Apyx Medical Corp - Quarter Report: 2008 March (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the Quarterly Period Ended March 31, 2008
OR
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Commission file number
012183
BOVIE
MEDICAL CORPORATION
(Exact
name of registrant as specified in its charter)
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Delaware
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11-2644611
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(State
or other jurisdiction Of incorporation or organization)
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(IRS
Employer Identification No.)
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734
Walt Whitman Rd., Melville, New York 11747
(Address
of principal executive offices)
(631)
421-5452
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. YES x NO ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check
one):
Large
Accelerated filer ¨ Accelerated
filer ¨ Non-accelerated
filer x
Indicate
by check mark whether the registrant is a shell company (as defined in the Rule
12b-2 of the Exchange Act). YES ¨ NO x
The
number of shares of common stock, par value $0.001 per share, outstanding on May
5, 2008 was 16,121,742.
INDEX
TO FORM 10-Q
FOR
THE QUARTER ENDED MARCH 31, 2008
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ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS
BOVIE
MEDICAL CORPORATION
CONSOLIDATED
BALANCE SHEETS
MARCH
31, 2008 AND DECEMBER 31, 2007
Assets
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(Unaudited)
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(Audited)
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|||||||
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March
31, 2008
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December
31, 2007
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|||||||
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Current
assets:
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||||||||
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Cash
and cash equivalents
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$ | 3,520,047 | $ | 3,534,759 | ||||
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Trade
accounts receivable, net of allowance for doubtful accounts of $8,645 and
$8,734, respectively
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2,416,258 | 2,525,451 | ||||||
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Inventories
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4,926,531 | 4,521,992 | ||||||
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Prepaid
expenses
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706,387 | 278,262 | ||||||
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Deferred
income tax asset, net
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501,846 | 603,223 | ||||||
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Total
current assets
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12,071,069 | 11,463,687 | ||||||
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Property
and equipment, net
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3,655,109 | 3,421,455 | ||||||
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Other
assets:
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||||||||
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Brand
name/trademark, net
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1,509,662 | 1,509,662 | ||||||
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Purchased
technology, net
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2,078,106 | 2,102,844 | ||||||
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License
rights, net
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263,016 | 278,797 | ||||||
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Deposits
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26,747 | 44,438 | ||||||
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Total
other assets
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3,877,531 | 3,935,741 | ||||||
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Total
Assets
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$ | 19,603,709 | $ | 18,820,883 | ||||
The
accompanying notes are an integral part of the consolidated financial
statements.
BOVIE
MEDICAL CORPORATION
CONSOLIDATED
BALANCE SHEETS
MARCH
31, 2008 AND DECEMBER 31, 2007
(CONTINUED)
Liabilities
and Stockholders' Equity
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(Unaudited)
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(Audited)
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|||||||
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March
31, 2008
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December
31, 2007
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|||||||
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Current
liabilities:
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||||||||
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Accounts
payable
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$ | 896,036 | $ | 807,437 | ||||
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Accrued
warranty
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48,424 | 56,386 | ||||||
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Accrued
payroll
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110,750 | 113,308 | ||||||
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Accrued
vacation
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249,889 | 229,591 | ||||||
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Current
portion of due to Lican
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50,000 | 50,000 | ||||||
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Customer
deposits
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36,240 | 36,077 | ||||||
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Deferred
revenues
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- | 56,386 | ||||||
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Accrued
expenses and other liabilities
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893,867 | 353,494 | ||||||
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Total
current liabilities
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2,285,206 | 1,702,679 | ||||||
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Deferred
income taxes payable, net
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12,042 | 8,188 | ||||||
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Due
to Lican, net of current portion
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318,150 | 318,150 | ||||||
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Total
liabilities
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2,615,398 | 2,029,017 | ||||||
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Commitments
and Contingencies
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||||||||
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Stockholders'
equity:
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||||||||
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Preferred
stock, par value $.001; 10,000,000 shares authorized; none issued and
outstanding
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- | - | ||||||
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Common
stock par value $.001; 40,000,000 shares authorized, 15,936,834 and
15,457,088 issued and outstanding on March 31, 2008 and December 31, 2007,
respectively
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15,938 | 15,457 | ||||||
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Additional
paid in capital
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22,440,681 | 22,435,161 | ||||||
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Accumulated
deficit
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(5,468,308 | ) | (5,658,752 | ) | ||||
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Total
stockholders' equity
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16,988,311 | 16,791,866 | ||||||
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Total
Liabilities and Stockholders' Equity
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$ | 19,603,709 | $ | 18,820,883 | ||||
The
accompanying notes are an integral part of the consolidated financial
statements.
BOVIE
MEDICAL CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
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March
31, 2008
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March
31, 2007
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|||||||
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Sales
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$ | 6,677,567 | $ | 6,705,175 | ||||
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Cost
of sales
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4,091,642 | 4,222,431 | ||||||
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Gross
profit
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2,585,925 | 2,482,744 | ||||||
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Other
costs and expenses:
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||||||||
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Research
and development
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357,700 | 350,673 | ||||||
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Professional
services
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163,132 | 190,585 | ||||||
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Salaries
and related costs
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732,401 | 700,618 | ||||||
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Selling,
general and administrative
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1,043,744 | 822,937 | ||||||
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Development
cost-joint venture
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- | 27,316 | ||||||
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Total
costs and expenses
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2,296,977 | 2,092,129 | ||||||
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Income
from operations
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288,948 | 390,615 | ||||||
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Interest
income, net
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21,727 | 39,672 | ||||||
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Income
before minority interest and income taxes
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310,675 | 430,287 | ||||||
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Minority
interest
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- | 5,000 | ||||||
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Provision
for income taxes
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(120,231 | ) | (189,996 | ) | ||||
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Realized
benefit of tax loss carryforward
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-- | 334,896 | ||||||
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Net
income
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$ | 190,444 | $ | 580,187 | ||||
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Earnings
per common share
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||||||||
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Basic
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$ | 0.01 | $ | 0.04 | ||||
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Diluted
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$ | 0.01 | $ | 0.03 | ||||
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Weighted
average number of shares outstanding
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15,922,863 | 15,288,638 | ||||||
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Weighted
average number of shares outstanding adjusted for dilutive
securities
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17,684,783 | 17,844,626 | ||||||
The
accompanying notes are an integral part of the consolidated financial
statements.
