|
(State or other jurisdiction
of incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
Title of each class
|
Trading
Symbol(s) |
Name of each exchange on which registered
|
|
|
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|||
|
Smaller reporting company
|
|||
Emerging growth company
|
Part I. Financial Information:
|
PAGE
|
||
ITEM 1. Financial Statements:
|
|||
a.
|
1
|
||
b.
|
2
|
||
c.
|
3
|
||
d.
|
4
|
||
e.
|
5
|
||
f.
|
6
|
||
23
|
|||
31
|
|||
31
|
|||
Part II. Other Information:
|
|||
32
|
|||
32
|
|||
33
|
|||
33
|
|||
34
|
|||
34
|
|||
34
|
|||
35
|
|||
Certifications
|
E-31.1
|
ITEM 1.
|
Financial Statements
|
June 30, 2023
|
December 31, 2022
|
|||||||
(unaudited) | ||||||||
Assets
|
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Restricted cash
|
||||||||
Accounts receivable, net of allowance for credit losses of $
|
|
|
||||||
Inventories
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Property and equipment, net
|
|
|
||||||
Operating lease right-of-use assets
|
|
|
||||||
Intangible assets, net
|
|
|
||||||
Goodwill
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
Liabilities and Stockholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
|
$
|
|
||||
Accrued expenses and other current liabilities
|
|
|
||||||
Deferred revenues
|
||||||||
Current portion of operating lease liabilities
|
|
|
||||||
Current portion of contingent consideration
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Long-term debt, net
|
|
|
||||||
Deferred revenues and other liabilities |
||||||||
Deferred tax liability
|
|
|
||||||
Operating lease liabilities, net of current portion
|
|
|
||||||
Contingent consideration, net of current portion |
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (Note 14)
|
||||||||
Stockholders’ equity:
|
||||||||
Series C convertible preferred stock, $
|
||||||||
Common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
Three Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Revenues, net
|
$
|
|
$
|
|
||||
Cost of revenues
|
|
|
||||||
Gross profit
|
|
|
||||||
Operating expenses:
|
||||||||
Engineering and product development
|
|
|
||||||
Selling and marketing
|
|
|
||||||
General and administrative
|
|
|
||||||
|
|
|||||||
Loss from operations
|
(
|
)
|
(
|
)
|
||||
Other (expense) income:
|
||||||||
Loss on debt extinguishment
|
( |
) | ||||||
Interest expense
|
(
|
)
|
(
|
)
|
||||
Interest income
|
||||||||
( |
) | ( |
) | |||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Net loss per share of common stock, basic and diluted
|
$ | ( |
) | $ | ( |
) | ||
Weighted average shares of common stock outstanding, basic and diluted
|
Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Revenues, net
|
$
|
|
$
|
|
||||
Cost of revenues
|
|
|
||||||
Gross profit
|
|
|
||||||
Operating expenses:
|
||||||||
Engineering and product development
|
|
|
||||||
Selling and marketing
|
|
|
||||||
General and administrative
|
|
|
||||||
|
|
|||||||
Loss from operations
|
(
|
)
|
(
|
)
|
||||
Other (expense) income:
|
||||||||
Loss on debt extinguishment
|
( |
) | ||||||
Interest expense
|
( |
) | ( |
) | ||||
Interest income
|
||||||||
( |
) | ( |
) | |||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Net loss per share of common stock, basic and diluted
|
$ | ( |
) | $ | ( |
) | ||
Weighted average shares of common stock outstanding, basic and diluted |
Additional |
Total |
|||||||||||||||||||
Common Stock
|
Paid-In
|
Accumulated
|
Stockholders’
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
||||||||||||||||
Balance at January 1, 2023
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
Stock-based compensation expense
|
—
|
|
|
|
|
|||||||||||||||
Issuance of restricted stock
|
|
|
|
|||||||||||||||||
Net loss
|
—
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
