|
Delaware
(State or other jurisdiction
of incorporation or organization)
|
|
13-3986004
(I.R.S. Employer
Identification No.)
|
|
Large accelerated filer
☐
|
Accelerated filer
☐
|
|||
Non-accelerated filer
☐
|
Smaller reporting company
ý
|
|||
Emerging growth company
☐
|
Part I. Financial Information:
|
PAGE
|
||
a.
|
3
|
||
b.
|
4
|
||
c.
|
5
|
||
d.
|
6
|
||
e.
|
7
|
||
f.
|
9
|
||
29
|
|||
38
|
|||
ITEM 4.
Controls and Procedures
|
38
|
||
ITEM 1.
Legal Proceedings
|
39
|
||
ITEM 1A.
Risk Factors
|
39
|
||
39
|
|||
ITEM 3.
Defaults Upon Senior Securities
|
39
|
||
ITEM 4.
Mine Safety Disclosures
|
39
|
||
ITEM 5.
Other Information
|
39
|
||
ITEM 6.
Exhibits
|
40
|
||
41
|
|||
E-31.1
|
September 30, 2017
|
December 31, 2016
|
|||||||
ASSETS
|
(unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
3,127
|
$
|
3,928
|
||||
Accounts receivable, net of allowance for doubtful accounts of $177 and $135, respectively
|
3,184
|
3,390
|
||||||
Inventories
|
3,533
|
2,817
|
||||||
Prepaid expenses and other current assets
|
209
|
617
|
||||||
Total current assets
|
10,053
|
10,752
|
||||||
Property and equipment, net
|
8,658
|
10,180
|
||||||
Intangible assets, net
|
12,302
|
13,412
|
||||||
Goodwill
|
8,803
|
8,803
|
||||||
Other assets
|
48
|
46
|
||||||
Total assets
|
$
|
39,864
|
$
|
43,193
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Note payable
|
$
|
34
|
$
|
339
|
||||
Current portion of long-term debt
|
1,936
|
1,714
|
||||||
Accounts payable
|
1,907
|
1,853
|
||||||
Other accrued liabilities
|
1,899
|
1,992
|
||||||
Deferred revenues
|
350
|
235
|
||||||
Total current liabilities
|
6,126
|
6,133
|
||||||
Long-term liabilities:
|
||||||||
Long-term debt, net
|
8,842
|
9,752
|
||||||
Senior secured convertible debentures, net
|
-
|
12,028
|
||||||
Warrant liability
|
28
|
105
|
||||||
Deferred tax liability
|
539
|
359
|
||||||
Other liabilities
|
412
|
97
|
||||||
Total liabilities
|
15,947
|
28,474
|
||||||
Commitment and contingencies
|
||||||||
Stockholders' equity:
|
||||||||
Series B Convertible Preferred Stock, $.10 par value, 10,000,000 shares authorized; 2,928 and 6,000 shares issued and outstanding, as of September 30, 2017 and December 31, 2016, respectively
|
-
|
1
|
||||||
Series C Convertible Preferred Stock, $.10 par value, 10,000,000 shares authorized; 40,482 and 0 shares issued and outstanding, as of September 30, 2017 and December 31, 2016,respectively
|
4
|
-
|
||||||
Common Stock, $.001 par value, 150,000,000 shares authorized; 2,477,743 and 2,166,898 shares issued and outstanding, as of September 30, 2017 and December 31, 2016, respectively
|
3
|
2
|
||||||
Additional paid-in capital
|
251,594
|
225,289
|
||||||
Accumulated deficit
|
(227,686
|
)
|
(210,575
|
)
|
||||
Accumulated other comprehensive income
|
2
|
2
|
||||||
Total stockholders' equity
|
23,917
|
14,719
|
||||||
Total liabilities and stockholders' equity
|
$
|
39,864
|
$
|
43,193
|
For the Three Months Ended
September 30,
|
||||||||
2017
|
2016
|
|||||||
Revenues
|
$
|
7,480
|
$
|
7,767
|
||||
Cost of revenues
|
3,276
|
3,070
|
||||||
Gross profit
|
4,204
|
4,697
|
||||||
|
||||||||
Operating expenses:
|
||||||||
Engineering and product development
|
411
|
382
|
||||||
Selling and marketing
|
2,687
|
2,840
|
||||||
General and administrative
|
1,678
|
1,880
|
||||||
|
4,776
|
5,102
|
||||||
Operating loss before other income (expense), net
|
(572
|
)
|
(405
|
)
|
||||
|
||||||||
Other income (expense), net:
|
||||||||
Interest expense, net
|
