Q3 2022 Apyx Medical Corp Earnings Call
Please standby.
Hello, and welcome ladies and gentlemen to the third quarter of 2022 earnings conference call for Apex Medical Corporation. At this time, all participants have been placed on listen only mode.
One of the company's prepared remarks, we will conduct a question and answer session. Please.
Please note that this conference call is being recorded another recording will be available on the company's website plug and play shortly before we begin I would like to remind everyone that our remarks and responses to your questions may contain forward looking statements.
On the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated including without limitation to those identified in the risk factors section of our most recent annual report on Form 10-K filed with the Securities and Exchange Commission.
Right.
Our most recent 10-Q filing and the company's other filings with the Securities and Exchange Commission.
Such factors may be updated from time to time in our filings with the SEC, which are available on our website. We undertake no obligation to publicly update or revise our forward looking statements as a result of new information future events or otherwise.
This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP.
Generally refer to these as non-GAAP financial measures reconciliations.
Reconciliations of those non-GAAP financial measures the most comparable measures calculated and presented in accordance with GAAP are available in the Earth.
Earnings press release on the Investor Relations portion of our website I would now like to turn the call over to Mr. Charlie Goodwin <unk> Medical's, President and Chief Executive Officer. Please go ahead Sir.
Thank you operator, welcome everyone to our third quarter earnings call.
I'm joined on today's call by our Chief Financial Officer terrorism.
Turning to a quick agenda of what we intend to cover today I'll start by reviewing our third quarter revenue results and the factors that contributed to our performance there.
Then I'll provide you with an update of our operational progress during the third quarter and in recent months.
Tara will then discuss our third quarter financial results in detail as well as our financial guidance for 2022 which we updated in today's earnings release.
Conclude with some thoughts on our updated guidance in key areas of focus in the fourth quarter before we open the call for Q&A.
Let's get started with a review of our revenue results for Q3.
Our total revenue in the third quarter decreased 23% year over year to $9 $1 million. These.
These results were approximately $1.5 million below the low end of the range of our expectations that we provided on our second quarter earnings call in August .
Our softer than anticipated total revenue performance was driven by advanced energy sales, which decreased 31% year over year to $7 $1 million and offset partially by OEM sales, which increased 34% year over year to $2 million.
Turning to a more detailed discussion of our performance in our advanced energy business.
While it is worth noting that our advanced energy sales results were impacted in part by timing of orders late in the quarter are softer than anticipated global sales performance in Q3 was largely related to the medical device safety communication posted by the F D. A in March.
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We continue to experience business disruption as a result of the safety communication, which impacts our global sales of our advanced energy products.
This disruption ultimately proved to be more pronounced and prolonged than we had anticipated both internationally and domestically.
In terms of our monthly sales trends in the third quarter.
Our global advanced energy sales performance in July saw the largest impact during the quarter.
As we continued to experience pronounced headwinds with international and domestic customers not moving forward with the adoption of our technology.
Our third quarter expectations had assumed improving adoption trends in August and September following the receipt of two new five 10-K clearances for our advanced energy products, which we announced on May 26th and July 18th as.
Well as the corresponding updates to the safety communication on June 2nd and July 21st.
We were pleased to see improving trends in the U S. During August and September however.
However, the pace and magnitude of these improvements were ultimately lower than we had anticipated.
Looking now at our advanced energy performance by geographic region in more detail.
Third quarter sales of our advanced energy products in the U S decreased by more than 20% year over year.
The year over year decrease in U S. Advanced energy sales was primarily driven by weakness we saw during the month of July .
Relative to July we were pleased to see improved year over year performance in both August and September although as I mentioned, our improved performance remained below the levels that we had anticipated.
Outside of the U S. We experienced slower ordering throughout the quarter in each of our primary markets due to the safety communication.
These declines continued to be driven primarily by weaker demand for both generators and hand pieces from distributors in key countries, most notably Latin America and Europe .
In the Asia Pacific Region, we also experienced lower demand in our largest market, Taiwan, which was driven in part by Covid related lockdowns.
As a result international sales of our generators and hand pieces, both decreased by more than 40% year over year.
