Apyx Medical Corp 8-K/A, filed Mar 19, 2020
Apyx Medical Corp (APYX)
8-K/A
2020-03-19
For: 2020-03-12
View Original
Added on
April 06, 2026
About this 8-K/A
Apyx Medical Corp filed this 8-K/A on March 19, 2020, reporting on events of March 12, 2020.
Items reported
- Item 2.02: Financial results
- Item 4.02: Earlier financial statements no longer reliable
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT |
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
March 16, 2020 |
Date of Report (Date of earliest event reported) |
 |
APYX MEDICAL CORPORATION |
(Exact name of registrant as specified in its charter) |
Delaware | 0-12183 | 11-2644611 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
5115 Ulmerton Road, Clearwater, FL 33760
(Address of principal executive offices, zip code)
(727) 384-2323
(Issuer’s telephone number)
(Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
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. o
EXPLANATORY NOTE
Apyx Medical Corporation (the “Company”) is filing this Amendment No. 1 on Form 8-K (this “Amended Filing”) to amend its Current Report on Form 8-K filed with the Securities and Exchange Commission on March 16, 2020 (the “Original Filing”), solely to file the independent accountants letter as an exhibit in accordance with Item 4.02(c)(3) of Form 8-K (the “Accountants Letter”). Except for filing the Accountants Letter, this Amended Filing does not amend the Original Filing.
Item 2.02 - Results of Operations and Financial Condition
On March 16, 2020, the Company issued a press release reporting on its preliminary unaudited results of operations for the fourth fiscal quarter and year ended December 31, 2019. A copy of that press release is attached hereto as Exhibit 99.1 and incorporated by reference herein. Such information, including the Exhibit 99.1 attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
ITEM 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review
On March 12, 2020, our Management and the Audit Committee of the Board of Directors, following discussion with our predecessor independent registered public accounting firm, concluded that the Company's previously filed financial statements for the twelve months ended December, 31 2018 and the quarterly statements for the three and nine months ended September 30, 2018 and three months ended March 31, 2019, can no longer be relied upon as the result of the aggregation of errors identified by Management and the Company’s new accounting personnel during 2019 related to the following:
– | The elimination of markup on intercompany sales from our subsidiary in Bulgaria, |
– | The collection and remission of employee’s income and payroll taxes related to the exercise of stock options in 2018 and 2019, |
– | The accrual and remission of the employer portion of payroll taxes related to those stock options exercises, |
– | Reporting the incorrect amount of income to employees on their form W-2 for both non-qualified and incentive stock option exercises and misclassification of some non-qualified stock option exercises as incentive stock option exercises, |
– | Accounting for stock-based compensation expense (related to forfeitures, vesting periods, modifications, fair value measurements and other miscellaneous items) |
– | Accounting for revenue and deferred expenses related to pre-developments activities in some of its OEM contracts |
Additionally, on March 12, 2020 the Audit Committee of the Board of Directors discussed with the predecessor independent registered public accounting firm the matters to be disclosed in this 8-K.
As a result of the aforementioned items, the financial statements for the year ended December 31, 2018, and the three- and nine-month periods ended September 30, 2018 and three-month period ended March 31, 2019 will be restated. The Company anticipates filing the restated financial statements within the extension period allowed in accordance with Form 12b-25, however the time required to complete the restatements cannot be stated with full certainty at this time.
These items have been discussed with BDO USA, LLP, our successor independent registered public accounting firm and Frazier & Deeter, LLC, our predecessor independent registered public accounting firm. Our predecessor independent registered public accounting firm was provided a copy of the disclosures made herein and was given the opportunity, no later than the day of filing this Current Report on Form 8-K, to review these disclosures and provide us with a letter stating whether or not they agree with these disclosures. We will attach the letter received as an exhibit to Amended Form 8-K within 2 business days after receipt.
Until we have reissued the restated results for the applicable periods discussed above, investors and other users of our filings with the SEC are cautioned to not rely on our financial statements in question, to the extent that they are affected by the accounting issues described above. Similarly, related press releases, earnings releases, and investor communications describing the Company's financial statements for these periods should no longer be relied upon.
