Apyx Medical(US:APYX)2023-08-10 21:46PART I. Financial Information This section outlines the company's unaudited financial statements and management's analysis of financial performance. ITEM 1. Condensed Consolidated Financial Statements (Unaudited) This section presents Apyx Medical Corporation's unaudited condensed consolidated financial statements and notes for Q2 2023. Condensed Consolidated Balance Sheets This section details the company's condensed consolidated balance sheets for June 30, 2023, and December 31, 2022. Condensed Consolidated Balance Sheets (In thousands) | ASSETS | June 30, 2023 (Unaudited) | December 31, 2022 | | :-------------------------- | :------------------------ | :---------------- | | Cash and cash equivalents | $18,479 | $10,192 | | Total current assets | $52,885 | $42,972 | | Total assets | $62,429 | $51,775 | | LIABILITIES AND EQUITY | | | | Total current liabilities | $19,029 | $11,850 | | Total liabilities | $25,696 | $13,982 | | Total stockholders' equity | $36,596 | $37,582 | | Total equity | $36,733 | $37,793 | | Total liabilities and equity| $62,429 | $51,775 | Condensed Consolidated Statements of Operations This section outlines the company's condensed consolidated statements of operations for Q2 and H1 2023 and 2022. Condensed Consolidated Statements of Operations (In thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sales | $13,569 | $10,292 | $25,711 | $22,785 | | Cost of sales | $4,290 | $3,378 | $8,859 | $7,652 | | Gross profit | $9,279 | $6,914 | $16,852 | $15,133 | | Loss from operations | $(1,235) | $(5,976) | $(6,846) | $(11,847) | | Net loss | $(1,019) | $(5,450) | $(4,551) | $(11,418) | | Net loss attributable to stockholders | $(994) | $(5,426) | $(4,477) | $(11,371) | | Loss per share: Basic and diluted | $(0.03) | $(0.16) | $(0.13) | $(0.33) | - Sales increased by 31.8% for the three months ended June 30, 2023, and by 12.8% for the six months ended June 30, 2023, compared to the respective prior year periods. Gross profit increased by 34.2% for the three months and 11.4% for the six months13146147 - Loss from operations significantly decreased from $(5,976) thousand to $(1,235) thousand for the three months ended June 30, 2023, and from $(11,847) thousand to $(6,846) thousand for the six months ended June 30, 2023, indicating improved operational efficiency or reduced expenses13 Condensed Consolidated Statements of Changes in Equity This section outlines the company's condensed consolidated statements of changes in equity for H1 2023. Condensed Consolidated Statements of Changes in Equity (In thousands) | Metric | Balance at Dec 31, 2022 | Six Months Ended June 30, 2023 | | :-------------------------- | :---------------------- | :----------------------------- | | Common Stock Par Value | $35 | $35 | | Additional Paid-In Capital | $73,282 | $76,773 | | Accumulated Deficit | $(35,735) | $(40,212) | | Non-controlling Interest | $211 | $137 | | Total Equity | $37,793 | $36,733 | - Total equity decreased from $37,793 thousand at December 31, 2022, to $36,733 thousand at June 30, 2023, primarily due to the net loss incurred during the period, partially offset by increases in additional paid-in capital from stock option exercises and stock-based compensation18 Condensed Consolidated Statements of Cash Flows This section details the company's condensed consolidated statements of cash flows for H1 2023 and 2022. Condensed Consolidated Statements of Cash Flows (In thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(6,733) | $(10,390) | | Net cash provided by (used in) investing activities | $7,001 | $(680) | | Net cash provided by financing activities | $8,158 | $100 | | Net change in cash and cash equivalents | $8,287 | $(10,807) | | Cash and cash equivalents, end of period | $18,479 | $20,063 | - The company experienced a significant positive shift in cash flow, moving from net cash used of $(10,807) thousand in H1 2022 to net cash provided of $8,287 thousand in H1 2023. This was primarily driven by proceeds from the sale-leaseback of property and a new term loan22180 Notes to Condensed Consolidated Financial Statements This section provides explanatory notes to the condensed consolidated financial statements, detailing accounting policies and events. NOTE 1. BASIS OF PRESENTATION Apyx Medical Corporation faced slowed demand due to an FDA Safety Communication, but recent clearances and management actions aim to mitigate going concern doubts. - Apyx Medical Corporation specializes in advanced energy technology, marketing Renuvion® for cosmetic surgery and J-Plasma® for hospital surgical markets, offering controlled heat to tissue24122 - The company experienced slowed demand for its Helium Plasma Technology following a March 14, 2022, FDA Safety Communication warning against off-label use26124 - Multiple FDA 510(k) clearances were received in 2022 and 2023 for Renuvion® Dermal Handpiece (dermal resurfacing) and Renuvion® APR Handpiece (skin laxity, subcutaneous tissue coagulation post-liposuction), with corresponding FDA Safety Communication updates2728125126128 - Management believes the May 10, 2023, FDA update to the Safety Communication addresses prior issues and should help mitigate future financial effects30129 - The company incurred an operating loss of $6.8 million and used $6.7 million of cash in operations for the six months ended June 30, 2023, raising substantial doubt about its ability to continue as a going concern32130 - To improve liquidity, the company entered into a $35 million Credit Agreement with MidCap Funding IV Trust, completed a $7.65 million sale-leaseback of its Clearwater, FL facility, received an $8.1 million tax refund from the IRS, and reduced U.S. headcount by 14%3334353637131132133134136 [NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS](