ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis in conjunction with our consolidated financial statements and related notes contained elsewhere in this report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors discussed in this report and those discussed in other documents we file with the SEC. In light of these risks, uncertainties and assumptions, readers are cautioned not to place undue reliance on such forward-looking statements. These forward-looking statements represent beliefs and assumptions as of the date of this report. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. Past performance does not guarantee future results.

Executive Level Overview

We are a surgical aesthetics company with a passion for elevating people’s lives through innovative products, including its Helium Plasma Platform Technology products marketed and sold as Renuvion® and the AYON Body Contouring SystemTM (“AYON”) in the cosmetic surgery market and J-Plasma® in the hospital surgical market. Renuvion and J-Plasma offer surgeons a unique ability to provide controlled heat to tissue to achieve their desired results. AYON is an FDA-cleared, surgeon-designed body contouring system that combines precision, versatility, and innovation in an all-in-one platform. It seamlessly integrates fat removal, closed loop contouring, and Renuvion’s tissue contraction and electrosurgical capabilities, empowering surgeons to deliver comprehensive body contouring treatments for patients. We also leverage our deep expertise and decades of experience in unique waveforms through OEM agreements with other medical device manufacturers.

Glucagon- like peptide -1 peptide receptor agonists (“GLP-1’s”), such as Mounjaro®, Wegovy® and Ozempic®, are prescribed for the treatment of diabetes and or weight loss in combination with exercise to improve glycemic control. GLP-1’s have also been found to mimic the GLP-1 satiety hormone in our bodies. When one eats, GLP-1 is released in the small intestines regulating blood sugar and sending signals to the brain centers that control appetite. Studies have shown patients taking GLP-1’s have experienced a loss of body weight. Currently, two GLP-1’s are cleared by the FDA for weight loss and now oral versions have been approved and, we anticipate a number of additional drug candidates will be approved.

We believe the increased use of GLP-1’s has had an initial negative impact on the revenue for plastic and cosmetic surgeons and created uncertainty in the aesthetic space. However, we believe, as these drugs will have a ripple effect that will eventually drive people towards plastic surgery and may provide a tailwind for sales of our Renuvion products. Rapid weight loss caused by these drugs can contribute to loose skin, particularly in the curvier areas of the body. To address this, the cosmetic surgery market is focusing on body contouring. Body contouring is a customizable treatment for patients to target specific fat deposits, engage in the transfer of fat, and treatments to address loose or lax skin. Renuvion is the only FDA approved device for the treatment of this issue post liposuction. Additionally, Renuvion may be used to treat skin laxity without the use of liposuction, potentially increasing the total available market for our products.

We have incurred recurring net losses and cash outflows from operations and we anticipate that losses will continue in the near term. For the year ended December 31, 2025, we incurred a loss from operations of $6.4 million and used $8.0 million of cash in operations. As of December 31, 2025, we had cash and cash equivalents of $31.7 million. We plan to continue to fund our operations and capital funding needs through existing cash, sales of our products and, if necessary, additional equity and/or debt financing. However, we cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on terms acceptable to us. The sale of additional equity would result in dilution to our stockholders. Incurring additional debt financing would result in further debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. If we are unable to raise additional capital in sufficient amounts or on acceptable terms, we may be required to delay, limit, reduce, or terminate our sales, marketing and product development. Any of these actions could harm our business, results of operations, cash flows and prospects.

In November 2024, we undertook a cost saving restructuring which included an organizational reduction in force to better focus, optimize and streamline operations. As a result of the organizational changes, we reduced our U.S. workforce by nearly 25%. We estimated the annualized future cost savings from the reduction in force to be approximately $4.3 million. We incurred pre-tax charges of approximately $0.6 million in the fourth quarter of 2024 representing, for the most part, one-time cash expenditures for severance and other employee termination benefits. In addition to the reduction in force, we eliminated bonuses in 2024, reduced the size of the board of directors from eight to five members and reduced aggregate board cash compensation from $0.5 million annually to $0.1 million, while increasing board stock-based compensation.

In addition to the organizational changes, we identified other direct cost savings we achieved in 2025. The identified cost savings include reductions in professional fees, lower research and development costs, lower credit card fees and stock-based compensation. These cost savings reduced our annual operating expenses below $40.0 million in 2025, as compared to $48.2 million and $53.7 million in 2024 and 2023, respectively.

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APYX MEDICAL CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

On November 8, 2023, we entered into a Credit and Guaranty Agreement (the “Perceptive Credit Agreement”), by and among Apyx Medical (as borrower), Apyx China Holding Corp. and Apyx Bulgaria EOOD, our wholly-owned subsidiaries (as subsidiary guarantors), and Perceptive Credit Holdings IV, LP (as initial lender and administrative agent) (“Perceptive”), and the lenders from time to time party thereto. The Perceptive Credit Agreement provided for a facility of up to $45 million, consisting of senior secured term loans. The Perceptive Credit Agreement provided for (i) an initial loan of $37.5 million and (ii) a delayed draw loan of $7.5 million. Our ability to borrow the delayed draw loan of $7.5 million lapsed on December 31, 2024.

On November 7, 2024, we entered into an amendment to the Perceptive Credit Agreement. The amendment reduced the financial covenant trailing twelve-month revenue targets relating to its Surgical Aesthetics segment (tested quarterly), with amended year-end targets of $37.0 million, $52.4 million and $60.3 million for 2025, 2026 and 2027, respectively. The amendment also introduced a maximum operating expense financial covenant, with full year targets of $40.0 million and $45.0 million for 2025 and 2026, respectively. The Perceptive Credit Agreement, as amended, continues to contain customary affirmative and negative covenants, including covenants limiting our ability, and our subsidiaries to, among other things, to incur debt, grant liens, make distributions, enter certain restrictive agreements, pay or modify subordinated debt, dispose of assets, make investments and acquisitions, enter into certain transactions with affiliates, and undergo certain fundamental changes, in each case, subject to limitations and exceptions set forth in the Perceptive Credit Agreement. Additionally, we must maintain a balance of $3.0 million in cash and cash equivalents during the term of the Perceptive Credit Agreement. As of December 31, 2025, we were in compliance with the financial covenants contained within the Perceptive Credit Agreement, as amended. Our continued compliance with covenants is subject to meeting or exceeding forecasted Surgical Aesthetics revenues, as amended, and reducing operating expenses.

For a more in-depth description of the terms of the Perceptive Credit Agreement, as amended, see Note 10 in Item 8 of this Annual Report on Form 10-K.

On November 7, 2024, we closed a $7.0 million registered direct offering with a healthcare-focused fund and issued 3,000,000 shares of common stock and 2,934,690 of pre-funded warrants to purchase common stock with an exercise price of $.001 per share.

For a more in-depth description of the terms of the registered direct offering, see Note 12 in Item 8 of this Annual Report on Form 10-K.

On November 18, 2025, we entered into an underwriting agreement where we sold 2,762,431 shares of common stock at an offering price of $3.62. After deducting incremental direct costs of the Offering, the our net proceeds were approximately $9.1 million.

For a more in-depth description of the terms of the offering, see Note 12 in Item 8 of this Annual Report on Form 10-K.

On December 1, 2025, we filed a shelf registration statement providing us the ability to register and sell our securities in the aggregate amount up to $100 million. This shelf registration statement replaced our previous shelf registration statement that expired during December 2025.

On May 13, 2025, we announced that we had received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) for AYON. We completed the soft launch of AYON, leveraging our relationships with key surgeons in critical geographies. Additionally, we commenced the commercial launch of AYON in September 2025.

AYON was developed with a focus on versatility and innovation. AYON has been designed to be the only device a surgeon needs for comprehensive body contouring solutions. This all-in-one system integrates advanced modalities to perform multiple functions seamlessly, removing unwanted fat, enhancing tissue contraction and addressing the full range of patient needs from contouring to aesthetic enhancement. The initial submission for AYON includes the following:

• Infiltration

• Dual aspiration to facilitate simultaneous users

• Ultrasound-assisted liposuction

• Electrocoagulation to support procedures requiring removal of excess tissue

• Volume enhancement capabilities

• Renuvion treatment to address loose and lax skin

On October 13, 2025, we announced that we had submitted the 510(k) premarket notification to the FDA for the label expansion of AYON to include power liposuction. We anticipate the clearance in the second quarter 2026.