(1,343
|
)
|
(1,175
|
)
|
||||
Change in fair value of warrant liability
|
81
|
132
|
||||||
Other income, net
|
-
|
3
|
||||||
Loss on extinguishment of debentures
|
(11,799
|
)
|
-
|
|||||
(13,061
|
)
|
(1,040
|
)
|
|||||
Loss before income taxes
|
(13,633
|
)
|
(1,445
|
)
|
||||
Income tax expense
|
38
|
64
|
||||||
Net loss
|
$
|
(13,671
|
)
|
$
|
(1,509
|
)
|
||
Net loss per common share - basic and diluted
|
$
|
(3.32
|
)
|
$
|
(0.71
|
)
|
||
Shares used in computing net loss per basic and diluted common share
|
2,477,743
|
2,135,952
|
||||||
Net loss per Preferred C share - basic and diluted
|
$
|
(1,235.43
|
)
|
$
|
-
|
|||
Shares used in computing net loss per basic and diluted Preferred C share
|
4,400
|
-
|
||||||
Other comprehensive loss:
|
||||||||
Foreign currency translation adjustments
|
-
|
$
|
(1
|
)
|
||||
Comprehensive loss
|
$
|
(13,671
|
)
|
$
|
(1,510
|
)
|
For the Nine Months Ended
September 30,
|
||||||||
2017
|
2016
|
|||||||
Revenues
|
$
|
23,454
|
$
|
23,126
|
||||
Cost of revenues
|
9,182
|
9,631
|
||||||
Gross profit
|
14,272
|
13,495
|
||||||
|
||||||||
Operating expenses:
|
||||||||
Engineering and product development
|
1,309
|
1,541
|
||||||
Selling and marketing
|
8,914
|
10,073
|
||||||
General and administrative
|
4,999
|
5,882
|
||||||
|
15,222
|
17,496
|
||||||
Operating loss before other income (expense), net
|
(950
|
)
|
(4,001
|
)
|
||||
|
||||||||
Other income (expense), net:
|
||||||||
Interest expense, net
|
(4,264
|
)
|
(3,571
|
)
|
||||
Change in fair value of warrant liability
|
77
|
5,316
|
||||||
Other income, net
|
6
|
(1
|
)
|
|||||
Loss on extinguishment of debentures
|
(11,799
|
)
|
-
|
|||||
(15,980
|
)
|
1,744
|
||||||
Loss before income taxes
|
(16,930
|
)
|
(2,257
|
)
|
||||
Income tax expense
|
181
|
191
|
||||||
Net loss
|
$
|
(17,111
|
)
|
$
|
(2,448
|
)
|
||
Net loss per common share:
|
||||||||
Basic
|
$
|
(5.94
|
)
|
$
|
(1.16
|
)
|
||
Diluted
|
$
|
(5.94
|
)
|
$
|
(3.55
|
)
|
||
Shares used in computing net loss per common share:
|
||||||||
Basic
|
2,328,274
|
2,107,365
|
||||||
Diluted
|
2,328,274
|
2,189,543
|
||||||
Net loss per Preferred C share - basic and diluted
|
$
|
(2,208.96
|
)
|
$
|
-
|
|
||
Shares used in computing net loss per basic and diluted Preferred C share
|
1,483
|
-
|
||||||
Other comprehensive income:
|
||||||||
Foreign currency translation adjustments
|
-
|
$
|
1
|
|||||
Comprehensive loss
|
$
|
(17,111
|
)
|
$
|
(2,447
|
)
|
Convertible Preferred Stock – Series B
|
Convertible Preferred Stock – Series C
|
Common Stock
|
Additional Paid-In
|
Accumulated
|
Accumulated Other Comprehensive
|
|||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Loss
|
Total
|
|||||||||||||||||||||||||||||||
BALANCE, JANUARY 1, 2017
|
6,000
|
$
|
1
|
-
|
$
|
-
|
2,166,898
|
$
|
2
|
$
|
225,289
|
$
|
(210,575
|
)
|
$
|
2
|
$
|
14,719
|
||||||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
136
|
-
|
-
|
136
|
||||||||||||||||||||||||||||||
Conversion of senior secured convertible debentures
|
-
|
-
|
-
|
-
|
70,000
|
-
|
262
|
-
|
-
|
262
|
||||||||||||||||||||||||||||||
Conversion of convertible preferred stock
|
(3,072
|
)
|
(1
|
)
|
-
|
-
|
239,500
|
1
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||
Issuance of common stock for fractional shares in reverse stock split
|
-
|
-
|
-
|
-
|
1,345
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
Issuance of convertible preferred stock in exchange for convertible debentures
|
-
|
-
|
40,482
|
4
|
-
|
-
|
