Delaware
No. |
|
11-2644611 |
(State
or other jurisdiction |
|
(IRS
Employer Identification No.) |
of
incorporation or organization) |
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Page | |
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· |
Product
development. |
· |
Product
testing. |
· |
Product
labeling. |
· |
Product
storage. |
· |
Pre-market
clearance or approval. |
· |
Advertising
and promotion. |
· |
Product
tractability, and |
· |
Product
indications. |
· |
Quality
System Regulations. |
· |
Medical
device reporting regulations, and |
· |
FDA
restrictions on promoting products for unapproved or off-label uses.
|
· |
Description
of the device and its components, |
· |
Safety
and performance of the device, |
· |
Clinical
evaluations with respect to the device, |
· |
Methods,
facilities and quality controls used to manufacture the device, and
|
· |
Proposed
labeling for the device. |
· |
Results
of bench and laboratory tests, animal studies, and clinical studies,
|
· |
A
complete description of the device and its components,
|
· |
A
detailed description of the methods, facilities and controls used to
manufacture the device, and |
· |
Proposed
labeling. |
2004 |
High |
Low | ||
|
|
| ||
1st
Quarter |
$ |
3.70 |
$ |
2.32 |
2nd
Quarter |
|
3.10 |
2.31 | |
3rd
Quarter |
|
3.00 |
2.06 | |
4th
Quarter |
|
2.72 |
2.25 | |
|
|
|||
2003 |
|
High |
Low | |
|
|
|||
1st
Quarter |
$ |
1.02 |
$ |
.72 |
2nd
Quarter |
|
1.45 |
.85 | |
3rd
Quarter |
|
3.35 |
1.35 | |
4th
Quarter |
|
3.75 |
2.95 | |
|
|
|
|
|
Analysis
of 2003/2004 |
|
|
Percentage
change in dollar amounts |
2004 |
2003 |
2003/2004 | |
% |
% |
% | |
Sales |
100.0 |
100.0 |
27.0 |
Cost
of sales |
61.1 |
59.6 |
30.0 |
Gross
profit |
38.9 |
40.4 |
23.0 |
Other
costs: |
|||
R
& D |
4.4 |
4.5 |
26.0 |
Professional
fees |
2.0 |
2.4 |
6.0 |
Salaries |
9.6 |
10.7 |
15.0 |
SGA |
16.4 |
18.2 |
15.0 |
Development
cost - joint venture |
.2 |
.5 |
-52.0 |
Total
other costs |
32.7 |
36.3 |
15.0 |
|
|||
Income
from operations |
6.2 |
4.1 |
93.1 |
|
|||
Other
income/expense |
1.2 |
-.1 |
-851 |
|
|||
Income
after other income/expense |
7.4 |
4.1 |
139 |
|
|||
Discontinued
operations |
-- |
-- |
-- |
|
|||
Net
Income |
7.4 |
4.0 |
139 |
|
|||
Income
tax expense |
-2.2 |
(1.0) |
(85.0) |
Income
tax benefit |
2.2 |
1.0 |
85.0 |
|
|||
Net
income after taxes |
7.4 |
4.0 |
139 |
Net
Sales (in thousands) |
|
Percentage
change |
|||||||||||
|
|
2004 |
|
2003 |
|
2004/2003 |
Increase |
| |||||
Domestic/international
salesL in
thousands) |
|
|
|
|
|
|
|
|
| ||||
Domestic |
|
$ |
17,448 |
|
$ |
13,714 |
|
|
27 |
% |
|
3,734 |
|
International |
|
|
3,047 |
|
|
2,403 |
|
|
27
|
|
|
644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
net sales |
|
$ |
20,495 |
|
$ |
16,117 |
|
|
27 |
|
|
4,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
line sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Electrosurgical |
|
$ |
12,684 |
|
$ |
8,957 |
|
|
42 |
|
|
3,727 |
|
Cauteries |
|
|
5,460 |
|
|
5,004 |
|
|
9 |
|
|
456 |
|
Other |
|
|
2,351 |
|
|
2,156 |
|
|
9 |
|
|
195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
net sales |
|
$ |
20,495 |
|
$ |
16,117 |
|
|
27 |
|
|
4,378 |
|
|
|
|
Payment
Period |
| |
2005 |
2006 |
2007 |
2008 |
2009 | |
Long-term
debt |
32 |
348 |
-0- |
-0- |
-0- |
Operating
leases |
146 |
142 |
135 |
115 |
-0- |
Unconditional
purchase obligations |
2,691 |
-0- |
-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- |
|
Name |
Position
|
Director
Since |
Andrew
Makrides |
Chairman
of the Board, President, CEO |
December
1982 |
J.