Shifting to a discussion of our operational performance and recent progress.
During the quarter. Our team was focused on two primary priorities first engaging with our new and existing U S customers and O U S distributors to provide them with the latest information on important updates related to the safety communication.
Our two new clearances, and the safety and efficacy profile of our products.
And second continuing to advance our regulatory strategy to secure additional five 10-K clearance is related to the use of our renewed on technology and cosmetic surgery procedures.
With respect to our first priority. We have remained focused on spending as much time as needed with our existing customers and distributors as well as new prospects to ensure that they are comfortable with the appropriate use of our products and understand their risk profile.
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After receiving two new five 10-K clearances, we updated our portfolio of marketing materials to reflect the incremental specific clinical indications.
Our sales team has been focused on sharing these materials and working with our current users and prospects. So that they understand our new specific clinical indications as well as the recent updates to the safety communication and how the communication remains focused on the use of.
Renew V on under our general indication for cutting and coagulation and ablation of soft tissue.
Ultimately this process is taking time, but we are encouraged by the increased increasing effectiveness of our sales force in recent weeks as they engage with customers and prospects to address their questions eliminate potential confusion related to the safety communication.
In our international business, we have remained focused on providing our distributor partners with the support and materials needed to engage with and educate their surgeon customers in the same way.
Specifically in the third quarter, we have been focused on engaging with our distributors in the many countries where our technology is used to explain our recent U S clearances and share our updated portfolio of marketing materials.
As a reminder, the process of engaging with educating and updating surgeons outside of the United States has been more prolonged as we do not engage directly with the clinicians.
The feedback that we've received globally from our customers continues to be positive with the large majority of appreciating our proactive newness and transparency.
The portfolio of evidence based support for renewable on technology, and its strong safety and efficacy profile.
With respect.
Back to the second priority that I outlined securing additional five 10-K clearance is related to the use of our renew VR technology in cosmetic surgery procedures.
In Q3, we were very pleased to obtain the second of two new 500, 10-K clearances for new specific indications related to the use of our renew V on technology.
As we announced on July 18th or renew V. On APR Handpiece is now indicated for use in subcutaneous dermatological and aesthetics procedures to improve the appearance of lax or loose skin in the neck and submental region.
As I mentioned earlier following the receipt of this clearance the F D. A posted related update to their safety communication.
This clearance and the 65 patient multicenter I D E clinical study that supported our five 10-K application further validates the safety and effectiveness of our renew V on technology.
The clearance also expands our addressable market opportunity in the cosmetic market to include 200000 neck contouring procedures performed in the U S annually.
We remain on track to begin the limited commercial launches for our two new five 10-K clearance says by the end of 2022.
Having secured two new five 10-K clearances, followed by related updates to the safety communication. There is no question, we are better positioned with the important real world validation and clinical evidence to support our strong safety profile of our technology.
With that said it is apparent that the disruption related to the safety communication has not been fully resolved it.
It continues to impact our performance and receiving two new five 10-K clearances. This summer while beneficial to overall demand has not resulted in the pace of recovery our prior guidance had assumed.
Given the slower than anticipated pace of recovery in recent months, our regular regulatory team have been proactively engaging with the F. D. A to understand the potential path and or potential new regulatory submission to secure an additional indication which.
We believe will directly address the remaining limitations of the safety communication.
In September we submitted a pre submission request for feedback of our proposed submission for specific indication demonstrating the safety of our renew beyond technology when used to improve the appearance of skin in combination with liposuction.
Assuming normal timelines, we would expect to receive the F. D. A formal response and feedback on our proposed plan in December .
Stepping back.
We are obviously frustrated with the ongoing challenges related to the F. D. A safety communication, but our team remains engaged positive and productive. Most importantly, we remain convinced in the strong safety and efficacy of our technology.
Through our proactive and collaborative engagement with the FDA, we aim to demonstrate our continued commitment as an organization to the responsible business practices and evidence based therapies that safety improve patient outcomes.
This is how we have always thought to distinguish apex medical and established leadership within the industry.
