|
Delaware
(State or other jurisdiction
of incorporation or organization)
|
|
13-3986004
(I.R.S. Employer
Identification No.)
|
|
PAGE
|
|||
ITEM 1. Financial Statements:
|
|||
a.
|
3
|
||
b.
|
4
|
||
c. |
5
|
||
d.
|
6
|
||
e.
|
7
|
||
f.
|
9
|
||
26
|
|||
35
|
|||
ITEM 4.
Controls and Procedures
|
35
|
||
ITEM 1.
Legal Proceedings
|
36
|
||
ITEM 1A.
Risk Factors
|
36
|
||
36
|
|||
ITEM 3.
Defaults Upon Senior Securities
|
37
|
||
ITEM 4.
Mine Safety Disclosures
|
37
|
||
ITEM 5.
Other Information
|
37
|
||
ITEM 6.
Exhibits
|
37
|
||
39
|
|||
E-31.1
|
September 30, 2016
|
December 31, 2015
|
|||||||
ASSETS
|
(unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
2,957
|
$
|
3,303
|
||||
Restricted cash
|
-
|
15
|
||||||
Accounts receivable, net of allowance for doubtful accounts of $105 and $45, respectively
|
2,936
|
4,068
|
||||||
Inventories, net
|
3,229
|
4,128
|
||||||
Prepaid expenses and other current assets
|
266
|
465
|
||||||
Total current assets
|
9,388
|
11,979
|
||||||
Property and equipment, net
|
10,848
|
13,851
|
||||||
Patents and licensed technologies, net
|
6,515
|
7,247
|
||||||
Other intangible assets, net
|
7,350
|
7,980
|
||||||
Goodwill
|
8,803
|
8,928
|
||||||
Other assets
|
46
|
94
|
||||||
Total assets
|
$
|
42,950
|
$
|
50,079
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Note payable
|
$
|
-
|
$
|
299
|
||||
Current portion of long-term debt
|
857
|
-
|
||||||
Accounts payable
|
1,899
|
4,446
|
||||||
Other accrued liabilities
|
1,538
|
2,161
|
||||||
Deferred revenues
|
327
|
173
|
||||||
Total current liabilities
|
4,621
|
7,079
|
||||||
Long-term liabilities:
|
||||||||
Long-term debt, net
|
10,549
|
9,851
|
||||||
Senior secured convertible debentures, net
|
11,398
|
9,839
|
||||||
Warrant liability
|
185
|
7,042
|
||||||
Deferred tax liability
|
299
|
119
|
||||||
Other liabilities
|
21
|
62
|
||||||
Total liabilities
|
27,073
|
33,992
|
||||||
Commitment and contingencies
|
||||||||
Stockholders' equity:
|
||||||||
Preferred Stock, $.10 par value, 10,000,000 shares authorized; 6,196 shares issued and outstanding
|
1
|
1
|
||||||
Common Stock, $.001 par value, 150,000,000 shares authorized; 10,732,804 and 10,283,393 shares issued and outstanding, respectively
|
11
|
10
|
||||||
Additional paid-in capital
|
225,551
|
223,315
|
||||||
Accumulated deficit
|
(209,688
|
)
|
(207,240
|
)
|
||||
Accumulated other comprehensive income
|
2
|
1
|
||||||
Total stockholders' equity
|
15,877
|
16,087
|
||||||
Total liabilities and stockholders' equity
|
$
|
42,950
|
$
|
50,079
|
For the Three Months Ended
September 30,
|
||||||||
2016
|
2015
|
|||||||
Revenues
|
$
|
7,767
|
$
|
8,323
|
||||
Cost of revenues
|
3,070
|
3,042
|
||||||
Gross profit
|
4,697
|
5,281
|
||||||
|
||||||||
Operating expenses:
|
||||||||
Engineering and product development
|
382
|
560
|
||||||
Selling and marketing
|
2,840
|
3,912
|
||||||
General and administrative
|
1,880
|
3,132
|
||||||
|
5,102
|
7,604
|
||||||
Operating loss before other income (expense), net
|
(405
|
)
|
(2,323
|
)
|
||||
|
||||||||
Other income (expense), net:
|
||||||||
Interest expense, net
|
(1,175
|
)
|
(5,577
|
)
|
||||
Change in fair value of warrant liability
|
132
|
(1,329
|
)
|
|||||
Other income, net
|
3
|
(5
|
)
|
|||||
(1,040
|
)
|
(6,911
|
)
|
|||||
Loss before income taxes
|
(1,445
|
)
|
(9,234
|
)
|
||||
Income tax expense
|
64
|
-
|
||||||
Net loss
|
(1,509
|
)
|
(9,234
|
)
|
||||
Deemed dividend related to warrant modification
|
-
|
(2,962
|
)
|
|||||
Net loss attributable to common stockholders
|
$
|
(1,509
|
)
|
$
|
(12,196
|
)
|
||
Net loss per basic and diluted share
|
$
|
(0.14
|
)
|
$
|
(1.29
|
)
|
||
Shares used in computing net loss per basic and diluted share:
|
10,679,761
|
9,442,022
|
||||||
Other comprehensive income (loss):
|
||||||||
Foreign currency translation adjustments
|
$
|
(1
|
)
|
$
|
10
|
|||
Comprehensive loss
|
$
|
(1,510
|
)
|
$
|
(12,186
|
)
|
For the Nine Months Ended
September 30,
|
||||||||
2016
|
2015
|
|||||||
Revenues
|
$
|
23,126
|
$
|
9,015
|
||||
Cost of revenues
|
9,631
|
10,226
|
||||||
Gross profit (loss)
|
13,495
|
(1,211
|
)
|
|||||
|
||||||||
Operating expenses:
|
||||||||
Engineering and product development
|
1,541
|
1,289
|
||||||
Selling and marketing
|
10,073
|
5,641
|
||||||
General and administrative
|
5,882
|
6,819
|
||||||
|
17,496
|
13,749
|
||||||
Operating loss before other income (expense), net
|
(4,001
|
)
|
(14,960
|
)
|
||||
|
||||||||
Other income (expense), net:
|
||||||||
Interest expense, net
|
(3,571
|
)
|
(8,738
|
)
|
||||
Change in fair value of warrant liability
|
5,316
|
(679
|
)
|
|||||
Other income, net
|
(1
|
)
|
23
|
|||||
1,744
|
(9,394
|
)
|
||||||
Loss before income taxes
|
(2,257
|
)
|
(24,354
|
)
|
||||
Income tax expense
|
191
|
-
|
||||||
Net loss
|
( 2,448
|
)
|
( 24,354
|
)
|
||||
Deemed dividend related to warrant modification
|
-
|
(2,962
|
)
|
|||||
