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APYX Apyx Medical Corporation

1.23
0.00 (0.00%)
Pre Market
Last Updated: 09:37:56
Delayed by 15 minutes
Share Name Share Symbol Market Type
Apyx Medical Corporation NASDAQ:APYX NASDAQ Common Stock
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 1.23 0.4921 1.83 0 09:37:56

Form 10-Q - Quarterly report [Sections 13 or 15(d)]

08/08/2024 10:00pm

Edgar (US Regulatory)


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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, 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-REG-w-tagline-REG-logo-Blue_Orange_RGB_1100px-wide.jpg
APYX MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware11-2644611
(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 classTrading symbol(s)Name of each exchange on which registered
Common StockAPYXNasdaq 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 filerSmaller 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 7, 2024, 34,643,926 shares of the registrant’s $0.001 par value common stock were outstanding.


APYX MEDICAL CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the quarterly period ended June 30, 2024

Page
Part I.
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at June 30, 2024 and December 31, 2023
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023
Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2024 and 2023
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023
Item 2.
Item 3.
Item 4.
Part II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
1

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)
June 30, 2024
(Unaudited)
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents$32,678 $43,652 
   Trade accounts receivable, net of allowance of $650 and $608
12,709 14,023 
Inventories, net of provision for obsolescence of $916 and $875
9,324 9,923 
Prepaid expenses and other current assets1,960 2,764 
Total current assets56,671 70,362 
Property and equipment, net of accumulated depreciation and amortization of $3,783 and
   $3,522
1,918 1,915 
Operating lease right-of-use assets4,935 5,162 
Finance lease right-of-use assets59 69 
Other assets1,811 1,732 
Total assets$65,394 $79,240 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$2,348 $2,712 
Accrued expenses and other current liabilities7,958 9,661 
Current portion of operating lease liabilities313 347 
Current portion of finance lease liabilities20 20 
Total current liabilities10,639 12,740 
Long-term debt, net of debt discounts and issuance costs33,628 33,185 
Long-term operating lease liabilities4,697 4,896 
Long-term finance lease liabilities43 53 
Long-term contract liabilities1,271 1,246 
Other liabilities192 198 
Total liabilities50,470 52,318 
EQUITY
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 issued and outstanding as of June 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 June 30, 2024, and 34,643,888 issued and outstanding as of December 31, 2023
35 35 
Additional paid-in capital83,292 81,114 
Accumulated deficit(68,580)(54,448)
Total stockholders’ equity
14,74726,701
Non-controlling interest 177 221 
Total equity14,924 26,922 
Total liabilities and equity$65,394 $79,240 
The accompanying notes are an integral part of the condensed consolidated financial statements.
2

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,
2024202320242023
Sales$12,149 $13,569 $22,393 $25,711 
Cost of sales4,656 4,290 8,951 8,859 
Gross profit7,493 9,279 13,442 16,852 
Other costs and expenses:
Research and development1,424 1,357 2,821 2,628 
Professional services2,096 1,594 3,670 3,334 
Salaries and related costs4,682 4,877 9,378 9,795 
Selling, general and administrative4,838 5,378 9,735 10,633 
Total other costs and expenses13,040 13,206 25,604 26,390 
   Gain on sale-leaseback 2,692  2,692 
Loss from operations(5,547)(1,235)(12,162)(6,846)
Interest income439 179 934 230 
Interest expense(1,427)(543)(2,823)(777)
Other (expense) income, net(1)646 (22)641 
Total other (expense) income, net(989)282 (1,911)94 
Loss before income taxes(6,536)(953)(14,073)(6,752)
Income tax expense (benefit)50 66 103 (2,201)
Net loss(6,586)(1,019)(14,176)(4,551)
   Net loss attributable to non-controlling interest(30)(25)(44)(74)
Net loss attributable to stockholders$(6,556)$(994)$(14,132)$(4,477)
Loss per share:
Basic and diluted$(0.19)$(0.03)$(0.41)$(0.13)

The accompanying notes are an integral part of the condensed consolidated financial statements.
3

APYX MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
(In thousands)
Common StockAdditional Paid-In CapitalAccumulated DeficitNon-controlling InterestTotal Equity
SharesPar Value
Balance at December 31, 202234,598 $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, 202334,598 $35 $75,235 $(39,218)$162 $36,214 
Shares issued on stock options exercised for cash25 — 56 — 56 
Stock based compensation— — 1,482 — 1,482 
Shares issued on net settlement of stock options6 — — — — 
Net loss— — — (994)(25)(1,019)
Balance at June 30, 202334,629 $35 $76,773 $(40,212)$137 $36,733 
Common StockAdditional Paid-In CapitalAccumulated DeficitNon-controlling InterestTotal
SharesPar Value
Balance at December 31, 202334,644 $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, 202434,644 $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, 202434,644 $35 $83,292 $(68,580)$177 $14,924 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
4

APYX MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended June 30,
20242023
Cash flows from operating activities
Net loss$(14,176)$(4,551)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization313 354 
Provision for inventory obsolescence60 178 
Loss (gain) on disposal of property and equipment20 (2,692)
Stock based compensation2,178 2,849 
Allowance for credit losses45 55 
Non-cash lease expense62 22 
Non-cash interest expense443 209 
Changes in operating assets and liabilities:
Trade receivables1,187 (1,441)
Prepaid expenses and other assets666 (57)
Income tax receivables (207)
Inventories547 534 
Accounts payable(345)(26)
Accrued and other liabilities(1,670)(1,960)
Net cash used in operating activities(10,670)(6,733)
Cash flows from investing activities
Purchases of property and equipment(324)(266)
Proceeds from sale of property and equipment 7,267 
Net cash (used in) provided by investing activities(324)7,001 
Cash flows from financing activities
Proceeds from stock option exercises 56 
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(10)(19)
Net cash (used in) provided by financing activities(10)8,158 
Effect of exchange rates on cash30 (139)
Net change in cash and cash equivalents(10,974)8,287 
Cash and cash equivalents, beginning of period43,652 10,192 
Cash and cash equivalents, end of period$32,678 $18,479 
Cash paid for:
Interest$2,371 $431 
Income taxes$180 $227 
Non cash activities:
Right-of-use assets capitalized and operating lease liabilities recognized upon execution of lease$ $4,917 

The accompanying notes are an integral part of the condensed consolidated financial statements.
5

APYX MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1.     BASIS OF PRESENTATION

Apyx Medical Corporation (“Company”, “Apyx”, “it” and similar terms) was incorporated in 1982, under the laws of the State of Delaware and has its principal executive office at 5115 Ulmerton Road, Clearwater, FL 33760.

The Company is an advanced energy technology company with a passion for elevating people’s lives through innovative products, including its Helium Plasma Platform Technology products marketed and sold as Renuvion® in the cosmetic surgery market and J-Plasma® in the hospital surgical market. Renuvion and J-Plasma offer surgeons a unique ability to provide controlled heat to tissue to achieve their desired results. The Company also leverages its deep expertise and decades of experience in unique waveforms through OEM agreements with other medical device manufacturers.

The accompanying unaudited condensed consolidated financial statements have been prepared based upon SEC rules that permit reduced disclosure for interim periods. For a more complete discussion of significant accounting policies and certain other information, please refer to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. In the opinion of management these condensed consolidated financial statements reflect all adjustments that are necessary for a fair presentation of results of consolidated operations and financial condition for the interim periods shown, including normal recurring accruals and other items. The results for the interim periods are not necessarily indicative of results for the full year.

Reclassifications

The Company has reclassified certain amounts presented in the prior period to conform to the current period presentation. These amounts primarily relate to management salaries that were previously included within salaries and related costs and are now included within research and development. These reclassifications had no impact on previously reported net loss, accumulated deficit or cash flows for the periods presented.


NOTE 2.     RECENT ACCOUNTING PRONOUNCEMENTS

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280), to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. Amongst other amendments, the standard requires annual and interim disclosures of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), and interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually. This standard does not change how an entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) to improve income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements.

No other new accounting pronouncement issued or effective during the fiscal year are expected to have a material impact on the Company’s condensed consolidated financial statements or disclosures.

NOTE 3.     INVENTORIES

Inventories consisted of the following:
6

APYX MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)



(In thousands)June 30,
2024
December 31,
2023
Raw materials$3,873 $4,112 
Work in process2,356 2,257 
Finished goods 4,011 4,429 
Gross inventories10,240 10,798 
Less: provision for obsolescence(916)(875)
Inventories, net$9,324 $9,923 

7

APYX MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)



NOTE 4.     ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following:
(in thousands)June 30,
2024
December 31,
2023
Accrued payroll$1,003 $829 
Accrued bonuses991 1,545 
Accrued commissions625 1,489 
Accrued product warranties446 445 
Accrued product liability claim insurance deductibles3,073 3,521 
Accrued professional fees and legal related contingent liabilities532 518 
Short-term contract liabilities778 488 
Other accrued expenses and current liabilities510 826 
Total accrued expenses and other current liabilities$7,958 $9,661 

NOTE 5.     DEBT

The Company’s outstanding debt with Perceptive Credit Holdings IV, LP (as initial lender and administrative agent) (“Perceptive Credit Agreement”) at June 30, 2024 and December 31, 2023 bears interest at a floating rate based on one-month SOFR, subject to a floor of 5.0%, plus 7.0% (12.3% at June 30, 2024). Included in interest expense for the three and six months ended June 30, 2024 are $64,000 and $129,000, respectively, of amortization of the debt issuance costs and $158,000 and $314,000, respectively, of amortization of debt discounts. Included in interest expense for the three and six months ended June 30, 2023 are $60,000 and $88,000, respectively, of amortization of the debt issuance costs and $83,000 and $121,000, respectively, of amortization of the debt discounts, including accretion of the exit fee on the Company’s prior credit agreement.

A $7.5 million delayed draw loan is available until December 31, 2024, conditioned upon, among other things, the achievement of a minimum revenue target. If drawn, the loan will be used for working capital and general corporate purposes.

The Perceptive debt contains customary affirmative and negative covenants, including covenants limiting the ability of the Company and its subsidiaries, among other things, to incur debt, grant liens, make distributions, enter certain restrictive agreements, pay or modify subordinated debt, dispose of assets, make investments and acquisitions, enter into certain transactions with affiliates, and undergo certain fundamental changes, in each case, subject to limitations and exceptions set forth in the Perceptive Credit Agreement. The Perceptive Credit Agreement also requires the Company to satisfy certain financial covenants, including minimum trailing twelve month net revenue targets relating to its Advanced Energy segment (tested quarterly), with year-end targets of $41.6 million, $57.0 million, $70.2 million, and $87.8 million for 2024, 2025, 2026, and 2027, respectively. Additionally, the Company must maintain a balance of $3 million in cash and cash equivalents during the duration of the Perceptive Credit Agreement’s term. As of June 30, 2024, the Company was in compliance with the financial covenants contained within the Perceptive Credit Agreement. The Company’s continued compliance with covenants is subject to meeting or exceeding forecasted Advanced Energy revenues.

In connection with the Company’s initial loan under the Perceptive Credit Agreement, the Company issued Perceptive warrants to purchase up to 1,250,000 shares of its common stock, par value $0.001, with an exercise price of $2.43 per share.

