What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-17 compared with 2021-03-31 · 105 added, 125 removed, 582 unchanged (28% of the section changed)

1 unchanged sentence

INDEX TO FINANCIAL INFORMATION

Report of Independent Registered Public Accounting Firm 30

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets at December 31, 202 1 and 20 20

34 unchanged sentences

December 31, 2021

December 31, 2020

Current assets:

17 unchanged sentences

Current portion of finance lease liabilities 165 238

Related party note payable — 140

Total current liabilities 13,205 9,153

1 unchanged sentence

Long-term finance lease liabilities 18 183

Contract liabilities 621 405

Long-term contract liabilities 1,323 621

Other liabilities 166 166

5 unchanged sentences

Additional paid-in capital 66,221 61,066

Retained earnings 2,621 14,517

(Accumulated deficit) retained earnings ( 12,551 ) 2,621

Total stockholders' equity 53,704 63,721

19 unchanged sentences

Interest expense ( 10 ) ( 46 )

Other income (loss), net 479 ( 351 )

Total other income, net 674 1,033

Other (losses) income, net ( 373 ) 479

Total other (loss) income, net ( 372 ) 674

Loss from operations before income taxes ( 14,820 ) ( 19,409 )

Income tax benefit ( 7,503 ) ( 130 )

Income tax expense (benefit) 380 ( 7,503 )

Net loss ( 15,200 ) ( 11,906 )

1 unchanged sentence

Net loss attributable to stockholders $ ( 15,172 ) $ ( 11,896 )

Loss per share

Basic and Diluted $ ( 0.35 ) $ ( 0.58 )

Loss per share - basic and diluted $ ( 0.44 ) $ ( 0.35 )

Weighted average number of shares outstanding - basic and diluted 34,332 34,212

3 unchanged sentences

(In thousands)

Shares Par Value Additional Paid-In Capital Retained Earnings Non-controlling interest equity Total Equity

December 31, 2018 33,705 $ 34 $ 52,920 $ 34,223 $ — $ 87,177

Shares issued on stock options exercised for cash 61 — 207 — — 207

Common Stock Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Non-controlling interest

Shares Par Value Total Equity

Balance at December 31, 2019 34,170 $ 34 $ 56,708 $ 14,517 $ — $ 71,259

Contributions from non-controlling interest — — — — 148 148

Shares issued on stock options exercises for cash 27 — 148 — — 148

Stock based compensation — — 4,210 — — 4,210

2 unchanged sentences

Net loss — — — ( 11,896 ) ( 10 ) ( 11,906 )

December 31, 2019 34,170 $ 34 $ 56,708 $ 14,517 $ — $ 71,259

Balance at December 31, 2020 34,289 $ 34 $ 61,066 $ 2,621 $ 138 $ 63,859

Contributions from non-controlling interest — — — — 195 195

Shares issued on stock options exercised for cash 27 — 148 — — 148

Shares issued on stock options exercises for cash 13 — 67 — — 67

Stock based compensation — $ — $ 5,088 $ — $ — $ 5,088

Shares issued on net settlement of stock options 108 — — — — —

Vested restricted stock issued 45 — — — — —

Net loss — — — ( 15,172 ) ( 28 ) ( 15,200 )

December 31, 2020 34,289 $ 34 $ 61,066 $ 2,621 $ 138 $ 63,859

Balance at December 31, 2021 34,410 $ 34 $ 66,221 $ ( 12,551 ) $ 305 $ 54,009

The accompanying notes are an integral part of the consolidated financial statements.

