As filed with the Securities and Exchange Commission on November 16, 2021
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
STRATA SKIN SCIENCES, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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13-3986004
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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5 Walnut Grove Drive, Suite 140
Horsham, Pennsylvania 19044
(215) 619-3200
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Robert J. Moccia
Chief Executive Officer
STRATA Skin Sciences, Inc.
5 Walnut Grove Drive, Suite 140
Horsham, Pennsylvania 19044
(215) 619-3200
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Sunjeet S. Gill, Esq.
Stevens & Lee, P.C.
620 Freedom Business Center Drive, Suite 200
King of Prussia, PA 19406
(610) 205-6000
Fax: (610) 337-4374
Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: ☐
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, other than securities offered only in
connection with dividend or interest reinvestment plans, check the following box: ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration
statement for the same offering. ☐
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the
Securities Act, check the following box. ☐
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b)
under the Securities Act, check the following box. ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large
accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☒
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Smaller reporting company
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☒
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Emerging growth company
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☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to
Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
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Title of securities
to be registered |
Amount to be registered(1)
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Proposed maximum offering price per share(2)
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Proposed maximum aggregate offering price(2)
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Amount of Registration Fee
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Common Stock, par value $0.001 per share
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373,626
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$
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1.82
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$
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679,999.32
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$
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63.04
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TOTAL:
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373,626
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$
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679,999.32
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$
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63.04
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Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), this Registration Statement shall also cover any additional securities that may be offered or issued in connection with any stock dividend, stock
split, recapitalization or other similar transaction effected without receipt of consideration that increases the outstanding number of shares of Common Stock.
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Estimated pursuant to Rule 457(c) under the Securities Act solely for the purpose of calculating the amount of the registration fee based upon the average of the high ($1.85) and low ($1.79) sale prices for a share of the registrant’s
common stock on November 9, 2021, as reported on the Nasdaq Capital Market, which is a date within five business days prior to the filing of this Registration Statement.
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The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to
said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell the securities until the Registration Statement filed with the Securities and Exchange Commission, of which this prospectus is a
part, is effective.
SUBJECT TO COMPLETION, DATED November 16, 2021
STRATA Skin Sciences, Inc.
373,626 Shares of Common Stock
Issuable upon Exercise of an Outstanding Warrant
This prospectus relates to the resale, from time to time, of up to 373,626 shares of our common stock, $0.001 par value per share, issuable upon exercise of a certain outstanding common stock purchase warrant by the
selling stockholder described herein.
Our common stock is listed on the Nasdaq Capital Market under the symbol “SSKN.” On November 12, 2021, the last reported sale price of our common stock on the Nasdaq Capital Market was $[__] per share.
All of the shares of common stock offered hereby are issuable upon the exercise of the warrant (the “Warrant”) to purchase up to 373,626 shares of common stock. The Warrant was issued by us on September 30, 2021 in
connection with an $8.0 million senior secured financing with MidCap Financial Trust (“MidCap”), of which the full amount was drawn by us on September 30, 2021. We will not receive any proceeds from the sale or distribution of the common stock by
the selling stockholder. The registration of the shares covered by this prospectus does not necessarily mean that any of the shares will be offered or sold by the selling stockholder. The timing and amount of any sale is within the selling
stockholder’s sole discretion, subject to certain restrictions. The selling stockholder may sell the shares described in the prospectus in a number of different ways and at varying prices. For additional information about how the selling
stockholders may sell their shares of common stock, you should refer to the section entitled “Plan of Distribution” in this prospectus. The shares offered by this prospectus and any prospectus supplement may be offered by the selling stockholder
directly to investors or to or through underwriters, dealers, or other agents. If any underwriters or agents are involved in the sale of any shares with respect to which this prospectus is being delivered, the names of such underwriters or agents
and any applicable commissions or discounts and over-allotment options will be set forth in a prospectus supplement.
We are registering the offer and sale of the common stock by the selling stockholders to satisfy certain registration rights we have granted to the selling stockholder. We are not selling any shares of common stock
under this prospectus and will not receive any proceeds from the sale of shares by the selling stockholder. We will receive proceeds from the cash exercise of the Warrant which, if exercised in cash with respect to all of the 373,626 shares of
common stock, would result in gross proceeds of $680,000 to us.
Investing in our common stock involves significant risks. You should carefully consider the risk factors beginning on page 10 of this prospectus and the risk factors incorporated by reference into
this prospectus before purchasing any of the shares offered by this prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is , 2021
TABLE OF CONTENTS
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This prospectus relates to shares of our common stock which the selling stockholder named in this prospectus may sell from time to time. We will not receive any of the proceeds from these sales. We have agreed to pay
the expenses incurred by us in registering these shares.
You should rely only on the information contained in, or incorporated by reference into, this prospectus. Neither we nor any agent have authorized anyone to provide any information or to make any representations other
than those contained in this prospectus or in any free writing prospectuses we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. If anyone provides
you with different or inconsistent information, you should not rely on it. Neither we nor any agent is making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.
You should not assume that the information in this prospectus or any other offering materials are accurate as of any date other than the date on the front of each document, regardless of the time of delivery of this
prospectus or any sale of securities. Our business, financial condition, results of operations and prospects may have changed since then.
This prospectus is not an offer or solicitation in respect to these securities in any jurisdiction in which such offer or solicitation would be unlawful. This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission (the “SEC”). The registration statement that contains this prospectus (including the exhibits to the registration statement) contains additional information about our company and the securities
offered under this prospectus. That registration statement can be read at the SEC website or at the SEC’s offices listed under the heading “Where You Can Find More Information.” You should also read this prospectus together with the additional
information described under “Where You Can Find More Information” and “Incorporation of Information by Reference.”
All statements contained in this prospectus, any prospectus supplement and the documents incorporated by reference herein and therein, other than statements of historical facts, that address future activities, events
or developments are forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements often contain the words “may,”
“could,” “should,” “would,” “plan,” “seek,” “likely,” “potential,” “will,” “believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” and similar expressions, although not all forward-looking statements contain these words.
All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including statements relating but not limited to:
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forecasts of future business performance, consumer trends and macro-economic conditions;
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descriptions of market, competitive conditions, and competitive product introductions;
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descriptions of plans or objectives of management for future operations, products or services;
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actions by the FDA or other regulatory agencies with respect to our products or product candidates;
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changes to third-party reimbursement of laser treatments using our devices;
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our estimates regarding the sufficiency of our cash resources, expenses, capital requirements and needs for additional financing and our ability to obtain additional financing;
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our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;
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anticipated results of existing or future litigation;
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our ability to grow an at-home phototherapy business;
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health emergencies, the spread of infectious disease or pandemics;
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our ability to protect our business against cybersecurity threats;
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our ability to attract and retain key members of our management team;
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our ability to successfully grow by acquisition as well as organically;
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descriptions or assumptions underlying or related to any of the above items; and
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other factors.
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These statements are based on certain assumptions and analyses made by us in light of our experience and our assessment of historical trends, current conditions and expected future developments as well as other factors
we believe are appropriate under the circumstances. However, whether actual results will conform to the expectations and predictions of management is subject to a number of risks and uncertainties that may cause actual results to differ
materially.
You should not place undue reliance on our forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond
our control. Our forward-looking statements are based on the information currently available to us and speak only as of the date of this prospectus, the date on the cover of any prospectus supplement, or, in the case of forward-looking statements
incorporated by reference, as of the date of the filing that includes the statement. New risks and uncertainties arise from time to time, and it is impossible for us to predict these matters or how they may affect us. Over time, our actual
results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such difference might be significant and materially adverse to
our security holders. We do not undertake and specifically decline any obligation to update any forward-looking statements or to publicly announce the results of any revisions to any statements to reflect new information or future events or
developments.
We have identified some of the important factors that could cause future events to differ from our current expectations and they are described in this prospectus under the caption “Risk Factors” as well as in our most
recent Annual Report on Form 10‑K, including without limitation under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other documents that we may file with the SEC, all
of which you should review carefully. Please consider our forward-looking statements in light of those risks as you read this prospectus, documents incorporated herein by reference and in other documents that we may file with the SEC.
This prospectus contains and incorporates by reference market data, industry statistics and other data that have been obtained from, or compiled from, information made available by third parties. Although we believe
these third-party sources are reliable, we have not independently verified the information. Except as may otherwise be noted, none of the sources cited in this prospectus has consented to the inclusion of any data from its reports, nor have we
sought their consent. In addition, some data are based on our good faith estimates. Such estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as our own management’s
experience in the industry, and are based on assumptions made by us based on such data and our knowledge of such industry and markets, which we believe to be reasonable. However, none of our estimates have been verified by any independent source.
See “Special Note Regarding Forward-Looking Statements” above.
