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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Strata Skin Sciences Inc | NASDAQ:SSKN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.0002 | 0.05% | 0.4102 | 0.415 | 0.50 | 0.411 | 0.41 | 0.411 | 2,035 | 01:00:00 |
[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
(State or other jurisdiction
of incorporation or organization)
|
13-3986004
(I.R.S. Employer
Identification No.)
|
Title of Each Class
|
Name of Each Exchange on Which Registered
|
||
Common Stock, par value $0.001 per share
|
Nasdaq Capital Market
|
Large accelerated filer
[__]
|
Accelerated filer
[ ]
|
||
Non-accelerated filer
[__]
|
Smaller reporting company [X]
|
|
|
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Page
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Part I
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Item 1. |
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1 |
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Item 1A.
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10
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|||
Item 1B.
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25
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|||
Item 2.
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26
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Item 3.
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26
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Item 4
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26
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|||
Part II |
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Item 5. |
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26
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Item 6.
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27
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Item 7.
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27
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Item 7A.
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38
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Item 8.
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38
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Item 9.
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38
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Item 9A.
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38
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Item 9B.
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39
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Part III |
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Item 10. |
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39
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Item 11.
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45
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Item 12.
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49
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Item 13.
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51
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Item 14.
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52
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Part IV |
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Item 15. |
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53 |
|
|
|
|
59
|
•
|
forecasts of future business performance, consumer trends and macro-economic conditions;
|
•
|
descriptions of market and/or competitive conditions;
|
•
|
descriptions of plans or objectives of management for future operations, products or services;
|
•
|
our estimates regarding the sufficiency of our cash resources, expenses, capital requirements and needs for additional financing and our ability to obtain additional financing;
|
•
|
our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;
|
•
|
our ability to obtain and maintain regulatory approvals of our products;
|
•
|
anticipated results of existing or future litigation; and
|
•
|
descriptions or assumptions underlying or related to any of the above items.
|
|
Topical therapies:
|
These can include corticosteroids, vitamin D3 derivatives, coal tar, anthralin and retinoids, among others, that are sold as a cream, gel, liquid, spray, or ointment. The efficacy of topical agents varies from person to person, although these products are commonly associated with a loss of potency over time as people develop resistance.
|
|
|
|
|
Phototherapy:
|
This is the area in which we operate. Our XTRAC Excimer Systems are FDA-cleared, reimbursed by insurance, and exhibit none of the significant side-effects associated with some alternative therapies.
|
|
|
|
|
Systemic medications:
|
There are a number of prescription medications available for psoriasis, which are given either by mouth or as an injection. The popularity and use of these medications is growing significantly, notwithstanding their potentially severe side-effects.
|
|
•
|
Patent-pending Biolock™ Cartridge
|
|
•
|
Gamma ray treated and sealed in individual packages
|
|
•
|
Incorporates seven-step safety system to prevent fluids from entering the motor
|
|
•
|
Multiple nose cones to facilitate more efficient patient flow
|
|
•
|
Ability to be reprocessed in autoclave after use
|
|
•
|
Adjustable speed and depth during the course of treatment
|
|
•
|
Corded and cordless power options.
|
Government
|
Regulation
|
|
•
|
96920 - designated for: the total area less than 250 square centimeters. CMS assigned a 2016 national payment of approximately $158.27 per treatment;
|
|
•
|
96921 - designated for: the total area 250 to 500 square centimeters. CMS assigned a 2016 national payment of approximately $174.42 per treatment; and
|
|
•
|
96922 - designated for: the total area over 500 square centimeters. CMS assigned a 2016 national payment of approximately $240.81 per treatment.
|
|
•
|
unforeseen difficulties in integrating operations, technologies, services, accounting and personnel;
|
|
•
|
diversion of financial and management resources from existing operations;
|
|
•
|
unforeseen difficulties related to entering geographic regions where we do not have prior experience;
|
|
•
|
risks relating to obtaining sufficient equity or debt financing;
|
|
•
|
potential loss of customers.
|
|
•
|
to hire, as needed, a sufficient number of qualified sales and marketing personnel with the aptitude, skills and understanding to market our products;
|
|
•
|
to adequately train our sales and marketing force in the use and benefits of all our products and services, thereby making them more effective promoters;
|
|
•
|
to manage our sales and marketing force and our ancillary channels (e.g., telesales) such that variable and semi-fixed expenses grow at a lesser rate than our revenues; and
|
|
•
|
to set the prices and other terms and conditions for treatments using the XTRAC system in a complex legal environment so that they will be accepted as attractive skin health and appropriate alternatives to conventional modalities and treatments.
|
•
|
the anti-kickback statute which prohibits certain business practices and relationships, including the payment or receipt of remuneration for the referral of patients whose care will be paid by Medicare or other federal healthcare programs, as modified by the ACA;
|
|
•
|
the physician self-referral prohibition, commonly referred to as the Stark Law;
|
|
•
|
the anti-inducement law, which prohibits providers from offering anything to a Medicare or Medicaid beneficiary to induce that beneficiary to use items or services covered by either program; the Civil False Claims Act, which prohibits any person from knowingly presenting or causing to be presented false or fraudulent claims for payment by the federal government, including the Medicare and Medicaid programs and;
|
|
•
|
the Civil Monetary Penalties Law, which authorizes HHS to impose civil penalties administratively for fraudulent or abusive acts. Sanctions for violating these federal laws include criminal and civil penalties that range from punitive sanctions, damage assessments, monetary penalties, imprisonment, denial of Medicare and Medicaid payments, or exclusion from the Medicare and Medicaid programs, or both.
|
|
•
|
the federal healthcare programs' Anti-Kickback Law, as modified by the ACA, which prohibits, among other things, persons or entities from soliciting, receiving, offering or providing remuneration, directly or indirectly, in return for or to induce either the referral of an individual for, or the purchase order or recommendation of, any item or service for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs;
|
|
|
•
|
federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent, or are for items or services not provided as claimed and which may apply to entities like us to the extent that our interactions with customers may affect their billing or coding practices;
|
|
|
•
|
the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which established new federal crimes for knowingly and willfully executing a scheme to defraud any healthcare benefit program or making false statements in connection with the delivery of or payment for healthcare benefits, items or services, as well as leading to regulations imposing certain requirements relating to the privacy, security and transmission of individually identifiable health information; and
|
|
|
•
|
state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and state laws governing the privacy of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
|
|
•
|
warning letters or untitled letters issued by the FDA;
|
|
•
|
fines, civil penalties, injunctions and criminal prosecution;
|
|
•
|
unanticipated expenditures to address or defend such actions;
|
|
•
|
delays in clearing or approving, or refusal to clear or approve, our products;
|
|
•
|
withdrawal or suspension of clearance or approval of our products by the FDA or other regulatory bodies;
|
|
•
|
product recall or seizure;
|
|
•
|
orders for physician or customer notification or device repair, replacement or refund;
|
|
•
|
interruption of production; and
|
|
•
|
operating restrictions.
|
|
•
|
Sell or license some of our technologies that we would not otherwise sell or license if we were in a stronger financial position;
|
|
•
|
Sell or license some of our technologies under terms that are less favorable than they otherwise might have been if we were in a stronger financial position; and
|
|
•
|
Consider further business combination transactions with other companies or positioning ourselves to be acquired by another company.