11 unchanged sentences

Stock based compensation 5,088 4,210

Realized and unrealized gains on short term investments — ( 164 )

Provision (benefit) for allowance for doubtful accounts 262 ( 163 )

Provision for allowance for doubtful accounts 128 262

Changes in current assets and liabilities:

8 unchanged sentences

Purchases of property and equipment ( 723 ) ( 581 )

Purchases of marketable securities — ( 18,884 )

Proceeds of marketable securities — 80,726

Net cash (used in) provided by investing activities ( 581 ) 60,541

Net cash used in investing activities ( 723 ) ( 581 )

Cash flows from financing activities

3 unchanged sentences

Contributions from non-controlling interests 195 148

Net cash (used in) provided by financing activities ( 73 ) 147

Net cash provided by (used in) financing activities 24 ( 73 )

Effect of exchange rates on cash 103 ( 177 )

6 unchanged sentences

Non cash operating and investing activities:

Transfer of other assets to fixed assets $ — $ 42

Transfer of inventory to fixed assets 23 277

Transfer of right-of-use assets to property and equipment on exercise of purchase option $ 43 $ —

Transfer of inventory to property and equipment — 23

The accompanying notes are an integral part of the consolidated financial statements.

4 unchanged sentences

The Company is an advanced energy technology company with a passion for elevating people’s lives through innovative products in the cosmetic and surgical markets.

Known for its innovative Helium Plasma Technology, Apyx is solely focused on bringing transformative solutions to the physicians and patients they serve.

It's Helium Plasma Technology is marketed and sold as Renuvion® in the cosmetic surgery market and J-Plasma® in the hospital surgical market.

Renuvion® offers plastic surgeons, fascial plastic surgeons and cosmetic physicians a unique ability to provide controlled heat to the tissue to achieve their desired results.

The J-Plasma® system allows surgeons to operate with a high level of precision, virtually eliminating unintended tissue trauma.

The Company also leverages its deep expertise and decades of experience in unique waveforms through original equipment manufacturing (OEM) agreements with other medical device manufacturers.

Known for its innovative Helium Plasma Technology, Apyx is solely focused on bringing transformative solutions to physicians and their patients.

Its Helium Plasma Technology is marketed and sold as Renuvion® in the cosmetic surgery market and J-Plasma® in the hospital surgical market.

Renuvion® offers plastic surgeons, fascial plastic surgeons and cosmetic physicians a unique ability to provide controlled heat to tissue to achieve their desired results.

The Company also leverages its deep expertise and decades of experience in unique waveforms through OEM agreements with other medical device manufacturers.

SIGNIFICANT ACCOUNTING POLICIES

8 unchanged sentences

Holdings of highly liquid investments with original maturities of three months or less from the date of purchase are considered to be cash equivalents.

As of December 31, 2020 and 2019, all of the Company’s U.S.

Treasury Bills have original maturities of three months or less and are included in cash and cash equivalents.

As of December 31, 2021 and 2020, all of the Company’s investments are in money market funds or in Treasury Bills with original maturities of three months or less and are included in cash and cash equivalents.

Concentration of Credit Risk

8 unchanged sentences

This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.

Management believes that the allowances for doubtful accounts of approximately $ 0.3 million at December 31, 2020 and 2019, are adequate to provide for possible bad debts.

Management believes that the allowances for doubtful accounts of approximately $ 0.4 million and $ 0.3 million at December 31, 2021 and 2020, respectively, are adequate to provide for probable bad debts.

APYX MEDICAL CORPORATION

22 unchanged sentences

Any impairment losses are not restored in the future if the fair value increases.

At December 31, 2020, the Company believes the remaining carrying values of its long-lived assets are recoverable.

At December 31, 2021 and 2020, the Company believes the remaining carrying values of its long-lived assets are recoverable.

Product Warranties

27 unchanged sentences

If the Company enters into a product development agreement, and development of the goods does not represent a performance obligation on a standalone basis, the Company defers the development fees billed to customers and the associated costs.

At December 31, 2020 and 2019, respectively, the Company had recorded approximately $ 0.6 million and $ 0.4 million of contract liabilities and $ 0.2 million and $ 0.1 million of contract assets related to the deferral of revenues and expenses under these agreements.

Recognition of the deferred billings and costs will occur as the Company performs on the accompanying supply arrangements.

4 unchanged sentences

The Company accounts for stock-based compensation in accordance with FASB ASC Topic 718, Compensation-Stock Compensation .

FASB ASC 718 requires recognizing compensation expense for all share-based payment awards made to employees, directors and non-employees based upon the awards’ grant date fair value.

FASB ASC 718 requires recognizing compensation expense for all share-based payment awards made to employees, directors and non-employees based upon the grant date fair value of such awards.

