BIOLASE(BIOL) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and management's discussion and analysis for the periods ended June 30, 2022 Item 1. Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements of BIOLASE, Inc. for the periods ended June 30, 2022, and December 31, 2021, including balance sheets, statements of operations and comprehensive loss, statements of redeemable preferred stock and stockholders' equity, and statements of cash flows, along with detailed notes to these financial statements Consolidated Balance Sheets This table presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2022, and December 31, 2021 | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :------------ | :---------------- | | Total Assets | $50,854 | $55,284 | | Total Current Assets | $44,267 | $49,354 | | Cash and Cash Equivalents | $19,549 | $29,972 | | Inventory | $16,573 | $12,929 | | Total Liabilities | $29,239 | $30,076 | | Total Stockholders' Equity | $21,615 | $25,208 | Consolidated Statements of Operations and Comprehensive Loss This table details the company's financial performance, including revenue, gross profit, and net loss, for the three and six months ended June 30, 2022 and 2021 | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Revenue | $12,235 | $9,134 | $22,401 | $17,250 | | Gross Profit | $5,141 | $4,041 | $9,870 | $6,781 | | Loss from Operations | ($5,055) | ($3,283) | ($9,260) | ($9,344) | | Net Loss | ($5,611) | ($702) | ($10,386) | ($7,603) | | Net Loss per Share (Basic & Diluted) | ($0.91) | ($0.12) | ($1.72) | ($1.43) | Consolidated Statements of Redeemable Preferred Stock and Stockholders' Equity This section outlines changes in redeemable preferred stock and stockholders' equity for the periods ended June 30, 2022 and 2021 | Metric | Balances, December 31, 2021 (in thousands) | Balances, June 30, 2022 (in thousands) | | :-------------------------------- | :-------------------------- | :------------------------ | | Common Stock Shares | 6,149 | 6,857 | | Common Stock Amount | $6 | $7 | | Additional Paid-in Capital | $293,325 | $300,414 | | Accumulated Deficit | ($267,534) | ($277,920) | | Total Stockholders' Equity | $25,208 | $21,615 | - The company completed a sale of common stock, net of fees, resulting in an increase of $5,849 thousand in additional paid-in capital and common stock shares during the six months ended June 30, 2022[10] - Series G Redeemable Preferred Stock was redeemed and eliminated by June 6, 2022, and Series F Convertible Preferred Stock was fully converted into common stock in Q1 2022, with none outstanding as of June 30, 2022[10][51][55] Consolidated Statements of Cash Flows This section details the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2022 and 2021 | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net Cash Used in Operating Activities | ($14,633) | ($10,008) | | Net Cash Used in Investing Activities | ($578) | ($311) | | Net Cash Provided by Financing Activities | $4,849 | $29,811 | | (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash | ($10,626) | $19,409 | | Cash, Cash Equivalents and Restricted Cash, End of Period | $19,549 | $37,285 | - The increase in cash used in operating activities was primarily due to a net loss of $10.4 million and a net increase in operating assets and liabilities of $5.8 million, including a $3.6 million increase in inventory and a $2.0 million increase in accounts receivable[169] - Financing activities in 2022 were primarily driven by $5.8 million net proceeds from a June 2022 direct offering and private placement, significantly lower than the $29.8 million provided in 2021 which included proceeds from common stock sales and warrant exercises[172][12] Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION This note describes BIOLASE's business, financial position, and the impact of a reverse stock split and cybersecurity incident - BIOLASE is a leading provider of advanced laser systems for the dental industry, developing, manufacturing, marketing, and selling proprietary systems for minimally invasive dental procedures[13] - The company had working capital of approximately $30.3 million and $19.5 million in cash and cash equivalents as of June 30, 2022, a decrease from $35.5 million working capital and $30.0 million cash as of December 31, 2021[18] - A one-for-twenty-five (1:25) reverse stock split was effective on April 28, 2022, approved by stockholders and the