Delaware
|
11-2644611
|
(State
or other jurisdiction
|
(IRS
Employer Identification No.)
|
Of
incorporation or organization)
|
|
BOVIE
MEDICAL CORPORATION
|
||
INDEX
TO FORM 10-QSB
|
||
Contents
|
Page
|
|
Part
I:
|
Financial
Information
|
1
|
Item
1:
|
Consolidated
Financial Statements
|
1
|
Consolidated
Balance Sheet - March 31, 2006
And
December 31, 2005
|
3
|
|
Consolidated
Statements of Operations for the
three
Months Ended March 31, 2006 and 2005
|
5
|
|
Consolidated
Statement of Shareholders' Equity
for
the period January 1, 2005 to March 31, 2006
|
6
|
|
Consolidated
Statements of Cash Flows for the
three
Months Ended March 31, 2006 and 2005
|
7
|
|
Notes
to Financial Statements
|
9
|
|
Item
2:
|
Management's
Discussion and Analysis
|
13
|
Part
II.
|
Other
Information
|
19
|
Item
1:
|
Legal
Proceedings
|
19
|
Item
2:
|
Unregistered
Sales of Equity Securities and use of Proceeds
|
19
|
Item
3:
|
Defaults
Upon Senior Securities
|
19
|
Item
4:
|
Submission
of Matters to Vote of Security Holders
|
19
|
Item
5:
|
Other
Information
|
19
|
Item
6:
|
Exhibits
|
20
|
BOVIE
MEDICAL CORPORATION
|
||
CONSOLIDATED
BALANCE SHEET
|
||
MARCH
31, 2006 AND DECEMBER 31, 2005
|
||
Assets
|
||
(Unaudited)
|
(Audited)
|
|
March
31, 2006
|
December
31, 2005
|
|
Current
assets:
|
||
Cash
|
$
1,633,263
|
$
1,295,266
|
Trade
accounts receivable
|
2,433,932
|
2,316,761
|
Inventories
|
3,278,593
|
2,996,832
|
Prepaid
expenses
|
283,557
|
335,492
|
Deferred
tax asset
|
386,200
|
386,200
|
Total
current assets
|
8,015,545
|
7,330,551
|
Property
and equipment, net
|
2,725,541
|
2,595,641
|
Other
assets:
|
||
Brand
name/Trademark
|
1,509,662
|
1,509,662
|
Purchased
technology (net)
|
167,310
|
33,663
|
License
rights
|
270,000
|
280,000
|
Deposits
|
21,215
|
21,215
|
1,968,187
|
1,844,540
|
|
$
12,709,273
|
$
11,770,732
|
|
The
accompanying notes are an integral part of the financial
statements.
|
BOVIE
MEDICAL CORPORATION
|
||
CONSOLIDATED
BALANCE SHEET
|
||
MARCH
31, 2006 AND DECEMBER 31, 2005
|
||
(CONTINUED)
|
||
Liabilities
and Stockholders' Equity
|
||
(Unaudited)
|
(Audited)
|
|
March
31, 2006
|
December
31, 2005
|
|
Current
liabilities:
|
||
Accounts
payable
|
$
843,126
|
868,212
|
Accrued
expenses and other liabilities
|
707,129
|
471,006
|
Deferred
Revenue
|
36,000
|
141,586
|
Notes
Payable
|
370,411
|
348,328
|
Total
current liabilities
|
1,956,666
|
1,829,132
|
Minority
Interest
|
135,000
|
140,000
|
Stockholders'
equity:
|
||
Preferred
Stock, par value $.001
10,000,000
shares authorized
0
issued and outstanding on March 31, 2006 and December 31,
2005
|
--
|
--
|
Common
stock par value $.001; 40,000,000 shares authorized, issued and
outstanding 14,181,568 shares and 14,040,728 shares on March 31,
2006 and
|
||
December
31, 2005 respectively
|
14,200
|
14,059
|
Additional
paid in capital
|
20,655,826
|
20,530,090
|
Accumulated
deficit
|
(10,052,419)
|
(10,742,549)
|
Total
stockholders' equity
|
10,617,607
|
9,801,600
|
Total
liabilities and stockholders' equity
|
$12,709,273
|
$11,770,732
|
The
accompanying notes are an integral part of the financial statements.
