What changed in this filing

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Item 9A. Controls and Procedures

2022-03-17 compared with 2021-03-31 · 236 added, 107 removed, 591 unchanged (37% of the section changed)

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management carried out an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, 2020, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management carried out an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, 2021, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission Internal Control Integrated Framework (2013).

Based on that evaluation, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2021.

Remediation of Previously Reported Material Weaknesses in Internal Control over Financial Reporting

We have remediated the material weaknesses previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019 and improved our internal control over financial reporting specifically in the areas of the overall control environment and documentation of control activities through the completion of remediation steps described below.

Control Environment

We have remediated the material weakness associated with the lack of sufficient qualified accounting personnel with an appropriate level of knowledge and experience with generally accepted accounting principle by (i) hiring a new Chief Financial Officer and a new Corporate Controller in 2019 with experience in internal controls and financial reporting that have been actively engaged in remediation efforts to address the material weaknesses (ii) enhancing our policies, procedures, and controls for all key business processes and (iii) training personnel to ensure consistent application of accounting principles and adherence to the Company’s policies, procedures, and controls.

Control Activities

We have remediated the material weakness associated with the ineffective control activities due to the lack of documentation and timeliness in executing certain business process controls specifically related to procure to pay and inventory processes and footnote reporting disclosures related to income tax accounts, primarily related to our United States operations by (i) enhancing our processes and review controls associated with the processes noted above (ii) ensuring the appropriate criteria for controls, including evidence of review, timeliness and variance thresholds are documented, (iii) engaging third-party specialists for

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income tax calculations and disclosures .and (iv) increasing management oversight of performance of such procedures and controls.

We have remediated the material weakness associated with the ineffective control over financial reporting in our Bulgarian subsidiary related to the purchasing of goods and services, including the processing and payment of vendor invoices by (i) enhancing controls over purchasing and disbursements in our Bulgarian subsidiary (ii) approving and validating vendor invoices received by verifying the related purchase authorization and the receipt of the goods or services and (iii) ensuring that documentation of approval was retained and performed timely.

Changes in Internal Control Over Financial Reporting

Except as noted above, there were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2020, that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

We rely extensively on information systems to manage our business and summarize and report our financial condition, results of operations and cash flows.

In 2020, implemented a new global enterprise resource planning (“ERP”) system, which replaced much of our existing core financial systems in the first quarter of 2021.

The ERP system is designed to accurately maintain our financial records, enhance the flow of financial information, improve data management and provide timely information to our management team.

As a result of this implementation, certain internal controls over financial reporting have been automated, modified or implemented to address the new environment associated with this type of system.

Other than the ERP system implementation noted above, there has not been any change in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our quarter ended December 31, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other Information

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however, in recommending directors, the Board and the Committee consider the specific background and experience of the Board members and other personal attributes in an effort to provide a diverse mix of capabilities, contributions and viewpoints which the Board believes enables it to function effectively as the Board of Directors of a company with our size and nature of business..

Moreover, our corporate governance guidelines commit the Company to maintaining a Board with a strong and diverse membership.

Moreover, our corporate governance guidelines commit the Company to maintaining a Board with a strong and diverse membership as set forth below.

Directors serve for one-year terms and are elected at the annual stockholders’ meeting.

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Minnie Baylor-Henry 74 Director August 2019

Wendy Levine 49 Director August 2021

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Board Diversity Summary as of December 31, 2021

Makrides Goodwin Waldman Andres Geraghty Swandal Baylor-Henry Levine

Gender Identity

Male X X X X X X

Did Not Disclose Gender

Demographic Background

African American or Black X

Alaskan Native or Native American

Hispanic or Latinx

Native Hawaiian or Pacific Islander

White X X X X X X X

Did Not Disclose Demographic Background

Years 39 4 11 7 11 4 2 < 1 year

Knowledge, Skills and Experience

Public Company Board Experience X X X X

Financial X X X

Risk Management X X X

Corporate Governance\Ethics X X X X

Legal\Regulatory X X X X

HR\Compensation X X X X X

Executive Experience X X X X X X X X

Operations X X X

Strategic Planning\Oversight X X X X X X X X

Sales and Marketing X X X

Technology X X X X

Andrew Makrides , Esq.

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As President of Gyrus ACMI’s surgical division, Mr.

Goodwin developed the company’s global distribution network and achieved average annual sales growth of 35% for three consecutive years, resulting in a promotion to President of Worldwide Sales in 2007.

Goodwin developed the company’s global distribution network and achieved average annual sales growth of 35% for three consecutive years, resulting in a promotion to President of

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Worldwide Sales in 2007.

As President of Worldwide Sales for Gyrus ACMI, Mr.

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Citronowicz’s employment contract extends to December 31, 2022.

Waldman, CPA , age 74, Director, Audit Committee Chair, and Lead Independent Director since March 2011.

Waldman, CPA , age 75, Director since March 2011 and Audit Committee Chairperson.

Waldman has over thirty-five years of experience in public accounting.

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Prior to joining EisnerAmper LLP, Mr.

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Waldman was the Partner-in-Charge of Commercial Audit Practice Development for Holtz Rubenstein Reminick, LLP from July 2006 to August 2011.

