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What changed in Apyx Medical Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Apyx Medical Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+220 added−261 removedSource: 10-K (2025-03-13) vs 10-K (2024-03-21)

Top changes in Apyx Medical Corp's 2024 10-K

220 paragraphs added · 261 removed · 151 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

53 edited+20 added−44 removed59 unchanged
Biggest changeWe believe the increased use of GLP-1’s may have an initial negative impact on the number of liposuction procedures, but in the long term, as these drugs have a ripple effects that will drive people towards plastic surgery, they will provide a tailwind for sales of our Renuvion products.
Biggest changeHowever, we believe, as these drugs will have a ripple effect that will eventually drive people towards plastic surgery and may provide a tailwind for sales of our Renuvion products. Rapid weight loss caused by these drugs can contribute to loose skin, particularly in the curvier areas of the body.
Throughout 2022, and continuing into 2023, we worked closely with the FDA to gain clearances for the use of our products in various surgical applications, demonstrating our commitment to both safety and efficacy, supported by both clinical study and real-world data. 10 Table of Contents APYX MEDICAL CORPORATION On May 10, 2023, the FDA updated the Safety Communication to inform consumers and healthcare providers about the clearance for the Renuvion APR handpiece for the coagulation of subcutaneous soft tissues following liposuction.
Throughout 2022, and continuing into 2023, we worked closely with the FDA to gain clearances for the use of our products in various surgical applications, demonstrating our commitment to both safety and efficacy, supported by both clinical study and real-world data. 7 Table of Contents APYX MEDICAL CORPORATION On May 10, 2023, the FDA updated the Safety Communication to inform consumers and healthcare providers about the clearance for the Renuvion APR handpiece for the coagulation of subcutaneous soft tissues following liposuction.
We expect global supply chain instability will continue to have an impact on our business, but to date that has not been material to our financial performance. The consequences of global supply chain instability, inflationary cost increases, and their adverse impact to the global economy, continue to evolve.
We expect global supply chain instability will continue to have an impact on our business, but to date that has not been material to our financial performance. The consequences of global supply chain instability, tariffs, inflationary cost increases, and their adverse impact to the global economy, continue to evolve.
We are an advanced energy technology company with a passion for elevating people’s lives through innovative products, including our Helium Plasma Technology products marketed and sold as Renuvion® in the cosmetic surgery market and J-Plasma® in the hospital surgical market.
We are an advanced energy technology company with a passion for elevating people’s lives through innovative products, including our Helium Plasma Platform Technology products marketed and sold as Renuvion ® in the cosmetic surgery market and J-Plasma ® in the hospital surgical market.
It also continues to be the subject of numerous presentations at traditional and cosmetic surgery conferences around the world. This technology initially received FDA clearance in 2012 and a CE mark in December 2014, which enables us to sell the product in the European Union. In 2014, we created and trained a direct sales force dedicated to sell this technology.
It also continues to be the subject of numerous presentations at traditional and cosmetic surgery conferences around the world. This technology initially received FDA clearance in 2012 and a CE mark in December 2014, which enables us to sell our technology in the European Union. In 2014, we created and trained a direct sales force dedicated to sell this technology.
Payers have become a more potent force in the marketplace and increased attention is being paid to medical device pricing, appropriate drug and medical device utilization and the quality and costs of healthcare generally. However, most of the Company’s products are not reimbursable by payers (including the US. Government) which alleviates some of the burden of reporting.
Payers have become a more potent force in the marketplace and increased attention is being paid to medical device pricing, appropriate drug and medical device utilization and the quality and costs of healthcare generally. However, most of our products are not reimbursable by payers (including the US. Government) which alleviates some of the burden of reporting.
Industry The cosmetic surgery market is a special segment of the medical field which is involved in the restoration, reconstruction, or alteration of the human body so as to enhance the body’s appearance. The market for cosmetic surgery includes surgical, minimally invasive, and nonsurgical cosmetic procedures.
Industry The cosmetic surgery market is a special segment of the medical field, which is involved in the restoration, reconstruction, or alteration of the human body to enhance the body’s appearance. The market for cosmetic surgery includes surgical, minimally invasive, and nonsurgical cosmetic procedures.
Revenue, costs and expenses resulting from this agreement are reported in our Consolidated Statements of Operations as a component of income or loss from operations of our OEM reporting segment. 11 Table of Contents APYX MEDICAL CORPORATION
Revenue, costs and expenses resulting from this agreement are reported in our Consolidated Statements of Operations as a component of income or loss from operations of our OEM reporting segment. 8 Table of Contents APYX MEDICAL CORPORATION
Joint Venture In 2019, the Company executed a joint venture agreement with its Chinese supplier whereby the Company has a 51% ownership interest, to establish a presence in the Chinese market for the manufacturing and sale of our Advanced Energy products. As of the date of this report, the joint venture has not commenced its principal operations.
Joint Venture In 2019, we executed a joint venture agreement with its Chinese supplier whereby we have a 51% ownership interest, to establish a presence in the Chinese market for the manufacturing and sale of our Advanced Energy products. As of the date of this report, the joint venture has not commenced its principal operations.
We believe that we have sustainable, competitive advantages in the cosmetic surgery market for several reasons: our long history of developing unique energy devices to meet the needs of physicians, our unique Helium Plasma Technology, our outstanding product quality supported by strong engineering and research and development capabilities, and the clinical support that our expanding global medical affairs team provides to our customers.
We believe, as the leader in surgical aesthetics, that we have sustainable, competitive advantages in the cosmetic surgery market for several reasons: our long history of developing unique energy devices to meet the needs of physicians, our unique Helium Plasma Technology, our outstanding product quality supported by strong engineering and research and development capabilities, and the clinical support that our expanding global medical affairs team provides to our customers.
Intellectual Property We rely on our intellectual property that we have developed or acquired over the years including patents, trade secrets, technical innovations and various licensing agreements to provide our future growth and build our competitive position. We have been issued 39 patents in the United States and 46 foreign patents.
Intellectual Property We rely on our intellectual property that we have developed or acquired over the years including patents, trade secrets, technical innovations and various licensing agreements to provide our future growth and build our competitive position. We have been issued 38 patents in the United States and 57 foreign patents.
Identified concerns and potential hazards are addressed immediately, which is evidenced by our low safety incident rate quarter over quarter. In 2023, we had no lost time accidents. 7 Table of Contents APYX MEDICAL CORPORATION Our Two Business Segments Our reportable segments are disclosed as principally organized and managed as two operating segments: Advanced Energy and OEM.
Identified concerns and potential hazards are addressed immediately, which is evidenced by our low safety incident rate quarter over quarter. During 2024 and 2023, we had no lost time accidents. 4 Table of Contents APYX MEDICAL CORPORATION Our Two Business Segments Our reportable segments are principally organized, managed and disclosed as two operating segments: Advanced Energy and OEM.
None of our current employees are covered by a collective bargaining agreement and we have never experienced a work stoppage. During 2023, our voluntary employee turnover rate was approximately 10.2%. Equal Opportunity We have worked to create a culture that fosters employee engagement, where diverse talent is productive and passionate about the work they do.
None of our current employees are covered by a collective bargaining agreement and we have never experienced a work stoppage. During 2024, our voluntary employee turnover rate was approximately 11.8%. Equal Opportunity We have worked to create a culture that fosters employee engagement, where diverse talent is productive and passionate about the work they do.
In late January 2023, we launched our recently FDA approved Apyx One Console in the U.S. This is a multi-functional generator incorporating an advanced 3-in-1 energy system that enables plastic and cosmetic surgeons to utilize Renuvion technology, together with full 8 Table of Contents APYX MEDICAL CORPORATION monopolar and bipolar energy.
In late January 2023, we launched our recently FDA approved Apyx One Console in the U.S. This is a multi-functional generator incorporating an advanced 3-in-1 energy system that enables plastic and cosmetic surgeons to utilize Renuvion technology, together with full monopolar and bipolar energy.
These new product releases continue to expand the procedure base for our Helium Plasma Technology by providing surgeons with the tools they need to access additional anatomic locations and perform specific procedures. Single-Use Handpiece Portfolio We offer a variety of different hand pieces for open and laparoscopic procedures.
These new product releases continue to expand the procedure base for our Helium Plasma Technology by providing surgeons with the tools they need to access additional anatomic locations and perform specific procedures. 6 Table of Contents APYX MEDICAL CORPORATION Single-Use Handpiece Portfolio We offer a variety of different hand pieces for open and laparoscopic procedures.
The Renuvion Micro Handpiece features include a smaller instrument shaft which complements our existing product portfolio, providing our customers with a new option to facilitate soft tissue contraction in those cases that may benefit from the use of a handpiece with a smaller profile. The Renuvion Micro Handpiece is designed for use with the Apyx One Console.
The Renuvion Micro Handpiece features include a smaller instrument shaft which complements our existing product portfolio, providing our customers with a new option to facilitate soft tissue contraction in those cases that may benefit from the use of a handpiece with a smaller profile.
The FDA accepts MDSAP audit reports as a substitute for routine Agency inspections. Global Supply Chain Impact The Company relies on global supply chains, and production and distribution processes, which are complex, are subject to increasing regulatory requirements, and may be faced with unexpected changes that may affect sourcing, supply and pricing of materials used in the Company’s products.
The FDA accepts MDSAP audit reports as a substitute for routine Agency inspections. Global Supply Chain Impact We rely on global supply chains, and production and distribution processes, which are complex, are subject to increasing regulatory requirements, and may be faced with unexpected changes that may affect sourcing, supply and pricing of materials, including tariffs, used in our products.
Glucagon-like peptide -1 peptide receptor agonists (GLP-1’s), such as Mounjaro ® , Wegov ® and Ozempic ® , are prescribed for the treatment of diabetes in combination with exercise to improve glycemic control. GLP-1’s have also been found to mimic the GLP-1 satiety hormone in our bodies.
Glucagon- like peptide -1 peptide receptor agonists (“GLP-1’s”), such as Mounjaro®, Wegovy® and Ozempic®, are prescribed for the treatment of diabetes and or weight loss in combination with exercise to improve glycemic control. GLP-1’s have also been found to mimic the GLP-1 satiety hormone in our bodies.
We feel that our products and our strategy as a 4 Table of Contents APYX MEDICAL CORPORATION customer-centric aesthetic medical device manufacturer have, and will continue to improve, the lives of doctors and their patients.
We feel that our products and our strategy as a customer-centric aesthetic medical device manufacturer have, and will continue to improve, the lives of doctors and their patients.
Helium Plasma Generator While we did a limited launch of our Apyx One Console in the U.S. in the fourth quarter of 2022, full commercial launch of the generator in the U.S. and select international markets started in 2023. We continued the sales of our Renuvion System 3 generator, to markets outside the U.S.
Helium Plasma Generator While we did a limited launch of our Apyx One Console in the U.S. in the fourth quarter of 2022, full commercial launch of the generator in the U.S. and select international markets started in 2023 and continued in 2024.
This global team of clinical support specialists focuses on supporting our users to ensure optimal outcomes for their patients. In addition, we have invested in training programs and marketing-related activities to support accelerated adoption of Renuvion into surgeons' practices.
This sales force is supported by a global team of clinical support specialists, which focuses on supporting our users to ensure optimal outcomes for their patients. In addition, we have invested in training programs and marketing-related activities to support accelerated adoption of our technology into surgeons' practices.
Body contouring is a customizable treatment for patients to target specific fat deposits, engage in fat transfer, and treatments to address skin laxity. Renuvion is the only FDA approved device for the treatment of this issue post liposuction.
To address this, the cosmetic surgery market is focusing on body contouring. Body contouring is a customizable treatment for patients to target specific fat deposits, engage in the transfer of fat, and treatments to address loose or lax skin. Renuvion is the only FDA approved device for the treatment of this issue post liposuction.