STRATAPEN®, XTRAC®, XTRAC S3®, VTRAC®, MELAFIND®, and PHAROS® are our registered trademarks. These trademarks are important to our business. Although we may have omitted the “®” or “TM” trademark designation for such
trademarks in this prospectus, all rights to such trademarks are nevertheless reserved. Unless otherwise noted, other trademarks used in this prospectus are the property of their respective holders.
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The following summary highlights selected information contained in this prospectus. This summary does not contain all the information that may be important to you. You should read the more
detailed information contained in this prospectus, including but not limited to, the risk factors beginning on page 10.
Unless the context requires otherwise, in this prospectus, the terms “STRATA,” the “Company,” “we,” “us,” “our” and similar terms refer to STRATA Skin Sciences, Inc. and its subsidiary, PhotoMedex
India Private Limited.
Business Overview
We are a medical technology company in dermatology dedicated to developing, commercializing and marketing innovative products for the treatment of dermatologic conditions. Our products include the XTRAC® and Pharos®
excimer lasers and VTRAC® lamp systems utilized in the treatment of psoriasis, vitiligo and various other skin conditions.
Recent Developments
Pharos Business. On August 16, 2021, we acquired (the “Pharos Transaction”) certain assets and certain liabilities related to the Pharos U.S. dermatology business of Ra Medical
Systems, Inc., a Delaware corporation (“Ra Medical”), pursuant to the terms and conditions of an Asset Purchase Agreement (the “Purchase Agreement”) entered into between us and Ra Medical. The purchase price paid by us to Ra Medical was equal to
$3.7 million, in cash, and the assumption of existing customer warranty and service agreements.
The Purchase Agreement contains customary representations and warranties related to the assets acquired and the Pharos Transaction in general. Both parties agreed to certain post-closing covenants as set forth more
fully in the Purchase Agreement. For seven years following the closing, Ra Medical agreed to non-competition and non-solicitation restrictive covenants in favor of us.
Both parties have agreed to indemnify the other party for losses arising from certain breaches of the Purchase Agreement and other liabilities, subject to certain limitations.
In connection with the closing of the Pharos Transaction, both parties entered into certain additional ancillary documents, including a services agreement (the “Services Agreement”) and certain other customary
agreements.
Pursuant to the Services Agreement, Ra Medical has agreed to provide a number of services to us as we integrate the acquired assets into the Company. The services include but are not limited to, providing chambers,
spare parts and consumables; training our field service and customer service teams; customer, telephonic and software support; and technical and regulatory consulting services. These services are provided on an as-needed basis only, as our field
service technicians will provide on-site service to Pharos users.
The acquisition of these assets and liabilities allows us to market our full business solutions to Ra Medical’s existing customer base comprised of 400 dermatology practices offering opportunities to increase its
recurring revenue base and a pathway to gain additional placements for the Company’s XTRAC excimer laser system
MidCap Financing. On September 30, 2021, we completed an $8.0 million senior secured financing (the “Senior Financing”) with MidCap Financial Trust (“MidCap”), of which the
full amount was drawn by us on September 30, 2021. Borrowings under the facility bear interest at a rate per annum equal to LIBOR (with a LIBOR floor rate of 0.50%) plus 7.50%. In connection with this financing, we repaid $7.275 million, plus
interest due, on our loan with Israel Discount Bank of New York and $500,000, plus interest, satisfying its obligations under our loan from the United States Small Business Administration pursuant to its Economic Injury Disaster Loan assistance
program. As a result, we had no outstanding borrowings from either lender. On September 30, 2021, in connection with the financing with MidCap, we also issued a warrant, with a ten-year term, to purchase 373,626 shares of our common stock to an
affiliate of MidCap and agreed to register the shares issuable thereunder pursuant to the terms and conditions of a registration rights agreement.
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XTRAC and Pharos Systems and VTRAC Systems
The XTRAC and Pharos excimer laser technology emits highly concentrated UV light targeted primarily towards autoimmune dermatological skin disorders such as psoriasis, vitiligo, atopic dermatitis, and eczema, among others. The XTRAC system
received U.S. Food and Drug Administration (“FDA”) clearance in 2000 and the Pharos in 2004 and excimer laser has since become a widely recognized treatment for psoriasis, vitiligo and other skin diseases. Psoriasis and vitiligo alone affect up
to 13 million people in the U.S. and 190 million people worldwide. VTRAC is a UV light lamp system that works in much the same way as the XTRAC. It received FDA clearance in August 2005 and Conformité Européenne (“CE”) mark approval in January
2006 and has been marketed exclusively in international markets. The acquisition of the Pharos assets acquired in the Pharos Transaction allows us to market our full business solutions to Ra Medical’s existing customer base offering opportunities
to increase its recurring revenue base and a pathway to gain additional placements for the Company’s XTRAC excimer laser system.
Present in natural sunlight, ultraviolet B (“UVB”) is an accepted psoriasis treatment that penetrates the skin to slow the growth of damaged skin cells thereby placing the disease into remission for a period of time.
Studies have shown that the remission time can last three to six months or longer. In our XTRAC system, our targeted therapy approach delivers optimum amounts of UVB light directly to skin lesions, sparing healthy tissue. Many peer reviewed
studies have proven that the XTRAC excimer laser can clear psoriasis faster and produce longer remissions than other UVB modalities, resulting in fewer treatments to produce the desired result.
We currently market four XTRAC excimer models. In October 2018, we announced the launch of XTRAC S3®, which, as compared to previous XTRAC generations, is smaller, faster and has a new user interface. In January
2020, we announced the FDA granted clearance for our XTRAC Momentum Excimer Laser System platform. This clearance is the first full platform clearance since 2008. Momentum has an increased power range to improve patient safety and treatment
efficiency; a new and exclusive proprietary short-hair tip, providing ease of use in difficult-to-treat scalp psoriasis; and an enhanced user interface and database. We continue to market the XTRAC Velocity, our third-generation laser and the
XTRAC Ultra Plus, which is also a highly effective model marketed primarily in certain international markets. The Momentum, S3, Velocity and the Ultra Plus are capable of treating mild, moderate and severe psoriasis, vitiligo, atopic dermatitis
and leukoderma.
The XTRAC excimer laser is marketed in the U.S. mainly under a recurring revenue model in which we place the system in the physician’s office for no upfront charge and generate our revenue on a per-use basis. We
estimate that there are over 1,000 XTRAC lasers in use in the U.S., of which 832 systems were, as of December 31, 2020, included in our recurring revenue model. The Pharos business provides the opportunity to for us to convert its customer base to
our recurring revenue model. The target U.S. audience for XTRAC lasers comprises approximately 3,500 dermatologists who perform disease management. Until 2019, in markets outside the U.S. the XTRAC laser had been marketed primarily as a capital
sale through a master international distributor to distributors in over twenty-five countries. The VTRAC is marketed exclusively in international markets through the same master international distributor.
Since 2019, we have been transitioning our international equipment sales through our master distributor to a direct distribution model for equipment sales and recurring revenue on a country by country basis. We have
signed contracts in Korea (in 2019), Japan (in 2020), and China (in January 2021).
Studies have concluded that XTRAC treatment leads to significant improvement in psoriasis plaques and severity scores in as few as six to ten treatments. Treatment protocols recommend that patients receive two
treatments per week with a minimum of 48 hours between treatments. Our data shows that treatment with XTRAC excimer lasers has an 89% efficacy rate and produces only minimal side effects. In support of its clinical effect, the XTRAC excimer
lasers have been cited in over 45 clinical studies and research programs, with findings published in peer-reviewed medical journals around the world. The XTRAC excimer laser has also been endorsed by the National Psoriasis Foundation, and its use
for psoriasis is covered by nearly all major insurance companies, including Medicare. XTRAC treatment is a reimbursable procedure for psoriasis under three Current Procedural Terminology (“CPT”) codes. There are three applicable CPT codes that
differ based on the total skin surface area being treated. Insurance Reimbursement to physicians varies based upon insurance company and location. The national CPT code reimbursement established by the Center for Medicaid Services (“CMS”), which
forms the basis for most insurance companies’ reimbursement levels, ranges for the three codes between $160 per treatment to $250 per treatment. (See “Third Party Reimbursement” below.)
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Psoriasis, the disease
The World Health Organization describes psoriasis as a chronic, noncommunicable, painful, disfiguring and disabling disease for which there is no cure, which generates a significant negative impact on patients’ quality
of life. It manifests itself in many forms and typically causes raised, red, scaly patches that appear on the skin and may cause itchiness, burning or stinging. Psoriasis is also associated with other serious health conditions such as diabetes,
heart disease and depression.
Psoriasis Treatment Options
There are essentially three main types of psoriasis treatments, as listed below:
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Topical therapies:
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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.
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Phototherapy:
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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.
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Systemic medications:
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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 are growing significantly, notwithstanding their cost and their
potentially severe side-effects.
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XTRAC excimer lasers are particularly significant and beneficial for mild to moderate psoriasis patients who prefer a noninvasive treatment approach without the side effects of invasive, systemic agents, or to patients
who have developed a resistance to topical agents. In many cases, patients treated with topical or systemic therapies are also candidates for phototherapy.