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Waldman was elected to the Board of Directors of Comtech Telecommunications Corp.

in August of 2015 and since December 2015, serves as Chair of its audit committee.

in August of 2015 and since December 2015, serves as Chair of its audit committee, and since December 17, 2021 serves as its Independent Lead Director.

In October 2016, Mr.

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Waldman is qualified to serve as Director, Audit Committee Chair and Lead Independent Director because of his over 35 years experience in public accounting and his positions on various boards.

Michael Geraghty , age 73, has served as a director since March 2010 and was previously employed as the President of Global Sales at Optos, Inc., a developer and manufacturer of retinal imaging devices for screening, detection and diagnosis of eye related conditions.

Michael Geraghty , age 74, has served as a director since March 2010 and was previously employed as the President of Global Sales at Optos, Inc., a developer and manufacturer of retinal imaging devices for screening, detection and diagnosis of eye

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related conditions.

From 2005 through 2008, he was the President of International Sales at Gyrus Acmi where he first started in 2000 as Senior Vice President of Sales for Gyrus Medical.

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He also is a partner of Hawk Healthcare, LLC, which provides strategic transaction management to private individuals and companies.

Since 2011, Mr.

Andres has served as the Legal Compliance Officer of Electrocore, Inc., a medical device company.

Andres joined the Longeviti Neuro Solutions, LLC Board of Directors which is developing cranial implant products for cranial reconstruction.

Andres helped found K2M, Inc.

(KTWO) and from 2004 until 2010 served as

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a member of the Board of Directors of K2M, Inc.

(KTWO) and from 2004 until 2010 served as a member of the Board of Directors of K2M, Inc.

Prior to 2004, Mr.

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Andres is qualified to serve as a director because of his extensive experience in patent and business strategy development and execution in the medical device industry.

Minnie Baylor-Henry , age 73, Director and Regulator Compliance Committee Chair since August 2019.

Minnie Baylor-Henry , age 74, Director and Regulatory Compliance Committee Chair since August 2019.

Baylor-Henry has over 25 years of regulatory affairs experience.

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Prior to joining the private sector, she worked for the US Food & Drug Administration (1991-1999) in many roles, including serving as the Director of the Division of Drug, Marketing, Advertising & Communications and the FDA’s National Health Fraud Coordinator.

Baylor-Henry joined the Board of Directors of scPharmaceuticals, a publicly-held company focused on developing technologies that enable subcutaneous administration of therapies and in 2019 the Board of Directors of PolarityTE, a publicly- held regenerative medicine company.

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Baylor-Henry joined the Board of Directors of scPharmaceuticals, a publicly-held company focused on developing technologies that enable subcutaneous administration of therapies and in 20 she stepped down from the Board of Directors of PolarityTE, a publicly- held regenerative medicine company.

She joined the Board of Directors of Paratek Pharmaceuticals, a publicly-held company focused on solutions for patients with infectious diseases.

Baylor-Henry received her pharmacy degree from Howard University’s College of Pharmacy and a law degree from Catholic University’s Columbus School of Law.

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Baylor-Henry is qualified to serve as Director and Regulatory and Compliance Committee Chair because of her extensive experience in global and regulatory management and compliance.

Wendy Levine , age 49, Director, has over 25 years of healthcare marketing and advertising experience across the pharmaceutical, biotech, medical device and vaccine sectors.

She is currently Group President and head of the advertising business at 21GRAMS, part of Real Chemistry, a global health innovation company, that she founded with her partners in 2018.

From 2003 to 2007, Ms.

Levine worked at Johnson & Johnson, where she served as Group Product Director in the Specialty Pharmaceuticals Business Unit and then as Director, Stakeholder Marketing in the Medical Device Business Unit.

From 2007 to 2009, Ms.

Levine held the position of Senior Director of Marketing for the influenza portfolio at Novartis Vaccines.

From 2009 to 2014, a love for advertising brought her to the agency world, where she rose through the ranks within account management at The Bloc.

From 2014 to 2015, Ms.

Levine held the role of EVP, Managing Director at McCann Health.

From 2015 to 2017, she worked as Director of Client Services at GSW.

Levine received her bachelor’s degree in interdisciplinary studies (economics and Western European culture) from the University of Pittsburgh and a master’s degree in education from Beaver College (Arcadia University).

The Company believes Ms.

Levine is qualified to serve as Director because of her extensive experience in marketing and advertising.

Involvement in Certain Legal Proceedings

Independent Board Members

The Board currently has six independent members, Andrew Makrides, John Andres, Michael Geraghty, Lawrence J.

Waldman, Craig Swandal and Minnie Baylor-Henry who meet the existing independence requirements of The NASDAQ Stock Market LLC and the Securities and Exchange Commission.

The Board currently has seven independent members, Andrew Makrides, John Andres, Michael Geraghty, Lawrence J.

Waldman, Craig Swandal, Minnie Baylor-Henry and Wendy Levine, each of whom meets the existing independence requirements of The NASDAQ Stock Market LLC and the Securities and Exchange Commission.

Board Leadership

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The committee chairs have authority to hold executive sessions without management and non-independent directors present.