OEM Segment Overview We leverage our expertise in the design, development and manufacturing of electrosurgical equipment and medical devices by producing generators, medical devices and related accessories for large, well-known medical device manufacturers through original equipment manufacturing (“OEM”) agreements, as well as start-up companies with the need for our energy-based designs.
These processes also are subject to complex and lengthy regulatory approvals. OEM Segment Overview We leverage our expertise in the design, development and manufacturing of electrosurgical equipment and medical devices by producing generators, medical devices and related accessories for large, well-known medical device manufacturers through OEM agreements, as well as start-up companies with the need for our energy-based designs.
Competition Currently, we are the only company with helium-based plasma products and four specific indications from the FDA. While the FDA Safety Communication did impact our sales, and we face competition from RF-based, argon plasma, and CO2 laser products within our target market, we still believe our competitive position did not change in 2023.
While the FDA Safety Communication did impact our sales, and we face competition from RF-based, argon plasma, and CO2 laser products within our target market, we still believe our competitive position did not change in 2024.
According to the recent International Society of Aesthetic Plastic Surgery (“ISAPS”) 2022 Global Survey report, liposuction procedures grew 21.1% year-over-year, and continues to be the number one aesthetic surgical procedure globally. Currently, the majority of procedures utilizing our Renuvion technology occur in conjunction with liposuction procedures.
According to the recent International Society of Aesthetic Plastic Surgery (“ISAPS”) 2023 Global Survey report, while liposuction procedures contracted 2.9% year-over-year, it continues to be the number one aesthetic surgical procedure globally and all surgical procedures increased 5.5% year-over-year. Currently, the majority of procedures utilizing our Renuvion technology occur in conjunction with liposuction procedures.
We aim to prevent any employee, visitor, customer, or person from being subjected to any health or safety risks. We provide annual training and expect our employees to diligently work towards the maintenance of safe and healthy working conditions, adhere to proper operating practices and procedures designed to prevent injury and illness, and conscientiously observe all safety regulations.
We provide annual training and expect our employees to diligently work towards the maintenance of safe and healthy working conditions, adhere to proper operating practices and procedures designed to prevent injury and illness, and conscientiously observe all safety regulations.
The helium-based plasma generated from these devices has been shown to provide increased precision and control and cause less thermal damage to tissue than CO2 laser, argon plasma and RF energy products currently available on the market.
The helium-based plasma generated from these devices has been shown to provide increased precision and control and cause less thermal damage to tissue than CO2 laser, argon plasma and RF energy products currently available on the market. The technology has a general indication and can be used for cutting, coagulating and ablating soft tissue.
Our primary focus is on the cosmetic surgery market where Renuvion offers plastic surgeons, facial plastic surgeons and cosmetic physicians a unique ability to provide controlled heat to the tissue to achieve their desired results. We also leverage our deep expertise and decades of experience in unique waveforms through original equipment manufacturing (“OEM”) agreements with other medical device manufacturers.
Renuvion and J-Plasma offer surgeons a unique ability to provide controlled heat to tissue to achieve their desired results. We also leverage our deep expertise and decades of experience in unique waveforms through Original Equipment Manufacturer (“OEM”) agreements with other medical device manufacturers.
Accordingly, the significance of the future impact to our business and financial statements remains subject to significant uncertainty. Backlog The value of unshipped factory orders is not material.
Accordingly, the significance of the future impact to our business and financial statements remains subject to significant uncertainty.
When one eats, GLP-1 is released in the small intestines regulating blood sugar and sending signals to the brain centers that control appetite.
When one eats, GLP-1 is released in the small intestines regulating blood sugar and sending signals to the brain centers that control appetite. Studies have shown patients taking GLP-1’s have experienced a loss of body weight.
This market is expected to have steady growth year-over-year and this growth is driven by social and cultural factors such as the influence of social media, societal influence for appearance and beauty, and increasing disposable income.
Additionally, Renuvion may be used to treat skin laxity without the use of liposuction, potentially increasing the total available market for our products. This market is expected to have steady growth year-over-year and this growth is driven by social and cultural factors such as the influence of social media, societal influence for appearance and beauty, and increasing disposable income.
Most notably, throughout 2021, we continued our launch of our Renuvion Apyx Plasma RF handpieces (“APR”) around the world. These handpieces were designed with improved ergonomics and usability for our Renuvion customers.
We launched numerous new extensions to our Helium Plasma product lines in an effort to target new surgical procedures, users, and markets. Most notably, throughout 2021, we continued our launch of our Renuvion Apyx Plasma RF handpieces (“APR”) around the world. These handpieces were designed with improved ergonomics and usability for our Renuvion customers.
We have 17 pending patent applications in the United States and 48 pending foreign applications. We have 8 U.S. registered trademarks, 7 international registered trademarks, and 32 pending international trademark applications.
We have 14 pending patent applications in the United States and 19 pending foreign applications. We have 9 U.S. registered trademarks, 29 international registered trademarks, 1 pending U.S. trademark application, and 9 pending international trademark applications.
Our high frequency electrosurgical generators can be used for delivery of RF energy and/or helium plasma to cut, coagulate and ablate soft tissue during open and minimally invasive surgical procedures.
We continued the sales of our Renuvion System 3 generator, to markets outside the U.S. and began introducing the Apyx Once Console in markets where we have received regulatory approval. Our high frequency electrosurgical generators can be used for delivery of RF energy and/or helium plasma to cut, coagulate and ablate soft tissue during open and minimally invasive surgical procedures.
If we are unable to raise additional capital in sufficient amounts or on acceptable terms, we may be required to delay, limit, reduce, or terminate our sales, marketing and product development. Any of these actions could harm our business, results of operations and prospects.
Incurring additional debt financing would result in further debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. If we are unable to raise additional capital in sufficient amounts or on acceptable terms, we may be required to delay, limit, reduce, or terminate our sales, marketing and product development.
For the year ended December 31, 2023, our A dvanced Energy segment contributed 82.9% of our consolidated total revenue and o ur OEM segment contributed 17.1% of our consolidated total revenue.
For the year ended December 31, 2024, our Advanced Energy segment contributed 80.3% of our consolidated total revenue and our OEM segment contributed 19.7% of our consolidated total revenue.
Employee Health and Safety The health and safety of our employees is our highest priority, and this is consistent with our operating philosophy. We provide a safe and healthy workplace for employees consistent with the requirements of the Occupational Safety and Health Act (“OSHA”).
We provide a safe and healthy workplace for employees consistent with the requirements of the Occupational Safety and Health Act (“OSHA”). We aim to prevent any employee, visitor, customer, or person from being subjected to any health or safety risks.
We plan to continue to fund our operations and capital funding needs through existing cash, sales of our products and if necessary additional equity and/or debt financing. However, we cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on terms favorable to us or our existing stockholders.
As of December 31, 2024, we had cash and cash equivalents of $31.7 million. We plan to continue to fund our operations and capital funding needs through existing cash, sales of our products and, if necessary, additional equity and/or debt financing.
In 2020, we completed the launch of our new generation APR handpieces in the U.S. market. During 2021, we began to launch these new handpieces in our international markets, designed specifically for minimally invasive use, with improved ergonomics and safety features. Discuss Micro here.
During 2021, we began to launch these new handpieces in our international markets, designed specifically for minimally invasive use, with improved ergonomics and safety features. Competition Currently, we are the only company with helium-based plasma products and four specific indications from the FDA.
Our mission and vision are to be the world’s leading innovator in unique energy solutions that continually reshape what’s possible in cosmetic and medical procedures through innovative solutions. Our shared values of transforming physicians’ and their patients’ lives, acting with integrity, and driving innovation, form the core of our company's culture.
Our mission and vision are to be the world’s leading innovator in unique energy solutions that continually reshape what’s possible in cosmetic and medical procedures through innovative solutions. Employee Health and Safety The health and safety of our employees is our highest priority, and this is consistent with our operating philosophy.
For a more in depth description of the terms of the MidCap Credit Agreement and the Perceptive Credit Agreement, see Note 11 of Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
Our continued compliance with covenants is subject to meeting or exceeding forecasted Advanced Energy revenues, as amended, and reducing operating expenses. For a more in-depth description of the terms of the Perceptive Credit Agreement, as amended, see Note 11 in Item 8 of this Annual Report on Form 10-K.
We also ensure all of our employees are fully trained and competent for the role for which they were hired.
Our recruitment practices include cross-functional departmental interviewing, allowing for the best fit not just for a specific department, but the Company as a whole. We also ensure all of our employees are fully trained and competent for the role for which they were hired.
The technology has a general indication and can 9 Table of Contents APYX MEDICAL CORPORATION be used for cutting, coagulating and ablating soft tissue. The advantages of helium plasma continue to be studied throughout the medical and scientific communities. We believe that cosmetic surgery applications are the primary area of opportunity for this technology.
The advantages of helium plasma continue to be studied throughout the medical and scientific communities. We believe that cosmetic surgery applications are the primary area of opportunity for this technology. In 2020, we completed the launch of our new generation APR handpieces in the U.S. market.
Studies have shown patients taking GLP-1’s have loss of body weight, Currently, two GLP-1’s are cleared by the FDA for weight loss, but we anticipate a number of additional drug candidates will be cleared as well as, oral versions of these injectable medications.
Currently, two GLP-1’s are cleared by the FDA for weight loss, but we anticipate a number of additional drug candidates will be cleared as well as, oral versions of these injectable medications. 2 Table of Contents APYX MEDICAL CORPORATION We believe the increased use of GLP-1’s has had an initial negative impact on the revenue for plastic and cosmetic surgeons and created uncertainty in the aesthetic space.
We have also experienced some impact on the purchase prices of our raw materials due to inflation, global inventory shortages and increased demand across the manufacturing sector. We maintain collaborative arrangements with three foreign suppliers, including our contract component manufacturer located in Ningbo, China, under which we request the development of certain products which we purchase pursuant to purchase orders.
We maintain collaborative arrangements with two foreign suppliers, including our contract component manufacturer located in Ningbo, China, under which we request the development of certain products, which we purchase pursuant to purchase orders. Our purchase order commitments are never more than one year in duration and are supported by our sales forecasts.
On November 22, 2022, we filed a shelf registration statement providing us the ability to register and sell our securities in the aggregate amount up to $100 million. The shelf registration included an embedded at-the-market (“ATM”) facility for up to $40 million. To date we have not utilized this facility.
We foresee, in totality, these cost savings will reduce our annual operating expenses below $40 million in 2025. 1 Table of Contents APYX MEDICAL CORPORATION On November 22, 2022, we filed a shelf registration statement providing us the ability to register and sell our securities in the aggregate amount up to $100 million.
In July 2022, we published our first ESG report aligned with the Sustainability Accounting Standards Board (“SASB”) Medical Equipment industry standards. Human Capital Management At December 31, 2023, we had 252 full-time employees world-wide, of whom 4 were executive officers, 40 were supervisory personnel, 31 were sales personnel and 181 were technical support, administrative and production employees.
Backlog The value of unshipped factory orders is not material. 3 Table of Contents APYX MEDICAL CORPORATION Human Capital Management At December 31, 2024, we had 220 full-time employees world-wide, of whom 4 were executive officers, 44 were supervisory personnel, 21 were sales personnel and 151 were technical support, administrative and production employees.
Our purchase order commitments are never more than one year in duration and are supported by our sales forecasts. In accordance with Defense Federal Acquisition Regulation Supplement 225.7022-5(b), to our knowledge, none of the products that we source are through entities manufacturing in the Xinjiang province.
To our knowledge, none of the products that we source are through entities manufacturing in the Xinjiang province.