We look forward to and support the F. D. As continued focus on ensuring that everyone. In the industry is adhering to the safe and effective use of cosmetic surgery technologies, especially those used during or after liposuction procedures, which to the.
The best of our understanding there are no products with a specific clearance to do so on the market today.
Let me turn it over to Tara to review, our quarterly financial results and 2022 guidance Tara.
Charlie I will start my review of our third quarter results at the gross profit line since Charlie already discussed our revenue results.
Gross profit for the third quarter of 2022 decreased $2.3 million or 29% year over year to $5 $8 million.
Gross profit margin was 63.2% compared to 68.1% in the prior year period.
The decrease in our gross margin was driven primarily by changes in the sales mix between our two segments with our OEM segment, comprising a higher percentage of total sales.
Product mix within our advanced energy segment.
And higher cost to manufacturer inventory as we continue to experience increased material and shipping costs.
These headwinds to our gross margin performance were partially offset by geographic mix within our advanced energy segment with domestic sales comprising a higher percentage of total sales and.
And by the increased mix of newer product models like our APR handpiece.
As we obtain registrations and introduce them into the various countries we serve.
Operating expenses decreased <unk> $5 million or 4% year over year to $11 5 million.
The decrease in operating expenses year over year was driven primarily by a point 3 million dollar decrease in salaries and related costs, which was primarily due to the elimination of our bonus accrual.
Loss from operations for the third quarter of 'twenty, 'twenty, two increased $1.8 million or 46% year over year to $5 $8 million.
Total other income net was $37000 compared to total other expense of $22 million last year.
The year over year change was driven primarily by the wind down of the supply arrangement with symmetry surgical related to the divestiture of our core business segment.
Income tax expense was $50000 compared to $73000 last year.
Net loss attributable to stockholders was <unk> five $8 million or 17 cents per share compared to point $42 million or 12 cents per share for the third quarter of 2021.
Adjusted EBITDA loss for the third quarter of 2022 was three point minus $9 million compared to adjusted EBITDA loss of point to point $7 million in the prior year period.
As a reminder, we provide a detailed reconciliation from net loss attributable to stockholders to non-GAAP adjusted EBITDA loss in our earnings press release.
As of September 32022, the company had cash and cash equivalents of $14 $8 million compared to $39 million as of December 31st 2021.
Cash used in operations for the first nine months of 2022 was $15.8 million compared to $10.7 million last year.
The increase in use of cash from operations is primarily attributable to the year over year increase in our net loss and our strategic initiatives to increase our inventory levels in order to ensure we are able to meet customer demand customer demand in light of the challenging global supply chain environment.
Turning to a review of our 2022 financial guidance, which we updated in our earnings press release today.
For the 12 months ended December 31, 2022, we expect.
Total revenue in the range of 44.8 to $47 $9 million.
Representing a decline of one 8% year over year.
This compares to our prior range of 51 million to $56 $4 million or growth of 5% to 16% year over year.
Our total revenue guidance range assumes advanced energy revenue of $37.3 million to $43 million, representing a decline of 6% to 13% year over year compared to our prior range of 44.5 to $49 $4 million or growth of four <unk>.
<unk> to 15% year over year.
And OEM revenue of approximately $7.5 million to $7.7 million representing growth of approximately 36% to 39% year over year.
<unk> paired to our prior range of approximately $6.5 million to $7 million or growth of approximately 17% to 26% year over year.
With respect to our advanced energy revenue guidance first our guidance range continues to reflect potential negative impacts on global new customer adoption and procedure related demand for hand pieces as a result of the F. D. A medical device safety communication on March 14th 2022.
Second our guidance range continues to assume contributions from the initial commercial launches for new specific clinical indications in dermal resurfacing procedures and procedures to improve the appearance of lack skin in the neck and sub mental region.
We continue to expect to enter full commercial launch for both of these indications by year end 2022.
And third our guidance range continues to assume that growth outside the U S is driven by demand in existing international markets.
In terms of our profitability guidance for fiscal year 'twenty 'twenty. Two we now expect net loss attributable to stockholders in the range of 22 to $19 $9 million compared to our prior range of 21 to $16 $6 million.