On July 28, 2025, we announced the launch of Renuvion in China following receipt of initial market clearance from the National Medical Products Administration of China.

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Other Matters

During 2025, we continued to accelerate sales growth in our Surgical Aesthetics business by launching AYON in the U.S. aesthetic surgery market, beginning in September, and fulfilling demand from distributors for Renuvion in our international markets. Management estimates that our products have been sold in more than 60 countries. Our direct sales force, along with our international network of distributors, is focused on becoming the sole provider of surgical equipment in the cosmetic surgical markets. This sales force is supported by a global team of clinical support specialists, which focuses on supporting our users to ensure optimal outcomes for their patients. In addition, we have invested in training programs and marketing-related activities to support accelerated adoption of our technology into surgeons' practices.

We believe that our continued investment and focus on the following strategic initiatives in 2026 and beyond will position us for long-term growth in the cosmetic surgery market:

• To continue to execute our regulatory pathway for AYON in the United States

In regards to our operating segments, our results are aggregated into reportable segments only if they exhibit similar economic characteristics. In addition to similar economic characteristics, we also consider the following factors in determining the reportable segments: the nature of business activities, the management structure directly accountable to our chief operating decision maker for operating and administrative activities, availability of discrete financial information, and information presented to the Board of Directors and investors. Asset information is not reviewed by the chief operating decision maker by segment and is not available by segment and, accordingly, we have not presented a measure of assets by reportable segment.

We operate in two business segments: Surgical Aesthetics and OEM. The Surgical Aesthetics segment sells both capital equipment and consumables in the form of a single use handpiece. Sales of handpiece units are a substantial portion of our business and for the years ended December 31, 2025 and 2024, we sold approximately 84,000 and 94,000 units, respectively. Our single-use handpiece revenue accounts for approximately 50% and 63% of our total Surgical Aesthetics revenue for the years ended December 31, 2025 and 2024, respectively. “Corporate & Other” includes certain unallocated corporate and administrative costs which are not specifically attributed to any reportable segment. The OEM segment is primarily development and manufacturing contract and product driven, and all related expenses are recorded as cost of sales, therefore no segment specific operating expenses are incurred.

We strongly encourage investors to visit our website: www.apyxmedical.com to view the most current news and to review our filings with the Securities and Exchange Commission.

Results of Operations

Sales, net

Year Ended

December 31,

Sales by Reportable Segment

Sales by Domestic and International

Total revenue increased by 9.9% or approximately $4.7 million for the year ended December 31, 2025 when compared with 2024. Surgical Aesthetics segment sales increased 17.4% or approximately $6.7 million for the year ended December 31, 2025 when compared with 2024. The Surgical Aesthetics sales increase was driven by sales of AYON in the U.S., as we commenced our commercial launch during September 2025. This increase was partially offset by decreases in domestic sales of generators, including upgrades to the Apyx One Console, where the purchase of AYON was not part of the sale, and decreased volume of single-use handpieces.

The OEM product line consists of proprietary products designed specifically for third party equipment manufacturers. Revenue for this product line decreased 20.9%, or approximately $2.0 million, when compared to 2024. The decrease in OEM sales was due to decreases in sales volume to existing customers. With the focus on Surgical Aesthetics, we anticipate that the OEM segment revenue will continue to decrease over time.

International sales represented approximately 26.6% and 29.3% of total revenues for the years ended December 31, 2025 and 2024, respectively. Management estimates our products have been sold in more than 60 countries through local distributors coordinated by sales and marketing personnel through our facilities in Clearwater, Florida and Sofia, Bulgaria.

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Gross Profit

Year Ended

December 31,

Percentage of sales 37.5 % 39.0 %

Percentage of sales 62.5 % 61.0 %

Our gross profit margin as a percentage of sales increased by approximately 1.5% during the year ended December 31, 2025, compared with 2024. The increase in gross profit margins for the year ended December 31, 2025 from the prior year is primarily due to mix between our two segments, with Surgical Aesthetics comprising a higher percentage of total sales and geographic mix, with domestic sales comprising a higher percentage of total sales. These increases were partially offset by tariffs that began effecting us in the second half of 2025.

Other Costs and Expenses

Research and development

Year Ended

December 31,

Research and development expense $ 3,373 $ 5,080 (33.6 )%

Percentage of sales 6.4 % 10.6 %

Our expenses for research and development related activities decreased by 33.6%, or approximately $1.7 million for the year ended December 31, 2025, compared with 2024. This decrease was primarily due to lower compensation and benefits costs from the prior year ($1.1 million) and lower spending on our product development initiatives and clinical studies ($0.6 million), as we complete the development of AYON.

Professional services

Year Ended

December 31,

Professional services expense $ 6,303 $ 6,914 (8.8 )%

Percentage of sales 11.9 % 14.4 %

Professional services expenses decreased 8.8%, or approximately $0.6 million for the year ended December 31, 2025, compared with 2024. This decrease was primarily due to decreases in physician and marketing consulting ($0.3 million), legal expenses ($0.3 million), accounting and audit fees ($0.1 million) and recruiting expenses ($0.1 million). These decreases were partially offset by an increase in board of director’s stock-based compensation expense ($0.2 million), which was offset by lower board cash compensation included in selling, general and administrative expenses.

Salaries and related costs

Year Ended

December 31,

Percentage of sales 26.5 % 36.1 %

Salaries and related expenses decreased 19.3%, or approximately $3.3 million for the year ended December 31, 2025, compared to 2024. The decrease was primarily due to a decrease in salaries and benefits ($2.9 million), which was due to lower headcount following our reduction in force in the fourth quarter of 2024 and lower stock-based compensation expense ($1.8 million). These decreases were partially offset by increases in bonus expense ($1.3 million) as the compensation committee declared a discretionary bonus in 2025 based on our financial and operational results and temporary labor costs ($0.1 million).

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Selling, general and administrative expenses

Year Ended

December 31,

Percentage of sales 29.9 % 39.2 %

Selling, general and administrative expense decreased by 16.2%, or approximately $3.1 million for the year ended December 31, 2025, compared with 2024. The change is primarily due to lower meeting and training costs ($1.0 million), travel expenses ($0.9 million), insurance expense, including claims on our policies ($0.6 million), regulatory and translation expenses ($0.4 million), board of directors cash compensation ($0.3 million), foreign currency gains and losses ($0.2 million), sales and property taxes ($0.1 million), payment processing fees ($0.1 million), software subscriptions ($0.1 million) and office supplies and shipping costs ($0.1 million). These decreases were partially offset by higher commissions ($0.5 million) and advertising expense, including trade show fees and related costs ($0.3 million).

Interest Income (Expense)

Year Ended

December 31,

Percentage of sales 2.1 % 3.3 %

Percentage of sales (10.6 )% (12.3 )%

Interest income decreased approximately $0.5 million for the year ended December 31, 2025, compared with 2024. This decrease is due to a lower average balance and lower average yield in on our cash equivalents in money market funds and U.S. Treasury securities.

Interest expense decreased approximately $0.3 million for the year ended December 31, 2025, when compared with the prior year. The decrease is primarily attributable to the write off of deferred costs allocated to the delayed draw term loan that expired in 2024.

Other Income (Loss), net

Year Ended

December 31,

Other income (expense), net $ 92 $ (161 )

Percentage of sales 0.2 % (0.3 )%

Other income (expense), net increased approximately $0.3 million for the year ended December 31, 2025, compared with 2024. This increase was primarily due to the prior year recording of a joint and several liability for sales taxes related to one customer ($0.2 million) and the current year reversal of a portion of this liability due to the statute of limitations lapsing ($0.1 million).