The Board has no formal policy with respect to separation of the positions of Chairman and CEO or with respect to whether the Chairman should be a member of management or an independent director, and believes that these are matters that should be

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discussed and determined by the Board from time to time.

The Chief Executive Officer of the Company, Charles D.

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Goodwin is best suited for leading discussions, at the Board level, regarding performance relative to our corporate strategy and this discussion accounts for a significant portion of the time devoted at our Board meetings.

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Board Evaluations

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During 2021, Mr.

Waldman served as the Audit Committee Chairman and financial expert.

Waldman served as the Audit Committee Chairperson and financial expert.

The Audit Committee meets as often as it determines necessary but not less frequently than once every fiscal quarter.

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Governance and Nominating Committee

The Governance and Nominating Committee is responsible for matters relating to the corporate governance of our company and the nomination of members of the board and committees thereof.

During 2020, our Governance and Nominating Committee consisted of three independent members of the Board of Directors, John Andres who serves as Chairman, Lawrence J.

During 2021, our Governance and Nominating Committee consisted of three independent members of the Board of Directors, John Andres who serves as Chairperson, Lawrence J.

Waldman and Michael Geraghty.

The Governance and Nominating Committee meets as often as it determines necessary, but not less than once a year.

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Compensation Committee

The Compensation Committee is responsible for overseeing our compensation and employee benefit plans (including those involving the issuance of our equity securities) and practices, including formulating, evaluating and approving the compensation of our executive officers and reviewing and recommending to the full Board of Directors the compensation of our Chief Executive Officer.

During 2020, our Compensation Committee consisted of three independent members of the Board of Directors, Michael Geraghty who served as Chairman, John Andres and Lawrence J.

During 2021, our Compensation Committee consisted of three independent members of the Board of Directors, Michael Geraghty who served as Chairperson, John Andres and Lawrence J.

The Compensation Committee meets as often as it determines necessary, but not less than once a year.

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Specifically, the Committee provides oversight of management’s efforts to comply with the requirements for a medical device company operating in a highly regulated environment with respect to healthcare compliance, product quality and safety, and other areas as directed by the Board.

During 2020, our Regulatory Compliance Committee consisted of three independent members of the Board of Directors, Minnie Baylor-Henry who serves as Chairperson, John Andres and Craig Swandal.

During 2021, our Regulatory Compliance Committee consisted of four independent members of the Board of Directors, Minnie Baylor-Henry who serves as Chairperson, John Andres, Craig Swandal and Wendy Levine.

The Regulatory Compliance Committee meets as often as it determines necessary, but not less than once a year.

Code of Ethics

The Company made revisions to the Code of Ethics in the fourth quarter of 2019.

We made minor revisions to our Code of Ethics (“the Code”) in the first quarter of 2021.

We also have made available a whistleblower hotline that provides a mechanism for reporting breaches of the Code in an anonymous manner.

Review and acknowledgement of the Code is required of all new employees as part of the on-boarding process, and of all existing employees on an annual basis.

A copy of the code of ethics, which expressly includes the fiduciary responsibilities of the CEO and CFO, along with a summary of the changes made in 2021, is available on our website at https://apyxmedical.com/code-of-ethics-and-conduct/ .

Executive Compensation Discussion and Analysis

This Compensation Discussion & Analysis (“CD&A”) explains our executive compensation program for our named executive officers (“NEOs”) listed below.

This CD&A also describes the Compensation Committee’s process for making pay decisions, as well as its rationale for specific decisions related to the fiscal year ended December 31, 2021.

Although Apyx Medical qualifies as a “smaller reporting company” as defined by the SEC, which allows us to take advantage of scaled-back disclosure requirements, we are including more extensive narrative about our executive compensation program in an effort to be more transparent.

We are also committed to keeping an open dialogue with our stockholders to help ensure that we have a regular pulse on investor perspectives and, as we continue to grow, we intend to further enhance our outreach efforts during 2022 and into the future.

Name Position

Goodwin President, CEO and Director

Moshe Citronowicz Senior Vice President

Todd Hornsby Executive Vice President

Tara Semb Chief Financial Officer

2021 Business Overview

2021 was a strong year for Apyx Medical Corporation, made possible by the hard work of our team members.

We delivered Advanced Energy sales growth in excess of 90% in 2021, which is impressive growth given the challenging operating

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environment this year.

We had notable operational progress to advance our long-term growth strategy and the impressive demand we have seen for our innovative Helium Plasma Technology reaffirms our conviction in the compelling long-term opportunity that remains ahead.

Below are key financial and strategic highlights:

• Total revenue of $48.5 million, representing growth of 75% year-over-year

• Advanced Energy revenue of $ $43.0 million, representing growth of approximately 93% year-over-year

• Loss from operations of $14.1 million, vs.

$20.1 million in 2020

WHAT GUIDES OUR PROGRAM

General Compensation Philosophy

The primary objective of our compensation program for employees, including our compensation program for executive officers, is to attract, retain and motivate qualified individuals and reward them in a manner that is fair to all stockholders.

We strive to provide incentives for every employee that rewards them for their contribution to the Company.

Our compensation program is designed to be competitive with other employment opportunities and to align the interests of all employees, including executive officers, with the long-term interests of our stockholders.