And adjusted EBITDA loss in the range of 14.1 to $11 $9 million compared to our prior range of $11.8 million to $8.2 million.
Our formal financial guidance for 2022 incorporates the following considerations for modeling purposes.
First gross margins of approximately 66% to 67% this year compared to our prior expectation of approximately 67% to 69% and.
And 69% in fiscal year, 2020 one.
Second operating expenses to increase in the range of 8% to 9% year over year compared to our prior expectation of approximately 14% to 16%.
The midpoint of our updated guidance range reflects the reduction in our full year operating expense expectations by approximately $3 million versus what our prior guidance had assumed.
Third net interest and other income of approximately $650000.
Fourth income tax expense of approximately 300 to $400000 compared to 300 to $500000 previously.
And we also expect noncash depreciation and amortization of approximately 900000 compared to $1 million previously.
Noncash stock based compensation expense of approximately $6 $8 million compared to $7 million previously.
Noncontrolling interests of approximately 114000.
And weighted average diluted shares outstanding of approximately $34 6 million shares.
Lastly, our 10-Q to be filed with the SEC includes language related to our balance sheet condition as of September 32022.
This language raise substantial doubt about the company's ability to continue as a going concern for a period of at least one year.
While it is not our practice to provide guidance related to expected cash burn in light of the revision to our financial guidance for 2022 and today's earnings release, we wanted to provide additional color for consideration when evaluating our balance sheet and financial condition.
First as of September 30th we had cash and cash equivalents of $14 $8 million.
Second as noted in our discussions with analysts and investors in 2022, we have an income tax receivable on our balance sheet, which represents incremental liquidity of approximately $7.5 million.
Third the midpoint of our updated financial guidance reflects a $3 million or 6% decrease in total GAAP operating expenses compared to what our prior guidance assumed.
And fourth the low end of our updated guidance range assumes a GAAP net loss of $4 9 million in Q4, reflecting modest sequential improvement.
We now expect working capital use of cash in Q4 to be approximately $5 million, which was offset partially by noncash depreciation and amortization and stock compensation expense of $2 million. Together. These are expected to result in cash at year end of approximately seven.
<unk> million dollars.
We actively continue to evaluate all potential options to enhance our balance sheet provide additional flexibility and to secure the capital needed to run the business in 2023, given the continued uncertain timing of our income tax receivable from the U S government.
With that I'll turn the call back to Charlie for closing remarks, Thanks Tara.
We we.
We have revised our financial guidance for 2022 to reflect both the softer than expected sales results in Q3, and a more gradual pace of recovery in business trends during the fourth quarter compared to what our prior guidance had assumed.
In addition to terrorists guidance related comp comments I want to emphasize that we are very focused on prudent expense expense management to maximize our resources. During this challenging time.
Through our efforts in 2022 we expect to position apex medical to return to our historical cadence of strong growth and our trajectory of progress towards profitability in the years to come.
With this in mind, we are working to secure the requisite capital to facilitate our strategic growth initiatives.
Looking ahead.
In the fourth quarter, we continue to engage with and support our customers and prospects, helping them better understand the recent developments related to the safety notice and appreciate the two new clearances, we have received.
In doing so we will leverage the updated promotional language now featured in our marketing program.
We will also continue our recent pace of progress on the regulatory front to secure new clearances with additional clinical indications related to the use of renewable V on technology, while preparing to commercialize or renew beyond technology for the new indications we have received.
Yeah.
More than ever we are excited by the safety and efficacy outcomes demonstrated by our renew beyond technology and its differentiation within the marketplace. We appreciate our employees and distributors for their efforts, helping us drive innovation in the cosmetic surgery market by facilitating.
Its awareness and adoption.
I would like to thank our customers investors and everyone on today's call for their continued support of apex medical and our mission with that operator, let's now open the call for questions.
Thank you.
Like to ask a question please signal by pressing star one on your telephone keypad.
If you're using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.
We do ask that you limit yourself to one question and one follow up.
If you would like to ask additional questions.
Might you to add yourself to the queue again my preference star one.