Using the XTRAC and Pharos Excimer Lasers to Treat Vitiligo and Other Skin Diseases
UV light therapy is considered to be an effective and safe treatment for many skin disorders beyond psoriasis. To this effect, the XTRAC technology is FDA cleared for the treatment of not only psoriasis but also
vitiligo (a skin pigment deficiency), atopic dermatitis (eczema) and leukoderma, which is a localized loss of skin pigmentation that occurs after an inflammatory skin condition such as a burn, intralesional steroid injection, or post dermabrasion.
XTRAC technology for vitiligo patients typically requires more therapy sessions than for psoriasis but is dependent on the severity of the disease. In the treatment of vitiligo, we believe the XTRAC functions to
reactivate the skin’s melanocytes (the cells that produce melanin), which causes pigment to return. To date, there is not sufficient data to confirm how long patients can expect their vitiligo to be in remission after XTRAC therapy. Based on
anecdotal reports, we believe that re‑pigmentation may last for several years. Historically, vitiligo treatments had been considered cosmetic procedures by insurance companies, and as such were not reimbursed. However, over the past several
years, there has been a significant increase in insurance coverage for these procedures and we estimate that currently approximately 76% of insurers consider XTRAC treatments to be medically necessary for the treatment of vitiligo and therefore
provide coverage.
We believe that several factors have limited the growth of the use of XTRAC treatments from those who suffer from psoriasis and vitiligo. Specifically, we believe that awareness of the positive effects of XTRAC
treatments has not been high enough among both sufferers and providers; and that the treatment regimen requiring sometimes up to 12 or more treatments has limited XTRAC use to certain patient populations. Addressing the lack of knowledge issue, we
have a direct to patient advertising campaign aimed at motivating psoriasis and vitiligo
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patients to seek out XTRAC treatments from our physician partners. Specific advertisements encourage prospective patients to contact our patient advocacy center via telephone or web site, wherein we provide information on the treatment and
insurance coverage, and ultimately we can schedule an appointment for the prospective patient to be evaluated by a physician within our customer network, convenient to their location, to determine if they would benefit from XTRAC treatments.
STRATAPEN
In January 2017, we entered into an OEM agreement with Esthetic Education, LLC to private label the STRATAPEN device. STRATAPEN® MicroSystems is a micropigmentation device that provides advanced technology offering
exceptional results. This contract expired in January 2020, but we continue to sell this product on a purchase order basis.
Competition
Our XTRAC product line competes with pharmaceutical compounds and methodologies used to treat an array of skin conditions. Such alternative treatments may be in the form of topical products, systemic medications, and
phototherapies from both large pharmaceutical and smaller devices companies. Our major competitors for dermatological solutions include The Daavlin Company, National Biologic Corporation, and pharmaceutical companies producing topical products and
systemic and biologic medications. Currently, our XTRAC system is believed to be a competitive therapy to alternative treatments on the basis of its recognized clinical effect, minimal side effect profile, cost-effectiveness and reimbursement.
Manufacturing
We manufacture our XTRAC products at our 17,000 sq. ft. facility in Carlsbad, California. Our California facility is certified as ISO 13485 compliant. ISO 13485 is an International standardization written by the
International Organization for Standardization, which publishes requirements for a comprehensive quality management system for the design and manufacture of medical devices. Certification to the standard is awarded by accredited third parties. We
believe that our present manufacturing capacity at these facilities is sufficient to meet foreseeable demand for our products.
Research and Development Efforts
Our research and development team, including engineers, consists of approximately four employees. We conduct research and development activities at our facility located in Carlsbad, California. Currently, our
research and development efforts are focused on the application of our XTRAC system for the treatment of inflammatory skin disorders.
Intellectual Property
Our policy is to protect our intellectual property by obtaining U.S. and foreign patents to protect technology, inventions and improvements important to the development of our business. As of December 31, 2020,
26 issued U.S. patents are in force, and many of these patents have foreign counterparts issued and pending. Of those issued, 10 U.S. patents and one German patent relate to the XTRAC and VTRAC product lines and eighteen U.S. patents.
Additionally, the Company maintains 16 patents from Mela Sciences, Inc. related to the MelaFind product.
We also rely on trade secrets and technical know-how in the manufacture and marketing of our products. We require our employees, consultants and contractors to execute confidentiality agreements with respect to our
proprietary information.
In February 2021, the license for the exclusive rights for patents related to the delivery of treatment to vitiligo with the Icahan School of Medicine at Mount Sinai expired. We do not believe that this will have a
material impact on our business.
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We believe that our patented methods and apparatus, together with proprietary trade-secret technology and registered trademarks, give us a competitive advantage; however, whether a patent is infringed or is valid, or
whether or not a patent application should be granted, are all complex matters of science and law, and therefore, we cannot be certain that, if challenged, our patented methods and apparatus and/or trade-secret technology would be upheld. If one
or more of our patented methods, patented apparatus or trade-secret technology rights, or our trademark rights, are invalidated, rejected or found unenforceable, that could reduce or eliminate any competitive advantage we might otherwise have had.
Third-Party Reimbursement
Our ability to market our phototherapy products successfully depends in large part on the extent to which various third parties are willing to reimburse patients or providers for the cost of medical procedures
utilizing our treatment products. These third parties include government authorities, private health insurers and other organizations, such as health maintenance organizations. Third-party payers are systematically challenging the prices charged
for medical products and services. They may deny reimbursement if they determine that a prescribed device is not used in accordance with cost-effective treatment methods as determined by the payer, or is experimental, unnecessary or
inappropriate. Accordingly, if less costly drugs or other treatments are available, third-party payers may not authorize, or may limit, reimbursement for the use of our products, even if our products are safer or more effective than the
alternatives. Additionally, they may require changes to our pricing structure and revenue model before authorizing reimbursement.
Reimbursement systems in international markets vary significantly by country and by region within some countries, and reimbursement approvals must be obtained on a country-by-country basis. Many international markets
have government-managed healthcare systems that control reimbursement for new devices and procedures. In most markets, there are private insurance systems, as well as government-managed systems. Our XTRAC products remain substantially without
approval for reimbursement in many international markets under either government or private reimbursement systems.
Many private plans key their reimbursement rates to rates set by the CMS under three distinct CPT codes based on the total skin surface area being treated.
As of December 31, 2020, the national rates were as follows:
|
•
|
96920 – designated for: the total area less than 250 square centimeters. CMS assigned a 2020 national payment of $166.37 per treatment;
|
|
•
|
96921 – designated for: the total area 250 to 500 square centimeters. CMS assigned a 2020 national payment of $182.25 per treatment; and
|
|
•
|
96922 – designated for: the total area over 500 square centimeters. CMS assigned a 2020 national payment of $248.66 per treatment. The national rates are adjusted by overhead factors applicable to each state.
|
Customers
Domestically, our customers consist of dermatologists and dermatological group clinics who partner with us in our recurring revenue model. As of December 31, 2020, we have 832 partner clinics throughout the United
States.
Internationally, we have been transitioning our international equipment sales through our master distributor to a direct distribution model for equipment sales and recurring revenue on a country by country basis. We
have signed contracts in Korea (in 2019), Japan (in 2020) and China (in January 2021). The change from equipment sales to a recurring revenue business model, internationally, will decrease sales in the short term, but is expected to increase
overall sales in the long term.
5
Our Corporate Information
Our principal executive offices are located at 5 Walnut Grove Drive, Suite 140, Horsham, Pennsylvania 19044, and our telephone number is (215) 619‑3200. We maintain an Internet website at www.strataskinsciences.com.
Information on or accessible through our website does not constitute part of this prospectus and should not be relied upon in connection with making any investment decision with respect to the securities offered by this prospectus.
We were incorporated in the State of New York in 1989 under the name Electro-Optical Sciences, Inc. and subsequently reincorporated under the laws of the State of Delaware in 1997. In April 2010, we changed our name
to MELA Sciences, Inc. On January 5, 2016, we changed our name to STRATA Skin Sciences, Inc.
