UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each class Trading symbol(s) Name of each exchange on which registered Common Stock APYX Nasdaq Stock Market, LLC Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☒ 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, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES E ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2020 was $5 million, an 11% decline year over year, at the low end of the guidance range provided [6][7] - Net loss for Q1 2020 was $2 million or $0.06 per diluted share, significantly lower than the net loss of $5.6 million or $0.17 per diluted share in Q1 2019 [35][36] - Cash and cash equivalents as of March 31, 2020, were $51.4 million, down from $58.8 million as of December 31, 2019 [37] Business Line Data and Key Metrics Changes - U.S. sales declined 7% year over year to $3.6 million, while international sales declined 20% year over year to $1.4 million [9] - Advanced Energy business sales declined 9% year over year to $4 million, and OEM business sales declined 20% year over year to $1 million [9][10] - Advanced Energy sales in March declined nearly 50% year over year, with U.S. cosmetic surgery customer sales down nearly 30% year over year [13] Market Data and Key Metrics Changes - The COVID-19 pandemic caused significant disruptions, leading to a sharp decline in procedural trends, particularly in the U.S. and international markets [12][13] - The company experienced a 90% year-over-year decline in sales during April 2020, with a slight recovery noted in the second half of the month [42] Company Strategy and Development Direction - The company is focused on four strategic initiatives to drive long-term growth in the cosmetic surgery market, including pursuing new clinical indications for Renuvion technology [19][30] - Despite the pandemic, the company plans to continue investing in key areas that support future growth, such as clinical studies and manufacturing efficiencies [17][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenges posed by COVID-19 but expressed confidence in the company's ability to recover and return to strong growth [24][30] - The company is well-capitalized with over $51 million in cash, allowing it to fund operations for multiple years [25] Other Important Information - The company will not provide full-year 2020 financial guidance due to uncertainties related to the pandemic [37] - The company has implemented cost-reduction measures, including delaying discretionary spending and eliminating bonus accruals [17][36] Q&A Session Summary Question: Has there been heightened demand from Renuvion users as practices reopen? - Management noted that there has been a slight pickup in handpiece demand in late April, with overall sales down 90% year over year for the month [42] Question: How are lean initiatives impacting manufacturing? - Management confirmed that manufacturing efficiencies have improved product margins in the Advanced Energy segment, and they continue to focus on these initiatives [44][45] Question: How did virtual event attendance compare to in-person events? - Virtual events saw significantly higher attendance, with one recent event attracting 123 participants, much larger than typical in-person events [49] Question: How has COVID-19 impacted international device approvals? - Management indicated that there have been no significant issues with device registrations in other countries, and they remain confident in meeting proposed timelines [51] Question: What percentage of customer offices are currently open? - Management stated that it is difficult to quantify the percentage of open offices due to varying state restrictions, but they are encouraged by the lifting of restrictions [54][55] Question: What is the timeline for resuming clinical trials? - Management could not provide a specific timeline for resuming clinical trials, as it depends on clinicians reopening their practices [58]

Financial Performance - Total revenue decreased by 11.2% or approximately $0.6 million for the three months ended March 31, 2020, compared to the same period in 2019[67]. - Advanced Energy segment sales decreased by 8.8% or approximately $0.4 million for the three months ended March 31, 2020, compared to the same period in 2019[67]. - Gross profit for the three months ended March 31, 2020, decreased by 16.3% year-over-year to $2.98 million, with a gross margin of 59.7% compared to 63.3% in 2019[75]. - The company incurred a net loss of $(7.5) million for the first quarter of 2020, which was primarily funded by cash used in operating activities[86]. - For the three months ended March 31, 2020, the company reported a net cash used in operating activities of approximately $7.4 million, compared to $5.1 million in the same period for 2019, reflecting an increase in operating loss[86]. - The company's working capital decreased to approximately $63.6 million as of March 31, 2020, from $64.4 million at December 31, 2019, primarily due to the net loss