BOVIE MEDICAL CORPORATION
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR
THE YEAR ENDED DECEMBER 31, 2007 AND THE PERIOD
ENDED
MARCH 31, 2008
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Additional
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||||||||||||||||||||||||
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Options
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Common
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Paid-in
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Accumulated
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|||||||||||||||||||||
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Outstanding
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Shares
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Par
Value
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Capital
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Deficit
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Total
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|||||||||||||||||||
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January
1, 2007
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3,263,700 | 15,223,538 | $ | 15,241 | $ | 22,104,399 | $ | (8,059,343 | ) | $ | 14,060,297 | |||||||||||||
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Options
granted
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137,500 | -- | -- | -- | -- | -- | ||||||||||||||||||
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Options
exercised
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(225,300 | ) | 225,300 | 225 | 309,925 | -- | 310,150 | |||||||||||||||||
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Options
forfeited
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(42,500 | ) | -- | -- | -- | -- | -- | |||||||||||||||||
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Stock
based compensation
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--- | -- | -- | 72,089 | 72,089 | |||||||||||||||||||
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Stock
swap to acquire assets
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-- | (9,179 | ) | (9 | ) | (56,241 | ) | -- | (56,250 | ) | ||||||||||||||
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Other
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-- | 17,429 | -- | 4,989 | -- | 4,989 | ||||||||||||||||||
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Income
for the year
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-- | -- | -- | -- | 2,400,591 | 2,400,591 | ||||||||||||||||||
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December
31, 2007
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3,133,400 | 15,457,088 | 15,457 | 22,435,161 | (5,658,752 | ) | 16,791,866 | |||||||||||||||||
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Options
exercised
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(550,000 | ) | 557,500 | 558 | 497,317 | 497,875 | ||||||||||||||||||
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Stock
based compensation
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-- | -- | -- | (499 | ) | -- | (499 | ) | ||||||||||||||||
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Options
granted
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-- | -- | -- | -- | -- | -- | ||||||||||||||||||
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Options
forfeited
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-- | -- | -- | -- | -- | -- | ||||||||||||||||||
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Stock
swap to acquire Shares
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-- | (77,754 | ) | (77 | ) | (491,298 | ) | -- | (491,375 | ) | ||||||||||||||
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Income
for the period
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-- | -- | -- | -- | 190,444 | 190,444 | ||||||||||||||||||
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March
31, 2008
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2,583,400 | 15,936,834 | $ | 15,938 | $ | 22,440,681 | $ | (5,468,308 | ) | $ | 16,988,311 | |||||||||||||
The
accompanying notes are an integral part of the consolidated financial
statements.
BOVIE MEDICAL CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
|
2008
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2007
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|||||||
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Cash
flows from operating activities
|
||||||||
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Net
income
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$ | 190,444 | $ | 580,187 | ||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
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Depreciation
and amortization of property and equipment
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208,782 | 113,387 | ||||||
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Amortization
of intangible assets
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37,883 | 14,230 | ||||||
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Provision
for (recovery of) inventory obsolescence
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(465 | ) | (2,103 | ) | ||||
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Loss
on disposal of property and equipment
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2,236 | - | ||||||
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Stock
based compensation
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(499 | ) | 4,468 | |||||
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Non-cash
reclassification
|
2,639 | - | ||||||
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Provision
(benefit) for deferred tax asset
|
105,231 | (159,900 | ) | |||||
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Provision
for bad debts
|
- | (1,219 | ) | |||||
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Minority
interest in net loss of joint venture
|
- | (5,000 | ) | |||||
|
Changes
in current assets and liabilities:
|
||||||||
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Trade
receivables
|
109,193 | 79,160 | ||||||
|
Prepaid
expenses
|
(428,124 | ) | (1,330 | ) | ||||
|
Inventories
|
(404,074 | ) | (570,182 | ) | ||||
|
Deposits
|
17,691 | - | ||||||
|
Accounts
payable
|
88,599 | 348,822 | ||||||
|
Accrued
and other liabilities
|
501,724 | 10,996 | ||||||
|
Customer
deposits
|
161 | (29,788 | ) | |||||
|
Deferred
revenues
|
(7,962 | ) | (85,651 | ) | ||||
|
Net
cash provided by operations
|
423,461 | 296,077 | ||||||
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Cash
flows from investing activities
|
||||||||
|
Purchases
of property and equipment
|
(455,245 | ) | (268,563 | ) | ||||
|
Proceeds
from sale of property and equipment
|
10,573 | - | ||||||
|
Net
cash used in investing activities
|
(444,672 | ) | (268,563 | ) | ||||
|
Cash
provided by financing activities -
|
||||||||
|
Common
shares issued
|
6,499 | 144,404 | ||||||
|
Net
change in cash and cash equivalents
|
(14,712 | ) | 171,918 | |||||
|
Cash
and cash equivalents, beginning of period
|
3,534,759 | 2,952,892 | ||||||
|
Cash
and cash equivalents, end of period
|
$ | 3,520,047 | $ | 3,124,810 | ||||
|
Cash
paid during the three months ended March 31, 2008 and
2007:
|
||||||||
|
Interest
paid
|
$ | 948 | $ | – | ||||
|
Income
taxes
|
$ | – | $ | 25,344 | ||||
The
accompanying notes are an integral part of the consolidated financial
statements
BOVIE MEDICAL CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE
1. BASIS OF PRESENTATION
The
accompanying condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America (U.S.) for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information necessary for a fair presentation of results of
operations, financial position, and cash flows in conformity with accounting
principles generally accepted in the U.S. In the opinion of
management, the condensed consolidated financial statements reflect all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation of the results of Bovie Medical Corporation and its
subsidiaries (collectively, the “Company” or “we”, “us”, “our”) for the periods
presented. Operating results for interim periods are not necessarily
indicative of results that may be expected for the fiscal year as a
whole.