It accounts for forfeitures as they occur.

10 unchanged sentences

actual results may differ from those estimates.

Income (Loss) Per Share

Earnings (Loss) Per Share

The Company computes basic (loss) earnings attributable to common stockholders per share by dividing net (loss) income attributable to common stockholders by the weighted average number of common shares outstanding for the reporting period.

5 unchanged sentences

Research and development expenses are charged to operations as incurred.

The Company utilizes the liability method of accounting for income taxes as set forth in FASB ASC Topic 740, Income Taxes .

Under the liability method, deferred taxes are determined based on temporary differences between the financial statement and

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The Company utilizes the liability method of accounting for income taxes as set forth in FASB ASC Topic 740, "Income Taxes".

Under the liability method, deferred taxes are determined based on temporary differences between the financial statement and tax bases of assets and liabilities using tax rates expected to be in effect during the years in which the deferred taxes reverse.

tax bases of assets and liabilities using tax rates expected to be in effect during the years in which the deferred taxes reverse.

The Company accounts for interest and penalties on income taxes as income tax expense.

1 unchanged sentence

In determining the need for valuation allowances the Company considers projected future taxable income, the timing of reversals of temporary differences, and the availability of tax planning strategies.

As of December 31, 2020 and 2019, the Company recorded a valuation allowance on the net deferred tax asset.

The Company assesses the realizability of deferred tax assets each reporting period and will be able to reduce the valuation allowance to the extent the financial results of continuing operations improve, and it becomes more likely than not that the deferred tax assets will be realizable.

As Management expects the Company to continue to generate losses in the foreseeable future after 2020, the Company will continue to record a full valuation allowance on the net deferred tax assets as of December 31, 2020.

As a result of the CARES ACT, during 2020, the Company released the valuation allowance on the Federal NOLs that can now be carried back to prior taxable years.

As of December 31, 2021 and 2020, the Company recorded a valuation allowance on the net deferred tax assets.

As Management has not fully determined the timing of when it will generate taxable income in the U.S., the Company will continue to record a full valuation allowance on the net deferred tax assets as of December 31, 2021.

As a result of the CARES Act, during 2020, the Company released the valuation allowance on the Federal NOLs 2019 and 2020 that have been carried back to prior taxable years.

The Company assesses the financial statement impact of an uncertain tax position taken or expected to be taken on an income tax return at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority.

9 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

CHANGE IN ACCOUNTING POLICY

During 2019, the Company began granting stock option awards deeper within the organization.

It does not have sufficient experience with grants to these employees and has experienced challenges in developing reliable forfeiture estimates at the grant date.

Accounting for revising the forfeiture estimates has been burdensome.

Accounting Standards Codification 718, Compensation- Stock Compensation , prescribes two methods for accounting for forfeitures on stock option awards, either the estimation method utilized by the Company previously, or by accounting for forfeitures as they occur.

On January 1, 2020, the Company made an accounting policy election change and began accounting for forfeitures on stock option awards using actual forfeitures.

This accounting policy election change was made on a retrospective basis.

However, the changes to the current and prior period were determined to be immaterial and there have been no changes to previously reported results as a result of the change.

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

RECENT ACCOUNTING PRONOUNCEMENTS

11 unchanged sentences

Any activity resulting from this agreement is netted and reported in the Consolidated Statements of Operations as other income (loss).

Core activity for 2021 amounted to $ 6.5 million with cost of sales equivalents of $ 5.5 million and other related expenses of $ 1.5 million for net other loss of $ 0.4 million.

Core activity for 2020 amounted to $ 9.4 million with cost of sales equivalents of $ 8.1 million and other related expenses of $ 0.8 million for net other income of $ 0.5 million.

Core activity in 2019 amounted to $ 9.4 million with cost of sales equivalents of $ 8.8 million and related operating expenses of $ 0.5 million for net other income of $ 0.1 million.

APYX MEDICAL CORPORATION

1 unchanged sentence

INTEREST IN JOINT VENTURE INVESTMENT

In 2019, the Company executed a joint venture agreement with its Chinese supplier ("China JV").