Robert Saron |
President
of Aaron Medical Industries,Inc. and Director |
August
1994 |
George
Kromer |
Director |
October
1995 |
Alfred
V. Greco |
Director |
April
1998 |
Brian
Madden |
Director |
September
2003 |
Moshe
Citronowicz |
Executive
Vice President and Chief Operating Officer |
-- |
Charles
Peabody |
Chief
Financial Officer and Secretary |
-- |
Michael
Norman |
Director |
September
2004 |
Randy
Rossi |
Director |
September
2004 |
Summary
Compensation Table | ||||||||
|
|
Long
Term Compensation | ||||||
|
Annual
Compensation |
Awards |
|
Payouts |
| |||
(a) |
(b) |
I |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
Name
and Principal Position |
Year |
Salary($) |
Bonus($) |
Other
Annual Compensation-($)* |
Restricted
Stock Award(s) ($) |
Securities
Underlying Options/ SARs(#) |
LTIP
Payouts ($) |
All
Other Compensation ($) |
|
|
|
|
|
|
|
|
|
Andrew
Makrides
President,
CEO,
Chairman
of
the
Board |
2004 |
$167,320 |
3,189 |
9,921 |
-- |
25,000 |
-- |
-- |
2003 |
$158,406 |
2,967 |
9,942 |
-- |
110,000 |
-- |
||
2002 |
$141,835 |
2,760 |
9,581 |
-- |
-- |
-- |
-- | |
|
|
|
|
|||||
|
|
|
|
|||||
|
|
|
|
|
||||
J.
Robert Saron
President
of Aaron
Medical
and
Director |
2004 |
$233,036 |
4515 |
16,533 |
-- |
25,000 |
-- |
-- |
2003 |
$219,786 |
4,200 |
15,568 |
-- |
110,000 |
-- |
-- | |
2002 |
$200,545 |
3,907 |
15,533 |
-- |
-- |
-- |
-- | |
|
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| |
Moshe
Citronowicz
Executive
Vice
President-
Chief
Operating
Officer |
2004 |
$170,766 |
3,318 |
15,848 |
-- |
25,000 |
-- |
-- |
2003 |
$158,637 |
3,086 |
14,345 |
-- |
110,000 |
-- |
-- | |
2002 |
$147,370 |
2,871 |
15,688 |
-- |
-- |
-- |
-- | |
|
|
|
|
|
| |||
|
|
|
|
|
| |||
|
|
|
|
|
| |||
|
|
|
|
|
|
| ||
Charles |
2004 |
$81,825 |
1,579 |
7,893 |
-- |
25,000 |
-- |
-- |
Peabody |
2003 |
$77,221 |
1,532 |
6,216 |
-- |
60,000 |
-- |
-- |
Chief |
2002 |
$76,227 |
1,532 |
6,051 |
- |
-- |
-- |
-- |
Financial |
|
|
|
|
|
|
| |
Officer |
|
|
|
|
|
|
|
|
Individual
Grants |
Potential
Realizable
Value
at Assumed Annual Rates of Stock Price Appreciation for Option
Term | ||||
Name
(a) |
Number
of Securities
Underlying
Options Granted
(b) |
%
of Total Options
Granted
to Employees in 2004
I |
Exercise
or Base Price per Share
(d) |
Expiration
Date
(e) |
5%($)
(f) |
10%($)
(g) |
Charles
Peabody(CFO) |
25,000 |
6.76% |
2.13 |
09/23/14 |
$
33,383 |
$
87,684 |
Moshe
Citronowicz(COO) |
25,000 |
6.76% |
2.13 |
09/23/14 |
$
33,383 |
$
87,684 |
J.