incurred during the first quarter[85]. Expenses - Research and development expenses increased by 34.2% for the three months ended March 31, 2020, primarily due to spending on two IDE clinical studies[77]. - Selling, general and administrative expenses increased by approximately 28.4% for the three months ended March 31, 2020, primarily due to higher bad debt expense of $0.6 million[81]. - Interest income decreased by 48.9% for the three months ended March 31, 2020, compared to the prior year, due to a lower average balance and yield on investments[83]. International Sales - International sales represented approximately 27.6% of total revenues for the three months ended March 31, 2020, down from 30.5% in the prior year[68]. - International sales are coordinated by sales and marketing personnel at the Clearwater, Florida facility, with products sold in more than 45 countries[68]. COVID-19 Impact - The company expects decreased demand to continue into the second quarter of 2020 and possibly beyond due to the impact of the COVID-19 pandemic[74]. - The company has implemented hiring restrictions and reduced discretionary spending in response to the COVID-19 pandemic[65]. - The company is actively working with customers to collect receivables amid multiple requests for extensions due to the impact of the COVID-19 pandemic[87]. - The company expects that utilizing the net operating loss carryback provisions will significantly help mitigate the working capital impact of the COVID-19 pandemic on sales and operations[86]. Tax and Financial Obligations - The effective tax rate for the three months ended March 31, 2020, was 71.5%, significantly higher than (0.1)% for the same period in 2019, primarily due to the release of a valuation allowance on net operating loss carryforwards[84]. - The company recognized an income tax benefit of approximately $4.9 million in Q1 2020, with an expected tax refund of approximately $3.7 million by the end of 2020[86]. - The CARES Act allows the company to defer payroll tax payments incurred between March 27, 2020, and December 31, 2020, with an expected deferral of between $0.4 million and $0.5 million[87]. - The company has purchase commitments totaling approximately $0.7 million, expected to be fulfilled within the next six months[89]. Legal Matters - The company has accrued $1,000,000 for defense costs related to legal claims, with $820,000 still accrued as of March 31, 2020[122]. - The company is involved in various legal actions concerning its Helium Plasma technology, which may have a material adverse impact on its financial condition if damages exceed insurance coverage limits[119]. - The company intends to vigorously defend against allegations in a class action lawsuit related to public statements about its JPlasma® technology[121]. - The company believes that the allegations in the Amended Complaint are without merit and that claims are adequately covered by insurance[122]. Internal Controls - The company has identified material weaknesses in internal control over financial reporting as of December 31, 2019, and is in the process of remediation[112]. - Management has identified three material weaknesses in internal control over financial reporting as of December 31, 2019, including the need for additional qualified accounting personnel[109]. - The company has taken steps to remediate material weaknesses by hiring a new Chief Financial Officer and a Corporate Controller with relevant experience[114]. - The company continues to monitor the effectiveness of its internal controls over financial reporting on an ongoing basis[115]. - There were no changes in internal control over financial reporting that materially affected the company during the three months ended March 31, 2020[116]. - The company accrues a liability in its consolidated financial statements for known or probable losses that can be reasonably estimated[123]. - If the estimated loss is a range, the minimum amount of the range is recorded when no amount within the range is a better estimate[123]. - Significant judgment is required to estimate the amount and timing of a loss to be recorded, indicating potential variability in actual results[123].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each Class Trading Symbol Name of each Exchange on which registered Common Stock, $.001 Par Value APYX NASDAQ Stock Market LLC FORM 10-K ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or o 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: ...

Apyx Medical Corporation (NASDAQ:APYX) Q4 2019 Earnings Conference Call March 16, 2020 5:00 PM ET Company Participants Charles Goodwin - President and Chief Executive Officer Tara Semb - Chief Financial Officer Conference Call Participants Matthew Hewitt - Craig-Hallum Capital Group LLC Matthew O’Brien - Piper Jaffray & Co. David Ciruli - JMP Securities Kyle Bauser - Dougherty & Company LLC Operator Good afternoon, ladies and gentlemen, and welcome to the Fourth Quarter and Fiscal Year 2019 Earnings Confere ...

