Apyx Medical Corp 10-Q/A for FY2019 Q1

Apyx Medical Corp (APYX)

10-Q/A 2020-05-08 For: 2019-03-31

Added on April 06, 2026

About this 10-Q/A

Apyx Medical Corp filed this 10-Q/A on May 8, 2020, covering the quarter ended March 31, 2019 (FY2019 Q1).

Headline figures

Quarter ended March 31, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $5.63M; up 65.7% from $3.4M a year earlier
Net loss: $5.61M; compared with a net loss of $935K a year earlier
Diluted EPS: -$0.17; compared with -$0.03 a year earlier

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



Large accelerated filer	o	Accelerated filer	ý
Non-accelerated filer	o	Smaller reporting company	ý
		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



Title of each Class	Trading Symbol	Name of each Exchange on which registered
Common Stock, $.001 Par Value	APYX	NASDAQ Stock Market LLC



		Page
Part I.	Financial Information	2

Item 1.	Financial Statements	2
	Consolidated Balance Sheets at March 31, 2019 and December 31, 2018	2
	Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018	3
	Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2019 and 2018	4
	Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018	5
	Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25
Item 4.	Controls and Procedures	25

Part II.	Other Information	26

Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	27
	Signatures	29



	March 31, 2019 as Restated		December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	32,415	$	16,596
Short term investments	40,885		61,678
Trade accounts receivable, net of allowance of $196 and $428	4,969		5,080
Inventories, net of provision for obsolescence of $398 and $439	5,598		5,297
Prepaid expenses and other current assets	1,449		1,184
Total current assets	85,316		89,835
Property and equipment, net	6,031		5,788
Intangibles	190		191
Deposits	80		73
Other assets	239		41
Total assets	$	91,856	$	95,928

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,504	$	1,423
Accrued and other liabilities	5,587		5,865
Joint and several payroll tax liability	1,014		713
Accrued severance and related	511		610
Total current liabilities	8,616		8,611
Note payable	140		140
Long term lease liability	75		—
Other long-term liabilities	194		—
Total liabilities	9,025		8,751
STOCKHOLDERS’ EQUITY
Common stock, $0.001 par value; 75,000,000 shares authorized; 34,033,255 issued and 33,891,255 outstanding as of March 31, 2019 and 33,847,100 issued and 33,704,525 outstanding as of December 31, 2018	34		34
Additional paid-in capital	54,182		52,920
Retained earnings	28,615		34,223
Total stockholders’ equity	82,831		87,177
Total liabilities and stockholders’ equity	$	91,856	$	95,928



	Three Months Ended March 31,
	2019 as Restated			2018
Sales	$	5,629		$	3,397
Cost of sales	2,066			1,185
Gross profit	3,563			2,212
Other costs and expenses:
Research and development	730			514
Professional services	2,118			506
Salaries and related costs	3,488			1,802
Selling, general and administrative	2,957			2,110
Total other costs and expenses	9,293			4,932
Loss from operations	(5,730		)	(2,720		)
Interest income	423			—
Interest expense	—			(34		)
Other losses	(295		)	—
Change in value of derivative liabilities	—			(26		)
Total other income (expense), net	128			(60		)
Loss before income taxes	(5,602		)	(2,780		)
Income tax expense	6			11
Loss from continuing operations	(5,608		)	(2,791		)
Income from discontinued operations, net of tax	—			1,856
Net loss	$	(5,608	)	$	(935	)

EPS from continuing operations:
Basic	$	(0.17	)	$	(0.08	)
Diluted	$	(0.17	)	$	(0.08	)

EPS from discontinued operations:
Basic	$	—		$	0.05
Diluted	$	—		$	0.05

EPS from total operations:
Basic	$	(0.17	)	$	(0.03	)
Diluted	$	(0.17	)	$	(0.03	)



	Common Stock
	Shares		Par Value		Additional Paid-In Capital			Retained Earnings (Accumulated deficit)			Total
Balance December 31, 2017	32,878		$	33	$	50,495		$	(28,496	)	$	22,032
Stock based compensation	—		—		372			—			372
Net loss	—		—		—			(935		)	(935		)
Balance March 31, 2018	32,878		$	33	$	50,867		$	(29,431	)	$	21,469

Balance December 31, 2018	33,705		$	34	$	52,920		$	34,223		$	87,177
Options exercised	271		—		777			—			777
Stock based compensation - as Restated	—		—		1,195			—			1,195
Stock exercise to acquire options and warrants	(85	)	—		(710		)	—			(710		)
Net loss - as Restated	—		—		—			(5,608		)	(5,608		)
Balance March 31, 2019 - as Restated	33,891		$	34	$	54,182		$	28,615		$	82,831