Net loss attributable to common stockholders
|
$
|
(2,448
|
)
|
$
|
(27,316
|
)
|
||
Net loss per share:
|
||||||||
Basic
|
$
|
(0.23
|
)
|
$
|
(3.42
|
)
|
||
Diluted
|
$
|
(0.71
|
)
|
$
|
(3.42
|
)
|
||
Shares used in computing net loss per share:
|
||||||||
Basic
|
10,536,824
|
7,994,012
|
||||||
Diluted
|
10,947,713
|
7,994,012
|
||||||
Other comprehensive income:
|
||||||||
Foreign currency translation adjustments
|
$
|
1
|
$
|
10
|
||||
Comprehensive loss
|
$
|
(2,447
|
)
|
$
|
(27,306
|
)
|
Convertible Preferred Stock
|
Common Stock
|
Additional Paid-In
|
Accumulated
|
Accumulated Other Comprehensive
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Income
|
Total
|
|||||||||||||||||||||||||
BALANCE, JANUARY 1, 2016
|
6,505
|
$
|
1
|
10,283,393
|
$
|
10
|
$
|
223,315
|
$
|
(207,240
|
)
|
$
|
1
|
$
|
16,087
|
|||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
401
|
-
|
-
|
401
|
||||||||||||||||||||||||
Conversion of senior secured convertible debentures
|
-
|
-
|
329,411
|
1
|
247
|
-
|
-
|
248
|
||||||||||||||||||||||||
Conversion of preferred stock
|
(309
|
)
|
-
|
120,000
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Warrants issued in connection with debt
|
-
|
-
|
-
|
-
|
47
|
-
|
-
|
47
|
||||||||||||||||||||||||
Reclassification of warrants to equity
|
-
|
-
|
-
|
-
|
1,541
|
-
|
-
|
1,541
|
||||||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
1
|
1
|
||||||||||||||||||||||||
Net loss for the nine months ended September 30, 2016
|
-
|
-
|
-
|
-
|
-
|
(2,448
|
)
|
-
|
(2,448
|
)
|
||||||||||||||||||||||
BALANCE, SEPTEMBER 30, 2016
|
6,196
|
$
|
1
|
10,732,804
|
$
|
11
|
$
|
225,551
|
$
|
(209,688
|
)
|
$
|
2
|
$
|
15,877
|
For the Nine Months Ended
September 30,
|
||||||||
2016
|
2015
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net loss
|
$
|
(2,448
|
)
|
$
|
(24,354
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
4,844
|
2,348
|
||||||
Provision for doubtful accounts
|
91
|
20
|
||||||
Stock-based compensation
|
401
|
1,483
|
||||||
Deferred tax provision
|
180
|
-
|
||||||
Impairment of long-lived assets
|
-
|
920
|
||||||
Inventory write-offs
|
-
|
4,818
|
||||||
Loss on disposal of property and equipment
|
124
|
-
|
||||||
Amortization of debt discount
|
1,821
|
7,571
|
||||||
Amortization of deferred financing costs
|
145
|
373
|
||||||
Change in fair value of warrant liability
|
(5,316
|
)
|
679
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
1,041
|
(300
|
)
|
|||||
Inventories
|
899
|
(295
|
)
|
|||||
Prepaid expenses and other assets
|
202
|
(321
|
)
|
|||||
Accounts payable and accrued expenses
|
(2,559
|
)
|
289
|
|||||
Other accrued liabilities
|
(623
|
)
|
(150
|
)
|
||||
Other liabilities
|
(40
|
)
|
(39
|
)
|
||||
Deferred revenues
|
154
|
13
|
||||||
Net cash used in operating activities
|
(1,084
|
)
|
(6,945
|
)
|
||||
Cash Flows From Investing Activities:
|
||||||||
Lasers placed-in-service, net
|
(607
|
)
|
(1,066
|
)
|
||||
Purchases of property and equipment
|
-
|
(17
|
)
|
|||||
Restricted cash
|
15
|
(100
|
)
|
|||||
Reimbursement of purchase price
|
125
|
-
|
||||||
Acquisition costs, net of cash received
|
-
|
(42,500
|
)
|
|||||
Net cash used in investing activities
|
(467
|
)
|
(43,683
|
)
|
For the Nine Months Ended
September 30,
|
||||||||
2016
|
2015
|
|||||||
Cash Flows From Financing Activities:
|
||||||||
Proceeds from long-term debt
|
1,500
|
-
|
||||||
Proceeds from convertible debentures
|
-
|
32,500
|
||||||
Proceeds from senior notes
|
-
|
10,000
|
||||||
Payments on notes payable
|
(299
|
)
|
(20
|
)
|
||||
Registration costs
|
-
|
(134
|
)
|
|||||
Net cash provided by financing activities
|
1,201
|
42,346
|
||||||
Effect of exchange rate changes on cash
|
4
|
17
|
||||||
Net decrease in cash and cash equivalents
|
(346
|
)
|
(8,265
|
)
|
||||
Cash and cash equivalents, beginning of period
|
3,303
|
11,434
|
||||||
Cash and cash equivalents, end of period
|
$
|
2,957
|
$
|
3,169
|
||||
Supplemental information:
|
||||||||
Cash paid for interest
|
$
|
1,517
|
$
|
402
|
||||
Supplemental information of non-cash investing and financing activities:
|
||||||||
Conversion of senior secured convertible debentures into common stock
|
$
|
248
|
$
|
4,593
|
||||
Conversion of series A convertible preferred stock into common stock
|
$
|
309
|
$
|
5,283
|
||||
Establishment of a warrant liability with a deemed dividend
|
$
|
-
|
$
|
2,962
|
||||
Reclassification of property and equipment to inventory, net
|
$
|
-
|
$
|
107
|
||||
Reclassification of warrants to (from) stockholders' equity
|
$
|
1,541
|
$
|
(5,399
|
)
|
|||
Recognition of debt discount and beneficial conversion feature on long-term debt
|
$
|
-
|
$
|
27,300
|
||||
Recognition of warrants issued as debt discount
|
$
|
47
|
$
|
-
|
|
•
|
Level 1 – unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.
|
|
•
|
Level 2 – pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.