Item 9.01 - Financial Statements and Exhibits
(d)
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Exhibit No. | Description | |
7.1 | ||
99.1 | ||
99.2 | ||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 16, 2020 | Apyx Medical Corporation | ||
By: | /s/ Charles D Goodwin II | ||
Charles D. Goodwin II | |||
President, Chief Executive Officer and Director | |||
By: | /s/ Tara Semb | ||
Tara Semb | |||
Chief Financial Officer, Secretary and Treasurer | |||
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March 16, 2020 Securities and Exchange Commission 100 F Street, N.E. Washington, DC 20549 Commissioners: We have read the statements made by Apyx Medical Corporation (the "Company"), which was filed with the Securities and Exchange Commission, pursuant to Item 4.02(b) of Form 8-K, as part of the Form 8-K of the Company dated March 16, 2020. We agree with the statements concerning our Firm disclosed under Item 4.02(b) in such Form 8-K. Sincerely, /s/ Frazier & Deeter, LLC Tampa, Florida
| EXHIBIT 99.1 | |
Apyx Medical Corporation Reports Fourth Quarter and Full Year of 2019 Preliminary Unaudited Financial Results and Introduces First Quarter of Fiscal Year 2020 Financial Outlook
Advanced Energy Sales increase 58% year-over-year in Q4 and increase 73% year-over-year in FY'19
CLEARWATER, FL — MARCH 16, 2020 - Apyx Medical Corporation (NASDAQ:APYX) (the “Company”), a maker of medical devices and supplies and the developer of Helium Plasma Technology, marketed and sold as Renuvion® in the cosmetic surgery market and J-Plasma® in the hospital surgical market, today reported preliminary unaudited financial results for its fourth quarter and fiscal year ended December 31, 2019 and introduced financial expectations for the first quarter ending March 31, 2020.
The financial information contained herein are preliminary and unaudited and are subject to risks and uncertainties including changes in connection with quarter end and year end adjustments following completion of the annual audit. Any variation between the Company’s actual final audited results and the preliminary unaudited financial information set forth herein may be material.
The financial results presented for the periods ending December 31, 2019 and 2018 reflect the restatements and the revisions detailed in the Company’s non-reliance press release and reconciliation table, which were filed as an exhibit to Form 8-K on March 16, 2020.
Fiscal Year 2019 Financial Summary:
• |
• | 2019 total revenue from continuing operations of approximately $28.2 million, up 69% year-over-year. |
◦ | Advanced Energy revenue of $22.6 million, up 73% year-over-year. |
◦ | OEM revenue of $5.6 million, up 54% year-over-year. |
• | 2019 total GAAP net loss from continuing operations of $19.7 million versus total GAAP loss from continuing operations of $10.8 million in 2018. |
• | 2019 total adjusted EBITDA loss from continuing operations of approximately $17.0 million versus adjusted EBITDA loss from continuing operations of approximately $12.3 million in 2018. |
• | The Company expects to report complete fourth quarter and full year 2019 financial results on its Form 10-K by March 31, 2020. |
Fourth Quarter 2019 Financial Summary:
• | Total Q4 revenue from continuing operations of $8.4 million, up 41% year-over-year. |
◦ | Advanced Energy revenue of $6.9 million, up 58% year-over-year. |
◦ | OEM revenue of $1.5 million, down 4% year-over-year. |
• | Total Q4 GAAP net loss from continuing operations of $5.4 million versus total GAAP net loss from continuing operations of $3.9 million for the fourth quarter of 2018. |
• | Total Q4 adjusted EBITDA loss from continuing operations of $4.8 million versus adjusted EBITDA loss from continuing operations of $4.6 million for 2018. |
Fourth Quarter 2019 Highlights:
• | On October 14, 2019, the Company announced that it had initiated subject enrollment in a U.S. Investigational Device Exemption clinical study evaluating the use of its Renuvion technology in skin laxity procedures in the neck and submental region. |
• | On October 14, 2019, the Company announced that it received U.S. Food and Drug Administration 510(k) clearance to market and sell the Apyx Plasma/RF Handpiece, a new addition to the Renuvion product family. |
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• | On December 3, 2019, the Company announced that it had initiated subject enrollment in a U.S. Investigational Device Exemption clinical study evaluating the use of its Renuvion technology in dermal resurfacing procedures. |
Management Comments:
“We are excited to bring 2019 to a strong close, with revenue growth of 58% in our Advanced Energy business during the fourth quarter, which was fueled by high demand for our Helium Plasma Technology products from customers in the U.S. cosmetic surgery market as well as our international distributors,” said Charlie Goodwin, President and Chief Executive Officer. “In addition to our impressive fourth quarter sales performance, we were also pleased to announce the initiation of enrollment in two new clinical studies evaluating use of our Renuvion technology in dermal resurfacing procedures and skin laxity procedures during the fourth quarter, which represent important milestones in our journey to obtain new clinical indications for specific cosmetic surgery procedures.”
