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(State or Other Jurisdiction of Incorporation)
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(I.R.S. Employer Identification No.)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
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Trading
Symbol(s)
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Name of each exchange on which registered
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STRATA SKIN SCIENCES, INC.
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Date: November 9, 2022
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By:
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/s/ Christopher Lesovitz
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Christopher Lesovitz
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Chief Financial Officer
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●
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Strong revenue in the third quarter 2022 of $9.4 million, a 22% increase over the third quarter of 2021
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●
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Strong international sales of $3.3 million, an 82% increase over the third quarter of 2021
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●
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Announced U.S. commercial launch of TheraClear®X acne therapy system
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For the Three Months Ended
September 30,
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||||||||
2022
|
2021
|
|||||||
Net loss
|
$
|
(995
|
)
|
$
|
(521
|
)
|
||
Adjustments:
|
||||||||
Depreciation and amortization
|
1,311
|
983
|
||||||
Amortization of right-of-use asset
|
67
|
87
|
||||||
Loss on disposal of property and equipment
|
17
|
10
|
||||||
Income tax expense
|
-
|
4
|
||||||
Interest expense, net
|
209
|
52
|
||||||
Non-GAAP EBITDA
|
609
|
615
|
||||||
Stock-based compensation
|
455
|
320
|
||||||
Non-GAAP adjusted EBITDA
|
$
|
1,064
|
$
|
935
|
Three Months Ended
September 30,
|
||||||||
2022
|
2021
|
|||||||
Gross domestic recurring billings
|
$
|
5,548
|
$
|
5,822
|
||||
Co-Pay adjustments
|
(188
|
)
|
(199
|
)
|
||||
Other discounts
|
(40
|
)
|
(43
|
)
|
||||
Deferred revenue from prior quarters
|
2,499
|
1,897
|
||||||
Deferral of revenue to future quarters
|
(2,309
|
)
|
(2,107
|
)
|
||||
GAAP Recorded domestic revenue
|
$
|
5,510
|
$
|
5,370
|
For the Three Months Ended
September 30,
|
||||||||
2022
|
2021
|
|||||||
Gross profit
|
$
|
5,799
|
$
|
5,376
|
||||
Amortization of acquired intangible assets
|
507
|
144
|
||||||
Non-GAAP gross profit
|
$
|
6,306
|
$
|
5,520
|
||||
Gross profit percentage
|
61.6
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%
|
69.7
|
%
|
||||
Non-GAAP gross profit percentage
|
67.0
|
%
|
71.6
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%
|
September 30, 2022
|
December 31, 2021
|
|||||||
Assets
|
(unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
7,454
|
$
|
12,586
|
||||
Restricted cash
|
1,361
|
-
|
||||||
Accounts receivable, net of allowance for doubtful accounts of $299 and $275 at
September 30, 2022 and December 31, 2021, respectively
|
3,655
|
3,433
|
||||||
Inventories
|
5,662
|
3,489
|
||||||
Prepaid expenses and other current assets
|
621
|
462
|
||||||
Total current assets
|
18,753
|
19,970
|
||||||
Property and equipment, net
|
6,566
|
6,883
|
||||||
Operating lease right-of-use assets
|
836
|
638
|
||||||
Intangible assets, net
|
18,110
|
10,083
|
||||||
Goodwill
|
8,803
|
8,803
|
||||||
Other assets
|
167
|
216
|
||||||
Total assets
|
$
|
53,235
|
$
|
46,593
|
||||
Liabilities and Stockholders' Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
4,369
|
$
|
2,822
|
||||
Accrued expenses and other current liabilities
|
6,075
|
6,377
|
||||||
Deferred revenues
|
2,968
|
3,285
|
||||||
Current portion of operating lease liabilities
|
246
|
318
|
||||||
Current portion of contingent consideration
|
500
|
-
|
||||||
Total current liabilities
|
14,158
|
12,802
|
||||||
Long-term debt
|
7,435
|
7,319
|
||||||
Deferred revenues and other liabilities
|
280
|
400
|
||||||
Deferred tax liability
|
266
|
266
|
||||||
Operating lease liabilities net of current portion
|
674
|
392
|
||||||
Contingent consideration, net of current portion
|
8,622
|
-
|
||||||
Total liabilities
|
31,435
|
21,179
|
||||||
Stockholders' equity:
|
||||||||
Series C convertible preferred stock, $0.10 par value; 10,000,000 shares authorized; no shares issued and
outstanding
|
-
|
-
|
||||||
Common stock, $0.001 par value, 150,000,000 shares authorized; 34,723,046 and 34,364,679 shares issued and
outstanding at September 30, 2022 and December 31, 2021, respectively
|
35
|
34
|
||||||
Additional paid-in capital
|
248,833
|
247,059
|
||||||
Accumulated deficit
|
(227,068
|
)
|
(221,679
|
)
|
||||
Total stockholders' equity
|
21,800
|
25,414
|
||||||
Total liabilities and stockholders’ equity
|
$
|
53,235
|
$
|
46,593
|
For the Three Months Ended
September 30,
|
||||||||
2022
|
2021
|
|||||||
$
|
9,413
|