The agreement requires the Company to make a capital contribution into the newly formed entity of approximately $ 357,000 , of which approximately $ 154,000 was contributed during the year ended December 31, 2020.

In 2019, the Company executed a joint venture agreement with its Chinese supplier (China JV) whereby the Company has a 51 % interest in the China JV.

The agreement required the Company to make capital contributions into the newly formed entity of approximately $ 357,000 , of which approximately $ 203,000 and $ 154,000 , respectively, were contributed during the years ended December 31, 2021 and 2020.

As of the date of these consolidated financial statements, the joint venture has not commenced principal operations.

Changes in the Company's ownership interest in its 51 % owned China JV were as follows:

(In thousands) Year Ended

December 31, 2020

Changes in the Company’s ownership investment in the China JV were as follows:

Year Ended December 31,

(In thousands) 2021 2020

Beginning interest in China JV $ 144 $ —

15 unchanged sentences

As a result, certain products were reduced to a lower carrying value, and some components were also written down as the Company determined to cease further production on these older models.

The total impairment was approximately $ 400,000 and is included in cost of sales in the accompanying Consolidated Statement of Operations for 2020.

Later in 2020, the Company's forecasts were revised, and it subsequently utilized a portion of the written down components and approximately $ 100,000 of the impairment was recovered through the sale of the corresponding manufactured handpieces.

The total impairment was approximately $ 0.4 million and is included in cost of sales in the accompanying Consolidated Statement of Operations for 2020.

Later in 2020, the Company’s forecasts were revised, and it subsequently utilized a portion of the written down components and approximately $ 0.1 million of the impairment was recovered through the sale of the corresponding manufactured handpieces.

There were no such impairments in 2021.

APYX MEDICAL CORPORATION

26 unchanged sentences

The Company’s lease on the Bulgaria facility includes rent escalation over the term of the lease.

Rent expense on the lease is accounted for on a straight-line basis over the lease term.

During 2019, the Bulgaria facility lease was extended for an additional 2 years.

In accordance with operating lease guidance under Topic 842, the extension was accounted for as a lease modification and the right-of-use asset and lease liability were remeasured at the modification date.

Rent expense on the Bulgaria facility lease is accounted for on a straight-line basis over the lease term.

These operating leases have terms expiring through December 2022.

Finance Leases

During 2019, the Company entered into non-cancelable finance leases for certain computer equipment and a vehicle in Clearwater, Florida.

The Company has entered into non-cancelable finance leases for certain computer equipment and a vehicle in Clearwater, Florida.

These finance leases have terms expiring through August 2023.

7 unchanged sentences

Total lease costs $ 374 $ 375

Cash and non-cash information related to our leases are as follows:

Cash information related to our leases are as follows:

December 31, 2021 Year Ended

1 unchanged sentence

(in thousands) Operating Finance Operating Finance

Non cash information:

Right-of-use assets capitalized and lease liabilities recognized upon adoption of Topic 842 $ — $ — $ 212 $ —

Right-of-use assets capitalized and lease liabilities recognized upon lease remeasurement $ — $ — $ 207 $ —

Right-of-use assets capitalized and lease liabilities recognized upon execution of lease $ — $ — $ 28 $ 710

Cash information:

Cash paid for lease liabilities $ 135 $ 228 $ 110 $ 251

23 unchanged sentences

Accrued product liability claim insurance deductibles 610 435

Accrued professional fees 222 1,383

Joint and several payroll liability 1,027 1,027

9 unchanged sentences

Provision for product warranties 318 215

Product warranty expenses incurred ( 169 ) ( 217 )

Product warranty costs incurred ( 223 ) ( 169 )

Accrued product warranties $ 593 $ 498

3 unchanged sentences

This amount of the liability was approximately $ 1.0 million at December 31, 2021 and 2020.

Included in other income (loss), net in the accompanying Consolidated Statements of Operations for 2019 is approximately $ 0.3 million related to the liability.

If the Company can establish that its employees have in fact paid these obligations, either presently or in the future, it will be relieved of its liability.

The Company will be relieved of this liability as the statute of limitations on the liability expires, which the Company expects to occur during April 2022 and April 2023, or once the Company can establish that its employees have in fact paid these obligations.