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's financials show increased sales but a larger net loss due to higher operating expenses - The company corrected **immaterial errors** in prior period statements related to stock-based compensation and OEM revenue recognition[17](index=17&type=chunk)[18](index=18&type=chunk)[20](index=20&type=chunk) [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $62,272 | $16,466 | | Total current assets | $78,905 | $89,517 | | Total assets | $86,943 | $95,610 | | **Liabilities & Equity** | | | | Total current liabilities | $9,039 | $7,585 | | Total liabilities | $10,210 | $7,725 | | Total stockholders' equity | $76,733 | $87,885 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q3 2019 | Q3 2018 | Nine Months 2019 | Nine Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Sales | $7,575 | $3,672 | $19,772 | $10,760 | | Gross Profit | $5,017 | $2,521 | $13,015 | $7,270 | | Loss from operations | $(4,697) | $(2,796) | $(14,935) | $(8,449) | | Net (Loss) Income | $(4,311) | $69,174 | $(13,900) | $67,967 | | Basic & Diluted EPS (Continuing Ops) | $(0.13) | $(0.01) | $(0.41) | $(0.19) | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) - Total stockholders' equity decreased from **$87.9 million** to **$76.7 million**, driven by a **net loss of $13.9 million** for the nine-month period[8](index=8&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(15,094) | $(2,835) | | Net cash provided by investing activities | $60,766 | $35,459 | | Net cash provided by (used in) financing activities | $152 | $(2,629) | | **Net change in cash** | **$45,806** | **$29,995** | | **Cash at end of period** | **$62,272** | **$40,663** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The company divested its **"Core" business segment** for **$97 million** to focus on its J-Plasma® technology[13](index=13&type=chunk) - Adoption of the new lease accounting standard (**Topic 842**) resulted in recognizing **$212,000** of operating lease liabilities and right-of-use assets[30](index=30&type=chunk) - The company is involved in legal actions related to its **J-Plasma® technology** and has accrued **$500,000** for class-action defense costs[44](index=44&type=chunk)[47](index=47&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue growth is driven by Renuvion® commercialization, though margins declined and expenses rose [Executive Level Overview](index=26&type=section&id=Executive%20Level%20Overview) - The company is focused on the full-scale commercialization of **Renuvion®** in the cosmetic surgery market[78](index=78&type=chunk) - **International sales grew to 26.7%** of total revenue in Q3 2019, up from 24.8% in Q3 2018[79](index=79&type=chunk) - The company initiated an **IDE clinical study** for skin laxity and received **510(k) clearance** for the Apyx Plasma/RF Handpiece[80](index=80&type=chunk)[81](index=81&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Revenue by Segment (in thousands) | Segment | Q3 2019 | Q3 2018 | % Change | Nine Months 2019 | Nine Months 2018 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Advanced Energy | $6,094 | $2,985 | 104.2% | $15,734 | $8,727 | 80.3% | | OEM | $1,481 | $687 | 115.6% | $4,038 | $2,033 | 98.6% | | **Total** | **$7,575** | **$3,672** | **106.3%** | **$19,772** | **$10,760** | **83.8%** | - **Gross margin decreased to 66.2%** in Q3 2019 from 68.7% in Q3 2018, driven by product mix and international sales[91](index=91&type=chunk) Operating Expense Changes (Q3 2019 vs Q3 2018) | Expense Category | Q3 2019 (in thousands) | Q3 2018 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Research & Development | $936 | $613 | 52.7% | | Professional services | $1,996 | $628 | 217.8% | | Salaries and related costs | $3,020 | $2,119 | 42.5% | | SG&A | $3,762 | $1,957 | 92.2% | [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) - **Working capital was approximately $69.9 million** at September 30, 2019, a decrease from $81.9 million at year-end 2018[106](index=106&type=chunk) - Net cash used in operating activities was **$15.1 million**, primarily funding the operating loss of $13.9 million[107](index=107&type=chunk) - The company had purchase commitments of approximately **$4.6 million** as of September 30, 2019[108](index=108&type=chunk) [Critical Accounting Estimates](index=32&type=section&id=Critical%20Accounting%20Estimates) - Management identifies several critical accounting estimates requiring significant judgment, including inventory reserves and litigation accruals[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk)[117](index=117&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company has indicated that this section is not applicable - Not applicable[123](index=123&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to material weaknesses, with remediation efforts underway - Management concluded that **disclosure controls and procedures were not effective** as of September 30, 2019[124](index=124&type=chunk) - The company has identified **three material weaknesses** in its control environment, control activities, and monitoring controls[130](index=130&type=chunk) - **Remediation efforts are underway**, including hiring new personnel and engaging a third-party specialist[133](index=133&type=chunk)[136](index=136&type=chunk) [Part II. Other Information](index=36&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company faces legal actions and a class-action lawsuit related to its J-Plasma® technology and disclosures - The company is involved in legal actions concerning the use of its **J-Plasma® technology**, which it believes are covered by insurance[140](index=140&type=chunk) - A **class-action complaint** was filed alleging violations of securities laws related to a 510(k) submission[141](index=141&type=chunk)[142](index=142&type=chunk) - The company believes the allegations are without merit but has accrued **$500,000 for initial defense costs**[143](index=143&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported for the period - There have been **no material changes** to the Risk Factors described in the annual report on Form 10-K[145](index=145&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[146](index=146&type=chunk) [Defaults Upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[146](index=146&type=chunk) [Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not Applicable[147](index=147&type=chunk) [Other Information](index=38&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - None[147](index=147&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including certifications and XBRL data files

Apyx Medical Corporation (NASDAQ:APYX) Q3 2019 Earnings Conference Call November 11, 2019 4:30 PM ET Company Participants Charlie Goodwin - President & Chief Executive Officer Tara Semb - Chief Financial Officer Conference Call Participants Lucas Baranowski - Craig-Hallum Capital Kyle Bauser - Dougherty Matthew O'Brien - Piper Jaffray Russell Cleveland - RENN Capital Operator Good afternoon, ladies and gentlemen, and welcome to the Third Quarter of Fiscal Year 2019 Earnings Conference Call for Apyx Medical ...

