apyx-20210630

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

June 30, 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 August 10, 2021, 34,322,749 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 June 30, 2021

Page

Part I.

Financial Information

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets at June 30, 2021 and December 31, 2020

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020

Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2021 and 2020

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

Part II.

Other Information

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Item 6.

PART I. Financial Information

ITEM 1. Condensed Consolidated Financial Statements

APYX MEDICAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	June 30, 2021 (Unaudited)		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	34,670	$	41,915
Trade accounts receivable, net of allowance of $340 and $300	8,985		8,399
Income tax receivables	7,654		7,654
Other receivables	1,386		1,275
Inventories, net of provision for obsolescence of $387 and $388	5,272		4,051
Prepaid expenses and other current assets	3,615		2,795
Total current assets	61,582		66,089
Property and equipment, net of accumulated depreciation and amortization of $5,120 and $4,813	6,471		6,541
Operating lease right-of-use assets	182		237
Finance lease right-of-use assets	329		437

Other assets	1,033		807
Total assets	$	69,597	$	74,111



LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,799	$	1,511
Accrued expenses and other current liabilities	7,594		7,278
Current portion of operating lease liabilities	127		126
Current portion of finance lease liabilities	225		238

Total current liabilities	10,745		9,153
Long-term operating lease liabilities	63		129
Long-term finance lease liabilities	76		183
Contract liabilities	886		621
Other liabilities	145		166
Total liabilities	11,915		10,252
EQUITY
Common stock, $0.001 par value; 75,000,000 shares authorized; 34,322,749 issued and outstanding as of June 30, 2021, and 34,289,222 issued and outstanding as of December 31, 2020	34		34
Additional paid-in capital	63,650		61,066
(Accumulated deficit) retained earnings	(6,326)		2,621
Total stockholders' equity	57,358		63,721
Non-controlling interest	324		138
Total equity	57,682		63,859
Total liabilities and equity	$	69,597	$	74,111

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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Sales	$	11,224	$	4,296	$	19,862	$	9,293
Cost of sales	3,690		2,202		6,468		4,215
Gross profit	7,534		2,094		13,394		5,078
Other costs and expenses:
Research and development	1,084		975		2,199		1,955
Professional services	1,889		1,658		3,410		4,047
Salaries and related costs	4,343		3,439		8,588		6,750
Selling, general and administrative	4,261		2,189		7,985		5,985
Total other costs and expenses	11,577		8,261		22,182		18,737
Loss from operations	(4,043)		(6,167)		(8,788)		(13,659)
Interest income	4		7		7		223
Interest expense	(2)		(8)		(6)		(14)
Other income (loss), net	97		(14)		4		412
Total other income (loss), net	99		(15)		5		621
Loss before income taxes	(3,944)		(6,182)		(8,783)		(13,038)
Income tax expense (benefit)	107		(1,492)		173		(6,397)
Net loss	(4,051)		(4,690)		(8,956)		(6,641)
Net loss attributable to non-controlling interest	(5)		—		(9)		—
Net loss attributable to stockholders	$	(4,046)	$	(4,690)	$	(8,947)	$	(6,641)

Loss per share:

Basic and diluted	$	(0.12)	$	(0.14)	$	(0.26)	$	(0.19)

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)


Three months ended June 30, 2020 and 2021
	Common Stock			Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Non-controlling Interest		Total Equity
	Shares	Par Value
Balance at March 31, 2020	34,184	$	34	$	57,829	$	12,566	$	—	$	70,429


Stock based compensation	—	—		1,097		—		—		1,097
Shares issued on net settlement of stock options	18	—		—		—		—		—

Net loss	—	—		—		(4,690)		—		(4,690)
Balance at June 30, 2020	34,202	$	34	$	58,926	$	7,876	$	—	$	66,836

Balance at March 31, 2021	34,318	$	34	$	62,281	$	(2,280)	$	134	$	60,169
Contributions from non-controlling interest	—	—		—		—		195		195

Stock based compensation	—	—		1,369		—		—		1,369
Shares issued on net settlement of stock options	5	—		—		—		—		—

Net loss	—	—		—		(4,046)		(5)		(4,051)
Balance at June 30, 2021	34,323	$	34	$	63,650	$	(6,326)	$	324	$	57,682

Six months ended June 30, 2020 and 2021
	Common Stock			Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Non-controlling Interest		Total
	Shares	Par Value
Balance at December 31, 2019	34,170	$	34	$	56,708	$	14,517	$	—	$	71,259

Shares issued on stock options exercises for cash	10	—		72		—		—		72
Stock based compensation	—	—		2,146		—		—		2,146
Shares issued on net settlement of stock options	22	—		—		—		—		—

Net loss	—	—		—		(6,641)		—		(6,641)
Balance at June 30, 2020	34,202	$	34	$	58,926	$	7,876	$	—	$	66,836

Balance at December 31, 2020	34,289	$	34	$	61,066	$	2,621	$	138	$	63,859
Contributions from non-controlling interest	—	—		—		—		195		195
Shares issued on stock options exercises for cash	8	—		21		—		—		21
Stock based compensation	—	—		2,563		—		—		2,563
Shares issued on net settlement of stock options	26	—		—		—		—		—

Net loss	—	—		—		(8,947)		(9)		(8,956)
Balance at June 30, 2021	34,323	$	34	$	63,650	$	(6,326)	$	324	$	57,682

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)


	Six Months Ended June 30,
	2021	2020
Cash flows from operating activities
Net loss	(8,956)	(6,641)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	440	439

SEC Form 10-Q filed by Apyx Medical Corporation