|
|
•
|
failure of any of our products to achieve or continue to have commercial success;
|
|
•
|
the timing of regulatory approval for our future products;
|
•
|
adverse regulatory determinations with respect to our existing products;
|
|
|
•
|
results of our research and development efforts and our clinical trials;
|
|
•
|
the announcement of new products or product enhancements by us or our competitors;
|
|
•
|
regulatory developments in the U.S. and foreign countries;
|
|
•
|
our ability to manufacture our products to commercial standards;
|
|
•
|
developments concerning our clinical collaborators, suppliers or marketing partners;
|
|
•
|
changes in financial estimates or recommendations by securities analysts;
|
|
•
|
public concern over our products;
|
|
•
|
developments or disputes concerning patents or other intellectual property rights;
|
|
•
|
product liability claims and litigation against us or our competitors;
|
|
•
|
the departure of key personnel;
|
|
•
|
the strength of our balance sheet;
|
|
•
|
variations in our financial results or those of companies that are perceived to be similar to us;
|
|
•
|
changes in the structure of third-party reimbursement in the U.S. and other countries;
|
|
•
|
changes in accounting principles or practices;
|
•
|
general economic, industry and market conditions; and
|
|
|
•
|
future sales of our common stock.
|
|
•
|
limit who may call a special meeting of stockholders;
|
|
•
|
establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon at stockholder meetings;
|
|
•
|
do not permit cumulative voting in the election of our directors, which would otherwise permit less than a majority of stockholders to elect directors;
|
|
•
|
prohibit stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; and
|
|
•
|
provide our board of directors the ability to designate the terms of and issue a new series of preferred stock without stockholder approval.
|
Item 5.
|
High
|
Low
|
|||||||
Year Ended December 31, 2017:
|
||||||||
Fourth Quarter
|
$
|
1.84
|
$
|
1.14
|
||||
Third Quarter
|
2.38
|
1.53
|
||||||
Second Quarter
|
3.97
|
2.33
|
||||||
First Quarter
|
3.15
|
2.25
|
||||||
Year Ended December 31, 2016:
|
||||||||
Fourth Quarter
|
$
|
3.05
|
$
|
2.20
|
||||
Third Quarter
|
3.70
|
2.50
|
||||||
Second Quarter
|
4.80
|
3.05
|
||||||
First Quarter
|
5.75
|
4.65
|
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options
|
Weighted-
Average Exercise
Price of
Outstanding
Options
|
Number of Securities Remaining Available
Under Equity
Compensation Plans (excluding securities reflected in column (A))
|
||||||||||
(A)
|
(B)
|
(C)
|
||||||||||
Equity compensation plans
|
||||||||||||
approved by security holders
|
865,722
|
$
|
4.74
|
1,624,795
|
||||||||
Equity compensation plans not approved by security holders
|
-
|
-
|
-
|
|||||||||
Total
|
865,722
|
$
|
4.74
|
1,624,795
|
|
•
|
XTRAC® Excimer Laser.
XTRAC received FDA clearance in 2000 and has since become a widely recognized treatment among dermatologists for psoriasis and other skin diseases. The XTRAC System delivers ultra-narrowband ultraviolet B light to affected areas of skin. Following a series of treatments typically performed twice weekly, psoriasis remission can be achieved and vitiligo patches can be re-pigmented. XTRAC is endorsed by the National Psoriasis Foundation, and its use for psoriasis is covered by nearly all major insurance companies, including Medicare. We estimate that more than half of all major insurance companies now offer reimbursement for vitiligo as well, a figure that is increasing.
|
|
•
|
VTRAC® Lamp.
VTRAC received FDA clearance in 2005 and provides targeted therapeutic efficacy demonstrated by excimer technology with the simplicity of design and reliability of a lamp system.
|
|
•
|
Nordlys System.
Nordlys has 16 indications cleared by FDA and has the ability to use a multitude of light based technologies all in one compact platform–SWT (Selective Waveband Technology: the latest evolution and advancement of Intense Pulsed Light), Nd:YAG and the FRAX 1550 non-ablative fractionated technology.
|
|
•
|
STRATAPEN
®
.
STRATAPEN uses the patent-pending Biolock cartridge. The Biolock needle depth can be adjusted during the course of the procedure to accommodate different treatment areas, and can easily maneuver around facial contours and delicate features, such as the eyes, nose and mouth.
|
For the Year Ended
December 31,
|
||||||||
2017
|
2016
|
|||||||
Dermatology Recurring Procedures
|
$
|
22,640
|
$
|
23,508
|
||||
Dermatology Procedures Equipment
|
8,792
|
7,065
|
||||||
Dermatology Imaging
|
17
|
134
|
||||||
Total Revenues
|
$
|
31,449
|
$
|
30,707
|
For the Year Ended
December 31,
|
||||||||
2017
|
2016
|
|||||||
Dermatology Recurring Procedures
|
$
|
8,744
|
$
|
8,763
|
||||
Dermatology Procedures Equipment
|
4,529
|
3,506
|
||||||
Dermatology Imaging
|
225
|
367
|
||||||
Total Cost of Revenues
|
$
|
13,498
|
$
|
12,636
|
Company Profit Analysis
|
For the Year Ended December 31,
|
|||||||
2017
|
2016
|
|||||||
Revenues
|
$
|
31,449
|
$
|
30,707
|
||||
Percent increase
|
2.4
|
%
|
||||||
Cost of revenues
|
13,498
|
12,636
|
||||||
Percent increase
|
6.8
|
%
|
||||||
Gross profit
|
$
|
17,951
|
$
|
18,071
|
||||
Gross margin percentage
|
57.1
|
%
|
58.8
|
%
|
Dermatology Recurring Procedures
|
For the Year Ended December 31,
|
|||||||
2017
|
2016
|
|||||||
Revenues
|
$
|
22,640
|
$
|
23,508
|
||||
Percent decrease
|
(3.7
|
%)
|
||||||
Cost of revenues
|
8,744
|
8,763
|
||||||
Percent decrease
|
(0.2
|
%)
|
||||||
Gross profit
|
$
|
13,896
|
$
|
14,745
|
||||
Gross margin percentage
|
61.4
|
%
|
62.7
|
%
|
Dermatology Procedures Equipment
|
For the Year Ended December 31,
|
|||||||
2017
|
2016
|
|||||||
Revenues
|
$
|
8,792
|
$
|
7,065
|
||||
Percent increase
|
24.4
|
%
|
||||||
Cost of revenues
|
4,529
|
3,506
|
||||||
Percent increase
|
29.2
|
%
|
||||||
Gross profit
|
$
|
4,263
|
$
|
3,559
|
||||
Gross margin percentage
|
48.5
|
%
|
50.4
|
%
|
For the Year Ended December 31,
|
||||||||||||
2017
|
2016
|
Change
|
||||||||||
Net loss
|
$
|
(18,831
|
)
|
$
|
(3,335
|
)
|
$
|
(15,496
|
)
|
|||
Adjustments:
|
||||||||||||
Income taxes
|
129
|
255
|
(126
|
)
|
||||||||
Depreciation and amortization *
|
6,336
|
6,366
|
(30
|
)
|
||||||||
Interest expense, net
|
2,056
|
2,226
|
(170
|
)
|
||||||||
Non-cash interest expense
|
2,556
|
2,674
|
(118
|
)
|
||||||||
EBITDA
|
(7,754
|
)
|
8,186
|
(15,940
|
)
|
|||||||
Stock-based compensation expense
|
186
|
113
|
73
|
|||||||||
Impairment of lasers placed-in-service
|
196
|
-
|
196
|
|||||||||
Impairment of intangible assets
|
523
|
-
|
523
|
|||||||||
Change in fair value of warrants
|
(102
|
)
|
(5,396
|
)
|
5,294
|
|||||||
Loss on extinguishment of debentures
|
11,799
|
-
|
11,799
|
|||||||||
Non-GAAP adjusted EBITDA
|
$
|
4,848
|
$
|
2,903
|
$
|
1,945
|
|
|
|
|
|
Name
|
|
Position
|
Age
|
|
LuAnn Via
|
|
Chairperson of the Board
|
64
|
|
Francis J. McCaney
|
President, Chief Executive Officer and Director
|
63
|
||
James L. Coyne
|
Director
|
60
|
||
Samuel E. Navarro
|
|
Director
|
62
|
|
David K. Stone
|
|
Director
|
61
|
|
Kathryn Swintek
|
|
Director
|
65
|
|
Jeffrey F. O'Donnell, Sr.