Apyx Medical Corp (NASDAQ:APYX) Q2 2019 Earnings Conference Call August 8, 2019 4:30 PM ET Company Participants Charlie Goodwin - President and CEO Tara Semb - CFO Conference Call Participants Matt Hewitt - Craig-Hallum Capital Group Kyle Bauser - Dougherty & Company Russell Cleveland - RENN Capital Group Jeffrey Bernstein - Cowen Prime Advisors Operator Good afternoon, ladies and gentlemen, and welcome to the second quarter of fiscal year 2019 earnings conference call for Apyx Medical Corporation. [Operato ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 0-12183 Energy Elevating Lives APYX MEDICAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 11-2644611 ...

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for the quarter ended March 31, 2019, detail the company's financial position and performance [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets%20at%20March%2031%2C%202019%20and%20December%2031%2C%202018) Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $32,415 | $16,466 | | Short term investments | $40,885 | $61,678 | | Total current assets | $85,240 | $89,517 | | Total assets | $91,703 | $95,610 | | Total current liabilities | $7,475 | $7,702 | | Total liabilities | $7,690 | $7,842 | | Total stockholders' equity | $84,013 | $87,768 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20for%20the%20three%20months%20ended%20March%2031%2C%202019%20and%202018) Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Sales | $5,823 | $3,397 | | Cost of sales | $2,103 | $1,185 | | Gross profit | $3,720 | $2,212 | | Loss from operations | $(5,203) | $(2,720) | | Net loss | $(4,681) | $(935) | | Basic EPS from continuing operations| $(0.14) | $(0.08) | | Diluted EPS from continuing operations| $(0.14) | $(0.08) | | Basic EPS from total operations | $(0.14) | $(0.03) | | Diluted EPS from total operations | $(0.14) | $(0.03) | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20for%20the%20three%20months%20ended%20March%2031%2C%202019%20and%202018) Changes in Stockholders' Equity (in thousands) | Metric | Balance Dec 31, 2018 | Options Exercised | Stock Based Compensation | Stock Exercise to Acquire Options and Warrants | Net Income | Balance Mar 31, 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Additional Paid-In Capital | $52,221 | $777 | $859 | $(710) | — | $53,147 | | Retained earnings | $35,513 | — | — | — | $(4,681) | $30,832 | | Total | $87,768 | $777 | $859 | $(710) | $(4,681) | $84,013 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20March%2031%2C%202019%20and%202018) Consolidated Statements of Cash Flows Highlights (in thousands) | Activity Type | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,639) | $(1,108) | | Net cash provided by (used in) investing activities | $20,521 | $(139) | | Net cash provided by (used in) financing activities | $67 | $(60) | | Net change in cash, cash equivalents and restricted cash | $15,949 | $(1,307) | | Cash, cash equivalents and restricted cash, end of period | $32,415 | $9,361 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [NOTE 1. BASIS OF PRESENTATION](index=8&type=section&id=NOTE%201.%20BASIS%20OF%20PRESENTATION) - Apyx Medical Corporation is a medical technology company focused on J-Plasma® (Renuvion™) for cutting, coagulation, and ablation of soft tissue, and also engages in OEM agreements[13](index=13&type=chunk) - The company **divested its electrosurgical "Core" business segment** on August 30, 2018, for **$97 million in cash** to focus on J-Plasma technology, reclassifying Core business financial results to discontinued operations[14](index=14&type=chunk)[17](index=17&type=chunk) - Apyx entered into a **10-year OEM agreement** with Symmetry Surgical Inc to manufacture generators, with revenue and expenses reported in the OEM segment[14](index=14&type=chunk)[16](index=16&type=chunk) [NOTE 2. INVENTORIES](index=8&type=section&id=NOTE%202.%20INVENTORIES) Inventories (in thousands) | Category | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Raw materials | $5,032 | $4,521 | | Finished goods | $964 | $1,130 | | Gross inventories | $5,996 | $5,651 | | Less: reserve for obsolescence | $(398) | $(439) | | Net inventories | $5,598 | $5,212 | [NOTE 3. INTANGIBLE ASSETS](index=10&type=section&id=NOTE%203.%20INTANGIBLE%20ASSETS) Intangible Assets (in thousands) | Category | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Purchased technology, net| $5 | $6 | | Goodwill | $185 | $185 | | Total Intangibles | $190 | $191 | - Intangible assets and goodwill resulted from the acquisition of Apyx (formerly Bovie) Bulgaria, EOOD in 2015[22](index=22&type=chunk) [NOTE 4. RECENT ACCOUNTING PRONOUNCEMENTS](index=10&type=section&id=NOTE%204.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) - Adopted ASU No 2016-18 (Restricted Cash Flows) retrospectively, adjusting cash flow statement presentation without other financial statement impact[23](index=23&type=chunk) - Adopted ASU No 2014-09 (Revenue from Contracts with Customers) using a modified retrospective approach, with **no material impact** on consolidated financial statements[24](index=24&type=chunk) - Adopted ASU No 2016-02 (Leases) in Q1 2019, recognizing a **$178k right-of-use asset** and corresponding lease liability on the balance sheet[25](index=25&type=chunk) [NOTE 5. EARNINGS PER SHARE](index=11&type=section&id=NOTE%205.