IRIDEX CORP
For the period ended Jun 29, 2024. Filed Aug 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 29, 2024 · Filed Aug 8, 2024
IRIX$0.66-3.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-30; filed 2024-05-14.
0000950170-24-059771
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-29; filed 2024-08-08.
0000950170-24-094090
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 56 previous paragraphs and 73 current paragraphs.
39 unchanged; 14 reworded; 14 added; 3 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Our total revenues decreased by $0.2 million, or 1.7%, from $12.9 million to $12.6 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.
Current report
Gross profit decreased $0.2 million, or 4.3% from $5.3 million to $5.1 million. Gross margin decreased by 1% from 41.7% to 40.7%. The decrease in gross margin was driven by lower royalty revenues.
Current report
Revenues
Current report
Gross Profit and Gross Margin
Current report
Gross profit decreased $1.7 million, or 3.2%, from $11.3 million to $9.6 million. Gross margin decreased by 3.2% from 42.5% to 39.3%. The decrease in gross margin was driven by lower revenues and manufacturing overhead absorbed by less royalty revenue.
Current report
Research and Development
Current report
Sales and Marketing
Current report
Sales and marketing expenses decreased by $1.3 million, or 15.4%, from $8.5 million to $7.2 million. The decrease was related to the reduction in headcount and lower consulting and travel expenses.
Current report
General and Administrative
Current report
General and administrative expenses increased by $0.9 million, or 19.4%, from $4.4 million to $5.3 million. The increase is a result of higher consulting costs and deal related legal expenses.
Current report
Other Income (Expense), Net
Current report
Income Taxes
Current report
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.
Current report
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. 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. 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.
Removed paragraphs (3)
Previous report
Gross profit decreased $1.5 million, or 25% from $5.9 million to $4.5 million. Gross margin decreased by 5.4% from 43.3% to 37.9%. The decrease in gross margin was the result of lower overhead absorption in the current period and a more favorable product mix in the same period in the prior year.
Previous report
The accompanying condensed consolidated financial statements have been prepared assuming we will continue as a going concern. However, we have sustained operating losses in the current quarter and expect to incur losses in the next five quarters. Accordingly, we concluded there was substantial doubt about our ability to continue as a going concern for 12 months from the date of the filing of this Quarterly Report on Form 10-Q. However, management currently believes that it has plans in place to reduce cash expenditure and can alleviate this substantial doubt as of the date of this filing.
Previous report
To fund further operations, we will need to raise additional capital. We may obtain additional financing in the future through the issuance of common stock, other equity or debt financing. Our ability to continue as a going concern or meet the minimum liquidity requirements in the future is dependent on our ability to raise additional capital, of which there can be no assurance. If the necessary financing is not obtained or achieved, we will likely be required to reduce our planned expenditures, which could have a material adverse impact on our results of operations, financial condition and our ability to achieve our strategic objective. There can be no assurance that financing will be available on acceptable terms, or at all. In addition, 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.
Reworded paragraphs (14)
Previous wording
Current macroeconomic conditions exhibit challenges that can affect capital equipment purchasing demand and timing, including recessionary fears, inflation concerns, heightened interest rates as a result of government actions to combat inflation, and uncertainty in the global banking and financial services market, concerns related to the upcoming presidential election in the United States, as well as other geopolitical developments, have impacted and may continue to impact business spending and the economy as a whole. As a result, we have seen customers extend purchase decision cycles. We have also experienced some demand softness due to pricing effects from the strength of the U.S. Dollar that have impacted and may continue to impact our operations.
Current wording
Current macroeconomic conditions exhibit challenges that can affect capital equipment purchasing demand and timing, including recessionary fears, inflation concerns, changing interest rates, concerns related to the upcoming presidential election in the United States, as well as other geopolitical developments, have impacted and may continue to impact business spending and the economy as a whole. As a result, we have seen customers extend purchase decision cycles. We have also experienced some demand softness due to pricing effects from the strength of the U.S. Dollar that have impacted and may continue to impact our operations.
Previous wording
For more information on risks associated with the current macroeconomic conditions, see the sections titled “Risk Factors” in Item 1A of Part II.
Current wording
For more information on risks associated with the current macroeconomic conditions, see the section titled “Risk Factors” in Item 1A of Part II.