This selling organization, along with our international network of distributors, is focused on the use of Renuvion in the cosmetic surgery market, supported by our global medical affairs team. This global team of clinical support specialists focuses on supporting our users to ensure optimal outcomes for their patients.
This sales force is supported by a global team of clinical support specialists, which focuses on supporting our users to ensure optimal outcomes for their patients. In addition, we have invested in training programs and marketing-related activities to support accelerated adoption of our technology into surgeons' practices.
Recruitment, Training and Development The implementation of our growth strategy largely depends on our ability to hire, train, and retain our workforce. Our recruitment practices include cross-functional departmental interviewing, allowing for the best fit not just for a specific department, but the Company as a whole.
We continuously focus our efforts on cultivating and enhancing our working culture that embraces equal opportunity. Recruitment, Training and Development The implementation of our growth strategy largely depends on our ability to hire, train, and retain our workforce.
For the year ended December 31, 2023, we incurred a loss from operations of $17.3 million and used $5.2 million of cash in operations, which is inclusive of the receipt of our tax refund of approximately $8.1 million. As of December 31, 2023, we had cash and cash equivalents of $43.7 million.
Liquidity We have incurred recurring net losses and cash outflows from operations and we anticipate that losses will continue in the near term. For the year ended December 31, 2024, we incurred a loss from operations of $18.8 million and used $18.0 million of cash in operations.
For a more in depth description of the terms of the Purchase Agreement see Notes 6 and 7 of Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
For a more in-depth description of the terms of the registered direct offering, see Note 13 in Item 8 of this Annual Report on Form 10-K. Our direct sales force, along with our international network of distributors, is focused on becoming the sole provider of surgical equipment in the cosmetic surgical markets.
During 2023, we continued our full-scale, global, commercialization efforts for Renuvion in the cosmetic and plastic surgery markets. As of December 31, 2023, we had a direct sales force of 31 field-based selling professionals and utilized 3 independent sales agencies. We also had 4 sales managers.
During 2024, we continued our full-scale, global, commercialization efforts for Renuvion in the cosmetic surgery market. Our direct sales force, along with our international network of distributors, is focused on becoming the sole provider of surgical equipment in the cosmetic surgery market.
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Recent Business Developments On March 14, 2022, the U.S. Food and Drug Administration (“FDA”) posted a Safety Communication that warned consumers and health care providers against the use of our Advanced Energy products outside of their FDA-cleared indications for general use in cutting, coagulation, and ablation of soft tissue during open and laparoscopic surgical procedures.
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Recent Business Developments On January 6, 2025, we announced that we had submitted a 510(k) premarket notification to the FDA for the AYON Body Contouring System ("AYON"). AYON was developed with a focus on versatility and innovation. AYON has been designed to be the only device a surgeon needs for comprehensive body contouring solutions.
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Following the Safety Communication, we experienced reduced demand for the adoption of our Helium Plasma Technology. On May 26, 2022, we announced that we received 510(k) clearance from the FDA for the use of the Renuvion Dermal handpiece for specific dermal resurfacing procedures.
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This all-in-one system integrates advanced modalities to perform multiple functions seamlessly, removing unwanted fat, enhancing tissue contraction and addressing the full range of patient needs from contouring to aesthetic enhancement.
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On July 18, 2022, we announced that we received 510(k) clearance from the FDA for the use of the Renuvion APR handpiece for certain skin contraction procedures.
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The initial submission for AYON includes the following: • Infiltration • Dual aspiration to facilitate simultaneous users • Ultrasound-assisted liposuction • Electrocoagulation to support procedures requiring removal of excess tissue • Volume enhancement capabilities • Renuvion treatment to address loose and lax skin During 2025, we plan to expand the indications with an additional 510(k) submission for AYON to include power assisted liposuction.
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On June 2, 2022 and July 21, 2022, the FDA updated the Medical Device Safety Communication to recognize the new 510(k) clearances for the Renuvion Dermal handpiece, and the expanded indications for the Renuvion APR handpiece.
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However, we cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on terms acceptable to us. The sale of additional equity would result in dilution to our stockholders.
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The 510(k) clearance for the Renuvion Dermal handpiece allows surgeons to perform dermal resurfacing procedures for the treatment of moderate to severe wrinkles and rhytides, limited to patients with Fitzpatrick Skin Types I, II or III. The 510(k) clearance for the Renuvion APR handpiece now addresses improving the appearance of lax (loose) skin in the neck and submental region.
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Any of these actions could harm our business, results of operations, cash flows, and prospects. In November 2024, we undertook a cost saving restructuring which included an organizational reduction in force to better focus, optimize and streamline operations. As a result of the organizational changes, we reduced our U.S. workforce by nearly 25%.
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On February 27, 2023, we announced that we received 510(k) clearance from the FDA for the use of the Renuvion APR handpiece for the delivery of radiofrequency energy and/or helium plasma where coagulation/contraction of soft tissue is needed. Soft tissue includes subcutaneous tissue.
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We estimate the annualized future cost savings from the reduction in force to be approximately $4.3 million, which we expect to contribute to our goal of decreasing losses and achieving cash-flow breakeven.
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On April 28, 2023, we announced that we received 510(k) clearance from the FDA for the use of the Renuvion APR handpiece for coagulation of subcutaneous soft tissues following liposuction for aesthetic body contouring.
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We incurred pre-tax charges of approximately $0.6 million in the fourth quarter of 2024 representing, for the most part, one-time cash expenditures for severance and other employee termination benefits.
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On May 10, 2023, the FDA updated the Safety Communication to inform consumers and healthcare providers about the clearance for the Renuvion APR handpiece for coagulation of subcutaneous soft tissues following liposuction. On June 14, 2023, we announced that we received 510(k) clearance from the FDA for the Renuvion Micro handpiece, a new addition to the Renuvion production family.
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In addition to the reduction in force, we eliminated bonuses in 2024, reduced the size of the board of directors from eight to five members and reduced aggregate board cash compensation from $0.5 million annually to $0.1 million, while increasing board stock-based compensation.
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The Renuvion Micro handpiece was cleared with an indication for the delivery of radiofrequency energy and/or helium plasma where coagulation/contraction of soft tissue is needed. Soft tissue includes subcutaneous tissue.
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In addition to the organizational changes, we have identified other direct cost savings we anticipate achieving in 2025. The identified cost savings include reductions in professional fees, lower research and development costs as we complete the development of AYON, lower credit card fees and stock-based compensation.
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While we expected that receiving these clearances would materially mitigate the financial effects of the Safety Communication in future periods, we continue to experience reduced demand for the adoption and utilization of our technology and we believe that this may have an adverse effect in future periods. 2 Table of Contents APYX MEDICAL CORPORATION Liquidity We have incurred recurring net losses and cash outflows from operations and we anticipate that losses will continue in the near term.
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The shelf registration statement included an embedded ATM facility for up to $40 million. To date we have not utilized this facility. On November 7, 2024, we entered into an amendment to the Perceptive Credit Agreement.
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The sale of additional equity w ould result in dilution to our stockholders. Incurring additional debt financing would result in further debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations.
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The amendment reduced the financial covenant trailing twelve-month revenue targets relating to its Advanced Energy segment (tested quarterly), with amended year-end targets of $34.4 million, $37.0 million, $52.4 million and $60.3 million for 2024, 2025, 2026 and 2027, respectively.
Removed
On February 17, 2023, we entered into a Credit, Security and Guaranty Agreement (the “MidCap Credit Agreement”) with MidCap Funding IV Trust (as agent), and MidCap Financial Trust (as term loan servicer), and the lenders party thereto from time to time.
Added
The amendment also introduced a maximum operating expense financial covenant, with full year targets of $40.0 million and $45.0 million for 2025 and 2026, respectively.
Removed
The MidCap Credit Agreement provided for an up to $35 million facility, consisting of senior secured term loans and a secured revolving facility.
Added
The Perceptive Credit Agreement, as amended, continues to contain customary affirmative and negative covenants, including covenants limiting our ability, and our subsidiaries to, among other things, to incur debt, grant liens, make distributions, enter certain restrictive agreements, pay or modify subordinated debt, dispose of assets, make investments and acquisitions, enter into certain transactions with affiliates, and undergo certain fundamental changes, in each case, subject to limitations and exceptions set forth in the Perceptive Credit Agreement.
Removed
The MidCap Credit Agreement provided for senior secured term loans of up to $25 million, comprised of (i) an initial tranche of $10 million, (ii) a second tranche of $5 million, and (iii) a third tranche of $10 million.

… 37 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

38 edited+8 added−15 removed117 unchanged
Biggest changeViolations of the FCPA, OFAC restrictions, the Bribery Act or other export control, anti-corruption, anti-money laundering and anti-terrorism laws or regulations may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could have a material adverse effect on our reputation, financial condition, and results of operations. 19 Table of Contents APYX MEDICAL CORPORATION We are subject to governmental export controls and economic sanctions that could impair our ability to compete in international markets due to licensing requirements and subject us to potential liability if we are not in compliance with applicable laws.
Biggest changeViolations of the FCPA, OFAC restrictions, the Bribery Act or other export control, anti-corruption, anti-money laundering and anti-terrorism laws or regulations may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could have a material adverse effect on our reputation, financial condition, and results of operations.
We operate in an industry susceptible to significant product liability claims; these claims may be brought by individuals seeking relief on their own behalf or purporting to represent a class. Quality is extremely important to us and our customers due to the impact on patients, and the serious and potentially costly consequences of product failure.
We operate in an industry susceptible to significant product liability claims; these claims may be brought by individuals seeking relief on their own behalf or purporting to represent a class. Quality is extremely important to us and our customers due to the potential impact on patients, and the serious and potentially costly consequences of product failure.
Our ability to successfully commercialize our products will depend on a number of factors, any of which could delay or prevent commercialization, including: • our inability to obtain the necessary regulatory clearances or approvals for expanded indications, new products, or product modifications; • our inability to demonstrate, if required, the safety and efficacy of new products with data from preclinical studies and clinical trials; • if our product is determined to be ineffective or unsafe following approval, and is removed from the market or we are required to perform additional research and development to further prove the safety and effectiveness of the product before re-entry into the market; • if the regulatory approvals/clearances of our new products are delayed or denied, or we are required to conduct further research and development of our products prior to receiving regulatory approval; 13 Table of Contents APYX MEDICAL CORPORATION • our inability to build and maintain a sales and marketing group to successfully launch and sell our new products; • if we experience sudden or extreme volatility in commodity prices and availability, including supply chain disruptions; • if we are required to allocate available funds to litigation matters; • if the needs of our physicians or their patients are not sufficiently met; • if we are unable to manufacture the quantity of products needed, in accordance with quality manufacturing standards, to meet market demand; • competition from other products or technologies prevents or reduces market acceptance of our products; • if we do not have, and cannot obtain, the intellectual property rights needed to manufacture or market our products without infringing on another company’s patents; or • if we are unsuccessful in defending against patent infringement, or other intellectual property rights claims, that could be brought against us, our products or technologies.
Our ability to successfully commercialize our products, including AYON, which we expect to launch during 2025, will depend on a number of factors, any of which could delay or prevent commercialization, including: • our inability to obtain the necessary regulatory clearances or approvals for expanded indications, new products, or product modifications; • our inability to demonstrate, if required, the safety and efficacy of new products with data from preclinical studies and clinical trials; • if our product is determined to be ineffective or unsafe following approval, and is removed from the market or we are required to perform additional research and development to further prove the safety and effectiveness of the product before re-entry into the market; • if the regulatory approvals/clearances of our new products are delayed or denied, or we are required to conduct further research and development of our products prior to receiving regulatory approval; 10 Table of Contents APYX MEDICAL CORPORATION • our inability to build and maintain a sales and marketing group to successfully launch and sell our new products; • if we experience sudden or extreme volatility in commodity prices and availability, including supply chain disruptions; • if we are required to allocate available funds to litigation matters; • if the needs of our physicians or their patients are not sufficiently met; • if we are unable to manufacture the quantity of products needed, in accordance with quality manufacturing standards, to meet market demand; • competition from other products or technologies prevents or reduces market acceptance of our products; • if we do not have, and cannot obtain, the intellectual property rights needed to manufacture or market our products without infringing on another company’s patents; or • if we are unsuccessful in defending against patent infringement, or other intellectual property rights claims, that could be brought against us, our products or technologies.
