulting services		74,327		74		(74	)		—			—
Issuance of common stock upon vesting of restricted stock units		30,021		63		(63	)		—			—
Exercise of stock options		1,552		3		10,143			—			10,146
Exercise of warrants		51,046		135		274,865			—			275,000
Net loss		—		—		—			(9,948,168	)		(9,948,168	)
Balance at September 30, 2021		12,010,019	$	35,834	$	47,345,266		$	(40,827,199	)	$	6,553,901

	As of September 30, 2020
Description	Total		Level 1		Level 2		Level 3
Liabilities:
Convertible notes	$	1,007,206		—		—	$	1,007,206
Total liabilities at fair value	$	1,007,206		—		—	$	1,007,206

	2021
Convertible notes
Balance as of beginning of period – September 30, 2020	$	1,007,206
Conversion of convertible promissory notes to common stock		(1,005,232	)
Change in fair value including accrued interest		(1,974	)
Balance as of end of period – September 30, 2021	$	—

	2021		2020
Warrants		7,503,808		3,390,320
Stock options		1,122,560		492,842
Restricted stock units		11,384		26,698
Unissued vested restricted stock units		1,148		2,063
Convertible notes		—		277,618

	For the Year Ended September 30,
	2021		2020
Cash paid for amounts included in the measurement of lease liability:
Operating cash flows from operating leases	$	70,897	$	38,462
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	73,118	$	335,119

	As of September 30,
	2021			2020
Right-of-use assets	$	288,948		$	282,211
Lease liability	$	315,673		$	312,176
Weighted average remaining lease term (years)		3.1			4.5
Weighted average discount rate		6.7	%		7.0	%

Calendar Year	As of September 30, 2021
2021 (period from October 1, 2021 to December 31, 2021)	$	32,435
2022		131,220
2023		82,333
2024		84,391
2025		21,227
Total lease payments		351,606
Less imputed interest		(35,933	)
Total		315,673
Short-term portion		(112,778	)
Long-term portion	$	202,895

	Useful Life
Net Intangibles, September 30, 2019	12-13 years	$	178,838
Less: amortization			(22,315	)
Net Intangibles, September 30, 2020			156,523
Less: amortization			(22,316	)
Net Intangibles, September 30, 2021		$	134,207

Deferred Revenue
Balance as of September 30, 2019	$	—
Upfront initial exclusivity payment		2,000,000
Revenue recognized		(1,926,566	)
Balance as of September 30, 2020		73,434
Revenue recognized		(64,812	)
Balance as of September 30, 2021	$	8,622

	Number of Options			Weighted Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value(1)
Outstanding at September 30, 2019		281,956		$	5.46		9.0	$	343,406
Granted		334,731		$	6.18		—		—
Exercised		(25,515	)	$	0.12		—		—
Forfeited/Cancelled		(98,330	)	$	5.91		—		—
Outstanding at September 30, 2020		492,842		$	6.13		8.8	$	96,088
Granted		703,117		$	5.83		—		—
Exercised		(1,538	)	$	6.60		—		—
Forfeited/Cancelled		(71,861	)	$	6.85		—		—
Outstanding at September 30, 2021		1,122,560		$	5.89		8.8	$	127,339
Vested and exercisable at September 30, 2021		481,047		$	5.89		8.2	$	311,388

	2021			2020
Expected stock price volatility		55.9	%		53.1	%
Expected life of options (years)		6.0			5.6
Expected dividend yield		0	%		0	%
Risk free interest rate		0.6	%		1.4	%

	Number of
	Shares
Non-vested at September 30, 2019		10,503
Granted		78,323
Forfeited		(2,335	)
Vested		(59,793	)
Non-vested at September 30, 2020		26,698
Granted		13,776
Vested		(29,090	)
Non-vested at September 30, 2021		11,384

	Warrants			Exercise Price Per Warrant		Weighted Average Exercise Price		Weighted Average Term (years)
Outstanding and exercisable at September 30, 2019		2,421,940		$	5.40 - 9.00	$	7.65		3.60
Issued		968,380		$	5.61	$	5.61		—
Exercised		—		$	—	$	—		—
Forfeited		—		$	—	$	—		—
Outstanding and exercisable at September 30, 2020		3,390,320		$	5.40 - 9.00	$	7.05		2.89
Issued		4,166,682		$	5.25	$	4.29		—
Exercised		(53,194	)	$	5.61-8.25	$	5.61		—
Forfeited		—		$	—	$	—		—
Outstanding and exercisable at September 30, 2021		7,503,808		$	5.25-9.00	$	6.06		3.23

Exercise Price		Number Outstanding		Weighted Average Remaining Contractual life (Years)	Number Exercisable at September 30, 2021
$	5.25		4,166,682	4.29		4,166,682
$	5.40		750,364	0.14		750,364
$	5.61		916,753	2.68		916,753
$	6.00		45,173	2.75		45,173
$	7.50		279,733	2.41		279,733
$	8.25		62,911	2.75		62,911
$	9.00		1,282,192	2.18		1,282,192
Total			7,503,808			7,503,808

	2021			2020
Income tax benefit at federal statutory rate		(21.0	)%		(21.0	)%
State income tax, net of federal benefit		(7.7	)		(7.7	)
Disqualified interest and other		—			17.0
Research credits		(3.7	)		(1.3	)
Stock-based compensation		1.0			0.2
Valuation allowance		31.4			12.8
Effective tax rate		—	%		—	%