The Company’s term loan under the Perceptive Credit Agreement, net consists of the following:

(In thousands)June 30,
2024
December 31,
2023
Term loan$37,500 $37,500 
Unamortized debt issuance costs(1,111)(1,240)
Unamortized debt discount(2,761)(3,075)
Term loan, net$33,628 $33,185 


8

APYX MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)



As of June 30, 2024, principal repayments on the debt are as follows:
(In thousands)
2024$ 
2025 
2026 
20272,216 
202835,284 
Total repayments$37,500 

NOTE 6.     CHINA JOINT VENTURE

In 2019, the Company executed a joint venture agreement with its Chinese supplier (the “China JV”) whereby the Company has a 51% ownership interest. The China JV has been consolidated in these condensed consolidated financial statements. The agreement required the Company to make capital contributions into the newly formed entity of approximately $357,000, which were made in prior years. In June 2023, the Company executed an amendment to the joint venture agreement to increase the amount of its registered capital. The amendment requires the Company to make additional capital contributions to the China JV of $255,000, of which $153,000 has been made as of June 30, 2024. As of the date of these condensed consolidated financial statements, the joint venture has not commenced principal operations.

Changes in the Company’s ownership investment in the China JV were as follows:

Three Months Ended June 30,Six Months Ended
June 30,
(In thousands)2024202320242023
Beginning interest in China JV$215$168$229$219
Net loss attributable to Apyx(31)(26)(45)(77)
Ending interest in China JV$184$142$184$142

NOTE 7.     EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share (“basic EPS”) is computed by dividing the net income or loss by the weighted average number of common shares outstanding for the reporting period. Diluted earnings (loss) per share (“diluted EPS”) gives effect to all dilutive potential shares outstanding. As the Company is in a net loss position for all periods presented, all potential shares outstanding are anti-dilutive. The following table provides the computation of basic and diluted loss per share.
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands, except per share data)2024202320242023
Numerator:
Net loss attributable to stockholders$(6,556)$(994)$(14,132)$(4,477)
Denominator:
Weighted average shares outstanding - basic and diluted
34,644 34,603 34,644 34,600 
Loss per share:
Basic and diluted$(0.19)$(0.03)$(0.41)$(0.13)
Anti-dilutive instruments excluded from diluted loss per common share:
Options8,430 7,700 8,430 7,700 
Warrants1,500 250 1,500 250 

9

APYX MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)



NOTE 8.     STOCK-BASED COMPENSATION

Under the Company’s stock option plans, the Board of Directors may grant restricted stock and options to purchase common shares to the Company's employees, officers, directors and consultants. The Company accounts for stock options in accordance with FASB ASC Topic 718, Compensation - Stock Compensation, with stock-based compensation expense recognized over the vesting period based on the fair value on the grant date utilizing the Black-Scholes model, which includes a number of estimates that affect the grant date fair value and the amount of expense to recognize.

The Company recognized approximately $1,050,000 and $2,178,000, respectively, in stock-based compensation expense during the three and six months ended June 30, 2024, as compared with $1,482,000 and $2,849,000, respectively, for the three and six months ended June 30, 2023.

Stock option activity is summarized as follows:
Number of optionsWeighted average exercise price
Outstanding at December 31, 2023
7,342,883 $6.31 
Granted1,468,929 2.36 
Exercised(569)2.50 
Canceled and forfeited(381,600)6.93 
Outstanding at June 30, 2024
8,429,643 $5.59 

The Company allows stock option holders to exercise stock-based awards by surrendering stock-based awards with an intrinsic value equal to the cumulative exercise price of the stock-based awards being exercised, referred to as net settlements. These surrenders are included in stock options exercised in the options rollforward above. There were no such exercises for the three months ended June 30, 2024. For the three months ended June 30, 2023, the Company received 4,305 options as payment in the exercise of 5,695 options. For the six months ended June 30, 2024 and 2023, respectively, the Company received 531 and 4,305 options as payment in the exercise of 38 and 5,695 options.

Common shares required to be issued upon the exercise of stock options would be issued from authorized and unissued shares. The Company calculated the grant date fair value of options granted in 2024 (“2024 Grants”) utilizing a Black-Scholes model.
2024 Grants
Strike price$1.27-$2.42
Risk-free rate4.0%-4.2%
Expected dividend yield
Expected volatility92.1%-94.3%
Expected term (in years)6

NOTE 9.     INCOME TAXES

Income tax expense was approximately $50,000 and $66,000 with effective tax rates of (0.8)% and (6.9)% for the three months ended June 30, 2024 and 2023, respectively. For the three months ended June 30, 2024 and 2023, the effective rate differs from the statutory rate primarily due to the full valuation allowance recorded on the net operating loss (“NOL”) and net deferred tax assets generated during the period.


10

APYX MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)



Income tax expense (benefit) was approximately $103,000 and $(2,201,000) with effective tax rates of (0.7)% and 32.6% for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024, the effective rate differs from the statutory rate primarily due to the full valuation allowance recorded on the NOL and net deferred tax assets generated during the period. For the six months ended June 30, 2023, the effective rate differs from the statutory rate primarily due to the reversal of the Company’s liability for uncertain tax positions, including accrued interest and penalties of approximately $2.1 million which were sustained upon the completion in January 2023 of the IRS examination of the Company's 2018 through 2020 income tax returns, partially offset by a valuation allowance on the NOL and net deferred tax assets generated during the period.

NOTE 10.     COMMITMENTS AND CONTINGENCIES

Litigation

The medical device industry is characterized by frequent claims and litigation, and the Company may become subject to various claims, lawsuits and proceedings in the ordinary course of our business. Such claims may include claims by current or former employees, distributors and competitors, claims concerning the marketing and promotion of the Company’s products and product liability claims.

The Company is involved in a number of legal actions relating to the use of our Helium Plasma Platform Technology, which actions are being defended by the Company’s insurance carrier-appointed counsel. The outcomes of these legal actions are not within the Company’s control and may not be known for prolonged periods of time. Management has not yet received from carrier-appointed defense counsel the estimates of the net potential range of losses in all of these cases, as would be required to confirm whether all of the claims in total are adequately covered by the varying levels of aggregate insurance coverage available for each relevant insurance policy period; further, in the case of one of the Company’s carriers, the Company is in a dispute regarding the total level of coverage available. Notwithstanding the foregoing, in the opinion of management, the Company has meritorious defenses, and such claims are not expected, individually or in the aggregate, to result in a material, adverse effect on its financial condition, results of operations and cash flows. However, in the event that damages exceed the aggregate coverage limits of the Company’s policies or if its insurance carriers disclaim coverage, management believes it is possible that costs associated with these claims could have a material adverse impact on the consolidated financial condition, results of operations and cash flows.

The Company accrues a liability in its condensed consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is recorded. If a loss is reasonably possible, but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded, actual results may differ from these estimates.

During 2022, the Company was notified of certain procedures alleged to have been performed by the same physician and which are currently the subject of two related products liability cases within the courts. During 2023, the Company was notified by its insurance carriers that all or most of the ten individual plaintiff’s allegations could be subject to separate deductibles notwithstanding the commonality of each underlying occurrence. During March 2024, two of the plaintiffs claims were dismissed by the courts. The Company has determined that a loss, comprised of estimated costs to defend the Company against the lawsuits, is probable and that the range of estimated losses is approximately $1,450,000 to $1,950,000. The Company recorded an estimated loss of $1,450,000 related to the matters during 2022. It is at least reasonably possible that a change in the actual amount of loss will occur in the near term, though management expects the actual amount of loss will be within the estimated range of losses.


11

APYX MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)



During March 2024, the Company was named as a defendant in a number of product liability lawsuits filed under the direction of a single plaintiff’s tort firm alleging off-label use of Renuvion products and the Company’s mismarketing of the same. The suits are venued predominantly in Florida and nearly all involve procedures conducted prior to 2023, which was before the Company received FDA 510k clearance for the use of Renuvion in the types of procedures at issue. The Company denies liability and intends to vigorously defend these suits and believes that it has applicable substantive and procedural defenses. The Company has determined that a loss, comprised of estimated costs to defend the Company against the lawsuits, is probable and currently estimates the range of losses in connection with these matters to be between $1,300,000 and $1,500,000. The Company recorded an estimated loss of $1,300,000 related to these matters during 2023. The Company has also determined that there is a reasonable possibility that there will be an additional loss related to the matters, but the Company is unable to provide an estimate of the range of such additional loss at this time.

Purchase Commitments

At June 30, 2024, the Company had purchase commitments totaling approximately $3.3 million, substantially all of which is expected to be purchased within the next twelve months.

12

APYX MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)



NOTE 11.     RELATED PARTY TRANSACTIONS

Two relatives of Nikolay Shilev, Apyx Bulgaria’s Managing Director, are considered related parties. Teodora Shileva, Mr. Shilev’s spouse, is an employee of the Company working in the accounting department. Svetoslav Shilev, Mr. Shilev’s son, is a quality manager in the quality assurance department.

The partner in the Company’s China JV is also a supplier to the Company. For the three months ended June 30, 2024 and 2023, the Company made purchases from this supplier of approximately $42,000 and $406,000, respectively. For the six months ended June 30, 2024 and 2023, the Company made purchases from this supplier of approximately $93,000 and $451,000, respectively. At June 30, 2024 and December 31, 2023, respectively, the Company had net payables to this supplier of approximately $23,000 and $82,000, respectively.

NOTE 12.     GEOGRAPHIC AND SEGMENT INFORMATION

Operating segments are aggregated into reportable segments only if they exhibit similar economic characteristics. In addition to similar economic characteristics, the Company also considers the following factors in determining the reportable segments: the nature of business activities, the management structure directly accountable to its chief operating decision maker for operating and administrative activities, availability of discrete financial information and information presented to the Board of Directors and investors. Asset information is not reviewed by the chief operating decision maker by segment and is not available by segment, accordingly, the Company has not presented a measure of assets by segment.

The Companys reportable segments are disclosed as principally organized and managed as two operating segments: Advanced Energy and OEM. Corporate & Other includes certain unallocated corporate and administrative costs which were not specifically attributed to any reportable segment. The OEM segment is primarily development and manufacturing contract and product driven. As a result, all related expenses are recorded as cost of sales and, therefore, there are no segment specific operating expenses incurred.

Summarized financial information with respect to reportable segments is as follows:

Three Months Ended June 30, 2024
(In thousands)Advanced EnergyOEMCorporate & OtherTotal
Sales$9,766 $2,383 $ $12,149 
(Loss) income from operations(1,696)461 (4,312)(5,547)
Interest income  439 439 
Interest expense  (1,427)(1,427)
Other loss, net  (1)(1)
Income tax expense  50 50 

13

APYX MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)



Three Months Ended June 30, 2023
(In thousands)Advanced EnergyOEMCorporate & OtherTotal
Sales$11,722 $1,847 $ $13,569 
Income (loss) from operations589 353 (2,177)(1,235)
Interest income  179 179 
Interest expense  (543)(543)
Other income, net  646 646 
Income tax expense  66 66 

Six Months Ended June 30, 2024
(In thousands)Advanced EnergyOEMCorporate & OtherTotal
Sales$17,219 $5,174 $ $22,393 
(Loss) income from operations(4,636)1,193 (8,719)(12,162)
Interest income  934 934 
Interest expense  (2,823)(2,823)
Other loss, net  (22)(22)
Income tax expense  103 103 

Six Months Ended June 30, 2023
(In thousands)Advanced EnergyOEMCorporate & OtherTotal
Sales$21,412 $4,299 $ $25,711 
(Loss) income from operations(887)1,204 (7,163)(6,846)
Interest income  230 230 
Interest expense  (777)(777)
Other income, net  641 641 
Income tax benefit  (2,201)(2,201)

International sales represented approximately 28.5% and 30.0% of total revenues for the three and six months ended June 30, 2024, respectively, as compared with approximately 25.3% and 26.1% of total revenues for the three and six months ended June 30, 2023, respectively.