Income Taxes

Year Ended

December 31,

Effective tax rate (2.5 )% (1.1 )%

Income tax expense was approximately $0.3 million, with effective tax rates of (2.5)% and (1.1)%, respectively, for the years ended December 31, 2025 and 2024, respectively. For each of the years ended December 31, 2025 and 2024, the effective tax rate differs from the statutory rate primarily due to the valuation allowance on our Federal and state net operating losses (NOLs) and net deferred tax assets generated during the year.

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APYX MEDICAL CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Liquidity and Capital Resources

At December 31, 2025 and 2024, we had approximately $31.7 million in cash and cash equivalents. Our working capital at December 31, 2025 was approximately $46.8 million compared with $45.7 million at December 31, 2024.

For the year ended December 31, 2025, net cash used in operating activities was $8.0 million, which principally funded our loss from operations of $6.4 million, compared with net cash used in operating activities of approximately $18.0 million for 2024. The decrease in cash used in operations is primarily due to the reduction in our operating loss, which is a result of the cost cutting measures implemented in the fourth quarter of 2024 combined with increased sales as we commenced the commercial launch of AYON during the second-half of 2025. This reduction was partially offset by higher trade accounts receivable on our higher sales and cash used to procure inventory for our expanded product portfolio.

Net cash used in investing activities for the year ended December 31, 2025, was $1.1 million related to investments in property and equipment. Net cash provided by investing activities for the year ended December 31, 2024, was $0.7 million related to investments in property and equipment.

Net cash provided by financing activities for the year ended December 31, 2025, was $9.6 million, which primarily related to proceeds received upon the closing of an underwriting agreement ($9.3 million) less costs incurred in the transaction ($0.2 million) as well as cash received upon stock option exercises ($0.5 million). Net cash provided by financing activities for the year ended December 31, 2024, was $6.7 million, which primarily related to proceeds received upon the closing of a registered direct offering ($7.0 million) less costs incurred in the transaction ($0.2 million).

On November 7, 2024, we entered into an amendment to the Perceptive Credit Agreement. The amendment reduced the financial covenant trailing twelve-month revenue targets relating to our Surgical Aesthetics segment (tested quarterly), with amended year-end targets of $37.0 million, $52.4 million and $60.3 million for 2025, 2026 and 2027, respectively. The amendment also introduced a maximum operating expense financial covenant, with full year targets of $40.0 million and $45.0 million for 2025 and 2026, respectively. The Perceptive Credit Agreement, as amended, continues to contain customary affirmative and negative covenants, including covenants limiting our ability, and our subsidiaries to, among other things, to incur debt, grant liens, make distributions, enter certain restrictive agreements, pay or modify subordinated debt, dispose of assets, make investments and acquisitions, enter into certain transactions with affiliates, and undergo certain fundamental changes, in each case, subject to limitations and exceptions set forth in the Perceptive Credit Agreement. Additionally, we must maintain a balance of $3.0 million in cash and cash equivalents during the term of the Perceptive Credit Agreement. As of

December 31, 2025, we were in compliance with the financial covenants contained within the Perceptive Credit Agreement, as amended. Our continued compliance with covenants is subject to meeting or exceeding forecasted Surgical Aesthetics revenues, as amended, and reducing operating expenses.

For a more in-depth description of the terms of the Perceptive Credit Agreement, as amended, see Note 10 in Item 8 of this Annual Report on Form 10-K.

For a more in-depth description of the terms of the registered direct offering, see Note 12 in Item 8 of this Annual Report on Form 10-K.

For a more in-depth description of the terms of the offering, see Note 12 in Item 8 of this Annual Report on Form 10-K.

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At December 31, 2025, we had purchase commitments for inventories totaling approximately $4.9 million, all of which is expected to be purchased by the end of 2026.

Critical Accounting Estimates

In preparing the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), we have adopted various accounting policies. Our most significant accounting policies are disclosed in Note 2 in Item 8 of this Annual Report on Form 10-K.

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Our estimates and assumptions, including those related to inventories, legal proceedings, research and development, warranty obligations, product liability, sales returns and discounts, stock-based compensation and income taxes are updated as appropriate, which in most cases is at least quarterly. We base our estimates on historical experience, or various assumptions that are believed to be reasonable under the circumstances and the results form the basis for making judgments about the reported values of assets, liabilities, revenues and expenses. Actual results may materially differ from these estimates.

Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made and (2) other materially different estimates could have been reasonably made or material changes in the estimates are reasonably likely to occur from period to period. Our critical accounting estimates include the following:

Accounts Receivable Allowance

We maintain a reserve for uncollectible accounts receivable. When evaluating the adequacy of the allowance for credit losses, we analyze historical bad debt experience, the composition of outstanding receivables by customer class, and the age of outstanding balances, and we make estimates in connection with establishing the allowance for credit losses, including the expected impacts of changes in the operating environment in multiple countries as well as the credit terms being offered to customer, to determine where adjustments to historical experience are warranted. The economic uncertainty in the capital equipment market being experienced in the aesthetic space as a result of the disruption from GLP-1's has resulted in the granting of extended credit terms. Accordingly, we believe that there is additional exposure in our outstanding receivables and have adjusted our accounts receivable allowance for this expectation. Changes in estimates are reflected in the period they are made. If the financial condition of our customers deteriorates, resulting in an inability to make payments, additional allowances may be required.

Litigation Contingencies

In accordance with authoritative guidance, we record 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. 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 accrued. If a loss is reasonably possible, but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. We discuss significant judgements with counsel, which include determining the legitimacy of asserted and unasserted claims, the probability that a loss has been incurred, the estimates of the net potential range of losses associated with these claims, the timing of the losses associated with these claims and historical experience with these claims. Additionally, the deductibles on our insurance policies that cover these claims have increased in recent periods, creating additional exposure and losses in excess of historical experience. It is at least reasonably possible that a change in the actual amount of loss will occur in the near term.

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APYX MEDICAL CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Inflation

The consequences of global supply chain instability, inflationary cost increases, potential and actual tariffs, and their adverse impact to the global economy, continue to evolve. Accordingly, the significance of the future impact to our business and financial statements remains subject to significant uncertainty. We continue to work on initiatives to combat inflation, including finding alternative suppliers that meet our quality standards, streamlining our supplier network to reduce the use of middlemen and redesigning some components to achieve better volume purchase prices. Inflation has not, to date, materially impacted our operations or financial performance. However, as these trends continue for raw materials, freight, and labor costs, our future financial performance could be adversely impacted.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements at this time.

Recent Accounting Pronouncements

See Note 3 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk

Not required.

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APYX MEDICAL CORPORATION

ITEM 8. Financial Statements and Supplementary Data

INDEX TO FINANCIAL INFORMATION

Page

Report of Independent Registered Public Accounting Firm (PCAOB ID: 49) 33

Notes to Consolidated Financial Statements 38

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Apyx Medical Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Apyx Medical Corporation and its subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, changes in equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical AuditMatters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. We determined that there are no critical audit matters.

/s/ RSM US LLP

We have served as the Company's auditor since 2020.