These announcements may include: • our listing status on the The NASDAQ Stock Market LLC; • our operating results falling below the expectations of public market analysts and investors; • developments in our relationships with or developments affecting our major customers; • negative regulatory action or regulatory non-approval with respect to our new products; • government regulation, governmental investigations, or audits related to us or to our products; • developments related to our patents or other proprietary rights or those of our competitors and • changes in the position of securities analysts with respect to our stock.
These announcements may include: • our listing status on the Nasdaq Global Select Market; • our operating results falling below the expectations of public market analysts and investors; • developments in our relationships with or developments affecting our major customers; • negative regulatory action or regulatory non-approval with respect to our new products; • government regulation, governmental investigations, or audits related to us or to our products; • developments related to our patents or other proprietary rights or those of our competitors and • changes in the position of securities analysts with respect to our stock.
In connection with the execution of the MidCap Credit Agreement and the Perceptive Credit Agreement, we issued warrants to purchase 1,500,000 shares of our commons stock, representing approximately 4.3% of our outstanding common stock.
In connection with the execution of the MidCap Credit Agreement and the Perceptive Credit Agreement, we issued warrants to purchase 1,500,000 shares of our commons stock, representing approximately 4.0% of our outstanding common stock.
These and other economic factors could materially adversely affect the Company’s business, results of operations, financial condition and stock price. The Company’s business can be impacted by political events, trade and other international disputes, war, terrorism, natural disasters, public health issues, industrial accidents and other business interruptions.
These and other economic factors could materially adversely affect the Company’s business, results of operations, financial condition and stock price. The Company ’ s business can be impacted by political events, trade and other international disputes, war, terrorism, natural disasters, public health issues, industrial accidents and other business interruptions.
We currently do not anticipate paying any dividends on our common stock in the foreseeable future, and we are subject to restrictions on our ability to pay dividends pursuant to our credit agreement executed in November 2023. We currently intend to retain future earnings, if any, to finance operations and invest in our business.
We currently do not anticipate paying any dividends on our common stock in the foreseeable future, and we are subject to restrictions on our ability to pay dividends pursuant to our credit agreement executed in November 2023 and as amended in November 2024. We currently intend to retain future earnings, if any, to finance operations and invest in our business.
There are increasing requirements for efficient and accurate processes for hazardous substance handling, supplier disclosures, and regulatory reporting in order to comply with numerous global health and environmental regulatory requirements and restrictions, including but not limited to: • Restriction on Hazardous Substances (“RoHS”) Directive • Packaging and Packing Waste Directive • REACH Regulation • Proposition 65 • Hazardous Air Pollutants: Ethylene Oxide 18 Table of Contents APYX MEDICAL CORPORATION Compliance with existing and future environmental regulations may have an impact on the manufacturing and sterilization of our medical devices.
There are increasing requirements for efficient and accurate processes for hazardous substance handling, supplier disclosures, and regulatory reporting in order to comply with numerous global health and environmental regulatory requirements and restrictions, including but not limited to: • Restriction on Hazardous Substances (“RoHS”) Directive • Packaging and Packing Waste Directive • REACH Regulation • Proposition 65 • Hazardous Air Pollutants: Ethylene Oxide Compliance with existing and future environmental regulations may have an impact on the manufacturing and sterilization of our medical devices.
Our common stock is listed on The NASDAQ Stock Market LLC under the ticker symbol “APYX”. The market price of our stock has been, and may continue to be, highly volatile and announcements by us or by third parties may have a significant impact on our stock price.
Our common stock is listed on the Nasdaq Global Select Market under the ticker symbol “APYX”. The market price of our stock has been, and may continue to be, highly volatile and announcements by us or by third parties may have a significant impact on our stock price.
We have 17 pending patent applications in the United States and 48 pending foreign applications. Our intellectual property portfolio for our Renuvion and J-Plasma products continues to grow on an annual basis. We intend to continue to seek legal protection, primarily through patents, for our proprietary technology.
We have 14 pending patent applications in the United States and 19 pending foreign applications. Our intellectual property portfolio for our Renuvion and J-Plasma products continues to grow on an annual basis. We intend to continue to seek legal protection, primarily through patents, for our proprietary technology.
If we are unable to protect our patents or other proprietary rights, or if we infringe on the patents or other proprietary rights of others, our competitiveness and business prospects may be materially damaged. We have been issued 39 patents in the United States and 46 foreign patents.
If we are unable to protect our patents or other proprietary rights, or if we infringe on the patents or other proprietary rights of others, our competitiveness and business prospects may be materially damaged. We have been issued 38 patents in the United States and 57 foreign patents.
Such restrictions or reductions in the availability of consumer credit, or the loss of our relationship with our current financing partners, could have an adverse effect on our business, financial conditions, and operating results. We have had a history of operating losses that have impacted our overall cash flows and may impact our ability to continue as a going concern.
Such restrictions or reductions in the availability of consumer credit, or the loss of our relationship with our current financing partners, could have an adverse effect on our business, financial conditions, and operating results. 9 Table of Contents APYX MEDICAL CORPORATION We have had a history of operating losses that have impacted our overall cash flows and may impact our ability to continue as a going concern.
Even in the absence of infringement by our products on third parties’ intellectual property rights, or litigation related to trade secrets, we have elected in the past, and may in the future, elect to enter into settlements to avoid the costs and risks of protracted litigation and the diversion of resources and management’s 14 Table of Contents APYX MEDICAL CORPORATION attention.
Even in the absence of infringement by our products on third parties’ intellectual property rights, or litigation related to trade secrets, we have elected in the past, and may in the future, elect to enter into settlements to avoid the costs and risks of protracted litigation and the diversion of resources and management’s attention.
Any such violation could result in significant criminal or civil fines, penalties, or other consequences, including reputational harm, which could have a material adverse effect on our business, financial condition, and results of operations. Risks Relating to Our Stock The market price of our stock has been and may continue to be highly volatile.
Any such violation could result in significant criminal or civil fines, penalties, or other consequences, including reputational harm, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. 16 Table of Contents APYX MEDICAL CORPORATION Risks Relating to Our Stock The market price of our stock has been and may continue to be highly volatile.
As a part of the regulatory process for obtaining marketing clearance or approval for new products and new indications for existing products, we conduct and participate in numerous clinical trials with a variety of study designs, patient populations, 16 Table of Contents APYX MEDICAL CORPORATION and trial endpoints.
As a part of the regulatory process for obtaining marketing clearance or approval for new products and new indications for existing products, we conduct and participate in numerous clinical trials with a variety of study designs, patient populations, and trial endpoints.
Macroeconomic trends including inflation and higher interest rates may adversely affect our financial condition, results of operations and cash flows. Inflation in the United States has recently accelerated and is currently expected to continue at an elevated level in the near-term. Higher inflation and interest rates could have an adverse impact on our operating expenses and our credit facilities.
Macroeconomic trends including inflation and higher interest rates may adversely affect our financial condition, results of operations and cash flows. We are in an inflationary period in the United States and is expected to continue at an elevated level in the near-term. Higher inflation and interest rates could have an adverse impact on our operating expenses and our credit facilities.
If we commence paying dividends in the future, our board of directors may decide, at its discretion, at any time, to decrease the number of dividends, otherwise 20 Table of Contents APYX MEDICAL CORPORATION modify or repeal the dividend policy or discontinue entirely the payment of dividends.
If we commence paying dividends in the future, our board of directors may decide, at its discretion, at any time, to decrease the number of dividends, otherwise modify or repeal the dividend policy or discontinue entirely the payment of dividends.
The competent authorities of the EU countries separately regulate the clinical research for medical devices and the market surveillance of products once they are placed on the market. A new Regulation (EU) 2017/745 on medical devices, or “EU MDR”, came into effect in May 2017, which imposes significant additional premarket and post-market requirements.
The competent authorities of the EU countries separately regulate the clinical research for medical devices and the market surveillance of products once they are placed on the market. A new Regulation (EU) 2017/745 on medical devices, or European Union Medical Device Regulation (“EU MDR”), was published in May 2017, which imposes significant additional premarket and post-market requirements.
Treasury Department’s Office of Foreign Assets Control (OFAC). Some of the products we manufacture and provide are controlled for export by BIS. Exports of our products to territories outside of the United States must be made in compliance with these laws and regulations.
Some of the products we manufacture and provide are controlled for export by BIS. Exports of our products to territories outside of the United States must be made in compliance with these laws and regulations.
The EU MDR represents the first major change to the EU medical device regulatory environment, has significantly raised the compliance bar for the medical device industry, and will cause significant changes to the regulatory obligations of manufacturers, importers and distributors involved in the medical device distribution chain.
The EU MDR supersedes the MDD and has significantly raised the compliance bar for the medical device industry and will cause significant changes to the regulatory obligations of manufacturers, importers and distributors involved in the medical device distribution chain.
General Risks We may, in the future, identify deficiencies in internal controls over financial reporting. While we have concluded that, as of December 31, 2023, our disclosure and reporting controls were effective as included in Part II, Item 9A of this Form 10-K, there can be no assurance that future control deficiencies or material weaknesses will not be identified.
While we have concluded that, as of December 31, 2024, our disclosure and reporting controls were effective as included in Part II, Item 9A of this Form 10-K, there can be no assurance that future control deficiencies or material weaknesses will not be identified.
We anticipate that we may need to adjust our operating expenditures to be commensurate with our expected levels of revenue and/or raise additional capital to finance operations. 12 Table of Contents APYX MEDICAL CORPORATION Due to our recurring net losses and the continued impact of the FDA Safety Communication on demand for the adoption and utilization of our technology, we may need to raise additional capital to fund our future operations.
We anticipate that we may need to adjust our operating expenditures to be commensurate with our expected levels of revenue and/or raise additional capital to finance operations. Due to our recurring net losses and the continued level of demand for the adoption and utilization of our technology, we may need to raise additional capital to fund our future operations.
Any failure to comply could subject us to significant civil or criminal exposure, administrative obligations and costs, other potential penalties from, and/or agreements with, the federal government. Governmental regulations worldwide have, and may continue to become, increasingly stringent and customary.
Any failure to comply could subject us to significant civil or criminal exposure, administrative obligations and costs, other potential penalties from, and/or agreements with, the federal government. Governmental regulations worldwide have, and may continue to become, increasingly stringent and customary. In the EU, all medical devices must carry the CE marking before being sold in the EU.
As of December 31, 2023, our outstanding stock options to our employees, officers, directors and consultants amounted to 7,342,883 shares of our common stock, representing approximately 21.2% of our outstanding common stock.
As of December 31, 2024, our outstanding stock options to our employees, officers, directors and consultants amounted to 7,638,458 shares of our common stock, representing approximately 20.2% of our outstanding common stock.
While we take measures to protect the security of, and unauthorized access to, our systems, as well as the privacy of personal and proprietary information, it is possible that our security controls over our systems, as well as other security practices we follow or those systems of our customers into which we operate and rely upon, may not prevent the improper access to or disclosure of personally identifiable 21 Table of Contents APYX MEDICAL CORPORATION or proprietary information.