14

APYX MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)



Sales by geographic region, based on the customer's “ship to” location on the invoice, are as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)2024202320242023
Sales by Domestic and International
Domestic$8,687 $10,137 $15,666 $19,008 
International3,462 3,432 6,727 6,703 
Total$12,149 $13,569 $22,393 $25,711 

15

APYX MEDICAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis in conjunction with our financial statements and related notes contained elsewhere in this report and with the audited consolidated financial statements and footnotes as of and for the year ended December 31, 2023 contained within our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 21, 2024. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors discussed in this report and those discussed in other documents we file with the SEC. In light of these risks, uncertainties and assumptions, readers are cautioned not to place undue reliance on such forward-looking statements. These forward-looking statements represent beliefs and assumptions as of the date of this report. While we may elect to update forward-looking statements and at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. Past performance does not guarantee future results.

Executive Level Overview

We are an advanced energy technology company with a passion for elevating people’s lives through innovative products, including our Helium Plasma Platform Technology products marketed and sold as Renuvion® in the cosmetic surgery market and J-Plasma® in the hospital surgical market. Renuvion and J-Plasma offer surgeons a unique ability to provide controlled heat to tissue to achieve their desired results. We also leverage our deep expertise and decades of experience in unique waveforms through OEM agreements with other medical device manufacturers.

We continue to drive sales in our Advanced Energy business by increasing the adoption of our multifunction generator and utilization of our single-use handpieces in the U.S. cosmetic surgery market and fulfilling demand from distributors in our international markets. Management estimates that our products have been sold in more than 60 countries. As of June 30, 2024, we had a direct sales force of 31 field-based selling professionals and utilized 3 independent sales agencies. We also had 4 sales managers. This selling organization, along with our international network of distributors, is focused on the use of Renuvion and J-Plasma in the cosmetic and hospital surgical markets, supported by our global medical affairs team. This global team of clinical support specialists focuses on supporting our users to ensure optimal outcomes for their patients. In 2023, we also began our direct to consumer marketing efforts, and began to further enhance our marketing to surgeons. In addition, we have invested in training programs and marketing-related activities to support accelerated adoption of Renuvion into surgeons’ practices.

Glucagon-like peptide -1 peptide receptor agonists (GLP-1’s), such as Mounjaro®, Wegov® and Ozempic®, are prescribed for the treatment of diabetes and or weight loss in combination with exercise to improve glycemic control. GLP-1’s have also been found to mimic the GLP-1 satiety hormone in our bodies. When one eats, GLP-1 is released in the small intestines regulating blood sugar and sending signals to the brain centers that control appetite. Studies have shown patients taking GLP-1’s have loss of body weight. Currently, two GLP-1’s are cleared by the FDA for weight loss, but we anticipate a number of additional drug candidates will be cleared as well as, oral versions of these injectable medications.

We believe the increased use of GLP-1’s may have an initial negative impact on the number of liposuction procedures, but in the long term, as these drugs have a ripple effect that will drive people towards plastic surgery, they will provide a tailwind for sales of our Renuvion products. The rapid weight loss from these drugs may cause what is known as “Ozempic Butt” characterized by sagging skin on the butt. Rapid weight loss can contribute to loose skin, particularly in the curvier areas of the body. To address this, the cosmetic surgery market is focusing on body contouring. Body contouring is a customizable treatment for patients to target specific fat deposits, engage in fat transfer, and treatments to address skin laxity. Renuvion is the only FDA approved device for the treatment of this issue post liposuction. Additionally, Renuvion may be used to treat skin laxity without the use of liposuction, potentially increasing the total available market for our products.

In regards to our operating segments, our results are aggregated into reportable segments only if they exhibit similar economic characteristics. In addition to similar economic characteristics, we also consider the following factors in determining the reportable segments: the nature of business activities, the management structure directly accountable to our chief operating decision maker for operating and administrative activities, availability of discrete financial information, and information presented to the Board of Directors and investors. Asset information is not reviewed by the chief operating decision maker by segment and is not available by segment and, accordingly, we have not presented a measure of assets by reportable segment.

Our reportable segments are disclosed as principally organized and managed as two operating segments: Advanced Energy and OEM. Corporate & Other includes certain unallocated corporate and administrative costs which are not specifically attributed
16

APYX MEDICAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

to any reportable segment. The OEM segment is primarily development and manufacturing contract and product driven, and all related expenses are recorded as cost of sales, therefore no segment specific operating expenses are incurred.

We strongly encourage investors to visit our website: www.apyxmedical.com to view the most current news and to review our filings with the Securities and Exchange Commission.

Results of Operations

Sales
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)20242023Change20242023Change
Sales by Reportable Segment
Advanced Energy$9,766 $11,722 (16.7)%$17,219 $21,412 (19.6)%
OEM2,383 1,847 29.0 %5,174 4,299 20.4 %
Total$12,149 $13,569 (10.5)%$22,393 $25,711 (12.9)%
(632,000)
Sales by Domestic and International
Domestic$8,687 $10,137 (14.3)%$15,666 $19,008 (17.6)%
International3,462 3,432 0.9 %6,727 6,703 0.4 %
Total$12,149 $13,569 (10.5)%$22,393 $25,711 (12.9)%

Total revenue decreased by 10.5%, or approximately $1.4 million, for the three months ended June 30, 2024 when compared with the three months ended June 30, 2023. Total revenue decreased by 12.9%, or approximately $3.3 million, for the six months ended June 30, 2024 when compared with the six months ended June 30, 2023.

Advanced Energy segment sales decreased 16.7%, or approximately $2.0 million, for the three months ended June 30, 2024 when compared with the three months ended June 30, 2023. Advanced Energy segment sales decreased 19.6%, or approximately $4.2 million, for the six months ended June 30, 2024 when compared with the six months ended June 30, 2023. The Advanced Energy sales decrease was driven by lower sales of our generators in both domestic and some international markets as a result of economic uncertainty in the capital equipment market that is being experienced in the aesthetic space. These decreases were partially offset by increased volume of single-use handpieces globally.

OEM segment sales increased 29.0%, or approximately $0.5 million, for the three months ended June 30, 2024 when compared with the three months ended June 30, 2023. OEM segment sales increased 20.4%, or approximately $0.9 million, for the six months ended June 30, 2024 when compared with the six months ended June 30, 2023. The increase in OEM sales was due to increases in sales volume to existing customers, including Symmetry Surgical under our 10-year generator manufacturing and supply agreement.

International sales represented approximately 28.5% and 30.0% of total revenues for the three and six months ended June 30, 2024, respectively, as compared with 25.3% and 26.1% of total revenues for the same period in the prior year. Management estimates our products have been sold in more than 60 countries through local dealers coordinated by sales and marketing personnel through our facilities in Clearwater, Florida and Sofia, Bulgaria.

17

APYX MEDICAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Gross Profit
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)20242023Change20242023Change
Cost of sales$4,656 $4,290 8.5 %$8,951 $8,859 1.0 %
Percentage of sales38.3 %31.6 %40.0 %34.5 %
Gross profit$7,493 $9,279 (19.2)%$13,442 $16,852 (20.2)%
Percentage of sales61.7 %68.4 %60.0 %65.5 %
Gross profit for the three months ended June 30, 2024, decreased (19.2)% to $7.5 million, compared to $9.3 million for the same period in the prior year. Gross margin for the three months ended June 30, 2024, was 61.7%, compared to 68.4% for the same period in 2023. The decrease in gross profit margins for the three months ended June 30, 2024 from the prior year period is primarily attributable to changes in the sales mix between our two segments, with our OEM segment comprising a higher percentage of total sales and geographic mix within our Advanced Energy segment, with international sales comprising a higher percentage of total sales.

Gross profit for the six months ended June 30, 2024, decreased (20.2)% to $13.4 million, compared to $16.9 million for the same period in the prior year. Gross margin for the six months ended June 30, 2024, was 60.0%, compared to 65.5% for the same period in 2023. The decrease in gross profit margins for the six months ended June 30, 2024 from the prior year period is primarily attributable to changes in the sales mix between our two segments, with our OEM segment comprising a higher percentage of total sales and geographic mix within our Advanced Energy segment, with international sales comprising a higher percentage of total sales.

Other Costs and Expenses
Research and development
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)20242023Change20242023Change
Research and development expense$1,424 $1,357 4.9 %$2,821 $2,628 7.3 %
Percentage of sales11.7 %10.0 %12.6 %10.2 %
Research and development expenses increased 4.9% for the three months ended June 30, 2024, primarily due to higher spending on our product development initiatives and clinical studies ($0.1 million).

Research and development expenses increased 7.3% for the six months ended June 30, 2024, primarily due to higher spending on our product development initiatives and clinical studies ($0.2 million).
Professional services
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)20242023Change20232023Change
Professional services expense$2,096 $1,594 31.5 %$3,670 $3,334 10.1 %
Percentage of sales17.3 %11.7 %16.4 %13.0 %

Professional services expense increased 31.5% for the three months ended June 30, 2024, primarily attributable to increases in legal expenses ($0.4 million), as a result of the reversal of a legal loss contingency in the prior year period, and physician and marketing consulting ($0.2 million). These decreases were partially offset by a decrease in board of director’s option expense ($0.1 million).

18

APYX MEDICAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Professional services expense increased 10.1% for the six months ended June 30, 2024, primarily attributable to increases in legal expenses ($0.4 million), as a result of the reversal of a legal loss contingency in the prior year period, and physician and marketing consulting ($0.2 million). These decreases were partially offset by a decrease in board of director’s stock-based compensation expense ($0.3 million).

Salaries and related costs
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)20242023Change20242023Change
Salaries and related expenses$4,682 $4,877 (4.0)%$9,378 $9,795 (4.3)%
Percentage of sales38.5 %35.9 %41.9 %38.1 %

During the three months ended June 30, 2024, salaries and related expenses decreased (4.0)%, primarily driven by lower stock based compensation expense ($0.2 million) and temporary labor expenses ($0.1 million). These decreases were partially offset by an increase in salaries and related taxes and benefits ($0.1 million).

During the six months ended June 30, 2024, salaries and related expenses decreased (4.3)%, primarily driven by lower stock based compensation expense ($0.4 million) and temporary labor expenses ($0.2 million). These decreases were partially offset by an increase in salaries and related taxes and benefits ($0.1 million) and bonus expense ($0.1 million).

Selling, general and administrative expenses
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)20242023Change20242023Change
SG&A expense$4,838 $5,378 (10.0)%$9,735 $10,633 (8.4)%
Percentage of sales39.8 %39.6 %43.5 %41.4 %

During the three months ended June 30, 2024, selling, general and administrative expense decreased (10.0)%, primarily driven by decreases in commissions ($0.7 million), advertising expense, including trade show fees and related costs ($0.2 million) and bad debt expense ($0.1 million). These decreases were partially offset by higher meeting and training costs ($0.4 million) and travel expense ($0.1 million).

During the six months ended June 30, 2024, selling, general and administrative expense decreased (8.4)%, primarily driven by decreases in commissions ($1.4 million), advertising expense, including trade show fees and related costs ($0.2 million), insurance expense, including claims on our policies ($0.1 million) and travel expense ($0.1 million). These decreases were partially offset by higher meeting and training costs ($0.7 million) and building lease expense ($0.2 million).

Gain on sale-leaseback

Three Months Ended June 30,Six Months Ended June 30,
(In thousands)2024202320242023
Gain on sale-leaseback— $2,692 — $2,692 
Percentage of sales— %19.8 %— %10.5 %

Gain on sale-leaseback for the three and six months ended June 30, 2023 was approximately $2.7 million as a result of the gain on the sale and leaseback of our Clearwater, FL facility in May 2023.




