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BASIS OF PRESENTATION | 9 Months Ended
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Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Unless the context otherwise indicates, the terms “Company,” “we,” “our,” “us,” “Apyx,” and similar terms refer to Apyx Medical Corporation and its consolidated subsidiaries. We are a medical technology company and the developer of J-Plasma® (marketed and sold under the Renuvion® Cosmetic Technology brand in the cosmetic surgery market), a patented plasma-based surgical product for cutting, coagulation and ablation of soft tissue. J-Plasma® technology utilizes a helium ionization process to produce a stable, focused beam of plasma that provides surgeons with greater precision and minimal invasiveness. The Company also leverages its expertise through original equipment manufacturing (OEM) agreements with other medical device manufacturers. On August 30, 2018, we closed on a definitive A sset P urchase A greement with Specialty Surgical Instrumentation Inc., a Tennessee Corporation and wholly-owned subsidiary of Symmetry Surgical Inc. (“Symmetry”), pursuant to which we divested and sold our electrosurgical "Core" business segment and related intellectual property, including the Bovie® brand and trademarks, to Symmetry for gross proceeds of $97 million in cash. The divestiture and sale of our Core business segment to Symmetry allows us to further focus on our strategic objective of commercializing our J-Plasma® technology, including the Renuvion® brand in the cosmetic surgery market. We also entered into with Symmetry a T ransition S ervices A greement, a Patent Licensing Agreement, a Disposables Supply Agreement, and a Generator Manufacturing and Supply Agreement, the latter of which will establish us as an OEM-provider of generators to Symmetry for a period of at least 10 years from the agreement date. In connection with the A sset P urchase A greement, we also entered into an Electro Surgical Disposables and Accessories, Cauteries and Other Products Supply Agreement with Symmetry for up to a four-year term, whereby we will manufacture certain Core products and sell them to Symmetry at agreed upon prices. Any revenue, costs and expenses resulting from this agreement are netted and reported in our c onsolidated s tatements of o perations as o ther gains or losses. For the three months ended September 30, 2019, Core sales following the divestiture amounted to $2.5 million with cost of sales of $2.1 million and related operating expenses of $0.2 million, which are included in other income (losses) i n the c onsolidated s tatement s of o perations. For the nine months ended September 30, 2019, Core sales following the divestiture amounted to $6.9 million with cost of sales of $6.6 million and related operating expenses of $0.3 million, which are included in other income (losses) in the c onsolidated s tatement s of o perations. In connection with the A sset P urchase A greement, we also entered into a Manufacture and Supply Agreement with Symmetry for a ten-year term, whereby we will manufacture certain products and sell them to Symmetry at agreed upon prices. Revenue, costs and expenses resulting from this agreement are reported in our c onsolidated s tatements as income or loss from operations of our OEM reporting segment. We reclassified the financial results of the Core business to discontinued operations and from segment results for all periods presented. Revisions Throughout 2019, the Company has been making efforts to remediate its material weakness in internal control as of December 31, 2018, including investing in new personnel that have expertise in a broad array of accounting topics. As a result of these investments, the Company reevaluated its accounting for stock-based compensation expense and during the three months ended September 30, 2019, the Company discovered immaterial errors in its accounting for certain items included in stock-based compensation expense. These errors related to its accounting for forfeitures, the vesting periods over which the expense was recognized, modifications, fair value measurements, and other minor miscellaneous items, all of which relate to the prior year. Additionally, the Company identified an issue relating to grants in the first quarter of 2019, whereby compensation was not recognized over the correct vesting period. During the three months ended September 30, 2019, the Company re-evaluated its accounting for pre-development activities on certain OEM contracts. In performing the review, the Company determined that the it has not completed its performance obligations on its pre-development activities