6
The following summary contains basic terms about this offering and our common stock and is not intended to be complete. It may not contain all of the information that is important to you. You
should read the more detailed information contained in this prospectus, including, but not limited to, the risk factors beginning on page 10. For a more complete description of the terms of the common stock, see “Description of our Capital Stock.”
|
Issuer
|
STRATA Skin Sciences, Inc.
|
|
Securities Offered by the Selling Stockholders
|
373,626 shares of common stock issuable upon the exercise of the Warrant issued to the selling stockholder in connection with the Senior Financing.
|
|
Common stock to be outstanding after this offering if the Warrant is exercised in full (1)
|
34,738,305 shares of common stock
|
|
Offering Plan
|
Selling stockholders may sell the shares of common stock from time to time in various ways at different prices, including prevailing market prices in the public market or in negotiated
transactions. See the section titled “Plan of Distribution” in this prospectus.
|
|
Use of Proceeds
|
We will not receive any of the proceeds from the sale of shares to be offered by the selling stockholder. However, we will receive proceeds upon any cash exercise of the common stock
purchase warrant. Unless we inform you otherwise in a prospectus supplement or free writing prospectus, we plan to use the net proceeds from the cash exercise of such Warrant for working capital, general corporate purposes and growth
initiatives, including organic growth and potential future acquisitions. See the section titled “Use of Proceeds” in this prospectus.
|
|
Dividend Policy for Common Stock
|
We do not anticipate paying cash dividends on our common stock in the foreseeable future.
|
| (1) |
The number of shares of common stock to be outstanding immediately after this offering as shown above is based on 34,364,679 shares of common stock outstanding as of November 7, 2021. The number of
outstanding shares excludes 3,788,613 shares of common stock reserved for issuance pursuant to grants under our Equity Incentive Plan, 4,028,314 shares of common stock reserved for future issuance under our Equity Incentive Plan and
shares of common stock issued pursuant to an equity distribution agreement with Ladenburg Thalmann & Co. Inc. (Ladenburg).
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|
Listing
|
Our common stock is listed on the Nasdaq Capital Market under the symbol “SSKN.”
|
|
Risk Factors
|
Our business is subject to substantial risk. Please carefully consider the “Risk Factors” section of this prospectus and other information included and incorporated by reference in
this prospectus prospectus including, but not limited to, the “Risk Factors” in our Annual Report on Form 10‑K for the year ended December 31, 2020 (together with any material changes thereto contained in any subsequent filed Quarterly
Reports on Form 10‑Q), for a discussion of the factors you should consider carefully before deciding to purchase these securities. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may
also impair our business operations. You should be able to bear a complete loss of your investment.
|
7
Investing in our securities involves a high degree of risk. You should carefully consider and evaluate all of the information contained in this prospectus and in the documents we incorporate by
reference into this prospectus, including our consolidated financial statements and accompanying notes and the information under the heading “Risk Factors” in our most recent annual report on Form 10-K, before you decide to purchase our
securities. See the section of this prospectus entitled “Incorporation of Certain Information by Reference.” The risks and uncertainties described in this prospectus and the documents incorporated by reference herein are not the only ones we
face. Additional risks and uncertainties that we do not presently know about or that we currently believe are not material may also adversely affect our business, business prospects, results of operations or financial condition. Any of the risks
and uncertainties set forth herein and the documents incorporated by reference herein, as updated by annual, quarterly and other reports and documents that we file with the SEC and incorporate by reference into this prospectus could materially and
adversely affect our business, results of operations and financial condition. The trading price of our securities could decline due to the materialization of any of these risks, and you may lose all or part of your investment.
Risks Related to this Offering and Ownership of Shares of Our Common Stock
The market for our common stock may not provide investors with adequate liquidity.
Our common stock is listed on the Nasdaq Capital Market. However, the trading market for our common stock may not be maintained and may not provide investors with adequate liquidity. The liquidity of the market for
our common stock depends on a number of factors, including prevailing interest rates, our financial condition and operating results, the number of holders of our common stock, the market for similar securities and the interest of securities dealers
in making a market in our common stock. We cannot predict the extent to which investor interest in our Company will maintain the trading market in our common stock, or how liquid that market will be. If an active market is not maintained,
investors may have difficulty selling shares of our common stock.
The market price of our common stock is variable and could be substantially affected by various factors.
The market price of our common stock could be subject to wide fluctuations in response to numerous factors. These fluctuations could cause you to lose all or part of your investment in our common stock since you might
be unable to sell your shares at or above the price you paid in this offering. The price of the common stock that will prevail in the market after this offering may be higher or lower than before this offering depending on many factors, some of
which are beyond our control and may not be directly related to our operating performance.
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•
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shift in our investor base;
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•
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general economic and financial market conditions;
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•
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government action or regulation;
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•
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changes in accounting standards, policies, guidance, interpretations or principles;
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•
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changes to the market and industry conditions as a result of the recent global outbreak of the COVID‑19 coronavirus;
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•
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the financial condition, operations, stock price performance and prospects of our competitors;
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•
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announcements by us or our competitors of significant acquisitions, dispositions or software developments;
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•
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changes in financial estimates or recommendations by securities analysts with respect to us or our competitors in our industry;
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8
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•
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our issuance of preferred equity and/or debt securities; and
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•
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actual or anticipated variations in annual and quarterly operating results of us and our competitors.
|
As a result of these and other factors, investors who purchase our common stock in this offering may experience a decrease, which could be substantial and rapid, in the market price of our common stock, including decreases unrelated to our
operating performance or prospects.
Future sales of substantial amounts of our common stock or other securities, or the possibility that such sales could occur, could adversely affect the market price of our common
stock.
We cannot predict the effect, if any, that future issuances or sales of our common stock or other securities will have on the market price of our common stock. Issuances or sales of substantial amounts of our common
stock, preferred stock, warrants, or debt securities convertible into or exercisable or exchangeable for common stock, or the perception that such issuances or sales might occur, could negatively impact the market price of our common stock and the
terms upon which we may obtain additional equity financing in the future.
Your percentage ownership will be further diluted in the future.
Your percentage ownership in our common stock will be diluted in the future because of equity awards that we expect will be granted to our directors, officers and employees. Our Equity Incentive Plan provides for the
grant of equity-based awards, including restricted stock, restricted stock units, stock options, stock appreciation rights and other equity-based awards to our directors, officers and other employees, advisors and consultants. In October 2021, we
entered into an equity distribution agreement with Ladenburg pursuant to which we may sell up to $11.0 million of our common stock in registered “at-the-market” offerings. The shares will be offered at prevailing market prices. As a result of
shares sold thereunder, your percentage ownership in our common stock will be diluted in the future.
We will not receive any of the proceeds from the sale of the shares in this offering.
We will not receive any of the proceeds from the sale of the shares in this offering. However, any sale of the shares of our common stock in this offering presumes that the warrant holders will have exercised some or
all of the Warrant at an exercise price of $1.82 per share. We will receive proceeds from the cash exercise of the Warrant which, if exercised with respect to all of the 373,626 shares of common stock, would result in gross proceeds of $680,000 to
us. To the extent we receive proceeds from the cash exercise of the Warrant, we intend to use such proceeds for working capital and general corporate purposes to support our growth.
9
All shares of our common stock offered by this prospectus are being registered for the account of the selling stockholder. We will not receive any of the proceeds from the sale of these shares. Any sale of these
shares presumes that the warrant holders will have exercised some or all of the Warrant at an exercise price of $1.82 per share. We will receive proceeds from the cash exercise of the Warrant which, if exercised with respect to all of the
373,626 shares of common stock, would result in gross proceeds of $680,000 to us.
Unless we inform you otherwise in a prospectus supplement or free writing prospectus, we plan to use the net proceeds from the cash exercise of such Warrant for working capital, general corporate purposes and growth
initiatives, including organic growth and potential future acquisitions. While the Company has a pipeline of acquisition targets, as is typically the case, the Company has no present arrangements or agreements for any such acquisitions.
We have not allocated any specific portion of the net proceeds to any particular purpose, and our management will have the discretion to allocate the proceeds as it determines. Furthermore, the amount and timing of
our actual expenditures will depend on numerous factors, including the cash used in or generated by our operations, the pace of the integration of acquired businesses, the level of our sales and marketing activities and the attractiveness of any
additional acquisitions or investments.
10
If you invest in our common stock in this offering, you will experience dilution to the extent of the difference between the price per share of our common stock you pay in this offering and the pro forma net tangible
book value per share of our common stock immediately after this offering.
Our net tangible book value on September 30, 2021 was approximately $6.8 million, or approximately $0.20 per share. “Net tangible book value” is total assets minus the sum of liabilities and intangible assets. “Net
tangible book value per share” is net tangible book value divided by the total number of shares of common stock outstanding at September 30, 2021.
After giving effect to the issuance of the common stock to investors exercising for cash the Warrant for all 373,626 shares of common stock issuable pursuant thereto at $1.82 per share, our as adjusted net tangible
book value as of September 30, 2021 would be approximately $7.5 million or $0.22 per share. This represents an immediate increase in net tangible book value of $0.02 per share to our existing stockholders and an immediate dilution in net tangible
book value of $1.60 per share to investors exercising the Warrant at $1.82 per share.