25,906
|
-
|
-
|
25,910
|
||||||||||||||||||||||||||||||
Net loss for the nine months ended September 30, 2017
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(17,111
|
)
|
-
|
(17,111
|
)
|
||||||||||||||||||||||||||||
BALANCE, SEPTEMBER 30, 2017
|
2,928
|
$
|
-
|
40,482
|
$
|
4
|
2,477,743
|
$
|
3
|
$
|
251,594
|
$
|
(227,686
|
)
|
$
|
2
|
$
|
23,917
|
For the Nine Months Ended September 30,
|
||||||||
2017
|
2016
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net loss
|
$
|
(17,111
|
)
|
$
|
(2,448
|
)
|
||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
4,811
|
4,844
|
||||||
Provision for doubtful accounts
|
58
|
91
|
||||||
Loss on disposal of property, plant and equipment
|
-
|
124
|
||||||
Gain on cancelation of distributor rights agreement
|
(40
|
)
|
-
|
|||||
Intangible asset write-off
|
23
|
-
|
||||||
Stock-based compensation
|
136
|
401
|
||||||
Deferred tax provision
|
180
|
180
|
||||||
Amortization of debt discount
|
2,344
|
1,821
|
||||||
Amortization of deferred financing costs
|
171
|
145
|
||||||
Loss on extinguishment of debt
|
11,799
|
-
|
||||||
Change in fair value of warrant liability
|
(77
|
)
|
(5,316
|
)
|
||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
130
|
|
1,041
|
|||||
Inventories
|
(716
|
)
|
899
|
|||||
Prepaid expenses and other assets
|
406
|
202
|
||||||
Accounts payable
|
71
|
(2,559
|
)
|
|||||
Other accrued liabilities
|
(162
|
)
|
(623
|
)
|
||||
Other liabilities
|
108
|
(40
|
)
|
|||||
Deferred revenues
|
115
|
154
|
||||||
Net cash provided by (used in) operating activities
|
2,246
|
(1,084
|
)
|
|||||
Cash Flows From Investing Activities:
|
||||||||
Lasers placed-in-service, net
|
(1,450
|
)
|
(607
|
)
|
||||
Purchases of property and equipment, net
|
(321
|
)
|
-
|
|||||
Payments on distributor rights liability
|
(115
|
)
|
-
|
|||||
Acquisition costs, net of cash received
|
-
|
125
|
||||||
Restricted cash
|
-
|
15
|
||||||
Net cash used in investing activities
|
(1,886
|
)
|
(467
|
)
|
||||
For the Nine Months Ended September 30,
|
||||||||
2017
|
2016
|
|||||||
Cash Flows From Financing Activities:
|
||||||||
Proceeds from long-term debt
|
-
|
1,500
|
||||||
Repayments of long-term debt
|
(857
|
)
|
-
|
|||||
Payments on notes payable
|
(304
|
)
|
(299
|
)
|
||||
Net cash (used in ) provided by financing activities
|
(1,161
|
)
|
1,201
|
|||||
Effect of exchange rate changes on cash
|
-
|
4
|
||||||
Net decrease in cash and cash equivalents
|
(801
|
)
|
(346
|
)
|
||||
Cash and cash equivalents, beginning of period
|
3,928
|
3,303
|
||||||
Cash and cash equivalents, end of period
|
$
|
3,127
|
$
|
2,957
|
||||
Supplemental information:
|
||||||||
Cash paid for interest
|
$
|
1,934
|
$
|
1,517
|
||||
Supplemental information of non-cash investing and financing activities:
|
||||||||
Conversion of senior secured convertible debentures into common stock
|
$
|
262
|
$
|
248
|
||||
Conversion of series A convertible preferred stock into common stock
|
$
|
309
|
||||||
Recognition of warrants issued as debt discount
|
$
|
-
|
$
|
47
|
||||
Reclassification of warrant liabilities to equity
|
$
|
-
|
$
|
1,541
|
||||
Acquisition of distributor rights asset and license liability
|
$
|
286
|
$
|
-
|
||||
Issuance of convertible preferred stock in exchange for convertible debentures
|
$
|
25,910
|
$
|
-
|
|
•
|
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 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, 2017
|
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 8)