The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management 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 management is required to make. Estimates that are
critical to the accompanying consolidated financial statements relate
principally to the adequacy of our accounts receivable and inventory allowances,
the recoverability of long-lived assets and the valuation of our net deferred
income tax assets. The markets for the Company’s products are characterized by
intense price competition, rapid technological development, evolving standards
and short product life cycles, all of which could impact the future realization
of its assets. Estimates and assumptions are reviewed periodically and the
effects of revisions are reflected in the period that they are determined to be
necessary. It is at least reasonably possible that the Company’s estimates could
change in the near term with respect to these matters.
For
further information, refer to the consolidated financial statements and notes
thereto included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2007. Certain prior year amounts may have been
reclassified to conform to the presentation used in 2008.
NOTE
2. INVENTORIES
Inventories
are stated at the lower of cost or market. Cost is determined
principally on the average cost method. Inventories at March 31, 2008
and December 31, 2007 were as follows:
|
March
31, 2008
|
December
31, 2007
|
|||||||
|
Raw
materials
|
$ | 2,709,397 | $ | 2,447,090 | ||||
|
Work
in process
|
1,305,730 | 1,230,172 | ||||||
|
Finished
goods
|
911,404 | 844,730 | ||||||
|
Total
|
$ | 4,926,531 | $ | 4,521,992 | ||||
NOTE
3. INTANGIBLE ASSETS
At March
31, 2008 and December 31, 2007 intangible assets consisted of the
following:
|
March
31, 2008
|
December
31, 2007
|
|||||||
|
Trade
name (life indefinite)
|
$ | 1,509,662 | $ | 1,509,662 | ||||
|
Purchased
technology (9-17 yr life)
|
$ | 2,435,539 | $ | 2,438,175 | ||||
|
Less: Accumulated
amortization
|
(357,433 | ) | (335,331 | ) | ||||
|
Net
carrying amount
|
$ | 2,078,106 | $ | 2,102,844 | ||||
|
License
rights (5 yr life)
|
$ | 315,619 | $ | 315,619 | ||||
|
Less
accumulated amortization
|
(52,603 | ) | (36,822 | ) | ||||
|
Net
carrying amount
|
$ | 263,016 | $ | 278,797 | ||||
NOTE
4. NEW ACCOUNTING PRONOUNCEMENTS
FIN
48 - Accounting for Uncertainty in Income Taxes – an Interpretation of FASB
Statement No. 109
In July
2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes - an interpretation of FASB Statement No. 109" ("FIN 48") which
prescribes a recognition threshold and measurement attribute, as well as
criteria for subsequently recognizing, derecognizing and measuring uncertain tax
positions for financial statement purposes. FIN 48 also requires expanded
disclosure with respect to the uncertainty in income tax assets and liabilities.
FIN 48 is effective for fiscal years beginning after December 15, 2006 and is
required to be recognized as a change in accounting principle through a
cumulative-effect adjustment to retained earnings as of the beginning of the
year of adoption. The Company adopted this statement effective January 1, 2007
and its adoption did not have a material impact on the Company's consolidated
financial position or results of operations.
SFAS
No. 141 (revised 2007), “Business Combinations” (SFAS No. 141(R)
In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations” (SFAS No. 141(R), which replaces SFAS No. 141, “Business
Combinations.” SFAS No. 141(R) retains the underlying concepts of SFAS No. 141
in that all business combinations are still required to be accounted for at fair
value under the acquisition method of accounting, but SFAS No. 141(R) changes
the method of applying the acquisition method in a number of significant
aspects. Acquisition costs will generally be expensed as incurred;
non-controlling interests will be valued at fair value at the acquisition date;
in-process research and development will be recorded at fair value as an
indefinite-lived intangible asset at the acquisition date; restructuring costs
associated with a business combination will generally be expensed subsequent to
the acquisition date; and changes in deferred tax asset valuation allowances and
income tax uncertainties after the acquisition date generally will affect income
tax expense. SFAS No. 141(R) is effective on a prospective basis for all
business combinations for which the acquisition date is on or after the
beginning of the first annual period subsequent to December 15, 2008, with an
exception related to the accounting for valuation allowances on deferred taxes
and acquired contingencies related to acquisitions completed before the
effective date. SFAS No. 141(R) amends SFAS No. 109 to require adjustments, made
after the effective date of this statement, to valuation allowances for acquired
deferred tax assets and income tax positions to be recognized as income tax
expense. The impact of our adoption of SFAS 141R will depend upon the nature and
terms of business combinations, if any, that we consummate on or after January
1, 2009.
SFAS
157 – Fair Value Measurement’
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements (“FAS
157”). This standard defines fair value, establishes a framework and gives
guidance regarding the methods used for measuring fair value, and expands
disclosures about fair value measurements. This standard is effective for
financial statements issued for fiscal years beginning after November 15, 2007.
In February 2008, the FASB released a FASB Staff Position (FSP FAS 157-2—
Effective Date of FASB Statement No. 157) which delays the effective date of
SFAS No. 157 for all non-financial assets and non-financial liabilities, except
those that are recognized or disclosed at fair value in the financial statements
on a recurring basis (at least annually) to fiscal years beginning after
November 15, 2008. The partial adoption of SFAS No. 157 on January 1, 2008, for
financial assets and liabilities did not have a material impact on the Company’s
consolidated financial position or results of operations.