Historically, for our executive officers, we link a much higher percentage of total compensation to incentive compensation such as stock-based compensation than we do for other employees.

With these objectives in mind, our Board has built executive and non-executive compensation programs that consist of three principal elements - base salary, performance bonuses and grants of stock options and/or shares of restricted stock.

To understand the competitiveness of compensation arrangements provided to our executive officers, in 2014 the Compensation Committee engaged Pearl Meyer & Partners to perform a competitive assessment of base salaries, bonuses for on-target performance and grants of equity incentives.

In 2018 and again in 2019, Pearl Meyer & Partners updated the competitive frame of reference for the study to consist of the following group of pre-selected companies that were of comparable size and operated in our industry category.

We strive to provide incentives for every employee that reward them for their contribution to the Company.

Performance-Driven and Stockholder-Aligned

A portion of a NEO’s total compensation should be variable (“at-risk”) and linked to the achievement of specific short- and long-term performance objectives and designed to drive stockholder value creation.

Competitively-Positioned

Target compensation should be competitive with that being offered to individuals in comparable roles at other companies with which we compete for talent to ensure that we employ the best people to lead our success.

Responsibly-Governed

Decisions about compensation should be guided by best-practice governance standards and rigorous processes that encourage prudent decision-making.

Elements of Pay

Pay Element How It’s Paid Purpose

Base Salary Cash (Fixed) Provide a competitive base salary rate relative to similar positions in the market and enable the Company to attract and retain critical executive talent.

Performance Bonuses (Annual Incentives) Cash (Variable) Reward executive officers for delivering on annual financial and/or strategic objectives that contribute to the creation of stockholder value.

Long-Term Incentives Equity (Variable) Provide incentives for executive officers to execute on longer-term financial goals that drive the creation of stockholder value, support the Company’s retention strategy, and provide alignment with the interests of our stockholders.

The Decision-Making Process

The Role of the Compensation Committee.

The Compensation Committee oversees the executive compensation program for our NEOs.

The Compensation Committee is comprised of independent, non-employee members of the Board.

The Compensation Committee works very closely with its independent consultant and management to examine the effectiveness of the Company’s executive compensation program throughout the year.

Details of the Compensation Committee’s authority and responsibilities are specified in its charter, which may be accessed at apyxmedical.com.

The Compensation Committee makes all final compensation and equity award decisions regarding our NEOs, except for the CEO, whose compensation is determined by the independent members of the full Board, based upon recommendations of the Compensation Committee.

The Role of Management.

Members of our management team attend regular meetings where executive compensation, Company and individual performance, and competitive compensation levels and practices are discussed and evaluated.

Only the Compensation Committee members are allowed to vote on decisions regarding NEO compensation.

The CEO reviews his recommendations pertaining to other executives (non-NEO) pay with the Compensation Committee providing transparency and oversight.

Decisions on non-NEO pay are made by the CEO.

The CEO does not participate in the deliberations of the

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Compensation Committee regarding his own compensation.

Independent members of the Board make all final determinations regarding CEO compensation.

The Role of the Independent Consultant.

The Compensation Committee engages an independent compensation consultant to provide expertise on competitive pay practices, program design, and an objective assessment of any inherent risks of any programs.

Pursuant to authority granted to it under its charter, the Compensation Committee has hired Pearl Meyer & Partners, LLC (“Pearl Meyer”) as its independent consultant.

Pearl Meyer reports directly to the Compensation Committee and does not provide any additional services to management.

The Compensation Committee has conducted an independence assessment of Pearl Meyer in accordance with SEC rules.

The Role of Peer Group Companies.

The Compensation Committee strives to set a competitive level of total compensation for each NEO as compared with executive officers in similar positions at comparable companies, which we define as our compensation peer group.

The Compensation Committee looks to its independent compensation consultant to provide and analyze competitive market data for each NEO, comparing each of their individual components of compensation and total compensation to market.

In addition to the peer group, Pearl Meyer may reference industry-specific, size-adjusted market survey data where appropriate.

This competitive assessment was last conducted in late 2019 for purposes of setting compensation levels for 2020.

Given the impact of the COVID-19 pandemic on our business in 2020, the Compensation Committee elected not to update the peer group or conduct a competitive assessment in late 2020 for the purposes of compensation determinations for 2021.

As described further below, the Compensation Committee froze cash compensation levels for 2021 and sized equity awards at a discount to those granted in 2020.

At the time of our last competitive assessment, Pearl Meyer recommended and the Compensation Committee approved an update to our peer group.

Pearl Meyer developed a set of objective filtering and selection criteria to identify US-based, publicly traded companies in the health care equipment, supplies or technology space that were comparable to Apyx at the time in terms of both revenue and market capitalization.

The 2020 compensation peer group was composed of the following companies and was unchanged for 2021:

GenMark Diagnostics, Inc.

OrthoPediatrics Corp.

BioLife Solutions, Inc.

Sensus Healthcare, Inc.

Corindus Vascular Robotics, Inc.

IRIDEX Corporation Restoration Robotics, Inc.

IRadimed Corporation TransEnterix, Inc.

Misonix, Inc.

Sensus Healthcare, Inc.

TransMedics Group, Inc.

Ekso Bionics Holdings, Inc.