For illustrative purposes, the following table illustrates this dilution per share to investors who purchased the shares at the same price which was paid by the selling stockholder to exercise their Warrant:
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Exercise price per share
|
$
|
1.82
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||||||
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Pro forma net tangible book value per share as of September 30, 2021
|
$
|
0.20
|
||||||
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Increase per share attributable to new investors
|
0.02
|
|||||||
|
Pro forma as adjusted net tangible book value per share after this offering
|
$
|
0.22
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||||||
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Dilution in net tangible book value per share to new investors
|
$
|
1.60
|
||||||
The table above is based on 34,364,679 shares of common stock outstanding as of September 30, 2021, and excludes, as of such date:
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•
|
3,963,889 shares of common stock issuable upon the exercise of options with a weighted average exercise price of $2.05;
|
|
•
|
144,497 shares of common stock issuable upon the vesting and settlement of outstanding restricted stock units;
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|
•
|
3,853,038 shares of common stock reserved for issuance pursuant to unvested grants under our equity compensation plans; and
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|
•
|
shares of common stock, having an aggregate offering price of up to $11.0 million, issued pursuant to an equity distribution agreement with Ladenburg.
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11
The shares of our common stock being offered by the selling stockholder are those issuable to the selling stockholder upon the exercise of the Warrant to purchase 373,626 shares of common stock that we issued on
September 30, 2021 in connection with the Senior Financing. This prospectus generally covers the resale of the shares of common stock issuable upon the exercise of the Warrant. The selling stockholder may resell, from time to time, all, some or
none of the shares of our common stock covered by this prospectus, as provided in this prospectus under “Plan of Distribution.” However, we do not know when or in what amount the selling stockholder may offer their shares for sale under this
prospectus, if any.
The following tables set forth the name and address of the selling stockholder, the number of shares beneficially owned by such selling stockholder and the number of shares to be offered by such selling stockholder
pursuant to this prospectus. The tables also provide information regarding the beneficial ownership of our common stock with respect to such selling stockholder, as adjusted to reflect the assumed sale of all of the shares of common stock offered
under this prospectus by such selling stockholder. Information concerning the selling stockholder may change from time to time and, if necessary, we will supplement this prospectus accordingly. In computing the number of shares of our common
stock beneficially owned by a person and the percentage ownership of that person, we deemed as outstanding any shares of our common stock that such person has the right to acquire within 60 days of the date of this prospectus. Such shares,
however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Beneficial ownership as shown in the following table has been determined in accordance with the rules of the SEC.
As of September 30, 2021, there were 34,364,679 shares of our common stock outstanding.
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Name and Address of Selling Stockholder
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Common Shares Beneficially
Owned Prior to This Offering |
Number of Shares Underlying Warrant (1)
|
Common Shares Beneficially Owned After This Offering
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||
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Number (1)
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Percentage
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Number
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Percentage
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||
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MidCap Funding XLVII Trust (2)
7255 Woodmont Ave, Suite 300
Bethesda, MD 20814
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373,626
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1.08%
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373,626
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0
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0%
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Total of Selling Stockholder:
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373,626
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1.08%
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373,626
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0
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0%
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| (1) |
Represents shares of common stock issuable if the Warrant is exercised in full.
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| (2) |
Apollo Capital Management, L.P. (“Apollo”) is the investment manager for MidCap Funding XXVII Trust (“MCFXXVII”). Apollo is a registered investment advisor with the SEC. Howard
Widra is an authorized signatory for Apollo Capital Management GP, LLC, which is the general partner of Apollo. Accordingly, Mr. Widra is permitted to make decisions on behalf of Apollo, acting in its capacity as the investment manager
of MCFXXVII, and therefore may be deemed to have voting control and investment discretion over the securities held by MCFXXVII as reported herein.
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12
Set forth below is our cash and capitalization as of September 30, 2021:
|
•
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on an actual basis; and
|
|
•
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as adjusted basis, reflecting the issuance of 373,626 shares of common stock offered by this prospectus, as a result of exercising the Warrant to purchase 373,626 shares of our common stock at an exercise price of $1.82 per share,
assuming net proceeds to us of approximately $650,000, after deducting estimated offering expenses payable by us.
|
The information below should be read in conjunction with our condensed financial statements for the nine months ended September 30, 2021 and with the “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” both of which are included in our Form 10-Q for the nine months ended September 30, 2021 and incorporated by reference in this prospectus.
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As of September 30, 2021
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||||||||
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Actual
|
As Adjusted
|
|||||||
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(in thousands, except share data)
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||||||||
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Cash and cash equivalents
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$
|
13,047
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$
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13,697
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||||
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Current portion of long-term debt
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$
|
-
|
$
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-
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||||
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Long-term debt, net of current portion
|
7,282
|
7,282
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||||||
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Total debt
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7,282
|
7,282
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||||||
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Stockholders’ equity
|
||||||||
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Common stock, $0.001 par value - authorized, 150,000,000 shares; issued and outstanding, 34,364,679 shares actual and 34,738,305 as adjusted
|
34
|
35
|
||||||
|
Additional paid-in capital
|
246,979
|
247,628
|
||||||
|
Accumulated deficit
|
(220,830
|
)
|
(220,830
|
)
|
||||
|
Total stockholders’ equity
|
26,183
|
26,833
|
||||||
|
Total capitalization
|
$
|
33,465
|
$
|
34,115
|
||||
The table above is based on 34,364,679 shares of common stock outstanding as of September 30, 2021, and excludes, as of such date:
|
•
|
3,963,889 shares of common stock issuable upon the exercise of options with a weighted average exercise price
of $2.05;
|
|
•
|
144,497 shares of common stock issuable upon the vesting and settlement of outstanding restricted stock units;
|
|
•
|
3,853,038 shares of common stock reserved for issuance pursuant to unvested grants under our equity compensation plans; and
|
|
•
|
shares of common stock having an aggregate offering price of up to $11.0 million issued pursuant to an equity distribution agreement with Ladenburg.
|
13
General
The following description of the material provisions of our capital stock (which includes a description of securities we may offer pursuant to the registration statement of which this prospectus, as the same may be
supplemented, forms a part) does not purport to be complete and is based on and qualified by our Certificate of Incorporation, as amended and restated (the “Charter”), our Bylaws, and our Warrant Agreement to Purchase Shares of the Common Stock of
STRATA Skin Sciences, Inc., dated as of September 30, 2021, between us and MidCap Funding XXVII Trust (“Warrant Agreement”), each of which is incorporated by reference in the registration statement of which this prospectus is a part. The summary
below is also qualified by reference to provisions of the Delaware General Corporation Law (“DGCL”).
Our authorized capital stock consists of 160,000,000 shares, consisting of 150,000,000 shares of common stock, $0.001 par value per share, and 10,000,000 shares of preferred stock, $0.10 par value per share. As of
November 7, 2021, our outstanding capital stock consists of 34,364,679 shares of common stock, and no shares of preferred stock. These figures do not include securities that may be issued upon exercise or vesting of our outstanding derivative
securities including our options to purchase shares of common stock and restricted stock units under our equity incentive plans and a stock purchase warrant.
We, directly or through agents, dealers or underwriters designated from time to time, may offer, issue and sell, together or separately, up to $25,000,000 in the aggregate of:
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•
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common stock;
|
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•
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preferred stock;
|
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•
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secured or unsecured debt securities consisting of notes, debentures or other evidences of indebtedness which may be senior debt securities, senior subordinated debt securities or subordinated debt securities, each of which may be
convertible into equity securities;
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•
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warrants to purchase our securities;
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•
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rights to purchase our securities; or
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•
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units comprised of, or other combinations of, the foregoing securities.
|
We may issue the debt securities as exchangeable for or convertible into shares of common stock, preferred stock or other securities. The preferred stock may also be exchangeable for and/or convertible into shares of
common stock, another series of preferred stock or other securities. The debt securities, the preferred stock, the common stock and the warrants are collectively referred to in this prospectus as the “securities.” When a particular series of
securities is offered, a supplement to this prospectus will be delivered with this prospectus, which will set forth the terms of the offering and sale of the offered securities.
Common Stock
As of November 7, 2021, there were 34,364,679 shares of common stock issued and outstanding. The outstanding shares of common stock are duly authorized, validly issued, fully paid and non-assessable.
Voting Power
Except as otherwise required by law or as provided in any certificate of designation for any series of Preferred Stock, the holders of common stock possess all the voting power for the election of our directors and all
other matters requiring stockholder action. Holders of common stock are entitled to one vote per share held of record on matters to be voted on by stockholders.
14
Dividends
Holders of common stock will be entitled to receive such dividends, if any, as may be declared from time to time by our board of directors in its discretion out of funds legally available therefor and shall share
equally on a per share basis in such dividends and distributions, provided that such holder is not an Unsuitable Person (as defined below).
Liquidation, Dissolution and Winding-Up
In the event of our voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up, the holders of our common stock will be entitled to receive an equal amount per share of all of our assets of
whatever kind available for distribution to stockholders, after the rights of our creditors and the rights of holders of Preferred Stock, if any, have been satisfied.
Preemptive or Other Rights
There are no sinking fund provisions applicable to the common stock. Our stockholders have no preemptive or other subscription rights.
Preferred Stock
Our board of directors has the authority to issue up to an aggregate of 10,000,000 shares of Preferred Stock in one or more series, and to fix the designations, preferences, rights, qualifications, limitations and
restrictions thereof or thereon, without any further vote or action by the stockholders. No shares of Preferred Stock are outstanding as of the date hereof.