19

APYX MEDICAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Interest Income (Expense)

Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)2024202320242023
Interest income$439 $179 $934 $230 
Percentage of sales3.6 %1.3 %4.2 %0.9 %
Interest expense(1,427)$(543)(2,823)$(777)
Percentage of sales(11.7)%(4.0)%(12.6)%(3.0)%

Interest income increased approximately $0.3 million and $0.7 million, respectively, for the three and six months ended June 30, 2024, when compared with the same periods the prior year. These increases are due to a higher average balance in our investments in money market funds and U.S. Treasury securities included in cash and cash equivalents.

Interest expense increased approximately $0.9 million and $2.0 million, respectively, for the three and six months ended June 30, 2024, when compared with the same periods in the prior year. These increases are due to cash and noncash interest expense on the Perceptive Credit Agreement.

Other Income (Loss), net

Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)2024202320242023
Other (expense) income, net$(1)$646 $(22)$641 
Percentage of sales— %4.8 %(0.1)%2.5 %

Other (expense) income, net decreased approximately $0.6 million and $0.7 million for the three and six months ended June 30, 2024, compared with the same periods in the prior year. These decreases were primarily attributable to a small insurance recovery in 2023 ($0.2 million) and the release of our joint and several payroll liability due to the lapse of the statute of limitations in the prior year ($0.4 million).

Income Taxes
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)2024202320242023
Income tax expense (benefit)$50 $66 $103 $(2,201)
Effective tax rate(0.8)%(6.9)%(0.7)%32.6 %

Our income tax expense was approximately $50,000 and $66,000 with effective tax rates of (0.8)% and (6.9)% for the three months ended June 30, 2024 and 2023, respectively. For the three months ended June 30, 2024 and 2023, the effective rate differs from the statutory rate primarily due to the full valuation allowance recorded on the net operating loss (“NOL”) and net deferred tax assets generated during the period.

Our income tax expense (benefit) was approximately $103,000 and $(2,201,000) with effective tax rates of (0.7)% and 32.6% for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024, the effective rate differs from the statutory rate primarily due to the full valuation allowance recorded on the NOL and net deferred tax assets generated during the period. For the six months ended June 30, 2023, the effective rate differs from the statutory rate primarily due to the reversal of the Company’s liability for uncertain tax positions, including accrued interest and penalties of approximately $2.1 million which were sustained upon the completion in January 2023 of the IRS examination of the Company's 2018 through 2020 income tax returns, partially offset by a valuation allowance on the NOL and net deferred tax assets generated during the period.

20

APYX MEDICAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Liquidity and Capital Resources

At June 30, 2024, we had approximately $32.7 million in cash and cash equivalents as compared to approximately $43.7 million in cash and cash equivalents at December 31, 2023. Our working capital at June 30, 2024 was approximately $46.0 million compared with $57.6 million at December 31, 2023.

For the six months ended June 30, 2024, net cash used in operating activities was approximately $10.7 million, which principally funded our loss from operations of $12.2 million, compared with net cash used in operating activities of approximately $6.7 million in the six months ended June 30, 2023. The increase in cash used in operations is primarily due to the payment of accrued bonuses in the first quarter of 2024, no bonuses were paid in 2023, and the increase in operating loss driven by lower Advanced Energy sales compared to the same period in the prior year. These decreases were partially offset by improvements in our accounts receivable and inventory positions.

Net cash used in investing activities six months ended June 30, 2024 was $0.3 million related to investments in property and equipment. Net cash provided by investing activities for the six months ended June 30, 2023 was $7.0 million related to the sale of our Clearwater, FL facility ($7.3 million), partially offset by investments in property and equipment ($0.3 million).

Net cash provided by financing activities for the six months ended June 30, 2023 was $8.1 million related to proceeds received upon the execution of the prior debt agreement ($9.9 million) less debt issuance costs incurred in the transaction ($1.8 million). This prior debt was paid off in November 2023 with proceeds from the Perceptive Credit Agreement.

We have incurred recurring net losses and cash outflows from operations and we anticipate that losses will continue in the near term. We plan to continue to fund our operations and capital funding needs through existing cash, sales of our products and if necessary additional equity and/or debt financing. However, we cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on terms acceptable to us. The sale of additional equity would result in dilution to our stockholders. Incurring additional debt financing would result in further debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. If we are unable to raise additional capital in sufficient amounts or on acceptable terms, we may be required to delay, limit, reduce, or terminate our sales, marketing and product development. Any of these actions could harm our business, results of operations and prospects.

On November 22, 2022, we filed a shelf registration statement providing us the ability to register and sell our securities in the aggregate amount up to $100 million. The shelf registration statement included an embedded ATM facility for up to $40 million. To date we have not utilized this facility.

On November 8, 2023, we entered into a Credit and Guaranty Agreement (the “Perceptive Credit Agreement”), by and among Apyx Medical (as borrower), Apyx China Holding Corp. and Apyx Bulgaria EOOD, our wholly-owned subsidiaries (as subsidiary guarantors), and Perceptive Credit Holdings IV, LP (as initial lender and administrative agent) (“Perceptive”), and the lenders from time to time party thereto. The Perceptive Credit Agreement provides for a facility of up to $45 million, consisting of senior secured term loans. The Perceptive Credit Agreement provides for (i) an initial loan of $37.5 million and (ii) a delayed draw loan of $7.5 million.

For a more in-depth description of the terms of the Perceptive Credit Agreement, see Note 11 in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023.

At June 30, 2024, we had purchase commitments totaling approximately $3.3 million, substantially all of which is expected to be purchased within the next twelve months.




21

APYX MEDICAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Critical Accounting Estimates

In preparing the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), we have adopted various accounting policies. Our most significant accounting policies are disclosed in Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 21, 2024.

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Our estimates and assumptions, including those related to inventories, intangible assets, property, plant and equipment, legal proceedings, research and development, warranty obligations, product liability, sales returns and discounts, stock-based compensation and income taxes are updated as appropriate, which in most cases is at least quarterly. We base our estimates on historical experience, or various assumptions that are believed to be reasonable under the circumstances and the results form the basis for making judgments about the reported values of assets, liabilities, revenues and expenses. Actual results may materially differ from these estimates.

Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made and (2) other materially different estimates could have been reasonably made or material changes in the estimates are reasonably likely to occur from period to period. Our critical accounting estimates include the following:

Stock-Based Compensation

Under our stock option plans, options to purchase common shares may be granted to employees, officers and directors by our Board of Directors. We account for stock options in accordance with FASB ASC Topic 718-10, Compensation-Stock Compensation, with compensation expense recognized over the vesting period. Options are valued using the Black-Scholes model, which includes a number of estimates that affect the amount of our expense. We have determined that the most critical of these estimates are the estimates of expected life and volatility used in the calculations.

Expected life

For employee stock-based compensation awards, we estimate the expected life of awards utilizing the SEC's simplified method. We utilize this method, as we have not historically granted stock-based compensation awards to employees in sufficient volumes to determine a reasonable estimate of the life of awards. For awards granted to non-employees, we calculate expected life using a combination of past exercise behavior, the contractual term and expected remaining exercise behavior.

Volatility

We determine the volatility by utilizing the historical volatility of our stock over the period of the awards expected life. The SEC allows us to include periods in excess of the useful life if we determine that they provide a more reasonable basis for the volatility of our stock. Additionally, ASC 718-10 allows us to exclude periods from the volatility if they pertain to events or circumstances that in our judgment are specific to us and if the event or transaction is not reasonably expected to occur again during the expected term of the awards. We have not included any additional periods, nor disregarded any periods, in calculating our volatility.

Accounts Receivable Allowance

We maintain a reserve for uncollectible accounts receivable. When evaluating the adequacy of the allowance for credit losses, we analyze historical bad debt experience, the composition of outstanding receivables by customer class, and the age of outstanding balances, and we make estimates in connection with establishing the allowance for credit losses, including the expected impacts of changes in the operating environment and other trends. Changes in estimates are reflected in the period they are made. If the financial condition of our customers deteriorates, resulting in an inability to make payments, additional allowances may be required.
22

APYX MEDICAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Inventory Obsolescence Allowance

We maintain a reserve for excess and obsolete inventory resulting from the potential inability to sell our products at prices in excess of current carrying costs. The markets in which we operate are highly competitive, with new products and surgical procedures introduced on an ongoing basis. Such marketplace changes may cause our products to become obsolete. We make estimates regarding the future recoverability of the costs of these products and record a provision for excess and obsolete inventories based on historical experience and expected future trends. If actual product life cycles, product demand or acceptance of new product introductions are less favorable than projected by management, additional inventory write-downs may be required, which would unfavorably affect future operating results.

Litigation Contingencies

In accordance with authoritative guidance, we record a liability in our consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible, but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded; actual results may differ from these estimates.

Income Taxes

The provision for income taxes includes federal, foreign, state and local income taxes currently payable and those deferred because of temporary differences between the financial statement and tax bases of assets and liabilities. Deferred tax assets or liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities using enacted marginal tax rates. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Deferred income tax expenses or credits are based on the changes in the asset or liability from period to period.

As a result of historical losses and our expectation to continue to generate losses in the near future, we recorded a valuation allowance on our net deferred tax assets. Exclusive of the carryback provisions of the CARES Act and the associated income tax benefit recognized in 2020, we do not anticipate recording an income tax benefit related to our deferred tax assets. We will reassess the realization of deferred tax assets each reporting period and will be able to reduce the valuation allowance to the extent our results of operations improve, and it becomes more likely than not that the deferred tax assets will be realized. As management has not fully determined the timing of when it will generate taxable income in the U.S., we continued to record a valuation allowance on the net deferred tax assets balance as of June 30, 2024.

We assess the financial statement impact of an uncertain tax position taken or expected to be taken on an income tax return at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not of being sustained based on the technical merit of the position.

Inflation

The consequences of global supply chain instability and inflationary cost increases and their adverse impact to the global economy, continue to evolve. Accordingly, the significance of the future impact to our business and financial statements remains subject to significant uncertainty. We continue to work on initiatives to combat inflation, including finding alternative suppliers that meet our quality standards, streamlining our supplier network to reduce the use of middlemen and redesigning some components to achieve better volume purchase prices. Inflation has not, to date, materially impacted our operations or financial performance. However, as these trends continue for raw materials, freight, and labor costs, our future financial performance could be adversely impacted.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements at this time.

23

APYX MEDICAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Recent Accounting Pronouncements


24

APYX MEDICAL CORPORATION
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

25

APYX MEDICAL CORPORATION
ITEM 4. Controls and Procedures

Disclosure Controls and Procedures

Our management has established and maintains disclosure controls and procedures that are designed to ensure that the information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, 2024, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by the Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
26

APYX MEDICAL CORPORATION
PART II.     Other Information

ITEM 1. Legal Proceedings



27

APYX MEDICAL CORPORATION
ITEM 1A. Risk Factors

There have been no material changes to the risk factors described under Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.


28

APYX MEDICAL CORPORATION
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not Applicable.

ITEM 5. Other Information

None.
29

APYX MEDICAL CORPORATION
ITEM 6. Exhibits
3.1
Articles of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 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 Exhibit 3.2 to the Registrant’s 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 Exhibit 3.5 to the Registrant’s Quarterly Report on Form 10-Q filed on November 3, 2017)
3.4
Certificate of Elimination (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 3, 2018)
3.5Certificate of Amendment of the Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 28, 2018)
31.1*
31.2*
32.1*
32.2*
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

* Filed herewith.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended and otherwise is not subject to liability under these sections.