And our first question comes from the line of Matt Hewitt with Craig Hallum Capital Group.
Please proceed with your question.
Good morning, Thank you for the update and for taking the questions. Maybe one question and then a follow up but first the first question is domestically.
You reported a pretty strong second quarter and that was despite the FDA safety communication in March what happened between Q2, and Q3 that that caused the U S or the domestic market to pull back a little bit.
Yeah, Thanks, Matt R. R U S.
A E sales decreased by more than 20% year over year in Q3 as I stated before our sales performance in July drove the majority of that year over year decline and we did see improved performance in August and September but the pace was still was still lower than we expected.
Versus the guidance the U S drove about half of of of that mix versus the low end of our guidance and the softer than anticipated sales performance was primarily due to a slower adoption by new customers related to the safety impact.
Okay. So maybe just a delayed reaction from the safety communication in the U S. And then as far as the international markets are concerned and I think that you had kind of laid this out on your Q2 call that you were expecting a little bit more of a.
Slower recovery international but as you as you talk to distributors in the international markets are there any that have had some success kind of bouncing back maybe a little bit quicker than their peers and if so is that something that you can replicate went with the remainder. Thank you.
You bet I, just want to be clear that outside the U S. It's it's it's still the same it's the sales decrease was by more than 40% and but we did see sequential improvements in August and September even outside of the United States and Latin America and <unk>.
Europe saw the most notable impact from the safety communication, but things in both of those regions are still improving there just not improving at the pace that we thought that's it's want everybody to understand that things are getting better they're just not getting better as quickly as we thought they were.
Got it thank you.
Hmm.
Yes.
Our next question comes from the line of Matthew O'brien with Piper Sandler. Please proceed with your question.
Great. Thanks for taking my question.
I guess, Charlie you know.
You guided in the middle of August .
New July with was really soft.
But it seemed like maybe your thoughts on the rest of the year, a little bit more aspirational than then.
I guess balance so as we look at Q4, there's a big step up again.
Especially in the advanced energy business, so why the confidence in that type of improvement and what are you seeing as far as new indications go.
Enthusiasm for those new indications.
Yeah. So.
We're confident in the ability to deliver at least the low end of our guidance range and we believe it represents a realistic view of the potential risks and headwinds that we are facing in the fourth quarter.
We do have multiple tailwind also in the fourth quarter. Obviously, there's there's it's it's the quarter, where we see the strongest growth from Q3 to Q4 because of the seasonal dynamics in our business. Our visibility is improving month to month and what's going on in the U S and outside the U S M.
And our engagement with prospects in recent months has resulted in the strong pipeline. The key though is is that it is taking longer to close in Q3 than we would liked which obviously puts a lot more potential sales in Q4.
And so we believe that the Q4 trends to date are very encouraging and look you know the last thing that we want to do is be in this situation again come come March.
We had always done a very good job of being able to forecast this business before the safety notice and it has proven more difficult the safety notice, but we were very comfortable with the low end of our guidance.
Okay Alright.
Helpful. And then your comments about getting back to more historical growth rate.
A really easy comp here in 'twenty two so.
Should we see should we anticipate some guiding to more of a big snapback next year or just more kind.
Yep Yep.
Similar growth to what we've seen historically hopefully there's some upside.
Yeah. So look we appreciate the question, but as of right now we're not obviously going to talk much about 23 other than what was in the prepared remarks, but we obviously remain incredibly bullish about this business incredibly bullish about our opportunity and.
You know in March we will definitely.
We'll definitely talk about what we think 'twenty two 'twenty three and is going to bring to us.
Okay understood. Thank you.
Our next question comes from the line of Kyle Mouser with Lake Street Capital markets. Please proceed with your question.
Great. Thanks for taking my questions and for all the updates.
Charlie you mentioned in the prepared remarks, a little bit about.
Request to go back to the FDA in and kind of evaluate pathways to get clearance in conjunction with LIFO.
Just wondering if you could provide a little bit more color on what the potential pathway would be.
Are you waiting to hear back by December just kind of curious you know.
Do you think you have the data that could be sufficient for a clearance.
We do run a trial just kind of curious thank you.