Tampa, Florida

March 10, 2026

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APYX MEDICAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

ASSETS

Current assets:

Prepaid expenses and other current assets 1,353 1,655

Operating lease right-of-use assets 4,218 4,703

Finance lease right-of-use assets 28 48

LIABILITIES AND EQUITY

Current liabilities:

Accrued expenses and other current liabilities 8,214 7,751

Current portion of operating lease liabilities 407 335

Current portion of finance lease liabilities 21 20

Long-term debt, net of debt discounts and issuance costs 34,849 33,893

Long-term operating lease liabilities 4,051 4,483

Long-term finance lease liabilities 12 33

Long-term contract liabilities 1,050 1,118

Commitments and Contingencies (Note 17)

EQUITY

Non-controlling interest 291 125

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

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APYX MEDICAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Year Ended December 31,

Other costs and expenses:

Other income (expense), net 92 (161 )

Total other expense, net (4,389 ) (4,462 )

Net loss attributable to non-controlling interest 106 (96 )

Net loss attributable to stockholders $ (11,211 ) $ (23,463 )

Loss per share:

Basic and diluted $ (0.27 ) $ (0.66 )

Weighted average number of shares outstanding - basic and diluted 41,095 35,542

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

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APYX MEDICAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands)

Common Stock

Stock based compensation — — 4,013 — — 4,013

Fair value of common stock issued in debt amendment 150 — 183 — — 183

Contributions from non-controlling interest — — — — 60 60

Shares issued on stock options exercises for cash 189 — 488 — — 488

Shares issued on net settlement of stock options 30 — — — — —

Shares issued on cashless exercise of warrants 1,011 1 (1 ) — — —

Stock based compensation — — 2,001 — — 2,001

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

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APYX MEDICAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended December 31,

Cash flows from operating activities

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 655 599

Provision for inventory obsolescence 341 163

Provision for product warranties 214 304

Loss on disposal of property and equipment 19 13

Allowance for credit losses 423 396

Non-cash lease expense 86 112

Changes in operating assets and liabilities:

Prepaid expenses and other assets 237 857

Accounts payable 355 (63 )

Accrued and other liabilities 209 (2,267 )

Net cash used in operating activities (8,001 ) (18,047 )

Cash flows from investing activities

Purchases of property and equipment (1,114 ) (722 )

Net cash used in investing activities (1,114 ) (722 )

Cash flows from financing activities

Proceeds from stock option exercises 488 —

Payment of direct incremental costs in capital raise (248 ) (224 )

Payment of debt costs — (11 )

Repayment of finance lease liabilities (20 ) (20 )

Contributions from non-controlling interest 60 —

Net cash provided by financing activities 9,580 6,745

Effect of exchange rates on cash (466 ) 113

Net change in cash and cash equivalents (1 ) (11,911 )

Cash and cash equivalents, beginning of year 31,741 43,652

Cash and cash equivalents, end of year $ 31,740 $ 31,741

Cash paid for:

Non cash activities:

Fair value of common stock issued in debt amendment $ — $ 183

Transfer of machinery and equipment to inventory $ 78 $ 62

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

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.DESCRIPTION OF BUSINESS

Apyx Medical Corporation (“Company”, “Apyx”, “it” and similar terms) was incorporated in 1982, under the laws of the State of Delaware and has its principal executive office at 5115 Ulmerton Road, Clearwater, FL 33760.

The Company is a surgical aesthetics company with a passion for elevating people’s lives through innovative products, including its Helium Plasma Platform Technology products marketed and sold as Renuvion® and the AYON Body Contouring SystemTM (“AYON”) in the cosmetic surgery market and J-Plasma® in the hospital surgical market. Renuvion and J-Plasma offer surgeons a unique ability to provide controlled heat to tissue to achieve their desired results. AYON is an FDA-cleared, surgeon-designed body contouring system that combines precision, versatility, and innovation in an all-in-one platform. It seamlessly integrates fat removal, closed loop contouring, and Renuvion’s tissue contraction and electrosurgical capabilities, empowering surgeons to deliver comprehensive body contouring treatments for patients. The Company also leverages its deep expertise and decades of experience in unique waveforms through OEM agreements with other medical device manufacturers.

Recent Business Developments

On May 13, 2025, the Company announced that it had received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) for AYON. The Company completed the soft launch of AYON, leveraging its relationships with key surgeons in critical geographies. Additionally, the Company commenced the commercial launch of AYON in September 2025.

• Infiltration

• Dual aspiration to facilitate simultaneous users

• Ultrasound-assisted liposuction

• Electrocoagulation to support procedures requiring removal of excess tissue

• Volume enhancement capabilities

• Renuvion treatment to address loose and lax skin

On October 13, 2025, the Company announced that it had submitted the 510(k) premarket notification to the FDA for the label expansion of AYON to include power liposuction. The Company anticipates receiving clearance in the second quarter 2026.

On July 28, 2025, the Company announced the launch of Renuvion in China following receipt of initial market clearance from the National Medical Products Administration of China.

Liquidity

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

Pursuant to the requirements of the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 205-40,Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these consolidated financial statements are issued. This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the condensed consolidated financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

The Company has incurred recurring net losses and cash outflows from operations and it anticipates that losses will continue in the near term. For the year ended December 31, 2025, the Company incurred a loss from operations of $6.4 million and used $8.0 million of cash in operations. As of December 31, 2025, cash and cash equivalents on-hand were $31.7 million.

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The Company plans to continue to fund its operations and capital funding needs through existing cash, sales of its products and, if necessary, additional equity and/or debt financing. However, the Company cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on terms acceptable to it. The sale of additional equity would result in dilution to our stockholders. Incurring additional debt financing would result in further debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict the Company's operations. If the Company is unable to raise additional capital in sufficient amounts or on acceptable terms, it may be required to delay, limit, reduce, or terminate its sales, marketing and product development. Any of these actions could harm the Company's business, results of operations, cash flows, and prospects.

In November 2024, the Company undertook a cost saving restructuring which included an organizational reduction in force to better focus, optimize and streamline operations. As a result of the organizational changes, the Company reduced its U.S. workforce by nearly 25%. Management estimated the annualized future cost savings from the reduction in force to be approximately $4.3 million. The Company incurred pre-tax charges of approximately $0.6 million in the fourth quarter of 2024 representing, for the most part, one-time cash expenditures for severance and other employee termination benefits. In addition to the reduction in force, the Company eliminated bonuses in 2024, reduced the board of directors from eight to five members and reduced board cash compensation from $0.5 million annually to $0.1 million.

In addition to the organizational changes, management identified other direct cost savings the Company achieved in 2025. The identified cost savings included reductions in professional fees, lower research and development costs, lower credit card fees and stock-based compensation. These cost savings reduced the Company’s annual operating expenses below $40.0 million in 2025, as compared to $48.2 and $53.7 million in 2024 and 2023, respectively.

November 18, 2025, the Company entered into an underwriting agreement where it sold

2,762,431 shares of common stock at an offering price of

$3.62. After deducting incremental direct costs of the Offering, the Company’s net proceeds were approximately

$9.1 million.

For a more in-depth description of the terms of the offering, see Note 12 in Item 8 of this Annual Report on Form 10-K.

On December 1, 2025, the Company filed a shelf registration statement providing it the ability to register and sell its securities in the aggregate amount up to $100 million. This shelf registration statement replaced the Company's previous shelf registration statement that expired during December 2025.

NOTE 2.SIGNIFICANT ACCOUNTING POLICIES

Consolidated Financial Statements

The accompanying consolidated financial statements include the accounts of Apyx, its wholly owned subsidiary, Apyx Bulgaria, EOOD, and Apyx SY Medical Devices (Ningbo) Co., Ltd. (“China JV”) (collectively, “Apyx,” or the “Company”). The Company has determined that the China JV, in which it has a 51% interest, is a variable interest entity (“VIE”) for which the Company is the primary beneficiary (see Note 4). All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. The reported amounts of revenues and expenses during the reporting period may be affected by the estimates and assumptions the Company is required to make.

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Cash and Cash Equivalents

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, 2025 and 2024, 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

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of trade accounts receivable. With respect to cash, the Company frequently maintains cash and cash equivalent balances in excess of federally insured limits. However, it has not experienced any losses in such accounts.

Trade Accounts Receivable and Allowance for Credit Losses

The Company’s standard credit terms for billings range from net 30 days to net 120 days, depending on the customer agreement. However, management uses its discretion in actual terms granted to customers. The economic uncertainty in the capital equipment market being experienced in the aesthetic space as a result of the disruption from GLP-1's has resulted in the granting of extended credit terms. Accounts receivable are determined to be past due if payments are not made in accordance with such agreements, however are not considered significant financing components.