30

APYX MEDICAL CORPORATION
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, thereunto duly authorized.
Apyx Medical Corporation
Date: August 8, 2024By:/s/ Charles D. Goodwin II
Charles D. Goodwin II
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: August 8, 2024By:/s/ Matthew Hill
Matthew Hill
Chief Financial Officer,
Treasurer and Secretary
(Principal Financial Officer)

31
EXHIBIT 31.1

Certificate Pursuant to Section 302
of Sarbanes – Oxley Act of 2002
CERTIFICATION OF CEO

I, Charles D Goodwin II, the Registrant's Chief Executive Officer, certify that:

1.I have reviewed this quarterly report on Form 10-Q 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
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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.
Date: August 8, 2024By:/s/ Charles D. Goodwin II
Charles D. Goodwin II
President and Chief Executive Officer

EXHIBIT 31.2

Certificate Pursuant to Section 302
of Sarbanes – Oxley Act of 2002
CERTIFICATION OF CFO

I, Matthew Hill, the Registrant's Chief Financial Officer, certify that:

1.I have reviewed this quarterly report on Form 10-Q 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
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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.
Date: August 8, 2024By:/s/ Matthew Hill
Matthew Hill
Chief Financial Officer, Treasurer and Secretary


EXHIBIT 32.1
Certificate Pursuant to 18 U.S.C Section 1350, as adopted pursuant to
Section 906 of Sarbanes – Oxley Act of 2002
CERTIFICATION OF CEO

In connection with the quarterly report on Form 10-Q of Apyx Medical Corporation (the "Company") for the period ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Chief Executive Officer certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002, that:

(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.
Date: August 8, 2024By:/s/ Charles D. Goodwin II
Charles D. Goodwin II
President and Chief Executive Officer




EXHIBIT 32.2
Certificate Pursuant to 18 U.S.C Section 1350, as adopted pursuant to
Section 906 of Sarbanes – Oxley Act of 2002
CERTIFICATION OF CFO

In connection with the quarterly report on Form 10-Q of Apyx Medical Corporation (the "Company") for the period ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Chief Financial Officer certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002, that:

(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.
Date: August 8, 2024By:/s/ Matthew Hill
Matthew Hill
Chief Financial Officer, Treasurer and Secretary


v3.24.2.u1
Cover - shares
6 Months Ended
Jun. 30, 2024
Aug. 07, 2024
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2024  
Document Transition Report false  
Entity File Number 001-31885  
Entity Registrant Name APYX MEDICAL CORPORATION  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 11-2644611  
Entity Address, Address Line One 5115 Ulmerton Road,  
Entity Address, City or Town Clearwater  
Entity Address, State or Province FL  
Entity Address, Postal Zip Code 33760  
City Area Code 727  
Local Phone Number 384-2323  
Title of 12(b) Security Common Stock  
Trading Symbol APYX  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   34,643,926
Entity Central Index Key 0000719135  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2024  
v3.24.2.u1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Current assets:    
Cash and cash equivalents $ 32,678 $ 43,652
Trade accounts receivable, net of allowance of $650 and $608 12,709 14,023
Inventories, net of provision for obsolescence of $916 and $875 9,324 9,923
Prepaid expenses and other current assets 1,960 2,764
Total current assets 56,671 70,362
Property and equipment, net of accumulated depreciation and amortization of $3,783 and $3,522 1,918 1,915
Operating lease right-of-use assets 4,935 5,162
Finance lease right-of-use assets 59 69
Other assets 1,811 1,732
Total assets 65,394 79,240
Current liabilities:    
Accounts payable 2,348 2,712
Accrued expenses and other current liabilities 7,958 9,661
Current portion of operating lease liabilities 313 347
Current portion of finance lease liabilities 20 20
Total current liabilities 10,639 12,740
Long-term debt, net of debt discounts and issuance costs 33,628 33,185
Long-term operating lease liabilities 4,697 4,896
Long-term finance lease liabilities 43 53
Long-term contract liabilities 1,271 1,246
Other liabilities 192 198
Total liabilities 50,470 52,318
EQUITY    
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 issued and outstanding as of June 30, 2024 and December 31, 2023 0 0
Common stock, $0.001 par value; 75,000,000 shares authorized; 34,643,926 issued and outstanding as of June 30, 2024, and 34,643,888 issued and outstanding as of December 31, 2023 35 35
Additional paid-in capital 83,292 81,114
Accumulated deficit (68,580) (54,448)
Total stockholders’ equity 14,747 26,701
Non-controlling interest 177 221
Total equity 14,924 26,922
Total liabilities and equity $ 65,394 $ 79,240
v3.24.2.u1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts receivable $ 650 $ 608
Inventories, provision for obsolescence 916 875
Accumulated depreciation and amortization $ 3,783 $ 3,522
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, shares authorized (in shares) 10,000,000 10,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized (in shares) 75,000,000 75,000,000
Common stock, shares issued (in shares) 34,643,926 34,643,888
Common stock, shares outstanding (in shares) 34,643,926 34,643,888
v3.24.2.u1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Income Statement [Abstract]        
Sales $ 12,149 $ 13,569 $ 22,393 $ 25,711
Cost of sales 4,656 4,290 8,951 8,859
Gross profit 7,493 9,279 13,442 16,852
Other costs and expenses:        
Research and development 1,424 1,357 2,821 2,628
Professional services 2,096 1,594 3,670 3,334
Salaries and related costs 4,682 4,877 9,378 9,795
Selling, general and administrative 4,838 5,378 9,735 10,633
Total other costs and expenses 13,040 13,206 25,604 26,390
Gain on sale-leaseback 0 2,692 0 2,692
Loss from operations (5,547) (1,235) (12,162) (6,846)
Interest income 439 179 934 230
Interest expense (1,427) (543) (2,823) (777)
Other (expense) income, net (1) 646 (22) 641
Total other (expense) income, net (989) 282 (1,911) 94
Loss before income taxes (6,536) (953) (14,073) (6,752)
Income tax expense (benefit) 50 66 103 (2,201)
Net loss (6,586) (1,019) (14,176) (4,551)
Net loss attributable to non-controlling interest (30) (25) (44) (74)
Net loss attributable to stockholders $ (6,556) $ (994) $ (14,132) $ (4,477)
Loss per share:        
Basic (in dollars per share) $ (0.19) $ (0.03) $ (0.41) $ (0.13)
Diluted (in dollars per share) $ (0.19) $ (0.03) $ (0.41) $ (0.13)
v3.24.2.u1
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Non-controlling Interest
Beginning balance (in shares) at Dec. 31, 2022   34,598      
Beginning balance at Dec. 31, 2022 $ 37,793 $ 35 $ 73,282 $ (35,735) $ 211
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Stock based compensation 1,367   1,367    
Proceeds received from issuance of warrants 586   586    
Net loss (3,532)     (3,483) (49)
Ending balance (in shares) at Mar. 31, 2023   34,598      
Ending balance at Mar. 31, 2023 36,214 $ 35 75,235 (39,218) 162
Beginning balance (in shares) at Dec. 31, 2022   34,598      
Beginning balance at Dec. 31, 2022 37,793 $ 35 73,282 (35,735) 211
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net loss (4,551)        
Ending balance (in shares) at Jun. 30, 2023   34,629      
Ending balance at Jun. 30, 2023 36,733 $ 35 76,773 (40,212) 137
Beginning balance (in shares) at Mar. 31, 2023   34,598      
Beginning balance at Mar. 31, 2023 36,214 $ 35 75,235 (39,218) 162
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Shares issued on stock options exercises for cash (in shares)   25      
Shares issued on stock options exercised for cash 56   56    
Stock based compensation 1,482   1,482    
Shares issued on net settlement of stock options (in shares)   6      
Net loss (1,019)     (994) (25)
Ending balance (in shares) at Jun. 30, 2023   34,629      
Ending balance at Jun. 30, 2023 36,733 $ 35 76,773 (40,212) 137
Beginning balance (in shares) at Dec. 31, 2023   34,644      
Beginning balance at Dec. 31, 2023 26,922 $ 35 81,114 (54,448) 221
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Stock based compensation 1,128   1,128    
Net loss (7,590)     (7,576) (14)
Ending balance (in shares) at Mar. 31, 2024   34,644      
Ending balance at Mar. 31, 2024 20,460 $ 35 82,242 (62,024) 207
Beginning balance (in shares) at Dec. 31, 2023   34,644      
Beginning balance at Dec. 31, 2023 26,922 $ 35 81,114 (54,448) 221
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net loss (14,176)        
Ending balance (in shares) at Jun. 30, 2024   34,644      
Ending balance at Jun. 30, 2024 14,924 $ 35 83,292 (68,580) 177
Beginning balance (in shares) at Mar. 31, 2024   34,644      
Beginning balance at Mar. 31, 2024 20,460 $ 35 82,242 (62,024) 207
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Stock based compensation 1,050   1,050    
Net loss (6,586)     (6,556) (30)
Ending balance (in shares) at Jun. 30, 2024   34,644      
Ending balance at Jun. 30, 2024 $ 14,924 $ 35 $ 83,292 $ (68,580) $ 177
v3.24.2.u1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Cash flows from operating activities    
Net loss $ (14,176) $ (4,551)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 313 354
Provision for inventory obsolescence 60 178
Loss (gain) on disposal of property and equipment 20 (2,692)
Stock based compensation 2,178 2,849
Allowance for credit losses 45 55
Non-cash lease expense 62 22
Non-cash interest expense 443 209
Changes in operating assets and liabilities:    
Trade receivables 1,187 (1,441)
Prepaid expenses and other assets 666 (57)
Income tax receivables 0 (207)
Inventories 547 534
Accounts payable (345) (26)
Accrued and other liabilities (1,670) (1,960)
Net cash used in operating activities (10,670) (6,733)
Cash flows from investing activities    
Purchases of property and equipment (324) (266)
Proceeds from sale of property and equipment 0 7,267
Net cash (used in) provided by investing activities (324) 7,001
Cash flows from financing activities    
Proceeds from stock option exercises 0 56
Proceeds from long-term debt 0 9,289
Payment of debt issuance costs 0 (1,754)
Proceeds received from issuance of warrants 0 586
Repayment of finance lease liabilities (10) (19)
Net cash (used in) provided by financing activities (10) 8,158
Effect of exchange rates on cash 30 (139)
Net change in cash and cash equivalents (10,974) 8,287
Cash and cash equivalents, beginning of period 43,652 10,192
Cash and cash equivalents, end of period 32,678 18,479
Cash paid for:    
Interest 2,371 431
Income taxes 180 227
Non cash activities:    
Right-of-use assets capitalized and operating lease liabilities recognized upon execution of lease $ 0 $ 4,917
v3.24.2.u1
BASIS OF PRESENTATION
6 Months Ended
Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
BASIS OF PRESENTATION BASIS OF PRESENTATION
Apyx Medical Corporation (“Company”, “Apyx”, “it” and similar terms) was incorporated in 1982, under the laws of the State of Delaware and has its principal executive office at 5115 Ulmerton Road, Clearwater, FL 33760.

The Company is an advanced energy technology company with a passion for elevating people’s lives through innovative products, including its Helium Plasma Platform Technology products marketed and sold as Renuvion® in the cosmetic surgery market and J-Plasma® in the hospital surgical market. Renuvion and J-Plasma offer surgeons a unique ability to provide controlled heat to tissue to achieve their desired results. The Company also leverages its deep expertise and decades of experience in unique waveforms through OEM agreements with other medical device manufacturers.

The accompanying unaudited condensed consolidated financial statements have been prepared based upon SEC rules that permit reduced disclosure for interim periods. For a more complete discussion of significant accounting policies and certain other information, please refer to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. In the opinion of management these condensed consolidated financial statements reflect all adjustments that are necessary for a fair presentation of results of consolidated operations and financial condition for the interim periods shown, including normal recurring accruals and other items. The results for the interim periods are not necessarily indicative of results for the full year.