However, despite these preventative measures, it is possible that our security controls over our systems, as well as other security practices we follow or those systems of our customers into which we operate and rely upon, may not prevent the improper access to or disclosure of personally identifiable or proprietary information.
Our failure to adhere to, or successfully implement processes in response to, changing regulatory requirements in this area could result in legal liability or impairment to our reputation in the marketplace, which could have a material adverse effect on our business, financial condition and results of operations.
Our failure to adhere to, or successfully implement processes in response to, changing regulatory requirements in this area could result in legal liability or impairment to our reputation in the marketplace, which could have a material adverse effect on our business, financial condition and results of operations. 18 Table of Contents APYX MEDICAL CORPORATION Adverse global and regional economic conditions could materially adversely affect the Company ’ s business, results of operations and financial condition.
We expect that as this global regulatory environment continues to evolve, it could impact the cost, the time needed to approve, and ultimately, our ability to maintain existing approvals or obtain future approvals for our products. Regulations of the the FDA and other regulatory agencies in and outside the U.S. impose significant compliance and monitoring obligations on our business.
We expect that as this global regulatory environment continues to evolve, it could impact the cost, the time needed to approve, and ultimately, our ability to maintain existing approvals or obtain future approvals for our products.
The FDA is closely monitoring the supply chain effects of closures and potential closures of certain facilities that use EtO to sterilize medical devices prior to their use, and is concerned about the future availability of sterile medical devices and the potential for medical device shortages that might impact patient care.
Our devices are not currently impacted by these closures, however, it is unknown if the current EtO facilities utilized by Apyx Medical could be impacted in the future. 15 Table of Contents APYX MEDICAL CORPORATION The FDA is closely monitoring the supply chain effects of closures and potential closures of certain facilities that use EtO to sterilize medical devices prior to their use, and is concerned about the future availability of sterile medical devices and the potential for medical device shortages that might impact patient care.
The procedures performed using our products are elective procedures not reimbursable through government or private health insurance, with the costs borne by the patient.
Continued expansion of the global market for aesthetic procedures is a material assumption of our business strategy. The procedures performed using our products are elective procedures not reimbursable through government or private health insurance, with the costs borne by the patient.
The issuance of additional equity through our shelf registration or through the exercise of some or all of our stock options and warrants will dilute the ownership interests of existing stockholders. Any sales in the public market of the common stock issuable upon such conversion or exercise could adversely affect prevailing market prices of our common stock.
The issuance of additional equity through our shelf registration or through the exercise of some or all of our stock options and warrants will dilute the ownership interests of existing stockholders.
We do, 15 Table of Contents APYX MEDICAL CORPORATION however, maintain a backup power source at our Clearwater facility, are working to establish deeper redundancies between both facilities, and have a disaster recovery plan in place to help mitigate this risk.
We do, however, maintain a backup power source at our Clearwater facility, are working to establish deeper redundancies between both facilities, and have a disaster recovery plan in place to help mitigate this risk. 12 Table of Contents APYX MEDICAL CORPORATION If there is not sufficient consumer demand for the procedures performed with our products, surgeon demand for our products could be inhibited, resulting in unfavorable operating results and reduced growth potential.
If the FDA were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical products are ineffective or pose an unreasonable health risk, they could ban such medical products, determine that our products 17 Table of Contents APYX MEDICAL CORPORATION are adulterated or misbranded, order a recall, repair, replacement, correction, or refund of such products, refuse to grant pending pre-market clearances or approvals, refuse to issue export certificates for foreign governments, or require us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health.
If the FDA were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical products are ineffective or pose an unreasonable health risk, they could ban such medical products, determine that our products are adulterated or misbranded, order a recall, repair, replacement, correction, or refund of such products.
Outside of the EU, regulations vary significantly from country to country and are becoming increasingly stringent and country specific. Territories and countries around the world continue to develop their own unique regulatory requirements, and these individual governments are passing laws that enforce these new regulations, including imposing fees, to register products in their country.
Territories and countries around the world continue to develop their own unique regulatory requirements, and these individual governments are passing laws that enforce these new regulations, including imposing fees, to register products in their country. The time and effort required to obtain approval to market products may be longer or shorter than that required in the U.S. or the EU.
If the terms of settlements entered into with certain of our competitors are not observed or enforced, we may suffer further costs and risks. Any of these circumstances could have a material adverse effect on our business, financial condition, results of operations or cash flows.
If the terms of settlements entered into with certain of our competitors are not observed or enforced, we may suffer further costs and risks.
Any non-compliance could have a material adverse effect on our business, financial condition, and results of operations. We are subject to export control laws and regulations, including the Export Administration Regulations (EAR), administered by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) and various economic and trade sanctions regulations overseen by the U.S.
We are subject to export control laws and regulations, including the Export Administration Regulations (EAR), administered by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) and various economic and trade sanctions regulations overseen by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).
We are subject to costly and complex laws and governmental regulations and any adverse regulatory action may materially adversely affect our financial condition and business operations.
Regulations of the FDA and other regulatory agencies in and outside the U.S. impose significant compliance and monitoring obligations on our business. 13 Table of Contents APYX MEDICAL CORPORATION We are subject to costly and complex laws and governmental regulations and any adverse regulatory action may materially adversely affect our financial condition and business operations.
In addition to patent, copyright, and trademark protection, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position.
Any of these circumstances could have a material adverse effect on our business, financial condition, results of operations or cash flows. 11 Table of Contents APYX MEDICAL CORPORATION In addition to patent, copyright, and trademark protection, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position.
Additionally, our business involves the use, storage and transmission of information about our employees, our customers and clients of our customers.
Additionally, our business involves the use, storage and transmission of information about our employees, our customers and clients of our customers. We take measures to protect the security of, and unauthorized access to, our systems, as well as the privacy of personal and proprietary information.
Removed
If there is not sufficient consumer demand for the procedures performed with our products, surgeon demand for our products could be inhibited, resulting in unfavorable operating results and reduced growth potential. Continued expansion of the global market for aesthetic procedures is a material assumption of our business strategy.
Added
The FDA may also refuse to grant pending pre-market clearances or approvals, refuse to issue export certificates for foreign governments, or require us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health.
Removed
On March 14, 2022, the FDA posted a Communication that warned consumers and health care providers against the use of our Advanced Energy products outside of their FDA-cleared indications for general use in cutting, coagulation, and ablation of soft tissue during open and laparoscopic surgical procedures.
Added
The CE mark represents compliance with the minimum standards of performance, safety, and quality (i.e., the essential requirements). Based on the device classification, a conformity assessment route is selected. An accredited notified body provides an assessment and issues the certificate.
Removed
We worked with the FDA towards securing 510(k) clearance for specific additional indications for our Advanced Energy productions. On May 26, 2022, we announced that we received 510(k) clearance from the FDA for the use of the Renuvion Dermal handpiece for specific dermal resurfacing procedures.
Added
The Essential Requirements have been revised and are now referred to as the General Safety and Performance Requirements. 14 Table of Contents APYX MEDICAL CORPORATION The EU MDR represents the first major change to the EU medical device regulatory environment since the 1990s when the Medical Device Directive (“MDD”) was put into effect.
Removed
On July 18, 2022, we announced that we received 510(k) clearance from the FDA for the use of the Renuvion APR handpiece for use in subcutaneous dermatological and aesthetic procedures.
Added
Additionally, due to the initial delay in the date of application and the reduction in accredited notified bodies, an extension was provided to the validity of MDD certificates. Devices which have a MDD certificate and have met the extension requirements set forth in the EU MDR may be placed on the market until December 31, 2028.
Removed
On June 2, 2022, and July 21, 2022, the FDA updated the Medical Device Safety Communication to recognize the new 510(k) clearances for the Renuvion Dermal handpiece, and the expanded indications for the Renuvion APR handpiece.
Added
High risk devices and implants have a shorter certificate extension period (December 31, 2027). Outside of the EU, regulations vary significantly from country to country and are becoming increasingly stringent and country specific.
Removed
The 510(k) clearance for the Renuvion Dermal handpiece allows surgeons to perform dermal resurfacing procedures for the treatment of moderate to severe wrinkles and rhytides, limited to patients with Fitzpatrick Skin Types I, II or III. The 510(k) clearance for the Renuvion APR handpiece now addresses improving the appearance of lax (loose) skin in the neck and submental region.
Added
We are subject to governmental export controls and economic sanctions that could impair our ability to compete in international markets due to licensing requirements and subject us to potential liability if we are not in compliance with applicable laws. Any non-compliance could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Removed
On February 27, 2023, we announced that we received 510(k) clearance from the FDA for the use of the Renuvion APR handpiece for the delivery of radiofrequency energy and/or helium plasma where coagulation/contraction of soft tissue is needed. Soft tissue includes subcutaneous tissue.
Added
Additionally, in the registered direct offering that we completed in November 2024, we issued 2,934,690 pre-funded warrants which will have a dilutive effect on our common stock outstanding when exercised. As of the date of this annual report on Form 10-K, the dilution is 7.8%.
Removed
On April 28, 2023, we announced that we received 510(k) clearance from the FDA for the use of Renuvion APR handpiece for coagulation of subcutaneous soft tissues following liposuction for aesthetic body contouring. This submission was supported by a clinical study and real world evidence.
Added
Any sales in the public market of the common stock issuable upon such conversion or exercise could adversely affect prevailing market prices of our common stock. 17 Table of Contents APYX MEDICAL CORPORATION General Risks We may, in the future, identify deficiencies in internal controls over financial reporting.
Removed
On May 10, 2023, the FDA updated the Safety Communication to inform consumers and healthcare providers about the clearance for the Renuvion APR handpiece for use under the skin in certain procedures intended to improve the appearance of the skin including for coagulation of subcutaneous soft tissues following liposuction for aesthetic body contouring.
Removed
On June 14, 2023, we announced that we received 510(k) clearance from the FDA for the Renuvion Micro handpiece, a new addition to the Renuvion production family. The Renuvion Micro handpiece was cleared with an indication for the delivery of radiofrequency energy and/or helium plasma where coagulation/contraction of soft tissue is needed. Soft tissue includes subcutaneous tissue.
Removed
While we expected that receiving these clearances would materially mitigate the financial effects of the Safety Communication in future periods, we continue to experience reduced demand for the adoption and utilization of our technology and we believe that this may have an adverse effect in future periods.
Removed
In the EU, a single regulatory approval process exists, and conformity with the legal requirements is represented by the CE Mark. To obtain a CE Mark, defined products must meet minimum standards of performance, safety, and quality (i.e., the essential requirements), and then, according to their classification, comply with one or more of a selection of conformity assessment routes.
Removed
The time and effort required to obtain approval to market products may be longer or shorter than that required in the U.S. or the EU.
Removed
Our devices are not currently impacted by these closures, however, it is unknown if the current EtO facilities utilized by Apyx Medical could be impacted in the future.
Removed
Adverse global and regional economic conditions could materially adversely affect the Company’s business, results of operations and financial condition.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+1 added−1 removed1 unchanged
Biggest changeWe currently expect to retain any future earnings to fund the operation and expansion of our business. 25 Table of Contents APYX MEDICAL CORPORATION Five Year Performance Graph The following line graph compares the value of our common shares with the value of the Russell 2000 Stock Index and the Russell 3000 Stock Index.
Biggest changeWe currently expect to retain any future earnings to fund the operation and expansion of our business. Five Year Performance Graph The following line graph compares the value of our common shares with the value of the Russell 2000 Stock Index and the Russell 3000 Stock Index.
The line graph assumes, in each case, an initial investment of $100 on December 31, 2019, based on the market prices at the end of each fiscal year through and including December 31, 2023, and reinvestment of dividends.