|
BOVIE
MEDICAL CORPORATION
|
||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||
FOR
THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
|
||
(UNAUDITED)
|
||
March
31, 2006
|
March
31, 2005
|
|
Sales
|
$
6,011,451
|
$
4,743,211
|
Cost
of sales
|
3,705,292
|
3,092,741
|
Gross
profit
|
2,306,159
|
1,650,470
|
Costs
and expenses:
|
||
Research
and development
|
110,980
|
179,544
|
Professional
services
|
129,927
|
148,022
|
Salaries
and related costs
|
524,504
|
421,472
|
Selling,
general and administrative
|
812,387
|
773,295
|
Development
cost-Joint Venture
|
33,717
|
40,803
|
1,611,515
|
1,563,136
|
|
Gain
from operations
|
694,644
|
87,334
|
Other
income (expense):
|
||
Interest
(net of income)
|
10,486
|
6,689
|
Net
Income before Minority Interest and Income Tax
|
705,130
|
94,023
|
Minority
Interest
|
(
5,000)
|
(
5,000)
|
Provision
for income tax
|
(
257,500)
|
(
31,160)
|
Realized
benefit of loss carryforward
|
247,500
|
31,160
|
Net
income
|
$
690,130
|
$
89,023
|
Earnings
per share
|
||
Net
income:
|
||
Basic
|
.05
|
.01
|
Diluted
|
.04
|
.01
|
Weighted
average number of shares outstanding
|
14,160,342
|
13,885,922
|
Weighted
average number of shares outstanding adjusted for dilutive securities
|
16,606,558
|
16,243,973
|
The
accompanying notes are an integral part of the financial
statements.
|
BOVIE
MEDICAL CORPORATION
|
|||||||
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY
|
|||||||
FOR
THE PERIOD ENDED JANUARY 1, 2005 TO MARCH 31,
2006
|
|||||||
Options
|
Common
|
Paid-in
|
|||||
Outstanding
|
Shares
|
Value
|
Capital
|
Deficit
|
Total
|
||
January
1, 2005
|
3,951,200
|
13,862,128
|
$
13,881
|
$20,391,407
|
$(11,148,757)
|
$9,256,531
|
|
Options
granted
|
475,500
|
--
|
--
|
--
|
--
|
--
|
|
Options
exercised
|
(178,600)
|
178,600
|
178
|
138,683
|
--
|
138,861
|
|
Options
forfeited
|
(
31,230)
|
--
|
--
|
--
|
--
|
--
|
|
Income
for period
|
--
|
--
|
--
|
--
|
406,208
|
406,208
|
|
December
31, 2005
|
4,168,870
|
14,040,728
|
$
14,059
|
$20,530,090
|
$
(10,742,549)
|
$9,801,600
|
|
Options
exercised
|
(
140,840)
|
140,840
|
141
|
125,736
|
--
|
125,877
|
|
Options
forfeited
|
(
6,140 )
|
||||||
Income
for period
|
--
|
--
|
--
|
--
|
690,130
|
690,130
|
|
March
31, 2006
|
4,034,170
|
14,181,568
|
$
14,200
|
$
20,655,826
|
$
(10,052,419)
|
$10,617,607
|
BOVIE
MEDICAL CORPORATION
|
||
CONSOLIDATED
STATEMENT OF CASH FLOWS
|
||
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
||
FOR
THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
|
||
(UNAUDITED)
|
||
2006
|
2005
|
|
Cash
flows from operating activities
|
||
Net
income
|
$
690,130
|
$
89,023
|
Adjustments
to reconcile net income
|
||
to
net cash provided by (used in) operating activities:
|
||
Depreciation
and amortization
|
126,774
|
108,842
|
Changes
in current assets and liabilities:
|
||
Receivables
|
(
117,171)
|
(
214,775)
|
Inventories
and repair parts
|
(
281,761)
|
(
242,079)
|
Prepaid
expenses
|
51,935
|
75,147
|
Accounts
payable
|
(25,086)
|
273,908
|
Accrued
expense
|
236,123
|
33,803
|
Deferred
Revenue
|
(
105,586)
|
(
12,900)
|
Net
cash provided (applied) by operating activities
|
575,358
|
110,969
|
Cash
flows from investing activities
|
||
Increase
in fixed assets
|
(
241,222)
|
(274,136)
|
Increase
in purchased technology
|
(
144,099)
|
(
2,000)
|
Net
cash used in investing activities
|
(
385,321)
|
(276,136)
|
Cash
flows from financing activities
|
||
Increase
(Decrease) in notes payable
|
22,083
|
(
7,903)
|
Common
shares purchased
|
125,877
|
20,103
|
Obligations
from shareholders
|
--
|
--
|
Net
cash provided in financing activities
|
147,960
|
12,200
|
Net
increase (decrease) in cash and cash equivalents
|
337,997
|
(152,967)
|
Cash
and cash equivalents, beginning of period
|
1,295,266
|
2,294,746
|
Cash
and cash equivalents, end of period
|
$
1,633,263
|
$
2,141,779
|
The
accompanying notes are an integral part of the financial
statements.