You should refer to any filing with the SEC relating to the series of preferred stock being offered for the specific terms of that series, including:
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•
|
the title of the series and the number of shares in the series;
|
|
•
|
the price at which the preferred stock will be offered;
|
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•
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the dividend rate or rates or method of calculating the rates, the dates on which the dividends will be payable, whether or not dividends will be cumulative or noncumulative and, if cumulative, the dates from which dividends on the
preferred stock being offered will cumulate;
|
|
•
|
the voting rights, if any, of the holders of shares of the preferred stock being offered;
|
|
•
|
the provisions for a sinking fund, if any, and the provisions for redemption, if applicable, of the preferred stock being offered, including any restrictions on the foregoing as a result of arrearage in the payment of dividends or
sinking fund installments;
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•
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the liquidation preference per share;
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|
•
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the terms and conditions, if applicable, upon which the preferred stock being offered will be convertible into our common stock, including the conversion price, or the manner of calculating the conversion price, and the conversion
period;
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•
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the terms and conditions, if applicable, upon which the preferred stock being offered will be exchangeable for debt securities, including the exchange price, or the manner of calculating the exchange price, and the exchange period;
|
|
•
|
any listing of the preferred stock being offered on any securities exchange;
|
|
•
|
a discussion of any material federal income tax considerations applicable to the preferred stock being offered;
|
15
|
•
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any preemptive rights;
|
|
•
|
the relative ranking and preferences of the preferred stock being offered as to dividend rights and rights upon liquidation, dissolution or the winding up of our affairs;
|
|
•
|
any limitations on the issuance of any class or series of preferred stock ranking senior or equal to the series of preferred stock being offered as to dividend rights and rights upon liquidation, dissolution or the winding up of our
affairs; and
|
|
•
|
any additional rights, preferences, qualifications, limitations and restrictions of the series.
|
Upon issuance, the shares of preferred stock will be fully paid and nonassessable, which means that its holders will have paid their purchase price in full and we may not require them to pay additional funds.
Any preferred stock terms selected by our board of directors could decrease the amount of earnings and assets available for distribution to holders of our common stock or adversely affect the rights and power,
including voting rights, of the holders of our common stock without any further vote or action by the stockholders. The rights of holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any
preferred stock that may be issued by us in the future. The issuance of preferred stock could also have the effect of delaying or preventing a change in control of our company or make removal of management more difficult.
Certain Anti-Takeover Provisions of Our Charter and Bylaws and Certain Provisions of Delaware Law
Our Charter and Bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our management without the consent of our board of directors. These provisions include:
|
•
|
no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
|
|
•
|
the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director with or without cause by stockholders, which
prevents stockholders from being able to fill vacancies on our board of directors;
|
|
•
|
the ability of our board of directors to determine whether to issue shares of our Preferred Stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which
could be used to significantly dilute the ownership of a hostile acquirer;
|
|
•
|
limiting the liability of, and providing indemnification to, our directors and officers;
|
|
•
|
specifying the Court of Chancery of the State of Delaware as the exclusive forum for adjudication of disputes;
|
|
•
|
controls over the procedures for the conduct and scheduling of stockholder meetings; and
|
|
•
|
advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential
acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
|
These provisions, singly or together, could delay hostile takeovers and changes in control of us or changes in our board of directors and management.
16
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the DGCL, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in
certain business combinations without approval of the holders of substantially all of our outstanding common stock. Any provision of our Charter or Bylaws, or Delaware law that has the effect of delaying or deterring a change in control could
limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
MidCap Warrant
As of the date of this prospectus, there is a warrant outstanding exercisable for 373,626 shares of common stock (the “Warrant”).
The Warrant was originally issued in connection with a loan and security agreement between us and MidCap. Pursuant to the terms of the Warrant Agreement, the Warrant entitles the registered holder to purchase 373,626
shares of our common stock at a per share price of $1.82, subject to adjustment as discussed below. The Warrant may be exercised only for a whole number of shares of our common stock. The Warrant is exercisable and will expire on September 30,
2031, which shall be automatically exercised on a “cashless” basis upon expiration if the fair market value of our common stock is greater than the exercise price of the Warrant on the expiration date of the Warrant.
The Warrant provides that the holder thereof may elect to exercise the warrant on a net “cashless” basis at any time prior to the expiration thereof. Pursuant to a registration rights agreement, we agreed to file a
registration statement covering the resale of the shares underlying the Warrant by November 14, 2021.
In connection with a Merger Event (defined below) that is a Liquid Sale (defined below) where the value per share of our common stock is greater than the exercise price then in effect, the Warrant shall, on and after
the closing of the Merger Event, automatically and without further action on the part of any party or other person, represent the right to receive, in lieu of the shares of our common stock that are issuable under the Warrant Agreement as of
immediately prior to the closing of such Merger Event, the consideration payable on or in respect of such shares of our common stock less the amount equal to then-effective exercise price multiplied by the number of shares of our common stock as to
which the Warrant is then exercised (such amount being the “purchase price”) for all such shares of our common stock (such consideration to include both the consideration payable at the closing of such Merger Event and all deferred consideration
payable thereafter, if any, including, but not limited to, payments of amounts deposited at such closing into escrow and payments in the nature of earn-outs, milestone payments or other performance-based payments), and such Merger Event
consideration shall be paid to the holder of the Warrant as and when it is paid to the holders of the outstanding shares of our common stock; provided, however, in the event of a Merger Event that is an arm’s length sale of all or substantially all
of our assets (and only its assets) to a third party that is not an affiliate of us (a “True Asset Sale”), the holder of the Warrant may either (a) exercise its conversion or purchase right under the Warrant and such exercise will be deemed
effective immediately prior to the consummation of such Merger Event, or (b) permit the Warrant to continue for the term of the Warrant Agreement if we continue as a going concern following the closing of any such True Asset Sale. In connection
with a Merger Event that is not a Liquid Sale, we shall cause the successor or surviving entity to assume the Warrant Agreement and our obligations thereunder on the closing thereof, and thereafter the Warrant shall be exercisable for the same
number, class, and type of securities or other property as the holder of the Warrant would have received in consideration for the shares of our common stock issuable under the Warrant Agreement had it exercised the Warrant in full as of immediately
prior to such closing, at an aggregate exercise price no greater than the aggregate exercise price in effect as of immediately prior to such closing, and subject to further adjustment from time to time in accordance with the provisions of this
Agreement. This provision shall similarly apply to successive Merger Events. For purposes of this section of the Prospectus:
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•
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A “Merger Event” means any of the following: (i) a sale, lease or other transfer of all or substantially all of our assets, (ii) any merger or consolidation involving us in which we are not the surviving entity or in which our
outstanding shares of capital stock are otherwise converted into or exchanged for shares of capital stock or other securities or property of another entity or converted into the right to receive cash, or (iii) any sale by holders of our
outstanding voting equity securities in a single transaction or series of related transactions of shares constituting a majority of the outstanding combined voting power of us; and
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17
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•
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A “Liquid Sale” means the closing of a Merger Event in which the consideration received by us and/or our stockholders, as applicable, consists solely of cash and/or securities meeting all of the following requirements:
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o
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the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act and is then current in its filing of all required reports and other information under the Act and the Exchange Act;
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o
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the class and series of shares or other security of the issuer that would be received by the holder of the Warrant in connection with the Merger Event were the holder to exercise the Warrant on or prior to the closing thereof is then
traded on a national securities exchange or over-the-counter market; and
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o
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following the closing of such Merger Event, the holder of the Warrant would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by the holder in such Merger Event were
the holder to exercise the Warrant in full on or prior to the closing of such Merger Event, except to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y) does not
extend beyond six (6) months from the closing of such Merger Event.
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Except for Merger Events discussed above, if we at any time shall, by combination, reclassification, exchange or subdivision of securities or otherwise, change any of the securities as to which purchase rights under
the Warrant Agreement exist into the same or a different number of securities of any other class or classes of securities, the Warrant Agreement shall thereafter represent the right to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities which were subject to the purchase rights under the Warrant Agreement immediately prior to such combination, reclassification, exchange, subdivision or other change. This
provision shall similarly apply to successive combination, reclassification, exchange, subdivision or other change.
If we at any time shall combine or subdivide our common stock, (i) in the case of a subdivision, the exercise price of the Warrant shall be proportionately decreased and the number of shares for which the Warrant is
exercisable shall be proportionately increased, or (ii) in the case of a combination, the exercise price of the Warrant shall be proportionately increased and the number of shares for which the Warrant is exercisable shall be proportionately
decreased.