|
|
•
|
Level 3 – pricing inputs are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation. Fair value is determined using comparable market transactions and other valuation methodologies, adjusted as appropriate for liquidity, credit, market and/or other risk factors
|
Fair Value as
of September 30, 2016
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
Significant other
Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Warrant liability (Note 10)
|
$
|
185
|
$
|
-
|
$
|
-
|
$
|
185
|
||||||||
Fair Value as
of December 31, 2015
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
Significant other
Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Warrant liability (Note 10)
|
$
|
7,042
|
$
|
-
|
$
|
-
|
$
|
7,042
|
September 30, 2016
|
||||
(unaudited)
|
||||
Accrual at beginning of year
|
$
|
226
|
||
Additions charged to warranty expense
|
141
|
|||
Expiring warranties/claimed satisfied
|
(220
|
)
|
||
Total
|
147
|
|||
Less: current portion
|
(127
|
)
|
||
$
|
20
|
Nine Months Ended
September 30, 2016
|
||||
Net loss
|
$
|
(2,448
|
)
|
|
Gain on the change in fair value of the warrant liability
|
(5,316
|
)
|
||
Diluted earnings
|
$
|
(7,764
|
)
|
|
Weighted average number of common and common equivalent shares outstanding:
|
||||
Basic number of common shares outstanding
|
10,536,824
|
|||
Dilutive effect of warrants
|
410,889
|
|||
Diluted number of common and common stock equivalent shares outstanding
|
10,947,713
|
September 30,
|
||||||||
2016
|
2015
|
|||||||
Common stock equivalents of convertible debentures
|
46,105,715
|
46,521,127
|
||||||
Common stock purchase warrants
|
12,033,098
|
16,078,920
|
||||||
Common stock equivalents of convertible preferred stock
|
2,415,866
|
2,535,866
|
||||||
Common stock options
|
3,007,227
|
2,302,802
|
||||||
Total
|
63,561,906
|
67,438,715
|
Fair Value
|
||||
Current assets
|
$
|
7,233
|
||
Property, plant and equipment
|
14,340
|
|||
Identifiable intangible assets
|
16,100
|
|||
Other assets
|
45
|
|||
Total assets assumed
|
37,718
|
|||
Current liabilities
|
(3,945
|
)
|
||
Note payable
|
(57
|
)
|
||
Other long term liabilities
|
(116
|
)
|
||
Total liabilities assumed
|
(4,118
|
)
|
||
Net assets acquired
|
$
|
33,600
|
Three Months Ended
September 30,2015
|
Nine Months Ended
September 30, 2015
|
|||||||
(unaudited)
|
(unaudited)
|
|||||||
Net revenues
|
$
|
8,323
|
$
|
23,684
|
||||
Net loss attributable to common stockholders
|
$
|
(12,186
|
)
|
$
|
(33,662
|
)
|
||
Net loss per basic and diluted share:
|
$
|
(1.29
|
)
|
$
|
(4.21
|
)
|
||
Shares used in calculating net loss per basic and diluted share:
|
9,442,022
|
7,994,012
|
September 30
,
2016
|
December 31, 2015
|
|||||||
(unaudited)
|
||||||||
Raw materials and work in progress
|
$
|
2,912
|
$
|
3,706
|
||||
Finished goods
|
317
|
422
|
||||||
Total inventories
|
$
|
3,229
|
$
|
4,128
|
September 30, 2016
|
December 31, 2015
|
|||||||
(unaudited)
|
||||||||
Lasers placed-in-service
|
$
|
16,344
|
$
|
15,782
|
||||
Equipment, computer hardware and software
|
161
|
1,219
|
||||||
Furniture and fixtures
|
111
|
2,080
|
||||||
Leasehold improvements
|
24
|
931
|
||||||
16,640
|
20,012
|
|||||||
Accumulated depreciation and amortization
|
(5,792
|
)
|
(6,161
|
)
|
||||
Property and equipment, net
|
$
|
10,848
|
$
|
13,851
|
September 30, 2016
|
December 31, 2015
|
|||||||
(unaudited)
|
||||||||
Core technology
|
$
|
5,974
|
$
|
5,974
|
||||
Product technology
|
2,000
|
2,000
|
||||||
7,974
|
7,974
|
|||||||
Accumulated amortization
|
(1,459
|
)
|
(727
|
)
|
||||
Patents and licensed technologies, net
|
$
|
6,515
|
$
|
7,247
|
Remaining 2016
|
$
|
244
|
||
2017
|
975
|
|||
2018
|
975
|
|||
2019
|
975
|
|||
2020
|
775
|
|||
Thereafter
|
2,571
|
|||
Total
|
$
|
6,515
|
September 30, 2016
|
December 31, 2015
|
|||||||
(unaudited)
|
||||||||
Customer relationships
|
$
|
6,900
|
$
|
6,900
|
||||
Tradenames
|
1,500
|
1,500
|
||||||
8,400
|
8,400
|
|||||||
Accumulated amortization
|
(1,050
|
)
|
(420
|
)
|
||||
Other intangible assets, net
|
$
|
7,350
|
$
|
7,980
|
Remaining 2016
|
$
|
210
|
||
2017
|
840
|
|||
2018
|
840
|
|||
2019
|
840
|
|||
2020
|
840
|
|||
Thereafter
|
3,780
|
|||
Total
|
$
|
7,350
|
September 3
0
, 2016
|
December 31, 2015
|
|||||||
(unaudited)
|
||||||||
Accrued warranty, current, see Note 1
|
$
|
127
|
$
|
168
|
||||
Accrued compensation, including commissions and vacation
|
737
|
1,336
|
||||||
Accrued sales and other taxes
|
397
|
349
|
||||||
Accrued professional fees and other accrued liabilities
|
277
|
308
|
||||||
Total other accrued liabilities
|
$
|
1,538
|
$
|
2,161
|
September 30, 2016
|
December 31, 2015
|
|||||||
(unaudited)
|
||||||||
Senior secured 2.25% convertible debentures, net of unamortized debt discount of $24,816 and $26,267, respectively; and deferred financing costs of $535 and $522, respectively
|
$
|
6,680
|
$
|
5,489
|
||||
Senior secured 4% convertible debentures, net of unamortized debt discount of $3,591 and $3,922, respectively; and deferred financing costs of $406 and $443, respectively
|
4,718
|
4,350
|
||||||
Total convertible debt
|
$
|
11,398
|
$
|
9,839
|
December 31, 2015
|
January 29, 2016
|
|||||||
Number of shares underlying warrants
|
650,442
|
99,057
|
||||||
Exercise price
|
$
|
1.13
|
$
|
1.06
|
||||
Stock price on date of issuance
|
$
|
1.11
|
$
|
1.05
|
||||
Fair value of warrants
|
$
|
321
|
$
|
47
|
||||
Volatility
|
50.0
|
%
|
50.0
|
%
|
||||
Risk-free interest rate
|
1.8
|
%
|
1.8
|
%
|
||||
Expected dividend yield
|
0
|
%
|
0
|
%
|
||||
Expected warrant life
|
5 years
|
5 years
|
September 30, 2016
|
June 22, 2016
|
December 31, 2015