When evaluating the adequacy of the allowance for credit losses, we analyze historical bad debt experience, the composition of outstanding receivables by customer class, and the age of outstanding balances, and we make estimates in connection with establishing the allowance for credit losses, including the expected impacts of changes in the operating environment and other trends. Changes in estimates are reflected in the period they are made. If the financial condition of our customers deteriorates, resulting in an inability to make payments, additional allowances may be required. 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 credit losses of approximately $1.0 million at December 31, 2025 and 2024, are adequate to provide for probable credit losses.

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined on a first in, first out basis. Finished goods and work-in-process inventories include material, labor and overhead costs. Factory overhead costs are allocated to manufactured inventory based upon labor hours.

The Company monitors inventory usage to determine if the carrying value of any items should be adjusted due to lack of demand for the item and adjusts inventory for estimated obsolescence or unusable inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Property and Equipment

Property and equipment are recorded at cost. Depreciation and amortization are provided for using the straight-line method over the estimated useful lives of the assets. The amortization of leasehold improvements is based on the shorter of the lease term or the life of the improvement. Betterments and major improvements, which extend the life of the asset, are capitalized, whereas maintenance and repairs and routine improvements are expensed as incurred. The estimated useful lives are: buildings and improvements, 39 years; machinery and equipment, 3-10 years; furniture and fixtures, 5-10 years; computer equipment and software, 3-5 years; and molds, 7-15 years.

Valuation of Long-Lived Assets

The Company reviews long-lived assets for recoverability if events or changes in circumstances indicate that the assets may have been impaired. This circumstance exists when the carrying amount of the asset exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition. In those cases, an impairment loss is recognized to the extent that the assets’ carrying amount exceeds its fair value. Any impairment losses are not restored in the future if the fair value increases. At December 31, 2025 and 2024, the Company believes the remaining carrying values of its long-lived assets are recoverable.

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Leases

The Company does not recognize leases with terms less than twelve months in duration, or that have variable only payments, in its Consolidated Balance Sheets as right-of-use assets and lease liabilities. The Company has adopted the practical expedient which allows for the Company to not separate lease and non-lease components of contracts. Accordingly, non-lease components are included in the measurement of the Company’s lease liabilities and right-of-use assets. If the Company is aware of the implicit rate in leases, the Company determines the operating lease liability using the implicit rate. For those leases where the Company is not aware of the implicit rate in the lease, the Company utilizes an incremental borrowing rate, which is indicative of its collateralized borrowing rate. Rates utilized were 1.83% to 9.09% for our outstanding leases at December 31, 2025.

Product Warranties

The Company provides a four-year limited warranty on end-user sales of its AYON and Renuvion/J-Plasma generators, a two year warranty on mounting fixtures, and a one-year warranty on certain accessories. The Company estimates and provides for future costs for product warranties in cost of sales at the time revenue is recognized. The Company bases its product warranty costs on related material costs, repair labor costs and shipping costs. The Company estimates the future cost of product warranties by considering historical material, repair labor, and shipping costs, and applying the experience rates to the outstanding warranty period for products sold. It is reasonably possible that actual results could differ from those estimates.

Debt and Debt Issuance Costs

Proceeds allocated to debt instruments are recorded net of discounts, such as those resulting from other financial instruments issued in a debt transaction or bifurcated embedded derivative features within the debt agreement, and debt issuance costs. Debt issuance costs are allocated to issued and unissued financial instruments based on costs incurred and the underlying commitments in the debt agreement. At the inception of the debt instrument, the Company determined the fair value of the debt and other financial instruments, including warrants and bifurcated embedded derivatives, and allocated the proceeds to each financial instrument based upon these estimated fair values. Debt issuance costs allocated to unissued financial instruments are deferred as an asset until the financial instrument is issued. Debt discounts and issuance costs are amortized over the estimated life of issued debt using the effective interest method and are presented as reduction of the related debt.

Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration that the Company expects to receive for those goods or services. To recognize revenue, the Company (i) identifies the contract(s) with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenue when, or as, it satisfies the performance obligation(s). For sales of the Company's Surgical Aesthetics products (Renuvion, AYON and J-Plasma), this is at a point in time when title has been transferred to the customer, which is generally at the time of shipment or receipt by customer for FOB destination terms. For sales of products under its OEM agreements, the Company recognizes revenue over time when no alternative use exists for the manufactured goods and the Company has rights to payment. Presently, the Company does not stock any significant completed goods under its OEM agreements, accordingly, the recognition of revenue under these agreements approximates point in time recognition. The following policies apply to its major categories of revenue transactions:

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Advertising Costs

Advertising costs are expensed as incurred. The amounts of advertising costs, including trade shows, direct to consumer advertising and other related costs, were approximately $1.6 million and $1.3 million for the years ended December 31, 2025, and 2024, respectively.

Stock-Based Compensation

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 grant date fair value of such awards. It accounts for forfeitures as they occur. The standard covers employee stock options, restricted stock and other equity awards. The Company utilizes a Black-Scholes model to estimate the grant date fair value of stock option awards. For employee and director awards, compensation expense is recognized on a straight-line basis over the vesting periods. For non-employee awards, compensation expense is recorded for non-forfeitable, fully vested awards at the grant date. For other awards granted to non-employees, compensation cost is recognized as services are provided, which approximates a straight-line basis over the vesting period.

Litigation Contingencies

In accordance with authoritative guidance, the Company accrues a liability in its consolidated financial statements 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 accrued. If a loss is reasonably possible, but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded; actual results may differ from those estimates.

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. Diluted (loss) earnings per share attributable to common stockholders gives effect to all potential dilutive shares outstanding during the period. The number of dilutive shares is calculated using the treasury stock method which reduces the effective number of shares by the amount of shares the Company could purchase with the proceeds of assumed exercises. Anti-dilutive instruments are excluded from the calculation of diluted shares. In periods of loss, all potentially dilutive instruments are anti-dilutive and are excluded from the calculation of diluted income (loss) per share.

Research and Development Costs

Research and development expenses are charged to operations as incurred. The amounts of research and development costs were approximately $3.4 million and $5.1 million for the years ended December 31, 2025 and 2024, respectively.

Income Taxes

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. The Company accounts for interest and penalties on income taxes as income tax expense. A valuation allowance is recorded when it is more likely than not that a tax benefit will not be realized. 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, 2025 and 2024, the Company recorded a valuation allowance on its net deferred tax assets.

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 realized. 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, 2025.

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. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not of being sustained.

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Foreign Currency Transactions

The functional currency of Apyx Bulgaria is the U.S. dollar. The monetary assets and liabilities that are denominated in a currency other than U.S. dollar are remeasured into U.S. dollars at the exchange rate on the balance sheet date, while non-monetary items are remeasured at historical rates. Revenue and expenses are remeasured at weighted average exchange rates during the period. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in selling, general and administrative expenses in the Consolidated Statements of Operations and were not material for the years ended December 31, 2025 and 2024.

NOTE 3.RECENT ACCOUNTING PRONOUNCEMENTS

In December 2023, the FASB issued ASU 2023-09,Income Taxes (Topic740) to improve income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 on January 1, 2025 on a retrospective basis. Adopting the standard resulted in additional income tax disclosures (see Note 14).

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), to disclose specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods. The objective of the disclosure requirements is to provide disaggregated information about a public business entity's expenses to help investors (a) better understand the entity's performance, (b) better assess the entity's prospects for future cash flows, and (c) compare an entity's performance over time and with that of other entities. The amendments in this ASU are effective for fiscal years beginning after December 15, 2026, interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements.

No other new accounting pronouncement issued or effective during the fiscal year are expected to have a material impact on the Company’s condensed consolidated financial statements or disclosures.