in these contracts. Accordingly, the Company determined that it had prematurely recognized revenues during the first quarter relating to these activities and did not defer the accompanying costs. The Company has determined that the effects of the corrections are not material to the consolidated financial statements as of December 31, 2018, March 31, 2019 or June 30, 2019, but has elected to correct the consolidated financial statements for the three and nine months ended September 30, 2019. Accordingly, the Company has corrected the errors in the periods to which they relate. There were no adjustments to the results of operations for the three months ended June 30, 2019. A summary of the revisions as of each reporting period affected is as follows: As of and for the year ended December 31, 2018:
(In thousands) | As Reported |  | Adjustments |  | As Revised |  |
Balance Sheet |  |  |  |  |  |  |
Accrued severance and related | $ | 727 |  |  | $ | (117 | ) |  | $ | 610 |  |  | [1], [3]
Additional paid-in capital | 52,221 |  |  | 699 |  |  | 52,920 |  |  | [1]
Retained earnings | 35,513 |  |  | (582 | ) |  | 34,931 |  |  | [1]
Statement of Operations |  |  |  |  |  |  |
Professional services | $ | 3,072 |  |  | $ | 34 |  |  | $ | 3,106 |  |  | [1]
Salaries and related costs | 8,673 |  |  | 548 |  |  | 9,221 |  |  | [1]
Loss per share from continuing operations |  |  |  |  |  |  |
Basic and Diluted | $ | (0.29 | ) |  | $ | (0.01 | ) |  | $ | (0.30 | ) |  |
Income per share from discontinued operations |  |  |  |  |  |  |
Basic | $ | 2.21 |  |  | $ | — |  |  | $ | 2.21 |  |  |
Diluted | $ | 2.14 |  |  | $ | — |  |  | $ | 2.14 |  |  |
Income per share all operations |  |  |  |  |  |  |
Basic | $ | 1.93 |  |  | $ | (0.02 | ) |  | $ | 1.91 |  |  |
Diluted | $ | 1.86 |  |  | $ | (0.01 | ) |  | $ | 1.85 |  |  |
[1] Adjustments relate to stock-based compensation corrections
[2] Adjustments relate to OEM revenue correction
[3] Financial statement caption has been condensed in accrued expenses and other liabilities in the current interim period
As of and for the three months ended March 31, 2019:
(In thousands) | As Reported |  | Adjustments |  | As Revised |  |
Balance Sheet |  |  |  |  |  |  |
Other assets | $ | 162 |  |  | $ | 77 |  |  | $ | 239 |  |  | [1]
Contract liabilities | — |  |  | 194 |  |  | 194 |  |  | [1]
Additional paid-in capital | 53,147 |  |  | 1,035 |  |  | 54,182 |  |  | [1]
Retained earnings | 30,832 |  |  | (1,152 | ) |  | 29,680 |  |  | [1]
Statement of Operations |  |  |  |  |  |  |
Sales | $ | 5,823 |  |  | $ | (194 | ) |  | $ | 5,629 |  |  | [2]
Professional services | 1,791 |  |  | 336 |  |  | 2,127 |  |  | [1]
Salaries and related costs | 3,221 |  |  | 117 |  |  | 3,338 |  |  | [1]
Selling, general and administrative | 3,101 |  |  | (77 | ) |  | 3,024 |  |  | [2]
Loss per share - basic and diluted | $ | (0.14 | ) |  | $ | (0.02 | ) |  | $ | (0.16 | ) |  |
[1] Adjustments relate to stock-based compensation corrections
[2] Adjustments relate to OEM revenue correction
As of and for the six months ended June 30, 2019:
(In thousands) | As Reported |  | Adjustments |  | As Revised |  |
Balance Sheet |  |  |  |  |  |  |
Other assets | $ | 368 |  |  | $ | 77 |  |  | $ | 445 |  |  | [1]
Contract liabilities | — |  |  | 194 |  |  | 194 |  |  | [1]
Additional paid-in capital | 54,051 |  |  | 1,035 |  |  | 55,086 |  |  | [1]
Retained earnings | 26,494 |  |  | (1,152 | ) |  | 25,342 |  |  | [1]
Statement of Operations |  |  |  |  |  |  |
Sales | $ | 12,391 |  |  | $ | (194 | ) |  | $ | 12,197 |  |  | [2]
Professional services | 3,424 |  |  | 336 |  |  | 3,760 |  |  | [1]
Salaries and related costs | 6,554 |  |  | 117 |  |  | 6,671 |  |  | [1]
Selling, general and administrative | 6,184 |  |  | (77 | ) |  | 6,107 |  |  | [2]
Loss per share - basic and diluted | $ | (0.27 | ) |  | $ | (0.02 | ) |  | $ | (0.29 | ) |  |
[1] Adjustments relate to stock-based compensation corrections
[2] Adjustments relate to OEM revenue correction
The accompanying unaudited consolidated financial statements have been prepared based upon SEC rules that permit reduced disclosure for interim periods. For a more complete discussion of significant accounting policies and certain other information, please refer to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018. These consolidated financial statements reflect all adjustments that are necessary for a fair presentation of results of consolidated operations and financial condition for the interim periods shown, including normal recurring accruals and other items. The results for the interim periods are not necessarily indicative of results for the full year.

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