Yeah. Thanks, Scott I appreciate the question as I said in our prepared remarks, we're focused on securing additional indications that we believe would directly address the remaining limitations of the safety communication.
And we submitted a pre sub mission request to the F. D. A in September and we've always we're going after to get new indications just because we got the first two doesn't mean that we were stopped its always been our plan to get more the objective of this specific requests though is to obtain their feed.
Back on the proposed submission for a specific indication demonstrating the safety of our renew beyond technology when used to improve the appearance of skin in combination with liposuction.
So our request is supported by safety data from our existing I D E study and the submental area.
And real World evidence in peer reviewed clinical studies and so we believe that it is a very strong case and it very much highlights the safety of renewed beyond and assuming the normal timelines, we would expect the F. D. As formal response and feedback from our plan in December .
Got it no appreciate that and then maybe just a follow up to that.
Yep.
You gotten pushed back from I guess either distributors or.
<unk>.
Or physicians in the U S foods that D now.
I like renew beyond but I'm just waiting for clearance with.
Renewed again in conjunction with LIFO GOR or.
I guess that.
Marketing efforts of course, she spend toward.
Treatment and the sub mental region scepter coagulation.
Resurfacing, so maybe it doesn't come up I'm. Just wondering are there positions out there that are kind of waiting for that final.
<unk> can move forward and make a decision.
Yeah. So I don't know if specifically waiting for that is necessarily the right thing where there is confusion in the market place among new prospects.
Is that.
When you look at the safety notice do use in combination with liposuction.
They believe that other technologies have the indication for that because they have not been called out by the F. D. A okay and we have.
And so the confusion is is that something is approved in combination with liposuction for these procedures and what we're having to do is go in with data the facts and everything else and talk to prospects and convince them and that's why the sales process is taking longer than we thought so I don't.
No that they necessarily are waiting for something but it's it's it's just taking our sales teams all over the world longer to get the prospects comfortable.
That they have that but the fortunate thing for US is the facts are the facts and and they're there to our knowledge. This this indication doesn't exist for antibody.
Got it okay. So just kind of resolving the confusion in the marketplace.
When people educated.
To be clear, Okay got it I appreciate it. Thank you Charles Thank you.
Our next question comes from the line of Dave <unk> with JMP Securities.
With your question.
Hey, good morning.
Maybe just quickly could you talk a little bit about your rep head count.
And what's been going on there are you still adding people or are you, losing anyone because of this I guess I'd just love your thoughts on how that force looks today versus maybe in the past yeah.
Yeah. So our team our team is actually the same that it's been it's about 40 feet on the street like it is like it has always been through this whole time and I you know I can't actually tell you how proud I am of the team I mean, it is it is a battle out there for them every day, but they remain steadfast and passionate about.
The technology and our are doing everything that they can on a daily basis to help alleviate the confusion that exists in the marketplace today as a result of the safety notice and so.
Knock on wood as we sit here today the team remains active engaged in and it's the same team that we've had for the entire year.
That's great and just a follow up on the delay.
The light bulb.
Specific language, so I called.
Called the communication, but I didn't remember that it had something specifically with in.
In combo with labor, which I'm imagining now than it did.
Just want to confirm that and then as you look at sort of a I could see new customers, saying, Hey, maybe I don't buy this before I feel.
I feel totally comfortable but the existing folks.
I mean, it seems like they might be impacted as well given the numbers. So I'm just curious if there's any delineation between you know someone that's new which I think would be more understandable versus say a legacy person.
That's looking at the statement now as two new clearances.
And why they might not be more willing to.
Jump right back in if they had been using it that way in the past.
Yeah.
So.
The first part of your question is yes, there were three parts of the safety notice two of them had been reversed by our.
Our indications for <unk>.
Submental area and for wrinkles and Rye tides. The other part of the safety notice was used in combination with LIFO and so that portion still exists and in fact, when the F. D. A updated their safety communications after our clearances for the two specific indications they still made a point in the updates of talking.
About the fact that it hasn't been proven safer effective with the use for life Oh, Okay. So that's number one that still does exist. Your second part of the question is is that we actually have had a tremendous amount of customer retention all over the world in certain parts of the world There was.