NOTE 4.CHINA JOINT VENTURE

In 2019, the Company executed a joint venture agreement with its Chinese supplier (the “China JV”) whereby the Company has a 51% ownership interest. The agreement required the Company to make capital contributions of approximately $357,000 into the newly formed entity, which were made in prior years. In June 2023, the Company executed an amendment to the joint venture agreement to increase the amount of its registered capital. The amendment requires the Company to make additional capital contributions to the China JV of $408,000, of which $214,000 has been made as of December 31, 2025. During May 2025, the China JV executed a distribution agreement with a Chinese distributor and commenced operations during the second quarter of 2025.

During 2024, the Company determined that the contributions made to the China JV to date are not sufficient for the China JV to fund expected losses without additional subordinated financial support. Accordingly, the Company has determined that the China JV is a VIE. The Company has determined that because it has the sole right to direct the activities of the China JV that most significantly impact its economic performance, and as the majority owner, has the obligation to absorb losses of the VIE and the right to receive benefits from the VIE that are significant to the China JV, that the Company is the primary beneficiary of the VIE. Accordingly, the China JV has been consolidated in these consolidated financial statements.

The China JV is organized as a limited liability company under the laws of the Peoples Republic of China, accordingly the Company's exposure to losses in the China JV is limited to the Company's registered capital in the Company, which is equal to the sum of the required capital contributions above. As the China JV is not currently sufficiently capitalized, the assets of the China JV are not available to settle obligations of the Company.

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following table summarizes the assets and liabilities of the China JV included in our consolidated balance sheets at December 31, 2025 and 2024, respectively:

Year Ended

December 31,

Cash and cash equivalents $ 383 $ 13

Trade accounts receivable 213 —

Inventories 31 —

Prepaid expenses and other current assets 12 54

Property and equipment, net 225 247

Accounts payable 186 8

Accrued expenses and other current liabilities 63 33

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

Year Ended

December 31,

Beginning interest in China JV $ 130 $ 229

Contributions 61 —

Net income (loss) attributable to Apyx 112 (99 )

Ending interest in China JV $ 303 $ 130

NOTE 5.INVENTORIES

Inventories consisted of the following:

December 31, December 31,

Less: provision for obsolescence (1,207 ) (1,032 )

NOTE 6.PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

December 31, December 31,

Computer equipment and software 1,223 1,171

Total property, plant and equipment 6,502 5,341

Less: accumulated depreciation and amortization (4,293 ) (3,989 )

Property and equipment in service 2,209 1,352

Construction in progress 162 635

Property and equipment, net $ 2,371 $ 1,987

Total depreciation expense was $0.7 million and $0.6 million for the years ended December 31, 2025 and 2024, respectively. Depreciation expense is included within cost of goods sold and selling, general and administrative expense in the Consolidated Statements of Operations.

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTE 7.LEASES

Operating Leases

The Company leases its facilities in Clearwater, Florida and Sofia, Bulgaria under non-cancelable operating lease agreements. During May 2023, the Company entered into a Single Tenant Industrial Building Lease (the “Lease”), on property it previously owned in Clearwater, Florida. The Lease has an initial term of ten (10) years commencing from the closing (the “Initial Term”), and a renewal term of five (5) years, exercisable at the Company’s option. The annual fixed rent is $619,500 for the first year of the Initial Term, and is subject to a 4% escalation every year thereafter through the Initial Term. Rent will be reset to the current market rate should the Company exercise the renewal option. The Lease provides for a 3% management fee on rent payments throughout the Initial Term and optional renewal term. During the year ended December 31, 2022, the Company entered into a five-year extension of its Sofia, Bulgaria facility. These operating leases have terms expiring through May 2033.

Finance Leases

The Company has entered into non-cancelable finance leases for certain computer equipment in Clearwater, Florida. During the year ended December 31, 2022, the Company entered into a 63-month lease for computer equipment. The computer equipment lease expires in July 2027.

Information about the Company’s lease costs are as follows:

Year Ended

December 31,

Operating lease costs $ 785 $ 888

Finance lease costs:

Amortization of right-of-use assets 21 21

Interest on lease liabilities 1 1

Cash information related to our leases are as follows:

Year Ended Year Ended

(in thousands) Operating Finance Operating Finance

Cash paid for lease liabilities $ 810 $ 21 $ 778 $ 21

Information about the Company’s weighted average remaining lease terms and discount rate assumptions are as follows:

Year Ended Year Ended

Operating Finance Operating Finance

Weighted average remaining lease term (in years) 7.1 1.6 8.0 2.6

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Maturities of lease liabilities as of December 31, 2025 are as follows:

(In thousands) Operating Finance

Less imputed interest (1,764 ) —

Present value of lease liabilities 4,458 33

Less current portion of lease liabilities (407 ) (21 )

Long-term portion of lease liabilities $ 4,051 $ 12

NOTE 8.ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following:

December 31, December 31,

Accrued bonuses 1,749 —

Accrued product warranties 434 428

Accrued product liability claim insurance deductibles 2,263 3,168

Accrued professional fees 320 390

Short-term contract liabilities 643 693

Other accrued expenses and current liabilities 1,214 1,096

Total accrued expenses and other current liabilities $ 8,214 $ 7,751

Included in accrued payroll and related costs at December 31, 2024 is approximately $0.4 million of accrued severance costs for the Company’s former Executive Vice President.

NOTE 9.PRODUCT WARRANTIES

Product warranty activity consisted of the following for the years ended:

December 31, December 31,

Provision for product warranties 214 304

Product warranty costs incurred (208 ) (321 )

Accrued product warranties $ 434 $ 428

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTE 10.DEBT

PERCEPTIVE CREDIT AGREEMENT

On November 8, 2023, the Company entered into a Credit and Guaranty Agreement (the “Perceptive Credit Agreement”), by and among the Company (as borrower), Apyx China Holding Corp. and Apyx Bulgaria EOOD, the Company’s wholly-owned subsidiaries (as subsidiary guarantors), and Perceptive Credit Holdings IV, LP (as initial lender and administrative agent)(“Perceptive”), and the lenders from time to time party thereto.

The Perceptive Credit Agreement provided for a facility of up to $45 million, consisting of senior secured term loans. The Perceptive Credit Agreement provided for (i) an initial loan of $37.5 million and (ii) a delayed draw loan of $7.5 million. The Company's ability to borrow the delayed draw loan lapsed on December 31, 2024. The Credit Agreement matures on November 8, 2028.

On November 7, 2024, the Company entered into an amendment to the Perceptive Credit Agreement. The amendment reduced the financial covenant trailing twelve-month revenue targets relating to its Surgical Aesthetics segment and introduced a maximum operating expense financial covenant for 2025 and 2026. In connection with the amendment to the Perceptive Credit Agreement, the Company issued Perceptive 150,000 shares of its common stock. The Company determined that the amendment was a modification in accordance with ASC 470.

Loans

The initial loan of $37.5 million was fully funded on November 8, 2023, with approximately $11.0 million of the proceeds used to payoff the obligations under the MidCap Credit Agreement, including approximately $1.0 million of related prepayment penalties and exit fees, and $2.7 million for transaction fees and other expenses incurred in connection with the Perceptive Credit Agreement, which included a 2% fee of the total facility payable to Perceptive at closing. After repayment of the MidCap Credit Agreement and payment of transaction fees and other expenses in connection with the Perceptive Credit Agreement, the net proceeds of these loans was used for working capital and general corporate purposes.

The initial loan bears interest at a floating rate based on one-month SOFR, subject to a floor of 5.0%, plus 7.0% (12.0% at December 31, 2025). The effective interest rate on the loan was 14.7% at December 31, 2025. The firstforty-eight (48) months of the loans constitute an interest-only period, with interest payable monthly on the last day of each month. Subsequent to the interest-only period, the outstanding principal amount of the loans is repayable in monthly payments of 3% of the outstanding balance on the payment date. All remaining outstanding principal, together with all accrued and unpaid interest, is due at maturity. The loan may be voluntarily prepaid in full, or in part, at any time, subject to terms and conditions set forth in the Perceptive Credit Agreement. Additionally, the loan is subject to mandatory prepayment obligations, pursuant to the terms of the Perceptive Credit Agreement. Prepayments of the loan is subject to fees of 10%, 9%, 6%, 4% and 2% of the prepayment amounts made during the first year, second year, third year, fourth year, and thereafter, respectively.