|
$
|
28
|
$
|
-
|
$
|
-
|
$
|
28
|
||||||||
Fair Value as of
December 31, 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 8)
|
$
|
105
|
$
|
-
|
$
|
-
|
$
|
105
|
For the Three Months
ended September 30, 2017
|
For the Three Months
ended September 30, 2017
|
|||||||||||||||
Common stock
|
Series C Preferred stock
|
Common stock
|
Series C Preferred stock
|
|||||||||||||
Net loss
|
$
|
(8,235
|
)
|
$
|
(5,436
|
)
|
$
|
(13,835
|
)
|
$
|
(3,276
|
)
|
||||
Weighted average number of shares outstanding during the period
|
2,477,743
|
4,400
|
2,328,274
|
1,483
|
||||||||||||
Basic and Diluted net loss per share
|
$
|
(3.32
|
)
|
$
|
(1,235.43
|
)
|
$
|
(5.94
|
)
|
$
|
(2,208.96
|
)
|
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
|
2,107,365
|
|||
Effect of warrants
|
82,178
|
|||
Diluted number of common and common stock equivalent shares outstanding
|
2,189,543
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||
2017
|
2016
|
2017
|
2016
|
|||||
Common stock equivalents of convertible debentures
|
7,546,299
|
8,541,577
|
8,191,777
|
8,561,343
|
||||
Common stock purchase warrants
|
2,406,625
|
2,656,816
|
2,406,625
|
2,724,584
|
||||
Common stock equivalents of convertible Preferred B stock
|
228,336
|
493,782
|
343,261
|
502,661
|
||||
Common stock options
|
855,389
|
600,914
|
873,554
|
563,155
|
||||
Total
|
11,036,649
|
12,293,089
|
11,815,217
|
12,351,743
|
September 30
,
2017
|
December 31, 2016
|
|||||||
(unaudited)
|
||||||||
Raw materials and work in progress
|
$
|
2,448
|
$
|
2,440
|
||||
Finished goods
|
1,085
|
377
|
||||||
Total inventories
|
$
|
3,533
|
$
|
2,817
|
September 30, 2017
|
December 31, 2016
|
|||||||
(unaudited)
|
||||||||
Lasers placed-in-service
|
$
|
18,018
|
$
|
16,712
|
||||
Equipment, computer hardware and software
|
468
|
160
|
||||||
Furniture and fixtures
|
118
|
111
|
||||||
Leasehold improvements
|
31
|
25
|
||||||
18,635
|
17,008
|
|||||||
Accumulated depreciation and amortization
|
(9,977
|
)
|
(6,828
|
)
|
||||
Property and equipment, net
|
$
|
8,658
|
$
|
10,180
|
September 30, 2017
|
December 31, 2016
|
|||||||
(unaudited)
|
||||||||
Core technology
|
$
|
5,700
|
$
|
5,974
|
||||
Product technology
|
2,000
|
2,000
|
||||||
Customer relationships
|
6,900
|
6,900
|
||||||
Tradenames
|
1,500
|
1,500
|
||||||
Distribution rights
|
286
|
-
|
||||||
16,386
|
16,374
|
|||||||
Accumulated amortization
|
(4,084
|
)
|
(2,962
|
)
|
||||
Patents and licensed technologies, net
|
$
|
12,302
|
$
|
13,412
|
Remaining 2017
|
$
|
476
|
||
2018
|
1,905
|
|||
2019
|
1,905
|
|||
2020
|
1,670
|
|||
2021
|
1,410
|
|||
Thereafter
|
4,936
|
|||
Total
|
$
|
12,302
|
September 3
0
, 2017
|
December 31, 2016
|
|||||||
(unaudited)
|
||||||||
Accrued warranty, current
|
$
|
98
|
$
|
102
|
||||
Accrued compensation, including commissions and vacation
|
861
|
1,177
|
||||||
Accrued sales and other taxes
|
520
|
439
|
||||||
Distributor rights liability, current
|
82
|
-
|
||||||
Accrued professional fees and other accrued liabilities
|
338
|
274
|
||||||
Total other accrued liabilities
|
$
|
1,899
|
$
|
1,992
|
December 31, 2016
|
||||
Senior secured 2.25% convertible debentures, net of unamortized debt discount of $24,314; and deferred financing costs of $524
|
$
|
7,174
|
||
Senior secured 4% convertible debentures, net of unamortized debt discount of $3,469; and deferred financing costs of $392
|
4,854
|
|||
Total convertible debt
|
$
|
12,028
|
September 30, 2017
|
December 31, 2016
|
|||||||
(unaudited)
