Avinger(US:AVGR)2024-11-07 22:05Revenue and Financial Performance - The company generated revenues of $7.7 million in 2023, down from $8.3 million in 2022 and $10.1 million in 2021, primarily due to staffing shortages and deferred elective procedures [135]. - Revenues for the three months ended September 30, 2024, decreased by approximately $0.2 million or 9% compared to the same period in 2023, with disposable catheter sales down 9% to $1.5 million [182]. - Revenues for the nine months ended September 30, 2024, decreased by approximately $0.4 million or 7% compared to the same period in 2023, with disposable catheter sales down 7% to $4.9 million [193]. - The company reported a net loss of $3.7 million and $13.6 million for the three and nine months ended September 30, 2024, respectively, with an accumulated deficit of $434.3 million as of the same date [160]. - Net cash used in operating activities for the nine months ended September 30, 2024 was $11.2 million, primarily due to a net loss of $13.6 million and an increase in net operating assets of $0.4 million [224]. - Net cash used in operating activities for the nine months ended September 30, 2023 was $11.0 million, with a net loss of $13.3 million [225]. Regulatory and Compliance - The company received 510(k) clearance from the FDA for the Tigereye Spinning Tip in April 2023, initiating a limited launch in Q2 2023 and expanding to full commercial availability in Q3 2023 [125]. - The company obtained 510(k) clearance for the Pantheris Large Vessel in June 2023, with a limited launch in Q3 2023 and full commercial availability expected in the second half of 2024 [126]. - The company received a Nasdaq delisting notice on April 25, 2023, due to a minimum bid price below $1.00, but regained compliance by September 27, 2023 [136][137]. - The company submitted a Compliance Plan to Nasdaq to address stockholders' equity deficiency and received an extension until November 14, 2023, to regain compliance [140]. - The company converted $11.0 million of outstanding indebtedness into equity in May 2024 as part of its plan to regain compliance with Nasdaq listing requirements [142]. Strategic Initiatives and Partnerships - A License Agreement was signed with Zylox-Tonbridge to distribute products in Greater China, with royalties based on gross revenue and product gross margin [149]. - The company is developing CTO crossing devices targeting the coronary artery disease market, with ongoing efforts to understand market requirements and anticipate additional expenses [123]. - The company expects to receive an additional $7.5 million upon the successful completion of certain milestones related to a strategic partnership and collaboration transaction [142]. - The company is focusing its sales and marketing efforts on interventional cardiologists, vascular surgeons, and interventional radiologists, while also developing relationships with key opinion leaders [132]. Operational Challenges and Cost Management - The company has experienced increased production and operating costs due to inflationary pressures, along with constraints in manufacturing and shipping caused by port closures and labor shortages [146]. - A workforce reduction plan was implemented in June 2024, decreasing total headcount by 17 employees, including a 33% reduction in sales personnel dedicated to the peripheral business [159]. - Gross margin for the three months ended September 30, 2024, increased to 26%, compared to 21% during the same period in 2023, primarily due to a decrease in cost of revenues [184]. - Gross margin for the nine months ended September 30, 2024, decreased to 21%, compared to 28% during the same period in 2023, primarily due to rising costs of materials and decreased production levels [195]. Financing and Capital Structure - The company anticipates issuing additional shares through financing transactions to maintain compliance with Nasdaq's Equity Requirement, with a recent public offering generating gross proceeds of $6.0 million [145]. - The company entered into a Purchase Agreement for up to $15 million in shares, with an initial issuance of 75,327 common shares at $3.664 each, totaling $7.5 million [152]. - In June 2024, the company issued 3,614,457 shares of common stock at a price of $1.66 per share, resulting in net proceeds of approximately $5.2 million after expenses [207]. - The company has a total contractual obligation of $8.4 million as of September 30, 2024, which includes operating lease obligations, CRG Loan, and non-cancelable purchase commitments [215]. - The CRG Loan amount is $4.2 million, with total obligations under the loan expected to reach $6.2 million by December 2028, including future interest and a back-end fee [216]. Future Outlook and Risks - The company expects to incur losses for the foreseeable future and may need to raise additional capital through equity or debt financings to meet operational needs and product development [203]. - The company may need to file for bankruptcy if additional sources of liquidity are not available to meet obligations [203]. - The company is evaluating its banking relationships following the acquisition of Silicon Valley Bank by First Citizens Bank, which could impact access to cash [204]. - The company anticipates demand for new product introductions, including Tigereye ST and Pantheris LV, impacting inventory levels [224]. Cash Management and Liquidity - As of September 30, 2024, the company had cash and cash equivalents of $5.9 million, up from $5.3 million as of December 31, 2023, while the accumulated deficit increased to $434.3 million from $420.7 million [202]. - Cash and cash equivalents were maintained with one financial institution, with current deposits exceeding insured limits, indicating low credit risk [230]. - An immediate 100 basis point change in interest rates would not materially affect the fair value of cash equivalents due to their short-term maturities [229]. - The company does not currently use or plan to use financial derivatives in its investment portfolio [229].