Venus cept (VERO) - 2024 Q4 - Annual Report

Financial Performance and Condition - For the year ended December 31, 2024 and 2023, approximately 26% and 33% of the company's system revenues were derived from internal financing programs[152]. - The company had an accumulated deficit of $308.9 million and$ 261.9 million as of December 31, 2024 and 2023, respectively[159]. - The company expects to continue incurring substantial operating losses and negative cash flows until it achieves profitability[160]. - The company may need additional capital to fund future operations due to unfavorable macroeconomic conditions[161]. - Global supply chain disruptions and inflation have negatively impacted the company's business, financial condition, and results of operations[162]. - As of December 31, 2024, the Company had cash and cash equivalents of approximately $4.3 million, indicating a need for additional financing to support operations and product development[183]. - The Company generated 13% of systems revenues from third-party distributors in 2024, up from 8% in 2023, highlighting reliance on external partners for market penetration[197]. - The company may recognize bad debt expenses if customers default on amounts payable, which could adversely affect its financial results[152]. - The company faces risks related to economic downturns, which may reduce patient demand for elective procedures, adversely affecting financial performance[189]. Strategic Alternatives and Restructuring - The company is evaluating potential strategic alternatives, including mergers, financings, and asset sales, but has not set a timetable for completion[156]. - The company has initiated a restructuring plan, including workforce reductions and discontinuation of operations in unprofitable markets[155]. - The company may need to raise additional capital through public or private equity or debt financings, which could result in dilution to stockholders[185]. - The Security Agreement restricts the Company's ability to incur additional indebtedness, potentially limiting future financing options[186]. Regulatory and Compliance Risks - Regulatory compliance is critical, as failure to meet FDA requirements could result in enforcement actions, including fines and product recalls[239]. - The company may face significant costs and delays if regulatory authorities change policies or if new regulations are enacted[238]. - The complexity of patent litigation may lead to substantial costs and could distract management from core business operations[232]. - The company must navigate extensive government regulations, which have become more stringent over time[237]. Intellectual Property and Innovation - The company has 16 issued U.S. patents and 8 pending U.S. patent applications as of December 31, 2024, covering various technologies[229]. - The company has 92 issued U.S. patents related to the ARTAS System, which is crucial for maintaining competitive advantage[229]. - The company must continue to innovate and develop new products to maintain its competitive position in the rapidly evolving medical technology market[196]. - The aesthetic equipment market is characterized by rapid innovation, and failure to develop new products may harm the Company's competitive position[195]. Market and Operational Risks - The company relies on a limited number of third-party contract manufacturers, which poses risks to timely and cost-effective production[206]. - The company is vulnerable to supply shortages and price fluctuations due to reliance on sole suppliers for certain components[209]. - The clinical trial process for regulatory clearances is lengthy and expensive, with uncertain outcomes that could delay new product introductions[219]. - Delays in clinical trials can significantly increase product development costs and may lead to trial failures[222]. - The company may face significant financial and managerial resource allocation if international operational risks materialize[204]. Stock and Shareholder Matters - The company received a notice from Nasdaq on May 31, 2023, indicating that its stockholders' equity was below the minimum requirement of$ 2,500,000 for continued listing[263]. - Nasdaq granted the company an extension until November 27, 2023, to regain compliance with the Minimum Equity Requirement, contingent upon achieving certain milestones[264]. - On November 28, 2023, Nasdaq determined that the company had not regained compliance, advising that its securities would be delisted on December 7, 2023, unless a hearing was requested[264]. - The company requested a hearing on December 5, 2023, which was held on March 5, 2024, staying any delisting pending the Panel's decision[265]. - On March 20, 2024, the Panel granted the company's request for continued listing, subject to demonstrating compliance with Nasdaq Listing Rule 5550(b) by May 28, 2024[265]. - The company was notified on June 4, 2024, that it had regained compliance with the stockholders' equity Minimum Equity Requirement[266]. - The company is under a "Mandatory Panel Monitor" through June 4, 2025, which could lead to delisting if noncompliance occurs during this period[267]. - On April 11, 2024, the company received a notice regarding noncompliance with the Minimum Bid Price Requirement, as its stock did not maintain a minimum closing bid price of $1.00 per share for 32 consecutive business days[268]. - The company has 180 calendar days from the Initial Compliance Date to regain compliance with the Minimum Bid Price Requirement[269]. - The Company received a notification from Nasdaq on October 17, 2024, granting an additional 180 calendar days to regain compliance with the Bid Price Requirement[270]. - A 1-for-11 reverse stock split was executed on March 3, 2025, and the Company regained compliance with the Bid Price Requirement by March 18, 2025[271]. - As of December 31, 2024, executive officers, directors, and certain shareholders beneficially own approximately 25% of the outstanding shares of common stock, allowing them to significantly influence shareholder matters[281]. - The Company does not intend to pay dividends on its common stock for the foreseeable future, relying on stock price appreciation for shareholder returns[277]. - The Company is classified as a smaller reporting company, which allows it to take advantage of certain exemptions from disclosure requirements, potentially making its securities less attractive to investors[276]. - Future sales of common stock may lead to immediate dilution for existing shareholders, potentially causing a decline in stock price[282]. - The market price of the Company's common stock may be volatile, influenced by various factors including market conditions and strategic alternatives[274]. - The Company is subject to anti-takeover provisions under Delaware law, which may hinder acquisition attempts[280]. - If the common stock is delisted, shareholders could face significant adverse consequences, including reduced liquidity and limited market quotations[272]. - The Company may experience fluctuations in financial results, which could impact stock price and investor perception[275].