Tivic Health Systems(US:TIVC)2023-08-14 21:01Revenue and Sales Performance - Revenue for Q2 2023 was $161,000, a decrease of $367,000 or 69.5% compared to Q2 2022, primarily due to an 82% decrease in unit sales despite a 69% increase in the per unit average sales price [116]. - For the six months ended June 30, 2023, revenue decreased by $419 thousand, or 43.8%, compared to the same period in 2022, primarily due to a 57% decrease in unit sales, offset by a 27% increase in the per unit average sales price [119]. Cost and Expenses - Cost of sales for Q2 2023 was $100,000, down from $403,000 in Q2 2022, resulting in a gross profit of $61,000 compared to $125,000 in the same period last year [116]. - For the three months ended June 30, 2023, cost of sales decreased by $303 thousand, or 75%, compared to the same period in 2022, driven by a decrease in sales volume [121]. - For the six months ended June 30, 2023, cost of sales decreased by $397 thousand, or 52%, compared to the same period in 2022, with variable costs decreasing from $80.94 per unit to $68.50 per unit [122]. - Total operating expenses for Q2 2023 were $2,186,000, a decrease of $957,000 from $3,143,000 in Q2 2022, with significant reductions in sales and marketing expenses [116]. - Sales and marketing expenses decreased by $899 thousand for the six months ended June 30, 2023, compared to the same period in 2022, due to reductions in unprofitable marketing spend [129]. - General and administrative expenses decreased by $200 thousand for the six months ended June 30, 2023, compared to the same period in 2022, primarily due to lower consulting and professional fee expenses [131]. Net Loss and Financial Position - The net loss for Q2 2023 was $2,125,000, which is an improvement of $893,000 compared to a net loss of $3,018,000 in Q2 2022 [116]. - As of June 30, 2023, the company had cash and cash equivalents of $2.7 million and an accumulated deficit of $33.9 million [135]. - The company expects to incur substantial additional operating losses for at least the next two years as it expands markets and develops new product lines [136]. - The company has incurred an accumulated deficit of $33.9 million through June 30, 2023, and expects to continue incurring additional losses as it expands sales, marketing, and R&D activities [146]. - Cash used in operating activities for the six months ended June 30, 2023, was $4.9 million, primarily due to a net loss of $4.2 million [152]. - The company anticipates that its cash and financial resources may be insufficient to meet anticipated needs for the next twelve months, necessitating additional capital raises [146]. Financing Activities - The company sold 116,923,000 shares of common stock from July 11, 2023, to August 9, 2023, raising approximately $5.2 million in gross proceeds [104]. - The company completed a public offering on February 13, 2023, resulting in net proceeds of approximately $3.6 million from the sale of 20,000,000 shares [137]. - From July 11, 2023, to August 9, 2023, the company sold an aggregate of 116,923,000 shares, resulting in net proceeds of approximately $4.8 million [135]. - The company generated $4.1 million in cash from financing activities during the six months ended June 30, 2023, from the sale of 20 million shares of common stock [154]. Strategic Initiatives - The company has expanded its intellectual property portfolio, receiving one new issuance and filing applications for four additional Patent Cooperation Treaty (PCT) applications [106]. - A new commercial distribution agreement was executed with Cardinal Health to enhance product distribution [106]. - The company is focusing R&D efforts on high-value market segments with strong ROI potential, particularly in life-threatening or debilitating conditions [105]. - The company has initiated a healthcare professional-targeted marketing program to broaden distribution and increase unit volume [115]. - The company is currently expanding its sales revenue through direct-to-consumer channels and wholesale distribution, with future growth dependent on successful marketing campaigns and product development [147]. - The company remains committed to evaluating strategic acquisitions and partnerships to align with its growth strategy, which may require substantial cash reserves [145]. Operational Challenges - The company has experienced disruptions in the supply of materials and components, leading to increased inventory balances to ensure product availability [156]. - Inflationary pressures are expected to continue, potentially impacting operating results due to increased costs of products and components [163]. - The ongoing geopolitical tensions and economic uncertainties may adversely affect the company's operations and financial condition [155]. Accounting and Reporting - The condensed financial statements are prepared in accordance with generally accepted accounting principles in the USA [168]. - Management makes estimates and assumptions affecting reported amounts of assets and liabilities, as well as expenses during the reporting period [168]. - Significant accounting policies and estimates are detailed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 [168]. - Actual results may differ from estimates based on different assumptions or conditions [168]. - Recent accounting pronouncements are described in Note 2 of the condensed financial statements included in the Quarterly Report on Form 10-Q [170].