Balance at March 31, 2023
|
|
|
|
(
|
)
|
|
||||||||||||||
Stock-based compensation expense
|
— |
|
|
|
||||||||||||||||
Modification of common stock warrants |
— | |||||||||||||||||||
Net loss
|
—
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
Balance at June 30, 2023
|
|
$ |
|
$ |
|
$ |
(
|
)
|
$ |
|
Additional |
Total |
|||||||||||||||||||
Common Stock
|
Paid-In
|
Accumulated
|
Stockholders’
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
||||||||||||||||
Balance at January 1, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
Stock-based compensation expense
|
—
|
|
|
|
|
|||||||||||||||
Issuance of common
stock for acquisition
|
|
|
|
|
|
|||||||||||||||
Net loss
|
—
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
Balance at March 31, 2022
|
|
|
|
(
|
)
|
|
||||||||||||||
Stock-based compensation expense
|
—
|
|
|
|
||||||||||||||||
Net loss
|
—
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
Balance at June 30, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
For the Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Amortization of operating lease right-of-use assets
|
|
|
||||||
Amortization of intangible assets
|
||||||||
Amortization of deferred financing costs and debt discount | ||||||||
Change in allowance for credit
losses
|
(
|
)
|
(
|
)
|
||||
Stock-based compensation expense
|
|
|
||||||
Loss on disposal of property and equipment
|
||||||||
Loss on debt extinguishment
|
||||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
|
|
||||||
Inventories
|
(
|
)
|
(
|
)
|
||||
Prepaid expenses and other assets
|
|
(
|
)
|
|||||
Accounts payable
|
|
|
||||||
Accrued expenses and other liabilities
|
|
(
|
)
|
|||||
Deferred revenues
|
(
|
)
|
(
|
)
|
||||
Operating lease liabilities
|
(
|
)
|
(
|
)
|
||||
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment
|
( |
) | ( |
) | ||||
Cash paid in connection with TheraClear asset acquisition
|
( |
) | ||||||
Net cash used in investing activities
|
( |
) | ( |
) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from long-term debt
|
||||||||
Payment of deferred financing costs
|
( |
) | ||||||
Net cash provided by financing activities
|
||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
(
|
)
|
|||||
Cash, cash equivalents and restricted cash, beginning of period
|
|
|
||||||
Cash, cash equivalents and restricted cash, end of period
|
$
|
|
$
|
|
||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Restricted cash
|
|
|
||||||
$
|
|
$
|
|
|||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for interest
|
$
|
|
$
|
|
||||
Supplemental disclosure of non-cash operating, investing and financing activities:
|
||||||||
Inventories acquired in connection with TheraClear asset acquisition
|
$ | $ | ||||||
Intangible assets acquired in connection with TheraClear asset acquisition
|
$ | $ | ||||||
Contingent consideration issued in connection with TheraClear asset acquisition
|
$ | $ | ||||||
Common stock issued in connection with TheraClear asset acquisition
|
$ | $ | ||||||
Modification of common stock warrants
|
$ |
$ |
||||||
Transfer of property and equipment to inventories | $ | $ | ||||||
Accrued payment of contingent consideration | $ | $ | ||||||
Accrued exit fee recorded as debt discount
|
$ |
$ |
||||||
Deferred financing costs in accounts payable |
$ |
$ |
|
•
|
Level 1 – quoted market prices in
active markets for identical assets or liabilities.
|
|
•
|
Level 2 – observable inputs other than
quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market
data for substantially the full term of the assets or liabilities.
|
|
•
|
Level 3 – inputs that are generally
unobservable and typically reflect the Company’s estimate of assumptions that market participants would use in pricing the asset or liability.