%20EARNINGS%20PER%20SHARE) Earnings Per Share (in thousands, except per share data) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net (loss) from continuing operations | $(4,681) | $(2,791) | | Net income from discontinued operations, net of tax | — | $1,856 | | Net (loss) from all operations | $(4,681) | $(935) | | Weighted average shares used to compute basic (loss) | 33,343 | 32,878 | | Basic and diluted loss per share from continuing operations | $(0.14) | $(0.08) | | Basic and diluted income per share from discontinued operations | — | $0.05 | | Basic and diluted loss per share from all operations | $(0.14) | $(0.03) | - Anti-dilutive instruments excluded from diluted loss per common share for Q1 2019 included **1,908k options**[29](index=29&type=chunk) [NOTE 6. STOCK-BASED COMPENSATION](index=12&type=section&id=NOTE%206.%20STOCK-BASED%20COMPENSATION) Stock-Based Compensation Expense (in thousands) | Period | Stock-Based Compensation Expense | | :--- | :--- | | Three months ended March 31, 2019 | $859 | | Three months ended March 31, 2018 | $372 | Stock Option Activity | Activity | Number of Options | Weighted Average Exercise Price | | :--- | :--- | :--- | | Outstanding at Dec 31, 2018 | 3,480,701 | $3.10 | | Granted | 1,277,500 | $7.73 | | Exercised | (270,549) | $2.87 | | Canceled and forfeited | (10,500) | $2.10 | | Outstanding at Mar 31, 2019 | 4,477,152 | $4.44 | [NOTE 7. INCOME TAXES](index=12&type=section&id=NOTE%207.%20INCOME%20TAXES) Income Tax (Benefit) Expense (in thousands) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Income tax (benefit) expense | $(124) | $11 | | Effective tax rate | -3% | 0.0% | Gross Unrecognized Tax Benefits (in thousands) | Period | Gross Unrealized Tax Benefits | | :--- | :--- | | Balance at January 1, 2019 | $1,313 | | Balance at March 31, 2019 | $1,313 | - The effective tax rate differs from the statutory rate primarily due to a change in the valuation allowance on net deferred tax assets and a **$130k adjustment** to the 2018 tax accrual, offset by foreign taxes[34](index=34&type=chunk) [NOTE 8. COMMITMENTS AND CONTINGENCIES](index=13&type=section&id=NOTE%208.%20COMMITMENTS%20AND%20CONTINGENCIES) Future Minimum Lease Payments (in thousands) | Year | Amount | | :--- | :--- | | 2019 (remaining 9 months) | $80 | | 2020 | $107 | | Total | $187 | - The company is involved in legal actions related to its J-Plasma technology and a class-action lawsuit filed April 17, 2019, alleging securities law violations regarding 510(k) submission statements for dermal resurfacing procedures[40](index=40&type=chunk)[42](index=42&type=chunk) - Management believes it has meritorious defenses and claims are adequately covered by insurance, but potential costs could materially impact financial condition; **$0.5 million has been accrued** for initial defense costs for the class-action suit[40](index=40&type=chunk)[43](index=43&type=chunk) - Purchase commitments for inventories totaled approximately **$5.8 million** as of March 31, 2019, with most expected to be purchased by the end of 2019[45](index=45&type=chunk) [NOTE 9. RELATED PARTY TRANSACTIONS](index=15&type=section&id=NOTE%209.%20RELATED%20PARTY%20TRANSACTIONS) - Several relatives of Nikolay Shilev, Apyx Bulgaria's Managing Director, are company employees and considered related parties: Teodora Shileva (spouse), Antoaneta Dimitrova Shileva-Toromanova (sister), and Svetoslav Shilev (son)[48](index=48&type=chunk) [NOTE 10. FINANCIAL INSTRUMENTS](index=15&type=section&id=NOTE%2010.%20FINANCIAL%20INSTRUMENTS) Cash, Cash Equivalents and Marketable Securities (in thousands) | Category | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $32,415 | $16,466 | | Short-term Marketable Securities | $40,885 | $61,678 | | Total | $73,300 | $78,144 | - The company elected the fair value option for investments with maturities of three months or greater at the time of purchase, reporting unrealized gains and losses in earnings[52](index=52&type=chunk) [NOTE 11. GEOGRAPHIC AND SEGMENT INFORMATION](index=16&type=section&id=NOTE%2011.