Mr. Goodwin continued: “In 2019, we achieved Advanced Energy revenue growth of 73% by successfully executing on our growth strategy to expand our share of the $1.5 billion market opportunity we are targeting in the U.S. and satisfy the increasing global demand for our technology. We are monitoring the crisis caused by the spread of the novel coronavirus (COVID-19) and are dedicated to protecting the health and safety of our employees, patients, surgeon customers and international distributor partners around the world. Given the challenges and uncertainties posed by the ongoing global pandemic, we will not be providing full year 2020 financial guidance at this time. In lieu of full year 2020 financial guidance, we are providing expectations for the first quarter of 2020. Assuming a more normalized business environment prevails at the time of our first quarter results conference call in May, we plan to provide updated expectations at that time. Importantly, with $58.8 million in cash on the balance sheet as of December 31, 2019, the Company is well positioned to fund our strategic growth initiatives for a number of years.”
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The following tables represent revenue from continuing operations by reportable segment (Unaudited) (Restated and Revised):
Three Months Ended December 31, | Increase/Decrease | Twelve Months Ended December 31, | Increase/Decrease | ||||||||||||||||||||||||||
(In thousands) | 2019 | 2018 | $ Change | % Change | 2019 | 2018 | $ Change | % Change | |||||||||||||||||||||
Advanced Energy | $ | 6,861 | $ | 4,341 | $ | 2,520 | 58.1 | % | $ | 22,595 | $ | 13,068 | $ | 9,527 | 72.9 | % | |||||||||||||
OEM | 1,521 | 1,585 | (64 | ) | (4.0 | )% | 5,559 | 3,618 | 1,941 | 53.6 | % | ||||||||||||||||||
Total | $ | 8,382 | $ | 5,926 | $ | 2,456 | 41.4 | % | $ | 28,154 | $ | 16,686 | $ | 11,468 | 68.7 | % | |||||||||||||
Three Months Ended December 31, | Increase/Decrease | Twelve Months Ended December 31, | Increase/Decrease | ||||||||||||||||||||||||||
(In thousands) | 2019 | 2018 | $ Change | % Change | 2019 | 2018 | $ Change | % Change | |||||||||||||||||||||
Domestic | $ | 5,582 | $ | 4,377 | $ | 1,205 | 27.5 | % | $ | 19,584 | $ | 12,858 | $ | 6,726 | 52.3 | % | |||||||||||||
International | 2,800 | 1,549 | 1,251 | 80.8 | % | 8,570 | 3,828 | 4,742 | 123.9 | % | |||||||||||||||||||
Total | $ | 8,382 | $ | 5,926 | $ | 2,456 | 41.4 | % | $ | 28,154 | $ | 16,686 | $ | 11,468 | 68.7 | % | |||||||||||||
Fourth Quarter 2019 Results:
Total revenue from continuing operations for the three months ended December 31, 2019, increased $2.5 million, or 41.4%, to $8.4 million, compared to $5.9 million in the prior year. Total revenue from continuing operations was driven by sales of the Company’s Advanced Energy generators and handpieces, offset slightly by a decline in OEM segment sales during the period. Advanced Energy segment sales increased approximately $2.5 million, or 58.1% year-over-year, to $6.9 million, compared to approximately $4.3 million last year, driven by contributions from the Company’s expanded sales force in the U.S. and new international distributors, compared to the prior year period. In both the U.S. and internationally, the Company experienced strong sales growth of its generators, coupled with utilization based demand for its handpieces. OEM segment sales decreased $0.1 million, or 4.0% year-over-year, to $1.5 million, compared to $1.6 million last year.