Reclassifications

The Company has reclassified certain amounts presented in the prior period to conform to the current period presentation. These amounts primarily relate to management salaries that were previously included within salaries and related costs and are now included within research and development. These reclassifications had no impact on previously reported net loss, accumulated deficit or cash flows for the periods presented.
v3.24.2.u1
RECENT ACCOUNTING PRONOUNCEMENTS
6 Months Ended
Jun. 30, 2024
Accounting Standards Update and Change in Accounting Principle [Abstract]  
RECENT ACCOUNTING PRONOUNCEMENTS RECENT ACCOUNTING PRONOUNCEMENTS
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280), to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. Amongst other amendments, the standard requires annual and interim disclosures of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), and interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually. This standard does not change how an entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) to improve income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements.

No other new accounting pronouncement issued or effective during the fiscal year are expected to have a material impact on the Company’s condensed consolidated financial statements or disclosures.
v3.24.2.u1
INVENTORIES
6 Months Ended
Jun. 30, 2024
Inventory Disclosure [Abstract]  
INVENTORIES INVENTORIES
Inventories consisted of the following:
(In thousands)June 30,
2024
December 31,
2023
Raw materials$3,873 $4,112 
Work in process2,356 2,257 
Finished goods 4,011 4,429 
Gross inventories10,240 10,798 
Less: provision for obsolescence(916)(875)
Inventories, net$9,324 $9,923 
v3.24.2.u1
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
6 Months Ended
Jun. 30, 2024
Payables and Accruals [Abstract]  
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following:
(in thousands)June 30,
2024
December 31,
2023
Accrued payroll$1,003 $829 
Accrued bonuses991 1,545 
Accrued commissions625 1,489 
Accrued product warranties446 445 
Accrued product liability claim insurance deductibles3,073 3,521 
Accrued professional fees and legal related contingent liabilities532 518 
Short-term contract liabilities778 488 
Other accrued expenses and current liabilities510 826 
Total accrued expenses and other current liabilities$7,958 $9,661 
v3.24.2.u1
DEBT
6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
DEBT DEBT
The Company’s outstanding debt with Perceptive Credit Holdings IV, LP (as initial lender and administrative agent) (“Perceptive Credit Agreement”) at June 30, 2024 and December 31, 2023 bears interest at a floating rate based on one-month SOFR, subject to a floor of 5.0%, plus 7.0% (12.3% at June 30, 2024). Included in interest expense for the three and six months ended June 30, 2024 are $64,000 and $129,000, respectively, of amortization of the debt issuance costs and $158,000 and $314,000, respectively, of amortization of debt discounts. Included in interest expense for the three and six months ended June 30, 2023 are $60,000 and $88,000, respectively, of amortization of the debt issuance costs and $83,000 and $121,000, respectively, of amortization of the debt discounts, including accretion of the exit fee on the Company’s prior credit agreement.

A $7.5 million delayed draw loan is available until December 31, 2024, conditioned upon, among other things, the achievement of a minimum revenue target. If drawn, the loan will be used for working capital and general corporate purposes.

The Perceptive debt contains customary affirmative and negative covenants, including covenants limiting the ability of the Company and its subsidiaries, among other things, to incur debt, grant liens, make distributions, enter certain restrictive agreements, pay or modify subordinated debt, dispose of assets, make investments and acquisitions, enter into certain transactions with affiliates, and undergo certain fundamental changes, in each case, subject to limitations and exceptions set forth in the Perceptive Credit Agreement. The Perceptive Credit Agreement also requires the Company to satisfy certain financial covenants, including minimum trailing twelve month net revenue targets relating to its Advanced Energy segment (tested quarterly), with year-end targets of $41.6 million, $57.0 million, $70.2 million, and $87.8 million for 2024, 2025, 2026, and 2027, respectively. Additionally, the Company must maintain a balance of $3 million in cash and cash equivalents during the duration of the Perceptive Credit Agreement’s term. As of June 30, 2024, the Company was in compliance with the financial covenants contained within the Perceptive Credit Agreement. The Company’s continued compliance with covenants is subject to meeting or exceeding forecasted Advanced Energy revenues.

In connection with the Company’s initial loan under the Perceptive Credit Agreement, the Company issued Perceptive warrants to purchase up to 1,250,000 shares of its common stock, par value $0.001, with an exercise price of $2.43 per share.

The Company’s term loan under the Perceptive Credit Agreement, net consists of the following:

(In thousands)June 30,
2024
December 31,
2023
Term loan$37,500 $37,500 
Unamortized debt issuance costs(1,111)(1,240)
Unamortized debt discount(2,761)(3,075)
Term loan, net$33,628 $33,185 
As of June 30, 2024, principal repayments on the debt are as follows:
(In thousands)
2024$— 
2025— 
2026— 
20272,216 
202835,284 
Total repayments$37,500 
v3.24.2.u1
CHINA JOINT VENTURE
6 Months Ended
Jun. 30, 2024
Noncontrolling Interest [Abstract]  
CHINA JOINT VENTURE CHINA JOINT VENTURE
In 2019, the Company executed a joint venture agreement with its Chinese supplier (the “China JV”) whereby the Company has a 51% ownership interest. The China JV has been consolidated in these condensed consolidated financial statements. The agreement required the Company to make capital contributions into the newly formed entity of approximately $357,000, which were made in prior years. In June 2023, the Company executed an amendment to the joint venture agreement to increase the amount of its registered capital. The amendment requires the Company to make additional capital contributions to the China JV of $255,000, of which $153,000 has been made as of June 30, 2024. As of the date of these condensed consolidated financial statements, the joint venture has not commenced principal operations.

Changes in the Company’s ownership investment in the China JV were as follows:

Three Months Ended June 30,Six Months Ended
June 30,
(In thousands)2024202320242023
Beginning interest in China JV$215$168$229$219
Net loss attributable to Apyx(31)(26)(45)(77)
Ending interest in China JV$184$142$184$142
v3.24.2.u1
EARNINGS (LOSS) PER SHARE
6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
EARNINGS (LOSS) PER SHARE EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share (“basic EPS”) is computed by dividing the net income or loss by the weighted average number of common shares outstanding for the reporting period. Diluted earnings (loss) per share (“diluted EPS”) gives effect to all dilutive potential shares outstanding. As the Company is in a net loss position for all periods presented, all potential shares outstanding are anti-dilutive. The following table provides the computation of basic and diluted loss per share.
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands, except per share data)2024202320242023
Numerator:
Net loss attributable to stockholders$(6,556)$(994)$(14,132)$(4,477)
Denominator:
Weighted average shares outstanding - basic and diluted
34,644 34,603 34,644 34,600 
Loss per share:
Basic and diluted$(0.19)$(0.03)$(0.41)$(0.13)
Anti-dilutive instruments excluded from diluted loss per common share:
Options8,430 7,700 8,430 7,700 
Warrants1,500 250 1,500 250 
v3.24.2.u1
STOCK-BASED COMPENSATION
6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION
Under the Company’s stock option plans, the Board of Directors may grant restricted stock and options to purchase common shares to the Company's employees, officers, directors and consultants. The Company accounts for stock options in accordance with FASB ASC Topic 718, Compensation - Stock Compensation, with stock-based compensation expense recognized over the vesting period based on the fair value on the grant date utilizing the Black-Scholes model, which includes a number of estimates that affect the grant date fair value and the amount of expense to recognize.

The Company recognized approximately $1,050,000 and $2,178,000, respectively, in stock-based compensation expense during the three and six months ended June 30, 2024, as compared with $1,482,000 and $2,849,000, respectively, for the three and six months ended June 30, 2023.

Stock option activity is summarized as follows:
Number of optionsWeighted average exercise price
Outstanding at December 31, 2023
7,342,883 $6.31 
Granted1,468,929 2.36 
Exercised(569)2.50 
Canceled and forfeited(381,600)6.93 
Outstanding at June 30, 2024
8,429,643 $5.59 

The Company allows stock option holders to exercise stock-based awards by surrendering stock-based awards with an intrinsic value equal to the cumulative exercise price of the stock-based awards being exercised, referred to as net settlements. These surrenders are included in stock options exercised in the options rollforward above. There were no such exercises for the three months ended June 30, 2024. For the three months ended June 30, 2023, the Company received 4,305 options as payment in the exercise of 5,695 options. For the six months ended June 30, 2024 and 2023, respectively, the Company received 531 and 4,305 options as payment in the exercise of 38 and 5,695 options.

Common shares required to be issued upon the exercise of stock options would be issued from authorized and unissued shares. The Company calculated the grant date fair value of options granted in 2024 (“2024 Grants”) utilizing a Black-Scholes model.
2024 Grants
Strike price$1.27-$2.42
Risk-free rate4.0%-4.2%
Expected dividend yield
Expected volatility92.1%-94.3%
Expected term (in years)6
v3.24.2.u1
INCOME TAXES
6 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income tax expense was approximately $50,000 and $66,000 with effective tax rates of (0.8)% and (6.9)% for the three months ended June 30, 2024 and 2023, respectively. For the three months ended June 30, 2024 and 2023, the effective rate differs from the statutory rate primarily due to the full valuation allowance recorded on the net operating loss (“NOL”) and net deferred tax assets generated during the period.
Income tax expense (benefit) was approximately $103,000 and $(2,201,000) with effective tax rates of (0.7)% and 32.6% for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024, the effective rate differs from the statutory rate primarily due to the full valuation allowance recorded on the NOL and net deferred tax assets generated during the period. For the six months ended June 30, 2023, the effective rate differs from the statutory rate primarily due to the reversal of the Company’s liability for uncertain tax positions, including accrued interest and penalties of approximately $2.1 million which were sustained upon the completion in January 2023 of the IRS examination of the Company's 2018 through 2020 income tax returns, partially offset by a valuation allowance on the NOL and net deferred tax assets generated during the period.
v3.24.2.u1
COMMITMENTS AND CONTINGENCIES
6 Months Ended
Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES
Litigation

The medical device industry is characterized by frequent claims and litigation, and the Company may become subject to various claims, lawsuits and proceedings in the ordinary course of our business. Such claims may include claims by current or former employees, distributors and competitors, claims concerning the marketing and promotion of the Company’s products and product liability claims.

The Company is involved in a number of legal actions relating to the use of our Helium Plasma Platform Technology, which actions are being defended by the Company’s insurance carrier-appointed counsel. The outcomes of these legal actions are not within the Company’s control and may not be known for prolonged periods of time. Management has not yet received from carrier-appointed defense counsel the estimates of the net potential range of losses in all of these cases, as would be required to confirm whether all of the claims in total are adequately covered by the varying levels of aggregate insurance coverage available for each relevant insurance policy period; further, in the case of one of the Company’s carriers, the Company is in a dispute regarding the total level of coverage available. Notwithstanding the foregoing, in the opinion of management, the Company has meritorious defenses, and such claims are not expected, individually or in the aggregate, to result in a material, adverse effect on its financial condition, results of operations and cash flows. However, in the event that damages exceed the aggregate coverage limits of the Company’s policies or if its insurance carriers disclaim coverage, management believes it is possible that costs associated with these claims could have a material adverse impact on the consolidated financial condition, results of operations and cash flows.

The Company accrues a liability in its condensed consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is recorded. If a loss is reasonably possible, but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded, actual results may differ from these estimates.