|
|
Three Months Ended June 30,
|
|||||||
|
2023
|
2022
|
||||||
Balance, beginning of period
|
$
|
|
$
|
|
||||
Additions
|
|
|
||||||
Expirations and claims satisfied
|
(
|
)
|
(
|
)
|
||||
Total
|
|
|
||||||
Less current portion within accrued expenses
and other current liabilities
|
(
|
)
|
(
|
)
|
||||
Balance within deferred revenues and other
liabilities
|
$
|
|
$
|
|
Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Balance, beginning of period
|
$
|
|
$
|
|
||||
Additions
|
|
|
||||||
Expirations and claims satisfied
|
(
|
)
|
(
|
)
|
||||
Total
|
|
|
||||||
Less current portion within accrued expenses and other current liabilities
|
(
|
)
|
(
|
)
|
||||
Balance within deferred revenues and other liabilities
|
$
|
|
$
|
|
June 30, |
||||||||
|
2023 | 2022 | ||||||
Restricted stock units
|
||||||||
Stock options
|
||||||||
Common stock warrants
|
||||||||
Total
|
•
|
identification of the contract, or contracts, with a customer;
|
|
•
|
identification of the performance obligations in the contract;
|
|
•
|
determination of the transaction price;
|
|
•
|
allocation of the transaction price to the performance obligations in the contract; and
|
|
•
|
recognition of revenue when, or as, performance obligations are satisfied.
|
Remaining
|
$
|
|
||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
Total
|
$
|
|
Consideration:
|
||||
Cash payment
|
$
|
|
||
Common stock issued |
||||
Transaction costs
|
|
|||
Contingent consideration | ||||
Total consideration
|
$
|
|
||
Assets acquired:
|
||||
Technology intangible asset |
$ |
|||
Inventories
|
|
|
||
Total assets acquired
|
$
|
|
June 30, 2023
|
December 31, 2022
|
|||||||
Raw materials and work-in-process
|
$
|
|
$
|
|
||||
Finished goods
|
|
|
||||||
Total inventories
|
$
|
|
$
|
|
June 30, 2023
|
December 31, 2022
|
|||||||
Dermatology
devices placed-in-service
|
$
|
|
$
|
|
||||
Equipment,
computer hardware and software
|
|
|
||||||
Furniture and
fixtures
|
|
|
||||||
Leasehold
improvements
|
|
|
||||||
|
|
|||||||
Accumulated depreciation and
amortization
|
(
|
)
|
(
|
)
|
||||
Property and equipment, net
|
$
|
|
$
|
|
|
Balance
|
Accumulated
Amortization
|
Intangible
Assets, net
|
|||||||||
June 30, 2023
|
||||||||||||
Core technology
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Product technology
|
|
(
|
)
|
|
||||||||
Customer relationships
|
|
(
|
)
|
|
||||||||
Tradenames
|
|
(
|
)
|
|
||||||||
Pharos customer lists
|
|
(
|
)
|
|
||||||||
$
|
|
$
|
(
|
)
|
$
|
|
||||||
December 31, 2022
|
||||||||||||
Core technology
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Product technology
|
|
(
|
)
|
|
||||||||
Customer relationships
|
|
(
|
)
|
|
||||||||
Tradenames
|
|
(
|
)
|
|
||||||||
Pharos customer lists
|
|
(
|
)
|
|
||||||||
$
|
|
$
|
(
|
)
|
$
|
|
Remaining 2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
June 30, 2023 | December 31, 2022 | |||||||
Warranty obligations
|
$
|
|
$
|
|
||||
Compensation and related benefits
|
|
|
||||||
State sales, use and other taxes
|
|
|
||||||
Professional fees and other
|
|
|
||||||
Total accrued expenses and other current liabilities
|
$
|
|
$
|
|
2026
|
$
|
|
||
2027 |
||||
2028 |
||||
|
|
|
||
Exit fee
|
||||
|
||||
Less: unamortized debt discount
|
( |
) | ||
Long-term debt, net