%20GEOGRAPHIC%20AND%20SEGMENT%20INFORMATION) Segment Sales and Net Income (Loss) from Continuing Operations (in thousands) | Segment | Sales (Q1 2019) | Sales (Q1 2018) | Net Income (Loss) (Q1 2019) | Net Income (Loss) (Q1 2018) | | :--- | :--- | :--- | :--- | :--- | | Advanced Energy | $4,371 | $2,629 | $(3,387) | $(578) | | OEM | $1,452 | $768 | $785 | $406 | | Corporate & Other | — | — | $(2,079) | $(2,619) | | Total | $5,823 | $3,397 | $(4,681) | $(2,791) | Sales by Geographic Region (in thousands) | Region | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Domestic | $4,104 | $2,758 | | International | $1,719 | $639 | | Total | $5,823 | $3,397 | - The company operates in two reportable segments: **Advanced Energy** and **OEM**, with 'Corporate & Other' covering unallocated costs[54](index=54&type=chunk) - International sales represented approximately **29.5% of total revenues** for Q1 2019, up from 18.8% for Q1 2018[55](index=55&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, results of operations, and strategic focus on J-Plasma technology [Executive Level Overview](index=17&type=section&id=Executive%20Level%20Overview) - Apyx Medical is a medical technology company focused on commercializing J-Plasma® (Renuvion™) in the cosmetic surgery market, supported by a direct sales force of **28 professionals** and **7 independent sales agencies**[59](index=59&type=chunk)[60](index=60&type=chunk) - International sales increased to **29.5% of total revenues** in Q1 2019, up from 18.8% in Q1 2018, with products sold in over 40 countries[61](index=61&type=chunk) - The company **voluntarily withdrew its 510(k) application** for J-Plasma/Renuvion in dermal resurfacing but remains committed to working with the FDA on a new submission[62](index=62&type=chunk) - The divestiture of the electrosurgical "Core" business segment for **$97 million** in August 2018 allows the company to focus on J-Plasma technology and includes a 10-year OEM agreement to supply generators to Symmetry Surgical Inc[63](index=63&type=chunk)[65](index=65&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) [Sales](index=18&type=section&id=Sales) Sales by Reportable Segment (in thousands) | Segment | March 31, 2019 | March 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Advanced Energy | $4,371 | $2,629 | 66.3% | | OEM | $1,452 | $768 | 89.1% | | Total | $5,823 | $3,397 | 71.4% | Sales by Domestic and International (in thousands) | Region | March 31, 2019 | March 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Domestic | $4,104 | $2,758 | 48.8% | | International | $1,719 | $639 | 256.5% | | Total | $5,823 | $3,397 | 71.4% | - Total revenue from continuing operations increased by **$2.4 million**, or **71.4%**, to $5.8 million in Q1 2019, driven by Advanced Energy generators and handpieces, with modest contribution from OEM segment sales[70](index=70&type=chunk) [Gross Profit](index=19&type=section&id=Gross%20Profit) Gross Profit (in thousands) | Metric | March 31, 2019 | March 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Cost of sales | $2,103 | $1,185 | 77.5% | | Percentage of sales | 36.1% | 34.9% | | | Gross profit | $3,720 | $2,212 | 68.2% | | Percentage of sales | 63.9% | 65.1% | | - Gross profit increased by **$1.5 million**, or **68.2%**, to $3.7 million in Q1 2019, but **gross margin decreased to 63.9%** from 65.1% due to product mix, higher international sales, and lower OEM margins[72](index=72&type=chunk) [Other Costs and Expenses](index=19&type=section&id=Other%20Costs%20and%20Expenses) [Research and development](index=19&type=section&id=Research%20and%20development) Research and Development Expense (in thousands) | Metric | March 31, 2019 | March 31, 2018 | Change | | :--- | :--- | :--- | :--- | | R&D expense | $810 | $514 | 57.6% | | Percentage of sales | 13.9% | 15.1% | | - R&D spending **increased by 57.6%** in Q1 2019, primarily due to focused spending on clinical studies and research projects related to the cosmetic surgery market[74](index=74&type=chunk) [Professional services](index=19&type=section&id=Professional%20services) Professional Services Expense (in thousands) | Metric | March 31, 2019 | March 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Professional services expense | $1,791 | $506 | 254.0% | | Percentage of sales | 30.8% | 14.9% | | - Professional services expense **increased by 254.0%** in Q1 2019, mainly due to increases in training-related physician consulting, medical advisory board stock option grants, marketing expenses, and legal and audit fees[75](index=75&type=chunk) [Salaries and related costs](index=20&type=section&id=Salaries%20and%20related%20costs) Salaries and Related Costs (in thousands) | Metric | March 31, 2019 | March 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Salaries and related expenses | $3,221 | $1,802 | 78.7% | | Percentage of sales | 55.3% | 53.0% | | - Salaries and related expenses **increased by 78.7%** in Q1 2019, driven by higher employee stock option expense, an increase in the sales force, and reclassification of regulatory salaries[78](index=78&type=chunk) [Selling, general and administrative expenses](index=20&type=section&id=Selling%2C%20general%20and%20administrative%20expenses) Selling, General and Administrative Expense (in thousands) | Metric | March 31, 2019 | March 31, 2018 | Change | | :--- | :--- | :--- | :--- | | SG&A Expense | $3,101 | $2,110 | 47.0% | | Percentage of sales | 53.3% | 62.1% | | - SG&A expense **increased by 47.0%** in Q1 2019, primarily due to sales commissions and product sample expense, partially offset by an adjustment to the bad debt reserve following the Core business disposition[80](index=80&type=chunk) [Other Income (Expense), net](index=20&type=section&id=Other%20Income%20(Expense)%2C%20net) Other Income (Expense), net (in thousands) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Interest income | $423 | $0 | 100.0% | | Interest expense | $0 | $(34)| (100.0)% | | Other losses | $(25)| $0 | 100.0% | | Change in fair value of derivative liabilities, net | $0 | $(26)| (100.0)% | - Interest income increased significantly in Q1 2019 due to short-term investments in U.S Treasury Securities purchased with proceeds from the Core business sale in September 2018[82](index=82&type=chunk) [Income Taxes](index=20&type=section&id=Income%20Taxes) Income Tax (Benefit) Expense (in thousands) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Income tax (benefit) expense | $(124) | $11 | | Effective tax rate | -3% | 0.0% | - The effective tax rate differs from the statutory rate primarily due to a change in the valuation allowance on net deferred tax assets and a **$130k adjustment** to the 2018 tax accrual[83](index=83&type=chunk) - A valuation allowance is maintained on net deferred tax assets due to historical losses and the expectation of continued losses from continuing operations in the near future[84](index=84&type=chunk) [Product Development](index=21&type=section&id=Product%20Development) - The company primarily develops products and improvements internally, funded by internal cash flow and equity issuances, with a focus on proprietary products to expand existing lines[85](index=85&type=chunk) - R&D teams are located in Clearwater, Florida, and Sofia, Bulgaria, maintaining close relationships with physicians and medical personnel[85](index=85&type=chunk) [Reliance on Collaborative, Manufacturing and Selling Arrangements](index=21&type=section&id=Reliance%20on%20Collaborative%2C%20Manufacturing%20and%20Selling%20Arrangements) - The majority of products are manufactured in-house in Clearwater, Florida, and Sofia, Bulgaria, with labor-intensive sub-assemblies potentially outsourced[86](index=86&type=chunk) - The company functions as an OEM-provider of generators to Symmetry for at least **10 years**[87](index=87&type=chunk) - Reliance on **sole-source suppliers** for the majority of raw materials poses a risk of significant disruptions in the supply chain, potentially impacting the ability to meet customer demands[88](index=88&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) - Working capital was approximately **$77.8 million** at March 31, 2019, a decrease from $81.8 million at December 31, 2018[89](index=89&type=chunk) - Net cash used in operating activities was approximately **$4.6 million** in Q1 2019, compared to $1.1 million in Q1 2018[90](index=90&type=chunk) - Net cash from investing activities was **$20.5 million** in Q1 2019, primarily due to the shift in categorization of short-term investments and cash equivalents in Treasury Bill investments[90](index=90&type=chunk) - Purchase commitments for inventories totaled approximately **$5.8 million** at March 31, 2019, expected to be purchased by the end of 2019[91](index=91&type=chunk) [Critical Accounting Estimates](index=23&type=section&id=Critical%20Accounting%20Estimates) [Inventory reserves](index=23&type=section&id=Inventory%20reserves) - The company maintains a reserve for excess and obsolete inventory, with estimates based on historical experience and expected future trends, acknowledging that actual product life cycles or demand could lead to additional write-downs[97](index=97&type=chunk) [Long-lived assets](index=23&type=section&id=Long-lived%20assets) - Long-lived assets are reviewed for impairment when circumstances indicate that their carrying amount may not be recoverable, with evaluations significantly impacted by estimates of future prices, volumes, capital needs, and economic trends[98](index=98&type=chunk) [Stock-based Compensation](index=23&type=section&id=Stock-based%20Compensation) - Stock options are expensed over the vesting period based on the trinomial lattice option-pricing model fair value on the grant date, which involves a number of estimates affecting the expense amount[99](index=99&type=chunk) [Litigation Contingencies](index=23&type=section&id=Litigation%20Contingencies) - A liability for legal actions is accrued when a loss is known or considered probable and the amount can be reasonably estimated, with significant judgment required to estimate the amount and timing of a loss[100](index=100&type=chunk)[101](index=101&type=chunk) [Income Taxes](index=24&type=section&id=Income%20Taxes) - The provision for income taxes includes federal, foreign, state, and local taxes, with deferred tax assets or liabilities computed based on temporary differences and valuation allowances recorded when a tax benefit is not likely to be realized[102](index=102&type=chunk)[103](index=103&type=chunk) - Uncertain tax positions are assessed at the largest amount that is **more-likely-than-not** to be sustained upon audit[104](index=104&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's market risk disclosures remain