Product Performance - Avenova, the company's leading product, has shown strong sales performance, becoming the top product by unit sales and net revenue despite a lower average net selling price compared to pharmacy channels [180]. - The launch of over-the-counter Avenova in Q2 2019 significantly expanded the addressable market, allowing consumers to purchase without a prescription, which proved beneficial during the COVID-19 pandemic [178][179]. - Avenova revenue increased by 16% to $5.2 million for the nine months ended September 30, 2021, from $4.5 million for the same period in 2020 [219]. Financial Performance - Product revenue, net, decreased by $0.3 million, or 15%, to $1.8 million for the three months ended September 30, 2021, compared to $2.2 million for the same period in 2020 [206]. - Total sales, net, decreased by $0.3 million, or 15%, to $1.8 million for the three months ended September 30, 2021, from $2.2 million for the same period in 2020 [206]. - Gross profit decreased by $0.3 million, to $1.3 million for the three months ended September 30, 2021, from $1.6 million for the same period in 2020 [210]. - Product revenue, net, decreased by $2.3 million, or 28%, to $5.8 million for the nine months ended September 30, 2021, from $8.0 million for the same period in 2020 [217]. - Operating loss increased by $1.0 million, or 21%, to $5.7 million for the nine months ended September 30, 2021, from $4.7 million for the same period in 2020 [217]. - Net loss and comprehensive loss was $5.7 million for the nine months ended September 30, 2021, compared to $9.3 million for the same period in 2020, a decrease of $3.6 million or 39% [217]. Cost Management - Cost of goods sold decreased by $1.6 million, or 51%, to $1.6 million for the nine months ended September 30, 2021, from $3.2 million for the same period in 2020 [220]. - Research and development expenses decreased by $213 thousand to $36 thousand for the nine months ended September 30, 2021, from $249 thousand for the same period in 2020 [222]. - Sales and marketing expenses increased by $0.6 million, or 14%, to $5.3 million for the nine months ended September 30, 2021, compared to $4.7 million for the same period in 2020 [224]. Cash Flow and Financing - Net cash used in operating activities was $4.9 million for the nine months ended September 30, 2021, consisting primarily of a net loss of $5.7 million [230]. - Cash and cash equivalents decreased to $9.0 million as of September 30, 2021, from $12.0 million as of December 31, 2020 [229]. - Net cash provided by financing activities was $2.0 million for the nine months ended September 30, 2021, primarily from the ATM program [234]. - The Company completed a Private Placement for gross proceeds of $15.0 million on November 2, 2021 [242]. Strategic Focus - The company has shifted focus back to its core eyecare business after experiencing a significant decrease in PPE sales, which were previously significant during Q2 2020 [184]. - The company introduced two complementary products, Warm Eye Compress and i-Chek Illuminated Eye Examination Mirror, to enhance the effectiveness of Avenova and provide a holistic approach to eye care [185]. - The company does not anticipate dedicating future resources toward the sale of KN95 Masks or other PPE, expecting no revenue from these products in 2021 or beyond [218]. Operational Efficiency - The company recorded no reserve for accounts receivable at September 30, 2021, indicating effective management of credit risk [188]. - Inventory adjustments for excess and obsolete inventory were recorded at $0.1 million and $0.2 million as of September 30, 2021, and December 31, 2020, respectively [189]. - Revenue generated through the company's webstores and partner pharmacies is recognized upon fulfillment, ensuring timely revenue recognition [192][195]. Employee Compensation - Stock-based compensation expenses are recognized based on fair values as they are earned, indicating a structured approach to employee incentives [199]. - General and administrative expenses remained consistent for the nine months ended September 30, 2021, and 2020 [225]. Other Financial Information - Other income decreased to $2 thousand for the nine months ended September 30, 2021, from $605 thousand for the same period in 2020 [228]. - The Company had no off-balance sheet arrangements as of September 30, 2021 [237]. - Contractual cash commitments as of September 30, 2021, totaled $202 thousand, primarily for facility and equipment leases [239]. - The acquisition of DERMAdoctor was completed on November 5, 2021, making it a wholly-owned subsidiary [243].
NovaBay(NBY) - 2021 Q3 - Quarterly Report