|
|
Director
|
58
|
• | reviewing and approving objectives relevant to executive officer compensation; | |
|
•
|
evaluating performance and recommending to the Board of Directors the compensation, including any incentive compensation, of our Chief Executive Officer and other executive officers in accordance with such objectives;
|
|
•
|
reviewing employment agreements for executive officers;
|
|
•
|
recommending to the Board of Directors the compensation for our directors;
|
|
•
|
administering our equity compensation plans and other employee benefit plans;
|
|
•
|
evaluating human resources and compensation strategies, as needed; and
|
|
•
|
evaluating periodically the Compensation Committee charter.
|
|
•
|
identifying and recommending to our Board of Directors individuals qualified to become members of our Board of Directors;
|
|
•
|
recommending to our Board of Directors the director nominees for the next annual meeting of stockholders;
|
|
•
|
recommending to our Board of Directors director committee assignments;
|
|
•
|
reviewing and evaluating succession planning for our Chief Executive Officer and other executive officers;
|
|
•
|
monitoring the independence of our directors;
|
|
•
|
developing and overseeing the corporate governance principles applicable to members of our Board of Directors, officers and employees;
|
|
•
|
reviewing and approving director compensation and administering the Non-Employee Director Plan;
|
|
•
|
monitoring the continuing education for our directors; and
|
|
•
|
evaluating annually the Nominations and Corporate Governance Committee charter.
|
|
•
|
appointing, evaluating and determining the compensation of our independent auditors;
|
|
•
|
reviewing and approving the scope of the annual audit, the audit fee and the financial statements;
|
|
•
|
reviewing disclosure controls and procedures, internal control over financial reporting, any internal audit function and corporate policies with respect to financial information;
|
|
•
|
reviewing other risks that may have a significant impact on our financial statements;
|
|
•
|
preparing the Audit Committee report for inclusion in the annual proxy statement;
|
|
•
|
establishing procedures for the receipt, retention and treatment of complaints regarding accounting and auditing matters;
|
|
•
|
approving all related party transactions, as defined by applicable Nasdaq Rules, to which we are a party; and
|
|
•
|
evaluating annually the Audit Committee charter.
|
|
•
|
a representation that the stockholder is a holder of record of our capital stock;
|
|
•
|
the name and address, as they appear on our books, of the stockholder sending such communication; and
|
|
•
|
the class and number of shares of our capital stock that are beneficially owned by such stockholder.
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus ($) (3)
|
Stock Awards
($) (4)
|
Option Awards
($) (4))
|
All Other Compensation
($) (5)
|
Total ($)
|
Francis J. McCaney (1), Director, President and Chief Executive Officer
|
2017
|
375,000
|
-
|
-
|
-
|
13,190
|
388,190
|
2016
|
56,700
|
-
|
-
|
150,273
|
1,000
|
207,973
|
|
Christina L. Allgeier (2), Chief Financial Officer and Treasurer
|
2017
|
220,000
|
-
|
-
|
-
|
13,610
|
233,610
|
2016
|
200,000
|
25,500
|
-
|
37,600
|
13,500
|
276,600
|
(1)
|
Francis J. McCaney was hired as President and Chief Executive Officer on October 31, 2016.
|
(2)
|
Christina L. Allgeier resigned from the Company effective December 31, 2017.
|
Bonus in the foregoing table is the bonus earned in 2017 and 2016, even though such bonus may have been paid in a subsequent period.
|
|
(4)
|
The amounts shown for option awards, restricted stock awards and stock purchase rights relate to shares granted. These amounts are equal to the aggregate grant-date fair value with respect to the awards made in the respective year, computed in accordance with FASB ASC Topic 718, before amortization and without giving effect to estimated forfeitures.
|
(5)
|
"All Other Compensation" includes car allowance of $12,000 and 401(k) matching contributions of $1,190 for Mr. McCaney.
For Ms. Allgeier it includes car allowance of $12,000 and 401(k) matching contributions of $1,610.
|
Option Awards
|
Stock Awards
|
||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable (1)
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable (1)
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price ($)
|
Option
Expiration
Date |
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)
|
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($) (1)
|
Francis J. McCaney
|
36,367
|
72,134
|
134,334
|
2.75
|
10/31/2026
|
0
|
0
|
N/A
|
N/A
|
Christina L. Allgeier
|
7,500
|
0
|
0
|
3.75
|
3/31/2018
|
0
|
0
|
N/A
|
N/A
|
(1)
|
Options granted to Mr. McCaney were under the 2016 Omnibus Incentive Plan and options granted to Ms. Allgeier were under the 2013 Equity Plan.
|
Name
|
Fees Earned ($)
|
Stock
Awards
($) (1)
|
All Other
Compensation
($) (2)
|
Total ($)
|
||||
Jeffrey F. O'Donnell, Sr.
|
85,000
|
9,030
|
120,000
|
214,030
|
||||
Samuel E. Navarro
|
35,000
|
9,030
|
60,000
|
104,030
|
||||
Kathryn Swintek
|
60,000
|
9,030
|
0
|
69,030
|
||||
David K. Stone
|
56,000
|
9,030
|
0
|
65,030
|
||||
LuAnn Via
|
54,500
|
9,030
|
0
|
63,530
|
||||
James L. Coyne (3)
|
30,000
|
22,688
|
0
|
52,688
|
||||
R. Rox Anderson (4)
|
10,250
|
0
|
0
|
10,250
|
(1)
|
The amounts shown for stock awards are equal to the aggregate grant-date fair value with respect to the stock awards for financial statement purposes.
|
(2)
|
Mr. O'Donnell Sr. and Mr. Navarro receive a monthly payment of $10,000 for their services under a consulting agreement with us. Mr. O'Donnell's agreement terminated on December 31, 2017, and Mr. Navarro's agreement terminated on June 30, 2017.
|
(3)
|
Mr. Coyne joined the Board in March 2017.
|
(4)
|
Dr. Anderson resigned from the Board on May 10, 2017.
|
Item 12. |
Name and Address Of Beneficial Owner
(1)
|
Number of Shares
Beneficially Owned
|
Percentage of
Shares
Beneficially Owned
(1)
|
||
Francis J. McCaney
(2)
|
40,367
|
*
|
||
Jeffrey F. O'Donnell, Sr.