Previous wording
While we believe that market for our products remains strong, however the overall capital expenditure landscape within hospitals, surgical centers and physician offices may continue to be negatively impacted by persistent macroeconomic concerns.
Current wording
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.
Previous wording
Research and development expenses decreased by $0.2 million, or 12.2% from $1.7 million to $1.5 million. Spending on investment in PASCAL product line and on new and expanded product portfolio decreased as we completed these projects.
Current wording
Research and development expenses decreased by $0.3 million, or 18.6% from $1.8 million to $1.5 million. Spending on investment in PASCAL product line and on new and expanded product portfolio decreased as we completed these projects.
Previous wording
Sales and marketing expenses decreased $0.6 million, or 12.5%, from $4.3 million to $3.7 million. The decrease was related to lower sales costs associated with lower commissions and reduction on headcount.
Current wording
Sales and marketing expenses decreased $0.8 million, or 18.2%, from $4.3 million to $3.5 million. The decrease was related to lower sales costs associated with lower commissions and reduction on headcount.
Previous wording
General and administrative expenses increased by $0.2 million, or 10% from $2.3 million to $2.5 million. The increase is a result of higher consulting costs.
Current wording
General and administrative expenses increased by $0.6 million, or 29.7% from $2.2 million to $2.8 million. The increase is a result of higher consulting costs and deal related legal expenses.
Previous wording
Other income (expense), net was $0.1 million for the three months ended March 30, 2024 compared to other income (expense), net, of $0.3 million for the three months ended April 1, 2023. Other income (expense), net, consisted primarily of interest income or expense and foreign currency gain or loss.
Current wording
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.
Previous wording
We recorded an income tax provision of $38 thousand and $12 thousand for the three months ended March 30, 2024 and April 1, 2023, respectively.
Current wording
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.
Previous wording
Our total revenues decreased by $1.9 million, or 14.2%, from $13.7 million to $11.8 million. The decrease was driven by an overall softer demand in our product lines, and lower royalties due to the expiration of licensed patents.
Current wording
Our total revenues decreased by $2.2 million, or 8.2%, from $26.6 million to $24.4 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.
Previous wording
As of March 30, 2024, we had cash and cash equivalents of $5.4 million and working capital of $11.5 million compared to cash and cash equivalents of $7.0 million and working capital of $14.5 million as of December 30, 2023.
Current wording
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.
Previous wording
Net cash used in operating activities was $1.6 million in the three months ended March 30, 2024 compared to net cash used in operating activities of $2.8 million in the three months ended April 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, accounts receivable from related parties, prepaids, and other long-term assets, offset by increases in cash used in accounts payable and deferred revenue.
Current wording
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.
Previous wording
For the three months ended March 30, 2024, net cash used in investing activities was $3 thousand, which consisted of capital expenditures. For the three months ended April 1, 2023, net cash used in investing activities was $43 thousand, which consisted of capital expenditures.
Current wording
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.
Previous wording
For the three months ended March 30, 2024, no net cash was used in financing activities. For the three months ended April 1, 2023, net cash provided by financing activities was $37 thousand, primarily from payroll taxes related to net share settlement of equity awards partially offset by the net proceeds arising from the proceeds from stock option exercises.
Current wording
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.
Previous wording
We have historically funded our operations primarily through sales of our products to customers, sales of our common stock and borrowing arrangements. As of March 30, 2024, our principal sources of liquidity consisted of cash and cash equivalents of $5.4 million. We have incurred net losses over the last several years, and as of March 30, 2024, have an accumulated deficit of approximately $82.5 million. We expect to continue to incur operating losses and negative cash flows from operations.
Current wording
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. We expect to continue to incur operating losses and negative cash flows from operations.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
The following comparisons are between the six months ended June 29, 2024 and July 1, 2023 (in thousands):
Current report — wording carried from elsewhere
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 discussed above.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Research and development expenses decreased by $0.6 million, or 15.5%, from $3.6 million to $3.0 million. Spending on investment in PASCAL product line and on new and expanded product portfolio decreased as we completed these new projects. We implemented cost savings measures including reductions in workforce that resulted in lower headcount expenses.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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.