apyx-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

March 31, 2022

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number:

0-12183



APYX MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)


Delaware						11-2644611
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

5115 Ulmerton Road, Clearwater, FL 33760

(Address of principal executive offices, zip code)

(727) 384-2323

(Registrant’s telephone number)

Securities Registered Pursuant to Section 12 (b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock	APYX	Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes: ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes: ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes: ☐ No ☒

As of May 10, 2022, 34,453,098 shares of the registrant’s $0.001 par value common stock were outstanding.


	March 31, 2022 (Unaudited)		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	26,234	$	30,870
Trade accounts receivable, net of allowance of $560 and $430	12,363		13,038
Income tax receivables	7,642		7,642
Other receivables	112		483
Inventories, net of provision for obsolescence of $348 and $263	7,019		6,778
Prepaid expenses and other current assets	1,441		1,926
Total current assets	54,811		60,737
Property and equipment, net of accumulated depreciation and amortization of $5,378 and $5,316	6,655		6,575
Operating lease right-of-use assets	90		121
Finance lease right-of-use assets	127		178

Other assets	1,314		1,110
Total assets	$	62,997	$	68,721



LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,562	$	2,631
Accrued expenses and other current liabilities	8,837		10,287
Current portion of operating lease liabilities	89		122
Current portion of finance lease liabilities	116		165

Total current liabilities	11,604		13,205

Long-term finance lease liabilities	13		18
Long-term contract liabilities	1,386		1,323
Other liabilities	151		166
Total liabilities	13,154		14,712
EQUITY
Common stock, $0.001 par value; 75,000,000 shares authorized; 34,453,098 issued and outstanding as of March 31, 2022, and 34,409,912 issued and outstanding as of December 31, 2021	34		34
Additional paid-in capital	68,023		66,221
Accumulated deficit	(18,496)		(12,551)
Total stockholders' equity	49,561		53,704
Non-controlling interest	282		305
Total equity	49,843		54,009
Total liabilities and equity	$	62,997	$	68,721


	Three Months Ended March 31,
	2022		2021
Sales	$	12,493	$	8,638
Cost of sales	4,274		2,778
Gross profit	8,219		5,860
Other costs and expenses:
Research and development	1,158		1,115
Professional services	2,286		1,521
Salaries and related costs	5,181		4,245
Selling, general and administrative	5,465		3,724
Total other costs and expenses	14,090		10,605
Loss from operations	(5,871)		(4,745)
Interest income	2		3
Interest expense	(8)		(4)
Other loss, net	(21)		(93)
Total other loss, net	(27)		(94)
Loss before income taxes	(5,898)		(4,839)
Income tax expense	70		66
Net loss	(5,968)		(4,905)
Net loss attributable to non-controlling interest	(23)		(4)
Net loss attributable to stockholders	$	(5,945)	$	(4,901)

Loss per share:

Basic and diluted	$	(0.17)	$	(0.14)


Three Months Ended March 31, 2022 and 2021
	Common Stock			Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Non-controlling Interest		Total Equity
	Shares	Par Value
Balance at December 31, 2020	34,289	$	34	$	61,066	$	2,621	$	138	$	63,859

Shares issued on stock options exercises for cash	8	—		21		—		—		21
Stock based compensation	—	—		1,194		—		—		1,194
Shares issued on net settlement of stock options	21	—		—		—		—		—

Net loss	—	—		—		(4,901)		(4)		(4,905)
Balance at March 31, 2021	34,318	$	34	$	62,281	$	(2,280)	$	134	$	60,169

Balance at December 31, 2021	34,410	$	34	$	66,221	$	(12,551)	$	305	$	54,009

Shares issued on stock options exercises for cash	24	—		152		—		—		152
Stock based compensation	—	—		1,650		—		—		1,650
Shares issued on net settlement of stock options	19	—		—		—		—		—

Net loss	—	—		—		(5,945)		(23)		(5,968)
Balance at March 31, 2022	34,453	$	34	$	68,023	$	(18,496)	$	282	$	49,843


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities
Net loss	(5,968)		(4,905)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	225		227
Provision for inventory obsolescence	85		—

Loss on disposal of property and equipment	26		—
Stock based compensation	1,650		1,194
Provision for allowance for doubtful accounts	140		6

Changes in operating assets and liabilities:
Trade receivables	475		680
Prepaid expenses and other assets	649		312

Inventories	(371)		(372)
Accounts payable	(51)		782
Accrued and other liabilities	(1,378)		24
Net cash used in operating activities	(4,518)		(2,052)
Cash flows from investing activities
Purchases of property and equipment	(279)		(192)


Net cash used in investing activities	(279)		(192)
Cash flows from financing activities
Proceeds from stock option exercises	152		21

Repayment of finance lease liabilities	(54)		(82)

Net cash provided by (used in) financing activities	98		(61)
Effect of exchange rates on cash	63		(71)
Net change in cash and cash equivalents	(4,636)		(2,376)
Cash and cash equivalents, beginning of period	30,870		41,915
Cash and cash equivalents, end of period	$	26,234	$	39,539

Cash paid for:
Interest	$	8	$	4
Income taxes	—		—


(In thousands)	March 31, 2022		December 31, 2021
Raw materials	$	3,487	$	3,603
Work in process	1,818		1,441
Finished goods	2,062		1,997
Gross inventories	7,367		7,041
Less: provision for obsolescence	(348)		(263)
Inventories, net	$	7,019	$	6,778


	Three Months Ended March 31,
(in thousands, except per share data)	2022		2021
Numerator:
Net loss attributable to stockholders	$	(5,945)	$	(4,901)

Denominator:
Weighted average shares outstanding - basic and diluted	34,429		34,302

Loss per share:
Basic and diluted	$	(0.17)	$	(0.14)

Anti-dilutive instruments excluded from diluted loss per common share:

Options	6,796		5,559


	Number of options	Weighted average exercise price




Outstanding at December 31, 2021	5,397,691	$	5.95
Granted	1,478,419	10.96
Exercised	(65,840)	5.96
Canceled and forfeited	(14,526)	10.23
Outstanding at March 31, 2022	6,795,744	$	7.03


			2022 Grants
Strike price			$10.96
Risk-free rate			1.6%
Expected dividend yield			—
Expected volatility			69.6%
Expected term (in years)			6


	Three Months Ended March 31, 2022
(In thousands)	Advanced Energy		OEM		Corporate & Other		Total
Sales	$	10,814	$	1,679	$	—	$	12,493











Income (loss) from operations	(1,339)		317		(4,849)		(5,871)

Interest income	—		—		2		2
Interest expense	—		—		(8)		(8)
Other loss, net	—		—		(21)		(21)



Income tax expense	—		—		70		70


	Three Months Ended March 31, 2021
(In thousands)	Advanced Energy		OEM		Corporate & Other		Total
Sales	$	7,660	$	978	$	—	$	8,638











Loss from operations	(602)		(3)		(4,140)		(4,745)

Interest income	—		—		3		3

Interest expense	—		—		(4)		(4)
Other loss, net	—		—		(93)		(93)



Income tax expense	—		—		66		66


(in thousands)	March 31, 2022		December 31, 2021
Accrued payroll	$	855	$	546
Accrued bonuses	571		2,117
Accrued commissions	954		1,656
Accrued product warranties	593		593
Accrued product liability claim insurance deductibles	597		610

Short-term contract liabilities	759		533
Joint and several payroll liability	986		1,027
Uncertain tax positions	1,916		1,863
Sales tax payable	163		428
Other accrued expenses and current liabilities	1,443		914
Total accrued expenses and other current liabilities	$	8,837	$	10,287