SFAS
158 – Employers’ Accounting for Defined Benefit Pension and Other Postretirement
Plans, an amendment of FASB Statement Nos. 87, 88, 106, and 132(R)
In
September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans, an amendment of FASB Statement
Nos. 87, 88, 106, and 132(R), or (“FAS 158”). This Statement requires an
employer that is a business entity and sponsors one or more single-employer
defined benefit plans to (a) recognize the funded status of a benefit
plan—measured as the difference between plan assets at fair value (with limited
exceptions) and the benefit obligation—in its statement of financial position;
(b) recognize, as a component of other comprehensive income, net of tax, the
gains or losses and prior service costs or credits that arise during the period
but are not recognized as components of net periodic benefit cost pursuant to
FAS 87, Employers’ Accounting for Pensions, or FAS 106, Employers’ Accounting
for Postretirement Benefits Other Than Pensions; (c) measure defined benefit
plan assets and obligations as of the date of the employer’s fiscal year-end
statement of financial position (with limited exceptions); and (d) disclose in
the notes to financial statements additional information about certain effects
on net periodic benefit cost for the next fiscal year that arise from delayed
recognition of the gains or losses, prior service costs or credits, and
transition assets or obligations. An employer with publicly traded
equity securities is required to initially recognize the funded status of a
defined benefit postretirement plan and to provide the required disclosures as
of the end of the fiscal year ending after December 15, 2006. Adoption of this
statement did not have a material effect on the Company’s consolidated financial
position or results of operations.
SFAS
159 – The Fair Value Option for Financial Assets and Financial
Liabilities—Including an amendment of FASB Statement No. 115
In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an amendment of FASB
Statement No. 115," which provides a fair value option election that permits
entities to irrevocably elect to measure certain financial assets and
liabilities (exceptions are specifically identified in the Statement) at fair
value as the initial and subsequent measurement attribute, with changes in fair
value recognized in earnings as they occur. SFAS No. 159 permits the fair value
option election on an instrument-by-instrument basis at initial recognition of
an asset or liability or upon an event that gives rise to a new basis of
accounting for that instrument. The adoption of SFAS No. 159 on
January 1, 2008, for financial assets and liabilities did not have a material
impact on the Company’s consolidated financial position or results of
operations.
SFAS
No. 160, “Non-controlling Interests in Consolidated Financial Statements, an
amendment of ARB No. 51” (SFAS No. 160)
In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51” (SFAS No. 160).
SFAS No. 160 will change the accounting and reporting for minority interests,
which will be recharacterized as non-controlling interests (NCI) and classified
as a component of equity. This new consolidation method will significantly
change the accounting for partial and/or step acquisitions. SFAS No. 160 will be
effective for the Company in the first quarter of fiscal year 2010. The Company
is currently evaluating the impact that the adoption of SFAS No. 160 will have,
but does not believe it will be material to the consolidated financial
statements.
SFAS 161 – Disclosures about Derivative
Instruments and Hedging Activities — an amendment of FASB Statement No. 133
(“FAS 161”)
In March
2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative
Instruments and Hedging Activities — an amendment of FASB Statement No. 133
(“FAS 161”). This Standard requires enhanced disclosures regarding
derivatives and hedging activities, including: (a) the manner in which an entity
uses derivative instruments; (b) the manner in which derivative instruments and
related hedged items are accounted for under Statement of Financial Accounting
Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities; and (c) the effect of
derivative instruments and related hedged items on an entity’s financial
position, financial performance, and cash flows. The Standard is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008. As FAS 161 relates specifically to derivatives, the Standard
will have no impact on our consolidated financial position or results of
operations.
EITF
Issue No. 07-3, “Accounting for Nonrefundable Advance Payments for Goods or
Services Received to Be Used in Future Research and Development Activities”
(EITF No. 07-3)
In June
2007, the Emerging Issues Task Force (EITF) reached a consensus on EITF Issue
No. 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services
Received to Be Used in Future Research and Development Activities” (EITF No.
07-3). EITF No. 07-3 requires companies that are involved in research and
development activities to defer nonrefundable advance payments for future
research and development activities and to recognize those payments as goods and
services are delivered. The Company will be required to assess on an ongoing
basis whether or not the goods or services will be delivered and to expense the
nonrefundable advance payments immediately if it is determined that delivery is
unlikely. EITF No. 07-3 is effective for new arrangements entered into
subsequent to the beginning of the Company’s fiscal year 2009. The Company is
currently evaluating the impact that the adoption of EITF No. 07-3 will have,
but does not believe it will be material to the consolidated financial position
or results of operations.
NOTE
5. STOCKHOLDERS’ EQUITY
During
the three month period ended March 31, 2008, we issued 557,500 common shares on
the exercise of employee and non-employee options. During the same time period
we received 77,754 common shares in a stock swap to exercise 552,500 options
(which exercise is included in the 557,500 shares). The issuance of
the common stock along with the receipt of treasury stock received through the
stock swap, resulted in a net increase in capital of $6,500.
NOTE
6. EARNINGS PER SHARE
We
compute basic earnings per share (“basic EPS”) by dividing net income 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 resulting from employee stock options
during the period. The following table sets forth the computation of
basic and diluted earnings per share for the three month periods ended March 31,
2008 and 2007.
|
March 31, 2008
|
March 31, 2007
|
|||||||
|
Net
income
|
$ | 190,444 | $ | 580,187 | ||||
|
Basic-weighted
average shares outstanding
|
15,922,863 | 15,288,638 | ||||||
|
Effect
of dilutive potential securities
|
1,761,921 | 2,555,988 | ||||||
|
Diluted
– weighted average shares outstanding
|
17,684,783 | 17,844,626 | ||||||
|
Basic
EPS
|
$ | 0.01 | $ | 0.04 | ||||
|
Diluted
EPS
|
$ | 0.01 | $ | 0.03 | ||||
The
shares used in the calculation of Diluted EPS exclude options to purchase shares
where the exercise price was greater than the average market price of common
shares during the quarter. Such shares aggregated 157,500 and 130,000
as of March 31, 2008 and 2007, respectively.
NOTE
7 STOCK-BASED COMPENSATION
Under the
Company’s stock option plan, options to purchase Common Shares may be granted to
key employees, officers and directors of the Company by the Board of Directors.
