Delaware
|
11-2644611
|
(State
or other jurisdiction
|
(IRS
Employer Identification No.)
|
Of
incorporation or organization)
|
|
BOVIE
MEDICAL CORPORATION
|
||
INDEX
TO FORM 10-QSB
|
||
FOR
THE QUARTER ENDED JUNE 30, 2006
|
||
Contents
|
Page
|
|
Part
I:
|
Financial
Information
|
1
|
Item
1:
|
Consolidated
Financial Statements
|
|
Consolidated
Balance Sheet - June 30, 2006
and
December 31, 2005
|
1
|
|
Consolidated
Statements of Operations for the
Three
and Six Months Ended June 30, 2006 and 2005
|
3
|
|
Consolidated
Statement of Shareholders' Equity
for
the period January 1, 2005 to June 30, 2006
|
4
|
|
Consolidated
Statements of Cash Flows for the
Six
Months Ended June 30, 2006 and 2005
|
5
|
|
Notes
to Financial Statements
|
7
|
|
Item
2:
|
Management's
Discussion and Analysis
|
11
|
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
|
19
|
Signatures
|
20
|
BOVIE
MEDICAL CORPORATION
|
||
CONSOLIDATED
BALANCE SHEET
|
||
JUNE
30, 2006 AND DECEMBER 31, 2005
|
||
Assets
|
||
(Unaudited)
|
(Audited)
|
|
June 30, 2006
|
December 31, 2005
|
|
Current
assets:
|
||
Cash
|
$
1,892,980
|
$
1,295,266
|
Trade
accounts receivable (net)
|
2,526,860
|
2,316,761
|
Inventories
|
3,260,892
|
2,996,832
|
Prepaid
expenses
|
417,162
|
335,492
|
Deferred
tax asset
|
386,200
|
386,200
|
Total
current assets
|
8,484,094
|
7,330,551
|
Property
and equipment, (net)
|
2,895,158
|
2,595,641
|
Other
assets:
|
||
Brand
name/trademark (net)
|
1,509,662
|
1,509,662
|
Purchased
technology (net)
|
250,290
|
33,663
|
License
rights (net)
|
260,000
|
280,000
|
Deposits
|
21,215
|
21,215
|
2,041,167
|
1,844,540
|
|
$
13,420,419
|
$
11,770,732
|
|
The
accompanying notes are an integral part of the financial
statements.
|
BOVIE
MEDICAL CORPORATION
|
||
CONSOLIDATED
BALANCE SHEET
|
||
JUNE
30, 2006 AND DECEMBER 31, 2005
|
||
(CONTINUED)
|
||
Liabilities
and Stockholders' Equity
|
||
(Unaudited)
|
(Audited)
|
|
June 30,
2006
|
December 31, 2005
|
|
Current
liabilities:
|
||
Accounts
payable
|
$
818,040
|
868,212
|
Accrued
expenses and other liabilities
|
702,403
|
471,006
|
Deferred
revenue
|
120,286
|
141,586
|
Notes
payable
|
185,848
|
348,328
|
Total
current liabilities
|
1,826,577
|
1,829,132
|
Minority
interest
|
130,000
|
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 14,342,368 shares and 14,040,728 shares on June 30, 2006
and
|
||
December
31, 2005 respectively
|
14,360
|
14,059
|
Additional
paid in capital
|
20,789,091
|
20,530,090
|
Accumulated
deficit
|
(9,339,609)
|
(10,742,549)
|
Total
stockholders' equity
|
11,463,842
|
9,801,600
|
Total
liabilities and stockholders' equity
|
$13,420,419
|
$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 JUNE 30, 2006 AND 2005 AND FOR
THE
|
||||
SIX
MONTHS ENDED JUNE 30, 2006 AND 2005
|
||||
(UNAUDITED)
|
||||
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
|||
2006
|
2005
|
2006
|
2005
|
|
Sales
|
$
6,740,745
|
$
5,057,912
|
$
12,752,196
|
$
9,801,123
|
Cost
of sales
|
3,848,484
|
3,416,576
|
7,553,776
|
6,458,437
|
Gross
Profit
|
2,892,261
|
1,641,336
|
5,198,420
|
3,342,686
|
Costs
and expenses:
|
||||
Research
and development
|
267,075
|
136,238
|
378,055
|
277,478
|
Professional
services
|
120,911
|
89,499
|
250,838
|
237,521
|
Salaries
and related costs
|
758,116
|
555,364