Robert Saron(2) |
25,000 |
6.76% |
2.13 |
09/23/14 |
$
33,383 |
$
87,684 |
Andrew
Makrides(CEO) |
25,000 |
6.76% |
2.13 |
09/23/14 |
$
33,383 |
$
87,684 |
J. |
Such
options were granted at 100% of fair market value on the date of grant and
become immediately exercisable as to the shares covered thereby.
|
Plan
category |
Number
of Securities
to
be issued upon
exercise
of
outstanding
options, |
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights |
Number
of securities
remaining
available
for
future issuance
under
equity
compensation
plans |
Equity
compensation Plans approved by Security holders
|
|
|
|
|
|
| |
3,951,200 |
$1.12 |
27,700 | |
Total
|
3,951,200 |
1.12 |
27,700 |
(a) |
(b) |
I |
(d) |
(e) | ||
Name |
Shares
Acquired on Exercise (#) |
Value
Realized ($) |
Number
of Securities Underlying Unexercised Options/SARs at December 31, 2004
(#) |
Value
of Unexercised In-the Money Options/SARs at December 31,
2004($) | ||
Exercisable |
Unexercisable |
Exercisable |
Unexercisable | |||
Andrew
Makrides |
- |
- |
510,000
|
- |
$
849,150 |
- |
Alfred
Greco |
- |
- |
360,000
|
- |
615,650
|
- |
George
Kromer |
- |
- |
415,000
|
- |
690,475
|
- |
Moshe
Citronowicz |
- |
- |
465,000
|
- |
803,725
|
- |
Rob
Saron |
- |
- |
530,000
|
- |
901,200
|
- |
Brian
Madden |
- |
- |
50,000 |
- |
10,250
|
- |
Michael
Norman |
- |
- |
25,000
|
- |
10,250
|
- |
Charles
Peabody |
- |
- |
110,000
|
- |
119,400
|
- |
Randy
Rossi |
- |
- |
25,000 |
- |
10,250 |
- |
|
|
|
|
|
|
|
Total |
- |
- |
2,490,000
|
- |
$
4,010,350 |
- |
J. |
Assumes
$2.54 per share fair market value on December 31, 2004 which was the
closing price on December 31, 2004, the last day of trading on NASDAQ in
2004. |
Bovie
Medical Corporation | ||||
December
31, 2004 | ||||
|
|
|
|
|
|
Contract |
Expiration |
Current |
Auto |
|
Date |
Date(1) |
Base
Pay |
Allowance |
|
|
|
|
|
Andrew
Makrides |
01/01/98 |
12/31/2009(1) |
$155,246 |
$
6,067 |
J.
Robert Saron |
01/01/98 |
12/31/2009(1) |
214,638 |
6,067 |
Moshe
Citronowicz |
01/01/98 |
12/31/2009(1) |
161,521 |
6,067 |
Charles
Peabody |
08/18/03 |
08/18/2004(2) |
77,479 |
-- |
J. |
Includes
total extensions for six years- Salaries increase annually pursuant to a
contract formula. In the event of a change in control, each officers’
contract contains an option for each respective officer to resign and
receive 3 years salary. |
|
Number
of Shares |
|
| |
|
Nature
of |
Percentage
of | ||
Name
and Address |
Title |
Owned
(i) |
Ownership |
Ownership(i) |
The
Frost National Bank |
Common |
1,000,000(xi) |
Beneficial |
5.6% |
FBO
Renaissance |
||||
US
Growth Investment |
||||
Trust
PLC. |
||||
Trust
no. W00740100 |
||||
|
||||
The
Frost National Bank |
Common |
1,000,000(xi) |
Beneficial |
5.6% |
FBO,
BFS US Special |
||||
Opportunities
Trust PLC. |
||||
Trust
no. W00118000 |
|
||||
Directors
and Officers |
||||
Andrew
Makrides
734
Walt Whitman Road
Melville,
NY 11746 |
Common |
825,800(ii) |
Beneficial |
5.7% |
|
||||
George
Kromer
P.O.
Box 188
Farmingville,
NY 11738 |
Common |
415,000(iii) |
Beneficial |
2.9% |
|
||||
Alfred
V. Greco
666
Fifth Avenue
New
York, NY 10103 |
Common |
381,500(iv) |
Beneficial |
2.7% |
|
||||
J.
