What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-12 compared with 2024-08-08 · 35 added, 31 removed, 114 unchanged (37% of the section changed)

51 unchanged sentences

Three Months Ended

Six Months Ended

June 29, 2024

Nine Months Ended

September 28, 2024

September 30, 2023

September 28, 2024

September 30, 2023

Cost of revenues

8 unchanged sentences

Provision for income taxes

The following comparisons are between the three months ended June 29, 2024 and July 1, 2023 (in thousands):

The following comparisons are between the three months ended September 28, 2024 and September 30, 2023 (in thousands):

Three Months Ended

June 29, 2024

September 28, 2024

September 30, 2023

Total revenues

Our total revenues decreased by $1.3 million, or 9.9%, from $12.9 million to $11.6 million.

The decrease was driven by overall softer demand in our Glaucoma "Cyclo G6" product lines, partially offset by increases in Medical Retina PASCAL products, and lower royalties due to the expiration of licensed patents.

The decrease was driven by overall softer demand in our Retina product lines and lower royalties due to the expiration of licensed patents, partially offset by increases Glaucoma "Cyclo G6" product lines.

While we believe that the market for our products remains strong, the overall capital expenditure landscape within hospitals, surgical centers and physician offices may continue to be negatively impacted by persistent macroeconomic concerns.

14 unchanged sentences

Other Income (Expense), Net

Other expense, net was $22 thousand for the three months ended June 29, 2024 compared to other income, net, of $0.1 million for the three months ended July 1, 2023.

Other income (expense), net, consisted primarily of interest income or expense and foreign currency gain or loss.

We recorded an income tax provision of $19 thousand and $10 thousand for the three months ended June 29, 2024 and July 1, 2023, respectively.

The following comparisons are between the six months ended June 29, 2024 and July 1, 2023 (in thousands):

Six Months Ended

June 29, 2024

Other expense, net was $46 thousand for the three months ended September 28, 2024 compared to other expense, net, of $58 thousand for the three months ended September 30, 2023.

Other income (expense), net, consisted primarily of interest income or expense and foreign currency transaction gain or loss.

We recorded an income tax provision of $17 thousand and $8 thousand for the three months ended September 28, 2024 and September 30, 2023, respectively.

The following comparisons are between the nine months ended September 28, 2024 and September 30, 2023 (in thousands):

Nine Months Ended

September 28, 2024

September 30, 2023

Total revenues

Our total revenues decreased by $3.4 million, or 8.7%, from $39.4 million to $36.0 million.

The decrease was driven by softer demand in our Glaucoma product lines, partially offset by increases in Medical Retina PASCAL products, and lower royalties due to the expiration of licensed patents.

The decrease was driven by softer demand in our Glaucoma and Retina product lines, and by lower royalties due to the expiration of licensed patents.

2 unchanged sentences

Gross margin decreased by 4.2% from 42.9% to 38.7%.

The decrease in gross margin was driven by lower revenues and manufacturing overhead absorbed by less royalty revenue.

The decrease in gross margin was driven by lower revenues and higher manufacturing overhead absorbed by less revenue.

Gross margins may fluctuate due to changes in the relative proportion of domestic and international sales, the product mix of sales, introduction of new products, manufacturing variances, total unit volume changes that lead to greater or lesser production efficiencies and other factors.

10 unchanged sentences

Other Income (Expense), Net

Other expense, net increased by $0.6 million from net income of $0.4 million to net other expense, net of $0.2 million for the six months ended June 29, 2024.

Other income (expense), net, consisted primarily of interest income or expense and foreign currency gain or loss.

We recorded an income tax provision of $57 thousand and $22 thousand for the six months ended June 29, 2024 and July 1, 2023, respectively.

Other expense, net increased by $0.5 million from net income of $0.3 million to net other expense, net of $0.2 million for the nine months ended September 28 2024.

Other income (expense), net, consisted primarily of interest income or expense and foreign currency transaction gain or loss.

We recorded an income tax provision of $74 thousand and $30 thousand for the nine months ended September 28, 2024 and September 30, 2023, respectively.

Liquidity, Capital Resources and Management Plans

1 unchanged sentence

In addition, liquidity includes the ability to obtain appropriate financing or to raise capital.