|
$ |
Number of
Shares
|
Weighted Average
Exercise Price
per Share
|
Weighted Average
Remaining
Contractual Term
(in years)
|
||||||||||
Outstanding at January 1, 2023
|
|
$
|
|
|||||||||
Granted
|
|
$
|
|
|||||||||
Exercised
|
|
$
|
|
|||||||||
Forfeited and expired
|
(
|
)
|
$
|
|
||||||||
Outstanding at June 30, 2023 | $ | |||||||||||
Exercisable at June 30, 2023 | $ | |||||||||||
Vested and expected to vest
|
$ |
Expected volatility
|
|
%
|
||
Risk‑free interest rate
|
|
%
|
||
Expected term (in years)
|
|
|||
Expected dividend yield
|
|
%
|
Number of
Shares
|
Weighted Average
Grant Date
Fair Value
|
|||||||
Unvested at January 1, 2023
|
|
$
|
|
|||||
Granted
|
|
$
|
|
|||||
Vested
|
(
|
)
|
$
|
|
||||
Unvested at June 30, 2023 | $ |
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
TOTAL
|
||||||||||
Three Months Ended June 30, 2023 | ||||||||||||
Revenues, net
|
$
|
|
$
|
|
$
|
|
||||||
Cost of revenues
|
|
|
|
|||||||||
Gross profit
|
|
|
|
|||||||||
Gross profit %
|
|
%
|
|
%
|
|
%
|
||||||
Allocated expenses:
|
||||||||||||
Engineering and product development
|
|
|
|
|||||||||
Selling and marketing
|
|
|
|
|||||||||
Unallocated expenses
|
|
|
|
|||||||||
|
|
|
||||||||||
Income (loss) from operations
|
|
|
(
|
)
|
||||||||
Loss on debt extinguishment |
( |
) | ||||||||||
Interest expense
|
|
|
(
|
)
|
||||||||
Interest income
|
||||||||||||
Net income (loss)
|
$
|
|
$
|
|
$
|
(
|
)
|
Dermatology
Recurring Procedures
|
Dermatology
Procedures
Equipment
|
TOTAL
|
||||||||||
Six Months Ended June 30, 2023 | ||||||||||||
Revenues, net
|
$
|
|
$
|
|
$
|
|
||||||
Cost of revenues
|
|
|
|
|||||||||
Gross profit
|
|
|
|
|||||||||
Gross profit %
|
% | % | % | |||||||||
Allocated expenses:
|
||||||||||||
Engineering and product development
|
|
|
|
|||||||||
Selling and marketing
|
|
|
|
|||||||||
Unallocated expenses
|
|
|
|
|||||||||
|
|
|||||||||||
(Loss) income from operations
|
( |
) | ( |
) | ||||||||
Loss on debt extinguishment | ( |
) | ||||||||||
Interest expense
|
|
|
(
|
)
|
||||||||
Interest income
|
||||||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
TOTAL
|
||||||||||
Three Months Ended June 30, 2022 | ||||||||||||
Revenues, net
|
$
|
|
$
|
|
$
|
|
||||||
Cost of revenues
|
|
|
|
|||||||||
Gross profit
|
|
|
|
|||||||||
Gross profit %
|
|
%
|
|
%
|
|
%
|
||||||
Allocated expenses:
|
||||||||||||
Engineering and product development
|
|
|
|
|||||||||
Selling and marketing
|
|
|
|
|||||||||
Unallocated expenses
|
|
|
|
|||||||||
|
|
|
||||||||||
(Loss) income from operations
|
(
|
)
|
|
(
|
)
|
|||||||
Interest expense
|
|
|
(
|
)
|
||||||||
Interest income | ||||||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
TOTAL
|
||||||||||
Six Months Ended June 30, 2022 | ||||||||||||
Revenues, net
|
$
|
|
$
|
|
$
|
|
||||||
Cost of revenues
|
|
|
|
|||||||||
Gross profit
|
|
|
|
|||||||||
Gross profit %
|
|
%
|
|
%
|
|
%
|
||||||
Allocated expenses:
|
||||||||||||
Engineering and product development
|
|
|
|
|||||||||
Selling and marketing
|
|
|
|
|||||||||
Unallocated expenses
|
|
|
|
|||||||||
|
|
|
||||||||||
(Loss) income from operations
|
(
|
)
|
|
(
|
)
|
|||||||
Interest expense
|
|
|
(
|
)
|
||||||||
Interest income
|
||||||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