	Three Months Ended March 31,
	2019 as Restated			2018
Cash flows from operating activities
Net loss	$	(5,608	)	$	(935	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	194			199
Provision for inventory obsolescence	41			(47		)
Stock based compensation	1,195			372
Change in fair value of derivative liabilities	—			26
Unrealized gain on short term investments	(164		)	—
Provision (benefit) for allowance for doubtful accounts	(238		)	(9		)
Changes in current assets and liabilities:
Trade receivables	349			(277		)
Prepaid expenses	(265		)	(26		)
Inventories	(342		)	(136		)
Deposits and other assets	(346		)	4
Accounts payable	81			514
Accrued severance and related	(99		)	—
Accrued expenses and other liabilities	113			(793		)
Net cash used in operating activities	(5,089		)	(1,108		)
Cash flows from investing activities
Purchases of property and equipment	(117		)	(139		)
Purchases of marketable securities	(18,884		)	—
Proceeds of marketable securities	39,842			—
Net cash provided by (used in) investing activities	20,841			(139		)
Cash flows from financing activities
Proceeds from stock options exercised	67			—
Repayment of mortgage note payable	—			(60		)
Net cash provided by (used in) financing activities	67			(60		)
Net change in cash, cash equivalents and restricted cash	15,819			(1,307		)
Cash, cash equivalents and restricted cash, beginning of period	16,596			10,668
Cash, cash equivalents and restricted cash, end of period	$	32,415		$	9,361

Cash paid for:
Interest expense	$	—		34

Non cash investing activities:
Cashless exercise of stock options/warrants	$	710		$	—
Capitalization of Lease	178			—


◦	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.


•	Other minor items primarily related to the appropriate cutoff of transactions at the balance sheet date and the duplicate recording of a State income tax payment.



(In thousands)	As Originally Reported		Adjustments			As Restated
ASSETS
Current assets:
Cash and cash equivalents	$	32,415	$	—		$	32,415
Short term investments	40,885		—			40,885
Trade accounts receivable, net	4,931		38			4,969
Inventories, net	5,598		—			5,598
Prepaid expenses and other current assets	1,411		38			1,449
Total current assets	85,240		76			85,316
Property and equipment, net	6,031		—			6,031
Intangibles	190		—			190
Deposits	80		—			80
Other assets	162		77			239
Total assets	$	91,703	$	153		$	91,856

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,504	$	—		$	1,504
Accrued expenses and other liabilities	5,460		127			5,587
Joint and several payroll tax liability	—		1,014			1,014
Accrued severance and related	511		—			511
Total current liabilities	7,475		1,141			8,616
Related party note payable	140		—			140
Long-term portion of operating lease liabilities	75		—			75
Other long-term liabilities	—		194			194
Total liabilities	7,690		1,335			9,025
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 75,000,000 shares authorized; 34,033,255 issued and 33,891,255 outstanding	34		—			34
Additional paid-in capital	53,147		1,035			54,182
Retained earnings	30,832		(2,217		)	28,615
Total stockholders’ equity	84,013		(1,182		)	82,831
Total liabilities and stockholders’ equity	$	91,703	$	153		$	91,856



(in thousands)	March 31, 2019 as Restated			December 31, 2018
Purchased technology (5-17 year lives)	$	1,447		$	1,448
Less: accumulated amortization	(1,442		)	(1,442		)
Purchased technology, net	$	5		$	6

Goodwill	$	185		$	185
Intangibles	$	190		$	191



	Three Months Ended March 31,
(in thousands, except per share data)	2019 as Restated			2018
Numerator:
Net (loss) from continuing operations	$	(5,608	)	$	(2,791	)
Numerator for diluted (loss) per common share - continuing operations	(5,608		)	(2,791		)

Net income from discontinued operations, net of tax	—			1,856
Numerator for diluted income per share - discontinued operations	—			1,856

Net (loss) from all operations	(5,608		)	(935		)
Numerator for full diluted (loss) per share - all	(5,608		)	(935		)

Denominator - continuing operations
Weighted average shares used to compute basic (loss)	33,343			32,878
Denominator for diluted (loss) per common share	33,343			32,878

Denominator - discontinued operations:
Weighted average shares used to compute basic (loss)	—			32,878
Denominator for diluted (loss) per common share - discontinued operations	—			32,878

Denominator - all operations:
Weighted average shares used to compute basic (loss)	33,343			32,878
Denominator for diluted (loss) per common share - all operations	33,343			32,878

Loss per share from continuing operations:
Basic and diluted	$	(0.17	)	$	(0.08	)

Income per share from discontinued operations
Basic and diluted	$	—		$	0.05

Loss per share from all operations
Basic and diluted	$	(0.17	)	$	(0.03	)

Anti-dilutive instruments excluded from diluted loss per common share:
Warrants	—			3
Options	1,908			470



	Number of options - as Restated		Weighted average exercise price - as Restated
Outstanding at December 31, 2018	3,254,799		$	3.18
Granted	1,277,500		7.73
Exercised	(270,549	)	2.87
Canceled and forfeited	(10,500	)	2.10
Outstanding at March 31, 2019	4,251,250		$	4.57