As of June 29, 2024, we had cash and cash equivalents of $4.1 million and working capital of $8.9 million compared to cash and cash equivalents of $7.0 million and working capital of $14.5 million as of December 30, 2023.

Net cash used in operating activities was $3.0 million in the six months ended June 29, 2024 compared to net cash used in operating activities of $4.0 million in the six months ended July 1, 2023.

The decrease in net cash used in operating activities, expressed in direct cash flow terms, was primarily due to cash provided by inventory, prepaids, and other current assets and accrued expenses, offset by increases in cash used in accounts payable.

For the six months ended June 29, 2024, and July 1, 2023 net cash used in investing activities was $3 thousand and $59 thousand, respectively, which consisted of capital expenditures.

For the six months ended June 29, 2024, no net cash was used in financing activities.

For the six months ended July 1, 2023, net cash used in financing activities was $26 thousand, primarily for taxes related to net share settlement of equity awards partially offset by the net proceeds arising from stock option exercises.

As of September 28, 2024, we had cash and cash equivalents of $3.9 million and working capital of $8.5 million compared to cash and cash equivalents of $7.0 million and working capital of $14.5 million as of December 30, 2023.

Net cash used in operating activities was $6.0 million in the nine months ended September 28, 2024 compared to net cash used in operating activities of $5.8 million in the nine months ended September 30, 2023.

The increase in net cash used in operating activities, expressed in direct cash flow terms, was primarily due to cash used in inventory, prepaids, and other current assets and accrued expenses, partially offset by decreases in cash paid to accounts payable and increased cash collections from accounts receivable.

For the nine months ended September 28, 2024, and September 30, 2023 net cash used in investing activities was $4 thousand and $141 thousand, respectively, which consisted of capital expenditures.

For the nine months ended September 28, 2024, net cash $2.8 million was provided by financing activities of issuance of convertible notes, net.

For the nine months ended September 30, 2023, net cash used in financing activities was $50 thousand.

We have historically funded our operations primarily through sales of our products to customers, sales of our common stock and borrowing arrangements.

As of June 29, 2024, our principal sources of liquidity consisted of cash and cash equivalents of $4.1 million.

We have incurred net losses over the last several years, and as of June 29, 2024, have an accumulated deficit of approximately $85.2 million.

As of September 28, 2024, our principal sources of liquidity consisted of cash and cash equivalents of $3.9 million.

We have incurred net losses over the last several years, and as of September 28, 2024, have an accumulated deficit of approximately $89.6 million.

We expect to continue to incur operating losses and negative cash flows from operations.

1 unchanged sentence

The accompanying condensed consolidated financial statements have been prepared assuming we will continue as a going concern.

For the six months ended June 29, 2024, we implemented cost savings initiatives to increase operational efficiencies across all departments, which we expect will decrease our operating expenses and increase working capital over the next five quarters.

Based on these cost savings initiatives implemented by us and the closing of the $3.4 million Note with Lind (with an option to have an additional $1.5 million Subsequent Note), management believes we have alleviated substantial doubt about our ability to satisfy our liquidity needs over the next 12 months.

Subsequent to the second quarter close, on August 7, 2024, we closed a Note with Lind and raised net proceeds of approximately $3.4 million.

For the nine months ended September 28, 2024, we implemented cost savings initiatives to increase operational efficiencies across all departments, which we expect will decrease our operating expenses and increase working capital through January 3, 2026.

Based on these cost savings initiatives implemented by us and the closing of the $3.4 million Note with Lind (with an option to have an additional $1.5 million in a Subsequent Note), management believes we have alleviated substantial doubt about our ability to satisfy our liquidity needs over the next 12 months.

On August 7, 2024, we closed a Note with Lind and raised net proceeds of approximately $3.4 million.

These funds are sufficient to meet our immediate and near-term capital requirements.

Our future capital requirements will depend on many factors, including our strategic alternatives, the timing and extent of our spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, the introduction of new and enhanced products and our costs to implement new manufacturing technologies.

In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

In the event that additional financing is required from outside sources, we may not be

able to raise it on terms acceptable to us or at all.

Any debt financing obtained by us in the future could also involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.

Additionally, if we raise additional funds through further issuances of equity, our existing stockholders could suffer dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences and

privileges senior to those of holders of our common stock.

If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be limited.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis