Financial Performance - The company incurred a net loss of $111 thousand for the three months ended March 31, 2022, compared to a net loss of $1.5 million for the same period in 2021 [171]. - As of March 31, 2022, the company had an accumulated deficit of $142 million and current assets totaling $12.5 million [171]. - Product revenue increased by $0.8 million, or 46%, to $2.6 million for the three months ended March 31, 2022, compared to $1.8 million for the same period in 2021 [207]. - Gross profit increased by 12%, reaching $1.5 million for the three months ended March 31, 2022, compared to $1.4 million for the same period in 2021 [213]. - Non-cash gain on changes in fair value of warrant liability was $2.1 million for the three months ended March 31, 2022, following the reclassification of the warrant liability to equity [218]. - Net cash used in operating activities was $2.1 million for the three months ended March 31, 2022, primarily due to a net loss of $111 thousand [221]. - As of March 31, 2022, cash and cash equivalents were $5.6 million, down from $7.5 million as of December 31, 2021 [220]. Acquisition and Product Development - The company acquired DERMAdoctor, LLC for approximately $12.0 million, with an additional $3.0 million contingent consideration based on achieving specific contribution margin targets [168]. - The acquisition of DERMAdoctor contributed $0.9 million in product revenue for the three months ended March 31, 2022, with no comparable revenue in 2021 [211]. - The company expanded its Avenova product offerings, adding Avenova Moist Heating Eye Compress and i-Chek, and partnered with ImprimisRx to promote Avenova Spray [170]. Sales and Marketing Strategy - The company expects to grow commercial sales of Avenova and DERMAdoctor branded products through domestic and international market expansion, particularly focusing on online channels [172]. - The company anticipates focusing sales and marketing resources on the DERMAdoctor brand moving forward [214]. - Revenue from Avenova Spray decreased by $0.2 million to $1.4 million for the three months ended March 31, 2022, due to increased returns from retail pharmacies [210]. - DERMAdoctor products experience higher sales in summer for sunscreen and antiperspirants, and in fall/winter for moisturizers, with a notable uptick during the fourth quarter holidays, especially in the U.S. and China [232]. Expenses and Inventory Management - General and administrative expenses increased by $1.0 million, or 84%, to $2.2 million for the three months ended March 31, 2022, from $1.2 million for the same period in 2021 [215]. - Cost of goods sold rose by 145%, to $1.1 million for the three months ended March 31, 2022, from $0.5 million for the same period in 2021, primarily due to $0.5 million in costs from DERMAdoctor products [212]. - Advertising expenses were $0.6 million for the three months ended March 31, 2022, down from $0.7 million in the same period in 2021 [197]. - The company recorded an allowance for excess and obsolete inventory adjustments of $522 thousand as of March 31, 2022 [177]. Financial Obligations and Risk Management - As of March 31, 2022, total contractual obligations amounted to $2.68 million, with facility leases accounting for $2.67 million and equipment leases for $9 thousand [233]. - The total commitment for facility leases increased from $0.5 million as of December 31, 2021, to $2.7 million as of March 31, 2022 [234]. - The company has limited exposure to market risk, primarily interest rate risk on cash and cash equivalents, with a 10% change in interest rates having an immaterial effect on the investment portfolio [237]. - The investment policy focuses on high-quality investments, capital preservation, liquidity assurance, and minimizing capital taxation, with no use of derivative financial instruments [237]. - The company maintains cash and cash equivalents in short-term marketable securities to mitigate interest rate risk [237]. - There has been no material exposure to foreign currency rate fluctuations due to the focus on the domestic U.S. market [238].
NovaBay(NBY) - 2022 Q1 - Quarterly Report