If we at any time while the Warrant Agreement is outstanding and unexpired shall pay a dividend with respect to the outstanding shares of our common stock payable in additional shares of our common stock, then the
exercise price of the Warrant shall be adjusted to that price determined by multiplying the exercise price in effect immediately prior to such date of determination by a fraction (i) the numerator of which shall be the total number of shares of our
common stock outstanding immediately prior to such dividend or distribution, and (ii) the denominator of which shall be the total number of shares of our common stock outstanding immediately after such dividend or distribution, and the number of
shares of our common stock for which the Warrant is exercisable shall be proportionately increased.
If we at any time while the Warrant Agreement is outstanding and unexpired shall make any other dividend or distribution on or with respect to our common stock, except any dividend or distribution (i) in cash, or
(ii) specifically provided for in any other clause of the Warrant Agreement, then, in each such case, provision shall be made by us such that the holder of the Warrant shall receive upon exercise or conversion of the Warrant a proportionate share
of any such distribution as though it were the holder of our common stock (or other stock for which our common stock is convertible) as of the record date fixed for the determination of our stockholders entitled to receive such distribution.
18
MidCap Credit Facility
On September 30, 2021, we entered into an $8.0 million senior secured credit facility (the “Credit Facility”) with MidCap pursuant to that certain Credit and Security
Agreement with MidCap as agent and the lenders party thereto (the “MidCap Credit Agreement”), of which the full amount was drawn by us on September 30, 2021. Borrowings under the Credit Facility bear interest at a rate per annum equal to LIBOR
(with a LIBOR floor rate of 0.50%) plus 7.50%. We are obligated to make only interest payments (payable monthly in arrears) through September 30, 2024. Commencing on October 1, 2024 and continuing for the remaining twenty-four months of the
facility, we will be required to make monthly interest payments and monthly principal payments based on the amortization schedule set forth in the MidCap Credit Agreement, subject to certain adjustments as described in the MidCap Credit Agreement.
The final maturity date under the MidCap Credit Agreement is September 1, 2026, unless earlier terminated.
Further, the MidCap Credit Agreement contains a quarterly financial covenant that requires us to not have less than $24.0 million of net revenue (raised to $30.0 million by December 31, 2023) for the trailing 12-month
period as of September 30, 2021, with compliance measured on the last day of each fiscal quarter beginning on September 30, 2021. Further, there are additional covenants that, among other things, restrict our ability and certain of our
subsidiaries to (i) incur, assume or guarantee additional indebtedness; (ii) pay dividends or redeem or repurchase capital stock; (iii) make other restricted payments; (iv) incur liens; (v) redeem debt that is junior in right of payment to the
Credit Facility; (vi) sell or otherwise dispose of assets, including capital stock of subsidiaries; (vii) enter into mergers or consolidations; and (viii) enter into transactions with affiliates. These covenants are subject to a number of
exceptions and qualifications.
19
Each selling stockholder of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the Nasdaq Stock Market or any
other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A selling stockholder may use any one or more of the following methods when selling
securities:
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•
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block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;
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•
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purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
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•
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an exchange distribution in accordance with the rules of the applicable exchange;
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•
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privately negotiated transactions;
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•
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settlement of short sales;
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•
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in transactions through broker-dealers that agree with the selling stockholders to sell a specified number of such securities at a stipulated price per security;
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•
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through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
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•
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a combination of any such methods of sale; or
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•
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any other method permitted pursuant to applicable law.
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The selling stockholders may also sell securities under Rule 144 under the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any
broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage
commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM‑2440.
In connection with the sale of the securities or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short
sales of the securities in the course of hedging the positions they assume. The selling stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers
that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).
The selling stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such
event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each selling stockholder has
informed us that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive fees, commissions and markups which, in the
aggregate, would exceed eight percent (8%).
20
We are required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
Because selling stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172
thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The selling stockholders have advised us that
there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the selling stockholders.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the selling stockholders without registration and without regard to any volume or manner-of-sale
limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been
sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities
laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is
available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock
for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have
informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
The validity of the issuance of the securities offered hereby and other certain legal matters will be passed upon Stevens & Lee, P.C., Philadelphia, Pennsylvania.
The consolidated balance sheets of STRATA Skin Sciences, Inc. and Subsidiary as of December 31, 2020 and 2019, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for
the years then ended, included in the 2020 Annual Report on Form 10-K, and the related notes, have been audited by Marcum LLP, independent registered public accounting firm, as set forth in their report thereon which is incorporated herein by
reference. Such financial statements have been incorporated by reference in reliance upon the report pertaining to such financial statements of such firm given upon their authority as experts in accounting and auditing.
We have filed a registration statement with the Securities and Exchange Commission under the Securities Act with respect to the shares of our common stock offered by this prospectus. This prospectus is part of that
registration statement and does not contain all the information included in the registration statement.
For further information with respect to our common stock and us, you should refer to the registration statement, its exhibits and the material incorporated by reference therein. Portions of the exhibits have been
omitted as permitted by the rules and regulations of the Securities and Exchange Commission. Statements made in this prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete. In each
instance, we refer you to the copy of the contracts or other documents filed as an exhibit to the registration statement, and these statements are hereby qualified in their entirety by reference to the contract or document. The registration
statement may be obtained from the web site that the Securities and Exchange
21
Commission maintains at http://www.sec.gov. We file annual, quarterly and current reports and other information with the Securities and Exchange Commission.
We are “incorporating by reference” certain documents we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information in the documents
incorporated by reference is considered to be part of this prospectus. Statements contained in documents that we file with the SEC and that are incorporated by reference in this prospectus will automatically update and supersede information
contained in this prospectus, including information in previously filed documents or reports that have been incorporated by reference in this prospectus, to the extent the new information differs from or is inconsistent with the old information.
We have filed or may file the following documents with the SEC and they are incorporated herein by reference as of their respective dates of filing:
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our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 25, 2021;
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•
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our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021, as filed with the SEC on May 13, 2021, June 30, 2021, as filed with the SEC on August 16, 2021, and September 30, 2021, as filed with the SEC on November 12,
2021;
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•
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Our Current Reports on Form 8-K and/or their amendments as filed with the SEC on January 4, 2021, January 12, 2021, March 1, 2021, March 9, 2021, March 15, 2021, March 24, 2021, April 12, 2021, May 12, 2021, July 7, 2021, August 17,
2021, August 20, 2021, October 4, 2021, October 18, 2021 and October 28, 2021; and
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•
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the description of our Capital Stock set forth in Form 8-A, as filed with the SEC on August 8, 2005, and as it may be further amended from time to time.
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In addition, all documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and before the termination or completion of this offering of our securities shall be deemed
to be incorporated by reference in this prospectus and to be a part of it from the filing dates of such documents, except in each case for information contained in any such filing where we indicate that such information is being furnished and is
not to be considered “filed” under the Securities Exchange Act of 1934, as amended.
Any statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus shall be deemed modified, superseded or replaced for purposes of this prospectus to the extent that a
statement contained in this prospectus, or in any subsequently filed document that also is deemed to be incorporated by reference in this prospectus, modifies, supersedes or replaces such statement. Any statement so modified, superseded or
replaced shall not be deemed, except as so modified, superseded or replaced, to constitute a part of this prospectus. None of the information that we disclose under Items 2.02 or 7.01 of any Current Report on Form 8-K or any corresponding
information, either furnished under Item 9.01 or included as an exhibit thereto, that we may from time to time furnish to the SEC will be incorporated by reference into, or otherwise included in, this prospectus, except as otherwise expressly set
forth in the relevant document. Subject to the foregoing, all information appearing in this prospectus is qualified in its entirety by the information appearing in the documents incorporated by reference.
You may request, orally or in writing, a copy of these documents, which will be provided to you at no cost, by contacting STRATA Skin Sciences, Inc., 5 Walnut Grove Drive, Suite 140, Horsham, Pennsylvania, Attention:
General Counsel. The Company can be reached via telephone at (215) 619-3200.
22
Our directors and officers are indemnified as provided by Section 145 of the General Corporation Law of Delaware and our amended and restated bylaws. We have agreed to indemnify each of our directors and certain
officers against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the
provisions described above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
23
STRATA Skin Sciences, Inc.
373,626 Shares of Common Stock
Issuable upon Exercise of an Outstanding Warrant
____________________________
PROSPECTUS
____________________________
____________________________
________________, 2021
PART II
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the Company’s estimates (other than the SEC registration fee) of the expenses in connection with the issuance and distribution of the securities being registered.
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Amount
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SEC registration fee
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$
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63.04
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Printing expenses
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$
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(1
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)
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Legal fees and expenses
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$
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(1
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)
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Accounting fees and expenses
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$
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(1
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)
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Transfer agent fees and expenses
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$
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(1
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)
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Miscellaneous
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$
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(1
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)
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Total
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$
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(1
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)
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| (1) |
These fees are calculated based on the securities offered and the number of issuance and accordingly cannot be estimated at this time.
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Item 15. Indemnification of Directors and Officers
Subsection (a) of Section 145 of the General Corporation Law of Delaware (the “DGCL”) empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation
and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification may be made with respect to
any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem
proper.