For the fourth quarter 2019, revenue from continuing operations in the United States increased $1.2 million, or 27.5% year-over-year, to $5.6 million, and international revenue from continuing operations increased $1.3 million, or 80.8% year-over-year, to $2.8 million. International sales growth in the fourth quarter was primarily driven by sales to international distributors in the Company’s Advanced Energy segment.
Gross profit for the three months ended December 31, 2019, increased approximately $2.0 million, or 57.9% year-over-year, to $5.6 million, compared to $3.5 million in the prior year. Gross margin for the three months ended December 31, 2019 was 66.4%, compared to 59.4% for the same period in the prior year. The primary drivers of the increase in gross profit margin were higher Advanced Energy sales as a percentage of total sales, as well as efficiencies realized in manufacturing processes in the fourth quarter of 2019. The year-over-year increase in gross margin was partially offset by a higher mix of Advanced Energy sales outside of the U.S. in the fourth quarter of 2019, compared to the prior year period.
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Operating expenses from continuing operations for the fourth quarter of 2019 increased $2.3 million, or 24.5% year-over-year, to $11.5 million, compared to $9.3 million for the fourth quarter of 2018. The year-over-year change in operating expenses from continuing operations was primarily driven by a $1.4 million increase in professional services costs, a $0.7 million increase in selling, general, and administrative expenses, a $0.5 million increase in research and development expenses and a $0.4 million increase in salaries and related costs. Operating expenses from continuing operations for the fourth quarter of 2018 included severance and related expense of $0.7 million, related to the departure of the Company’s former Chief Financial Officer.
Net loss from continuing operations for fourth quarter of 2019 was $5.4 million, or $0.16 per diluted share, compared to a net loss from continuing operations of $3.9 million, or $0.12 per diluted share, for the fourth quarter of 2018. Total loss from discontinued operations, net of tax, was $0.6 million, or $0.02 per diluted share, in the fourth quarter of 2018. Net loss for the fourth quarter of 2019 was $5.4 million, or $0.16 per diluted share, compared to net loss of $4.5 million, or $0.13 per diluted share, for the fourth quarter of 2018.
Fiscal Year 2019 Results:
Total revenue for the twelve months ended December 31, 2019 increased $11.5 million, or 68.7%, to $28.2 million, compared to $16.7 million in the twelve months ended December 31, 2018. Total revenue growth was driven by a 72.9% increase in Advance Energy sales and a 53.6% increase in OEM sales.
For the twelve months ended December 31, 2019, revenue in the United States increased $6.7 million, or 52.3% year-over-year, to $19.6 million, and international revenue from continuing operations increased approximately $4.7 million, or 123.9% year-over-year, to $8.6 million. International sales growth for the year was primarily driven by sales to international distributors in the Company’s Advanced Energy segment.
Net loss from continuing operations for the twelve months ended December 31, 2019 was $19.7 million, or $0.58 per diluted share, compared to net loss from continuing operations of $10.8 million, or $0.33 per diluted share, for the twelve months ended December 31, 2018. Total income from discontinued operations, net of tax, was $73.5 million, or $2.14 per diluted share, for the twelve months ended December 31, 2018. Net loss for the twelve months ended December 31, 2019 was $19.7 million, or $.58 per diluted share, compared to net income for the twelve months ended December 31, 2018 of $62.7 million, or $1.82 per diluted share.
As of December 31, 2019, the Company had cash and equivalents of $58.8 million as compared to cash and equivalents of $16.5 million and short-term investments of $61.7 million as of December 31, 2018. The Company had working capital of $64.4 million as of December 31, 2019 as compared to $81.2 million as of December 31, 2018.