|
1,282,620
|
1,066,021
|
Selling,
general and administrative
|
990,372
|
955,008
|
1,812,759
|
1,733,302
|
Development
joint venture
|
44,283
|
30,579
|
78,000
|
73,882
|
2,180,757
|
1,766,688
|
3,802,272
|
3,388,204
|
|
Gain/(loss)
from operations
|
711,504
|
(
125,352)
|
1,396,148
|
(
45,518)
|
Other
income (expense):
|
||||
Interest
(net of income expense)
|
11,306
|
4,515
|
21,792
|
11,204
|
Net
income (loss) before minority interest and income tax
|
722,810
|
(120,837)
|
1,417,940
|
(34,314)
|
Minority
interest
|
5,000
|
2,500
|
10,000
|
5,000
|
Provision
for income tax
|
(
235,700)
|
--
|
(
493,200)
|
--
|
Realized
benefit of loss carryforward
|
220,700
|
--
|
468,200
|
--
|
Net
income (loss)
|
$
712,810
|
$
(
118,337)
|
$
1,402,940
|
$(
29,314)
|
Earnings
per share/(loss)
|
||||
Net
income:
|
||||
Basic/(loss)
|
.05
|
(.01)
|
.10
|
(.00)
|
Diluted
|
.04
|
N/A
|
.08
|
N/A
|
Weighted
average number of shares outstanding
|
14,286,858
|
13,908,188
|
14,223,949
|
13,897,055
|
Weighted
average number of shares outstanding adjusted for dilutive securities
|
17,129,404
|
N/A
|
16,957,670
|
N/A
|
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 JUNE 30,
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
|
(301,640)
|
301,640
|
301
|
259,001
|
--
|
259,302
|
Options
forfeited
|
(
64,090 )
|
|||||
Income
for period
|
--
|
--
|
--
|
--
|
1,402,940
|
1,402,940
|
June
30, 2006
|
3,803,140
|
14,342,368
|
$
14,360
|
$
20,789,091
|
$
(9,339,609)
|
$11,463,842
|
2006
|
2005
|
||
Cash
flows from operating activities
|
|||
Net
income ( loss)
|
$
1,402,940
|
$ ( 29,314)
|
|
Adjustments
to reconcile net income
|
|||
to
net cash provided by (used in) operating activities:
|
|||
Depreciation
and amortization
|
238,842
|
254,081
|
|
Changes
in current assets and liabilities:
|
|||
Receivables
|
(
210,100)
|
( 587,352)
|
|
Inventories
and repair parts
|
(
264,060)
|
( 455,597)
|
|
Prepaid
expenses
|
(
81,670)
|
14,436
|
|
Other
receivable
|
--
|
( 55,000)
|
|
Accounts
payable
|
(
50,172)
|
178,210
|
|
Accrued
expense
|
231,397
|
149,381
|
|
Deferred
revenue
|
(
21,300)
|
( 25,821)
|
|
Net
cash provided (applied) by operating activities
|
1,245,877
|
( 556,976)
|
|
Cash
flows from investing activities
|
|||
Increase
in fixed assets
|
(
510,886)
|
( 656,675)
|
|
Increase
in deposits
|
--
|
( 2,000)
|
|
Increase
in purchased technology
|
(
234,099)
|
( 2,001)
|
|
Net
cash used in investing activities
|
(
744,985)
|
( 660,6760)
|
|
Cash
flows from financing activities
|
|||
Decrease
in mortgage payable
|
(
348,328)
|
( 15,831)
|
|
Increase
in notes payable
|
185,848
|
--
|
|
Common
shares purchased
|
259,302
|
29,113
|
|
Net
cash provided in financing activities
|
96,822
|
13,282
|
|
Net
increase (decrease) in cash and cash equivalents
|
597,714
|
(1,204,370)
|
|
Cash
and cash equivalents, beginning of period
|
1,295,266
|
2,294,746
|
|
Cash
and cash equivalents, end of period
|
$1,892,980
|
$ 1,090,376
|
|
|
2006
|
2005
|
Interest
paid
|
$
16,070
|
$
10,675
|
Income
taxes
|
-
0
-
|
-
0
-
|
June
30, 2006
|
December
31, 2005
|
|
Raw
materials
|
$
1,189,107
|
$
1,139,730
|
Work
in process
|
1,464,732
|
1,267,991
|
Finished
goods
|
607,053
|
589,111
|
Total
|
$
3,260,892
|
$
2,996,832
|
June 30, 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