The Company accounts for stock options in accordance with SFAS Statement 123 (R)
with option expense amortized over the vesting period based on the binomial
lattice option-pricing model fair value on the grant date, which includes a
number of estimates that affect the amount of our expense. During the three
months ended March 31, 2008 the Company recaptured previously expensed costs in
the amount of $20,040 related to stock options that were fully vested prior to
the adoption of SFAS Statement 123 (R).This amount was substantially offset by
stock option expense for the three month period ended March 31, 2008 of
$19,542.
NOTE
8 INCOME TAXES
As of
March 31, 2008, the Company had a net deferred income tax assets of
approximately $502,000 arising primarily from net operating loss carry forwards.
The Company’s income has been reduced by a provision for deferred income taxes
in accordance with Financial Accounting Standards Statement No. 109 "Accounting
for Income Taxes" ("FAS 109"), and assuming we continue to generate positive
results of operations, such treatment will continue until the remaining balance
of our deferred income tax assets arising from net operating loss carryforwards
are realized. We estimate that our net operating loss carryforwards will be
fully utilized by December 31, 2008. Until such carryforwards are
utilized, we do not expect to pay any income taxes, other than those arising
from the alternative minimum tax.
NOTE
9 SUBSEQUENT EVENT
On April
29, Bovie signed an agreement with Boston Scientific Corporation (NYSE: BSX -
News) to acquire technology, patents, and assets related to the use of
conductive sintered steel as an electrode for radio frequency (RF) cutting and
coagulation, intended to lower blood loss, quicken procedure times and provide
cost savings for hospitals. Potential fields of therapy for the technology
acquired include liver, pancreatic and kidney tumor therapies along with
orthopedic and blood vessel sealing. The process involves delivery of RF current
and sterile saline for resection, hemostatic sealing and coagulation in open and
laparoscopic surgery. The worldwide market size for the liver and orthopedic
market is expected to total $500 million in 2009.
This
agreement replaces a previously signed distribution and marketing agreement
between the Company and Boston Scientific that required Bovie to develop and
manufacture certain products using Boston Scientifics’ intellectual
property. Bovie intends to finalize the development and
commercialization of the technology. As part of the agreement, Bovie granted a
license to Boston Scientific limited until 2016 to uses outside of those fields
listed above.
End of
financial information
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Executive
Level Overview
We are a
medical device company engaged in the manufacturing and marketing of
electrosurgical devices. Our medical products include a wide range of devices
including electrosurgical generators and accessories, cauteries, medical
lighting, nerve locators and other products.
We
internally divide our operations into three product
lines. Electrosurgical products, battery operated cauteries and other
products. The electrosurgical segment sells electrosurgical products which
include dessicators, generators, electrodes, electrosurgical pencils and various
ancillary disposable products. These products are used in surgery for the
cutting and coagulation of tissue. Battery operated cauteries are used for
precise hemostasis (to stop bleeding) in ophthalmology and in other fields. Our
other revenues are derived from nerve locators, disposable and reusable
penlights, medical lighting, license fees, development fees and other
miscellaneous income.
Domestic
sales accounted for approximately 79% of total revenues in the first three
months of 2008 as compared to approximately 85% in the first three months of
2007. Most of the Company’s products are marketed through medical
distributors, which distribute to more than 6,000 hospitals, as well as doctors
and other health-care facilities. The Company’s products are sold in more than
150 countries through local distributors coordinated by our in-house sales and
marketing personnel at our St. Petersburg, Florida facility. We have no
manufacturing facilities or branch offices other than the Florida and Canadian
facilities.
Our ten
largest customers accounted for approximately 64.6% and 71.2% of net revenues
for the first three months of 2008 and 2007 respectively. At March
31, 2008 and 2007, our ten largest trade receivables accounted for approximately
63.3% and 73% of our net receivables, respectively. In the first
three months of 2008 and 2007 one customer, accounted for 16% and 18% of total
sales, respectively.
Our
business is generally not seasonal in nature.
Outlook
for 2008
With our
continued progress in the development of Bovie’s MEG and Polarian hand held
instruments, coupled with the recently acquired technology from Boston
Scientific Corporation, management remains optimistic that these products could
significantly impact future revenues. Subsequent to the close of our
first quarter, we announced a CE Mark for our Modular Ergonomic Instruments (MEG
laparoscopic line); thus, allowing this product to be marketed throughout the
European Union. Our domestic marketing efforts in these areas should
commence prior to the end of the third quarter, subject to FDA
clearance.
We strive
to become a dynamic, strong growth and profit oriented company, marked by
proprietary technologies, creating value-building opportunities. This
commitment to be a leading innovator requires great effort and financial
resources that should result in increased shareholder value.
Forecasting
is admittedly a difficult task and it has always been our policy to adopt a
conservative approach. The outlook is based on a number of
assumptions, which are subject to change and some of which are outside our
control. A variation in our assumptions may result in a change in
this outlook.
Result
of Operations (to be read in conjunction with the consolidated statements of
operations)
The table
below outlines the components of the consolidated statements of operations as
percentages of net sales and the year-to-year percentage changes in dollar
amounts for the quarters ended March 31, 2008 and 2007:
|
2008
|
2007
|
Percentage
change in
Dollar
amounts
2008/2007
|
||||||||||
|
%
|
%
|
%
|
||||||||||
|
Sales
|
100.0 | 100.0 | (0.4 | ) | ||||||||
|
Cost
of sales
|
61.3 | 63.0 | (3.1 | ) | ||||||||
|
Gross
profit
|
38.7 | 37.0 | 4.2 | |||||||||
|
Other
costs:
|
||||||||||||
|
Research
and development
|
5.4 | 5.2 | 2.0 | |||||||||
|
Professional
services
|
2.4 | 2.8 | (14.4 | ) | ||||||||
|
Salaries
and related costs
|
10.9 | 10.4 | 4.5 | |||||||||
|
Selling,
general and administrative
|
15.6 | 12.3 | 26.8 | |||||||||
|
Development
cost-joint venture
|
0.0 | 0.4 | (100.0 | ) | ||||||||
|
Total
other costs
|
34.3 | 31.2 | 9.8 | |||||||||
|
Income
from operations
|
4.4 | 5.8 | (26.0 | ) | ||||||||
|
Interest
income, net
|
0.3 | 0.6 | (45.2 | ) | ||||||||
|
Income
before minority interest and income tax
|
4.7 | 6.4 | (27.8 | |||||||||
|
Minority
interest
|
0.0 | 0.1 | (100.0 | ) | ||||||||
|
Provision
for income tax
|
(1.8 | ) | ( 2.8 | ) | (36.7 | ) | ||||||
|
Realized
benefit of tax loss carryforward
|
0.0 | 5.0 | (100.0 | ) | ||||||||
|
Net
income
|
2.9 | 8.7 | (67.2 | ) | ||||||||
The table
below sets forth domestic/international and product line sales information for
the first quarters of 2008 and 2007.