Collateral

The obligations of the Company under the Perceptive Credit Agreement are secured by first priority liens on substantially all of its assets.

Covenants

As amended, the Perceptive Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company and its subsidiaries, among other things, to incur debt, grant liens, make distributions, enter certain restrictive agreements, pay or modify subordinated debt, dispose of assets, make investments and acquisitions, enter into certain transactions with affiliates, and undergo certain fundamental changes, in each case, subject to limitations and exceptions set forth in the Perceptive Credit Agreement. As amended, the Perceptive Credit Agreement also requires the Company to satisfy certain financial covenants, including minimum trailing twelve month net revenue targets relating to its Surgical Aesthetics segment (tested quarterly), with year-end targets of $37.0 million, $52.4 million, and $60.3 million for 2025,2026, and 2027, respectively. The amendment introduced a maximum operating expense financial covenant, with full year targets of $40.0 million and $45.0 million for 2025 and 2026, respectively. Additionally, the Company must maintain a balance of $3 million in cash and cash equivalents during the duration of the Perceptive Credit Agreement’s term. As of December 31, 2025, the Company was in compliance with the financial covenants contained within the Perceptive Credit Agreement, as amended. The Company’s continued compliance with covenants is subject to meeting or exceeding forecasted Surgical Aesthetics revenues, as amended, and reducing operating expenses.

Events of Default

The Perceptive Credit Agreement also contains customary Events of Default (as defined in the Perceptive Credit Agreement) that include, among other things, certain payment defaults, cross defaults to certain other contracts and indebtedness, covenant defaults, inaccuracy of representations and warranties, bankruptcy and insolvency defaults, judgment defaults, change of control defaults, defaults related to the failure to remain registered with the Securities and Exchange Commission and listed for trading on the Nasdaq Stock Market, and any material adverse change.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Upon the occurrence and during the continuance of an Event of Default under the Perceptive Credit Agreement, the administrative agent, if requested by the respective lenders, may, among other things, (i) terminate commitments, (ii) declare all outstanding obligations under the agreement (including principal and accrued and unpaid interest) immediately due and payable, and (iii) exercise the other rights and remedies provided for under the agreement. The Perceptive Credit Agreement provides that, under certain circumstances, a default interest rate will apply on all obligations upon the occurrence and during the existence of an Event of Default, at a per annum rate equal to 3% in excess of the applicable interest rate.

The Company bifurcated a derivative liability related to the potential acceleration triggered upon an event of default (contingent put option) and the supplemental interest upon an event of default features of the Perceptive Credit Agreement. The fair value of the bifurcated derivative is de minimis to the Company’s consolidated financial statements.

Debt Discounts - Issuance of Warrants and Common Stock

In connection with the Company’s initial loan under the Perceptive Credit Agreement, the Company issued Perceptive warrants to purchase up to 1,250,000 shares of its common stock, par value $0.001, with an exercise price of $2.43 per share. The warrants have a 10 year term and can be exercised by issuing payment to the Company for the number of warrants exercised or exercised net by surrendering warrants with an intrinsic value equal to the cumulative exercise price of the warrants being exercised. The Company determined that these warrants meet the criteria for equity classification and included the proceeds allocated to the warrants, on a relative fair value basis, as a debt discount and additional paid-in capital in the accompanying consolidated financial statements.

In connection with the amendment to the Perceptive Credit Agreement, the Company paid lender fees of approximately $11,000 and issued 150,000 shares of its common stock to Perceptive. The Company included the fair value of the common stock in debt discounts and additional paid in capital in the accompanying consolidated financial statements.

Debt Issuance Costs

In connection with entering into the Perceptive Credit Agreement, the Company incurred debt issuance costs of approximately $1.5 million, comprised primarily of commissions paid to the financial advisor. These costs were allocated to the initial term loan and the currently unissued delayed draw term loan. The costs allocated to the issued term loan are being amortized using the effective interest method over the life of the loan. The costs allocated to the unissued delayed draw term were deferred and were recognized on December 31, 2024, at the point that the Company's rights to borrow on the term loan expired.

Issuance of Warrants to Prior Lender

In connection with the Company’s prior credit agreement, the Company issued warrants to purchase up to 250,000 shares of its common stock, par value $0.001, with an exercise price of $3.40 per share. These warrants remain outstanding as of December 31, 2025.

The warrants have a 10 year term and can be exercised by issuing payment to the Company for the number of warrants exercised or exercised net by surrendering warrants with an intrinsic value equal to the cumulative exercise price of the warrants being exercised.

Other Debt Information

Included in interest expense for the year ended December 31, 2025 are $694,000 and $262,000 of amortization of the debt issuance costs and debt discounts, respectively. Included in interest expense for the year ended December 31, 2024 are $516,000 and $214,000 of amortization of the debt issuance costs and debt discounts, respectively.

The Company’s term loan, net consists of the following at

December 31, 2025:

December 31, December 31,

Unamortized debt issuance costs (717 ) (979 )

Unamortized debt discount (1,934 ) (2,628 )

As of December 31, 2025, principal repayments on the term loan are as follows:

(In thousands)

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTE 11.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 or if the Company has an unfulfilled performance obligation that a customer has been invoiced for.

At December 31, 2025, 2024 and 2023, respectively, the Company had recorded approximately $1.7 million, $2.0 million and $1.7 million of contract liabilities and $0.3 million, $0.4 million and $0.5 million of contract assets related to customer prepayments and the deferral of revenues and expenses under these agreements. At December 31, 2025, $0.6 million of the contract liabilities and $0.1 million of the contract assets are presented as current in the accompanying Consolidated Balance Sheets within accrued expenses and other current liabilities and prepaid expenses and other current assets, respectively. At December 31, 2024, $0.7 million of the contract liabilities and $0.1 million of the contract assets are presented as current in the accompanying Consolidated Balance Sheets within accrued expenses and other current liabilities and prepaid expenses and other current assets, respectively.

During the year ended December 31, 2025, the Company recognized approximately $0.6 million of contract liabilities and $0.2 million of contract assets that existed as of December 31,2024, in sales and cost of sales, respectively, in the accompanying Consolidated Statement of Operations. During the year ended December 31, 2024, the Company recognized approximately $0.1 million of contract liabilities and $0.1 million of contract assets that existed as of December 31,2023, in sales and cost of sales, respectively, in the accompanying Consolidated Statement of Operations.

NOTE 12.CAPITAL RAISES

PUBLIC OFFERING

On November 18, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Lucid Capital Markets, LLC (the “Underwriter”), pursuant to which the Company agreed to issue and sell to the Underwriter 2,762,431 shares of common stock at an offering price of $3.62 and grant to the Underwriter an overallotment option for the purchase up to 414,365 additional shares of common stock at $3.62 (the “Option”) (the “Offering”). The Offering closed on November 19, 2025. The Option expired unexercised.

After deducting incremental direct costs of the Offering, the Company’s net proceeds were approximately $9.1 million. The Company intends to use the net proceeds from the Offering for working capital and general corporate purposes.

The Underwriting Agreement contains customary representations and warranties and agreements of the Company and the Underwriter, customary conditions to closing, and customary indemnification obligations of the Company.

REGISTERED DIRECT OFFERING

On November 7, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with several institutional investors named therein (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “Registered Offering”), an aggregate of: (i) 3,000,000 shares (the “Shares”) of Common Stock, at an offering price of $1.18 per share, and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 2,934,690 shares of Common Stock (the “Warrant Shares”) at an offering price of $1.179 per Pre-Funded Warrant (which represents the per share offering price for Common Stock, less the exercise price per share for each Pre-Funded Warrant of $0.001). The Registered Offering closed on November 8, 2024.

After deducting incremental direct costs of the Registered Offering, the Company’s net proceeds were approximately $6.8 million. The Company intends to use the net proceeds from the Registered Offering for working capital and general corporate purposes.