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Utah Medical Products Inc.

Nuvectra Corporation Viveve Medical, Inc.

IRadimed Corporation OrthoPediatrics Corp.

In addition to the peer group, Pearl Meyer referenced industry-specific, size-adjusted market survey data where appropriate.

The results of the survey confirmed that, consistent with our desired philosophy, our compensation arrangements were competitive with the marketplace, with some variation by individual.

Compensation Program

2021 Executive Compensation Program

We pay base salaries to our Executive Officers in order to provide a consistent, minimum level of pay that sustained individual performance warrants.

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The Compensation Committee benchmarks base salaries using a major independent consulting firm and using their recommendations and other information the Committee evaluates and establishes the base compensation for our executives.

Due to the impact of the COVID-19 pandemic, none of the NEOs received base salary increases for fiscal 2021.

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Name 2021 2020 % Change

Goodwin $ 450,000 $ 450,000 0%

Moshe Citronowicz $ 299,000 $ 299,000 0%

Todd Hornsby $ 347,000 $ 347,000 0%

Tara Semb $ 328,000 $ 328,000 0%

Performance Bonus

The second component of executive compensation is performance bonuses which are earned when defined metrics are achieved.

For 2020, the Company established a combination of financial, operational and personal objectives as the broad criteria that would determine annual performance bonus amounts for the year.

As a result of COVID-19, the Compensation Committee, in consultation with Pearl Meyer, revised the financial portion of these objectives to non-financial objectives that correlate with the long-term growth of the Company.

Based on the achievement of the non-financial objectives, the Compensation Committee approved payout of the 2020 bonuses at 50% of the levels paid in 2019.

After careful review and consideration of the revised measures that comprise the 2020 bonus, the Compensation Committee approved the following performance bonuses for the named executive officers:

The performance-based cash incentive bonus is designed to provide an opportunity for our senior executives, including our NEOs, to earn an annual incentive, paid in cash, based on the achievement of certain financial targets and/or strategic priorities.

An executive’s incentive target is a percentage of their base salary.

The Compensation Committee assessed our performance against certain financial metrics during 2021 with payouts measured on a scale of zero to 125% of target.

The table below discloses the annual incentive targets for each NEO for 2021:

Name 2021 Base Salary

($) Bonus Target

(% of Base Salary) Bonus at Target

Goodwin $ 450,000 75 % $ 337,500

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Tara Semb $ 328,000 45 % $ 147,600

Total $ 374,150

Stock Options

The third component of executive compensation is equity grants which have mainly come in the form of stock options.

In 2021, we returned to 100% formula-driven, financial performance goals, consistent with our pre-pandemic approach to performance-based compensation.

We used Total Revenue, Operating Income/(loss) and Total Operating Cash Burn as the financial performance metrics for determining annual performance bonuses because we believe it is important to focus on driving our top line revenue growth, while focusing on continued improvements to our gross product margins and efficiently investing in our operations to drive towards longer-term, bottom-line profitability.

This ultimately results in our ability to maintain acceptable levels of cash burn, setting a path to generating positive cash flow through our overall business performance.

2021 Annual Incentive Plan Payouts.

Based on the actual financial performance results, the funding for performance bonuses was set at 125% of each NEO’s applicable target.

The Committee retains discretion to further adjust the award upward or downward based on its assessment of individual performance.

The following table lists the actual awards earned by the NEOs in 2021 (and paid in 2022):

Name Bonus Target

(% of Base Salary) Bonus Target

($) Actual Award Payout

Goodwin 75 % $ 337,500 $ 421,875

Moshe Citronowicz 30 % $ 89,700 $ 112,125

Todd Hornsby 50 % $ 173,500 $ 216,875

Tara Semb 45 % $ 147,600 $ 184,500

Equity Compensation

We believe that equity ownership in our Company is important to provide our Executive Officers and key employees with long-term incentives to better align interests of executives with the interests of stockholders and build value for our stockholders.

In addition, the equity compensation is designed to attract and retain the executive management team.

Stock options have value only if the stock price increases over time and, therefore, provide executives with an incentive to build Apyx’s value.

This characteristic ensures that the Executive Officers and key employees have a meaningful portion of their compensation tied to future stock price increases and rewards management for long-term strategic planning through the resulting enhancement of the stock price.

In addition, equity compensation is designed to attract and retain the executive management team and other key employees throughout the organization.

In January 2021, the Board approved equity awards to the NEOs.

These equity awards were granted using incentive stock options to the extent permitted by the IRS;

due to the impact of COVID-19, these were granted at levels representing 50% of the eligible shares to be granted to each person.

Stock options are intended to align the interests of award recipients with those of stockholders, since options deliver value only if Apyx’s stock price appreciates after they are granted.

This characteristic

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ensures that the Executive Officers and key employees have a meaningful portion of their compensation tied to future stock price increases and rewards management for long-term strategic planning through the resulting enhancement of the stock price.

The 2021 awards for each NEO were as follows:

Name Stock Options

(# of options)

Goodwin 121,500

Moshe Citronowicz 36,000

Todd Hornsby 50,000

Tara Semb 48,000

The stock options vest one-third per year on the anniversary date of the grant over a 3-year period, expire on the 10 th anniversary of the grant date, and have an exercise price of $9.29 per share.