Robert Saron
7100
30th
Avenue North
St.
Petersburg, FL 33710 |
Common |
962,976(v) |
Beneficial |
6.7% |
|
||||
Moshe
Citronowicz
7100
30th
Avenue North
St.
Petersburg, FL 33710 |
Common |
639,591
(vi) |
Beneficial |
4.5% |
Brian
Madden
300
Garden City Plaza
Garden
City, NY 11530 |
Common |
75,000
(vii) |
Beneficial |
.5% |
|
||||
Charles
Peabody |
Common |
110,000(x) |
Beneficial |
.8% |
7100
30th
Ave |
||||
N.
St. Petersburg, FL |
||||
|
||||
Mike
Norman |
Common |
25,000(ix) |
Beneficial |
.2% |
410
Jericho Tpke, |
||||
Jericho,
NY |
||||
|
||||
Randy
Rossi |
Common |
25,000(ix) |
Beneficial |
.2% |
19
Bubbling Brook Rd., |
||||
Walpole,
Mass |
||||
|
||||
Officers
and Directors as a group(9) |
3,449,867(viii) |
20% |
Exhibit
3.1 |
Articles
of Incorporation* |
Exhibit
3.2 |
By-Laws* |
Exhibit
4.1 |
Copy
of Stock Certificate * |
Exhibit
10.1 |
Joint
Venture Agreement dated February 25, 2000
Between
Bovie Medical Corporation and Jump Agentur fur
Elektrotechnik
GmBH** |
Exhibit
10.2 |
Agreement
between Bovie Medical Corporation and Arthrex Inc. dated
June
2002, filed with Form S-3 on November 23, 2004, which is incorporated here
in by reference. This agreement is the subject of an application for
confidential treatment.** |
Exhibit
10.3 |
Distribution
and Service Center Agreement between Bovie and
Symbol Medical
Limited dated December 31, 2004** |
Exhibit
10.4 |
Employment
Agreement- Andrew Makrides |
Exhibit
10.5 |
Employment
Agreement-J. Robert Saron |
Exhibit
10.6 |
Employment
Agreement-Moshe Citronowicz |
_____________________ |
|
*
Incorporated by reference to Exhibits 3.1,3.2 and 4.1 to Form 10KSB/A for
December 31, 2003 filed | |
With
the SEC on February 16, 2005. |
(a) |
Filed
on October 4, 2004 item 5 - other events reporting appointment of two new
directors. |
|
|
2004 |
2003 |
| |||
Audit
Fees (1) |
|
$ |
133,442 |
|
$ |
110,669 |
|
|
|
|
|
|
|
|
|
Non-Audit
Fees: |
|
|
|
|
|
|
|
Audit
Related Fees(2) |
|
|
--
|
|
|
-- |
|
Tax
Fees(3) |
|
|
5,000 |
|
|
5,000 |
|
All
other Fees(4) |
|
|
-- |
|
|
-- |
|
Total
Fees paid to Auditor |
|
$ |
138,442
|
|
$ |
115,669 |
|
J. |
Audit
fees consist of fees billed for professional services rendered for the
audit of Bovie’s annual financial statements and review of the interim
consolidated financial statements and review of the interim consolidated
financial statements included in quarterly reports and services that are
normally provided by Bloom & Co., LLP in connection with statutory and
regulatory filings or engagements. |
|
Bovie
Medical Corporation |
|
|
|
By:
/s/ Andrew Makrides |
|
Andrew
Makrides |
|
President |
|
Chairman
of the Board |
Contents |
|
|
|
|
|
F-1 | |
|
|
F-3 | |
|
|
F-5 | |
|
|
F-6 | |
|
|
F-9 | |
|
|
BLOOM
& CO., LLP 50 CLINTON STREET. HEMPSTEAD. NEW YORK 11550:
|
TEL:
516 - 486-5900 |
CERTIFIED
PUBLIC ACCOUNTANTS |
FAX:
516 - 486-5476 |
|
|
STEVEN
BLOOM, CPA
FREDERICK
PAUKER, CPA
SIROUSSE
TABRIZTCHI, Ph.D. CPA |
MEMBER
OF AMERICAN INSTITUTE OF
CERTIFIED
PUBLIC ACCOUNTANTS |
|
|
2004 |
2003 |
| |||
Current
assets: |
|
|
|
|
| ||
|
|
|
|
|
| ||
Cash |
|
$ |