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

CONTRACT ASSETS AND LIABILITIES

The Company’s contracts with customers may result in the Company having contract assets and liabilities.

These contract assets and liabilities arise primarily from OEM development and supply agreements where the development of the goods does not represent a performance obligation on a standalone basis.

The Company defers the development fees billed to customers, and the associated costs, and recognizes them as it completes performance obligations on the supply portion of the agreement.

Other contract liabilities may be recognized when a customer prepays for goods or services.

At December 31, 2021 and 2020, respectively, the Company had recorded approximately $ 1.9 million and $ 0.6 million of contract liabilities and $ 0.5 million and $ 0.2 million of contract assets related to customer prepayments and the deferral of revenues and expenses under these agreements.

At December 31, 2021, $ 0.5 million of the contract liabilities and $ 0.1 million of the contract assets are presented as current in the accompanying Consolidated Balance Sheet within accrued expenses and other current liabilities and prepaid expenses and other current assets, respectively.

At December 31, 2020, 0 contract assets or liabilities were current in the accompanying Consolidated Balance Sheet.

During 2021, the Company did not recognize any significant contract liabilities or contract assets that existed as of December 31, 2020 in sales or cost of sales in the accompanying Consolidated Statement of Operations for the year ended December 31, 2021.

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

EARNINGS (LOSS) PER SHARE

10 unchanged sentences

Options 5,398 4,939

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

FINANCIAL INSTRUMENTS

Cash and Cash Equivalents at December 31, 2020 and 2019, respectively, consisted of approximately $ 2,250,000 and $ 2,237,000 in cash and $ 39,665,000 and $ 56,575,000 in U.S.

Treasury Securities with maturities of 3 months or less.

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Components of the provision for income taxes are as follows:

Components of income tax expense (benefit) are as follows:

(In thousands) December 31,

10 unchanged sentences

Valuation allowance 3,131 1,029

Total provision for income tax $ ( 7,503 ) $ ( 130 )

Total income tax expense (benefit) $ 380 $ ( 7,503 )

Below is a reconciliation of the statutory federal income tax rate to the Company's effective tax rate:

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Year Ended December 31,

2 unchanged sentences

Valuation allowance ( 21.1 ) % ( 5.3 ) %

Incentive stock compensation expense ( 1.8 ) % ( 1.7 ) %

Section 162(m) compensation ( 3.8 ) % — %

GILTI ( 1.2 ) % — %

NOL carryback from CARES Act — % 18.9 %

2 unchanged sentences

Major components of the Company’s deferred tax assets (liabilities) are as follows:

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(In thousands) December 31,

3 unchanged sentences

Stock-based compensation 1,701 1,603

Accrued bonus 555 —

Other 886 745

13 unchanged sentences

For the NOLs generated in 2019, the Company previously recorded a full valuation allowance on the deferred tax assets associated with the NOL due to realization not being probable under then existing tax law.

The CARES Act makes these assets realizable and, as of the date of the CARES Act, the Company has recognized an income tax benefit of approximately $ 3.7 million associated with the release of the valuation allowance on its Federal NOL deferred tax asset from 2019.

Additionally, using the provisions of the CARES Act, the Company is carrying back its 2020 Federal NOL of approximately $ 3.7 million.

The CARES Act makes these assets realizable and, as of the date of the CARES Act, the Company recognized an income tax benefit of approximately $ 3.7 million associated with the release of the valuation allowance on its Federal NOL deferred tax asset from 2019.

Additionally, using the provisions of the CARES Act, the Company carried back its 2020 Federal NOL of approximately $ 3.7 million.

The Company considers all positive and negative evidence regarding the realization of deferred tax assets, including past operating results and future sources of taxable income.

3 unchanged sentences

If it decides to repatriate the foreign earnings, the Company will need to adjust its income tax provision in the period it determines that the earnings will no longer be indefinitely invested outside the United States.

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

1 unchanged sentence

As of December 31, 2021 and 2020, the Company has recorded a liability of approximately $ 1.3 million related to uncertain tax positions and accrued approximately $ 0.6 million and $ 0.4 million, respectively, of interest and penalties on these positions.