|
||||||||||
Number of shares underlying the warrants
|
2,015,446
|
14,099,267
|
14,099,267
|
|||||||||
Stock price
|
$
|
0.53
|
$
|
0.65
|
$
|
1.11
|
||||||
Volatility
|
46.00
|
%
|
35.00 - 50.00
|
%
|
35.90 – 50.00
|
%
|
||||||
Risk-free interest rate
|
0.60% – 0.79
|
%
|
0.25% – 1.04
|
%
|
0.02% - 1.63
|
%
|
||||||
Expected dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
||||||
Expected warrant life
|
2.37 – 2.60 years
|
0.09– 4.0 years
|
0.07 – 4.48 years
|
Issuance Date
|
December 31, 2015
|
Decrease in Fair Value
|
Reclassification to Equity
|
September 30, 2016
|
||||||||||||
10/31/2013
|
$
|
379
|
$
|
(312
|
)
|
$
|
-
|
$
|
67
|
|||||||
2/5/2014
|
715
|
(597
|
)
|
-
|
118
|
|||||||||||
7/24/2014 Series A
|
2,415
|
(1,573
|
)
|
(842
|
)
|
-
|
||||||||||
7/24/2014 Series B
|
1,726
|
(1,713
|
)
|
(13
|
)
|
-
|
||||||||||
6/22/2015
|
1,807
|
(1,121
|
)
|
(686
|
)
|
-
|
||||||||||
Total
|
$
|
7,042
|
$
|
(5,316
|
)
|
$
|
(1,541
|
)
|
$
|
185
|
Issuance Date
|
December 31, 2014
|
Initial Measurement
|
Increase (Decrease)
in Fair Value
|
Reclassed from Equity
|
September 30, 2015
|
|||||||||||||||
10/31/2013
|
$
|
233
|
$
|
-
|
$
|
309
|
$
|
-
|
$
|
542
|
||||||||||
2/5/2014
|
266
|
-
|
767
|
-
|
1,033
|
|||||||||||||||
7/24/2014 Series A
|
-
|
-
|
3,452
|
3,452
|
||||||||||||||||
7/24/2014 Series B
|
-
|
-
|
1,947
|
1,947
|
||||||||||||||||
6/22/2015
|
-
|
2,958
|
(397
|
)
|
-
|
2,561
|
||||||||||||||
Total
|
$
|
499
|
$
|
2,958
|
$
|
679
|
$
|
5,399
|
$
|
9,535
|
Issuance Date
|
December 31, 2015
|
Reductions
|
September 30, 2016
|
|||||||||
10/31/2013
|
685,715
|
-
|
685,715
|
|||||||||
2/5/2014
|
1,329,731
|
-
|
1,329,731
|
|||||||||
7/24/2014 Series A
|
4,288,500
|
(4,288,500
|
)
|
-
|
||||||||
7/24/2014 Series B
|
4,795,321
|
(4,795,321
|
)
|
-
|
||||||||
6/22/2015
|
3,000,000
|
(3,000,000
|
)
|
-
|
||||||||
Total
|
14,099,267
|
(12,083,821
|
)
|
2,015,446
|
Balance at December 31, 2015
|
16,729,362
|
|||
Additions
|
99,057
|
|||
Expirations
|
(4,795,321
|
)
|
||
Balance at September 30, 2016
|
12,033,098
|
Issue Date
|
Expiration Date
|
Total Warrants
|
Exercise Price
|
||||||
4/26/2013
|
4/26/2018
|
69,321
|
$
|
11.18
|
|||||
10/31/2013
|
4/30/2019
|
685,715
|
$
|
0.75
|
|||||
2/5/2014
|
2/5/2019
|
1,329,731
|
$
|
0.75
|
|||||
7/24/2014
|
7/24/2019
|
6,198,832
|
$
|
0.75 - $ 2.45
|
|||||
6/22/2015
|
6/22/2020
|
3,000,000
|
$
|
0.75
|
|||||
12/30/2015
|
12/30/2020
|
650,442
|
$
|
1.13
|
|||||
1/29/2016
|
1/29/2021
|
99,057
|
$
|
1.06
|
|||||
12,033,098
|
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
Dermatology
Imaging
|
TOTAL
|
|||||||||||||
Revenues
|
$
|
6,205
|
$
|
1,550
|
$
|
12
|
$
|
7,767
|
||||||||
Costs of revenues
|
2,162
|
877
|
31
|
3,070
|
||||||||||||
Gross profit
|
4,043
|
673
|
( 19
|
)
|
4,697
|
|||||||||||
Gross profit %
|
65.2
|
%
|
43.4
|
%
|
(158.3
|
%)
|
60.5
|
%
|
||||||||
Allocated operating expenses:
|
||||||||||||||||
Engineering and product development
|
343
|
31
|
8
|
382
|
||||||||||||
Selling and marketing expenses
|
2,767
|
57
|
16
|
2,840
|
||||||||||||
Unallocated operating expenses
|
-
|
-
|
-
|
1,880
|
||||||||||||
3,110
|
88
|
24
|
5,102
|
|||||||||||||
Income (loss) from operations
|
933
|
585
|
(43
|
)
|
(405
|
)
|
||||||||||
Interest expense, net
|
-
|
-
|
-
|
(1,175
|
)
|
|||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
132
|
||||||||||||
Other income (expense), net
|
-
|
-
|
-
|
3
|
||||||||||||
Income (loss) before income taxes
|
$
|
933
|
$
|
585
|
$
|
(43
|
)
|
$
|
(1,445
|
)
|
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
Dermatology
Imaging
|
TOTAL
|
|||||||||||||
Revenues
|
$
|
7,033
|
$
|
1,189
|
$
|
101
|
$
|
8,323
|
||||||||
Costs of revenues
|
2,326
|
607
|
109
|
3,042
|
||||||||||||
Gross profit
|
4,707
|
582
|
(8
|
)
|
5,281
|
|||||||||||
Gross profit %
|
66.9
|
%
|
48.9
|
%
|
(7.9
|
%)
|
63.5
|
%
|
||||||||
Allocated operating expenses:
|
||||||||||||||||
Engineering and product development
|
348
|
31
|
181
|
560
|
||||||||||||
Selling and marketing expenses
|
3,553
|
97
|
262
|
3,912
|
||||||||||||
Unallocated operating expenses
|
-
|
-
|
-
|
3,132
|
||||||||||||
3,901
|
128
|
443
|
7,604
|
|||||||||||||
Income (loss) from operations
|
806
|
454
|
(451
|
)
|
(2,323
|
)
|
||||||||||
Interest expense, net
|
-
|
-
|
-
|
(5,577
|
)
|
|||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
(1,329
|
)
|
|||||||||||
Other income (expense), net
|
-
|
-
|
-
|
(5
|
)
|
|||||||||||
Net income (loss)
|
$
|
806
|
$
|
454
|
$
|
(451
|
)
|
$
|
(9,234
|
)
|
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
Dermatology
Imaging
|
TOTAL
|
|||||||||||||
Revenues
|
$
|
17,826
|
$
|
5,174
|
$
|
126
|
$
|
23,126
|
||||||||
Costs of revenues
|
6,723
|
2,641
|
267
|
9,631
|
||||||||||||
Gross profit
|
11,103
|
2,533
|
( 141
|
)
|
13,495
|
|||||||||||
Gross profit %
|
62.3
|
%
|
49.0
|
%
|
(111.9
|
%)
|
58.4
|
%
|
||||||||
Allocated operating expenses:
|
||||||||||||||||
Engineering and product development
|
977
|
147
|
417
|
1,541
|
||||||||||||
Selling and marketing expenses
|
9,626
|
261
|
186
|
10,073
|
||||||||||||
Unallocated operating expenses
|
-
|
-
|
-
|
5,882
|
||||||||||||
10,603
|
408
|
603
|
17,496
|
|||||||||||||
Income (loss) from operations
|
500
|
2,125
|
(744
|
)
|
(4,001
|
)
|
||||||||||
Interest expense, net
|
-
|
-
|
-
|
(3,571
|
)
|
|||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
5,316
|
||||||||||||
Other income (expense), net
|
-
|
-
|
-
|
(1
|
)
|
|||||||||||
Income (loss) before income taxes
|
$
|
500
|
$
|
2,125
|
$
|
(744
|
)
|
$
|
(2,257
|
)
|
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
Dermatology