The line graph assumes, in each case, an initial investment of $100 on December 31, 2020, based on the market prices at the end of each fiscal year through and including December 31, 2024, and reinvestment of dividends.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock currently is traded on the NASDAQ Global Select Market LLC. As of March 19, 2024, we had approximately 600 stockholders of record.
ITEM 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock currently is traded on the Nasdaq Global Select Market. As of March 11, 2025, we had approximately 600 stockholders of record.
Removed
December 31, 2019 2020 2021 2022 2023 Apyx Medical Corporation 100.00 85.11 151.54 16.67 30.98 Russell 2000 Index 100.00 118.36 134.57 105.56 121.49 Russell 3000 Index 100.00 118.26 147.35 117.17 145.24 26 Table of Contents APYX MEDICAL CORPORATION
Added
December 31, 2020 2021 2022 2023 2024 Apyx Medical Corporation 100 178.06 19.58 36.38 21.94 Russell 2000 Index 100 113.69 89.18 102.64 112.92 Russell 3000 Index 100 124.60 99.08 122.81 150.01 22 Table of Contents APYX MEDICAL CORPORATION

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

57 edited+40 added−50 removed15 unchanged
Biggest changeThese decreases were partially offset by geographic mix within our Advanced Energy segment, with higher margin domestic sales comprising a higher percentage of total sales and the mix of newer product models as we obtain registrations, allowing these products to be introduced into the markets we serve. 31 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Other Costs and Expenses Research and development Year Ended December 31, (In thousands) 2023 2022 Change Research and development $ 4,844 $ 4,544 6.6 % Percentage of sales 9.3 % 10.2 % Our expenses for research and development related activities increased by 6.6% or approximately $0.3 million for the year ended December 31, 2023, compared with 2022.
Biggest changeThe decrease in gross profit margins for the year ended December 31, 2024 from the prior year is primarily due to a decrease in the average selling price of generators to domestic customers, changes in the sales mix between our two segments, with our OEM segment comprising a higher percentage of total sales and geographic mix within our Advanced Energy segment, with international sales comprising a higher percentage of total sales. 26 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Other Costs and Expenses Research and development Year Ended December 31, (In thousands) 2024 2023 Change Research and development expense $ 5,080 $ 5,440 (6.6 )% Percentage of sales 10.6 % 10.4 % Our expenses for research and development related activities decreased by 6.6% or approximately $0.4 million for the year ended December 31, 2024, compared with 2023.
Net cash provided by financing activities for the year ended December 31, 2023, was $32.2 million, which primarily related to proceeds received upon the execution of the Perceptive Credit Agreement ($36.4 million) less debt issuance costs incurred in the transactions for both the Perceptive Credit Agreement and MidCap Credit Agreement ($3.1 million) and fees, premiums and costs to extinguish the MidCap Credit Agreement ($1.3 million).
Net cash provided by financing activities for the year ended December 31, 2023, was $32.2 million, which primarily related to proceeds received upon the execution of the Perceptive Credit Agreement ($36.4 million) less debt issuance costs incurred in the transactions with both the Perceptive Credit Agreement and MidCap Credit Agreement ($3.1 million) and fees, premiums and costs to extinguish the MidCap Credit Agreement ($1.3 million).
During January 2023, we were notified that the IRS examination process of our 2018, 2019 and 2020 tax returns was complete and that the Company's tax refunds were approved for approximately $0.2 million more than the amount recorded in the Company's Consolidated Balance Sheet at December 31, 2022.
During January 2023, we were notified that the IRS examination process of our 2018, 2019 and 2020 tax returns was complete and that our tax refunds were approved for approximately $0.2 million more than the amount recorded in the Company's Consolidated Balance Sheet at December 31, 2023.
Other Matters During 2023, we continued to drive sales in our Advanced Energy business by increasing the adoption and utilization of our handpieces in the U.S. cosmetic surgery market and fulfilling demand from distributors in our international markets. Management estimates that our products have been sold in more than 60 countries.
Other Matters During 2024, we continued to drive sales in our Advanced Energy business by increasing the adoption and utilization of our handpieces in the U.S. cosmetic surgery market and fulfilling demand from distributors in our international markets. Management estimates that our products have been sold in more than 60 countries.
If we are unable to raise additional capital in sufficient amounts or on acceptable terms, we may be required to delay, limit, reduce, or terminate our sales, marketing and product development. Any of these actions could harm our business, results of operations and prospects.
If we are unable to raise additional capital in sufficient amounts or on acceptable terms, we may be required to delay, limit, reduce, or terminate our sales, marketing and product development. Any of these actions could harm our business, results of operations, cash flows and prospects.
We plan to continue to fund our operations and capital funding needs through existing cash, sales of our products and, if necessary, additional equity and/or debt financing. However, we cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on terms favorable to us or our existing stockholders.
We plan to continue to fund our operations and capital funding needs through existing cash, sales of our products and, if necessary, additional equity and/or debt financing. However, we cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on terms acceptable to us.
Net cash provided by investing activities for the year ended December 31, 2023, was $6.7 million related to the sale of our Clearwater, FL facility ($7.3 million), partially offset by investments in property and equipment ($0.5 million). Net cash used in investing activities for the year ended December 31, 2022, was $1.0 million related to investments in property and equipment.
Net cash provided by investing activities for the year ended December 31, 2023, was $6.7 million related to the sale of our Clearwater, FL facility ($7.3 million), partially offset by investments in property and equipment ($0.5 million).
ITEM 6. [Reserved] 27 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 7 . Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis in conjunction with our consolidated financial statements and related notes contained elsewhere in this report.
ITEM 6. [Reserved] 23 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 7 . Management ’ s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis in conjunction with our consolidated financial statements and related notes contained elsewhere in this report.
Executive Level Overview We are an advanced energy technology company with a passion for elevating people’s lives through innovative products, including our Helium Plasma Technology products marketed and sold as Renuvion in the cosmetic surgery market and J-Plasma in the hospital surgical market.
Executive Level Overview We are a surgical aesthetic company with a passion for elevating people’s lives through innovative products, including our Helium Plasma Platform Technology products marketed and sold as Renuvion in the cosmetic surgery market and J-Plasma in the hospital surgical market.
In addition, we have invested in training programs and marketing-related activities to support accelerated adoption of Renuvion into surgeons' practices.
In addition, we have invested in training programs and marketing-related activities to support accelerated adoption of our technology into surgeons' practices.
We base our estimates on historical experience, or various assumptions that are believed to be reasonable under the circumstances and the results form the basis for making judgments about the reported values of assets, liabilities, revenues and expenses.
We base our estimates on historical experience, or various assumptions that are believed to be reasonable under the circumstances and the results form the basis for making judgments about the reported values of assets, liabilities, revenues and expenses. Actual results may materially differ from these estimates.
Renuvion and J-Plasma offer surgeons a unique ability to provide controlled heat to tissue to achieve their desired results. We also leverage our deep expertise and decades of experience in unique waveforms through OEM agreements with other medical device manufacturers. On March 14, 2022, the U.S.
Renuvion and J-Plasma offer surgeons a unique ability to provide controlled heat to tissue to achieve their desired results. We also leverage our deep expertise and decades of experience in unique waveforms through OEM agreements with other medical device manufacturers.
This increase is due to higher yields on our investments in money market funds and U.S. Treasury securities included in cash and cash equivalents combined with a higher average balance. Interest expense increased approximately $2.5 million for the year ended December 31, 2023, when compared with the prior year.
This increase is due to a higher average balance in on our investments in money market funds and U.S. Treasury securities included in cash and cash equivalents. Interest expense increased approximately $3.4 million for the year ended December 31, 2024, when compared with the prior year.
Other Income (Loss), net Year Ended December 31, (In thousands) 2023 2022 Other income, net $ 622 $ 509 Percentage of sales 1.2 % 1.1 % Loss on extinguishment of debt $ (3,088) $ — Percentage of sales (5.9) % — % Other income, net increased approximately $0.1 million for the year ended December 31, 2023, compared with 2022.
Other Income (Loss), net Year Ended December 31, (In thousands) 2024 2023 Other (expense) income, net $ (161 ) $ 622 Percentage of sales (0.3 )% 1.2 % Loss on extinguishment of debt $ — $ (3,088 ) Percentage of sales — % (5.9 )% Other (expense) income, net decreased approximately $0.8 million for the year ended December 31, 2024, compared with 2023.
Interest Income (Expense) Year Ended December 31, (In thousands) 2023 2022 Interest income $ 921 $ 157 Percentage of sales 1.8 % 0.4 % Interest expense $ (2,478) $ (15) Percentage of sales (4.7) % — % Interest income increased approximately $0.8 million for the year ended December 31, 2023, compared with 2022.
Interest Income (Expense) Year Ended December 31, (In thousands) 2024 2023 Interest income $ 1,606 $ 921 Percentage of sales 3.3 % 1.8 % Interest expense $ (5,907 ) $ (2,478 ) Percentage of sales (12.3 )% (4.7 )% Interest income increased approximately $0.7 million for the year ended December 31, 2024, compared with 2023.
The Perceptive Credit Agreement provides for a facility of up to $45 million, consisting of senior secured term loans. The Perceptive Credit Agreement provides for (i) an initial loan of $37.5 million and (ii) a delayed draw loan of $7.5 million.
The Perceptive Credit Agreement provided for a facility of up to $45 million, consisting of senior secured term loans. The Perceptive Credit Agreement provided for (i) an initial loan of $37.5 million and (ii) a delayed draw loan of $7.5 million. The Company's ability to borrow the delayed draw loan of $7.5 million lapsed on December 31, 2024.
If a loss is reasonably possible, but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements.
If a loss is reasonably possible, but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded.
This increase was primarily due to higher spending on our product development initiatives and clinical studies ($0.2 million) and increased labor and benefits costs from the same period in the prior year ($0.1 million).
This increase was primarily due to lower compensation and benefits costs from the prior year ($0.3 million) and lower spending on our product development initiatives and clinical studies ($0.1 million).
Actual results may materially differ from these estimates. 35 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made and (2) other materially different estimates could have been reasonably made or material changes in the estimates are reasonably likely to occur from period to period.
Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made and (2) other materially different estimates could have been reasonably made or material changes in the estimates are reasonably likely to occur from period to period.
For the year ended December 31, 2023 , net cash used in operating activities was $5.2 million, which is inclusive of the receipt of our tax refund of approximately $8.1 million , which principally funded our loss from operations of $17.3 million, compared with net cash used in operating activities of approximately $20.3 million for 2022.
For the year ended December 31, 2024, net cash used in operating activities was $18.0 million, which principally funded our loss from operations of $18.8 million, compared with net cash used in operating activities, exclusive of the receipt of our $8.1 million final income tax refund, of approximately $13.3 million for 2023.
For the year ended December 31, 2022, the effective tax rate differs from the statutory rate primarily due to the valuation allowance on our Federal and State net operating losses (NOLs) combined with interest and penalties on our uncertain tax positions.
For the year ended December 31, 2024, the effective tax rate differs from the statutory rate primarily due to the valuation allowance on our Federal and state net operating losses (NOLs) and net deferred tax assets generated during the year.
These increases are due to cash and noncash interest expense on the MidCap Credit Agreement executed on February 17, 2023, and the Perceptive Credit Agreement executed on November 8, 2023.
These increases are due to cash and noncash interest expense on the Perceptive Credit Agreement.
Professional services Year Ended December 31, (In thousands) 2023 2022 Change Professional services $ 7,031 $ 9,044 (22.3) % Percentage of sales 13.4 % 20.3 % Professional services expenses decreased 22.3%, or approximately $2.0 million for the year ended December 31, 2023, compared with 2022.
Professional services Year Ended December 31, (In thousands) 2024 2023 Change Professional services expense $ 6,914 $ 7,031 (1.7 )% Percentage of sales 14.4 % 13.4 % Professional services expenses decreased 1.7%, or approximately $0.1 million for the year ended December 31, 2024, compared with 2023.