|
|
2006
|
2005
|
Interest
paid
|
$
6,424
|
$
5,087
|
Income
taxes
|
-
0
-
|
-
0
-
|
March
31, 2006
|
December
31, 2005
|
|
Raw
materials
|
$1,130,627
|
$
1,139,730
|
Work
in process
|
1,471,963
|
1,267,991
|
Finished
goods
|
676,003
|
589,111
|
Total
|
$
3,278,593
|
$
2,996,832
|
March
31, 2006
|
December
31, 2005
|
|
Goodwill
acquired:
|
||
Trade
name (life indefinite)
|
$
1,509,662
|
$
1,509,662
|
Other
intangibles:
|
||
License
rights (20 yr life)
|
400,000
|
400,000
|
Less:
Accumulated amortization
|
(
130,000)
|
(
120,000)
|
Net
carrying amount
|
270,000
|
280,000
|
Purchased
technology (5 yr life)
|
$
424,863
|
$
280,764
|
Less:
Accumulated amortization
|
(257,553)
|
(247,101)
|
Net
carrying amount
|
$
167,310
|
$
33,663
|
Three
months ended March 31
|
||
2006
|
2005
|
|
Net
income
|
$
690
|
$
89
|
Basic-weighted
average shares outstanding
|
14,160
|
13,886
|
Effect
of dilutive potential securities
|
2,447
|
2,358
|
Diluted
- weighted average shares outstanding
|
16,607
|
16,244
|
Basic
EPS
|
$
.05
|
$
.01
|
Diluted
EPS
|
$
.04
|
$
.01
|
Percentage
change in
|
|||
Dollar
amounts
|
|||
2006
|
2005
|
2006/2005
|
|
%
|
%
|
%
|
|
Sales
|
100.0
|
100.0
|
26.7
|
Cost
of sales
|
61.6
|
65.2
|
19.8
|
Gross
profit
|
38.4
|
34.8
|
39.7
|
Other
costs:
|
|||
R
& D
|
1.8
|
3.8
|
(
38.2)
|
Professional
fees
|
2.2
|
3.1
|
(
12.2)
|
Salaries
|
8.7
|
8.9
|
24.4
|
SGA
|
13.5
|
16.4
|
5.1
|
Equity
in loss of Unconsolidated affiliate
|
.6
|
.9
|
(
17.4)
|
Total
other costs
|
26.8
|
33.0
|
3.1
|
Gain/
from operations
|
11.6
|
1.9
|
695.4
|
Other
income
|
.2
|
.1
|
56.8
|
Net
Income before Minority Interest and Income Tax
|
11.8
|
2.0
|
650.0
|
Minority
Interest
|
(
.1)
|
(
.1)
|
0.0
|
Income
tax expense
|
(
4.3)
|
(
.7)
|
726.4
|
Income
tax benefit
|
4.1
|
.7
|
694.3
|
Net
earnings
|
11.5
|
1.9
|
680.8
|
The
table below sets forth domestic/international and product line
sales
information for the first quarter of 2006 and 2005.
|
||||
Net
Sales (in thousands)
|
Percentage
change
|
Increase/
|
||
2006
|
2005
|
2006/2005
|
(Decrease)
|
|
Domestic/international
sales:
|
||||
Domestic
|
$
5,230
|
$
4,015
|
30.3
|
1,215
|
International
|
781
|
728
|
7.3
|
53
|
Total
net sales
|
$
6,011
|
$
4,743
|
26.7
|
1,268
|
Product
line sales:
|
||||
Electrosurgical
|
$
3,814
|
$
2,511
|
51.9
|
1,303
|
Cauteries
|
1,347
|
1,330
|
1.3
|
17
|
Other
|
850
|
902
|
(
5.8)
|
(
52)
|
Total
net sales
|
$
6,011
|
$
4,743
|
26.7
|
1,268
|
|
As
of March 31,
|
|
Payment
Period
|
|
|
2006
|
2007
|
2008
|
2009
|
2010
|
|
Current
debt
|
370
|
-0-
|
-0-
|
-0-
|
-0-
|
Operating
leases
|
107
|
135
|
115
|
-0-
|
-0-
|
Unconditional
purchase obligations
|
1,540
|
600
|
-0-
|
-0-
|
-0-
|
|
|
Amount
of Commitment
|
|
|||||||
|
|
Total
|
Expiration
Per Period
|
|
||||||
|
|
Amount
|
Less
than
|
In
excess of
|
|
|||||
|
|
Committed
|
1
year
|
1
year
|
|
|||||
Secured
revolving credit agreement and other lines of credit
|
|
$
|
1.5
|
|
$
|
1.5
|
|
|
-0-
|
|
31.1
|
Certifications
of Andrew Makrides, President and Chief Operating Officer of Registrant
pursuant to Rule 13a-14 adopted under the Securities Exchange Act
of 1934,
as amended, and Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2
|
Certifications
of Andrew Makrides and Chief Financial Officer of Registrant pursuant
to
Rule 13a-14 adopted under the Securities Exchange Act of 1934,
as amended,
and Section 302 of the Sarbanes-Oxley act of 2002.
|
32.1
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002.
|