Three Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Dermatology recurring procedures
|
$
|
|
$
|
|
||||
Dermatology procedures equipment
|
|
|
||||||
Unallocated expenses
|
|
|
||||||
Consolidated total
|
$
|
|
$
|
|
Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Dermatology recurring procedures
|
$
|
|
$
|
|
||||
Dermatology procedures equipment
|
|
|
||||||
Unallocated expenses
|
|
|
||||||
Consolidated total
|
$
|
|
$
|
|
Dermatology Recurring Procedures
|
Dermatology Procedures Equipment
|
TOTAL
|
||||||||||
Three Months Ended June 30, 2023 | ||||||||||||
Domestic
|
$
|
|
$
|
|
$
|
|
||||||
Foreign
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
Six Months Ended June 30, 2023 | ||||||||||||
Domestic
|
$
|
|
$
|
|
$
|
|
||||||
Foreign
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
Dermatology Recurring Procedures
|
Dermatology Procedures Equipment
|
TOTAL
|
||||||||||
Three Months Ended June 30, 2022 | ||||||||||||
Domestic
|
$
|
|
$
|
|
$
|
|
||||||
Foreign
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
Six Months Ended June 30, 2022 | ||||||||||||
Domestic
|
$
|
|
$
|
|
$
|
|
||||||
Foreign
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
Remaining 2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026 | ||||
Total remaining lease payments
|
$
|
|
||
Less: imputed interest
|
(
|
)
|
||
Total lease liabilities
|
$
|
|
• |
XTRAC® Excimer Laser. XTRAC received FDA clearance in 2000 and has since become a widely recognized treatment among dermatologists for psoriasis and other skin diseases. The
XTRAC System delivers ultra-narrowband ultraviolet B (“UVB”) light to affected areas of skin. Following a series of treatments typically performed twice weekly, psoriasis remission can be achieved, and
vitiligo patches can be re-pigmented. XTRAC is endorsed by the National Psoriasis Foundation, and its use for psoriasis is covered by nearly all major insurance companies, including Medicare. We estimate that more than half of all major
insurance companies now offer reimbursement for vitiligo as well, a figure that is increasing.
|
• |
In the third quarter of 2018, we announced the FDA granted clearance for our Multi Micro Dose (MMD) tip for our XTRAC excimer laser. The MMD Tip accessory is indicated for use in conjunction with the XTRAC laser system to filter the Narrow
Band UVB (“NB-UVB”) light at delivery in order to calculate and individualize the maximum non-blistering dose for a particular patient.
|
• |
In January 2020, we announced the FDA granted clearance of our XTRAC Momentum Excimer Laser Platform. In February 2022, we announced the commercial launch, with the first installation in the U.S. market, of our next
generation excimer laser system, XTRAC Momentum® 1.0.
|
• |
VTRAC® Lamp. VTRAC received FDA clearance in 2005 and provides targeted therapeutic efficacy demonstrated by excimer technology with the simplicity of design and reliability
of a lamp system.
|
• |
TheraClear® X Acne Treatment Device. The TheraClear® Acne Therapy System was cleared by the FDA through the 510(k) process and
combines intense pulse light with vacuum (suction) for the treatment of mild to moderate inflammatory acne (including acne vulgaris), comedonal acne and pustular acne.