Imaging
|
TOTAL
|
|||||||||||||
Revenues
|
$
|
7,138
|
$
|
1,638
|
$
|
239
|
$
|
9,015
|
||||||||
Costs of revenues
|
2,386
|
891
|
6,949
|
10,226
|
||||||||||||
Gross profit
|
4,752
|
747
|
(6,710
|
)
|
(1,211
|
)
|
||||||||||
Gross profit %
|
66.6
|
%
|
45.6
|
%
|
(2807.5
|
%)
|
(13.4
|
%)
|
||||||||
Allocated operating expenses:
|
||||||||||||||||
Engineering and product development
|
355
|
62
|
872
|
1,289
|
||||||||||||
Selling and marketing expenses
|
3,727
|
127
|
1,787
|
5,641
|
||||||||||||
Unallocated operating expenses
|
-
|
-
|
-
|
6,819
|
||||||||||||
4,082
|
189
|
2,659
|
13,749
|
|||||||||||||
Income (loss) from operations
|
670
|
558
|
(9,369
|
)
|
(14,960
|
)
|
||||||||||
Interest expense, net
|
-
|
-
|
(8,738
|
)
|
||||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
(679
|
)
|
|||||||||||
Other income (expense), net
|
-
|
-
|
-
|
23
|
||||||||||||
Net income (loss)
|
$
|
670
|
$
|
558
|
$
|
(9,369
|
)
|
$
|
(24,354
|
)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Domestic
|
$
|
6,287
|
$
|
7,114
|
$
|
18,444
|
$
|
7,236
|
||||||||
Foreign
|
1,480
|
1,209
|
4,682
|
1,779
|
||||||||||||
$
|
7,767
|
$
|
8,323
|
$
|
23,126
|
$
|
9,015
|
•
|
XTRAC® Excimer Laser.
XTRAC received FDA clearance in 2000 and has since become a widely recognized treatment among dermatologists for psoriasis and other skin diseases. The XTRAC System delivers ultra-narrowband ultraviolet B ("UVB"
)
light to affected areas of skin. Following a series of treatments typically performed twice weekly, psoriasis remission can be achieved and vitiligo patches can be re-pigmented. XTRAC is endorsed by the National Psoriasis Foundation, and its use for psoriasis is covered by nearly all major insurance companies, including Medicare. We estimate that more than half of all major insurance companies now offer reimbursement for vitiligo as well, a figure that is increasing.
|
|
•
|
VTRAC® Lamp.
VTRAC received FDA clearance in 2005 and
provides targeted therapeutic efficacy demonstrated by excimer technology with the simplicity of design and reliability of a lamp system.
|
|
•
|
MelaFind®
.
MelaFind received a Pre-Market Approval, or PMA, from the FDA, in November 2011, having already received in September 2011 Conformité Européenne ("CE") Mark approval. MelaFind is a non-invasive, point–of-care, (i.e. in the doctor's office) instrument to aid dermatologists in their decision to biopsy suspicious pigmented lesions, (e.g. melanoma). MelaFind aids in the evaluation of clinically atypical pigmented skin lesions, when a dermatologist chooses to obtain additional information before making a final decision to biopsy in order to rule out melanoma. MelaFind acquires and displays multi-spectral (from blue to near infrared) images and dermoscopic Red Green Blue ("RGB") digital data from pigmented skin lesions.
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Dermatology Recurring Procedures
|
$
|
6,205
|
$
|
7,033
|
$
|
17,826
|
$
|
7,138
|
||||||||
Dermatology Procedures Equipment
|
1,550
|
1,189
|
5,174
|
1,638
|
||||||||||||
Dermatology Imaging
|
12
|
101
|
126
|
239
|
||||||||||||
Total Revenues
|
$
|
7,767
|
$
|
8,323
|
$
|
23,126
|
$
|
9,015
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Dermatology Recurring Procedures
|
$
|
2,162
|
$
|
2,326
|
$
|
6,723
|
$
|
2,386
|
||||||||
Dermatology Procedures Equipment
|
877
|
607
|
2,641
|
891
|
||||||||||||
Dermatology Imaging
|
31
|
109
|
267
|
6,949
|
||||||||||||
Total Cost of Revenues
|
$
|
3,070
|
$
|
3,042
|
$
|
9,631
|
$
|
10,226
|
Company Profit Analysis
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenues
|
$
|
7,767
|
$
|
8,323
|
$
|
23,126
|
$
|
9,015
|
||||||||
Percent (decrease) increase
|
(6.7
|
%)
|
156.5
|
%
|
||||||||||||
Cost of revenues
|
3,070
|
3,042
|
9,631
|
10,226
|
||||||||||||
Percent increase (decrease)
|
0.9
|
%
|
(5.8
|
%)
|
||||||||||||
Gross profit
|
$
|
4,697
|
$
|
5,281
|
$
|
13,495
|
$
|
(1,211
|
)
|
|||||||
Gross margin percentage
|
60.5
|
%
|
63.5
|
%
|
58.4
|
%
|
(13.4
|
%)
|
Dermatology Recurring Procedures
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenues
|
$
|
6,205
|
$
|
7,033
|
$
|
17,826
|
$
|
7,138
|
||||||||
Percent (decrease) increase
|
(11.8
|
%)
|
149.7
|
%
|
||||||||||||
Cost of revenues
|
2,162
|
2,326
|
6,723
|
2,386
|
||||||||||||
Percent (decrease) increase
|
(7.1
|
%)
|
181.8
|
%
|
||||||||||||
Gross profit
|
$
|
4,043
|
$
|
4,707
|
$
|
11,103
|
$
|
4,752
|
||||||||
Gross margin percentage
|
65.2
|
%
|
66.9
|
%
|
62.3
|
%
|
66.6
|
%
|
Dermatology Procedures Equipment
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenues
|
$
|
1,550
|
$
|
1,189
|
$
|
5,174
|
$
|
1,638
|
||||||||
Percent increase
|
30.4
|
%
|
215.9
|
%
|
||||||||||||
Cost of revenues
|
877
|
607
|
2,641
|
891
|
||||||||||||
Percent increase
|
44.5
|
%
|
196.4
|
%
|
||||||||||||
Gross profit
|
$
|
673
|
$
|
582
|
$
|
2,533
|
$
|
747
|
||||||||
Gross margin percentage
|
43.4
|
%
|
48.9
|
%
|
49.0
|
%
|
45.6
|
%
|
Dermatology Imaging
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenues
|
$
|
12
|
$
|
101
|
$
|
126
|
$
|
239
|
||||||||
Percent decrease
|
(88.1
|
%)
|
(47.3
|
%)
|
||||||||||||
Cost of revenues
|
31
|
109
|
267
|
6,949
|
||||||||||||
Percent decrease
|
(71.6
|
%)
|
(96.2
|
%)
|
||||||||||||
Gross profit
|
$
|
(19
|
)
|
$
|
(8
|
)
|
$
|
(141
|
)
|
$
|
(6,710
|
)
|
||||
Gross margin percentage
|
(158.3
|
%)
|
(7.9
|
%)
|
(111.9
|
%)
|
(2,807.5
|
%)
|
•
|
In the three and nine months ended September 30, 2015, we recorded $826 in stock-based compensation expense related to the special option issuance to certain board directors.