Section 145 of the DGCL further provides that to the extent a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in the defense of any action, suit or proceeding
referred to in subsections (a) and (b) or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith; that
indemnification or advancement of expenses provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and empowers the corporation to purchase and maintain insurance on behalf of a
director, officer, employee or agent of the corporation against any liability asserted against him or incurred by him in any such capacity or arising out of his status as such whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.
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Reference is also made to Section 102(b)(7) of the DGCL, which enables a corporation in its certificate of incorporation to eliminate or limit the personal liability of a director for monetary damages for violations of
a director’s fiduciary duty, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or (iv) for any transaction from which the director derived an improper
personal benefit.
Our certificate of incorporation, as amended, provides that to the fullest extent permitted by the DGCL, a director shall not be personally liable to the Company or its stockholders for monetary damages for monetary
damages for breach of fiduciary duty as a director. The Company may indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, by reason of the fact that he, his testator or
intestate is or was a director, officer or employee of the Company or serves or served at any other enterprise as a director, officer or employee at the request of the Company. Article V of our amended and restated by-laws provides that we shall
indemnify our directors and officers, or former directors and officers, against any and all expenses and liabilities, to the fullest extent permitted by the DGCL.
We have entered into agreements to indemnify our directors and officers. These agreements, among other things, will indemnify and advance expenses to our directors and officers for all expenses, including, but not
limited to, attorney’s fees, witness fees, damages, judgments, fines, penalties and settlement amounts incurred by any such person in any action or proceeding, including any action by us arising out of such person’s services as our director or
officer, or any other company or enterprise to which the person provides services at our request.
Item 16. Exhibits
The following exhibits are filed with this Registration statement.
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Exhibit Number
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Description of Document
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3.1
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3.2
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5.1
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10.1
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10.2
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23.1
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23.2
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24.1
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* Filed herewith.
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Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration
statement.
Provided, however, that the undertakings set forth in paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) above do not apply if the registration statement is on Form S-3 or
Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act that are incorporated by reference in the registration statements or is contained in a form of prospectus filed pursuant to Rule 424(b) that is a part of the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the
registration statement; and
(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i),
(vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter,
such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
II-3
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that
in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser
by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned
registrant; and
(iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, as amended, each filing of the registrant’s annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions or
otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, and will be governed by the final adjudication of such issue.
(d) If and when applicable, the undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the
Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on this Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Horsham, Pennsylvania on the 15th day of November, 2021.
STRATA SKIN SCIENCES, INC.
By: /s/ Robert J. Moccia
Robert J. Moccia
Chief Executive Officer (Principal Executive Officer)
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and officers of STRATA Skin Sciences, Inc. constitutes and appoints Robert J. Moccia, Christopher Lesovitz or Jay Sturm as his or her true and
lawful attorney-in-fact and agent, with full powers of substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this registration statement and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents,
with full power to act alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, and
hereby ratifying and confirming all that the said attorney-in-fact and agent, or his substitute or substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
|
Signature
|
Title
|
Date
|
|
/s/ Robert J. Moccia
Robert J. Moccia |
Chief Executive Officer and Director
(Principal Executive Officer) |
November 15, 2021
|
|
/s/ Christopher Lesovitz
Christopher Lesovitz |
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer) |
November 15, 2021
|
|
/s/ William D. Humphries
William D. Humphries |
Director, Chairperson of the Board of Directors
|
November 15, 2021
|
|
/s/ LuAnn Via
LuAnn Via |
Director, Vice Chairperson of the Board of Directors
|
November 15, 2021
|
|
/s/ Uri Geiger
Uri Geiger |
Director
|
November 15, 2021
|
|
/s/ Samuel Rubinstein
Samuel Rubinstein |
Director
|
November 15, 2021
|
|
/s/ Nachum Shamir
Nachum Shamir |
Director
|
November 15, 2021
|
|
/s/ Douglas Strang
Douglas Strang |
Director
|
November 15, 2021
|
II-5
EXHIBIT 5.1
November 15, 2021
5 Walnut Grove Drive, Suite 140
Horsham, Pennsylvania 19044
Horsham, Pennsylvania 19044
We have acted as counsel to STRATA Skin Sciences, Inc., a Delaware corporation (the “Company”), in connection with a Registration Statement on Form S-3 (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Act”), for the proposed resale from time to time by
the Selling Securityholders (as defined below) of up to 373,626 shares (“Warrant Shares”) of common stock, par value $0.001 per share, of the
Company (the “Common Stock”) issuable upon the exercise of the Warrant Agreement to Purchase Shares of the Common Stock of STRATA Skin Sciences,
Inc. (the “Warrant”), dated as of September 30, 2021, between the Company and MidCap Funding XXVII Trust. The holders of the Warrant Shares are
collectively refereed to as the “Selling Securityholders.”
In rendering the opinions set forth below, we have examined originals or copies certified or otherwise identified to our satisfaction of
the following: (i) the Registration Statement, including the exhibits filed therewith, (ii) the Warrant Agreement, all exhibits, annexes and schedules attached thereto, all ancillary agreements, and all documentation provided by the Company in
connection therewith (collectively, the “Transaction Documents”), (iii) the minutes of meetings and resolutions of the board of directors of the
Company as provided to us by the Company, (iv) the certificate of incorporation (the “Certificate of Incorporation”) and bylaws (the “Bylaws” and collectively with the Certificate of Incorporation, the “Charter Documents”) of the Company, each as restated and/or amended to date, and (v) such other documents as we have deemed necessary for purposes of rendering the opinion hereinafter set forth.such documents and
corporate and public records as we deem necessary as a basis for the opinion hereinafter expressed. With respect to such examination, we have assumed the genuineness of all signatures appearing on all documents presented to us as originals, and the
conformity to the originals of all documents presented to us as conformed or reproduced copies. Where factual matters relevant to such opinion were not independently established, we have relied upon certificates of executive officers and
responsible employees and agents of the Company.
For purposes of this opinion letter, we have also assumed that (a) all Warrant Shares will be offered, issued and sold in compliance with
applicable federal and state securities laws and in the manner stated in the Registration Statement, (b) any definitive purchase, underwriting or similar agreement with respect to any Warrant Shares offered will have been duly authorized and
validly executed and delivered by the Company and the other parties thereto, (c) at the time of any offering or sale of any Warrant Shares, there will be sufficient shares of Common Stock authorized and unissued under the Certificate of
Incorporation and not otherwise reserved for issuance, (d) at the time of issuance of the Warrant Shares, the Company validly exists and is duly qualified and in good standing under the laws of its jurisdiction of incorporation, and has the necessary
corporate power for such issuance, and (e) at the time of issuance of the Warrant Shares, the Charter Documents and the Transaction Documents are in full force and effect and have not been amended, restated, supplemented or otherwise altered, and
there has been no authorization of any such amendment, restatement, supplement or other alteration, in either case since the date hereof. We have further assumed the legal capacity of natural persons, and we have assumed that each party to the
documents we have examined or relied on (other than the Company) has the legal capacity or authority and has satisfied all legal requirements that are applicable to that party to the extent necessary to make such documents enforceable against that
party. We have not verified any of the foregoing assumptions.
We are members of the bar of the Commonwealth of Pennsylvania and the State of Delaware and do not express any opinion as to matters
arising under the laws of any jurisdiction other than the United States federal securities laws and the Delaware General Corporation Law.
Based upon and subject to the foregoing and the other matters set forth herein, it is our opinion that the Warrant Shares have been
duly authorized by the Company, the Warrant Shares, when issued and paid for by the Selling Securityholders pursuant to the Warrant upon payment to the Company of the required consideration in accordance with the terms of the Warrant, will be
validly issued, fully paid and non-assessable shares of Common Stock.
We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration Statement, and to the use of our name as your counsel
under “Legal Matters” in the Prospectus constituting a part of the Registration Statement. In giving this consent, we do not thereby concede that we come within the categories of persons whose consent is required by the Act or the General Rules and
Regulations promulgated thereunder. We assume no obligation to update or supplement any of the opinions set forth herein to reflect any changes of law or fact that may occur.
STEVENS & LEE
/s/ Stevens & Lee
EXHIBIT 23.1
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT
We consent to the incorporation by reference in this Registration Statement of STRATA Skin Sciences, Inc. and Subsidiary on Form S-3 of our report dated
March 25, 2021, with respect to our audits of the consolidated financial statements of STRATA Skin Services, Inc. and Subsidiary as of December 31, 2020 and 2019 and for the years ended December 31, 2020 and 2019 appearing in the Annual Report on
Form 10-K of STRATA Skin Sciences, Inc. for the year ended December 31, 2020. We also consent to the reference to our firm under the heading “Experts” in the Prospectus, which is part of this Registration Statement.
/s/ Marcum llp
Marcum llp
Philadelphia, Pennsylvania
November 15, 2021