apyx-20210331

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, 2021

☐

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, 2020, 34,317,863 shares of the registrant’s $0.001 par value common stock were outstanding.


	March 31, 2021 (Unaudited)		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	39,539	$	41,915

Trade accounts receivable, net of allowance of $300 and $300	7,683		8,399
Income tax receivables	7,654		7,654
Other receivables	1,110		1,275
Inventories, net of provision for obsolescence of $374 and $388	4,463		4,051
Prepaid expenses and other current assets	2,593		2,795
Total current assets	63,042		66,089
Property and equipment, net of accumulated depreciation and amortization of $4,985 and $4,813	6,599		6,541
Operating lease right-of-use assets	212		237
Finance lease right-of-use assets	383		437

Other assets	860		807
Total assets	$	71,096	$	74,111



LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,283	$	1,511
Accrued expenses and other current liabilities	7,090		7,278
Current portion of operating lease liabilities	125		126
Current portion of finance lease liabilities	232		238

Total current liabilities	9,730		9,153
Long-term operating lease liabilities	94		129
Long-term finance lease liabilities	107		183
Contract liabilities	855		621


Other liabilities	141		166
Total liabilities	10,927		10,252
EQUITY
Common stock, $0.001 par value; 75,000,000 shares authorized; 34,317,863 issued and outstanding as of March 31, 2021, and 34,289,222 outstanding as of December 31, 2020	34		34
Additional paid-in capital	62,281		61,066
(Accumulated deficit) retained earnings	(2,280)		2,621
Total stockholders' equity	60,035		63,721
Non-controlling interest	134		138
Total equity	60,169		63,859
Total liabilities and equity	$	71,096	$	74,111


	Three Months Ended March 31,
	2021		2020
Sales	$	8,638	$	4,997
Cost of sales	2,778		2,013
Gross profit	5,860		2,984
Other costs and expenses:
Research and development	1,115		980
Professional services	1,521		2,389
Salaries and related costs	4,245		3,311
Selling, general and administrative	3,724		3,796


Total other costs and expenses	10,605		10,476
Loss from operations	(4,745)		(7,492)
Interest income	3		216
Interest expense	(4)		(6)
Other (loss) income, net	(93)		426


Total other (loss) income, net	(94)		636
Loss before income taxes	(4,839)		(6,856)
Income tax expense (benefit)	66		(4,905)




Net loss	(4,905)		(1,951)
Net loss attributable to non-controlling interest	(4)		—
Net loss attributable to stockholders	$	(4,901)	$	(1,951)

Loss per Share:

Basic and diluted	$	(0.14)	$	(0.06)


Three months ended March 31, 2020 and 2021
		Common Stock			Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Non-controlling Interest		Total Equity
	Shares	Par Value
Balance at December 31, 2019		34,170	$	34	$	56,708	$	14,517	$	—	$	71,259
Shares issued on stock options exercised for cash		10	—		72		—		—		72
Stock based compensation		—	—		1,049		—		—		1,049
Shares issued on net settlement of stock options		4	—		—		—		—		—
Net loss		—	—		—		(1,951)		—		(1,951)
Balance at March 31, 2020		34,184	$	34	$	57,829	$	12,566	$	—	$	70,429

Balance at December 31, 2020		34,289	$	34	$	61,066	$	2,621	$	138	$	63,859

Shares issued on stock options exercised 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


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities
Net loss	$	(4,905)	$	(1,951)
Adjustments to reconcile net loss to net cash used in operating activities:


Depreciation and amortization	227		214
Provision for inventory obsolescence	—		10


Stock based compensation	1,194		1,049



Provision for allowance for doubtful accounts	6		324

Changes in operating assets and liabilities:
Trade receivables	680		1,520
Income tax receivables	—		(4,641)
Prepaid expenses and other assets	312		(1,383)
Inventories	(372)		(855)

Accounts payable	782		107
Accrued and other liabilities	24		(1,801)

Net cash used in operating activities	(2,052)		(7,407)
Cash flows from investing activities
Purchases of property and equipment	(192)		(90)

Net cash used in investing activities	(192)		(90)
Cash flows from financing activities
Proceeds from stock option exercises	21		72

Repayment of finance lease liabilities	(82)		(57)




Net cash (used in) provided by financing activities	(61)		15
Effect of exchange rates on cash	(71)		50
Net change in cash and cash equivalents	(2,376)		(7,432)
Cash and cash equivalents, beginning of period	41,915		58,812
Cash and cash equivalents, end of period	$	39,539	$	51,380

Cash paid for:
Interest	$	4	$	6
Income taxes	—		—


(In thousands)	March 31, 2021		December 31, 2020
Raw materials	$	2,515	$	2,243
Work in process	891		1,109
Finished goods	1,431		1,087
Gross inventories	4,837		4,439
Less: provision for obsolescence	(374)		(388)
Inventories, net	$	4,463	$	4,051


(In thousands)	Three Months Ended March 31, 2021

Beginning interest in China JV	$	144
Contributions	—
Net loss attributable to Apyx	(4)
Ending interest in China JV	$	140


	Three Months Ended March 31,
(in thousands, except per share data)	2021		2020
Numerator:
Net loss attributable to stockholders	$	(4,901)	$	(1,951)

Denominator:
Weighted average shares outstanding - basic and diluted	34,302		34,176

Loss per share:
Basic and diluted	$	(0.14)	$	(0.06)

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

Options	5,559		5,084


	Number of options	Weighted average exercise price




Outstanding at December 31, 2020	4,938,943	$	5.46
Granted	700,980	9.29
Exercised	(44,082)	4.25
Canceled and forfeited	(36,401)	8.47
Outstanding at March 31, 2021	5,559,440	$	5.93


			2021 Grants
Strike price			$9.29
Risk-free rate			0.6%
Expected dividend yield			—
Expected volatility			70.8%
Expected term (in years)			6


	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, 2021		December 31, 2020
Accrued payroll	$	740	$	808
Accrued bonuses	413		811
Accrued commissions	748		1,001
Accrued product warranties	510		498
Accrued product liability claim insurance deductibles	329		435
Accrued professional fees	297		222
Joint and several payroll liability	1,027		1,027
Uncertain tax positions	1,707		1,658
Sales tax payable	453		591
Other accrued expenses and current liabilities	866		227
Total accrued expenses and other current liabilities	$	7,090	$	7,278


	Three Months Ended March 31, 2020
(In thousands)	Advanced Energy		OEM		Corporate & Other		Total
Sales	$	3,986	$	1,011	$	—	$	4,997











Income (loss) from operations	(3,984)		247		(3,755)		(7,492)

Interest income	—		—		216		216

Interest expense	—		—		(6)		(6)
Other income, net	—		—		426		426



Income tax benefit	—		—		(4,905)		(4,905)

SEC Form 10-Q filed by Apyx Medical Corporation