|
For the Three Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Dermatology recurring procedures
|
$
|
5,456
|
$
|
5,582
|
||||
Dermatology procedures equipment
|
2,794
|
3,523
|
||||||
Total revenues
|
$
|
8,250
|
$
|
9,105
|
For the Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Dermatology recurring procedures
|
$
|
10,665
|
$
|
10,649
|
||||
Dermatology procedures equipment
|
5,152
|
5,497
|
||||||
Total revenues
|
$
|
15,817
|
$
|
16,146
|
For the Three Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Dermatology recurring procedures
|
$
|
2,205
|
$
|
2,298
|
||||
Dermatology procedures equipment
|
1,727
|
1,814
|
||||||
Total cost of revenues
|
$
|
3,932
|
$
|
4,112
|
For the Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Dermatology recurring procedures
|
$
|
4,225
|
$
|
4,330
|
||||
Dermatology procedures equipment
|
2,886
|
2,695
|
||||||
Total cost of revenues
|
$
|
7,111
|
$
|
7,025
|
For the Three Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Revenues
|
$
|
8,250
|
$
|
9,105
|
||||
Cost of revenues
|
3,932
|
4,112
|
||||||
Gross profit
|
$
|
4,318
|
$
|
4,993
|
||||
Gross profit percentage
|
52.3
|
%
|
54.8
|
%
|
For the Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Revenues
|
$
|
15,817
|
$
|
16,146
|
||||
Cost of revenues
|
7,111
|
7,025
|
||||||
Gross profit
|
$
|
8,706
|
$
|
9,121
|
||||
Gross profit percentage
|
55.0
|
%
|
56.5
|
%
|
For the Three Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Revenues
|
$
|
5,456
|
$
|
5,582
|
||||
Cost of revenues
|
2,205
|
2,298
|
||||||
Gross profit
|
$
|
3,251
|
$
|
3,284
|
||||
Gross profit percentage
|
59.6
|
%
|
58.8
|
%
|
For the Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Revenues
|
$
|
10,665
|
$
|
10,649
|
||||
Cost of revenues
|
4,225
|
4,330
|
||||||
Gross profit
|
$
|
6,440
|
$
|
6,319
|
||||
Gross profit percentage
|
60.4
|
%
|
59.3
|
%
|
For the Three Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Revenues
|
$
|
2,794
|
$
|
3,523
|
||||
Cost of revenues
|
1,727
|
1,814
|
||||||
Gross profit
|
$
|
1,067
|
$
|
1,709
|
||||
Gross profit percentage
|
38.2
|
%
|
48.5
|
%
|
For the Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Revenues
|
$
|
5,152
|
$
|
5,497
|
||||
Cost of revenues
|
2,886
|
2,695
|
||||||
Gross profit
|
$
|
2,266
|
$
|
2,802
|
||||
Gross profit percentage
|
44.0
|
%
|
51.0
|
%
|
For the Three Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Gross profit
|
$
|
4,318
|
$
|
4,993
|
||||
Amortization of acquired intangible assets
|
508
|
532
|
||||||
Non-GAAP gross profit
|
$
|
4,826
|
$
|
5,525
|
||||
Gross profit percentage
|
52.3
|
%
|
54.8
|
%
|
||||
Non-GAAP gross profit percentage
|
58.5
|
%
|
60.7
|
%
|
For the Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Gross profit
|
$
|
8,706
|
$
|
9,121
|
||||
Amortization of acquired intangible assets
|
1,016
|
1,016
|
||||||
Non-GAAP gross profit
|
$
|
9,722
|
$
|
10,137
|
||||
Gross profit percentage
|
55.0
|
%
|
56.5
|
%
|
||||
Non-GAAP gross profit percentage
|
61.5
|
%
|
62.8
|
%
|
For the Three Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Net loss
|
$
|
(3,148
|
)
|
$
|
(1,892
|
)
|
||
Adjustments:
|
||||||||
Depreciation and amortization
|
1,428
|
1,339
|
||||||
Amortization of operating lease right-of-use assets
|
63
|
92
|
||||||
Loss on disposal of property and equipment
|
24
|
18
|
||||||
Interest expense, net
|
277
|
198
|
||||||
Non-GAAP EBITDA
|
(1,356
|
)
|
(245
|
)
|
||||
Stock-based compensation expense
|
352
|
452
|
||||||
Loss on debt extinguishment
|
909
|
—
|
||||||
Non-GAAP adjusted EBITDA
|
$
|
(95
|
)
|
$
|
207
|
|
For the Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Net loss
|
$
|
(5,983
|
)
|
$
|
(4,394
|
)
|
||
Adjustments:
|
||||||||
Depreciation and amortization
|
2,825
|
2,660
|
||||||
Amortization of operating lease right-of-use assets
|
168
|
181
|
||||||
Loss on disposal of property and equipment
|
24
|
35
|
||||||
Interest expense, net
|
526
|
397
|
||||||
Non-GAAP EBITDA
|
(2,440
|
)
|
(1,121
|
)
|
||||
Stock-based compensation expense
|
677
|
820
|
||||||
Loss on debt extinguishment
|
909
|
—
|
||||||
Non-GAAP adjusted EBITDA
|
$
|
(854
|
)
|
$
|
(301
|
)
|
ITEM 3. |
Quantitative and Qualitative Disclosure about Market Risk
|
ITEM 4. |
Controls and Procedures
|
ITEM 1. |
Legal Proceedings
|
- |
it may be difficult for us to satisfy our obligations, including debt service requirements under our outstanding debt, resulting in possible defaults on and acceleration of such indebtedness;
|
- |
our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions or other general corporate purposes may be impaired;
|
- |
a substantial portion of cash flow from operations may be dedicated to the payment of principal and interest on our debt, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures, future business
opportunities, acquisitions and other purposes;
|
- |
we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited;
|
- |
our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our high level of debt; and
|
- |
our ability to borrow additional funds or to refinance debt may be limited.