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First Quarter of Fiscal Year 2020 Financial Outlook:
The Company is introducing first quarter of fiscal year 2020 financial expectations for:
• | Total revenue in the range of $5.0 million to $5.6 million, representing a decrease of 11% to 0% year-over-year, compared to total revenue of $5.6 million in first quarter of fiscal year 2019. |
• | Total revenue guidance assumes: |
• | Advanced Energy revenue in the range of $4.0 million to $4.6 million, representing a decrease of 8% to an increase of 6% year-over-year, compared to Advanced Energy revenue of $4.4 million in first quarter of fiscal year 2019. |
• | OEM revenue of approximately $1.0 million, representing a decrease of 21% year-over-year, compared to $1.3 million in the first quarter of fiscal year 2019. |
• | GAAP net loss in the range of $9.0 million to $8.6 million, compared to GAAP net loss of $5.6 million in first quarter of fiscal year 2019. |
• | Adjusted EBITDA loss in the range of $7.8 million to $7.4 million, compared to adjusted EBITDA loss of $4.7 million in first quarter of fiscal year 2019. |
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Conference Call Details:
Management will host a conference call at 5:00 p.m. Eastern Time on March 16 to discuss the results of the quarter and to host a question and answer session. To listen to the call by phone, interested parties may dial 877-407-8289 (or 201-689-8341 for international callers) and provide access code 13698937. Participants should ask for the Apyx Medical Corporation Call. A live webcast of the call will be accessible via the Investor Relations section of the Company’s website and at:
https://78449.themediaframe.com/dataconf/productusers/apyx/mediaframe/35817/indexl.html
A telephonic replay will be available approximately two hours after the end of the call through March 30, 2020. The replay can be accessed by dialing 877-660-6853 for U.S. callers or 201-612-7415 for international callers and using the replay access code: 13698937. The webcast will be archived on the Investor Relations section of the Company’s website.
Investor Relations Contact:
Westwicke Partners on behalf of Apyx Medical Corporation
Mike Piccinino, CFA
investor.relations@apyxmedical.com
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About Apyx Medical Corporation:
Apyx Medical Corporation (formerly Bovie Medical Corporation) is an advanced energy technology company with a passion for elevating people’s lives through innovative products in the cosmetic and surgical markets. Known for its innovative Helium Plasma Technology, Apyx is solely focused on bringing transformative solutions to the physicians and patients it serves. The company’s Helium Plasma Technology is marketed and sold as Renuvion® in the cosmetic surgery market and J-Plasma® in the hospital surgical market. Renuvion® offers plastic surgeons, fascial plastic surgeons and cosmetic physicians a unique ability to provide controlled heat to the tissue to achieve their desired results. The J-Plasma® system allows surgeons to operate with a high level of precision and virtually eliminating unintended tissue trauma. The Company also leverages its deep expertise and decades of experience in unique waveforms through original equipment manufacturing (OEM) agreements with other medical device manufacturers. For further information about the Company and its products, please refer to the Apyx Medical Corporation website at www.ApyxMedical.com.
Cautionary Statement on Forward-Looking Statements:
Certain matters discussed in this release and oral statements made from time to time by representatives of the Company may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved.
Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Many of these factors are beyond the Company’s ability to control or predict. Important factors that may cause actual results to differ materially and that could impact the Company and the statements contained in this release can be found in the Company’s filings with the Securities and Exchange Commission including the Company’s Report on Form 10-K for the year ended December 31, 2019, which is expected to be filed by March 31, 2020. For forward-looking statements in this release, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise.
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APYX MEDICAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Restated and Revised) (In thousands, except per share data) | ||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Sales | $ | 8,382 | $ | 5,926 | $ | 28,154 | $ | 16,686 | ||||||||
Cost of sales | 2,819 | 2,403 | 9,027 | 5,893 | ||||||||||||
Gross profit | 5,563 | 3,523 | 19,127 | 10,793 | ||||||||||||
Other costs and expenses: | ||||||||||||||||
Research and development | 1,097 | 579 | 3,811 | 2,469 | ||||||||||||
