Financial Performance - The company incurred net losses of $5.8 million and $11.0 million for the years ended December 31, 2021, and 2020, respectively, with an accumulated deficit of $141.9 million as of December 31, 2021[145]. - Product revenue decreased by $1.5 million, or 15%, to $8.4 million for the year ended December 31, 2021, compared to $9.9 million for the year ended December 31, 2020[177]. - Gross profit decreased by $0.3 million, or 5%, to $5.6 million for the year ended December 31, 2021, from $6.0 million for the year ended December 31, 2020[183]. - The net loss for 2021 was $5,824,000, an improvement from a net loss of $11,039,000 in 2020[246]. - Net loss attributable to common stockholders for 2021 was $6,559,000, compared to $11,039,000 in 2020[246]. - The basic and diluted net loss per share for 2021 was $(0.15), an improvement from $(0.31) in 2020[312]. Revenue and Sales - The company expects to grow commercial sales of Avenova and DERMAdoctor branded products through domestic and international market expansion, particularly focusing on online channels[146]. - Total net sales for 2021 were $8,421,000, a decrease of 15.2% from $9,934,000 in 2020[246]. - Avenova Spray revenue from major distribution partners increased to 59% in 2021 from 50% in 2020, indicating a significant growth in direct sales through Amazon[271]. - Total sales for the quarter were $2,641,000, up from $1,840,000 in the prior quarter, reflecting a growth of 43%[201]. Expenses - Total operating expenses increased to $14,507,000 in 2021, up 17.1% from $12,390,000 in 2020[246]. - Sales and marketing expenses increased by $1.0 million, or 17%, to $7.2 million for the year ended December 31, 2021, from $6.2 million for the year ended December 31, 2020[185]. - General and administrative expenses increased by $1.3 million, or 22%, to $7.2 million for the year ended December 31, 2021, from $5.9 million for the year ended December 31, 2020[186]. - Research and development expenses decreased by $241 thousand, or 85%, to $44 thousand for the year ended December 31, 2021, from $285 thousand for the year ended December 31, 2020[184]. Cash Flow and Liquidity - Net cash used in operating activities was $9.2 million for the year ended December 31, 2021, compared to $4.7 million for the year ended December 31, 2020[194]. - Cash used in investing activities was $12.0 million for the year ended December 31, 2021, primarily due to the DERMAdoctor Acquisition[196]. - Net cash provided by financing activities was $17.0 million for the year ended December 31, 2021, including net proceeds of $14.9 million from the 2021 Private Placement[197]. - Cash and cash equivalents decreased to $7.504 million in 2021 from $11.952 million in 2020, a decline of approximately 37.5%[244]. Acquisition and Integration - The company acquired DERMAdoctor, LLC for approximately $12.0 million, with an additional $3.0 million in contingent consideration based on achieving specific contribution margin targets[141]. - The company recorded a goodwill of $4.528 million and other intangible assets of $5.200 million following the acquisition of DERMAdoctor, LLC on November 5, 2021[224]. - The total net assets acquired from DERMAdoctor amounted to $8.039 million, with goodwill of $4.528 million attributed to assembled workforce and expected synergies[320]. - The Company recognized approximately $1.2 million in transaction costs related to the DERMAdoctor Acquisition, recorded in general and administrative expenses[323]. Inventory and Assets - As of December 31, 2021, total assets increased to $23.978 million from $15.238 million in 2020, representing a growth of approximately 57.5%[244]. - Inventory levels rose to $3.220 million in 2021 from $0.608 million in 2020, an increase of approximately 429.5%[244]. - The company recorded an allowance for excess and obsolete inventory adjustments of $641 thousand and $236 thousand as of December 31, 2021, and 2020, respectively[150]. - Accounts receivable increased to $1.668 million in 2021 from $1.106 million in 2020, reflecting a growth of approximately 51%[244]. Liabilities - Total liabilities rose significantly to $13.807 million in 2021 from $2.920 million in 2020, marking an increase of approximately 373.5%[244]. - The contingent earnout liability associated with the DERMAdoctor acquisition was recorded at $0.561 million as of December 31, 2021[228]. Market and Economic Conditions - The company does not expect inflation to materially impact its business in the near future[203]. - The company relies on seven contract manufacturers for product production, which may lead to supply chain risks, particularly in light of the COVID-19 pandemic[273].
NovaBay(NBY) - 2021 Q4 - Annual Report