apyx20240930

apyx20240930_10q.htm

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 September 30, 2024

or

☐			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: 001-31885

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 Global Select Market

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 November 6, 2024, 34,643,886 shares of the registrant’s $0.001 par value common stock were outstanding.

Table of Contents

APYX MEDICAL CORPORATION

INDEX TO QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended September 30, 2024

		Page
Part I.	Financial Information	2

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets at September 30, 2024 and December 31, 2023	2
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023	3
	Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2024 and 2023	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	5
	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24
Item 4.	Controls and Procedures	24

Part II.	Other Information	25

Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
	Signatures	27

Table of Contents

PART I. Financial Information

ITEM 1. Condensed Consolidated Financial Statements

APYX MEDICAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	*September 30, 2024*
	*(Unaudited)*			*December 31, 2023*
ASSETS
Current assets:
Cash and cash equivalents	$	28,013		$	43,652
Trade accounts receivable, net of allowance of $750 and $608		13,036			14,023
Inventories, net of provision for obsolescence of $930 and $875		9,000			9,923
Prepaid expenses and other current assets		2,109			2,764
Total current assets		52,158			70,362
Property and equipment, net of accumulated depreciation and amortization of $3,889 and $3,522		1,905			1,915
Operating lease right-of-use assets		4,820			5,162
Finance lease right-of-use assets		53			69
Other assets		1,785			1,732
Total assets	$	60,721		$	79,240
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,914		$	2,712
Accrued expenses and other current liabilities		7,291			9,661
Current portion of operating lease liabilities		330			347
Current portion of finance lease liabilities		20			20
Total current liabilities		9,555			12,740
Long-term debt, net of debt discounts and issuance costs		33,853			33,185
Long-term operating lease liabilities		4,606			4,896
Long-term finance lease liabilities		38			53
Long-term contract liabilities		1,271			1,246
Other liabilities		201			198
Total liabilities		49,524			52,318
EQUITY
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 issued and outstanding as of September 30, 2024 and December 31, 2023		—			—
Common stock, $0.001 par value; 75,000,000 shares authorized; 34,643,926 issued and outstanding as of September 30, 2024, and 34,643,888 issued and outstanding as of December 31, 2023		35			35
Additional paid-in capital		84,289			81,114
Accumulated deficit		(73,283	)		(54,448	)
Total stockholders’ equity		11,041			26,701
Non-controlling interest		156			221
Total equity		11,197			26,922
Total liabilities and equity	$	60,721		$	79,240

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

APYX MEDICAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
	*2024*			*2023*			*2024*			*2023*
Sales	$	11,487		$	11,976		$	33,880		$	37,687
Cost of sales		4,533			3,998			13,484			12,857
Gross profit		6,954			7,978			20,396			24,830
Other costs and expenses:
Research and development		1,142			1,409			3,963			4,037
Professional services		1,648			1,831			5,318			5,165
Salaries and related costs		3,508			4,534			12,886			14,329
Selling, general and administrative		4,291			4,841			14,026			15,474
Total other costs and expenses		10,589			12,615			36,193			39,005
Gain on sale-leaseback		—			—			—			2,692
Loss from operations		(3,635	)		(4,637	)		(15,797	)		(11,483	)
Interest income		378			248			1,312			478
Interest expense		(1,431	)		(585	)		(4,254	)		(1,362	)
Other income (expense), net		24			(19	)		2			622
Total other expense, net		(1,029	)		(356	)		(2,940	)		(262	)
Loss before income taxes		(4,664	)		(4,993	)		(18,737	)		(11,745	)
Income tax expense (benefit)		60			(318	)		163			(2,519	)
Net loss		(4,724	)		(4,675	)		(18,900	)		(9,226	)
Net loss attributable to non-controlling interest		(21	)		(46	)		(65	)		(120	)
Net loss attributable to stockholders	$	(4,703	)	$	(4,629	)	$	(18,835	)	$	(9,106	)

Loss per share:
Basic and diluted	$	(0.14	)	$	(0.13	)	$	(0.54	)	$	(0.26	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

APYX MEDICAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(In thousands)

					*Additional*					*Non-*
	*Common Stock*				*Paid-In*		*Accumulated*			*controlling*			*Total*
	*Shares*		*Par Value*		*Capital*		*Deficit*			*Interest*			*Equity*
Balance at December 31, 2022		34,598	$	35	$	73,282	$	(35,735	)	$	211		$	37,793
Stock based compensation		—		—		1,367		—			—			1,367
Proceeds received from issuance of warrants		—		—		586		—			—			586
Net loss		—		—		—		(3,483	)		(49	)		(3,532	)
Balance at March 31, 2023		34,598	$	35	$	75,235	$	(39,218	)	$	162		$	36,214
Shares issued on stock options exercised for cash		25		—		56		—			—			56
Stock based compensation		—		—		1,482		—			—			1,482
Shares issued on net settlement of stock options		6		—		—		—			—			—
Net loss		—		—		—		(994	)		(25	)		(1,019	)
Balance at June 30, 2023		34,629	$	35	$	76,773	$	(40,212	)	$	137		$	36,733
Contributions from non-controlling interest		—		—		—		—			147			147
Shares issued on stock options exercised for cash		10		—		30		—			—			30
Stock based compensation		—		—		1,351		—			—			1,351
Shares issued on net settlement of stock options		5		—		—		—			—			—
Net loss		—		—		—		(4,629	)		(46	)		(4,675	)
Balance at September 30, 2023		34,644	$	35	$	78,154	$	(44,841	)	$	238		$	33,586

					*Additional*					*Non-*
	*Common Stock*				*Paid-In*		*Accumulated*			*controlling*
	*Shares*		*Par Value*		*Capital*		*Deficit*			*Interest*			*Total*
Balance at December 31, 2023		34,644	$	35	$	81,114	$	(54,448	)	$	221		$	26,922
Stock based compensation		—		—		1,128		—			—			1,128
Net loss		—		—		—		(7,576	)		(14	)		(7,590	)
Balance at March 31, 2024		34,644	$	35	$	82,242	$	(62,024	)	$	207		$	20,460
Stock based compensation		—		—		1,050		—			—			1,050
Net loss		—		—		—		(6,556	)		(30	)		(6,586	)
Balance at June 30, 2024		34,644	$	35	$	83,292	$	(68,580	)	$	177		$	14,924
Stock based compensation		—		—		997		—			—			997
Net loss		—		—		—		(4,703	)		(21	)		(4,724	)
Balance at September 30, 2024		34,644	$	35	$	84,289	$	(73,283	)	$	156		$	11,197

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

APYX MEDICAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	*Nine Months Ended September 30,*
	*2024*			*2023*
Cash flows from operating activities
Net loss	$	(18,900	)	$	(9,226	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		457			540
Provision for inventory obsolescence		61			229
Loss (gain) on disposal of property and equipment		48			(2,656	)
Stock based compensation		3,175			4,200
Allowance for credit losses		146			176
Non-cash lease expense		86			56
Non-cash interest expense		668			354
Changes in operating assets and liabilities:
Trade receivables		879			(2,192	)
Prepaid expenses and other assets		542			(698	)
Income tax receivables		—			7,545
Inventories		902			401
Accounts payable		(819	)		(613	)
Accrued and other liabilities		(2,355	)		(1,153	)
Net cash used in operating activities		(15,110	)		(3,037	)
Cash flows from investing activities
Purchases of property and equipment		(477	)		(440	)
Proceeds from sale of property and equipment		—			7,267
Net cash (used in) provided by investing activities		(477	)		6,827
Cash flows from financing activities
Proceeds from stock option exercises		—			86
Proceeds from long-term debt		—			9,289
Payment of debt issuance costs		—			(1,754	)
Proceeds from debt allocated to warrants		—			586
Repayment of finance lease liabilities		(15	)		(

SEC Form 10-Q filed by Apyx Medical Corporation