|
||||||||
Term note, net of debt discount of $177 and $258, respectively; and deferred financing cost of $188 and $276, respectively
|
$
|
10,778
|
$
|
11,466
|
||||
Less: current portion
|
(1,936
|
)
|
(1,714
|
)
|
||||
Total long-term debt
|
$
|
8,842
|
$
|
9,752
|
Remaining in 2017
|
$
|
572
|
||
2018
|
2,387
|
|||
2019
|
4,092
|
|||
2020
|
4,092
|
|||
$
|
11,143
|
|||
September 30, 2017
|
December 31, 2016
|
|||||||
Number of shares underlying the warrants
|
403,090
|
403,090
|
||||||
Stock price
|
$
|
1.77
|
$
|
2.20
|
||||
Volatility
|
48.00
|
%
|
47.00
|
%
|
||||
Risk-free interest rate
|
1.31 – 1.45
|
%
|
1.22
|
%
|
||||
Expected dividend yield
|
0
|
%
|
0
|
%
|
||||
Expected warrant life
|
1.37 – 1.60 years
|
2.12 – 2.35 years
|
Issuance Date
|
December 31, 2016
|
Decrease in Fair Value
|
September 30, 2017
|
|||||||||
10/31/2013
|
$
|
39
|
$
|
(28
|
)
|
$
|
11
|
|||||
2/5/2014
|
66
|
( 49
|
)
|
17
|
||||||||
Total
|
$
|
105
|
$
|
(77
|
)
|
$
|
28
|
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
|
September 30, 2017
|
||
10/31/2013
|
137,143
|
||
2/5/2014
|
265,947
|
||
Total
|
403,090
|
Issue Date
|
Expiration Date
|
Total Warrants
|
Exercise Price
|
||||||
4/26/2013
|
4/26/2018
|
13,865
|
$
|
55.90
|
|||||
10/31/2013
|
4/30/2019
|
137,143
|
$
|
3.75
|
|||||
2/5/2014
|
2/5/2019
|
265,947
|
$
|
3.75
|
|||||
7/24/2014
|
7/24/2019
|
1,239,769
|
$
|
3.75 - $ 12.25
|
|||||
6/22/2015
|
6/22/2020
|
600,000
|
$
|
3.75
|
|||||
12/30/2015
|
12/30/2020
|
130,089
|
$
|
5.65
|
|||||
1/29/2016
|
1/29/2021
|
19,812
|
$
|
5.30
|
|||||
2,406,625
|
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
Dermatology
Imaging
|
TOTAL
|
|||||||||||||
Revenues
|
$
|
5,720
|
$
|
1,751
|
$
|
9
|
$
|
7,480
|
||||||||
Costs of revenues
|
2,084
|
967
|
225
|
3,276
|
||||||||||||
Gross profit
|
3,636
|
784
|
(216
|
)
|
4,204
|
|||||||||||
Gross profit %
|
63.6
|
%
|
44.8
|
%
|
(2400.0
|
%)
|
56.2
|
%
|
||||||||
Allocated operating expenses:
|
||||||||||||||||
Engineering and product development
|
348
|
63
|
-
|
411
|
||||||||||||
Selling and marketing expenses
|
2,238
|
449
|
-
|
2,687
|
||||||||||||
Unallocated operating expenses
|
-
|
-
|
-
|
1,678
|
||||||||||||
2,586
|
512
|
-
|
4,776
|
|||||||||||||
Income (loss) from operations
|
1,050
|
272
|
(216
|
)
|
(572
|
)
|
||||||||||
Interest expense, net
|
-
|
-
|
-
|
(1,343
|
)
|
|||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
81
|
||||||||||||
Loss on extinguishment of debt
|
-
|
-
|
-
|
(11,799
|
)
|
|||||||||||
Income (loss) before income taxes
|
$
|
1,050
|
$
|
272
|
$
|
(216
|
)
|
$
|
(13,633
|
)
|
||||||
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
|
$
|
17,653
|
$
|
5,784
|
$
|
17
|
$
|
23,454
|
||||||||
Costs of revenues
|
5,969
|
2,988
|
225
|
9,182
|
||||||||||||
Gross profit
|
11,684
|
2,796
|
( 208
|
)
|
14,272
|
|||||||||||
Gross profit %
|
66.2
|
%
|
48.3
|
%
|
(1223.5
|
%)
|
60.9
|
%
|
||||||||
Allocated operating expenses:
|
||||||||||||||||
Engineering and product development
|
1,104
|
204
|
1
|
1,309
|
||||||||||||
Selling and marketing expenses
|
7,747
|
1,167
|
-
|
8,914
|
||||||||||||
Unallocated operating expenses
|
-
|
-
|
-
|
4,999
|
||||||||||||
8,851
|
1,371
|
1
|
15,222
|
|||||||||||||
Income (loss) from operations
|
2,833
|
1,425
|
(209
|
)
|
(950
|
)
|
||||||||||
Interest expense, net
|
-
|
-
|
-
|
(4,264
|
)
|
|||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
77
|
||||||||||||
Extinguishment of debt
|
-
|
-
|
-
|
(11,799
|
)
|
|||||||||||