Professional services | 2,717 | 1,291 | 8,562 | 3,106 | ||||||||||||
Salaries and related costs | 3,895 | 3,487 | 14,052 | 9,272 | ||||||||||||
Selling, general and administrative | 3,815 | 3,158 | 13,614 | 9,438 | ||||||||||||
Severance and related expense | — | 741 | — | 741 | ||||||||||||
Total other costs and expenses | 11,524 | 9,256 | 40,039 | 25,026 | ||||||||||||
Loss from operations | (5,961 | ) | (5,733 | ) | (20,912 | ) | (14,233 | ) | ||||||||
Interest income | 239 | 481 | 1,392 | 616 | ||||||||||||
Interest expense | (8 | ) | (2 | ) | (8 | ) | (104 | ) | ||||||||
Other losses | (86 | ) | (48 | ) | (382 | ) | (916 | ) | ||||||||
Fee associated with refinance | — | — | — | 20 | ||||||||||||
Total other income, net | 145 | 431 | 1,002 | (384 | ) | |||||||||||
Loss before income taxes | (5,816 | ) | (5,302 | ) | (19,910 | ) | (14,617 | ) | ||||||||
Income tax benefit | (383 | ) | (1,393 | ) | (260 | ) | (3,777 | ) | ||||||||
Loss from continuing operations | (5,433 | ) | (3,909 | ) | (19,650 | ) | (10,840 | ) | ||||||||
Income from discontinued operations, net of tax | — | 37 | — | 5,099 | ||||||||||||
Gain on sale of Core Business, net of tax | — | (668 | ) | — | 68,404 | |||||||||||
Total income (loss) from discontinued operations, net of tax | — | (631 | ) | — | 73,503 | |||||||||||
Net income (loss) | $ | (5,433 | ) | — | $ | (4,540 | ) | $ | (19,650 | ) | $ | 62,663 | ||||
EPS from continuing operations: | ||||||||||||||||
Basic and diluted | $ | (0.16 | ) | $ | (0.12 | ) | $ | (0.58 | ) | $ | (0.33 | ) | ||||
EPS from discontinued operations: | ||||||||||||||||
Basic | $ | — | $ | (0.02 | ) | $ | — | $ | 2.21 | |||||||
Diluted | $ | — | $ | (0.02 | ) | $ | — | $ | 2.14 | |||||||
EPS from total operations: | ||||||||||||||||
Basic | $ | (0.16 | ) | $ | (0.13 | ) | $ | (0.58 | ) | $ | 1.89 | |||||
Diluted | $ | (0.16 | ) | $ | (0.13 | ) | $ | (0.58 | ) | $ | 1.82 | |||||
Weighted average number of shares outstanding - basic | 34,159 | 33,694 | 34,069 | 33,185 | ||||||||||||
Weighted average number of shares outstanding - diluted | 34,159 | 33,694 | 34,069 | 34,366 | ||||||||||||
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APYX MEDICAL CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (Restated and Revised) (In thousands, except share and per share data) | ||
December 31, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 58,812 | $ | 16,466 | |||
Short term investments | — | 61,678 | |||||
Trade accounts receivable, net of allowance of $273 and $428 | 7,987 | 3,656 | |||||
Other receivables | 1,233 | 1,359 | |||||
Inventories, net of provision for obsolescence of $392 and $439 | 5,050 | 3,061 | |||||
Prepaid expenses and other current assets | 3,582 | 3,297 | |||||
Total current assets | 76,664 | 89,517 | |||||
Property and equipment, net | 6,618 | 5,788 | |||||
Operating lease right-of-use assets | 350 | — | |||||
Finance lease right-of-use assets | 653 | — | |||||
Other assets | 391 | 305 | |||||
Total assets | $ | 84,676 | $ | 95,610 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 2,369 | $ | 1,423 | |||
Accrued expenses and other liabilities | 9,396 | 6,926 | |||||
Current portion of operating lease liabilities | 108 | — | |||||
Current portion of finance lease liabilities | 229 | — | |||||
Related party note payable | 140 | — | |||||
Total current liabilities | 12,242 | 8,349 | |||||
Related party note payable | — | 140 | |||||
Long-term operating lease liabilities | 235 | — | |||||
Long-term finance lease liabilities | 421 | — | |||||
Other liabilities | 519 | — | |||||
Total liabilities | 13,417 | 8,489 | |||||
STOCKHOLDERS' EQUITY | |||||||
Common stock, $0.001 par value; 75,000,000 shares authorized; 34,312,527 issued and 34,169,952 outstanding as of December 31, 2019, and 33,847,100 issued and 33,704,525 outstanding as of December 31, 2018 | 34 | 34 | |||||
Additional paid-in capital | 56,708 | 52,920 | |||||
Retained earnings | 14,517 | 34,167 | |||||
Total stockholders' equity | 71,259 | 87,121 | |||||
Total liabilities and stockholders' equity | $ | 84,676 | $ | 95,610 | |||
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APYX MEDICAL CORPORATION RECONCILIATION OF GAAP NET INCOME/(LOSS) RESULTS TO NON-GAAP ADJUSTED EBITDA/(LOSS) (Unaudited) (Restated and Revised) (In thousands) | ||
Use of Non-GAAP Financial Measures
We present these non-GAAP measures because we believe these measures are useful indicators of our operating performance. Our management uses these non-GAAP measures principally as a measure of our operating performance and believes that these measures are useful to investors because they are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We also believe that these measures are useful to our management and investors as a measure of comparative operating performance from period to period.