|
ITEM 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
ITEM 3. |
Defaults Upon Senior Securities.
|
ITEM 4. |
Mine Safety Disclosures
|
ITEM 5. |
Other Information
|
ITEM 6. |
Exhibits
|
Amendment No. 3 to Credit and Security Agreement, dated as of June 30, 2023, among STRATA Skin Sciences, Inc., MidCap Financial Trust, as administrative agent, and the lenders identified therein. (Incorporated by reference to Exhibit 10.1
to the Company’s Current Report on Form 8-K filed July 6, 2023.)
|
|
Credit & Security Agreement, dated as of September 30, 2021, as amended January 10, 2022, September 6, 2022 and June 30, 2023, among STRATA Skin Sciences, Inc., MidCap Financial Trust, as administrative agent, and the lenders
identified therein (Incorporated by reference to Exhibit A to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 6, 2023.)
|
|
Letter Agreement, dated as of June 30, 2023, between STRATA Skin Sciences, Inc. and MidCap Financial Trust, as administrative agent. (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed July 6,
2023.)
|
|
Amended and Restated Warrant Agreement to Purchase Shares of the Common Stock of STRATA Skin Sciences, Inc., dated as of June 30, 2023, between STRATA Skin Sciences, Inc. and MidCap Funding XXVII Trust. (Incorporated by reference to
Exhibit 10.4 to the Company’s Current Report on Form 8-K filed July 6, 2023.)
|
|
Amended and Restated Registration Rights Agreement, dated as of June 30, 2023, between STRATA Skin Sciences, Inc. and MidCap Funding XXVII Trust. (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed
July 6, 2023.)
|
|
Intellectual Property Security Agreement Supplement, dated July 5, 2023, between STRATA Skin Sciences, Inc. and MidCap Financial Trust
|
|
Rule 13a-14(a) Certificate of Chief Executive Officer (attached hereto)
|
|
Rule 13a-14(a) Certificate of Chief Financial Officer (attached hereto)
|
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (attached hereto)
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Schema
|
101.CAL
|
XBRL Taxonomy Calculation Linkbase
|
101.DEF
|
XBRL Taxonomy Definition Linkbase
|
101.LAB
|
XBRL Taxonomy Label Linkbase
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase
|
* |
The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by the
Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
|
STRATA SKIN SCIENCES, INC.
|
Date August 9, 2023
|
By:
|
/s/ Robert J. Moccia
|
|
Name: Robert J. Moccia
|
|||
Title: President & Chief Executive Officer
|
Date August 9, 2023
|
By:
|
/s/ Christopher Lesovitz
|
|
Name: Christopher Lesovitz
|
|||
Title: Chief Financial Officer
|
GRANTORS:
|
STRATA SKIN SCIENCES, INC.
|
By: |
||
Name: | ||
Title: |
AGENT:
|
|||
MIDCAP FINANCIAL TRUST
|
|||
By: Apollo Capital Management, L.P.,
|
|||
its investment manager
|
|||
By: Apollo Capital Management GP, LLC,
|
|||
its general partner
|
|||
By: | |||
Name: Maurice Amsellem
|
|||
Title: Authorized Signatory
|
Country
|
Patent
Application No.