Other income (expense), net
|
-
|
-
|
-
|
6
|
||||||||||||
Income (loss) before income taxes
|
$
|
2,833
|
$
|
1,425
|
$
|
(209
|
)
|
$
|
(16,930
|
)
|
||||||
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
|
)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Domestic
|
$
|
6,337
|
$
|
6,287
|
$
|
19,612
|
$
|
18,444
|
||||||||
Foreign
|
1,143
|
1,480
|
3,842
|
4,682
|
||||||||||||
$
|
7,480
|
$
|
7,767
|
$
|
23,454
|
$
|
23,126
|
Year,
|
||||
2017 (remaining three months)
|
$
|
113
|
||
2018
|
429
|
|||
2019
|
160
|
|||
Total
|
$
|
702
|
•
|
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.
|
|
•
|
Nordlys System.
Nordlys has 16 indications cleared by FDA and has the ability to use a multitude of light based technologies all in on compact platform
–SWT (Selective Waveband Technology: the latest evolution and advancement of Intense Pulsed Light), Nd:YAG and the FRAX 1550 non-ablative fractionated technology.
|
|
•
|
STRATAPEN™.
STRATAPEN uses the patent-pending Biolock cartridge. The Biolock needle depth can be adjusted during the course of the procedure to accommodate different treatment areas, and can easily maneuver around facial contours and delicate features, such as the eyes, nose and mouth.
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Dermatology Recurring Procedures
|
$
|
5,720
|
$
|
6,205
|
$
|
17,653
|
$
|
17,826
|
||||||||
Dermatology Procedures Equipment
|
1,751
|
1,550
|
5,784
|
5,174
|
||||||||||||
Dermatology Imaging
|
9
|
12
|
17
|
126
|
||||||||||||
Total Revenues
|
$
|
7,480
|
$
|
7,767
|
$
|
23,454
|
$
|
23,126
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Dermatology Recurring Procedures
|
$
|
2,084
|
$
|
2,326
|
$
|
5,969
|
$
|
6,723
|
||||||||
Dermatology Procedures Equipment
|
967
|
607
|
2,988
|
2,641
|
||||||||||||
Dermatology Imaging
|
-
|
109
|
225
|
267
|
||||||||||||
Total Cost of Revenues
|
$
|
3,276
|
$
|
3,042
|
$
|
9,182
|
$
|
9,631
|
Company Profit Analysis
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Revenues
|
$
|
7,480
|
$
|
7,767
|
$
|
23,453
|
$
|
23,126
|
||||||||
Percent (decrease) increase
|
(3.7
|
%)
|
1.4
|
%
|
||||||||||||
Cost of revenues
|
3,276
|
3,070
|
9,182
|
9,631
|
||||||||||||
Percent increase (decrease)
|
6.7
|
%
|
(4.7
|
%)
|
||||||||||||
Gross profit
|
$
|
4,204
|
$
|
4,697
|
$
|
14,271
|
$
|
13,495
|
||||||||
Gross margin percentage
|
56.2
|
%
|
60.5
|
%
|
60.9
|
%
|
58.4
|
%
|
Dermatology Recurring Procedures
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Revenues
|
$
|
5,720
|
$
|
6,205
|
$
|
17,653
|
$
|
17,826
|
||||||||
Percent decrease
|
(7.8
|
%)
|
(1.0
|
%)
|
||||||||||||
Cost of revenues
|
2,084
|
2,162
|
5,969
|
6,723
|
||||||||||||
Percent decrease
|
(3.6
|
%)
|
(11.2
|
%)
|
||||||||||||
Gross profit
|
$
|
3,636
|
$
|
4,043
|
11,684
|
$
|
11,103
|
|||||||||
Gross margin percentage
|
63.6
|
%
|
65.2
|
%
|
66.2
|
%
|
62.3
|
%
|
Dermatology Procedures Equipment
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Revenues
|
$
|
1,751
|
$
|
1,550
|
$
|
5,784
|
$
|
5,174
|
||||||||
Percent increase
|
13.0
|
%
|
11.8
|
%
|
||||||||||||
Cost of revenues
|
967
|
877
|
2,988
|
2,641
|
||||||||||||
Percent increase
|
10.3
|
%
|
13.1
|
%
|
||||||||||||
Gross profit
|
$
|
784
|
$
|
673
|
$
|
2,796
|
$
|
2,533
|
||||||||
Gross margin percentage
|
44.8
|
%
|
43.4
|
%
|
48.3
|
%
|
49.0
|
%
|
·
|
A decrease of approximately $535 for the nine months ended September 30, 2017, respectively, due to the closing of the Irvington, NY facility in May 2016.