It is expected that the change in unrecognized tax benefits within the next 12 months will not be significant.

All unrecognized tax benefits are expected to be resolved within the next 12 months.

The following is a roll-forward of the Company's total gross unrecognized tax benefits, not including interest and penalties, for the years ended December 31:

5 unchanged sentences

End of year balance $ 1,313 $ 1,313

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The Company is subject to U.S.

10 unchanged sentences

The Company makes matching contributions of 50 % of the employee contributions up to a total of 3 % of participant payroll.

Matching contributions made by the Company totaled approximately $ 0.3 million for each of the years ended December 31, 2020 and 2019, respectively.

Matching contributions made by the Company totaled approximately $ 0.4 million and $ 0.3 million for each of the years ended December 31, 2021 and 2020, respectively.

RELATED PARTY TRANSACTIONS

9 unchanged sentences

The partner in the Company’s China joint venture is also a supplie r of the Company.

For the years ended December 31, 2020 and 2019, the Company made purchases from this supplier of approximately $ 1,441,000 and $ 2,643,000 , respectively.

For the years ended December 31, 2021 and 2020, the Company made purchases from this supplier of approximately $ 1.3 million and $ 1.4 million, respectively.

At December 31, 2021 and 2020, respectively, the Company owed this supplier approximately $ 1,000 and $ 38,000 , respective ly.

COMMITMENTS AND CONTINGENCIES

The medical device industry is characterized by frequent claims and litigation, and the Company may become subject to various claims, lawsuits and proceedings in the ordinary course of our business.

The medical device industry is characterized by frequent claims and litigation, and the Company may become subject to various

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

claims, lawsuits and proceedings in the ordinary course of our business.

Such claims may include claims by current or former employees, distributors and competitors, claims concerning the marketing and promotion of our products and product liability claims.

The Company is involved in a number of legal actions relating to the use of our Helium Plasma technology.

The outcomes of these legal actions are not within the Company’s complete control and may not be known for prolonged periods of time.

The outcomes of these legal actions are not within the Company’s control and may not be known for prolonged periods of time.

It believes that such claims are adequately covered by insurance;

2 unchanged sentences

However, in the event that damages exceed the aggregate coverage limits of the Company’s policies or if its insurance carriers disclaim coverage, management believes it is possible that costs associated with these claims could have a material adverse impact on the consolidated financial condition, results of operations and cash flows.

On April 17, 2019, a complaint (the “Complaint”) was filed in the United States District Court for the Middle District of Florida, against the Company and Charles D.

Goodwin, the Company’s President and Chief Executive Officer and a member of the Company’s Board of Directors, alleging certain violations of the Securities Exchange Act of 1934, as amended.

On July 16, 2019, the Court appointed lead plaintiff for the putative class and approved the lead plaintiff’s selection of counsel.

On September 3, 2019, lead plaintiff filed an amended complaint (the “Amended Complaint”) with the Court.

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The Amended Complaint seeks class action status on behalf of all persons and entities that acquired the Company’s securities between December 21, 2018 and April 1, 2019, and alleges violations by the Company and Goodwin of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended and Rule 10b-5 thereunder, primarily related to certain public statements concerning the Premarket Notification 510(k) submission made to the US Food and Drug Administration for a new indication for the Company’s J-Plasma® technology for use in dermal resurfacing procedures.

On October 3, 2019, defendants filed a motion to dismiss the Amended Complaint, and on March 11, 2020, the Court denied that motion.

On July 10, 2020, the parties executed a settlement agreement, which was subject to Court approval.

The Court preliminarily approved the settlement on July 21, 2020.

The settlement agreement provides for the dismissal of the action with prejudice.

On November 6, 2020, the Court issued its final order approving the settlement and dismissing the action and all claims contained in the Amended Complaint with prejudice.

At December 31, 2020, the Company has settled and fully paid all obligations related to this matter.

Included in selling, general and administrative expenses for the year ended December 31, 2019 is $ 1,000,000 for the matter.

At December 31, 2019, the Company had accrued $ 820,000 for the matter.