(3)
|
145,856
|
3.22%
|
||
Samuel E. Navarro
(4)
|
145,276
|
3.21%
|
||
David K. Stone
(5)
|
47,007
|
1.06%
|
||
Kathryn Swintek
(6)
|
46,827
|
1.06%
|
||
LuAnn Via
(7)
|
46,566
|
1.05%
|
||
James L. Coyne
(8)
|
11,250
|
*
|
||
All directors and officers as a group (seven persons)
(9)
|
483,149
|
9.95%
|
||
Broadfin Healthcare Master Fund, Ltd
(10)
|
203,346
|
9.99%
|
||
Sabby Healthcare Master Fund, Ltd
(11)
|
225,103
|
9.99%
|
||
Sabby Volatility Warrant Master Fund, Ltd
(12)
|
-
|
9.99%
|
(1)
|
Beneficial ownership is determined in accordance with the rules of the Commission. Shares of common stock subject to delivery, or subject to options or warrants currently exercisable or exercisable, within 60 days of March 22 2018, are deemed outstanding for computing the percentage ownership of the stockholder holding the options or warrants, but are not deemed outstanding for computing the percentage ownership of any other stockholder. Unless otherwise indicated in the footnotes to this table, we believe stockholders named in the table have sole voting and sole investment power with respect to the shares set forth opposite such stockholder's name. Unless otherwise indicated, the listed officers, directors and stockholders can be reached at our principal offices. Percentage of ownership is based on
4,379,425
shares of common stock outstanding as of March 22, 2018.
|
(2)
|
Includes 4,000 shares of common stock and vested options to purchase 36,367 shares of common stock. Does not include options to purchase up to 206,468 shares of common stock, which may vest more than 60 days after March 22, 2018
.
|
(3)
|
Includes 271 shares of common stock and vested options to purchase 145,585 shares of common stock. Does not include unvested options to purchase up to 15,000 shares of common stock, which may vest more than 60 days after March 22, 2018. Mr. O'Donnell's address is 100 Lakeside Drive, Suite 100, Horsham, PA 19044.
|
(4)
|
Includes vested options to purchase 145,276 shares of common stock. Does not include unvested options to purchase up to 15,000 shares of common stock, which may vest more than 60 days after March 15, 2018. Mr. Navarro's address is 100 Lakeside Drive, Suite 100, Horsham, PA 19044.
|
(5)
|
Includes 271 shares of common stock and vested options to purchase 46,736 shares of common stock. Does not include unvested options to purchase up to 15,000 shares of common stock, which may vest more than 60 days after March 22 2018. Mr. Stone's address is 100 Lakeside Drive, Suite 100, Horsham, PA 19044.
|
(6)
|
Includes 671 shares of common stock and vested options to purchase 46,156 shares of common stock. Does not include unvested options to purchase up to 15,000 shares of common stock, which may vest more than 60 days after March 22, 2018. Ms. Swintek's address is 100 Lakeside Drive, Suite 100, Horsham, PA 19044.
|
(7)
|
Includes 571 shares of common stock and vested options to purchase 45,995 shares of common stock. Does not include unvested options to purchase up to 15,000 shares of common stock, which may vest more than 60 days after March 22 2018. Ms. Via's address is 100 Lakeside Drive, Suite 100, Horsham, PA 19044.
|
(8)
|
Includes vested options to purchase 11,250 shares of common stock. Does not include unvested options to purchase up to 15,000 shares of common stock, which may vest more than 60 days after March 22, 2018. Mr. Coyne's address is 100 Lakeside Drive, Suite 100, Horsham, PA 19044.
|
(9)
|
Includes 5,784 shares of common stock and vested options to purchase 477,365 shares of common stock. Does not include unvested options to purchase up to 296,468 shares of common stock, which may vest more than 60 days after March 22, 2018.
|
(11)
|
The business address of Sabby Healthcare Master Fund Ltd. ("Sabby HMF") is c/o Sabby Management LLC, 10 Mountainview Road, Suite 205, Upper Saddle River, NJ 07458. Sabby Management, LLC serves as the investment manager of Sabby HMF. Hal Mintz is the manager of Sabby Management, LLC and has voting and investment control of the securities held by Sabby HMF. Each of Sabby Management, LLC and Hal Mintz disclaims beneficial ownership over the securities beneficially owned by Sabby HMF except to the extent of their respective pecuniary interest therein.
Sabby HMF holds the following securities: (i) 225,103
shares of common stock; (ii) warrants to purchase969,308 shares of common stock at $3.75 per share; (iii) 4,971,067 shares of common stock issuable upon conversion of 13,372 shares of Series C convertible preferred stock. The conversion of all preferred stock and the exercise of all warrants referenced in this footnote are subject to a 9.99% blocker.
The foregoing information has been derived in part from a Schedule 13D filed by Sabby HMF on January 2, 2018
.
|
(12)
|
The business address of Sabby Volatility Warrant Master Fund Ltd. ("Sabby VWMF") is c/o Sabby Management LLC, 10 Mountainview Road, Suite 205, Upper Saddle River, NJ 07458. Sabby Management, LLC serves as the investment manager of Sabby VWMF. Hal Mintz is the manager of Sabby Management, LLC and has voting and investment control of the securities held by Sabby VWMF. Each of Sabby Management, LLC and Hal Mintz disclaims beneficial ownership over the securities beneficially owned by Sabby VWMF except to the extent of their respective pecuniary interest therein. Sabby VWMF holds the following securities: (i)
-0-
shares of common stock; (ii) warrants to purchase251,426 shares of common stock at $3.75 per share; (iii) 1,861,948 shares of common stock issuable upon conversion of 5,009 shares of Series C convertible preferred stock. The conversion of all preferred stock and the exercise of all warrants referenced in this footnote are subject to a 9.99% blocker. The foregoing information has been derived in part from a Schedule 13D filed by Sabby VWMF on January 2, 2018
.
|
2017
|
2016
|
|||||||
Audit Fees
(1)
|
$
|
428,100
|
$
|
370,500
|
||||
Audit-Related Fees
(2)
|
29,700
|
-
|
||||||
Tax Fees
(3)
|
58,000
|
56,500
|
||||||
All Other Fees
(4)
|
-
|
-
|
||||||
Total
|
$
|
515,800
|
$
|
427,000
|
(1)
|
Consists of fees billed for the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the auditors in connection with statutory and regulatory filings or engagements.
|
(2)
|
Consists of assurance and related services that are reasonably related to the performance of the audit and reviews of our financial statements and are not included in "audit fees" in this table.
|
(3)
|
Consists of all tax related services.
|
(4)
|
There were no other fees billed by EisnerAmper LLP for the years ended December 31, 2017 and 2016.
|
(a)(1)
|
Financial Statements
|
|
|
3.1
|
||
3.2
|
||
3.3
|
||
3.4
|
||
3.5
|
||
3.6
|
||
3.7
|
||
3.8
|
||
4.1
|
||
4.2
|
||
4.3
|
||
4.4
|
||
4.5
|
||
4.6
|
||
4.7
|
||
4.8
|
||
4.9
|
4.10
|
||
4.11
|
||
4.12
|
||
4.13
|
||
4.14*
|
||
4.15*
|
||
10.1*
|
||
10.2*
|
||
10.3
|
||
10.4
|
||
10.5
|
||
10.6
|
||
10.7
|
||
10.8
|
||
10.9
|
||
10.10
|
||
10.11
|
||
10.12
|
||
10.13
|
||
10.14
|
||
10.15
|
||
10.16
|
10.17
|
||
10.18
|
||
10.19
|
||
10.20
|
||
10.21
|
||
10.22
|
||
10.23
|
Intentionally omitted.
|
|
10.24
|
||
10.25*
|
||
10.26*
|
||
10.27*
|
||
10.28*
|
||
10.29*
|
||
10.30*
|
||
10.31
|
||
10.32
|
||
10.33
|
||
10.34
|
||
10.35
|
10.36
|
||
10.37
|
||
10.38
|
||
10.39
|
||
10.40*
|
||
10.41*
|
||
10.42
|
||
10.43
|
||
10.44*
|
||
10.45*
|
||
10.46*
|
||
10.47*
|
||
10.48*
|
||
10.49*
|
||
10.50*
|
||
10.51 |
|
|
10.52 |
|
|
23.1
|
STRATA SKIN SCIENCES, INC.