During 2022, the Company was notified of certain procedures alleged to have been performed by the same physician and which are currently the subject of two related products liability cases within the courts. During 2023, the Company was notified by its insurance carriers that all or most of the ten individual plaintiff’s allegations could be subject to separate deductibles notwithstanding the commonality of each underlying occurrence. During March 2024, two of the plaintiffs claims were dismissed by the courts. The Company has determined that a loss, comprised of estimated costs to defend the Company against the lawsuits, is probable and that the range of estimated losses is approximately $1,450,000 to $1,950,000. The Company recorded an estimated loss of $1,450,000 related to the matters during 2022. It is at least reasonably possible that a change in the actual amount of loss will occur in the near term, though management expects the actual amount of loss will be within the estimated range of losses.
During March 2024, the Company was named as a defendant in a number of product liability lawsuits filed under the direction of a single plaintiff’s tort firm alleging off-label use of Renuvion products and the Company’s mismarketing of the same. The suits are venued predominantly in Florida and nearly all involve procedures conducted prior to 2023, which was before the Company received FDA 510k clearance for the use of Renuvion in the types of procedures at issue. The Company denies liability and intends to vigorously defend these suits and believes that it has applicable substantive and procedural defenses. The Company has determined that a loss, comprised of estimated costs to defend the Company against the lawsuits, is probable and currently estimates the range of losses in connection with these matters to be between $1,300,000 and $1,500,000. The Company recorded an estimated loss of $1,300,000 related to these matters during 2023. The Company has also determined that there is a reasonable possibility that there will be an additional loss related to the matters, but the Company is unable to provide an estimate of the range of such additional loss at this time.

Purchase Commitments

At June 30, 2024, the Company had purchase commitments totaling approximately $3.3 million, substantially all of which is expected to be purchased within the next twelve months.
v3.24.2.u1
RELATED PARTY TRANSACTIONS
6 Months Ended
Jun. 30, 2024
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS RELATED PARTY TRANSACTIONS
Two relatives of Nikolay Shilev, Apyx Bulgaria’s Managing Director, are considered related parties. Teodora Shileva, Mr. Shilev’s spouse, is an employee of the Company working in the accounting department. Svetoslav Shilev, Mr. Shilev’s son, is a quality manager in the quality assurance department.

The partner in the Company’s China JV is also a supplier to the Company. For the three months ended June 30, 2024 and 2023, the Company made purchases from this supplier of approximately $42,000 and $406,000, respectively. For the six months ended June 30, 2024 and 2023, the Company made purchases from this supplier of approximately $93,000 and $451,000, respectively. At June 30, 2024 and December 31, 2023, respectively, the Company had net payables to this supplier of approximately $23,000 and $82,000, respectively.
v3.24.2.u1
GEOGRAPHIC AND SEGMENT INFORMATION
6 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
GEOGRAPHIC AND SEGMENT INFORMATION GEOGRAPHIC AND SEGMENT INFORMATION
Operating segments are aggregated into reportable segments only if they exhibit similar economic characteristics. In addition to similar economic characteristics, the Company also considers the following factors in determining the reportable segments: the nature of business activities, the management structure directly accountable to its chief operating decision maker for operating and administrative activities, availability of discrete financial information and information presented to the Board of Directors and investors. Asset information is not reviewed by the chief operating decision maker by segment and is not available by segment, accordingly, the Company has not presented a measure of assets by segment.

The Companys reportable segments are disclosed as principally organized and managed as two operating segments: Advanced Energy and OEM. Corporate & Other includes certain unallocated corporate and administrative costs which were not specifically attributed to any reportable segment. The OEM segment is primarily development and manufacturing contract and product driven. As a result, all related expenses are recorded as cost of sales and, therefore, there are no segment specific operating expenses incurred.

Summarized financial information with respect to reportable segments is as follows:

Three Months Ended June 30, 2024
(In thousands)Advanced EnergyOEMCorporate & OtherTotal
Sales$9,766 $2,383 $— $12,149 
(Loss) income from operations(1,696)461 (4,312)(5,547)
Interest income— — 439 439 
Interest expense— — (1,427)(1,427)
Other loss, net— — (1)(1)
Income tax expense— — 50 50 
Three Months Ended June 30, 2023
(In thousands)Advanced EnergyOEMCorporate & OtherTotal
Sales$11,722 $1,847 $— $13,569 
Income (loss) from operations589 353 (2,177)(1,235)
Interest income— — 179 179 
Interest expense— — (543)(543)
Other income, net— — 646 646 
Income tax expense— — 66 66 

Six Months Ended June 30, 2024
(In thousands)Advanced EnergyOEMCorporate & OtherTotal
Sales$17,219 $5,174 $— $22,393 
(Loss) income from operations(4,636)1,193 (8,719)(12,162)
Interest income— — 934 934 
Interest expense— — (2,823)(2,823)
Other loss, net— — (22)(22)
Income tax expense— — 103 103 

Six Months Ended June 30, 2023
(In thousands)Advanced EnergyOEMCorporate & OtherTotal
Sales$21,412 $4,299 $— $25,711 
(Loss) income from operations(887)1,204 (7,163)(6,846)
Interest income— — 230 230 
Interest expense— — (777)(777)
Other income, net— — 641 641 
Income tax benefit— — (2,201)(2,201)

International sales represented approximately 28.5% and 30.0% of total revenues for the three and six months ended June 30, 2024, respectively, as compared with approximately 25.3% and 26.1% of total revenues for the three and six months ended June 30, 2023, respectively.
Sales by geographic region, based on the customer's “ship to” location on the invoice, are as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)2024202320242023
Sales by Domestic and International
Domestic$8,687 $10,137 $15,666 $19,008 
International3,462 3,432 6,727 6,703 
Total$12,149 $13,569 $22,393 $25,711 
v3.24.2.u1
BASIS OF PRESENTATION (Policies)
6 Months Ended
Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Reclassifications
Reclassifications

The Company has reclassified certain amounts presented in the prior period to conform to the current period presentation. These amounts primarily relate to management salaries that were previously included within salaries and related costs and are now included within research and development. These reclassifications had no impact on previously reported net loss, accumulated deficit or cash flows for the periods presented.
Recent Accounting Pronouncements RECENT ACCOUNTING PRONOUNCEMENTS
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280), to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. Amongst other amendments, the standard requires annual and interim disclosures of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), and interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually. This standard does not change how an entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) to improve income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements.

No other new accounting pronouncement issued or effective during the fiscal year are expected to have a material impact on the Company’s condensed consolidated financial statements or disclosures.
Share Based Compensation
Under the Company’s stock option plans, the Board of Directors may grant restricted stock and options to purchase common shares to the Company's employees, officers, directors and consultants. The Company accounts for stock options in accordance with FASB ASC Topic 718, Compensation - Stock Compensation, with stock-based compensation expense recognized over the vesting period based on the fair value on the grant date utilizing the Black-Scholes model, which includes a number of estimates that affect the grant date fair value and the amount of expense to recognize.
v3.24.2.u1
INVENTORIES (Tables)
6 Months Ended
Jun. 30, 2024
Inventory Disclosure [Abstract]  
Schedule of Inventory
Inventories consisted of the following:
(In thousands)June 30,
2024
December 31,
2023
Raw materials$3,873 $4,112 
Work in process2,356 2,257 
Finished goods 4,011 4,429 
Gross inventories10,240 10,798 
Less: provision for obsolescence(916)(875)
Inventories, net$9,324 $9,923 
v3.24.2.u1
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)
6 Months Ended
Jun. 30, 2024
Payables and Accruals [Abstract]  
Schedule of Accounts Payable and Accrued Liabilities
Accrued expenses and other current liabilities consisted of the following:
(in thousands)June 30,
2024
December 31,
2023
Accrued payroll$1,003 $829 
Accrued bonuses991 1,545 
Accrued commissions625 1,489 
Accrued product warranties446 445 
Accrued product liability claim insurance deductibles3,073 3,521 
Accrued professional fees and legal related contingent liabilities532 518 
Short-term contract liabilities778 488 
Other accrued expenses and current liabilities510 826 
Total accrued expenses and other current liabilities$7,958 $9,661 
v3.24.2.u1
DEBT (Tables)
6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Schedule of Term Loan
The Company’s term loan under the Perceptive Credit Agreement, net consists of the following:

(In thousands)June 30,
2024
December 31,
2023
Term loan$37,500 $37,500 
Unamortized debt issuance costs(1,111)(1,240)
Unamortized debt discount(2,761)(3,075)
Term loan, net$33,628 $33,185 
Schedule of Maturities of Long-Term Debt
As of June 30, 2024, principal repayments on the debt are as follows:
(In thousands)
2024$— 
2025— 
2026— 
20272,216 
202835,284 
Total repayments$37,500 
v3.24.2.u1
CHINA JOINT VENTURE (Tables)
6 Months Ended
Jun. 30, 2024
Noncontrolling Interest [Abstract]  
Schedule of China Joint Venture
Changes in the Company’s ownership investment in the China JV were as follows:

Three Months Ended June 30,Six Months Ended
June 30,
(In thousands)2024202320242023
Beginning interest in China JV$215$168$229$219
Net loss attributable to Apyx(31)(26)(45)(77)
Ending interest in China JV$184$142$184$142
v3.24.2.u1
EARNINGS (LOSS) PER SHARE (Tables)
6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
Schedule of Basic and Diluted Earnings (Loss) Per Share The following table provides the computation of basic and diluted loss per share.
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands, except per share data)2024202320242023
Numerator:
Net loss attributable to stockholders$(6,556)$(994)$(14,132)$(4,477)
Denominator:
Weighted average shares outstanding - basic and diluted
34,644 34,603 34,644 34,600 
Loss per share:
Basic and diluted$(0.19)$(0.03)$(0.41)$(0.13)
Anti-dilutive instruments excluded from diluted loss per common share:
Options8,430 7,700 8,430 7,700 
Warrants1,500 250 1,500 250 
v3.24.2.u1
STOCK-BASED COMPENSATION (Tables)
6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Schedule of Stock Options and Stock Awards
Stock option activity is summarized as follows:
Number of optionsWeighted average exercise price
Outstanding at December 31, 2023
7,342,883 $6.31 
Granted1,468,929 2.36 
Exercised(569)2.50 
Canceled and forfeited(381,600)6.93 
Outstanding at June 30, 2024
8,429,643 $5.59 
Schedule of Option Fair Value Assumptions The Company calculated the grant date fair value of options granted in 2024 (“2024 Grants”) utilizing a Black-Scholes model.
2024 Grants
Strike price$1.27-$2.42
Risk-free rate4.0%-4.2%
Expected dividend yield
Expected volatility92.1%-94.3%
Expected term (in years)6
v3.24.2.u1
GEOGRAPHIC AND SEGMENT INFORMATION (Tables)
6 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
Schedule of Reporting Information by Segment
Summarized financial information with respect to reportable segments is as follows:

Three Months Ended June 30, 2024
(In thousands)Advanced EnergyOEMCorporate & OtherTotal
Sales$9,766 $2,383 $— $12,149 
(Loss) income from operations(1,696)461 (4,312)(5,547)
Interest income— — 439 439 
Interest expense— — (1,427)(1,427)
Other loss, net— — (1)(1)
Income tax expense— — 50 50 
Three Months Ended June 30, 2023
(In thousands)Advanced EnergyOEMCorporate & OtherTotal
Sales$11,722 $1,847 $— $13,569 
Income (loss) from operations589 353 (2,177)(1,235)
Interest income— — 179 179 
Interest expense— — (543)(543)
Other income, net— — 646 646 
Income tax expense— — 66 66 

Six Months Ended June 30, 2024
(In thousands)Advanced EnergyOEMCorporate & OtherTotal
Sales$17,219 $5,174 $— $22,393 
(Loss) income from operations(4,636)1,193 (8,719)(12,162)
Interest income— — 934 934 
Interest expense— — (2,823)(2,823)
Other loss, net— — (22)(22)
Income tax expense— — 103 103 