2,294,746 |
|
$ |
306,137 |
|
Trade
accounts receivable, net |
|
|
1,954,287 |
|
|
1,708,181 |
|
Inventories |
|
|
2,001,637 |
|
|
2,451,149 |
|
Prepaid
expenses |
|
|
328,765 |
|
|
390,025 |
|
Deferred
tax asset |
|
|
386,200 |
|
|
386,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current assets |
|
|
6,965,635 |
|
|
5,241,692 |
|
|
|
|
|
|
|
|
|
Property
and equipment, net |
|
|
2,116,324 |
|
|
1,900,015 |
|
|
|
|
| ||||
Other
assets: |
|
|
| ||||
|
|
|
| ||||
Repair
parts |
|
|
124,363 |
228,226 |
| ||
Brand
name/Trademark |
|
|
1,509,662 |
1,509,662 |
| ||
Purchased
technology (net) |
|
|
88,572 |
144,967 |
| ||
License
rights, restated |
350,000 |
360,000 |
|||||
Deposits |
|
|
14,445 |
9,470 |
| ||
| |||||||
|
|
|
| ||||
|
|
|
2,087,042 |
2,252,325 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets |
|
$ |
11,169,001 |
|
$ |
9,394,032 |
|
|
|
|
| ||||
|
|
|
| ||||
The
accompanying notes are an integral part of the financial
statements. |
|
|
|
Current
liabilities: |
|
2004 |
2003 |
| |||
|
|
|
|
|
| ||
Accounts
payable |
|
$ |
620,151 |
|
$ |
679,792 |
|
Accrued
expenses and other liabilities |
|
|
568,482 |
|
|
473,630 |
|
Customers
deposits |
|
|
36,000 |
|
|
112,000 |
|
Deferred
Revenue |
|
|
157,844 |
|
|
103,445 |
|
Current
maturities of long term debt |
|
|
31,668 |
|
|
35,343 |
|
|
|
|
|
|
|
|
|
Total
current liabilities |
|
|
1,414,145 |
|
|
1,404,210
|
|
|
|
|
|
|
|
|
|
Mortgage
Payable-Non current |
|
|
348,325 |
|
|
379,995 |
|
Minority
interest, restated |
150,000 |
160,000 |
|||||
Stockholders'
equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock 10,000,000 shares
authorized,
none outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock par value $.001;
40,000,000
shares authorized,
13,862,128
and 13,464,528
issued
and outstanding
on
December 31, 2004 and
December
31, 2003 respectively, |
|
|
13,881 |
|
|
13,482 |
|
Additional
paid in capital |
|
|
20,391,407 |
|
|
20,097,095 |
|
Accumulated
deficit |
|
|
(11,148,757 |
) |
|
(12,660,750 |
) |
|
|
|
|
|
|
|
|
Total
stockholders' equity |
|
|
9,256,531 |
|
|
7,449,827 |
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity |
|
$ |
11,169,001 |
|
$ |
9,394,032 |
|
The
accompanying notes are an integral part of the financial
statements. |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
2004 |
2003 |
| |||
|
|
|
|
|
| ||
Sales |
|
$ |
20,495,101 |
|
$ |
16,117,722 |
|
Cost
of sales |
|
|
12,514,063 |
|
|
9,604,183 |
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
|
7,981,038 |
|
|
6,513,539 |
|
|
|
|
|
|
|
|
|
Other
costs: |
|
|
|
|
|
|
|
Research
and development |
|
|
907,389 |
|
|
717,347
|
|
Professional
services |
|
|
415,606 |
|
|
392,796 |
|
Salaries
and related costs |
|
|
1,977,053 |
|
|
1,721,545 |
|
Selling,
general and administration |
|
|
3,363,148 |
|
|
2,936,479 |
|
Development
costs - joint venture |
|
|
39,286 |
|
|
81,914
|
|
|
|
|
|
|
|
|
|
Total
other costs |
|
|
6,702,482 |
|
|
5,850,081 |
|
|
|
|
|
|
|
|
|
Income
from operations |
|
|
1,278,556 |
|
|
663,458 |
|
|
|
|
|
|
|
|
|
Other
income and (expense): |
|
|
|