|
|||||
Date: April 2, 2018
|
By: /s/ Francis J. McCaney
|
||||
Francis J. McCaney
|
|||||
President and Chief Executive Officer
|
Signature
|
Capacity in Which Signed
|
Date
|
||
/s/ LuAnn Via
|
Chairman of the Board of Directors
|
April 2, 2018
|
||
LuAnn Via
|
||||
/s/ Francis J. McCaney
|
President, Chief Executive Officer and Director (Principal Executive Officer), and Interim Chief Financial Officer (Principal Financial and Accounting Officer)
|
April 2, 2018
|
||
Francis J. McCaney
|
||||
/s/ James L. Coyne
|
Director
|
April 2, 2018
|
||
James L. Coyne
|
||||
/s/ Samuel E. Navarro
|
Director
|
April 2, 2018
|
||
Samuel E. Navarro
|
||||
/s/ David K. Stone
|
Director
|
April 2, 2018
|
||
David K. Stone
|
||||
/s/ Kathryn Swintek
|
Director
|
April 2, 2018
|
||
Kathryn Swintek
|
||||
/s/
Jeffrey F. O'Donnell, Sr.
|
Director
|
April 2, 2018
|
||
Jeffrey F. O'Donnell, Sr.
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets, December 31, 2017 and 2016
|
F-3
|
Consolidated Statements of Operations and Comprehensive Loss, Years ended December 31, 2017 and 2016
|
F-4
|
Consolidated Statement of Changes in Stockholders' Equity, Years ended December 31, 2017 and 2016
|
F-5
|
Consolidated Statements of Cash Flows, Years ended December 31, 2017 and 2016
|
F-6
|
Notes to Consolidated Financial Statements
|
F-8
|
December 31, 2017
|
December 31, 2016
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
4,069
|
$
|
3,928
|
||||
Accounts receivable, net
|
3,141
|
3,390
|
||||||
Inventories
|
3,009
|
2,817
|
||||||
Prepaid expenses and other current assets
|
533
|
617
|
||||||
Total current assets
|
10,752
|
10,752
|
||||||
Property and equipment, net
|
7,703
|
10,180
|
||||||
Intangible assets, net
|
11,325
|
13,412
|
||||||
Goodwill
|
8,803
|
8,803
|
||||||
Other assets
|
48
|
46
|
||||||
Total assets
|
$
|
38,631
|
$
|
43,193
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Note payable
|
$
|
357
|
$
|
339
|
||||
Current portion of long-term debt
|
2,387
|
1,714
|
||||||
Accounts payable
|
2,277
|
1,853
|
||||||
Other accrued liabilities
|
2,360
|
1,992
|
||||||
Deferred revenues
|
291
|
235
|
||||||
Total current liabilities
|
7,672
|
6,133
|
||||||
Long-term liabilities:
|
||||||||
Long-term debt, net
|
7,853
|
9,752
|
||||||
Senior secured convertible debentures, net
|
-
|
12,028
|
||||||
Warrant liability
|
3
|
105
|
||||||
Deferred tax liability
|
414
|
359
|
||||||
Other liabilities
|
444
|
97
|
||||||
Total liabilities
|
16,386
|
28,474
|
||||||
Commitments and contingencies
|
||||||||
Stockholders' equity:
|
||||||||
Series B Convertible Preferred Stock, $.10 par value, 10,000,000 shares authorized; 0 and 6,000 shares issued and outstanding as of December 31, 2017 and 2016, respectively
|
-
|
1
|
||||||
Series C Convertible Preferred Stock, $.10 par value, 10,000,000 shares authorized; 36,182 and 0 shares issued and outstanding as of December 31, 2017 and 2016, respectively
|
4
|
-
|
||||||
Common Stock, $.001 par value, 150,000,000 shares authorized; 4,304,425 and 2,166,898 shares issued and outstanding as of December 31, 2017 and 2016, respectively
|
4
|
2
|
||||||
Additional paid-in capital
|
251,643
|
225,289
|
||||||
Accumulated deficit
|
(229,406
|
)
|
(210,575
|
)
|
||||
Accumulated other comprehensive income
|
-
|
2
|
||||||
Total stockholders' equity
|
22,245
|
14,719
|
||||||
Total liabilities and stockholders' equity
|
$
|
38,631
|
$
|
43,193
|
For the Year Ended December 31,
|
||||||||
2017
|
2016
|
|||||||
Revenues
|
$
|
31,449
|
$
|
30,707
|
||||
Cost of revenues
|
13,498
|
12,636
|
||||||
Gross profit
|
17,951
|
18,071
|
||||||
|
||||||||
Operating expenses:
|
||||||||
Engineering and product development
|
1,711
|
1,929
|
||||||
Selling and marketing
|
11,249
|
12,102
|
||||||
General and administrative
|
7,401
|
7,637
|
||||||
|
20,361
|
21,668
|
||||||
Loss from operations
|
(2,410
|
)
|
(3,597
|
)
|
||||
|
||||||||
Other income (expense), net:
|
||||||||
Interest expense, net
|
(4,612
|
)
|
(4,900
|
)
|
||||
Change in fair value of warrant liability
|
102
|
5,396
|
||||||
Other income, net
|
17
|
21
|
||||||
Loss on extinguishment of debentures
|
(11,799
|
)
|
-
|
|||||
(16,292
|
)
|
517
|
||||||
Loss before income taxes
|
(18,702
|
)
|
(3,080
|
)
|
||||
Income tax expense
|
129
|
255
|
||||||
Net loss
|
$
|
(18,831
|
)
|
$
|
(3,335
|
)
|
||
Net loss per common share:
|
||||||||
Basic
|
$
|
(2.85
|
)
|
$
|
(1.57
|
)
|
||
Diluted
|
$
|
(2.85
|
)
|
$
|
(3.77
|
)
|
||
Shares used in computing net loss per common share:
|
||||||||
Basic
|
2,713,782
|
2,119,014
|
||||||
Diluted
|
2,713,782
|
2,315,715
|
||||||
Net loss per Preferred C share - basic and diluted
|
$
|
(1,061.25
|
)
|
$
|
-
|
|||
Shares used in computing net loss per basic and diluted Preferred C share
|
10,444
|
-
|
||||||
Other comprehensive (loss) income:
|
||||||||
Foreign currency translation adjustments
|
$
|
(2
|
)
|
$
|
1
|
|||
Comprehensive loss
|
$
|
(18,833
|
)
|
$
|
(3,334
|
)
|
Accumulated
|
||||||||||||||||||||||||||||||||||||||||
Convertible Preferred
Stock – Series B
|
Convertible Preferred
Stock – Series C
|
Common Stock
|
Additional
Paid-In
|
Accumulated
|
Other Comprehensive
|
|||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Income
|
Total
|
|||||||||||||||||||||||||||||||