Six Months Ended June 30, 2023
(In thousands)Advanced EnergyOEMCorporate & OtherTotal
Sales$21,412 $4,299 $— $25,711 
(Loss) income from operations(887)1,204 (7,163)(6,846)
Interest income— — 230 230 
Interest expense— — (777)(777)
Other income, net— — 641 641 
Income tax benefit— — (2,201)(2,201)
Schedule of Sales by Geographic Region
Sales by geographic region, based on the customer's “ship to” location on the invoice, are as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)2024202320242023
Sales by Domestic and International
Domestic$8,687 $10,137 $15,666 $19,008 
International3,462 3,432 6,727 6,703 
Total$12,149 $13,569 $22,393 $25,711 
v3.24.2.u1
INVENTORIES (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Inventory Disclosure [Abstract]    
Raw materials $ 3,873 $ 4,112
Work in process 2,356 2,257
Finished goods 4,011 4,429
Gross inventories 10,240 10,798
Less: provision for obsolescence (916) (875)
Inventories, net $ 9,324 $ 9,923
v3.24.2.u1
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Payables and Accruals [Abstract]    
Accrued payroll $ 1,003 $ 829
Accrued bonuses 991 1,545
Accrued commissions 625 1,489
Accrued product warranties 446 445
Accrued product liability claim insurance deductibles 3,073 3,521
Accrued professional fees and legal related contingent liabilities 532 518
Short-term contract liabilities 778 488
Other accrued expenses and current liabilities 510 826
Total accrued expenses and other current liabilities $ 7,958 $ 9,661
v3.24.2.u1
DEBT - Narrative (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Debt Instrument [Line Items]            
Common stock, par value (in dollars per share) $ 0.001 $ 0.001 $ 0.001   $ 0.001  
Perceptive Warrants            
Debt Instrument [Line Items]            
Warrants (in shares) 1,250,000   1,250,000   1,250,000  
Warrants, exercise price (in dollars per share) $ 2.43   $ 2.43   $ 2.43  
Line of Credit | Perceptive Credit Agreement            
Debt Instrument [Line Items]            
Interest rate floor 5.00% 5.00%        
Variable rate 7.00% 7.00%        
Line of credit facility, interest rate at period end 12.30%   12.30%   12.30%  
Amortization of debt issuance costs     $ 64 $ 60 $ 129 $ 88
Amortization of debt discount (premium)     158 $ 83 314 $ 121
Twelve month net revenue target, year one         41,600  
Twelve month net revenue target, year two         57,000  
Twelve month net revenue target, year three         70,200  
Twelve month net revenue target, year four         87,800  
Cash and cash equivalents balance $ 3,000   3,000   3,000  
Line of Credit | Perceptive Credit Agreement, Delayed Draw Loan            
Debt Instrument [Line Items]            
Credit facility $ 7,500   $ 7,500   $ 7,500  
v3.24.2.u1
DEBT - Schedule of Term Loan (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Debt Instrument [Line Items]    
Term loan $ 37,500  
Secured Debt | Term Loan    
Debt Instrument [Line Items]    
Term loan 37,500 $ 37,500
Unamortized debt issuance costs (1,111) (1,240)
Unamortized debt discount (2,761) (3,075)
Term loan, net $ 33,628 $ 33,185
v3.24.2.u1
DEBT - Schedule of Long-Term Debt Maturities (Details)
$ in Thousands
Jun. 30, 2024
USD ($)
Debt Disclosure [Abstract]  
2024 $ 0
2025 0
2026 0
2027 2,216
2028 35,284
Total repayments $ 37,500
v3.24.2.u1
CHINA JOINT VENTURE - Narrative (Details) - USD ($)
$ in Thousands
13 Months Ended
Jun. 30, 2024
Dec. 31, 2019
Corporate Joint Venture    
Noncontrolling Interest [Line Items]    
Required capital contribution $ 255 $ 357
Noncontrolling interest, increase from subsidiary equity issuance $ 153  
Chinese Supplier    
Noncontrolling Interest [Line Items]    
Ownership interest   51.00%
v3.24.2.u1
CHINA JOINT VENTURE - Rollforward of Joint Venture (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]        
Beginning interest in China JV     $ 221  
Net loss attributable to Apyx $ (30) $ (25) (44) $ (74)
Ending interest in China JV 177   177  
Corporate Joint Venture        
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]        
Beginning interest in China JV 215 168 229 219
Net loss attributable to Apyx (31) (26) (45) (77)
Ending interest in China JV $ 184 $ 142 $ 184 $ 142
v3.24.2.u1
EARNINGS (LOSS) PER SHARE (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Numerator:        
Net loss attributable to stockholders, basic $ (6,556) $ (994) $ (14,132) $ (4,477)
Net loss attributable to stockholders, diluted $ (6,556) $ (994) $ (14,132) $ (4,477)
Denominator:        
Weighted average shares outstanding - basic (in shares) 34,644 34,603 34,644 34,600
Weighted average shares outstanding - diluted (in shares) 34,644 34,603 34,644 34,600
Loss per share:        
Basic (in dollars per share) $ (0.19) $ (0.03) $ (0.41) $ (0.13)
Diluted (in dollars per share) $ (0.19) $ (0.03) $ (0.41) $ (0.13)
Options        
Anti-dilutive instruments excluded from diluted loss per common share:        
Anti-dilutive instruments (in shares) 8,430 7,700 8,430 7,700
Warrants        
Anti-dilutive instruments excluded from diluted loss per common share:        
Anti-dilutive instruments (in shares) 1,500 250 1,500 250
v3.24.2.u1
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]        
Stock based compensation $ 1,050 $ 1,482 $ 2,178 $ 2,849
Shares received in stock swaps (in shares)   4,305 531 4,305
Shares issued in stock swaps (in shares)   5,695 38 5,695
v3.24.2.u1
STOCK-BASED COMPENSATION - Summary of Stock Options (Details)
6 Months Ended
Jun. 30, 2024
$ / shares
shares
Number of options  
Outstanding, beginning of period (in shares) | shares 7,342,883
Granted (in shares) | shares 1,468,929
Exercised (in shares) | shares (569)
Canceled and forfeited (in shares) | shares (381,600)
Outstanding, end of period (in shares) | shares 8,429,643
Weighted average exercise price  
Outstanding, beginning of period (in dollars per share) | $ / shares $ 6.31
Granted (in dollars per share) | $ / shares 2.36
Exercised (in dollars per share) | $ / shares 2.50
Canceled and forfeited (in dollars per shares) | $ / shares 6.93
Outstanding, end of period (in dollars per share) | $ / shares $ 5.59
v3.24.2.u1
STOCK-BASED COMPENSATION - Fair Value Assumptions (Details)
6 Months Ended
Jun. 30, 2024
$ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Strike price (in dollars per share) $ 2.36
Risk-free rate, minimum 4.00%
Risk-free rate, maximum 4.20%
Expected dividend yield 0.00%
Expected volatility, minimum 92.10%
Expected volatility, maximum 94.30%
Expected term (in years) 6 years
Minimum  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Strike price (in dollars per share) $ 1.27
Maximum  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Strike price (in dollars per share) $ 2.42
v3.24.2.u1
INCOME TAXES (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Income Tax Disclosure [Abstract]        
Income tax expense (benefit) $ 50 $ 66 $ 103 $ (2,201)
Effective income tax rate (0.80%) (6.90%) (0.70%) 32.60%
Tax adjustments, settlements, and unusual provisions       $ 2,100
v3.24.2.u1
COMMITMENTS AND CONTINGENCIES (Details)
$ in Thousands
1 Months Ended 6 Months Ended 12 Months Ended
Mar. 31, 2024
claim
Jun. 30, 2024
USD ($)
Dec. 31, 2023
USD ($)
plaintiff
Dec. 31, 2022
USD ($)
case
Loss Contingencies [Line Items]        
Purchase obligation   $ 3,300    
Purchase obligation, expected purchase period   12 months    
Product Liability Matters        
Loss Contingencies [Line Items]        
Loss contingency, number of cases | case       2
Loss contingency, number of plaintiffs | plaintiff     10  
Loss contingency, claims dismissed, number | claim 2      
Loss contingency, loss in period       $ 1,450
Renuvion Product Liability Matters        
Loss Contingencies [Line Items]        
Loss contingency, loss in period     $ 1,300  
Minimum | Product Liability Matters        
Loss Contingencies [Line Items]        
Estimate of possible loss   $ 1,450    
Minimum | Renuvion Product Liability Matters        
Loss Contingencies [Line Items]        
Estimate of possible loss   1,300    
Maximum | Product Liability Matters        
Loss Contingencies [Line Items]        
Estimate of possible loss   1,950    
Maximum | Renuvion Product Liability Matters        
Loss Contingencies [Line Items]        
Estimate of possible loss   $ 1,500    
v3.24.2.u1
RELATED PARTY TRANSACTIONS (Details)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
USD ($)
related_party
Jun. 30, 2023
USD ($)
Jun. 30, 2024
USD ($)
related_party
Jun. 30, 2023
USD ($)
Dec. 31, 2023
USD ($)
Related Party Transaction [Line Items]          
Related party transaction, number of related parties | related_party 2   2    
Co-venturer          
Related Party Transaction [Line Items]          
Purchases from related party $ 42 $ 406 $ 93 $ 451  
Accounts payable $ 23   $ 23   $ 82
v3.24.2.u1
GEOGRAPHIC AND SEGMENT INFORMATION - Narrative (Details) - segment
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Segment Reporting [Abstract]        
Number of reportable segments     2  
Number of operating segments     2  
International sales, percent of total revenue 28.50% 25.30% 30.00% 26.10%
v3.24.2.u1
GEOGRAPHIC AND SEGMENT INFORMATION - Reportable Segment (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Segment Reporting Information [Line Items]        
Sales $ 12,149 $ 13,569 $ 22,393 $ 25,711
(Loss) income from operations (5,547) (1,235) (12,162) (6,846)
Interest income 439 179 934 230
Interest expense (1,427) (543) (2,823) (777)
Other loss, net (1) 646 (22) 641
Income tax expense (benefit) 50 66 103 (2,201)
Operating Segments | Advanced Energy        
Segment Reporting Information [Line Items]        
Sales 9,766 11,722 17,219 21,412
(Loss) income from operations (1,696) 589 (4,636) (887)
Interest income 0 0 0 0
Interest expense 0 0 0 0
Other loss, net 0 0 0 0
Income tax expense (benefit) 0 0 0 0
Operating Segments | OEM        
Segment Reporting Information [Line Items]        
Sales 2,383 1,847 5,174 4,299
(Loss) income from operations 461 353 1,193 1,204
Interest income 0 0 0 0
Interest expense 0 0 0 0
Other loss, net 0 0 0 0
Income tax expense (benefit) 0 0 0 0
Corporate & Other        
Segment Reporting Information [Line Items]        
Sales 0 0 0 0
(Loss) income from operations (4,312) (2,177) (8,719) (7,163)
Interest income 439 179 934 230
Interest expense (1,427) (543) (2,823) (777)
Other loss, net (1) 646 (22) 641
Income tax expense (benefit) $ 50 $ 66 $ 103 $ (2,201)
v3.24.2.u1
GEOGRAPHIC AND SEGMENT INFORMATION - Geographic (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Segment Reporting Information [Line Items]        
Sales $ 12,149 $ 13,569 $ 22,393 $ 25,711
Domestic        
Segment Reporting Information [Line Items]        
Sales 8,687 10,137 15,666 19,008
International        
Segment Reporting Information [Line Items]        
Sales $ 3,462 $ 3,432 $ 6,727 $ 6,703

1 Year Apyx Medical Chart

1 Year Apyx Medical Chart

1 Month Apyx Medical Chart

1 Month Apyx Medical Chart