|
Net
Sales (in thousands)
|
2008
|
2007
|
Percentage
change
2008/2007
|
Increase/
(Decrease)
|
||||||||||||
|
Domestic/international
sales:
|
||||||||||||||||
|
Domestic
|
$ | 5,238 | $ | 5,708 | (8.2 | ) | $ | (470 | ) | |||||||
|
International
|
1,440 | 997 | 44.4 | 443 | ||||||||||||
|
Total
net sales
|
$ | 6,678 | $ | 6,705 | (.4 | ) | $ | (27 | ) | |||||||
|
Product
line sales:
|
||||||||||||||||
|
Electrosurgical
|
$ | 4,534 | $ | 4,654 | (2.6 | ) | $ | (120 | ) | |||||||
|
Cauteries
|
1,535 | 1,461 | 5.1 | 74 | ||||||||||||
|
Other
|
609 | 590 | 3.2 | 19 | ||||||||||||
|
Total
net sales
|
$ | 6,678 | $ | 6,705 | (.4 | ) | $ | (27 | ) | |||||||
2008
Compared with 2007
The
results of operations for the three months ended March 31, 2008 show a 0.4%
decrease in sales, as compared to the first three months of 2007. Sales of
electrosurgical products decrease by 2.6% or $0.1 million compared to the first
quarter of 2007. This decrease was due to a decrease in sales of
products to our OEM customers. Sales of cauteries increased by 5.1%,
from $1.46 million in 2007 to $1.54 million in 2008. Other sales
increased by 3.2% from approximately $590,000 to $609,000. No sales
of one particular electrosurgical product dominated the number of units
sold.
Domestic
sales were $5.2 million for first quarter 2008, representing a decrease of 8.2%
from the same period last year. International sales were $1.4 million
for the first quarter of 2008, representing an increase of 44.4% over the same
period in 2007.
Cost of
sales represented 61.3% of sales in the first quarter of 2008 as compared to 63%
of sales in the first quarter of 2007, a total of $4.1 million and $4.2 million,
respectively, a decrease of $0.1 million. The reason for the decrease
in cost of sales percentage was due to the decrease in our higher cost OEM
products.
Research
and development expenses were 5.4% and 5.2% of sales for the first quarters of
2008 and 2007, respectively. These expenses increased 2.0% in 2008 to
$357,700, an increase over the corresponding period of 2007 of
$350,673. This increase is due to costs related to annual salary
increases. New products under development are the MEG and Polarian hand held
instruments, plasma technology, and various improvements to our line of
electrosurgical generators.
Professional
services decreased by $27,453 or 14.4%, from $190,585 in the first quarter of
2007 to $162,132 for the first quarter of 2008. This decrease was mainly from a
reduction in legal costs.
Administrative
and sales salaries and related costs increased in the first quarter of 2008 by
4.5% to approximately $730,000 as compared to the first quarter of 2007 at
approximately $700,000. The increase was mainly attributable to
annual salary increases.
Selling,
general and administrative expenses increased as a percentage of sales by 3.3%
for the first quarter of 2008 as compared to the first quarter of 2007. Selling,
general and administrative expenses were $1,043,744 and $822,937 for first
quarters of 2008 and 2007, respectively, an increase of $220,807. This change
was due mainly to four items: an increase in commissions from higher non-OEM
sales, the addition of European market consulting fees to setup the distribution
channel for our new products, an increase in amortization expense from
manufacturing and license agreements, and an increase in general insurance
premiums.
Net
interest earned decreased by $17,945 during the first quarter of 2008 when
compared to the first quarter of 2007 primarily as a result of our cash balances
being invested and yielding lower interest rates due to certain interest rate
cuts that have occurred since March 31, 2007.
The
provisions for income taxes in the financial statements are based on effective
income tax rates of 38.7% and 44% for the quarters ended
December 31, 2008 and 2007, respectively. There was also a
significant tax loss carryover benefit recorded in the first quarter of 2007.
This benefit arose from management’s decision to reverse a portion of the
valuation allowance related to the Company’s deferred income tax assets at such
time. Later in 2007, the remaining portion of the valuation allowance
was eliminated when management determined it was more likely than not that all
of its deferred income taxes would be realized. As a result, the
Company’s income is now being reduced by a provision for deferred income taxes,
and such treatment will continue (assuming positive results of operations) until
such time that the Company’s deferred income tax asset arising from its net
operating loss carryforwards and certain other credits are
realized. In spite of this, until such assets are realized, the
Company does not anticipate having to pay any income taxes other than those
arising from alternative minimum taxes which approximated $15,000 for each of
the quarters ended March 31, 2008 and 2007.
Diluted
net earnings decreased $0.02 to $0.01 per share or $190,444 in the first quarter
of 2008 as compared to $580,187 of $0.03 per share in the first quarter of
2007. The decrease in earnings from operations was $101,667 versus
the after tax difference of $389,743 when compared to the first quarter of
2007. The difference was a result of the realized tax benefit of the
loss carryforward realized in the first quarter of 2007.