	2019 Grants
Option value	$	7.15	-	$	7.91
Risk-free rate	2.6%		-	2.6		%
Expected dividend yield	—
Expected volatility	69.1%		-	69.1		%
Expected term (in years)	6



(In thousands)
2019 (remaining 9 months)	$	80
2020	107
Total	$	187



(In thousands)	Adjusted Cost		Unrealized Gains		Fair Value⁽³⁾		Cash and Cash Equivalents ⁽¹⁾		Short-term Marketable Securities
Cash	$	3,802	$	—	$	3,802	$	3,802	$	—

Level 1 ⁽²⁾
U.S. Treasury Securities, maturities less than three months	28,613		—		28,613		28,613		—
U.S. Treasury Securities, maturities greater than three months	40,721		164		40,885		—		40,885
Total	$	73,136	$	164	$	73,300	$	32,415	$	40,885



(In thousands)	Adjusted Cost		Unrealized Gains		Fair Value⁽³⁾		Cash and Cash Equivalents ⁽¹⁾		Short-term Marketable Securities
Cash	$	6,467	$	—	$	6,467	$	6,467	$	—

Level 1 ⁽²⁾
U.S. Treasury Securities, maturities less than three months	10,129		—		10,129		10,129		—
U.S. Treasury Securities, maturities greater than three months	61,431		247		61,678		—		61,678
Total	$	78,027	$	247	$	78,274	$	16,596	$	61,678



	Three Months Ended March 31,
(In thousands)	2019 as Restated		2018		Change
Sales by Reportable Segment
Advanced Energy	4,371		2,629		66.3	%
OEM	1,258		768		63.8	%
Total	$	5,629	$	3,397	65.7	%

Sales by Domestic and International
Domestic	3,910		2,758		41.8	%
International	1,719		639		169.0	%
Total	$	5,629	$	3,397	65.7	%



(in thousands)	Gross Unrealized Tax Benefits
Balance at January 1, 2019	$	1,313
Additions of tax positions related to the current year	—
Additions of tax positions related to the prior year	—
Decreases for tax positions related to the prior year	—
Balance at March 31, 2019	$	1,313



	Three Months Ended March 31, 2019 - as Restated
(In thousands)	Advanced Energy		OEM	Corporate & Other		Total
Sales	4,371		1,258	—		5,629

Net income (loss) from continuing operations	(3,328	)	591	(2,993	)	(5,730	)

Interest income	—		—	423		423
Other losses	—		—	(295	)	(295	)
Income tax expense	—		—	6		6



	Three Months Ended March 31, 2018
(In thousands)	Advanced Energy		OEM	Corporate & Other		Total
Sales	2,629		768	—		3,397

Net income (loss) from continuing operations	(578	)	406	(2,548	)	(2,720	)

Interest expense	—		—	(34	)	(34	)
Change in value of derivative liabilities	—		—	(26	)	(26	)
Income tax expense	—		—	11		11



	Three Months Ended March 31,
(In thousands)	2019		2018
Sales by Domestic and International
Domestic	$	3,910	$	2,758
International	1,719		639
Total	$	5,629	$	3,397



2.1		Asset Purchase Agreement, dated as of July 9, 2018, by and between Bovie Medical Corporation and Specialty Surgical Instrumentation Inc. (Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 9, 2018)
3.1		Articles of Incorporation of the Registrant (Incorporated by reference to the Registrant’s report on Form 10-K/A filed on March 31, 2011)
3.2		By laws of the Registrant (Incorporated by reference to the Registrant’s Annual Report on Form 10-K/A filed on March 31, 2011)
3.3		Certificate of Amendment of the Certificate of Incorporation of the Registrant (Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on November 3, 2017).
3.4		Certificate of Elimination (Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on May 3, 2018)
3.5		Certificate of Amendment of the Certificate of Incorporation of the Registrant (Incorporated by reference to the Registrant's Current Report of Form 8-K filed on December 28, 2018)
31.1*		Certification pursuant to Section 302 of Sarbanes-Oxley Act of 202
31.2*		Certification pursuant to Section 302 of Sarbanes-Oxley Act of 202
32.1*		Certification pursuant to Section 906 of Sarbanes-Oxley Act of 202
32.2*		Certification pursuant to Section 906 of Sarbanes-Oxley Act of 202
101.INS**		XBRL Instance Document
101.SCH**		XBRL Taxonomy Extension Schema Document
101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**		XBRL Taxonomy Extension Label Linkbase Document
101.PRE**		XBRL Taxonomy Extension Label Presentation Document



	Apyx Medical Corporation

Date: May 8, 2020	By:	/s/ Charles D. Goodwin II
		Charles D. Goodwin II
		President, Chief Executive Officer and Director
		(Principal Executive Officer)

Date: May 8, 2020	By:	/s/ Tara Semb
		Tara Semb
		Chief Financial Officer,
		Treasurer and Secretary
		(Principal Financial Officer)


1.	I have reviewed this quarterly report on Form 10-Q/A of Apyx Medical Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.