Accordingly, the significance of the future impact to our business and financial statements remains subject to significant uncertainty. We continue to work on initiatives to combat inflation, including finding alternative suppliers that meet our quality standards, streamlining our supplier network to reduce the use of middlemen and redesigning some components to achieve better volume purchase prices.
We continue to work on initiatives to combat inflation, including finding alternative suppliers that meet our quality standards, streamlining our supplier network to reduce the use of middlemen and redesigning some components to achieve better volume purchase prices. Inflation has not, to date, materially impacted our operations or financial performance.
This increase was primarily attributable to a small insurance recovery in 2023 ($0.2 million). This increase was partially offset by a decrease in the release of our joint and several payroll liability due to the lapse of the statute of limitations on a portion of the liability ($0.1 million).
This decrease was primarily due to the current year recording of a joint and several liability for sales taxes related to one customer ($0.2 million), a small insurance recovery in 2023 ($0.2 million) and the release of our joint and several payroll liability due to the lapse of the statute of limitations on a portion of the liability ($0.4 million) in 2023.
Gross Profit Year Ended December 31, (In thousands) 2023 2022 Change Cost of sales $ 18,590 $ 15,379 20.9 % Percentage of sales 35.5 % 34.6 % Gross profit $ 33,759 $ 29,131 15.9 % Percentage of sales 64.5 % 65.4 % Our gross profit margin as a percentage of sales decreased by approximately 1.0% during the year ended December 31, 2023, compared with 2022.
Gross Profit Year Ended December 31, (In thousands) 2024 2023 Change Cost of sales $ 18,742 $ 18,590 0.8 % Percentage of sales 39.0 % 35.5 % Gross profit $ 29,360 $ 33,759 (13.0 )% Percentage of sales 61.0 % 64.5 % Our gross profit margin as a percentage of sales decreased by approximately 3.5% during the year ended December 31, 2024, compared with 2023.
When evaluating the adequacy of the allowance for doubtful accounts, we analyze historical bad debt experience, the composition of outstanding receivables by customer class, and the age of outstanding balances, and we make estimates in connection with establishing the allowance for doubtful accounts, including the expected impacts of changes in the operating environment and other trends.
When evaluating the adequacy of the allowance for credit losses, we analyze historical bad debt experience, the composition of outstanding receivables by customer class, and the age of outstanding balances, and we make estimates in connection with establishing the allowance for credit losses, including the expected impacts of changes in the operating environment in multiple countries as well as the credit terms being offered to customer, to determine where adjustments to historical experience are warranted.
This selling organization, along with our international network of distributors, is focused on the use of Renuvion and J-Plasma in the cosmetic and hospital surgical markets, supported by our global medical affairs team. This global team of clinical support specialists focuses on supporting our users to ensure optimal outcomes for their patients.
Our direct sales force, along with our international network of distributors, is focused on becoming the sole provider of surgical equipment in the cosmetic surgical markets. This sales force is supported by a global team of clinical support specialists, which focuses on supporting our users to ensure optimal outcomes for their patients.
Any of these actions could harm our business, results of operations and prospects. On November 22, 2022, we filed a shelf registration statement providing us the ability to register and sell our securities in the aggregate amount up to $100 million. The shelf registration included an embedded ATM facility for up to $40 million.
We foresee, in totality, these cost savings will reduce our annual operating expenses below $40 million in 2025. On November 22, 2022, we filed a shelf registration statement providing us the ability to register and sell our securities in the aggregate amount up to $100 million. The shelf registration statement included an embedded ATM facility for up to $40 million.
Selling, general and administrative expenses Year Ended December 31, (In thousands) 2023 2022 Change Selling, general and administrative $ 22,198 $ 20,484 8.4 % Percentage of sales 42.4 % 46.0 % Selling, general and administrative expense increased by 8.4% or approximately $1.7 million for the year ended December 31, 2023, compared with 2022.
Selling, general and administrative expenses Year Ended December 31, (In thousands) 2024 2023 Change SG&A expense $ 18,858 $ 22,198 (15.0 )% Percentage of sales 39.2 % 42.4 % Selling, general and administrative expense decreased by 15.0% or approximately $3.3 million for the year ended December 31, 2024, compared with 2023.
Advanced Energy segment sales increased 17.9% or approximately $6.6 million for the year ended December 31, 2023 when compared with 2022.
Advanced Energy segment sales decreased 11.0% or approximately $4.8 million for the year ended December 31, 2024 when compared with 2023.
For the year ended December 31, 2023, the effective tax rate differs from the statutory rate primarily due to the valuation allowance on our Federal and State net operating losses (NOLs) combined with the reversal of our uncertain tax positions upon completion of the IRS audit of our tax return for the 2018, 2019 and 2020 years in January 2023.
For the year ended December 31, 2023, the effective tax rate differs from the statutory rate primarily due to the valuation allowance on our Federal and state net operating losses (NOLs) combined with the reversal of our uncertain tax positions upon completion of the IRS audit of our tax return for the 2018, 2019 and 2020 years in January 2023. 28 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Liquidity and Capital Resources At December 31, 2024, we had approximately $31.7 million in cash and cash equivalents as compared to approximately $43.7 million in cash and cash equivalents at December 31, 2023.
Salaries and related costs Year Ended December 31, (In thousands) 2023 2022 Change Salaries and related costs $ 19,637 $ 18,621 5.5 % Percentage of sales 37.5 % 41.8 % Salaries and related expenses increased 5.5% or approximately $1.0 million for the year ended December 31, 2023, compared to 2022.
Salaries and related costs Year Ended December 31, (In thousands) 2024 2023 Change Salaries and related expenses $ 17,353 $ 19,041 (8.9 )% Percentage of sales 36.1 % 36.4 % Salaries and related expenses decreased 8.9% or approximately $1.7 million for the year ended December 31, 2024, compared to 2023.
Our most significant accounting policies are disclosed in Note 2 in Item 8 of this Annual Report on Form 10-K. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
International sales represented approximately 26.8% and 29.9% of total revenues for the years ended December 31, 2023, and 2022, respectively. Management estimates our products have been sold in more than 60 countries through local distributors coordinated by sales and marketing personnel through our facilities in Clearwater, Florida and Sofia, Bulgaria.
Management estimates our products have been sold in more than 60 countries through local distributors coordinated by sales and marketing personnel through our facilities in Clearwater, Florida and Sofia, Bulgaria.
For the year ended December 31, 2023, we incurred a loss from operations of $17.3 million and used $5.2 million of cash in operations, which is inclusive of the receipt of our tax refund of approximately $8.1 million. As of December 31, 2023, we had cash and cash equivalents of $43.7 million.
For the year ended December 31, 2024, we incurred a loss from operations of $18.8 million and used $18.0 million of cash in operations. As of December 31, 2024, we had cash and cash equivalents of $31.7 million.
On May 8, 2023 we closed the Purchase Agreement and concurrently executed a 10-year agreement to leaseback the underlying Property from the Purchaser. For a more in-depth description of the terms of the Purchase Agreement see Notes 6 and 7 in Item 8 of this Annual Report on Form 10-K.
On May 8, 2023, we closed the Purchase Agreement and concurrently executed a 10-year agreement to leaseback the underlying Property from the Purchaser.
Litigation Contingencies In accordance with authoritative guidance, we record a liability in our consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated.
If the financial condition of our customers deteriorates, resulting in an inability to make payments, additional allowances may be required. 30 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Litigation Contingencies In accordance with authoritative guidance, we record a liability in our consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated.
Asset information is not reviewed by the chief operating decision maker by segment and is not available by segment and, accordingly, we have not presented a measure of assets by reportable segment. Our reportable segments are disclosed as principally organized and managed as two operating segments: Advanced Energy and OEM.
Asset information is not reviewed by the chief operating decision maker by segment and is not available by segment and, accordingly, we have not presented a measure of assets by reportable segment. 25 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued e operate in two business segments: OEM and Advanced Energy.
Inflation has not, to date, materially impacted our operations or financial performance. However, as these trends continue for raw materials, freight, and labor costs, our future financial performance could be adversely impacted. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements at this time.
However, as these trends continue for raw materials, freight, and labor costs, our future financial performance could be adversely impacted. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements at this time. Recent Accounting Pronouncements See Note 3 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. ITEM 7A .
For a more in-depth description of the terms of the Midcap Credit Agreement and the Perceptive Credit Agreement, see Note 11 in Item 8 of this Annual Report on Form 10-K. On February 27, 2023, our Board of Directors approved a plan to sell and leaseback our real property located in Clearwater, FL.
On February 27, 2023, our Board of Directors approved a plan to sell and leaseback our real property located in Clearwater, FL.
The OEM product line consists of proprietary products designed specifically for third party equipment manufacturers. Revenue for this product line increased 16.3%, or approximately $1.3 million, when compared to 2022.
These decreases were partially offset by increased volume of single-use handpieces globally and sales of Apyx One Console upgrades internationally. The OEM product line consists of proprietary products designed specifically for third party equipment manufacturers. Revenue for this product line increased 5.9%, or approximately $0.5 million, when compared to 2023.
Liquidity and Capital Resources At December 31, 2023, we had approximately $43.7 million in cash and cash equivalents as compared to approximately $10.2 million in cash and cash equivalents at December 31, 2022. Our working capital at December 31, 2023 was approximately $57.6 million compared with $31.1 million at December 31, 2022.
Our working capital at December 31, 2024 was approximately $45.7 million compared with $57.6 million at December 31, 2023.
The change is primarily driven by increases in commissions ($1.1 million), insurance expense, as a result of increased product liability claims on our policies ($0.9 million), travel expense ($0.3 million), regulatory costs ($0.2 million), building lease expense ($0.2 million) and payment processing fees ($0.1 million).
The change is primarily due to decreases in commissions ($2.0 million), insurance expense, including claims on our policies ($1.4 million), advertising expense, including trade show fees and related costs ($0.5 million), travel expense ($0.4 million) and payment processing fees ($0.2 million).
For a more in-depth description of the terms of the Midcap Credit Agreement and the Perceptive Credit Agreement see Note 11 in Item 8 of this Annual Report on Form 10-K. On February 27, 2023, our Board of Directors approved a plan to sell and leaseback our real property located in Clearwater, FL.
Our continued compliance with covenants is subject to meeting or exceeding forecasted Advanced Energy revenues, as amended and reducing operating expenses. For a more in-depth description of the terms of the Midcap Credit Agreement and the Perceptive Credit Agreement, as amended, see Note 11 in Item 8 of this Annual Report on Form 10-K.
We believe that our continued investment and focus on the following strategic initiatives in 2023 and beyond will position the Company for long-term growth in the cosmetic surgery market: • To formalize our regulatory strategy to pursue specific clinical indications that will enable us to sell our Renuvion products for targeted procedures • To secure new clinical evidence demonstrating the safety and efficacy of our Helium Plasma Technology • To provide enhanced physician and practice support for our cosmetic surgery customers • To improve our manufacturing capabilities and efficiencies In regards to our operating segments, our results are aggregated into reportable segments only if they exhibit similar economic characteristics.
We believe that our continued investment and focus on the following strategic initiatives in 2025 and beyond will position the Company for long-term growth in the cosmetic surgery market: • To provide enhanced physician and practice support for our cosmetic surgery customers • To expand our regulatory approvals to expand product availability in new markets worldwide • To execute our regulatory pathway for our AYON in the United States • To successfully launch AYON in the United States and eventually worldwide • To generate consumer interest in the treatment of loose and lax skin through a focused direct-to-consumer advertising strategy, including as a result of the side effects of GLP-1's In regards to our operating segments, our results are aggregated into reportable segments only if they exhibit similar economic characteristics.