Stock options are subject to the award recipient’s continued employment through each vesting date.

Stock option awards to Executive Officers and key employees are entirely discretionary.

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The Board of Directors approves, rejects, or, if necessary, modifies the Committee’s recommendations.

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Perquisites and Other Benefits

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Tax and Accounting Considerations

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), places a limit of $1.0 million on the amount of compensation that we may deduct as a business expense in any year with respect to each of our most highly paid executives unless, among other things, such compensation is performance-based and has been approved by stockholders.

The non-performance-based compensation paid to our executive officers for the 2020 fiscal year did not exceed the $1.0 million limit per executive officer.

We regularly consider the various tax and accounting implications of our compensation plans.

Section 162(m) of the Code generally prohibits any publicly held corporation from taking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year to the CEO and the other “covered employees” as defined in the rule.

Under the tax laws in effect before 2018, compensation that qualified as “performance-based compensation” under Section 162(m) of the Code was deductible without regard to this limitation.

Effective for tax years beginning after December 31, 2017, the Tax Cuts and Jobs Act of 2017 generally eliminated the performance-based exemption, subject to a special rule that grandfathers certain awards and agreements that were in effect on November 2, 2017.

While considering tax deductibility as only one of several considerations in determining compensation, the Committee believes that the tax deduction limitation should not compromise its ability to structure compensation programs that provide benefits to the Company that outweigh the potential benefit of a tax deduction and, therefore, may approve compensation that is not deductible for tax purposes.

Accounting considerations also play an important role in the design of our executive compensation program.

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Because of option expensing and the impact of dilution on our stockholders, we pay close attention to the number and value of the shares underlying stock options we grant.

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Compensation of Executive Officers

The following table sets forth the compensation paid to each of our Executive Officers for the three years ended December 31, 2020 and 2019 for services to our Company in all capacities:

The following table sets forth the compensation paid to each of our Executive Officers for the years ended December 31, 2021 and 2020 for services to our Company in all capacities:

Name and Principal Position Year Salary Bonus

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CFO, Treasurer and Secretary 2020 $ 328,000 $ 73,800 $ — 472,128 $ — $ — $ 9,257 $ 883,185

*Assumed role as Executive Vice President on January 2, 2019.

**Assumed role as CFO, Treasurer and Secretary on January 2, 2019.

(1) These columns represent the grant date fair value of the awards as calculated in accordance with FASB ASC 718 (Stock Compensation).

(2) The amounts for 2021 include compensation under the following plans and programs:

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Citronowicz T.

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(1) Employment contracts provide for the Executives to remain employed by the Company until such time as their employment is terminated pursuant to the terms of their Employment Agreement.

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Goodwin Employment Agreement

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Goodwin’s options which were exercisable as of the date of termination shall remain exercisable for a period of 3 months following the date of termination.

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In the event Mr.

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Semb will receive an initial annual base salary of $328,000, which shall be reviewed from time to time and may be increased, but not decreased, by the Committee in its sole and exclusive discretion.

Semb shall be entitled to participate in any bonus or incentive plan available to the Company’s executives generally, on such terms as the Committee may determine in its discretion.

Semb shall be entitled to participate in

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any bonus or incentive plan available to the Company’s executives generally, on such terms as the Committee may determine in its discretion.

In the event Ms.

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Semb’s options that (i) were exercisable as of the date of termination and (ii) would have become exercisable on the next anniversary of the effective date following the date of termination, shall become and remain exercisable for a period of 12 months following the date of termination.

APYX MEDICAL CORPORATION

The Semb Agreement contains customary non-competition, non-solicitation, and confidentiality provisions in favor of the Company.

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Hornsby’s outstanding option grants shall continue to be treated in accordance with the terms of the applicable plan and award agreement, provided that the portion of Mr.

Hornsby’s options (i) that were exercisable as of the effective date of the Hornsby Agreement and (ii) that would have become exercisable on the next anniversary of the effective date following the date of termination shall become and remain exercisable for a period of 12 months following the date of termination.

Hornsby’s options (i) that were exercisable as of the effective date of the Hornsby Agreement and (ii)

APYX MEDICAL CORPORATION

that would have become exercisable on the next anniversary of the effective date following the date of termination shall become and remain exercisable for a period of 12 months following the date of termination.

In the event Mr.

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Citronowicz may be terminated as follows:

APYX MEDICAL CORPORATION

Upon the death of the Mr.

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There are no other employment contracts that have non-cancelable terms in excess of one year.

APYX MEDICAL CORPORATION

Outstanding Equity Awards

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Tara Semb 75,333 133,667 $ 8.35 1/9/2029 - 1/29/2031

*** These columns represent the grant date fair value of the awards as calculated in accordance with FASB ASC 718 (Stock Compensation).

In 2003, the Board of Directors adopted, and our stockholders approved Apyx's 2003 Executive and Employee Stock Option Plan covering a total of 1,200,000 shares of common stock issuable upon exercise of options to be granted under the Plan.

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Except for the increase in the number of shares covered by the plan, the plan remains otherwise unchanged from its present status.