A pause to see what this means but because of the work of our of our sales reps and distributors all over the world we've.
We've had to we've been engaged with our existing customer base and I and we've done a great job of holding our existing customer base and.
You know the FDA safety communication has clearly impacted our adoption, but we've increased our active installed base by more than 30% year over year in both the U S and international markets and we're pleased to see our active installed base increased in the mid single digits on a quarter over quarter basis.
Both U S and internationally and this reflects the strong execution of our sales team and gives us the confidence that were on the road to recovery, albeit at a much slower pace than we originally assumed so we're holding we're holding well through there.
Well, thank you for that.
Yes.
And as a reminder, if anyone has any questions you May press star one on your telephone keypad. Our next question comes from the line of Matthew O'brien with Piper Sandler. Please proceed with your question.
Thanks for taking the follow up.
And I'm not sure if it's for Charlie our Terra, but I would just love to hear a little bit more on the cash side of things.
And I think Terry you said you came out of Q3 with about $15 million cash or affecting the end of this year to be at seven but you are making some adjustments as far as spending goes still seems like a lot of burn here in Q4.
Can you flush that out a little bit more options that you have.
And how soon we could see some of those options executed on in terms of raising capital.
Sorry for the long question, but just any sense for the income tax receivable timing of when you can get that I'm, assuming that 75 is not in your year end cash number.
It is not it is not and we are.
Close with the IRS on that process, it's been a long painful process again. This was part of the cares Act, which you know under Covid happened two years ago, but.
But we do see that we are.
We feel that we're at as close to the end of the process is that we've been in the interaction we've had with the IRS. So we're very hopeful to get that but yes. It's not included in that that ending balance.
And we continue to look at expenses to make sure. They are commensurate with the revenue expectations.
And as we speak we are actively looking at all options for enhancing the balance sheet and increasing our liquidity in the near term.
Got it thank you.
Yep.
And again as a quick reminder, quite press star one will enjoy yourself in the question and execute.
Our next question comes from the line of Russell Cleveland with Renn Capital. Please proceed with your question.
Oh, Hello pulse one of my questions you know the enormous harm that was done to us by the FDA.
With the safety communication I'm wondering what.
What the FDA can do to make amends here I know the bureaucrats.
Basically you know don't will never met a mistake, but there seems to me.
Our need for clarification.
Because we have now had our five 10-K's wishes.
Sean were safe and effective on our many of our products. So the question is what can we do.
To interact with the FDA to clear up this this mass they are crazy I I really don't believe they've.
Come on to run the company, but that's exactly what's happening so could you comment on that.
Yeah, So look where we're doing everything that we can do with the agency our regulatory teams are.
Involved in getting the new clearances and getting the requisite things that are taken care of there for to do that and we're partnering with them in order to.
Get everything that we need so we can be the company in a leadership position as we move forward and we will get through this this is.
This isn't this isn't something that we wanted or isn't anything that we ask for is not very fun for us on a day to day basis, but we as a company believe in our technology, but we believe in our mission. We will we will get this taken care of its just taking.
Turn that we Didnt want, but we respect the agency and we will continue to keep working with the agency to get things done well.
Well, specifically what could the agency do can make amends here I think perhaps the big question and.
No at the time I Express to you.
This communication and needed to be challenge.
And so the big question is what can they do.
From the FDA to clear up this oh.
Misinformation really about our products.
Yeah, well, we're working with what went well what can we do as a company.
Two two.
Talk to the FDA about this yeah.
We are working with talking to the F. D. A is the company and working with them and we're in we're not going to talk publicly about what a lot of those things are but our focus is definitely on working with the agency to get this resolved.
Okay. So.
Yeah.
Are they aware of the damage they have done.
Look we have dialogue, we have constant dialogues with the agency the agencies aware of what's going on yes.
Right.
Thanks, so much for taking the question.
Yeah.
And we are currently showing no remaining questions at this time that does conclude our conference for today.
Thank you for your participation.
Okay.
Okay.
Okay.
[music].
Okay.