|
·
|
A decrease $266 in stock compensation from the nine months ended September 30, 2017 from the same periods in 2016.
|
For the Three Months Ended
September 30,
|
||||||||||||
2017
|
2016
|
Change
|
||||||||||
Net loss
|
$
|
(13,671
|
)
|
$
|
(1,509
|
)
|
$
|
(12,162
|
)
|
|||
Adjustments:
|
||||||||||||
Income taxes
|
38
|
64
|
(26
|
)
|
||||||||
Depreciation and amortization *
|
1,602
|
1,521
|
81
|
|||||||||
Interest expense, net
|
564
|
537
|
27
|
|||||||||
Non-cash interest expense
|
779
|
638
|
141
|
|||||||||
Non-GAAP EBITDA
|
(10,688
|
)
|
1,251
|
(11,939
|
)
|
|||||||
Stock-based compensation expense
|
63
|
116
|
(53
|
)
|
||||||||
Change in fair value of warrants
|
(81
|
)
|
(132
|
)
|
51
|
|||||||
Loss on extinguishment of debentures
|
11,799
|
-
|
11,799
|
|||||||||
Non-GAAP adjusted EBITDA
|
$
|
1,093
|
$
|
1,235
|
$
|
(142
|
)
|
|||||
For the Nine Months Ended
September 30,
|
||||||||||||
2017
|
2016
|
Change
|
||||||||||
Net loss
|
$
|
(17,111
|
)
|
$
|
(2,448
|
)
|
$
|
(14,663
|
)
|
|||
Adjustments:
|
||||||||||||
Income taxes
|
181
|
191
|
(10
|
)
|
||||||||
Depreciation and amortization *
|
4,811
|
4,844
|
(33
|
)
|
||||||||
Interest expense, net
|
1,752
|
1,604
|
148
|
|||||||||
Non-cash interest expense
|
2,512
|
1,967
|
545
|
|||||||||
Non-GAAP EBITDA
|
(7,855
|
)
|
6,158
|
(14,013
|
)
|
|||||||
Stock-based compensation expense
|
136
|
401
|
(265
|
)
|
||||||||
Change in fair value of warrants
|
(77
|
)
|
(5,316
|
)
|
5,239
|
|||||||
Loss on extinguishment of debt
|
11,799
|
-
|
11,799
|
|||||||||
Non-GAAP adjusted EBITDA
|
$
|
4,003
|
$
|
1,243
|
$
|
2,760
|
||||||
3.1
|
||
3.2
|
||
3.3
|
||
3.4
|
||
3.5
|
||
3.6
|
||
3.7
|
||
3.8
|
||
3.9
|
||
10.51
|
||
10.52
|
||
31.1
|
||
31.2
|
||
32.1*
|
||
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, 2017
|
By:
|
/s/ Francis J. McCaney
|
|
|
|
Name Francis J. McCaney
|
|
|
|
Title President and Chief Executive Officer
|
|
Date November 14, 2017
|
By:
|
/s/ Christina L. Allgeier
|
|
|
|
Name Christina L. Allgeier
|
|
|
|
Title Chief Financial Officer
|
|
(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, 2017
|
By:
|
/s/ Frank J. McCaney
|
|
|
|
Name: Frank J. McCaney
|
|
|
|
Title: Chief Executive Officer
|
|
(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, 2017
|
By:
|
/s/ Christina Allgeier
|
|
Christina Allgeier
|
|||
Chief Financial Officer
|
|
1.