	2021			2020
Deferred tax assets:
Federal and state operating loss carryforwards	$	7,575,069		$	4,936,384
Acquired intangibles		24,541			22,635
Accruals and other		8,370			30,406
Research and development credit carryforwards		812,781			450,081
Stock-based compensation		451,757			255,068
Total deferred tax assets		8,872,518			5,694,574
Deferred tax liabilities:
Fixed assets		(64,189	)		—
Total deferred tax liabilities		(64,189	)		—
Valuation allowance		(8,808,329	)		(5,694,574	)
Net deferred tax assets	$	—		$	—

Name	Position(s)	Age
David Rosa	Class II Director, Chief Executive Officer, and President	57
Mark Christianson	Business Development Director, Medical Sales Liaison	54
Steve Mertens	Chief Technology Officer	59
Ronald McClurg	Chief Financial Officer	63
Jeffrey Mathiesen	Class III Director	61
Paul Buckman	Class I Director and Chairman of the Board	66
Edward Andrle	Class III Director	64

Name and Principal Position	Year		Salary ($)		Option Awards ($)(1)		Non-Equity Incentive Plan Compensation ($)		All Other Compensation ($)		Total ($)
Dave Rosa,		2021		410,844		1,285,899		192,608		—		1,889,351
Chief Executive Officer and President		2020		403,914		547,091		171,886		—		1,122,891

Ron McClurg,		2021		187,500		290,498		44,531		—		522,529
Chief Financial Officer		2020		—		—		—		—		—

Steve Mertens,		2021		242,631		72,169		56,338		—		371,138
Chief Technology Officer		2020		238,966		—		49,281		—		288,247

(1)	25% of the shares underlying the option vested immediately upon grant; the remaining vest monthly in equal increments over a 36 month period beginning April 1, 2020.
(2)	25% of the shares underlying the option vest on January 27, 2022; the remaining vest monthly in equal increments over a 36 month period thereafter.
(3)	25% of the shares underlying the option vested on November 5, 2020 and the remaining 75% vest in 36 equal monthly installments beginning on December 1, 2020, subject to acceleration upon achieving certain performance milestones. As of September 30, 2021, 20% of the shares underlying the options had vested upon the achievement of performance milestones.
(4)	25% of the shares underlying the option vest on January 27, 2022; the remaining vest monthly in equal increments over a 36 month period thereafter, subject to acceleration upon achieving certain performance milestones. As of September 30, 2021, 20% of the shares underlying the options had vested upon the achievement of performance milestones.
(5)	25% of the shares underlying the option vest on January 1, 2022; the remaining vest monthly in equal increments over a 36 month period thereafter.
(6)	25% of the shares underlying the option vest on January 27, 2022; the remaining vest monthly in equal increments over a 36 month period thereafter.

Name	Fees Earned or Paid in Cash ($)⁽¹⁾		Stock Awards ($)⁽²⁾			Option Awards ($)⁽²⁾			Total ($)
Paul Buckman		112,000		33,338	(3)		16,666	(4)		162,004
Edward Andrle		62,000		33,338	(5)		16,666	(6)		112,004
Jeffrey Mathiesen		66,500		33,338	(7)		16,666	(8)		116,504

(2)	Stock option and RSU awards were granted under the 2017 Equity Incentive Plan. The amounts reported reflect the aggregate grant date fair value of each equity award granted to the Company’s non-employee directors during the fiscal year ended September 30, 2021, as computed in accordance with ASC 718. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.

(3)	At the end of fiscal year 2021, Mr. Buckman had 3,446 outstanding stock awards.

(4)	At the end of fiscal year 2021, Mr. Buckman had 77,466 outstanding stock options.

(5)	At the end of fiscal year 2021, Mr. Andrle had 3,446 outstanding stock awards.

(6)	At the end of fiscal year 2021, Mr. Andrle had 12,591 outstanding stock options.

(7)	At the end of fiscal year 2021, Mr. Mathiesen had 3,446 outstanding stock awards.

(8)	At the end of fiscal year 2021, Mr. Mathiesen had 66,126 outstanding stock options.

Name and address of beneficial owner	Number of shares of Common Stock beneficially owned			Percentage of Common Stock beneficially owned⁽¹⁾
Greater than 5% Stockholders:
James E. Besser⁽²⁾ 2 Calle Candina, #1701 San Juan, Puerto Rico, 00907 United States of America		1,747,651			10.8	%

Directors and Named Executive Officers:
David Rosa		606,669	⁽³⁾		3.7	%
Paul Buckman		105,804	⁽⁴⁾		*
Jeffrey Mathiesen		99,852	⁽⁵⁾		*
Edward Andrle		23,906	⁽⁶⁾		*
Steve Mertens		37,296	⁽⁷⁾		*
Ronald McClurg		27,917	⁽⁸⁾		*
All Current Directors and Officers as a Group (7 persons)		1,252,614	⁽⁹⁾		7.5	%

(7)	Includes 37,296 shares of Common Stock issuable upon exercise of outstanding options that have vested or vest within 60 days of December 6, 2021.

(8)	Includes 27,917 shares of Common Stock issuable upon exercise of outstanding options that have vested or vest within 60 days of December 6, 2021.

Plan Category	Number of Securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a))(1)(2) (c)
Equity compensation plans not approved by security holders(3)		0	$	0		0
Equity compensation plan approved by security holders		1,122,560	$	5.89		389,709
Total		1,122,560	$	5.89		389,709

(2)	Consists of 241,338 shares remaining available for issuance under the 2017 Equity Incentive Plan and 148,371 shares remaining available for issuance under the 2016 Equity Incentive Plan.

(3)	There are no other securities available for future issuance under Company Plans as of September 30, 2021. The Company adopted an Inducement Plan subsequent to September 30, 2021.