|
|
•
|
In the nine months ended September 30, 2015, we recorded $456 in costs related to the asset purchase.
|
For the Three Months Ended September 30,
|
||||||||||||
2016
|
2015
|
Change
|
||||||||||
Net loss
|
$
|
(1,509
|
)
|
$
|
(9,234
|
)
|
$
|
7,725
|
||||
Adjustments:
|
||||||||||||
Income taxes
|
64
|
-
|
64
|
|||||||||
Depreciation and amortization
*
|
1,521
|
1,710
|
(189
|
)
|
||||||||
Interest expense, net
|
537
|
506
|
31
|
|||||||||
Non-cash interest expense
|
638
|
5,071
|
(4,433
|
)
|
||||||||
EBITDA
|
1,251
|
(1,947
|
)
|
3,198
|
||||||||
Stock-based compensation expense
|
116
|
1,007
|
(891
|
)
|
||||||||
Change in fair value of warrants
|
(132
|
)
|
1,329
|
(1,461
|
)
|
|||||||
Non-GAAP adjusted EBITDA
|
$
|
1,235
|
$
|
389
|
$
|
846
|
||||||
For the Nine Months Ended September 30,
|
||||||||||||
2016
|
2015
|
Change
|
||||||||||
Net loss
|
$
|
(2,448
|
)
|
$
|
(24,354
|
)
|
$
|
21,906
|
||||
Adjustments:
|
||||||||||||
Income taxes
|
191
|
-
|
191
|
|||||||||
Depreciation and amortization
*
|
4,844
|
2,348
|
2,496
|
|||||||||
Interest expense, net
|
1,604
|
794
|
810
|
|||||||||
Non-cash interest expense
|
1,967
|
7,944
|
(5,977
|
)
|
||||||||
EBITDA
|
6,158
|
(13,268
|
)
|
19,426
|
||||||||
Stock-based compensation expense
|
401
|
1,483
|
(1,082
|
)
|
||||||||
Change in fair value of warrants
|
(5,316
|
)
|
679
|
(5,995
|
)
|
|||||||
Acquisition costs
|
-
|
456
|
(456
|
)
|
||||||||
Impairment of property and equipment
|
-
|
920
|
(920
|
)
|
||||||||
Inventory valuation reserves
|
-
|
4,818
|
(4,818
|
)
|
||||||||
Non-GAAP adjusted EBITDA
|
$
|
1,243
|
$
|
(4,912
|
)
|
$
|
6,155
|
|||||
3.1
|
Fifth Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 contained in our Registration Statement on Form S-3 (File No. 333-167113), as filed on May 26, 2010).
|
|
3.2
|
Fourth Amended and Restated Bylaws of the Company (Incorporated by reference to Exhibit 3.2 contained in our Form 8-K current report as filed on July 21, 2015).
|
|
3.3
|
Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 contained in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 filed on August 7, 2014).
|
|
3.4
|
Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, filed on July 10, 2014).
|
|
3.5
|
Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, filed on February 3, 2014).
|
|
3.6
|
Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, filed on July 23, 2014).
|
|
3.7
|
Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, as filed on September 30, 2015).
|
|
10.40
|
Extension Agreement dated as of July 20, 2016 between Strata Skin Sciences, Inc. and Jeffrey F. O'Donnell, Sr.
(Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, as filed on July 22, 2016).
|
10.41
|
Extension Agreement dated as of July 20, 2016 between Strata Skin Sciences, Inc. and Samuel E. Navarro
(Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, as filed on July 22, 2016).
|
|
10.42
|
First Amendment to Credit and Security Agreement dated as of August 8, 2016 among MidCap Financial Trust, as administrative agent, the Lenders as listed on the signature pages thereto and the Company.
|
|
10.43
|
Amended and Restated Fee Letter Agreement dated as of August 8, 2016, by and between Midcap Financial Trust as Agent and the Company.
|
|
10.44
|
STRATA Skin Sciences 2016 Omnibus Option Plan (Filed herewith)
|
|
10.45
|
Employment Agreement between the Company and Frank J. McCaney dated as of October 31, 2016. (Filed herewith)
|
|
10.46
|
Stock Option Agreement between the Company and Frank J. McCaney dated as of October 31, 2016.(Filed herewith)
|
|
10.47
|
Severance and Release Agreement between the Company and Michael R. Stewart dated as of October 31, 2016. (Filed herewith)
|
|
10.48
|
Consulting Agreement between the Company and Michael R. Stewart dated as of October 31, 2016. (Filed herewith)
|
|
31.1
|
Rule 13a-14(a) Certificate of Chief Executive Officer
|
|
31.2
|
Rule 13a-14(a) Certificate of Chief Financial Officer
|
|
32.1*
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Schema
|
|
101.CAL
|
XBRL Taxonomy Calculation Linkbase
|
|
101.DEF
|
XBRL Taxonomy Definition Linkbase
|
|
101.LAB
|
XBRL Taxonomy Label Linkbase
|
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase
|
*
|
The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed "filed" by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
|
|
STRATA SKIN SCIENCES, INC
.
|
|
|
|
|
|
|
Date November 14, 2016
|
By:
|
/s/ Frank J. McCaney
|
|
|
|
Name Frank J. McCaney
|
|
|
|
Title Chief Executive Officer
|
|
Date November 14, 2016
|
By:
|
/s/ Christina L. Allgeier
|
|
|
|
Name Christina L. Allgeier
|
|
|
|
Title Chief Financial Officer
|
|
•
|
Net earnings or net income (before or after taxes)
|
• | Earnings per share or earnings per share growth, total units, or unit growth |
• | Net sales, sales growth, total revenue, or revenue growth |
• | Net operating profit |
• | Return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales, or revenue) |
• | Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment) |
• | Earnings before or after taxes, interest, depreciation, and/or amortization |
• | Gross or operating margins |
• | Productivity ratios |
• | Share price or relative share price (including, but not limited to, growth measures and total stockholder return) |
• | Expense targets |
• | Margins |
• | Operating efficiency |
• | Market share or change in market share |
• | Customer retention or satisfaction |
• | Working capital targets |
• | Completion of strategic financing goals, acquisitions or alliances and clinical progress |
• | Company project milestones |
• | Economic value added or EVA® (net operating profit after tax minus the sum of capital multiplied by the cost of capital) |
|
EMPLOYEE
:
/s/ Frank J. McCaney
Frank J. McCaney
|
COMPANY
:
Strata Skin Sciences, Inc.