The Company has presented the following non-GAAP financial measures in this press release: adjusted EBITDA. The Company defines adjusted EBITDA as its reported net income/(loss) (GAAP) plus income tax expense, interest, depreciation and amortization, stock-compensation expense, and changes in value of derivative liabilities.
(In thousands) | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Net loss from continuing operations GAAP Basis | $ | (5,433 | ) | (3,909 | ) | $ | (19,650 | ) | (10,840 | ) | |||
Interest income, net | (239 | ) | (481 | ) | (1,392 | ) | (616 | ) | |||||
Interest expense | 8 | 2 | 8 | 104 | |||||||||
Income tax benefit | (383 | ) | (1,393 | ) | (260 | ) | (3,777 | ) | |||||
Depreciation and amortization | 244 | 240 | 754 | 669 | |||||||||
Stock based compensation | 987 | 986 | 3,581 | 2,224 | |||||||||
Change in value of derivative liabilities | — | — | — | (20 | ) | ||||||||
Adjusted EBITDA | (4,816 | ) | (4,555 | ) | (16,959 | ) | (12,256 | ) | |||||
Severance and related expense | — | 741 | — | 741 | |||||||||
Adjusted EBITDA, excluding non-recurring items* | (4,816 | ) | (3,814 | ) | (16,959 | ) | (11,515 | ) | |||||
The following unaudited table presents a reconciliation of net loss to Adjusted EBITDA for the first quarter of fiscal year 2020. The reconciliation assumes the mid-point of the Adjusted EBITDA loss range and the midpoint of each component of the reconciliation, corresponding to guidance for GAAP net loss of $9.0 million to $8.6 million for the first quarter of fiscal year 2020.
(In millions) | First Quarter 2020 | ||
Net loss GAAP Basis | $ | (8.8 | ) |
Interest income, net | (0.1 | ) | |
Income tax (benefit) expense | 0.1 | ||
Depreciation and amortization | 0.2 | ||
Stock based compensation | 1.0 | ||
Adjusted EBITDA | $ | (7.6 | ) |
10
| EXHIBIT 99.2 | |
Apyx Medical Corporation to Restate Previously Issued Financial Statements
CLEARWATER, FL - MARCH 16, 2020 - Apyx Medical Corporation (NASDAQ:APYX) (the “Company”), a maker of medical devices and supplies and the developer of Helium Plasma Technology, marketed and sold as Renuvion® in the cosmetic surgery market and J-Plasma® in the hospital surgical market, today announced it will be restating its previously issued consolidated financial statements for the twelve months ended December, 31 2018 and the quarterly statements for the three and nine months ended September 30, 2018 and three months ended March 31, 2019. This decision was approved by the Company's Board of Directors upon the recommendation of the Company's Audit Committee, and after consultation with Management and the Company's predecessor independent registered public accounting firm.
Investors should no longer rely upon the Company's previously released financial statements for the time periods cited above. Similarly, related press releases, earnings releases, and investor communications describing the Company's financial statements for these periods should no longer be relied upon.
The decision to restate these financial statements is based on the conclusion that the financial statements for the aforementioned financial periods cannot be relied upon as a result of the aggregation of errors identified by management and the Company’s new accounting personnel during the preparation of its fiscal year 2019 Form 10-K and third quarter 2019 Form 10-Q, related to the following:
As identified during preparation of the fiscal year 2019 Form 10-K:
•The elimination of markup on intercompany sales from our subsidiary in Bulgaria
▪For the three months ended March 31, 2019, the total impact included increases to both gross profit
and to operating expenses of approximately $113,000.