Board, without changing the number of authorized shares[22] - In December 2021, the company experienced a cybersecurity attack, which caused a brief network disruption. All liabilities were fully insured, and cash reimbursement was received in March 2022[23] NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the key accounting policies and significant estimates used in preparing the financial statements - Significant estimates in financial statements include allowances on accounts receivable, inventory, deferred taxes, warranty expenses, goodwill, revenue deferrals, stock-based compensation, contingent liabilities, and income tax provisions[24] - The company's financial instruments (cash, receivables, payables, SWK Loan) approximate fair value due to their short maturity or market interest rates[27] - Substantially all revenue is in U.S. dollars, with a small portion of revenue and expenses in foreign currencies (Euro, Indian Rupee). No hedging contracts were entered into during the reported periods[29] - The company adopted ASU 2020-06 (convertible debt/preferred stock) and ASU 2021-04 (equity-classified written call options) effective January 1, 2022, with no material impact on financial statements. ASU 2016-13 (Credit Losses) will be effective January 1, 2023, and the company is currently assessing its impact[31][32][33] NOTE 3—REVENUE RECOGNITION This note details the company's revenue recognition policies, disaggregated by geographic area and timing of transfer - Revenue from products and services transferred at a single point in time (primarily laser systems and consumables) accounted for 90% of net revenue for the three and six months ended June 30, 2022, while services transferred over time accounted for 10%[36][37] | Geographic Area | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $8,899 | $5,865 | $15,877 | $11,086 | | International | $3,336 | $3,269 | $6,524 | $6,164 | | Total Net Revenue | $12,235 | $9,134 | $22,401 | $17,250 | | Timing of Transfer | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Over Time | $1,210 | $1,056 | $2,331 | $2,115 | | At a Point in Time | $11,025 | $8,078 | $20,070 | $15,135 | | Total Net Revenue | $12,235 | $9,134 | $22,401 | $17,250 | NOTE 4—REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY This note provides details on changes in preferred stock, common stock, warrants, and stock-based compensation during the period - Series G Preferred Stock was eliminated on June 6, 2022, following its automatic redemption after the 2022 Annual Meeting and the Reverse Stock Split. The remaining Series F Preferred Stock was converted into common stock in Q1 2022, with no shares outstanding as of June 30, 2022[51][55] | Category | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Cost of Revenue | $93 | $35 | $113 | $113 | | Sales and Marketing | $213 | $108 | $312 | $229 | | General and Administrative | $109 | $168 | $151 | $718 | | Engineering and Development | $475 | $55 | $524 | $237 | | Total | $890 | $366 | $1,100 | $1,297 | - In June 2022, the company issued 678,745 shares of common stock and warrants to purchase 726,660 shares (pre-funded) and 1,405,405 shares (common) in a direct offering and private placement, generating approximately $6.5 million in gross proceeds[67] | Metric | Shares (thousands) | Weighted Average Exercise Price | | :-------------------------------- | :----------------- | :------------------------------ | | Warrants outstanding, Dec 31, 2021 | 720 | $19.98 | | Granted or Issued | 2,132 | $3.05 | | Forfeited, cancelled, or expired | (31) | $225.00 | | Warrants outstanding at June 30, 2022 | 2,821 | $4.90 | - Phantom RSUs and SARs were reclassed to equity (Additional Paid-In Capital) in Q2 2022 due to the Reverse Stock Split, with a portion remaining as long-term liability[80][81] NOTE 5—INVENTORY This note presents the breakdown of inventory by category and the allowance for excess and obsolete amounts | Category | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------- | :------------ | :---------------- | | Raw Materials | $5,454 | $4,444 | | Work-in-Process | $2,175 | $1,726 | | Finished Goods | $8,944 | $6,759 | | Total Inventory | $16,573 | $12,929 | - Inventory has been reduced by $1.0 million for estimated excess and obsolete amounts as of both June 30, 2022, and December 31, 2021[84] NOTE 6—PROPERTY, PLANT, AND EQUIPMENT This note details the company's property, plant, and equipment, net