NovaBay(US:NBY)2021-08-12 20:10Product Performance - Avenova, the company's leading product, has achieved record unit sales quarter over quarter, with a significant increase in consumer usage [176]. - The launch of over-the-counter Avenova in Q2 2019 expanded the addressable market, allowing consumers to purchase without a prescription, contributing to its strong sales performance [177]. - Avenova is now the leading product by unit sales and net revenue, despite a lower average net selling price compared to prescription Avenova [180]. - Avenova revenue increased by 65% to $1.9 million for the three months ended June 30, 2021, driven by a higher number of overall units sold, particularly over-the-counter units [209]. - Avenova revenue increased by 29% to $3.5 million for the six months ended June 30, 2021, reflecting continued growth in unit sales [222]. Financial Performance - Product revenue, net decreased by $1.9 million, or 47%, to $2.1 million for the three months ended June 30, 2021, primarily due to the absence of KN95 Masks sales which generated $2.8 million in the same period of 2020 [208]. - For the six months ended June 30, 2021, product revenue, net decreased by $1.9 million, or 33%, to $3.9 million, again due to the absence of KN95 Masks sales [221]. - Gross profit decreased by $0.4 million to $1.5 million for the three months ended June 30, 2021, mainly due to the lack of KN95 Masks sales in 2021 [213]. - Gross profit for the six months ended June 30, 2021, decreased by $0.4 million to $2.9 million, primarily due to the discontinuation of KN95 Masks sales [224]. - Operating loss for the three months ended June 30, 2021, was $1.9 million, an increase of 74% compared to the prior year [207]. Expenses and Cash Flow - Total operating expenses increased by $0.4 million, or 12%, to $3.4 million for the three months ended June 30, 2021, primarily due to higher sales and marketing expenses [207]. - Sales and marketing expenses increased by $0.5 million, or 16%, to $3.5 million for the six months ended June 30, 2021, from $3.0 million for the same period in 2020 [227]. - Net cash used in operating activities was $3.4 million for the six months ended June 30, 2021, compared to $1.9 million for the same period in 2020 [233][234]. - Net cash provided by financing activities was $1.8 million for the six months ended June 30, 2021, compared to $3.7 million for the same period in 2020 [236][237]. - As of June 30, 2021, cash and cash equivalents were $10.3 million, down from $12.0 million as of December 31, 2020 [232]. Inventory and Allowances - The company recorded an allowance for excess and obsolete inventory of $0.2 million as of June 30, 2021 [190]. - The balance of product revenue allowances was $902,000 as of June 30, 2021, reflecting various discounts, rebates, and returns [197]. Strategic Initiatives - The company introduced two complementary products, Warm Eye Compress and i-Chek Illuminated Eye Examination Mirror, to enhance the Avenova user experience [185]. - The company continues to focus on digital marketing and public relations initiatives to promote Avenova directly to consumers [180]. - The rebranded CelleRx® Clinical Reset™ was launched into the beauty industry, leveraging new consumer-focused messaging [182]. Other Financial Information - The company had no off-balance sheet arrangements as of June 30, 2021 [239]. - Contractual cash commitments as of June 30, 2021 totaled $317 thousand, with $295 thousand for facility leases and $22 thousand for equipment leases [241][242]. - The company recognized other income of $2 thousand for the six months ended June 30, 2021, down from $176 thousand for the same period in 2020 [231]. - The company may consider raising additional capital through debt and equity financings due to changing circumstances affecting cash flow [232]. - The company does not expect inflation to have a material impact on its business in the near future [238].