$
|
7,711
|
|||||
Cost of revenues
|
3,614
|
2,335
|
||||||
Gross profit
|
5,799
|
5,376
|
||||||
|
||||||||
Operating expenses:
|
||||||||
Engineering and product development
|
216
|
371
|
||||||
Selling and marketing
|
3,754
|
3,295
|
||||||
General and administrative
|
2,615
|
2,175
|
||||||
|
6,585
|
5,841
|
||||||
Loss from operations
|
(786
|
)
|
(465
|
)
|
||||
Other income (expense):
|
||||||||
Interest expense
|
(244
|
)
|
(53
|
)
|
||||
Interest income
|
35
|
1
|
||||||
(209
|
)
|
(52
|
)
|
|||||
Loss before income taxes
|
(995
|
)
|
(517
|
)
|
||||
Income tax expense
|
-
|
(4
|
)
|
|||||
Net loss
|
$
|
(995
|
)
|
$
|
(521
|
)
|
||
Net loss per share of common stock, basic and diluted
|
$
|
(0.03
|
)
|
$
|
(0.02
|
)
|
||
Weighted average shares of common stock outstanding, basic and diluted
|
34,723,046
|
34,150,438
|
||||||
For the Nine Months Ended
September 30,
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||||||||
2022
|
2021
|
|||||||
Revenues, net
|
$
|
25,559
|
$
|
20,920
|
||||
Cost of revenues
|
10,639
|
7,070
|
||||||
Gross profit
|
14,920
|
13,850
|
||||||
|
||||||||
Operating expenses:
|
||||||||
Engineering and product development
|
588
|
1,158
|
||||||
Selling and marketing
|
11,516
|
9,387
|
||||||
General and administrative
|
7,599
|
7,085
|
||||||
|
19,703
|
17,630
|
||||||
Loss from operations
|
(4,783
|
)
|
(3,780
|
)
|
||||
|
||||||||
Other income (expense):
|
||||||||
Gain on debt extinguishment
|
-
|
2,028
|
||||||
Interest expense
|
(651
|
)
|
(109
|
)
|
||||
Interest income
|
45
|
16
|
||||||
(606
|
)
|
1,935
|
||||||
Loss before income taxes
|
(5,389
|
)
|
(1,845
|
)
|
||||
Income tax expense
|
-
|
(12
|
)
|
|||||
Net loss
|
$
|
(5,389
|
)
|
$
|
(1,857
|
)
|
||
Net loss per share of common stock, basic and diluted
|
$
|
(0.16
|
)
|
$
|
(0.05
|
)
|
||
Weighted average shares of common stock outstanding, basic and diluted
|
34,708,606
|
33,944,321
|
For the Nine Months Ended
September 30,
|
||||||||
2022
|
2021
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(5,389
|
)
|
$
|
(1,857
|
)
|
||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
||||||||
Amortization of intangible assets
|
2,155
|
1,113
|
||||||
Amortization of operating lease right-of-use assets
|
248
|
261
|
||||||
Depreciation and amortization
|
1,816
|
1,576
|
||||||
Amortization of deferred financing costs and debt discount
|
116
|
-
|
||||||
Provision (recoveries) for doubtful accounts
|
24
|
(26
|
)
|
|||||
Stock-based compensation
|
1,275
|
1,563
|
||||||
Loss on disposal of property and equipment
|
52
|
73
|
||||||
Gain on debt extinguishment
|
-
|
(2,028
|
)
|
|||||
Deferred taxes
|
-
|
12
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(246
|
)
|
(181
|
)
|
||||
Inventories
|
(1,616
|
)
|
219
|
|||||
Prepaid expenses and other assets
|
(110
|
)
|
(243
|
)
|
||||
Accounts payable
|
1,547
|
(284
|
)
|
|||||
Accrued expenses and other liabilities
|
(267
|
)
|
858
|
|||||
Deferred revenues
|
(472
|
)
|
58
|
|||||
Operating lease liabilities
|
(236
|
)
|
(275
|
)
|
||||
Net cash (used in) provided by operating activities
|
(1,103
|
)
|
839
|
|||||
Cash flows from investing activities:
|
||||||||
Purchase of property and equipment
|
(2,037
|
)
|
(2,523
|
)
|
||||
Cash paid in connection with TheraClear asset acquisition
|
(631
|
)
|
-
|
|||||
Cash paid in connection with Ra Medical asset acquisition
|
-
|
(3,473
|
)
|
|||||
Net cash used in investing activities
|
(2,668
|
)
|
(5,996
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from long-term debt
|
-
|
8,000
|
||||||
Payment of deferred financing costs
|
-
|
(133
|
)
|
|||||
Repayment of note payable
|
-
|
(7,275
|
)
|
|||||
Repayment of long-term debt
|
-
|
(500
|
)
|
|||||
Net cash provided by financing activities
|
-
|
92
|
||||||
Net decrease in cash, cash equivalents and restricted cash
|
(3,771
|
)
|
(5,065
|
)
|
||||
Cash, cash equivalents and restricted cash, beginning of period
|
12,586
|
18,112
|
||||||
Cash, cash equivalents and restricted cash, end of period
|
$
|
8,815
|
$
|
13,047
|
||||
Cash and cash equivalents
|
$
|
7,454
|
$
|
13,047
|
||||
Restricted cash
|
1,361
|
-
|
||||||
$
|
8,815
|
$
|
13,047
|
|||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for interest
|
$
|
523
|
$
|
109
|
||||
Supplemental disclosure of non-cash operating, investing and financing activities:
|
||||||||
Change in operating lease right-of-use assets and liability due to amended lease
|
$
|
446
|
$
|
-
|
||||
Inventories acquired in connection with TheraClear asset acquisition
|
$
|
71
|
$
|
-
|
||||
Intangible assets acquired in connection with TheraClear asset acquisition
|
$
|
10,182
|
$
|
-
|
||||
Contingent consideration issued in connection with TheraClear asset acquisition
|
$
|
9,122
|
$
|
-
|
||||
Common stock issued in connection with TheraClear asset acquisition
|
$
|
500
|
$
|
-
|
||||
Transfer of property and equipment to inventories
|
$
|
486
|
$
|
-
|
||||
Fair value of warrants issued in connection with debt
|
$
|
-
|
$
|
585
|
||||
Assumed deferred revenue in connection with Ra Medical asset acquisition
|
$
|
-
|
$
|
1,841
|