of accumulated depreciation and amortization | Category | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :------------ | :---------------- | | Total (Gross) | $9,496 | $8,952 | | Accumulated Depreciation & Amortization | ($8,284) | ($8,049) | | Property, Plant, & Equipment, Net | $1,373 | $1,067 | - Depreciation and amortization expense for property, plant, and equipment totaled $0.1 million for the three months and $0.3 million for the six months ended June 30, 2022[85] NOTE 7—INTANGIBLE ASSETS AND GOODWILL This note provides information on goodwill and fully amortized intangible assets, with no impairment identified - Goodwill remained at $2.9 million as of June 30, 2022, and December 31, 2021, with no impairment identified since the September 30, 2021 annual test[87] - All intangible assets have been fully amortized, and no amortization expense was recognized during the three and six months ended June 30, 2022 and 2021[87] NOTE 8—ACCRUED LIABILITIES This note details the components of accrued liabilities, including payroll, warranty, and professional services, and changes in warranty accrual | Category | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------- | :------------ | :---------------- | | Payroll and Benefits | $3,275 | $3,969 | | Warranty Accrual, Current | $802 | $565 | | Accrued Professional Services | $654 | $275 | | Lease Liability | $591 | $405 | | Settlement Accrual | $0 | $805 | | Total Accrued Liabilities | $6,498 | $8,276 | - The settlement accrual of $805 thousand as of December 31, 2021, was paid in January 2022, removing the liability[107] | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Balance, Beginning of Period | $1,138 | $1,396 | $1,086 | $1,132 | | Provision for Estimated Warranty Cost | $910 | $140 | $1,461 | $804 | | Warranty Expenditures | ($815) | ($478) | ($1,314) | ($878) | | Balance, End of Period | $1,233 | $1,058 | $1,233 | $1,058 | NOTE 9—DEBT This note outlines the company's debt obligations, including the SWK Loan and EIDL Loan, and recent amendments | Category | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :------------ | :---------------- | | SWK Loan | $13,300 | $14,300 | | EIDL Loan | $150 | $150 | | Discount and Debt Issuance Costs | ($720) | ($847) | | Total Non-Current Term Loans, Net | $12,730 | $13,603 | - The SWK Loan's interest-only period was extended by two quarters to November 2023 via the Ninth Amendment, and the company prepaid $1.0 million of the loan balance[93] - The EIDL Loan's first payment due date was extended to November 2022. The Paycheck Protection Program (PPP) Loan, totaling $2.98 million, was fully forgiven by the SBA in June 2021[95][98] NOTE 10—LEASES This note describes the company's operating leases for facilities and presents related right-of-use assets and lease liabilities - The company leases its corporate headquarters (expires Dec 2025) and a manufacturing facility (expires June 2025), with an additional 15,000 sq ft lease commencing Feb 2022[99][100] | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :------------ | :---------------- | | Right-of-Use Assets | $2,047 | $1,717 | | Total Lease Liabilities | $2,183 | $1,854 | | Current Operating Lease Liabilities | $591 | $405 | | Non-Current Lease Liabilities | $1,592 | $1,449 | - Rent expense totaled $0.3 million for the three months and $0.5 million for the six months ended June 30, 2022[103] NOTE 11—COMMITMENTS AND CONTINGENCIES This note discusses the settlement of patent litigation and the removal of associated liabilities - The company settled patent litigation with CAO Group, Inc. in January 2019, involving a cash payment, issuance of restricted common stock, and a future cash payment based on stock value. All remaining amounts due to CAO Group, Inc. were paid in January 2022, removing the associated liability[106][107] NOTE 12—SEGMENT INFORMATION This note confirms the company operates in a single business segment and provides revenue breakdown by geographic location - The company operates in a single business segment, with management using one measurement of profitability[108] | Geographic Location | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $8,899 (73%) | $5,865 (64%) | $15,877 (71%) | $11,086 (64%) | | International | $3,336 (27%) | $3,269 (36%) | $6,524 (29%) | $6,164 (36%) | NOTE 13—CONCENTRATIONS This note details revenue concentrations by product category and reliance on single suppliers