|
(
140,000)
|
(
120,000)
|
Net
carrying amount
|
260,000
|
280,000
|
Purchased
technology (5 yr life)
|
$
514,863
|
$
280,764
|
Less:
Accumulated amortization
|
(264,573)
|
(247,101)
|
Net
carrying amount
|
$
250,290
|
$
33,663
|
Six
months ended June 30
|
||
2006
|
2005
|
|
Net
income
|
$
1,403
|
$
(29)
|
Basic-weighted
average shares outstanding
|
14,224
|
13,897
|
Effect
of dilutive potential securities
|
2,734
|
N/A
|
Diluted
- weighted average shares outstanding
|
16,958
|
N/A
|
Basic
EPS
|
$
.10
|
$
(
.01
)
|
Diluted
EPS
|
$
.08
|
$
N/A
|
Percentage
|
Percentage
|
|||||
Change
in
|
Change
in
|
|||||
2nd
Quarter
|
Dollar
amounts
|
Six
months
|
Dollar
amounts
|
|||
2006
|
2005
|
2006
|
2005
|
|||
%
|
%
|
%
|
%
|
%
|
%
|
|
Sales
|
100.0
|
100.0
|
33.0
|
100.0
|
100.0
|
30.0
|
Cost
of sales
|
57.0
|
67.0
|
13.0
|
59.0
|
66.0
|
17.0
|
Gross
profit
|
43.0
|
33.0
|
76.0
|
41.0
|
34.0
|
56.0
|
Other
costs:
|
||||||
R
& D
|
4.0
|
3.0
|
96.0
|
3.0
|
3.0
|
36.0
|
Professional
fees
|
2.0
|
2.0
|
35.0
|
2.0
|
2.0
|
6.0
|
Salaries
|
11.0
|
10.0
|
37.0
|
10.0
|
10.0
|
20.0
|
SGA
|
15.0
|
19.0
|
4.0
|
14.0
|
18.0
|
4.0
|
Equity
in loss of Unconsolidated affiliate
|
1.0
|
1.0
|
45.0
|
1.0
|
1.0
|
6.0
|
Total
other costs
|
32.0
|
35.0
|
23.0
|
30.0
|
34.0
|
12.0
|
Gain/
from operations
|
11.0
|
(2.0)
|
668.0
|
11.0
|
0.0
|
3,167.0
|
Other
income
|
0.0
|
0.00
|
150.0
|
0.0
|
0.0
|
94.0
|
Net
Income before Minority Interest and Income Tax
|
11.0
|
(2.0)
|
698.0
|
11.0
|
0.0
|
4,232.0
|
Minority
Interest
|
0.0
|
0.0
|
0.0
|
0.0
|
||
Income
tax expense
|
(
3.0)
|
0.0
|
(4.0)
|
0.0
|
||
Income
tax benefit
|
3.0
|
0.0
|
|
4.0
|
0.0
|
|
Net
earnings
|
11.0
|
(2.0)
|
702.0
|
11.0
|
0.00
|
4,886.0
|
The
table below sets forth domestic/international and product line sales
information for the second quarter of 2006 and 2005.
|
||||
Net
Sales (in thousands)
|
Percentage
change
|
Increase/
|
||
2006
|
2005
|
2006/2005
|
(Decrease)
|
|
Domestic/international
sales:
|
||||
Domestic
|
$
5,888
|
$
4,270
|
38.0
|
1,618
|
International
|
853
|
788
|
8.0
|
65
|
Total
net sales
|
$
6,741
|
$
5,058
|
33.0
|
1,683
|
Product
line sales:
|
||||
Electrosurgical
|
$
4,569
|
$
2,987
|
53.0
|
1,582
|
Cauteries
|
1,530
|
1,272
|
20.0
|
258
|
Other
|
642
|
799
|
(
20.0)
|
(
157)
|
Total
net sales
|
$
6,741
|
$
5,058
|
33.0
|
1,683
|
The
table below sets forth domestic/international and product line sales
information for the six months of 2006 and 2005.
|
||||
Net
Sales (in thousands)
|
Percentage
change
|
Increase/
|
||
2006
|
2005
|
2006/2005
|
(Decrease)
|
|
Domestic/international
sales:
|
||||
Domestic
|
$
11,117
|
$
8,193
|
36.0
|
2,924
|
International
|
1,635
|
1,608
|
2.0
|
27
|
Total
net sales
|
$
12,752
|
$
9,801
|
30.0
|
2,951
|
Product
line sales:
|
||||
Electrosurgical
|
$
8,380
|
$
5,498
|
52.0
|
2,882
|
Cauteries
|
2,877
|
2,602
|
11.0
|
275
|
Other
|
1,495
|
1,701
|
(
12.0)
|
(
206)
|
Total
net sales
|
$
12,752
|
$
9,801
|
30.0
|
2,951
|
|
As
of June 30,
|
|
Payment
Period
|
|
|
2006
|
2007
|
2008
|
2009
|
2010
|
|
Current
debt
|
146
|
40
|
-0-
|
-0-
|
-0-
|
Operating
leases
|
71
|
135
|
115
|
-0-
|
-0-
|
Unconditional
purchase obligations
|
1,323
|
1200
|
-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.
|