Marketing
and Sales
We sell
our products through distributors both overseas and in U.S.
markets. New distributors are contacted through responses to our
advertising in domestic and international medical journals and domestic or
international trade shows.
An
adequate supply of raw materials is available from both domestic and
international suppliers. The relationship between us and our
suppliers is generally limited to individual purchase order agreements,
supplemented by contractual arrangements with key vendors to ensure availability
of certain products. We have developed multiple sources of supply
where possible.
Product
Development
Most of
the Company’s products and product improvements have been developed internally.
Funds for this development have resulted primarily from internal cash flow and
the issuance of common stock upon the exercise of stock options. The Company
maintains close working relationships with physicians and medical personnel in
hospitals and universities who assist in product research and development. New
and improved products play a critical role in the Company’s sales growth. The
Company continues to place emphasis on the development of proprietary products
and product improvements to complement and expand its existing product lines.
The Company has a centralized research and development focus, with its Florida
and Canadian manufacturing locations responsible for new product development and
product improvements. Our research, development and engineering units at the
manufacturing location maintain relationships with distribution locations and
customers in order to provide an understanding of changes in the market and
product needs. During 2007 and into 2008 we invested in the ICON GS (J-Plasma
technology), modular laparoscopic and Endoscopic instruments, the
Gastrointestinal “GI” device and undertook development of Cardio and Urological
Electrosurgical devices for a contractual partner. The ongoing cost for this
development will be paid from operating cash flows.
In the
next year we do not contemplate any material purchase or acquisition of assets
that our ordinary cash flow and or credit line would be unable to
sustain.
Reliance
on Collaborative, Manufacturing and Selling Arrangements
We are
dependent on certain contractual OEM customers for product development, wherein
we are to provide the manufacturing of the product developed. However, the
customer has no legal obligation to purchase the developed products. Should the
collaborative customer fail to give us purchase orders for the product after
development, our future business and value of related assets could be negatively
affected. Furthermore, no assurance can be given that a collaborative customer
may give sufficient high priority to our products. In addition, disagreements or
disputes may arise between Bovie and its contractual customers, which could
adversely affect production of our products. We also have informal collaborative
arrangements with two foreign suppliers where in we request the development of
certain items and components and we purchase them pursuant to purchase orders.
Our purchase orders are never more than one year and are supported by orders
from our customers.
Liquidity
and Capital Resources
Our
working capital at March 31, 2008 and 2007 remained stable at $9.8 million.
Accounts receivable day sales outstanding were 34.5 days and 41.0 days at March
31, 2008 and March 31, 2007 respectively.
We
generated cash from operations of $0.4 million for the three months ended March
31, 2008 compared with generating cash to operations of $0.3 million in the same
period of 2007, an increase of $0.1 million.
In the
first three months ended March 31, 2008 we used approximately $450,000 for the
purchase of property and equipment.
We had
approximately $3.5 million in cash and cash equivalents at March 31, 2008. We
believe our cash on hand, as well as anticipated cash flows from operations,
will be sufficient to fund future operating capital requirements, future
manufacturing facility construction, other capital expenditures and future
acquisitions to supplement our current product offerings. Should additional
funds be required, we have $1.5 million of borrowing capacity available under
our existing credit facility, which currently expires on May 2,
2009.
The
Company’s future contractual obligations for agreements with initial terms
greater than one year, including agreements to purchase materials in the normal
course of business, are summarized as follows (in thousands):
|
As
of March 31,
|
Payment
Period
|
|||||||||||||||||||
|
2008
|
2009
|
2010
|
2011
|
2012
|
||||||||||||||||
|
Operating
leases
|
203 | 208 | 199 | 172 | 167 | |||||||||||||||
|
Employment
Agreement
|
782 | 1,022 | 799 | 858 | 72 | |||||||||||||||
|
Purchase
Commitments
|
2,897 | -0- | -0- | -0- | -0- | |||||||||||||||
Our
future results of operations and the other forward-looking statements contained
herein, particularly the statements regarding growth in the medical products
industry, capital spending, research and development, and marketing and general
and administrative expenses, involve a number of risks and uncertainties. In
addition to the factors discussed above, there are other factors that could
cause actual results to differ materially, such as business conditions and the
general economies, competitive factors including rival manufacturers’
availability of components at reasonable prices, risk of nonpayment of accounts
receivable, risks associated with foreign operations and litigation involving
intellectual property and consumer issues.
We
believe that we have the product mix, facilities, personnel, competitive edge,
operating cash flows and financial resources for business success in the
immediate (1 year) future and distant future (after 1 year), but future
revenues, costs, margins, product mix and profits are all subject to the
influence of a number of factors, as discussed above.
Critical
Accounting Estimates
We have
adopted various accounting policies to prepare the consolidated financial
statements in accordance with accounting principles generally accepted in the
United States of America (U.S. GAAP). Our most significant accounting policies
are disclosed in Note 1 to the consolidated financial statements.
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 bad debts, inventories,
intangible assets, property, plant and equipment, legal proceedings, research
and development, warranty obligations, product liability, sales returns and
discounts, 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:
Allowance for doubtful
accounts
We
maintain an allowance for doubtful accounts for estimated losses in the
collection of accounts receivable. We make estimates regarding the future
ability of our customers to make required payments based on historical credit
experience and expected future trends. If actual customer financial conditions
are less favorable than projected by management, additional accounts receivable
write-offs may be necessary, which would unfavorably affect future operating
results.
Inventory
Reserves
We
maintain reserves for excess and obsolete inventory resulting from the potential
inability to sell our products at prices in excess of current carrying costs.
The markets in which we operate are highly competitive, with new products and
surgical procedures introduced on an ongoing basis. Such marketplace changes may
cause our products to become obsolete. We make estimates regarding the future
recoverability of the costs of these products and record a provision for excess
and obsolete inventories based on historical experience, and expected future
trends. If actual product life cycles, product demand or acceptance of new
product introductions are less favorable than projected by management,
additional inventory write-downs may be required, which would unfavorably affect
future operating results.