BALANCE, JANUARY 1, 2016
|
6,505
|
$
|
1
|
-
|
$
|
-
|
2,056,679
|
$
|
2
|
$
|
223,323
|
$
|
(207,240
|
)
|
$
|
1
|
$
|
16,087
|
||||||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
113
|
-
|
-
|
113
|
||||||||||||||||||||||||||||||
Conversion of convertible preferred stock
|
(505
|
)
|
-
|
-
|
-
|
39,337
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||
Conversion of senior secured convertible debentures
|
-
|
-
|
-
|
-
|
70,882
|
-
|
265
|
-
|
-
|
265
|
||||||||||||||||||||||||||||||
Warrants issued in connection with debt
|
-
|
-
|
-
|
-
|
-
|
-
|
47
|
-
|
-
|
47
|
||||||||||||||||||||||||||||||
Reclassification of warrant liability to stockholders' equity
|
-
|
-
|
-
|
-
|
-
|
-
|
1,541
|
-
|
-
|
1,541
|
||||||||||||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1
|
1
|
||||||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,335
|
)
|
-
|
(3,335
|
)
|
||||||||||||||||||||||||||||
BALANCE, DECEMBER 31, 2016
|
6,000
|
1
|
-
|
-
|
2,166,898
|
2
|
225,289
|
(210,575
|
)
|
2
|
14,719
|
|||||||||||||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
186
|
-
|
-
|
186
|
||||||||||||||||||||||||||||||
Issuance of convertible preferred stock in exchange for convertible debentures
|
-
|
-
|
40,482
|
4
|
-
|
-
|
25,906
|
-
|
-
|
25,910
|
||||||||||||||||||||||||||||||
Conversion of convertible preferred stock into common stock
|
(6,000
|
)
|
(1
|
)
|
(4,300
|
)
|
-
|
2,066,182
|
2
|
-
|
-
|
-
|
1
|
|||||||||||||||||||||||||||
Conversion of senior secured convertible debentures into common stock
|
-
|
-
|
-
|
-
|
70,000
|
-
|
262
|
-
|
-
|
262
|
||||||||||||||||||||||||||||||
Issuance of common stock for fractional shares in reverse stock split
|
-
|
-
|
-
|
-
|
1,345
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
Other comprehensive loss
|
(2
|
)
|
(2
|
)
|
||||||||||||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(18,831
|
)
|
-
|
(18,831
|
)
|
||||||||||||||||||||||||||||
BALANCE, DECEMBER 31, 2017
|
-
|
$
|
-
|
36,182
|
$
|
4
|
4,304,425
|
$
|
4
|
$
|
251,643
|
$
|
(229,406
|
)
|
$
|
-
|
$
|
22,245
|
For the Year Ended
December 31,
|
||||||||
2017
|
2016
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net loss
|
$
|
(18,831
|
)
|
$
|
(3,335
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
6,336
|
6,366
|
||||||
Provision for doubtful accounts
|
109
|
120
|
||||||
Gain on cancellation of distributor rights agreement
|
(40
|
)
|
-
|
|||||
Impairment of lasers placed-in-service
|
196
|
|||||||
Impairment of intangible assets
|
523
|
-
|
||||||
Stock-based compensation
|
186
|
113
|
||||||
Deferred taxes
|
55
|
240
|
||||||
Loss on disposal of property and equipment
|
-
|
124
|
||||||
Loss on extinguishment of debentures
|
11,799
|
-
|
||||||
Amortization of debt discount
|
2,360
|
2,473
|
||||||
Amortization of deferred financing costs
|
188
|
200
|
||||||
Change in fair value of warrant liability
|
(102
|
)
|
(5,396
|
)
|
||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
184
|
558
|
||||||
Inventories
|
(193
|
)
|
1,311
|
|||||
Prepaid expenses and other assets
|
475
|
224
|
||||||
Accounts payable
|
381
|
(2,605
|
)
|
|||||
Other accrued liabilities
|
298
|
(169
|
)
|
|||||
Other liabilities
|
159
|
36
|
||||||
Deferred revenues
|
57
|
62
|
||||||
Net cash provided by operating activities
|
4,140
|
322
|
||||||
Cash Flows From Investing Activities:
|
||||||||
Lasers placed-in-service, net
|
(1,739
|
)
|
(1,008
|
)
|
||||
Purchases of property and equipment, net
|
(320
|
)
|
-
|
|||||
Payments on distributor rights liability
|
(135
|
)
|
-
|
|||||
Restricted cash
|
-
|
15
|
||||||
Return of acquisition purchase price from escrow
|
-
|
125
|
||||||
Net cash used in investing activities
|
(2,194
|
)
|
(868
|
)
|
For the Year Ended December 31,
|
||||||||
2017
|
2016
|
|||||||
Cash Flows From Financing Activities:
|
||||||||
Proceeds from long-term debt
|
-
|
1,500
|
||||||
Repayments of long-term debt
|
(1,429
|
)
|
-
|
|||||
Payments on notes payable
|
(374
|
)
|
(333
|
)
|
||||
Net cash (used in) provided by financing activities
|
(1,803
|
)
|
1,167
|
|||||
Effect of exchange rate changes on cash
|
(2
|
)
|
4
|
|||||
Net increase in cash and cash equivalents
|
141
|
625
|
||||||
Cash and cash equivalents, beginning of period
|
3,928
|
3,303
|
||||||
Cash and cash equivalents, end of period
|
$
|
4,069
|
$
|
3,928
|
||||
Supplemental information:
|
||||||||
Cash paid for interest
|
$
|
2,215
|
$
|
2,054
|
||||
Cash paid for income taxes
|
$
|
28
|
$
|
15
|
||||
Supplemental information of non-cash investing and financing activities:
|
||||||||
Conversion of senior secured convertible debentures into common stock
|
$
|
262
|
$
|
265
|
||||
Reclassification of warrant liability to stockholders' equity
|
$
|
-
|
$
|
1,541
|
||||
Recognition of warrants issued with term note credit facility as debt discount
|
$
|
-
|
$
|
47
|
||||
Prepaid insurance financed with notes payable
|
$
|
392
|
$
|
372
|
||||
Acquisition of distributor rights asset for license liability
|
$
|
286
|
$
|
-
|
||||
Issuance of convertible Preferred C stock in exchange for convertible debentures
|
$
|
25,910
|
$
|
-
|
|
•
|
Level 1 – unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.
|
|
•
|
Level 2 – pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.