In 2011, the Board of Directors granted 25,000 options to purchase a like number of shares of common stock.

In July 2012, our stockholders approved the 2012 Share Incentive Plan covering a total of 750,000 shares of common stock issuable upon exercise of options to be granted under the plan.

In July 2012, the Company’s stockholders approved the 2012 Share Incentive Plan covering a total of 750,000 shares of common stock issuable upon exercise of options to be granted under the plan.

At December 31, 2021 approximately 70,000 are available to be issued in this plan.

In July 2015, our stockholders approved the 2015 Executive and Employee Stock Option Plan covering a total of 2,000,000 shares of common stock issuable upon exercise of options to be granted under the plan.

In July 2015, the Company’s stockholders approved the 2015 Executive and Employee Stock Option Plan covering a total of 2,000,000 shares of common stock issuable upon exercise of options to be granted under the plan.

At December 31, 2021 approximately 240,000 are available to be issued in this plan.

APYX MEDICAL CORPORATION

In August 2017, our stockholders approved the 2017 Executive and Employee Stock Option Plan covering a total of 3,000,000 shares of common stock issuable upon exercise of options to be granted under the plan.

In August 2017, the Company’s stockholders approved the 2017 Executive and Employee Stock Option Plan covering a total of 3,000,000 shares of common stock issuable upon exercise of options to be granted under the plan.

At December 31, 2021 approximately 80,000 are available to be issued in this plan.

In August 2019, our stockholders approved the 2019 Share Incentive Plan covering a total of 2,000,000 shares of common stock issuable upon exercise of options to be granted under the plan.

In August 2019, the Company’s stockholders approved the 2019 Share Incentive Plan covering a total of 2,000,000 shares of common stock issuable upon exercise of options to be granted under the plan.

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.

There have been no changes in the pricing of any options previously or currently awarded.

APYX MEDICAL CORPORATION

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Board of Directors is responsible for determining the compensation of executive officers of the Company, as well as compensation awarded pursuant to the Company’s equity incentive plans.

In 2020, our Compensation Committee consisted of three independent members of the Board of Directors, Michael Geraghty (Chairman), John Andres and Lawrence J.

In 2021, our Compensation Committee consisted of three independent members of the Board of Directors, Michael Geraghty (Chairperson), John Andres and Lawrence J.

No member of the Compensation Committee is or has been an officer or employee of the Company or any of its subsidiaries.

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Based on our Compensation Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, our Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our Proxy Statement and in this Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for filing with the SEC.

During 2020, our Compensation Committee consisted of three independent members of the Board of Directors, Michael Geraghty, who served as Chairman, John Andres and Lawrence J.

During 2021, our Compensation Committee consisted of three independent members of the Board of Directors, Michael Geraghty, who served as Chairperson, John Andres and Lawrence J.

APYX MEDICAL CORPORATION

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Westborough, MA 01581

Andrew Makrides Common 692,712 (ii) Beneficial 2.0 %

Cowen Financial Products, LLC Common 1,990,093 Beneficial 5.5 %

599 Lexington Ave.

New York, NY 10022

Goodwin II Common 1,466,750 (ii) Beneficial 4.1 %

5115 Ulmerton Rd.

Clearwater, FL 33760

Goodwin II Common 1,266,583 (iii) Beneficial 3.6 %

APYX MEDICAL CORPORATION

Andrew Makrides Common 709,060 (iii) Beneficial 2.1 %

5115 Ulmerton Rd.

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Clearwater, FL 33760

APYX MEDICAL CORPORATION

Lawrence Waldman Common 177,817 (v)

Todd Hornsby Common 339,334 (v)

Beneficial 1.0 %

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Clearwater, FL 33760

Todd Hornsby Common 239,000 (vi)

Lawrence Waldman Common 194,165 (vi)

Beneficial 0.6 %

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Clearwater, FL 33760

Craig Swandal Common 66,740 (viii)

Tara Semb Common 145,000 (viii)

Beneficial 0.4 %

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Clearwater, FL 33760

Tara Semb Common 75,333 (x)

Craig Swandal Common 83,088 (x)

Beneficial 0.2 %

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Clearwater, FL 33760

Wendy Levine Common 12,203 (xii)

Beneficial — %

5115 Ulmerton Rd.

Clearwater, FL 33760

Officers and Directors as a group (11 people) 3,954,866

(i) Based on 34,428,487 outstanding shares of Common Stock as of March 15, 2022, of which officers and directors owned a total of 1,135,976 shares at March 15, 2022.

We have calculated the percentage on the basis of the number of outstanding securities plus, for each person or group, any securities that person or group has current or future right to acquire pursuant to options, warrants, conversion privileges or other rights based on the 13G and 13D SEC filings at March 29, 2021 (and exercisable within 60 days thereafter).

We have calculated the percentage ownership in the table above on the basis of the number of outstanding securities plus, for each person or group, any securities that person or group has current or future right to acquire pursuant to options, warrants, conversion privileges or other rights based on the 13G and 13D SEC filings at March 15, 2022 (and exercisable within 60 days thereafter).

(ii) Includes 28,250 shares and 1,438,500 vested options (and exercisable within 60 days thereafter).

APYX MEDICAL CORPORATION

(iii) Includes 607,972 shares and 101,088 vested options (and exercisable within 60 days thereafter).