for key components | Product Category | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Laser Systems | $7,987 (65.3%) | $5,720 (62.6%) | $14,322 (63.9%) | $10,540 (61.1%) | | Consumables and Other | $3,038 (24.8%) | $2,358 (25.8%) | $5,748 (25.7%) | $4,595 (26.6%) | | Services | $1,210 (9.9%) | $1,056 (11.6%) | $2,331 (10.4%) | $2,115 (12.3%) | - No individual customer represented more than 10% of revenue for the reported periods. However, as of June 30, 2022, accounts receivable from one customer totaled approximately 12% of total gross accounts receivable[112][114] - The company relies on single suppliers for certain key components, which could cause manufacturing delays if suppliers change[115] NOTE 14—INCOME TAXES This note explains the company's income tax position, including deferred tax assets and the effective tax rate - A full valuation allowance is maintained against net deferred tax assets due to prior net losses, indicating uncertainty about their realization[116] | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income Tax (Provision) Benefit | ($23) | $80 | ($40) | $20 | | Effective Tax Rate | 0.4% | 10.2% | 0.4% | 0.3% | - The effective tax rate differs from the statutory 21% primarily due to valuation allowances and current liabilities from estimated state and foreign income taxes[118] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, including an overview of the business, strategic outlook, recent developments, critical accounting policies, and a detailed comparison of financial performance for the three and six months ended June 30, 2022, versus 2021. It also discusses liquidity and capital resources Overview This section provides an overview of BIOLASE's business as a leading provider of advanced dental laser systems and its patent portfolio - BIOLASE is a leading provider of advanced laser systems for the dental industry, offering minimally invasive procedures with benefits like less pain, faster healing, and improved patient care[124] - The company offers Waterlase (all-tissue) and diode (soft-tissue) systems, with Waterlase FDA cleared for over 80 clinical indications[125] - As of June 30, 2022, BIOLASE held approximately 302 issued and 31 pending U.S. and international patents, mostly related to Waterlase technology[125] Business and Outlook This section outlines BIOLASE's strategic focus on increasing product demand, operational excellence, and expanding product lines and clinical applications - The company's strategy focuses on increasing awareness and demand for its products among dental practitioners and patients, and growing consumables revenue[129] - BIOLASE aims for operating excellence through lean initiatives, focusing on sales strategy, cash flow management, and optimizing engineering for innovative new products[129] - The company plans to expand its product line and clinical applications, leveraging existing technologies into adjacent medical fields like ophthalmology, orthopedics, and pain management[130] - Revenue grew by 34% and 30% for the three and six months ended June 30, 2022, respectively, driven by high demand from new users and recovery from COVID-19 impacts[131] - BIOLASE launched specialist training programs (Waterlase Pediatric Dental Academy, periodontal community program, Waterlase Endo Academy, Epic Hygiene Academy) to educate providers and increase patient access[132] - In 2021, the company partnered with EdgeEndo to develop and produce the EdgePro, a laser using proprietary Er,Cr:YSGG technology for root canal cleaning and disinfection[133] Recent Developments This section highlights key corporate actions including a direct offering, reverse stock split, preferred stock elimination, and debt agreement amendment - On June 27, 2022, BIOLASE completed a direct offering and private placement, issuing common stock and warrants, generating approximately $6.5 million in gross proceeds[133] - A one-for-twenty-five (1:25) reverse stock split became effective on April 28, 2022, following stockholder and board approval[134] - Series G Preferred Stock was eliminated on June 6, 2022, after being redeemed following the 2022 Annual Meeting and the reverse stock split[135] - On June 30, 2022, the Ninth Amendment to the Credit Agreement with SWK extended the interest-only period to November 2023, reduced minimum liquid asset requirements, and included a $1.0 million loan prepayment[136] Critical Accounting Policies This