|
The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, 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
|
|
2.
|
The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
|
|
|
/s/ Frank J. McCaney
|
|
|
|
|
|
Name: Frank J. McCaney
|
|
|
|
|
Title: Chief Executive Officer
|
|
|
|
|
|
|
|
|
/s/ Christina Allgeier
|
|
|
|
|
|
Name: Christina Allgeier
|
|
|
|
|
Title: Chief Financial Officer
|
|
(1)
|
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.
|
1.
|
The Financial Covenant Schedule is hereby replaced in its entirety with the Financial Covenant Schedule attached to this Amendment as Exhibit A.
|
2.
|
The Amortization Schedule (For Each Credit Facility) is hereby replaced in its entirety with the Amortization Schedule (For Each Credit Facility) attached to this Amendment as Exhibit B.
|
1.
|
reimbursement or payment of its costs and expenses incurred in connection with this Amendment (including reasonable fees, charges and disbursements of counsel to Agent and the Lenders);
|
2.
|
duly executed signature pages to this Amendment from the Lenders, the Borrower and Agent; and
|
3.
|
a duly executed amendment and restatement of the fee letter agreement, dated as of August 9, 2016, by and between Borrower and Agent, in form and substance acceptable to Agent.
|
Minimum Net Revenue - Covenant Level
|
||
TTM Period Ending (to be reported to Agent within 30 days after such date)
|
Number of Months in Testing Period
|
Minimum Net Revenue for Such Period
|
31-Jul-16
|
7
|
15,031,000
|
31-Aug-16
|
8
|
17,331,000
|
30-Sep-16
|
9
|
20,781,000
|
31-Oct-16
|
10
|
22,926,000
|
30-Nov-16
|
11
|
25,499,000
|
31-Dec-16
|
12
|
29,359,000
|
31-Jan-17
|
12
|
29,595,000
|
28-Feb-17
|
12
|
29,878,000
|
31-Mar-17
|
12
|
30,302,000
|
30-Apr-17
|
12
|
30,458,000
|
31-May-17
|
12
|
30,645,000
|
30-Jun-17
|
12
|
30,925,000
|
31-Jul-17
|
12
|
31,258,000
|
31-Aug-17
|
12
|
31,592,000
|
30-Sep-17
|
12
|
31,925,000
|
31-Oct-17
|
12
|
31,500,000
|
30-Nov-17
|
12
|
31,750,000
|
31-Dec-17
|
12
|
32,000,000
|
31-Jan-18
|
12
|
32,250,000
|
28-Feb-18
|
12
|
32,500,000
|
31-Mar-18
|
12
|
33,000,000
|
30-Apr-18
|
12
|
33,250,000
|
31-May-18
|
12
|
33,500,000
|
30-Jun-18
|
12
|
34,000,000
|
31-Jul-18
|
12
|
34,500,000
|
31-Aug-18
|
12
|
35,000,000
|
30-Sep-18
|
12
|
35,500,000
|
31-Oct-18
|
12
|
36,000,000
|
30-Nov-18
|
12
|
36,500,000
|
31-December-18 and the last day of each month occurring thereafter
|
12
|
36,785,000
|
1.
|
on the Closing Date, an origination fee equal to the sum of $60,000. Such fee shall be non-refundable.
|
2.
|
on the Maturity Date, or on any earlier date on which the Obligations become due and payable in full, an amount equal to (a) six and 25/100 Percent (6.25%) of the "
Exit Fee Base Amount
" (as defined below) less (b) any "
Partial Exit Fee
" (as defined below) previously paid. The "
Exit Fee Base Amount
" means the total aggregate maximum principal amount of all Applicable Commitments for all Credit Facilities specified on the Credit Facility Schedule (without giving effect to any reduction in or elimination of such Applicable Commitments upon the occurrence of a Default or Event of Default), including the principal amounts of all undisbursed tranches.
|
3.
|
on the date of any full or partial prepayment of the Credit Facilities (or, in the case of a mandatory full or partial prepayment under the Credit Agreement, on the date such mandatory prepayment becomes due and payable), an amount equal to six and 25/100 Percent (6.25%) of the principal amount of the Credit Facilities paid or prepaid (or in the case of a mandatory prepayment, required to be paid) on such date (such fee is herein referred to as the "
Partial Exit Fee
").
|
|
|