Impairment of goodwill and
other long-lived assets
We review
long-lived assets which are held and used, including property and equipment and
purchased intangible assets, for impairment whenever changes in circumstances
indicate that the carrying amount of the assets may not be recoverable. Such
evaluations compare the carrying amount of an asset to future undiscounted net
cash flows expected to be generated by the asset over its expected useful life
and are significantly impacted by estimates of future prices and volumes for our
products, capital needs, economic trends and other factors which are inherently
difficult to forecast. If the asset is considered to be impaired, we record an
impairment charge equal to the amount by which the carrying value of the asset
exceeds its fair value determined by either a quoted market price, if any, or a
value determined by utilizing a discounted cash flow technique.
We test
our goodwill for impairment, at a minimum, annually. The
goodwill impairment test is a two-step process. The first step of the impairment
analysis compares the fair value of the goodwill to its carrying amount. In
determining fair value, the accounting guidance allows for the use of several
valuation methodologies, although it states quoted market prices are the best
evidence of fair value. If the fair value is less than the assets’ carrying
amount, we recognize an impairment loss equal to that excess
amount.
Share-based
Compensation
Under
the Company’s stock option plan, options to purchase Common Shares of the
Company may be granted to key employees, officers and directors of the Company
by the Board of Directors. The Company accounts for stock options in accordance
with SFAS Statement 123 (R) with option expense amortized over the vesting
period based on the binomial lattice option-pricing model fair value on the
grant date, which includes a number of estimates that affect the amount of our
expense.
Income
Taxes
We
operate in multiple tax jurisdictions both inside and outside the United States.
Accordingly, management must determine the appropriate allocation of income to
each of these jurisdictions. Tax audits associated with the allocation of this
income and other complex issues may require an extended period of time to
resolve and may result in income tax adjustments if changes to the income
allocation are required between jurisdictions with different tax rates. Because
tax adjustments in certain jurisdictions can be significant, we record accruals
representing our best estimate of the probable resolution of these matters. To
the extent additional information becomes available, such accruals are adjusted
to reflect the revised estimated probable outcome.
Other
Matters
We
distribute our products throughout the world. As a result, our financial results
could be significantly affected by factors such as changes in foreign currency
exchange rates or weak economic conditions in foreign markets. Our operating
results are primarily exposed to changes in exchange rates among the United
States dollar and European currencies, in particular the euro and the British
pound. When the United States dollar weakens against foreign currencies, the
dollar value of sales denominated in foreign currencies increases. When the
United States dollar strengthens, the opposite situation occurs. We manufacture
our products in the United States, China, Canada and Bulgaria and incur the
costs to manufacture in US dollars. This worldwide deployment of factories
serves to partially mitigate the impact of the high costs of manufacturing in
the US.
ITEM 3. Quantitative and Qualitative
Disclosures about Market Risk
Interest
rate risk
Our
financial instruments include cash, cash equivalents and short-term investments.
We are exposed to interest rate risk on our short-term investments. The primary
objective of our investment activities is to preserve principal while at the
same time maximizing yields without significantly increasing risk. To achieve
this objective, we invest in highly liquid overnight money market investments.
To minimize our exposure due to adverse shifts in interest rates, we invest in
short-term overnight securities. If a 10% change in interest rates were to have
occurred on March 31, 2008, this change would not have had a material effect on
the fair value of our investment portfolio as of that date. Due to the short
holding period of our investments, we have concluded that we do not have a
material financial market risk exposure.
Foreign
Currency Risk
Although
we have a foreign subsidiary located in Canada, our transactions outside our
functional currency are minimal and not a material financial
risk.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation
of disclosure controls and procedures
An
evaluation of the effectiveness of the design and operation of the Company’s
disclosure controls and procedures [as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)] as of March 31, 2008 was carried out under the supervision and
with the participation of the Company’s management, including the President and
Chief Executive Officer, and the Chief Financial Officer (“the Certifying
Officers”). Based on that evaluation, the Certifying Officers
concluded that the Company’s disclosure controls and procedures are
effective.
Disclosure
controls and procedures are designed to ensure that information required to be
disclosed in our reports filed or submitted under the Securities Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed or submitted under the Securities
Exchange Act is accumulated and communicated to management, including our
President and Chief Financial Officer, as appropriate, to allow timely decisions
and timely reporting regarding required disclosure.
(b) Changes
in internal controls
At
December 31, 2007, our management identified a significant deficiency in our
disclosure controls, however such deficiency was remediated as of the filing
date of our 2007 Form 10-K. With the exception of the remediation of this
deficiency, there were no changes in our internal control over financial
reporting that occurred during our first quarter of fiscal 2008 that
have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There
were no legal proceedings during the quarterly period ended March 31, 2008 that
could have a material effect on our financial position.
ITEM 1A. RISK FACTORS
There
have been no material changes to the Risk Factors previously disclosed in our
Form 10K for the year ended December 31, 2007, in response to Item 1A to Part 1
of Form 10K.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS
None
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None
ITEM
5. OTHER INFORMATION
(a) The
Company filed a Form 510-K application, which has since been approved, with the
Food and Drug Administration (FDA) for its “In-a-Flash” Suture Removal Device
which is designed to remove sutures with a tension free cut. This
device is to be utilized in various human and animal medical
procedures.
The
Company has received 510-K approval to market its ICON GI.
(b) Since
our last proxy statement disseminated to our shareholders in connection with our
last annual meeting of shareholders held on October 30, 2007, there have been no
changes in the procedures by which our security holders or 5% holders may
recommend nominees to our Board of Directors.
ITEM 6. EXHIBITS
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Certifications
of Andrew Makrides, President and Chief Executive 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.
|
|
|
Certifications
of Gary D. Pickett, 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.
|
|
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Bovie
Medical Corporation.
(Registrant)
Date: May 12,
2008
/s/Andrew
Makrides
Chief
Executive Officer - Andrew Makrides
/s/Gary D.
Pickett
Chief
Financial Officer- Gary D. Pickett
20