During the year ended December 31, 2023, loss on extinguishment of debt was approximately $3.1 million as a result of the extinguishment of the MidCap Credit Agreement upon execution of the Perceptive Credit Agreement. 33 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Income Taxes Twelve Months Ended December 31, (In thousands) 2023 2022 Change Income tax (benefit) expense $ (2,432) $ 367 (762.7) % Effective tax rate 11.4 % (1.6) % Income tax (benefit) expense was approximately $2.4 million and $0.4 million, with effective tax rates of 11.4% and (1.6)%, respectively, for the years ended December 31, 2023 and 2022, respectively.
Income Taxes Year Ended December 31, (In thousands) 2024 2023 Income tax expense (benefit) $ 252 $ (2,432 ) Effective tax rate (1.1 )% 11.4 % Income tax expense (benefit) was approximately $0.3 million and $(2.4 million), with effective tax rates of (1.1)% and 11.4%, respectively, for the years ended December 31, 2024 and 2023, respectively.
Gain on sale-leaseback Year Ended December 31, (In thousands) 2023 2022 Gain on sale-leaseback $ 2,692 $ — Percentage of sales 5.1 % — % Durin g the year ended December 31, 2023, gain on sale-leaseback was approximately $2.7 million as a result of the gain on the sale and leaseback of our Clearwater, FL facility in May 2023.
These decreases were partially offset by higher meeting and training costs ($0.7 million), building lease expense ($0.2 million), allowances for credit losses ($0.1 million) and regulatory fees ($0.1 million). 27 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Gain on sale-leaseback Year Ended December 31, (In thousands) 2024 2023 Gain on sale-leaseback $ — $ 2,692 Percentage of sales — % 5.1 % During the year ended December 31, 2023, gain on sale-leaseback was approximately $2.7 million as a result of the gain on the sale and leaseback of our Clearwater, FL facility in May 2023.
On May 8, 2023, we closed the Purchase Agreement and concurrently executed a 10-year agreement to leaseback the underlying Property from the Purchaser. For a more in-depth description of the terms of the Purchase Agreement see Notes 6 and 7 in Item 8 of this Annual Report on Form 10-K.
For a more in-depth description of the terms of the Purchase Agreement see Notes 6 and 7 in Item 8 of this Annual Report on Form 10-K. 29 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued On November 7, 2024, we entered into an amendment to the Perceptive Credit Agreement.
“ Corporate & Other ” includes certain unallocated corporate and administrative costs which are not specifically attributed to any reportable segment. The OEM segment is primarily development and manufacturing contract and product driven, and all related expenses are recorded as cost of sales, therefore no segment specific operating expenses are incurred.
The OEM segment is primarily development and manufacturing contract and product driven, and all related expenses are recorded as cost of sales, therefore no segment specific operating expenses are incurred. We strongly encourage investors to visit our website: www.apyxmedical.com to view the most current news and to review our filings with the Securities and Exchange Commission.
This decrease was primarily attributable to decreases in legal expenses ($1.2 million) associated with the estimated loss recorded in the prior year for certain legal actions and current year reversal of a legal loss contingency, physician consulting fees ($0.5 million), accounting and audit fees ($0.2 million) and board of director’s option expense ($0.2 million).
This decrease was primarily due to decreases in board of director’s stock-based compensation expense ($0.5 million), recruiting expenses ($0.4 million) and accounting and audit fees ($0.2 million).
We strongly encourage investors to visit our website: www.apyxmedical.com to view the most current news and to review our filings with the Securities and Exchange Commission. 30 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Results of Operations Sales Year Ended December 31, (In thousands) 2023 2022 Change Sales by Reportable Segment Advanced Energy $ 43,382 $ 36,803 17.9 % OEM 8,967 7,707 16.3 % Total $ 52,349 $ 44,510 17.6 % Sales by Domestic and International Domestic $ 38,345 $ 31,208 22.9 % International 14,004 13,302 5.3 % Total $ 52,349 $ 44,510 17.6 % Total revenue increased by 17.6% or approximately $7.8 million for the year ended December 31, 2023 when compared with 2022.
Results of Operations Sales Year Ended December 31, (In thousands) 2024 2023 Change Sales by Reportable Segment Advanced Energy $ 38,606 $ 43,382 (11.0 )% OEM 9,496 8,967 5.9 % Total $ 48,102 $ 52,349 (8.1 )% Sales by Domestic and International Domestic $ 34,022 $ 38,345 (11.3 )% International 14,080 14,004 0.5 % Total $ 48,102 $ 52,349 (8.1 )% Total revenue decreased by 8.1% or approximately $4.2 million for the year ended December 31, 2024 when compared with 2023.
We have incurred recurring net losses and cash outflows from operations and we anticipate that losses will continue in the near term. We plan to continue to fund our operations and capital funding needs through existing cash, sales of our products and if necessary additional equity and/or debt financing.
Additionally, Renuvion may be used to treat skin laxity without the use of liposuction, potentially increasing the total available market for our products. We have incurred recurring net losses and cash outflows from operations and we anticipate that losses will continue in the near term.
At December 31, 2023, we had purchase commitments for inventories totaling approximately $3.8 million , all of which is expected to be purchased by the end of 2024. Critical Accounting Estimates In preparing the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), we have adopted various accounting policies.
Critical Accounting Estimates In preparing the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), we have adopted various accounting policies. Our most significant accounting policies are disclosed in Note 2 in Item 8 of this Annual Report on Form 10-K.
An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not of being sustained based on the technical merit of the position. Inflation The consequences of global supply chain instability and inflationary cost increases and their adverse impact to the global economy, continue to evolve.
Inflation The consequences of global supply chain instability, inflationary cost increases, potential and actual tariffs, and their adverse impact to the global economy, continue to evolve. Accordingly, the significance of the future impact to our business and financial statements remains subject to significant uncertainty.
We have not included any additional periods, nor disregarded any periods, in calculating our volatility. Accounts Receivable Allowance We maintain a reserve for uncollectible accounts receivable.
Our critical accounting estimates include the following: Accounts Receivable Allowance We maintain a reserve for uncollectible accounts receivable.
Recent Accounting Pronouncements See Note 3 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. ITEM 7A . Quantitative and Qualitative Disclosures about Market Risk Not required. 37 Table of Contents APYX MEDICAL CORPORATION
Quantitative and Qualitative Disclosures about Market Risk Not required. 31 Table of Contents APYX MEDICAL CORPORATION
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Food and Drug Administration (“FDA”) posted a Safety Communication that warned consumers and health care providers against the use of our Advanced Energy products outside of their FDA-cleared indications for general use in cutting, coagulation, and ablation of soft tissue during open and laparoscopic surgical procedures.
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Glucagon- like peptide -1 peptide receptor agonists (“GLP-1’s”), such as Mounjaro ® , Wegovy ® and Ozempic ® , are prescribed for the treatment of diabetes and or weight loss in combination with exercise to improve glycemic control. GLP-1’s have also been found to mimic the GLP-1 satiety hormone in our bodies.
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Following the Safety Communication, we experienced reduced demand for the adoption of our Helium Plasma Technology. On May 26, 2022, we announced that we received 510(k) clearance from the FDA for the use of the Renuvion Dermal handpiece for specific dermal resurfacing procedures.
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When one eats, GLP-1 is released in the small intestines regulating blood sugar and sending signals to the brain centers that control appetite. Studies have shown patients taking GLP-1’s have experienced a loss of body weight.
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On July 18, 2022, we announced that we received 510(k) clearance from the FDA for the use of the Renuvion APR handpiece for certain skin contraction procedures.
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Currently, two GLP-1’s are cleared by the FDA for weight loss, but we anticipate a number of additional drug candidates will be cleared as well as, oral versions of these injectable medications. We believe the increased use of GLP-1’s has had an initial negative impact on the revenue for plastic and cosmetic surgeons and created uncertainty in the aesthetic space.
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On June 2, 2022 and July 21, 2022, the FDA updated the Medical Device Safety Communication to recognize the new 510(k) clearances for the Renuvion Dermal handpiece, and the expanded indications for the Renuvion APR handpiece.
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However, we believe, as these drugs will have a ripple effect that will eventually drive people towards plastic surgery and may provide a tailwind for sales of our Renuvion products. Rapid weight loss caused by these drugs can contribute to loose skin, particularly in the curvier areas of the body.
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The 510(k) clearance for the Renuvion Dermal handpiece allows surgeons to perform dermal resurfacing procedures for the treatment of moderate to severe wrinkles and rhytides, limited to patients with Fitzpatrick Skin Types I, II or III. The 510(k) clearance for the Renuvion APR handpiece now addresses improving the appearance of lax (loose) skin in the neck and submental region.
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To address this, the cosmetic surgery market is focusing on body contouring. Body contouring is a customizable treatment for patients to target specific fat deposits, engage in the transfer of fat, and treatments to address loose or lax skin. Renuvion is the only FDA approved device for the treatment of this issue post liposuction.
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On February 27, 2023, we announced that we received 510(k) clearance from the FDA for the use of the Renuvion APR handpiece for the delivery of radiofrequency energy and/or helium plasma where coagulation/contraction of soft tissue is needed. Soft tissue includes subcutaneous tissue.
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In November 2024, we undertook a cost saving restructuring which included an organizational reduction in force to better focus, optimize and streamline operations. As a result of the organizational changes, we reduced our U.S. workforce by nearly 25%.
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On April 28, 2023, we announced that we received 510(k) clearance from the FDA for the use of the Renuvion APR handpiece for coagulation of subcutaneous soft tissues following liposuction for aesthetic body contouring.
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We estimate the annualized future cost savings from the reduction in force to be approximately $4.3 million which we expect to contribute to our goal of decreasing losses and achieving cash-flow breakeven.
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On May 10, 2023, the FDA updated the Safety Communication to inform consumers and healthcare providers about the clearance for the Renuvion APR handpiece for use under the skin in certain procedures intended to improve the appearance of the skin, including for coagulation of subcutaneous soft tissues following liposuction for aesthetic body contouring.
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We incurred pre-tax charges of approximately $0.6 million in the fourth quarter of 2024 representing, for the most part, one-time cash expenditures for severance and other employee termination benefits.
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While we expected that receiving these clearances would mitigate the financial effects of the Safety Communication in future periods, we continue to experience reduced demand for the adoption and utilization of our technology and we believe that this may have an adverse effect in the current and potentially future periods.
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In addition to the reduction in force, we eliminated bonuses in 2024, reduced the size of the board of directors from eight to five members and reduced aggregate board cash compensation from $0.5 million annually to $0.1 million, while increasing board stock-based compensation.
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On June 14, 2023, we announced that we received 510(k) clearance from the FDA for the Renuvion Micro handpiece, a new addition to the Renuvion production family. The Renuvion Micro handpiece was cleared with an indication for the delivery of radiofrequency energy and/or helium plasma where coagulation/contraction of soft tissue is needed. Soft tissue includes subcutaneous tissue.
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In addition to the organizational changes, we have identified other direct cost savings we anticipate achieving in 2025. The identified cost savings include reductions in professional fees, lower research and development costs as we complete the development of AYON, lower credit card fees and stock-based compensation.
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As part of our plan to accelerate and fully fund the development of our Advanced Energy business, with a focus in the cosmetic surgery market, we sold our Core business in 2018 for gross proceeds of $97 million.
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To date we have not utilized this facility. 24 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued On November 7, 2024, we entered into an amendment to the Perceptive Credit Agreement.
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These proceeds were used to launch broad 28 Table of Contents APYX MEDICAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued marketing and sales initiatives which resulted in rapid sales growth through December 31, 2021 and into the first quarter of 2022.

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