By:
/s/ Jeffrey F. O'Donnell
Jeffrey F. O'Donnell,
Chairman of the Board
|
1.
|
Term.
|
(a)
|
The term of this Agreement shall begin on the Effective Date and terminate upon the earlier of (i) six (6) months following the Effective Date (i.e. April 1, 2017), (ii) immediately upon termination by the Company for Cause, (iii) immediately upon the death of Consultant, or (iv) immediately upon Consultant's disability (the "Term"). Consultant acknowledges that there is no guarantee of continued compensation or work following the conclusion of the Term.
|
(b)
|
For purposes of this Agreement, "Cause" is defined as: (i) Consultant's material violation of the material terms of this Agreement or the Release; (ii) a breach by Consultant of a fiduciary responsibility owing to the Company; (iii) Consultant's failure to perform the Services after written notice of such failure and failure to cure within five (5) days; or (iv) a breach by Consultant of Paragraph 12 of this Agreement, the Employee Confidentiality and Invention Agreement dated as of December 15, 2014 between Consultant and the Company, or Section 7 (as amended) of the Amended and Restated Employment Agreement between the Parties dated as of December 15, 2015.
|
(c)
|
For purposes of this Agreement, Consultant shall be deemed to be under a "disability (i) if Consultant and the Company agree that Consultant is disabled, or (ii) in the event that Consultant shall be unable to or shall fail to render and perform services under this Agreement for a total of fifteen (15) days during the Term.
|
2.
|
Services.
Consultant shall provide such services to the Company as may be required by the Company from time to time (the "Services"), including, but not limited to: (a) providing the Company, its Board of Directors and its Chief Executive Officer with assistance and information necessary to the transition of Chief Executive Officer and other management job responsibilities; (b) providing assistance to and cooperation with the Company in locating information or data, providing other known information, and
|
3.
|
Relationship of the Parties.
It is understood and agreed that all Services that Consultant performs for the Company shall be as an independent contractor and not as an employee. Nothing herein shall be deemed to create an employer-employee relationship between the Company and Consultant.
|
4.
|
Payment.
During the Term, the Company shall pay Consultant a monthly fee in the amount of Twelve Thousand Five Hundred Dollars ($12,500.00). The Company shall pay the monthly fee owing to Consultant under this Agreement in accordance with the Company's standard accounts payable practices and procedures.
|
5.
|
Benefits.
Consultant shall not be eligible for any Company-paid benefits pursuant to this Agreement, including, but not limited to, medical, disability or other insurance, vacation, holiday or sick pay, or any other compensation or consideration commonly known as fringe benefits.
|
6.
|
Expenses.
The Company shall reimburse Consultant for the reasonable and necessary out-of-pocket business expenses incurred by Consultant for or on behalf of the Company in furtherance of the performance of the Services in accordance with the Company's then-existing policies relating to expense reimbursement, subject in all cases to the Company's requirements with respect to reporting and documentation of such expenses.
|
7.
|
Location.
Consultant will not be required to perform Services for the Company as set forth in this Agreement at the Company's workplace. Consultant may perform Services pursuant to this Agreement anywhere else that Consultant desires, including Consultant's own office.
|
8.
|
Timing and Days of Work.
The Company will not establish hours or days of work for Consultant; provided, however, that Consultant shall perform Services for the equivalent of a minimum of two (2) days per week during the Term.
|
9.
|
Authority.
Consultant has no authority to bind, obligate or contract on behalf of the Company.
|
10.
|
Status of Work.
Consultant is neither required to submit regular reports to the Company nor to attend the Company's general employee meetings. However, Consultant shall keep the Company informed of the status of Consultant's performance of Services and provide the deliverables associated with the Services in a timely manner.
|
11.
|
Taxes.
Consultant acknowledges that Consultant will not be treated as an employee of the Company for purposes of employment taxes, federal and state income tax withholding, social security taxes, city and county taxes, employee benefit provisions, workers' compensation and state and federal unemployment compensation. Consultant is solely responsible for the payment of federal self-employment and all other federal, state and local taxes and agrees to defend, indemnify and hold harmless the Company for
|
12.
|
Non-Exclusive Service.
During the Term, Consultant is generally free to provide services to any other person or entity, provided that: (a) such work does not interfere with Consultant's performance of Services for the Company, (b) Consultant abides by the provisions of this Agreement relating to Confidential Information, and (c) Consultant abides by the provisions of Section 7 (as amended) of the Amended and Restated Employment Agreement between the Parties dated as of December 15, 2015.
|
13.
|
Confidential Information.
|
(a)
|
"Confidential Information" shall mean any information not generally known outside the Company. Confidential Information is sometimes referred to as proprietary information or trade secrets. Examples of Confidential Information include without limitation: trade secrets; technical and non-technical business knowledge; technology; the business methods, systems or practices (including pricing policies and process for products and services) used by the Company; sales and marketing, competitive and logistical information; financial records, the names of customers, prospective customers, suppliers, vendors, creditors or other parties with which the Company has or proposes to have business dealings, the nature of the relationship with such persons or entities, or any other information relating to such persons or entities or the Company's dealings with such persons or entities; computer software used by the Company or provided to its customers; and other information relating to the business of the Company that is not known to the general public.
|
(b)
|
During the Term and at all times thereafter, unless authorized in writing by the Company, Consultant will not:
|
(i)
|
use any Confidential information for any purpose other than to perform the Services;
|
(ii)
|
use for Consultant's benefit or advantage the Confidential Information or for the benefit of any third party or in any way that would be detrimental to the Company; or
|
(iii)
|
disclose or cause to be disclosed the Confidential Information or authorize or permit such disclosure of the Confidential Information to any third party.