The Company accrues a liability in our consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated.

The Company accrues a liability in its consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated.

If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is recorded.

2 unchanged sentences

Purchase Commitments

At December 31, 2020, the Company has purchase commitments for inventories totaling approximately $ 1.9 million, substantially all of which is expected to be purchased by the end of 2021.

China Joint Venture

The Company's agreement in the China joint venture requires it to make a capital contribution into the newly formed entity of $ 357,000 .

As of the date of these consolidated financial statements, approximately $ 203,000 of its capital commitment remains to be funded.

At December 31, 2021, the Company has purchase commitments for inventories totaling approximately $ 4.9 million, all of which is expected to be purchased by the end of 2022.

Concentrations

Sales to one customer within the OEM segment represented 10 % and 11 % of total sales for the year ended December 31, 2020 and 2019, respectively.

Sales to one customer within the Advanced Energy segment represented 11 % of total sales for the year ended December 31, 2021.

Sales to one customer within the OEM segment represented 10 % of total sales for the year ended December 31, 2020.

There were no other significant sales concentrations for the years ended December 31, 2021 and 2020.

Receivables from two customers within the Advanced Energy segment represented 22 % and 31 %, respectively, of trade accounts receivable at December 31, 2021 and December 31, 2020.

APYX MEDICAL CORPORATION

13 unchanged sentences

At December 31, 2021, all 1,370,000 are available to be issued in this plan.

In August 2021, the Company’s stockholders approved the 2021 Share Incentive Plan covering a total of 1,375,000 shares of common stock issuable upon exercise of options to be granted under the plan.

At December 31, 2021, all 1,375,000 are available to be issued in this plan.

On January 19, 2022, the Company granted employees appro ximately 1,500,000 options to purchase common shares of the Company's stock.

All options granted were pursuant to the plans noted above.

All options granted were pursuant to the 2015 and 2019 Plans noted above.

The options ves t over a period of three years .

10 unchanged sentences

Outstanding at December 31, 2021 5,397,691 $ 5.95

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Number of options Weighted average grant date fair value

4 unchanged sentences

Non-vested at December 31, 2021 1,802,216 $ 5.21

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Common shares required to be issued upon the exercise of stock options would be issued from authorized and unissued shares.

25 unchanged sentences

During the years ended December 31, 2021 and 2020, the Company received 111,831 and 39,448 options as payment in the exercise of 107,357 and 47,088 options, respectively.

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

As of December 31, 2021, there was approximately $ 5,010,000 of total unrecognized stock-based compensation expense, related to unvested stock options granted under the plans above.

This expense is expected to be recognized over a weighted-average period of approximately 1 year.

During October 2015, the Company granted 225,922 restricted stock units that vest ratably over a period of 5 years.

As of December 31, 2020, all of the restricted stock units had vested.

APYX MEDICAL CORPORATION

16 unchanged sentences

Interest expense — — ( 10 ) ( 10 )

Other income, net — — 479 479

Income tax benefit — — 7,503 7,503

Other losses, net — — ( 373 ) ( 373 )

Income tax expense — — 380 380

Year ended December 31, 2020

4 unchanged sentences

Interest expense — — ( 46 ) ( 46 )

Other losses, net — — ( 351 ) ( 351 )

Other income, net — — 479 479

Income tax benefit — — 7,503 7,503

International sales in 2021 and 2020, were 32.0 % and 32.1 % of sales, respectively.

Substantially all of these sales are denominated in U.S.

Revenue by geographic region, based on the "ship to" location on the invoice are as follows:

5 unchanged sentences

Total $ 48,517 $ 27,711

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

SUBSEQUENT EVENTS

On March 14, 2022, the FDA posted a Medical Device Safety Communication ("Communication") that warns consumers and health care providers against the use of our Advanced Energy products outside of their FDA-cleared indications for general use in cutting, coagulation, and ablation of soft tissue during open and laparoscopic surgical procedures.

We continue to work with the FDA towards securing 510(k) clearance for additional indications.

We are in the process of evaluating what effects, if any, the Communication will have on our results of operations, cash flows and financial position.

APYX MEDICAL CORPORATION

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data