KORU Medical Systems(US:KRMD)2022-08-03 20:29Financial Performance - Total net sales for the three months ended June 30, 2022, were $6.5 million, an 18.4% increase from $5.5 million in the same period last year, driven by growth in all three business sources [94]. - Domestic core sales increased by 8.7% to $5.0 million, while international core sales rose by 10.7% to $951,485, and novel therapies sales surged by 746.6% to $598,352 [96]. - For the six months ended June 30, 2022, total net sales were $12.8 million, a 16.7% increase from $11.0 million in the prior year, with domestic core sales up by 10.9% [103]. - Novel therapies sales for the six months ended June 30, 2022, reached $954,204, a 765.0% increase compared to $110,311 in the same period last year [103]. Profitability and Loss - Gross profit for the three months ended June 30, 2022, was $3.3 million, representing 51.1% of net sales, down from 58.1% in the prior year due to accelerated amortization of manufacturing variances [97]. - The net loss for the three months ended June 30, 2022, was $2.9 million, a 159.8% increase from a net loss of $1.1 million in the same period last year [102]. - Gross profit for the six months ended June 30, 2022, was $6,968,478, an increase of $526,440 or 8.2% compared to the same period in 2021, with gross profit as a percentage of net sales decreasing to 54.5% from 58.8% [104]. - The net loss for the six months ended June 30, 2022, was $5,458,855, compared to a net loss of $2,400,687 in the same period last year, representing an increase of 127.4% [108]. Operating Expenses - Operating expenses for the same period increased by 52.8% to $6.8 million, primarily due to higher selling, general and administrative expenses and research and development costs [99]. - Selling, general and administrative expenses rose to $11,021,235, an increase of $1,942,461 or 21.4%, primarily due to $2 million in compensation and benefits for new hires [105]. - Research and development expenses increased by 237% to $1.3 million for the three months ended June 30, 2022, primarily due to higher consulting fees for product development [100]. - Research and development expenses surged to $2,452,086, a significant increase of $1,728,367 or 238.8%, driven by higher consulting fees and compensation [106]. Cash Flow and Liquidity - Cash on hand as of June 30, 2022, was $18.3 million, with expectations that cash flows from operations will be sufficient to meet requirements for at least the next 12 months [109][114]. - Net cash used in operating activities was $4,625,314 for the six months ended June 30, 2022, primarily due to the net loss and working capital changes [116]. - The company anticipates that equipment financing and inventory reduction will help reduce cash outflows by the end of fiscal year 2022 [110]. Inventory and Supply Chain - Inventory position was $6.8 million as of June 30, 2022, reflecting excess work in process inventory due to supply chain issues, with plans to reduce this by the end of 2022 [112]. - Supply chain issues and labor shortages resulted in estimated backorders of $0.3 million, which are expected to be cleared in the third quarter of 2022 [96]. Capital Expenditures - The company expects capital expenditures for manufacturing and leasehold improvements to be between $1.5 million and $2.0 million in 2022 [111]. - Net cash used in investing activities was $1,928,829 for the six months ended June 30, 2022, primarily for capital expenditures related to manufacturing and office equipment [118]. - The company is transitioning to a dual source of manufacturing to improve costs, with the implementation expected to be completed by the end of the first quarter of 2023 [92].