•The collection and remission of employee’s income and payroll taxes related to the exercise of stock options
in 2018 and 2019; the accrual and remission of the employer portion of payroll taxes related to those stock
options exercises; reporting the incorrect amount of income to employees on their form W-2 for both non
qualified and incentive stock option exercises, and misclassification of some non-qualified stock option
exercises as incentive stock option exercises
▪For the three and nine months ended September 30, 2018 and year ended December 31, 2018, the total
aggregated impact included an increase of approximately $51,000 to operating expenses, an increase of approximately $713,000 to other losses and an increase to net loss of approximately $764,000.
▪For the three months ended March 31, 2019, the total aggregated impact included an increase to
operating expenses of $13,000, an increase of approximately $300,000 to other losses and an increase to net loss of approximately $313,000.
As previously disclosed and adjusted in Form 10-Q for the three and nine months ended September 2019 filed on November 11, 2019:
•Accounting for stock-based compensation expense (related to forfeitures, vesting periods, modifications, fair
value measurements and other miscellaneous items)
▪For the year ended December 31, 2018, the total impact included increases to operating expenses,
operating loss and net loss of approximately $582,000 each.
▪For the three months ended March 31, 2019, the total impact included increases to operating expenses,
operating loss and net loss of approximately $453,000 each.
•Accounting for revenue and deferred expenses related to pre-development activities in some of our OEM
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contracts
▪For the three months ended March 31, 2019, the total impact included decreases to sales of
approximately $194,000, decreases to operating expenses of approximately $77,000 and increases to both operating loss and net loss of approximately $117,000.
A full reconciliation of these restatement adjustments, as well as revisions deemed to have an immaterial impact to the periods ended June 30 and September 30, 2019 is included with this press release and is available on the investor relations page of the Company’s website.
Apyx Medical has experienced a significant business transformation over the last couple of years, including the disposition of its Core business in 2018 and changes to key management personnel. Throughout 2019, the Company has been making efforts to remediate its material weaknesses in internal controls over financial reporting identified in 2018, including investing in new personnel that have expertise in a broad array of accounting topics. As a result of these investments and remediation efforts, these errors in reporting were identified during 2019. Due to the aggregation of these errors, the Company’s predecessor independent registered public accounting firm determined the changes were material enough to require a restatement of the prior periods aforementioned.
Today's announcement reiterates the Company’s continued commitment to best practices and upholding the highest standards of financial reporting. Apyx Medical continues to be committed to building a strong foundation of processes, procedures, systems and talent in order to capitalize on future global growth opportunities.
About Apyx Medical Corporation:
Apyx Medical Corporation (formerly Bovie Medical Corporation) is an advanced energy technology company with a passion for elevating people’s lives through innovative products in the cosmetic and surgical markets. Known for its innovative Helium Plasma Technology, Apyx is solely focused on bringing transformative solutions to the physicians and patients it serves. The company’s Helium Plasma Technology is marketed and sold as Renuvion® in the cosmetic surgery market and J-Plasma® in the hospital surgical market. Renuvion® offers plastic surgeons, fascial plastic surgeons and cosmetic physicians a unique ability to provide controlled heat to the tissue to achieve their desired results. The J-Plasma® system allows surgeons to operate with a high level of precision and virtually eliminating unintended tissue trauma. The Company also leverages its deep expertise and decades of experience in unique waveforms through original equipment manufacturing (OEM) agreements with other medical device manufacturers. For further information about the Company and its products, please refer to the Apyx Medical Corporation website at www.ApyxMedical.com.
Cautionary Statement on Forward-Looking Statements:
Certain matters discussed in this release and oral statements made from time to time by representatives of the Company may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved.
Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Many of these factors are beyond the Company’s ability to control or predict. Important factors that may cause actual results to differ materially and that could impact the Company and the statements contained in this release can be found in the Company’s filings with the Securities and Exchange Commission including the Company’s Report on Form 10-K for the year ended December 31, 2019, which is expected to be filed by March 31, 2020. For forward-looking statements in this release, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future
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events or otherwise.
Investor Relations Contact:
Westwicke Partners on behalf of Apyx Medical Corporation
Mike Piccinino, CFA
investor.relations@apyxmedical.com
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Supplemental Reconciliation of Restatement Adjustments and Revisions - March 16, 2020
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