|
|
•
|
Level 3 – pricing inputs are unobservable for the asset or liability and only used when there is little, if any, market activity for the asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation. Fair value is determined using comparable market transactions and other valuation methodologies, adjusted as appropriate for liquidity, credit, market and/or other risk factors
|
Fair Value
as of December
31, 2017
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Warrant liability (Note 11)
|
$
|
3
|
$
|
-
|
$
|
-
|
$
|
3
|
||||||||
Fair Value
as of December
31, 2016
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Warrant liability (Note 11)
|
$
|
105
|
$
|
-
|
$
|
-
|
$
|
105
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
Accrual at beginning of year
|
$
|
115
|
$
|
226
|
||||
Additions charged to warranty expense
|
161
|
196
|
||||||
Expiring warranties/claimed satisfied
|
(98
|
)
|
(307
|
)
|
||||
Total
|
178
|
115
|
||||||
Less: current portion
|
(109
|
)
|
(102
|
)
|
||||
Total long-term accrued warranty costs
|
$
|
69
|
$
|
13
|
Year ended December 31, 2017
|
||||
Common
stock
|
Series C
Preferred stock
|
|||
Net loss
|
($ 7,747)
|
($ 11,084)
|
||
Weighted average number of shares outstanding during the period
|
2,713,782
|
10,444
|
||
Basic and Diluted net loss per share
|
($ 2.85)
|
($ 1,061.25)
|
Year Ended December 31, 2016
|
||
Net loss
|
($ 3,335)
|
|
Gain on the change in fair value of the warrant liability
|
(5,396)
|
|
Diluted loss
|
($ 8,731)
|
|
Weighted average number of common and common equivalent shares outstanding:
|
||
Basic number of common shares outstanding
|
2,119,014
|
|
Dilutive effect of warrants
|
196,701
|
|
Diluted number of common and common stock equivalent shares outstanding
|
2,315,715
|
Year Ended December 31,
|
||||||
2017
|
2016
|
|||||
Common stock equivalents of convertible debentures
|
6,622,821
|
9,231,570
|
||||
Common stock purchase warrants
|
2,406,625
|
3,739,037
|
||||
Common stock equivalents of convertible Preferred B stock
|
289,462
|
496,824
|
||||
Common stock options
|
876,373
|
613,773
|
||||
Total
|
10,195,281
|
14,081,204
|
December 31, 2017
|
December 31, 2016
|
|||||||
Raw materials and work in progress
|
$
|
2,490
|
$
|
2,440
|
||||
Finished goods
|
519
|
377
|
||||||
$
|
3,009
|
$
|
2,817
|
December 31, 2017
|
December 31, 2016
|
|||||||
Lasers placed-in-service
|
$
|
17,820
|
$
|
16,712
|
||||
Equipment, computer hardware and software
|
462
|
160
|
||||||
Furniture and fixtures
|
124
|
111
|
||||||
Leasehold improvements
|
31
|
25
|
||||||
18,437
|
17,008
|
|||||||
Accumulated depreciation and amortization
|
(10,734
|
)
|
(6,828
|
)
|
||||
Property and equipment, net
|
$
|
7,703
|
$
|
10,180
|
December 31, 2017
|
December 31, 2016
|
|||||||
Core technology
|
$
|
5,700
|
$
|
5,974
|
||||
Product technology
|
1,500
|
2,000
|
||||||
Customer relationships
|
6,900
|
6,900
|
||||||
Tradenames
|
1,500
|
1,500
|
||||||
Distribution rights
|
286
|
-
|
||||||
15,886
|
16,374
|
|||||||
Accumulated amortization
|
(4,561
|
)
|
(2,962
|
)
|
||||
Intangible assets, net
|
$
|
11,325
|
$
|
13,412
|
2018
|
$
|
1,905
|
||
2019
|
1,605
|
|||
2020
|
1,470
|
|||
2021
|
1,410
|
|||
2022
|
1,410
|
|||
Thereafter
|
3,525
|
|||
Total
|
$
|
11,325
|
Balance at January 1, 2016
|
$
|
8,928
|
||
Return of purchase price from escrow
|
(125
|
)
|
||
Balance at December 31, 2016 and 2017
|
$
|
8,803
|
December 31, 2017 and 2016
|
||||
Dermatology Recurring Procedures segment
|
$
|
7,958
|
||
Dermatology Procedures Equipment segment
|
845
|
|||
Total
|
$
|
8,803
|
December 31, 2017
|
December 31, 2016
|
|||||||
Accrued warranty, current, see Note 1
|
$
|
109
|
$
|
102
|
||||
Accrued compensation, including commissions and vacation
|
785
|
1,177
|
||||||
Accrued sales and other taxes
|
904
|
439
|
||||||
Distributor rights liability, current
|
85
|
-
|
||||||
Accrued professional fees and other accrued liabilities
|
477
|
274
|
||||||
Total other accrued liabilities
|
$
|
2,360
|
$
|
1,992
|
December 31, 2016
|
||||
Senior secured 2.25% convertible debentures, net of unamortized debt discount of $24,314; and deferred financing
costs of $524
|
$
|
7,174
|
||
Senior secured 4% convertible debentures, net of unamortized debt discount of $3,469; and deferred financing
costs of $392
|
4,854
|
|||
Total convertible debt
|
$
|
12,028
|
December 31, 2017
|
December 31, 2016
|
|||||||
Term note, net of debt discount of $160 and $258, respectively; and deferred financing cost of $171 and $276, respectively
|
$
|
10,240
|
$
|
11,466
|
||||
Less: current portion
|
(2,387
|
)
|
(1,714
|
)
|
||||
Total long-term debt
|
$
|
7,853
|
$
|
9,752
|
2018
|
$
|
2,387
|
||
2019
|
4,092
|
|||
2020
|
4,092
|
|||
$
|
10,571
|
Year Ending December 31,
|
||||
2018
|
$
|
426
|
||
2019
|
174
|
|||
2020
|
14
|
|||
2021
|
14
|
|||
2022
|
14
|
|||
Total
|
$
|
642
|
December 31, 2017
|
December 31, 2016
|
|||||||
Number of shares underlying the warrants
|
403,090
|
403,090
|
||||||
Stock price
|
$
|
1.23
|
$
|
2.20
|
||||
Volatility
|
48.60
|
%
|
47.00
|
%
|
||||
Risk-free interest rate
|
1.76
|
%
|
1.22
|
%
|
||||
Expected dividend yield
|
0
|
%
|
0
|
%
|
||||
Expected warrant life
|
1.12 – 1.35 years
|
2.12 – 2.35 years
|
Issuance Date
|
December 31, 2016
|
Decrease in Fair Value
|
December 31, 2017
|
|||||||||
10/31/2013
|
$
|
39
|
$
|
(37
|
)
|
$
|
2
|
|||||
2/5/2014
|
66
|
( 65
|
)
|
1
|
||||||||
Total
|
$
|
105
|
$
|
(102
|
)
|
$
|
3
|
Issuance Date
|
December 31, 2015
|
Decrease in
Fair Value
|
Reclassification
to Equity
|
December 31, 2016
|
||||||||||||
10/31/2013
|
$
|
379
|
$
|
(340
|
)
|
$
|
-
|
$
|
39
|
|||||||
2/5/2014
|
715
|
(649
|
)
|
-
|
66
|
|||||||||||
7/24/2014 Series A
|
2,415
|
(1,573
|
)
|
(842
|
)
|
-
|
||||||||||
7/24/2014 Series B
|
1,726
|
(1,713
|
)
|
(13
|
)
|
-
|
||||||||||
6/22/2015
|
1,807
|
(1,121
|
)
|
(686
|
)
|
-
|
||||||||||
Total
|
$
|
7,042
|
$
|
(5,396
|
)
|
$
|
(1,541
|
)
|
$
|
105
|
Issuance Date
|
December 31, 2017
|
||
10/31/2013
|
137,143
|
||
2/5/2014
|
265,947
|
||
Total
|
403,090
|
Issue Date
|
Expiration Date
|
Total Warrants
|
Exercise Price
|
||||||
4/26/2013
|
4/26/2018
|
13,865
|
$
|
55.90
|
|||||
10/31/2013*
|
4/30/2019
|
137,143
|
$
|
3.75
|
|||||
2/5/2014*
|
2/5/2019
|
265,947
|
$
|
3.75
|
|||||
7/24/2014
|
7/24/2019
|
1,239,769
|
$
|
3.75 - $ 12.25
|
|||||
6/22/2015
|
6/22/2020
|
600,000
|
$
|
3.75
|
|||||
12/30/2015
|
12/30/2020
|
130,089
|
$
|
5.65
|
|||||
1/29/2016
|
1/29/2021
|
19,812
|
$
|
5.30
|
|||||
2,406,625
|
Number of
Stock Options
|
Weighted
Average
Exercise Price
|
|||||||
Outstanding at December 31, 2015
|
536,904
|
$
|
8.07
|
|||||
Granted
|
468,002
|
2.90
|
||||||
Exercised
|
-
|
-
|
||||||
Expired/forfeited
|
(104,767
|
)
|
10.35
|
|||||
Outstanding at December 31, 2016
|
900,139
|
5.11
|
||||||
Granted
|
101,250
|
1.46
|
||||||
Exercised
|
-
|
-
|
||||||
Expired/forfeited
|
(135,667
|
)
|
4.78
|
|||||
Outstanding at December 31, 2017
|
865,722
|
$
|
4.74
|
|||||
Exercisable at December 31, 2017
|
542,905
|
$
|
6.10
|
|||||
Options expected to vest at December 31, 2017
|
188,484
|
$
|
2.24
|
Options Range
of Exercise
Prices
|
Outstanding
Number of
Shares
|
Weighted Average
Remaining
Contractual Life
(years)
|
Weighted Average
Exercise Price
|
Exercisable
Number of
Shares
|
Exercisable
Weighted Avg.