materially unchanged from the previous Annual Report on Form 10-K - For disclosures about market risk, the company refers to Part II, Item 7A of its Annual Report on Form 10-K for the year ended December 31, 2018[108](index=108&type=chunk) - Management believes there have been **no material changes** to the market risk information provided in the Annual Report on Form 10-K[108](index=108&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management identifies material weaknesses in internal controls and outlines ongoing remediation efforts [Evaluation of Disclosure Controls and Procedures](index=25&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management concluded that the company's internal control over financial reporting was **not effective** as of December 31, 2018, due to identified material weaknesses[110](index=110&type=chunk) - An independent registered public accounting firm issued an **adverse opinion** on the effectiveness of internal control over financial reporting for the period ended December 31, 2018[111](index=111&type=chunk) - Three material weaknesses were identified: an **ineffective control environment**, **ineffective control activities**, and **ineffective monitoring controls**[113](index=113&type=chunk) [Remediation Efforts to Address Material Weaknesses](index=25&type=section&id=Remediation%20Efforts%20to%20Address%20Material%20Weaknesses) - The company is continuing remediation efforts by improving documentation of internal controls, guidance, communication, and emphasizing their importance[114](index=114&type=chunk) - Improvements are being made to risk assessment procedures, timeliness, and the identification, documentation, and assessment of information used in performing internal controls[115](index=115&type=chunk) - The company is enhancing policies, procedures, and controls for all key processes, including personnel training and implementing enhanced monitoring procedures, with assistance from third-party specialists[116](index=116&type=chunk)[117](index=117&type=chunk) [Changes in Internal Control over Financial Reporting](index=26&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There were **no changes** in internal control over financial reporting during the three months ended March 31, 2019, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[120](index=120&type=chunk) [Part II. Other Information](index=27&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in legal actions related to its J-Plasma technology and a class-action lawsuit - The company is involved in legal actions relating to the use of its J-Plasma technology, with management believing it has meritorious defenses and that such claims are adequately covered by insurance[123](index=123&type=chunk) - A **class-action complaint** was filed on April 17, 2019, alleging securities law violations related to public statements concerning the Premarket Notification 510(k) submission for J-Plasma® technology for dermal resurfacing procedures[124](index=124&type=chunk)[125](index=125&type=chunk) - The company and its CEO intend to **vigorously defend** against the class-action suit, believing the allegations are without merit, and accrue liabilities for actions when a loss is probable and estimable[126](index=126&type=chunk)[127](index=127&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors are reported for the period - This section is marked as 'Not Applicable'[128](index=128&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds occurred during the reporting period - There were no unregistered sales of equity securities and use of proceeds[128](index=128&type=chunk) [Item 3. Defaults Upon Senior Securities](index=27&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - There were no defaults upon senior securities[128](index=128&type=chunk) [Item 4. Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable as the company is not involved in mining operations - This section is marked as 'Not Applicable'[128](index=128&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) There is no other information to report under this item - There is no other information to report under this item[129](index=129&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q - Exhibits include the Asset Purchase Agreement, Articles of Incorporation, By-laws, Certificates of Amendment/Elimination, and certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[131](index=131&type=chunk) - XBRL (Extensible Business Reporting Language) information, including Instance Document and Taxonomy Extension Documents, is furnished[131](index=131&type=chunk)[132](index=132&type=chunk) [Signatures](index=30&type=section&id=Signatures) The report is certified by the registrant's authorized officers - The report is signed by Charles D Goodwin II, President, Chief Executive Officer and Director (Principal Executive Officer)[134](index=134&type=chunk) - The report is also signed by Tara Semb, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer)[134](index=134&type=chunk)[136](index=136&type=chunk)