|
(c)
|
Consultant will surrender to the Company at any time upon request, and at the conclusion of the Term, all written or otherwise tangible documentation representing or embodying Confidential Information, in whatever form, whether or not copyrighted or patented, and any copies or imitations of the Confidential Information, whether or not made by Consultant, including without limitation all notes, computer software and data files, documents, books, records, data
|
(d)
|
Consultant shall promptly and fully disclose to the Company, with all necessary detail, all developments, know-how, discoveries, inventions, improvements, concepts, ideas, formulae, processes and methods (whether copyrightable, patentable or otherwise) made, received, conceived, acquired or written by Consultant (whether or not at the request or upon the suggestion of the Company, solely or jointly with others), during the Term that: (i) result from, arise out of, or relate to any work, project, assignment or task performed by Consultant on behalf of the Company, whether undertaken voluntarily or assigned to Consultant by the Company; (i) were developed using the Company's resources; (iii) result from Consultant's use or knowledge of the Company's Confidential Information; or (iv) relate to the Company's business or any of the products or services being developed, manufactured or sold by the Company or that may be used in relation therewith (collectively referred to as "
Inventions
"). Consultant hereby acknowledges that all original works of authorship that are made by Consultant (solely or jointly with others) within the above terms and that are protectable by copyright are "works made for hire," as that term is defined in the United States Copyright Act, including but not limited to blog posts and other marketing materials. Consultant understands and hereby agrees that the decision whether or not to commercialize or market any Invention developed by Consultant solely or jointly with others is within the Company's sole discretion and for the Company's sole benefit and that no royalty shall be due to Consultant as a result of the Company's efforts to commercialize or market any such Invention.
|
(e)
|
Consultant hereby assigns and transfers to the Company all of Consultant's right, title and interest in and to the Inventions, and Consultant further agrees to deliver to the Company any and all drawings, notes, specifications and data relating to the Inventions, and to sign, acknowledge and deliver all such further papers, including applications for and assignments of copyrights and patents, and all renewals thereof, as may be necessary to obtain copyrights and patents for any Inventions in any and all countries and to vest title thereto in the Company and its successors and assigns and to otherwise protect the Company's interests therein. Consultant shall not charge the Company for time spent in complying with these obligations. Consultant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Consultant's agent and attorney in fact, to act for and in Consultant's behalf and stead to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering Inventions or original works of authorship assigned to the Company as above and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by Consultant.
|
(f)
|
The Consultant acknowledges that compliance with this Agreement is necessary to protect the goodwill and other proprietary interests of the Company and that the Consultant has been and will be entrusted with highly confidential information
|
(g)
|
Consultant acknowledges that the Defend Trade Secrets Act of 2016 (the "Act") provides that an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that: (i) is made (A) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Consultant further acknowledges that the Act provides that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual: (x) files any document containing the trade secret under seal; and (y) does not disclose the trade secret, except pursuant to court order.
|
14.
|
Workers' Compensation.
Consultant shall not be eligible for workers' compensation insurance from the Company and shall be solely responsible for any injuries or damages that Consultant may sustain in the course of performing Services pursuant to this Agreement.
|
15.
|
Indemnification.
The Company agrees to indemnify and hold harmless Consultant with respect to any claim made, or action, suit or proceeding instituted against Consultant, that is based upon or arises out of the Services performed by the Consultant in accordance with the terms and provisions of this Agreement to the extent that consultants to the Company may be indemnified under the By-laws of the Company, except if such claim, action or proceeding arises from the fault or negligence of Consultant or from the Consultant's failure to comply with any term or provision of this Agreement. Consultant shall defend, indemnify and hold harmless the Company from any and all liability, damages, suits and losses, including attorneys' fees, arising out of Consultant's performance under this Agreement, including but not limited to (a) any breach by Consultant of any term, condition or obligation under this Agreement, or (b) Consultant's gross negligence or willful misconduct. The Company shall have the right to offset against any fees due to Consultant for any claims, losses, liabilities, expenses, fees or other disbursement incurred by the Company pursuant to this paragraph. Each Party shall provide the other Party with prompt notice of any claim for which indemnification will be sought and shall cooperate with the other Party in the investigation and defense of such claim.
|
16.
|
Successor and Assigns.
This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs and successors. The Company may assign this Agreement to any person or entity, including, but not limited to, any successor, parent, subsidiary or affiliated entity of the Company. The Company also may assign this Agreement in connection with any sale or merger (whether a sale or merger of stock or assets or otherwise) of the Company or the business of the Company. Consultant expressly consents to the assignment of the commitments, restrictions and undertakings set forth in this Agreement to any new owner of the Company's business or purchaser of the Company. Consultant may not assign, pledge, or encumber its interest in this Agreement, or any part thereof, without the written consent of the Company.
|
17.
|
Waiver; Severability.
A waiver by either Party of any provision or condition of this Agreement shall not be construed or deemed to be a waiver of any other provision or condition of this Agreement, or a waiver of a subsequent breach of the same provision or condition, unless such waiver is so expressed in writing and signed by the Party to be bound. If any provision of this Agreement is determined to be invalid under applicable law and regulations by a court of competent jurisdiction, such provisions shall be inapplicable and deemed omitted to the extent of such invalidity without impairing the validity of the remaining provisions of this Agreement.
|
18.
|
Entire Agreement.
This Agreement constitutes the entire agreement between the Parties, supersedes all prior and contemporaneous agreements or understandings, oral or written, between the Parties, and may be modified only by a writing signed by both Parties; provided, however, that this Agreement does not supersede or otherwise modify (a) the Amended and Restated Employment Agreement between the Parties dated as of December 15, 2015, or (b) the Release.
|
19.
|
Survival of Representations, Warranties and Covenants.
The provisions of this Agreement that by their terms are intended to endure beyond the term of this Agreement shall survive the termination of this Agreement.
|
20.
|
Governing Law and Venue.
This Agreement shall be construed and enforced under the substantive laws of the Commonwealth of Pennsylvania, without reference to its conflict of laws principles.
|
MICHAEL R. STEWART
|
STRATA SKIN SCIENCES, INC.
|
|||
/s/ Michael R. Stewart
|
/s/ Jeffrey F. O'Donnell, Sr.
|
|||
Michael R. Stewart |
By:
Jeffrey F. O'Donnell, Sr.
|
|||
Title:
Chairman of the Board
|
(1) | I have reviewed this quarterly report on Form 10-Q of STRATA Skin Sciences, Inc.; |
(2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
(3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
(4) | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
(5) | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: November 14, 2016
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By:
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/s/ Frank J. McCaney
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Name: Frank J. McCaney
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Title: Chief Executive Officer
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(1) | I have reviewed this quarterly report on Form 10-Q of STRATA Skin Sciences, Inc.; |
(2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
(3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
(4) | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
(5) | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: November 14, 2016
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By:
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/s/ Christina Allgeier
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Christina Allgeier
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Chief Financial Officer
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1.
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The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, to which this Certification is attached as Exhibit 32.1 (the "Periodic Report"), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and
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2.
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The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/Frank J. McCaney
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Name:
Frank J. McCaney
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Title: Chief Executive Officer
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/s/ Christina Allgeier
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Name: Christina Allgeier
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Title: Chief Financial Officer
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(1)
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This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of STRATA Skin Sciences, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing. A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to STRATA Skin Sciences, Inc. and will be retained by STRATA Skin Sciences, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
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