section confirms no significant changes to critical accounting policies from the prior fiscal year - No significant changes occurred in the company's critical accounting policies during the six months ended June 30, 2022, from those disclosed in the 2021 Form 10-K[137] Results of Operations This section provides a detailed analysis of the company's financial performance for the reported periods Non-GAAP Disclosure This section defines and reconciles Adjusted EBITDA as a non-GAAP financial measure used by management to evaluate core operating results - Management uses Adjusted EBITDA as a non-GAAP financial measure to evaluate core operating results and trends, believing it provides greater transparency for investors[139][141] - Adjusted EBITDA is defined as net loss before interest, taxes, depreciation and amortization, patent litigation settlements, stock-based and other non-cash compensation, change in allowance for doubtful accounts, and gain on debt forgiveness[141] | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | GAAP Net Loss | ($5,611) | ($702) | ($10,386) | ($7,603) | | Interest Expense, Net | $430 | $582 | $863 | $1,157 | | Income Tax (Provision) Benefit | $23 | ($80) | $40 | ($20) | | Depreciation and Amortization | $130 | $91 | $247 | $176 | | Stock-based and other non-cash compensation | $890 | $369 | $1,100 | $1,297 | | Gain on Debt Forgiveness | $0 | ($3,014) | $0 | ($3,014) | | Adjusted EBITDA | ($4,079) | ($2,655) | ($7,993) | ($7,925) | Comparison of Results of Operations (Three Months) This section compares the company's financial performance for the three months ended June 30, 2022, versus 2021 | Category | June 30, 2022 (in thousands) | June 30, 2021 (in thousands) | Change (YoY) (in thousands) | % Change (YoY) | | :------------------ | :------------ | :------------ | :----------- | :------------- | | Laser Systems | $7,987 | $5,720 | +$2,267 | +39.6% | | Consumables and Other | $3,038 | $2,358 | +$680 | +28.8% | | Services | $1,210 | $1,056 | +$154 | +14.6% | | Total Net Revenue | $12,235 | $9,134 | +$3,101 | +34.0% | - Total net revenue increased by 34% due to increased Waterlase sales to new U.S. customers and specialists. International revenue increased by 2%[146] - Gross profit increased by 27% to $5.1 million (42% of net revenue), driven by higher sales volumes and increased average selling prices in the U.S., partially offset by supply chain issues and lower-margin OEM products[147] | Expense Category | June 30, 2022 (in thousands) | June 30, 2021 (in thousands) | Change (YoY) (in thousands) | % Change (YoY) | | :-------------------------- | :------------ | :------------ | :----------- | :------------- | | Sales and Marketing | $5,402 | $3,311 | +$2,091 | +63.2% | | General and Administrative | $3,141 | $2,779 | +$362 | +13.0% | | Engineering and Development | $1,653 | $1,162 | +$491 | +42.3% | | Total Operating Expenses | $10,196 | $7,324 | +$2,872 | +39.2% | - Sales and marketing expenses increased by $2.1 million (63%) due to higher compensation, commissions, travel, and trade show expenses. Net loss increased to $5.6 million from $0.7 million in the prior year, primarily due to higher operating expenses and a foreign currency loss[150][155] Comparison of Results of Operations (Six Months) This section compares the company's financial performance for the six months ended June 30, 2022, versus 2021 | Category | June 30, 2022 (in thousands) | June 30, 2021 (in thousands) | Change (YoY) (in thousands) | % Change (YoY) | | :------------------ | :------------ | :------------ | :----------- | :------------- | | Laser Systems | $14,322 | $10,540 | +$3,782 | +35.9% | | Consumables and Other | $5,748 | $4,595 | +$1,153 | +25.1% | | Services | $2,331 | $2,115 | +$216 | +10.2% | | Total Net Revenue | $22,401 | $17,250 | +$5,151 | +29.9% | - Total net revenue increased by 30% to $22.4 million, driven by increased Waterlase sales to new U.S. customers and specialists. U.S. revenue increased by 43%, while international revenue increased by 6%[159] - Gross profit increased by 46% to $9.9 million (44% of net revenue), reflecting higher sales volumes in the U.S. (higher margin), increased average selling prices, and favorable absorption of fixed expenses[160] | Expense Category | June 30, 2022 (in thousands) | June 30, 2021 (in thousands) | Change (YoY) (in thousands) | % Change (YoY) | | :-------------------------- | :------------ | :------------ | :----------- | :------------- | | Sales and Marketing | $10,216 | $6,864 | +$3,352 | +48.8% | | General and Administrative | $5,717 | $6,134 | ($417) | -6.8% | | Engineering and Development | $3,197 | $2,966 | +$231 | +7.8% | | Total Operating Expenses | $19,130 | $16,125 | +$3,005 | +18.6% | - Sales and marketing expenses increased by $3.4 million (49%) due to higher compensation, travel, trade show, and advertising expenses. General and administrative expenses decreased by $0.4 million (7%) due to lower compensation and severance expenses, partially offset by higher allowance for doubtful accounts and 2022 Annual Meeting expenses. Net loss increased to $10.4 million from $7.6 million in the prior year, primarily due to higher operating expenses and foreign currency losses[161][162][166] Liquidity and Capital Resources This section discusses the company's cash position, cash flow activities, and future capital needs and strategies - Cash and cash equivalents decreased from $30.0 million at December 31, 2021, to $19.5 million at June 30, 2022, primarily due to a net loss of $10.4 million, increased operating assets and liabilities ($5.8 million), and a $1.0 million loan payment, partially offset by $5.8 million from a June 2022 offering[167] | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net Cash Flows Used in Operating Activities | ($14,633) | ($10,008) | | Net Cash Flows Used in Investing Activities | ($578) | ($311) | | Net Cash Flows Provided by Financing Activities | $4,849 | $29,811 | | Net Change in Cash, Cash Equivalents and Restricted Cash | ($10,626) | $19,409 | - The company expects to improve financial condition by increasing sales, expanding product offerings, developing sales force and distributor relationships, forming strategic arrangements, educating patients, and reducing expenses[176] - The company may need to raise additional capital through equity or debt offerings in the future, with no assurance of availability on acceptable terms or without dilution[174] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there are no quantitative and qualitative disclosures about market risk - The company has no material quantitative and qualitative disclosures about market risk[181] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal controls over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[182] - There were no material changes in internal control over financial reporting during the period covered by the report[183] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, other information, exhibits, and required signatures Item 1. Legal Proceedings This section states that while the company may be subject to legal proceedings in the ordinary course of business, there are no matters as of June 30, 2022, that management believes will have a material adverse effect on its financial position, results of operations, or cash flows - As of June 30, 2022, management believes there are no legal proceedings or claims that will have a material adverse effect on the company's financial position, results of operations, or cash flows[183] Item 1A. Risk Factors This section indicates that there have been no material changes to the risk factors previously disclosed in the 2021 Form 10-K, and reminds readers that additional unknown or immaterial risks could still adversely affect the business - No material changes to risk factors have occurred since those disclosed in the 2021 Form 10-K[184] Item 5. Other Information This section states that there is no other information to report - This section states "None," indicating no other information to report[184] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including amendments to the Certificate of Incorporation, bylaws, warrant forms, and the Ninth Amendment to the Credit Agreement, along with certifications - Key exhibits include amendments to the Restated Certificate of Incorporation (e.g., Reverse Stock Split), Certificate of Elimination of Series G Preferred Stock, forms of warrants (Pre-Funded and Common), and the Ninth Amendment to the Credit Agreement[186] Signatures This section contains the required signatures of the registrant's authorized officers, including the President and Chief Executive Officer and the Chief Financial Officer, certifying the report - The report is signed by John R. Beaver, President and Chief Executive Officer, and Jennifer Bright, Chief Financial Officer, on August 11, 2022[190]