Exercise Price
|
|||||||||||||||||
$
|
1.29 - $5.00
|
483,585
|
8.90
|
$
|
2.58
|
160,867
|
$
|
2.90
|
||||||||||||||
$
|
5.01 - $10.00
|
372,500
|
7.62
|
6.19
|
372,500
|
6.19
|
||||||||||||||||
$
|
10.01 - $181.00
|
9,637
|
5.44
|
56.65
|
9,538
|
56.35
|
||||||||||||||||
Total
|
865,722
|
8.31
|
$
|
4.74
|
542,905
|
$
|
6.10
|
Years Ended December 31,
|
|||
2017
|
2016
|
||
Risk-free interest rate
|
1.98 – 2.17%
|
1.51 – 2.18%
|
|
Volatility
|
46%-48%
|
50%
|
|
Expected dividend yield
|
0%
|
0%
|
|
Expected life
|
5.5 years
|
6.5 years
|
|
Estimated forfeiture rate
|
0%
|
0%
|
Year Ended December 31,
|
||||||||
2017
|
2016
|
|||||||
Current:
|
||||||||
Federal
|
$
|
64
|
$
|
-
|
||||
State
|
11
|
15
|
||||||
75
|
15
|
|||||||
Deferred:
|
||||||||
Federal
|
(24
|
)
|
178
|
|||||
State
|
78
|
62
|
||||||
54
|
240
|
|||||||
Income tax expense
|
$
|
129
|
$
|
255
|
For the Years Ended December 31,
|
||||||||
2017
|
2016
|
|||||||
Computed expected tax benefit
|
$
|
(6,359
|
)
|
$
|
(1,047
|
)
|
||
State tax benefit, net of federal effect
|
(1,113
|
)
|
(499
|
)
|
||||
Warrant value fluctuation
|
(34
|
)
|
(1,835
|
)
|
||||
Tax Cuts and Jobs Act impact
|
23,834
|
-
|
||||||
Net (decrease) increase in valuation allowance
|
(16,199
|
)
|
3,636
|
|||||
Provision for income taxes
|
$
|
129
|
$
|
255
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
Deferred tax assets/(liabilities):
|
||||||||
Net operating loss carryforward
|
$
|
50,472
|
$
|
72,870
|
||||
Intangible assets
|
4,595
|
8,711
|
||||||
Inventory
|
66
|
149
|
||||||
Reserves & accrued expenses
|
228
|
291
|
||||||
Convertible debt discount
|
-
|
(11,097
|
)
|
|||||
Property & equipment
|
130
|
432
|
||||||
Non-cash compensation
|
793
|
1,127
|
||||||
Goodwill
|
(414
|
)
|
(359
|
)
|
||||
Total deferred tax assets
|
55,870
|
72,124
|
||||||
Less: valuation allowance
|
(56,284
|
)
|
(72,483
|
)
|
||||
Net deferred tax assets/(liabilities)
|
$
|
(414
|
)
|
$
|
(359
|
)
|
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
Dermatology
Imaging
|
TOTAL
|
|||||||||||||
Revenues
|
$
|
22,640
|
$
|
8,792
|
$
|
17
|
$
|
31,449
|
||||||||
Costs of revenues
|
8,744
|
4,529
|
225
|
13,498
|
||||||||||||
Gross profit
|
13,896
|
4,263
|
(208
|
)
|
17,951
|
|||||||||||
Gross profit %
|
61.4
|
%
|
48.5
|
%
|
-1223.5
|
%
|
57.1
|
%
|
||||||||
Allocated operating expenses:
|
||||||||||||||||
Engineering and product development
|
1,431
|
279
|
1
|
1,711
|
||||||||||||
Selling and marketing expenses
|
9,454
|
1,795
|
0
|
11,249
|
||||||||||||
Unallocated operating expenses
|
-
|
-
|
-
|
7,401
|
||||||||||||
10,885
|
2,074
|
1
|
20,361
|
|||||||||||||
Income (loss) from operations
|
3,011
|
2,189
|
(209
|
)
|
(2,410
|
)
|
||||||||||
Interest expense, net
|
-
|
-
|
-
|
(4,612
|
)
|
|||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
102
|
||||||||||||
Other income (expense), net
|
-
|
-
|
-
|
17
|
||||||||||||
Loss on extinguishment of debentures
|
-
|
-
|
-
|
(11,799
|
)
|
|||||||||||
Income (loss) before income taxes
|
$
|
3,011
|
$
|
2,189
|
$
|
(209
|
)
|
$
|
(18,702
|
)
|
||||||
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
Dermatology
Imaging
|
TOTAL
|
|||||||||||||
Revenues
|
$
|
23,508
|
$
|
7,065
|
$
|
134
|
$
|
30,707
|
||||||||
Costs of revenues
|
8,763
|
3,506
|
367
|
12,636
|
||||||||||||
Gross profit
|
14,745
|
3,559
|
(233
|
)
|
18,071
|
|||||||||||
Gross profit %
|
62.7
|
%
|
50.4
|
%
|
(173.9
|
%)
|
58.8
|
%
|
||||||||
Allocated operating expenses:
|
||||||||||||||||
Engineering and product development
|
1,288
|
210
|
431
|
1,929
|
||||||||||||
Selling and marketing expenses
|
11,541
|
375
|
186
|
12,102
|
||||||||||||
Unallocated operating expenses
|
-
|
-
|
-
|
7,637
|
||||||||||||
12,829
|
585
|
617
|
21,668
|
|||||||||||||
Income (loss) from operations
|
1,916
|
2,974
|
(850
|
)
|
(3,597
|
)
|
||||||||||
Interest expense, net
|
-
|
-
|
-
|
(4,900
|
)
|
|||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
5,396
|
||||||||||||
Other income (expense), net
|
-
|
-
|
-
|
21
|
||||||||||||
Income (loss) before income taxes
|
$
|
1,916
|
$
|
2,974
|
$
|
(850
|
)
|
$
|
(3,080
|
)
|
Years Ended December 31,
|
||||||||
2017
|
2016
|
|||||||
Domestic
|
$
|
26,178
|
$
|
24,486
|
||||
Foreign
|
5,271
|
6,221
|
||||||
$
|
31,449
|
$
|
30,707
|
|||||
December 31,
|
||||||||
Assets:
|
2017
|
2016
|
||||||
Dermatology Recurring Procedures
|
$
|
29,722
|
$
|
34,612
|
||||
Dermatology Procedures Equipment
|
4,403
|
3,980
|
||||||
Dermatology Imaging
|
-
|
265
|
||||||
Other unallocated assets
|
4,506
|
4,336
|
||||||
Consolidated total
|
$
|
38,631
|
$
|
43,193
|
1 Year Strata Skin Sciences Chart |
1 Month Strata Skin Sciences Chart |
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