|
Title
|
Status
|
Current
Legal
Entities
Owned
|
U.S.
|
63/488,272
|
UV Delivery System and method for 308nm Phototherapy Lasers
|
Pending
|
Strata Skin Sciences, Inc.
|
U.S.
|
17/634,079
|
Tip Section for Use in Phototherapy
|
Pending
|
Strata Skin Sciences, Inc.
|
U.S.
|
17/640,067
|
Method for Targeted Treating Dermatoses
|
Pending
|
Strata Skin Sciences, Inc.
|
U.S.
|
17/640,125
|
Method for Targeted Treating Dermatoses
|
Pending
|
Strata Skin Sciences, Inc.
|
U.S.
|
17/640,093
|
Method for Targeted Treating Dermatoses
|
Pending
|
Strata Skin Sciences, Inc.
|
Description
|
Registration/
Application
Number
|
Registration/
Application
Date
|
MELA
|
1339968
|
Renewal Due - January 8, 2030
|
VTRAC
|
7121033
|
Renewal Due - July 27, 2030
|
XTRAC
|
7121034
|
Renewal Due - July 6, 2030
|
XTRAC S3
|
48089244
|
Renewal Due - April 13, 2031
|
MELA
|
8796088
|
Renewal Due - January 7, 2030
|
S3
|
1514976
|
Renewal Due - January 10, 2030
|
VTRAC
|
7482284
|
Renewal Due - December 19, 2028
|
XTRAC
|
7480511
|
Renewal Due - December 19, 2028
|
VTRAC
|
2578256
|
Renewal Due - August 8, 2023
|
XTRAC
|
2578258
|
Renewal Due - August 8, 2023
|
VTRAC
|
40-0809817
|
Renewal Due - December 24, 2029
|
XTRAC
|
40-0809816
|
Renewal Due - December 24, 2029
|
VTRAC
|
1383636
|
Renewal Due - October 31, 2029
|
XTRAC
|
1385590
|
Renewal Due - November 15, 2029
|
MELA
|
UK00908796088
|
Renewal Due - January 7, 2030
|
S3
|
1514976
|
Renewal Due - January 10, 2030
|
S3
|
UK00801514976
|
Renewal Due - January 10, 2030
|
VTRAC
|
UK00907482284
|
Renewal Due - December 19, 2028
|
XTRAC
|
UK00907480511
|
Renewal Due - December 19, 2028
|
MELA
|
4,226,001
|
|
MMD
|
6598213
|
Renewal Due – December 21, 2027
|
S3
|
1514976
|
Renewal Due - January 10, 2030
|
MOMENTUM
|
6959003
|
Renewal Due – January 17, 2029
|
(1) |
I have reviewed this quarterly report on Form 10-Q of STRATA Skin Sciences, Inc.;
|
(2) |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
(3) |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
(4) |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
(d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(5) |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
|
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and
|
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 9, 2023
|
By:
|
/s/ Robert J. Moccia
|
Name: Robert J. Moccia
|
||
Title: Chief Executive Officer
|
(1) |
I have reviewed this quarterly report on Form 10-Q of STRATA Skin Sciences, Inc.;
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(2) |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
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(3) |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
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(4) |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b) |
designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
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(d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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(5) |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
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(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and
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(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Dated: August 9, 2023
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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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1.
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The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934, as amended, and
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2.
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The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated: August 9, 2023
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/s/ Robert J. Moccia
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Name: Robert J. Moccia
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Title: Chief Executive Officer
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/s/ Christopher Lesovitz
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Name: Christopher Lesovitz
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Title: Chief Financial Officer
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(1)
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This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any
filing of STRATA Skin Sciences, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such
filing. A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to STRATA Skin Sciences, Inc. and will be retained by STRATA Skin Sciences, Inc. and furnished to the
Securities and Exchange Commission or its staff upon request.
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