The Purchase Agreement contains customary representations and warranties and agreements of the Company and the Purchasers and customary indemnification rights and obligations of the parties. Subject to certain ownership limitations described in the Purchase Agreement and Pre-Funded Warrants, the Pre-Funded Warrants are immediately exercisable and may be exercised at a nominal consideration of $0.001 per share of Common Stock at any time until all of the Pre-Funded Warrants are exercised in full. A holder will not have the right to exercise any portion of the Pre-Funded Warrants if the holder (together with its affiliates) would beneficially own in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Pre-Funded Warrants.

The Pre-Funded warrants were classified as equity in accordance with ASC 815,Derivatives and Hedging, given the Pre-funded warrants are indexed to the Company’s own shares of common stock and are accounted for as a component of additional paid-in capital at the time of issuance. The Pre-Funded warrants are included in the calculation of basic and diluted loss per share.

During 2025, the Company received 275 Pre-Funded warrants as payment in the cashless exercise of 1,010,792 Pre-Funded warrants.

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTE 13.EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share (“basic EPS”) is computed by dividing the net income or loss by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share (“diluted EPS”) gives effect to all dilutive potential shares outstanding. As the Company is in a net loss position for all periods presented, all potential shares outstanding are anti-dilutive. The following table provides the computation of basic and diluted loss per share.

Year Ended

December 31,

(in thousands, except per share data) 2025 2024

Numerator:

Net loss attributable to stockholders $ (11,211 ) $ (23,463 )

Denominator:

Weighted average shares outstanding - basic and diluted 41,095 35,542

Loss per share: Basic and diluted $ (0.27 ) $ (0.66 )

Anti-dilutive instruments excluded from diluted loss per common share:

NOTE 14.INCOME TAXES

The components of (loss) income before provision for income taxes are as follows:

Year Ended December 31,

Components of income tax expense are as follows:

December 31, December 31,

Current:

Federal $ — $ —

Deferred:

Federal — —

State — —

Foreign — —

— —

Total income tax expense $ 270 $ 252

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Year Ended December 31,

Amount Percent Amount Percent

Foreign tax effects:

Bulgaria:

Statutory tax rate difference (332 ) 3.1 % (270 ) 1.2 %

Effect of cross-border tax laws:

Nontaxable or nondeductible items:

Other adjustments:

(i) The states that contribute to the majority (greater than 50%) of the tax effect in this category includes Florida and California for each of the years ended December 31, 2025 and 2024.

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

December 31, December 31,

Deferred tax assets:

Research and development capitalization 2,418 2,890

Accrued insurance deductibles 499 653

Accrued bonuses 441 —

Total deferred tax assets, net of valuation allowance 1,307 1,359

Deferred tax liabilities:

Lease right-of-use assets (1,007 ) (1,116 )

Property and equipment (180 ) (134 )

Total deferred tax liabilities (1,307 ) (1,359 )

Net deferred tax assets $ — $ —

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. For the years ended December 31, 2025 and 2024, the valuation allowance increased by $1.4 million and $4.3 million, respectively. The $22.1 million valuation allowance at December 31, 2025 is related to Federal and State deferred tax assets the Company believes are not more likely than not to be realized.

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

At December 31, 2025 the Company had federal net operating loss carryforwards of approximately $44.3 million which will be carried forward indefinitely and may be used to offset up to 80% of federal taxable income. In addition, the Company has state net operating loss carryforwards of approximately $79.9 million. Approximately $36.9 million will begin to expire in 2029 and the remainder will be carried forward indefinitely. Additionally the Company has federal research and development carryforwards of approximately $0.3 million.

Cash taxes paid are as follows:

Year Ended December 31,

Federal $ — $ —

Foreign:

In 2025, the individual jurisdiction with cash taxes paid that equaled or exceeded 5% of total income taxes paid was Bulgaria and Texas. In 2024, the individual jurisdiction with cash taxes paid that equaled or exceeded 5% of total income taxes paid was Bulgaria.

On July 4, 2025 changes to U.S. tax law were enacted. The provisions allow for the immediate expensing of domestic research and experimentation costs, 100% accelerated bonus depreciation on eligible capital expenditures, and other tax law changes impacting 2025 with other changes impacting the Company and being effective in 2026. The impacts of these changes are included in our results for the year ended December 31, 2025.

The Company considers the earnings of Apyx Bulgaria, EOOD to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestment of those subsidiary earnings. It has not recorded a deferred tax liability related to the U.S. Federal and State income taxes and foreign withholding taxes on the undistributed earnings of Apyx Bulgaria, EOOD indefinitely invested outside the United States. 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.

The Company is subject to U.S. federal and state income tax examination. The Company’s 2022 through 2024 U.S. federal income tax returns are subject to examination by the Internal Revenue Service. The Company’s state income tax returns are subject to examination for the 2021 through 2024 tax years.

NOTE 15.RETIREMENT PLAN

The Company provides a tax-qualified profit-sharing retirement plan under section 401(k) of the Internal Revenue Code for the benefit of eligible employees with an accumulation of funds for retirement on a tax-deferred basis and provides for annual discretionary contribution to individual trust funds.

All employees are eligible to participate upon completing three months of service. The employees may make voluntary contributions to the plan up to the maximum percentage allowed by the Internal Revenue Code. Vesting in employee matching contributions is graded and depends on the years of service. After three years from their date of hire, the employees are 100% vested. 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 for each of the years ended December 31, 2025 and 2024.

NOTE 16.RELATED PARTY TRANSACTIONS

Certain relatives of Nikolay Shilev, Apyx Bulgaria’s Managing Director, are considered related parties. Teodora Shileva, Mr. Shilev’s spouse, is an employee of the Company working in the accounting department. Svetoslav Shilev, Mr. Shilev’s son, is a quality manager in the quality assurance department.

The partner in the Company’s China joint venture is also a supplier of the Company. For the years ended December 31, 2025 and 2024, the Company made purchases from this supplier of approximately $1.3 million and $1.0 million, respectively. At December 31, 2025 and 2024, the Company had payables to this supplier of approximately $372,000 and $243,000, respectively.

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APYX MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTE 17.COMMITMENTS AND CONTINGENCIES

Litigation

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

The Company is involved in a number of legal actions relating to the use of its Helium Plasma Platform Technology, which actions are being defended by the Company’s insurance carrier-appointed counsel. The outcomes of these legal actions are not within the Company’s control and may not be known for prolonged periods of time. Management has not yet received from carrier-appointed defense counsel the estimates of the net potential range of losses in all of these cases, as would be required to confirm whether all of the claims in total are adequately covered by the varying levels of aggregate insurance coverage available for each relevant insurance policy period; further, in the case of one of the Company’s carriers, the Company is in a dispute regarding the total level of coverage available. Notwithstanding the foregoing, in the opinion of management, the Company has meritorious defenses, and such claims are not expected, individually or in the aggregate, to result in a material, adverse effect on its financial condition, results of operations and cash flows. 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.

During

2022, the Company was notified of certain procedures alleged to have been performed by the same physician and which are currently the subject of

two related products liability cases within the courts. During

2023, the Company was notified by its insurance carriers that all or most of the

ten individual plaintiff’s allegations could be subject to separate deductibles notwithstanding the commonality of each underlying occurrence. During

March 2024, two of the plaintiffs claims were dismissed by the courts. Additionally, during

2024, the Company determined that

one of the procedures was performed by a different physician. The Company has determined that a loss, comprised of estimated costs to defend the Company against the lawsuits, is probable and that the estimated loss is approximately

$1,950,000. The Company recorded an estimated loss of

$1,450,000 related to the matters during

APYX US Equity

APYX · 10-K · period ended 2025-12-31

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk

ITEM 8. Financial Statements and Supplementary Data

APYX US Equity☆

APYX · 10-K · period ended 2025-12-31

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk

ITEM 8. Financial Statements and Supplementary Data

APYX US Equity