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(xi) Includes 0 shares and 47,088 vested options (and exercisable within 60 days thereafter).

APYX MEDICAL CORPORATION

(xii) Includes 0 shares and 12,203 vested options (and exercisable within 60 days thereafter).

Section 16(a) Beneficial Ownership Reporting Compliance

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Officers, directors and greater than ten-percent shareholders (the “Reporting Persons”) are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

To the Company’s knowledge, based solely on its review of the copies of such reports received or written representations from certain Reporting Persons that no other reports were required, the Company believes that during its fiscal year ended December 31, 2020 all filing requirements applicable to the Reporting Persons were timely met, with the exception of Craig A.

Swandal who did not timely file his Form 4s for 2 separate transactions and Lawrence J.

Waldman who did not timely file his Form 4 for 1 transaction.

To the Company’s knowledge, based solely on its review of the copies of such reports received or written representations from certain Reporting Persons that no other reports were required, the Company believes that during its fiscal year ended December 31, 2021 all filing requirements applicable to the Reporting Persons were timely met.

APYX MEDICAL CORPORATION

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Independent Board Members

The Board currently has six independent members, Andrew Makrides, John Andres, Michael Geraghty, Lawrence J.

Waldman, Craig Swandal, and Minnie Baylor-Henry, who meet the existing independence requirements of The NASDAQ Stock Market LLC and the Securities and Exchange Commission.

The Board currently has seven independent members, Andrew Makrides, John Andres, Michael Geraghty, Lawrence J.

Waldman, Craig Swandal, Minnie Baylor-Henry and Wendy Levine who meet the existing independence requirements of The NASDAQ Stock Market LLC and the Securities and Exchange Commission.

Principal Accountant Fees and Services

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Total fees billed $ 583 $ 420

In 2019, we reported BDO USA, LLP as our principal accountant.

The 2019 year was subsequently reaudited by RSM US, LLP, and we have included them as our principal accountant in the table above.

Fees paid to BDO USA, LLP in conjunction with their 2019 audit work was $0.8 million.

(1) Audit fees consist of billed and unbilled fees for professional services rendered for the audit of Apyx's annual financial statements and reviews of its interim consolidated financial statements included in quarterly reports and other services related to statutory and regulatory filings or engagements.

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(3) Tax fees consist of billed and unbilled fees for professional services rendered for tax compliance and tax advice (domestic and international).

These services include assistance regarding federal, state and international tax compliance, acquisitions and international tax planning.

These services include assistance regarding federal and international tax compliance and planning associated with transfer pricing and research and development activities.

(4) All other fees consist of fees for products and services other than the services reported above.

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Consolidated Statements of Operations for the years ended December 31, 202 1 and 20 20

Consolidated Statement of Changes in Equity for the years ended December 31, 20 20 a nd 201 9

Consolidated Statement of Changes in Equity for the years ended December 31, 202 1 and 20 20

Consolidated Statements of Cash Flows for the years ended December 31, 202 1 and 20 20

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(a)(3) EXHIBITS

APYX MEDICAL CORPORATION

3.1 Articles of Incorporation of the Registrant (Incorporated by reference to the Registrant’s report on Form 10-K/A filed on March 31, 2011)

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3.5 Certificate of Amendment of the Certificate of Incorporation of the Registrant (Incorporated by reference to the Registrant's Current Report on Form 8-K filed on December 28, 2018)

4.1 Indenture (Incorporated by reference to the Registrant's Registration Statement on Form S-3 filed on May 4, 2018)

4.1 Description of the Registrant’s Securities (Incorporated by the reference to the Registrant's Annual Report on Form 10-K filed on March 31, 2020)

10.1** Charles D.

Goodwin II Employment Agreement, dated December 15, 2017 (Incorporated by the reference to the Registrant's Annual Report on Form 10-K filed on March 13, 2018)

10.2** Separation Agreement and General Release, dated November 12, 2018, by and between the Company and Jay D.

Ewers (Incorporated by the reference to the Registrant's Annual Report on Form 10-K filed on March 14, 2019)

10.3** Tara Semb Employment Agreement, dated January 2, 2019 (Incorporated by the reference to the Registrant's Annual Report on Form 10-K filed on March 14, 2019)

Tara Semb Amended and Restated Employment Agreement, dated September 16, 2020 (Incorporated by reference to the Registrant's Current Report on Form 8-K filed on September 18, 2020)

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14.1 Code of Ethics (Incorporated by the reference to the Registrant's Annual Report on Form 10-K filed on March 31, 2020)

16.1 Letter from B DO USA, LLP (Incorporated by the reference to the Registrant's Current Report on Form 8-K filed on August 20, 2020)

21.1 List of Subsidiaries (Incorporated by the reference to the Registrant's Annual Report on Form 10-K filed on March 31, 2020)

21.1* List of Subsidiaries

23.1* Consent of RSM US LLP

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101.PRE*** XBRL Taxonomy Extension Label Presentation Document

APYX MEDICAL CORPORATION

* Filed herewith.

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Minnie Baylor-Henry

/s/ WENDY LEVINE Director March 17, 2022

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 9A. Controls and Procedures