Financial Performance - Revenues for the three months ended September 30, 2024, were $376 thousand, down from $458 thousand for the same period in 2023, a decrease of about 18%[7] - Gross profit for the nine months ended September 30, 2024, was $1,225 thousand, compared to $889 thousand for the same period in 2023, an increase of approximately 38%[7] - Net loss for the three months ended September 30, 2024, was $998 thousand, compared to a net loss of $727 thousand for the same period in 2023, indicating a worsening of approximately 37%[7] - For the nine months ended September 30, 2024, the net loss was $2,274,000 compared to a net loss of $2,898,000 for the same period in 2023, indicating a decrease in losses[9] - Gross profit for the three months ended September 30, 2024, was approximately $133,000, a decrease of 62% or $216,000 from $349,000 in 2023, with gross profit as a percentage of revenues dropping from 76% to 35%[51] - For the nine months ended September 30, 2024, revenues increased by approximately 91% to $2,114,000 from $1,106,000 in 2023[52] - Gross profit for the nine months ended September 30, 2024, was approximately $1,225,000, an increase of 53% or $425,000 compared to $800,000 in 2023, with gross profit as a percentage of revenues decreasing from 72% to 58%[53] Cash Flow and Liquidity - Cash decreased significantly from $3,283 million on December 31, 2023, to $1,305 million on September 30, 2024, a reduction of about 60%[6] - The company reported a net cash used in operating activities of $1,968,000 for the nine months ended September 30, 2024, compared to $3,111,000 for the same period in 2023, showing an improvement in cash flow management[9] - Cash at the end of the period was $1,305,000, down from $3,787,000 at the end of the previous year, indicating a significant reduction in liquidity[9] - The company has incurred negative cash flows from operating activities and expects to continue this trend through at least fiscal year 2024, raising concerns about its ability to sustain operations[11] - The company has not generated sufficient resources to fund operations for the next twelve months, leading to substantial doubt about its ability to continue as a going concern[11] - The company has substantial doubt about its ability to continue as a going concern due to insufficient resources to fund operations for the next twelve months[60] Expenses - Operating expenses increased to $1,103 thousand for the three months ended September 30, 2024, from $1,019 thousand in the same period of 2023, an increase of about 8%[7] - Research and development expenses for the three months ended September 30, 2024, were $249 thousand, significantly higher than $33 thousand in the same period of 2023, reflecting a substantial increase in investment[7] - Research and development expenses for the nine months ended September 30, 2024, were approximately $557,000, an increase of 353% from $123,000 in 2023, representing 26% of total revenues[53] - General and administrative expenses decreased by approximately 16% to $2,335,000 for the nine months ended September 30, 2024, from $2,780,000 in 2023, with expenses as a percentage of total revenues dropping from 251% to 110%[53] Assets and Liabilities - Total assets decreased from $6,674 million on December 31, 2023, to $4,682 million on September 30, 2024, representing a decline of approximately 30%[6] - Total current liabilities increased from $2,454 million on December 31, 2023, to $2,521 million on September 30, 2024, an increase of approximately 3%[6] - Total liabilities rose from $2,686 million on December 31, 2023, to $2,810 million on September 30, 2024, an increase of about 5%[6] - As of September 30, 2024, total stockholders' equity was $1,872,000, a decrease from $3,988,000 as of December 31, 2023, reflecting ongoing financial challenges[8] Stock and Financing - The number of weighted average common stock outstanding increased from 1,721,026 shares for the three months ended September 30, 2023, to 2,803,181 shares for the same period in 2024, an increase of approximately 63%[7] - The company completed a private placement on August 30, 2023, raising approximately $4,215,000 in net proceeds for general corporate purposes[22] - The company is dependent on additional financing to cover losses and negative cash flows, which may impact its product development and commercial strategy[11] - The company received a Nasdaq compliance letter indicating it did not meet the minimum bid price requirement of $1.00 per share[44] - The company has been notified of potential delisting from Nasdaq due to not meeting the $5,000,000 minimum stockholders' equity requirement[44] Legal and Compliance Issues - Protrade Systems, Inc. claims damages of approximately $3 million against the Company for breach of an Exclusive Distribution Agreement[38] - The arbitrator awarded Protrade $1,500,250, which includes $1,432,000 for "lost profits" and $68,250 for arbitration costs[38] - The Company accrued approximately $2 million for the arbitration award to Protrade as of September 30, 2024, including interest[48] - The Company intends to appeal the arbitration award and has filed an appeal with the Appellate Division, Second Department[48] - The company received a letter from Nasdaq indicating non-compliance with the minimum bid price requirement of $1.00 per share, with a compliance period until October 7, 2024[60] Operational Challenges - The ongoing conflict in Israel may adversely affect the company's operations, including potential disruptions in supply chains and labor availability[59] - The company may face challenges in raising additional capital, which is necessary to finance losses and negative cash flows from operations[60] Internal Controls and Governance - As of March 31, 2024, the company's disclosure controls and procedures were deemed ineffective due to material weaknesses in internal control over financial reporting[56] - The company has remediated the material weakness related to the issuance of shares in excess of authorized shares, implementing new approval procedures for equity issuances[57] - The company has expanded consultations with third-party specialists to enhance documentation and monitoring of financial reporting processes[57] - Management is reviewing and refining the overall design of the company's internal control environment to improve effectiveness[57] - The company has implemented a risk assessment process with the assistance of a third-party service provider to strengthen internal controls over financial reporting[57] Miscellaneous - The report was signed by Brian Murphy, CEO, and Stephen Brown, CFO, on November 14, 2024[64]
NanoVibronix(NAOV) - 2024 Q3 - Quarterly Report