|
|
|
|
Gain from involuntary conversion of fixed assets |
|
|
245,264 |
|
|
|
|
Interest income |
|
|
3,263 |
|
|
2,980 |
|
Interest expense |
|
|
(
15,090 |
) |
|
(34,060 |
) |
|
|
|
233,437 |
|
(31,080 |
) | |
|
|
|
|
|
|
|
|
Net
income before income tax |
|
|
1,511,993 |
|
|
632,378 |
|
|
|
|
|
|
|
|
|
Income
tax expense |
|
|
(541,000 |
) |
|
(228,000 |
) |
Income
tax benefit |
|
|
541,000 |
|
|
228,000 |
|
|
|
|
|
|
|
|
|
Net
income from continuing operations |
|
$ |
1,511,993 |
|
$ |
632,378 |
|
|
|
|
|
|
|
|
|
Discontinued
Operations: |
|
|
|
|
|
|
|
Gain
from operations of discontinued component |
|
|
|
|
|
|
|
(loss
on disposal -0-) |
|
|
-- |
|
|
48,939 |
|
|
|
|
|
|
|
|
|
Income
tax expense |
|
|
|
|
|
(18,000 |
) |
Income
tax benefit |
|
|
--
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
Gain
from discontinued operations |
|
|
-- |
|
|
48,939 |
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
1,511,993 |
|
$ |
681,317 |
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of the financial
statements. |
|
|
|
|
|
|
|
|
|
2004 |
2003 |
| |||
|
|
|
|
|
| ||
| |||||||
Basic
earnings per common share |
|
$ |
.11 |
|
$ |
.05 |
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share |
|
|
.09 |
|
|
.05 |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Earnings
from discontinued operations |
|
|
-- |
|
|
-- |
|
Weighted
average number |
|
|
|
|
|
|
|
of
common shares outstanding |
|
|
13,755,552 |
|
|
13,188,353 |
|
|
|
|
|
|
|
|
|
Incremental
items: |
|
|
|
|
|
|
|
Stock
options |
|
|
2,422,329 |
|
|
1,647,097 |
|
|
|
|
|
|
|
|
|
Diluted
weighted average |
|
|
|
|
|
|
|
common
shares outstanding |
|
|
16,177,881 |
|
|
14,835,450 |
|
|
|
|
|
|
|
|
|
*Basic
Earnings per share were $.004 and diluted earnings per share were $.003
from discontinued operations. |
|
|
|
|
|
|
|
The
accompanying notes are an integral part of the financial
statements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
Preferred |
Common |
Paid- |
||||
|
Outstanding |
Shares |
Value |
Shares |
Value |
in
Capital |
Deficit |
Total |
January
1, 2003 |
2,909,000 |
-- |
-- |
13,256,103 |
$13,274 |
$19,820,044 |
$(13,342,067) |
$6,491,251 |
|
|
|
|
|
|
| ||
Subscription
Receivable |
|
|
|
6,131 |
|
6,131 | ||
|
|
|
|
|
|
| ||
Cancel
shares on |
|
|
|
|
|
| ||
Recission
offer |
-- |
-- |
-- |
(142,575) |
(143) |
18,931 |
-- |
18,788 |
|
|
|
|
|
|
|
| |
Exercise
options for cash |
(350,000) |
|
|
350,000 |
350 |
250,650 |
-- |
251,000 |
|
|
|
|
|
|
|
| |
Options
cancelled or forfeited |
(361,200) |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
|
|
|||||||
Options
granted |
1,791,000 |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
|
|
|||||||
Shares
issued for promotion |
-- |
-- |
-- |
1,000 |
1 |
1,339 |
-- |
1,340 |
|
|
|
|
|
| |||
Income
for period |
-- |
-- |
-- |
-- |
-- |
-- |
681,317 |
681,317 |
|
|
|
|
|
| |||
December
31, 2003 |
3,988,800 |
-- |
-- |
13,464,528 |
$13,482 |
$20,097,095 |
$(12,660,750) |
$7,449,827 |
|
|
|
|
|
|
| ||
Options
granted |
370,000 |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
|
|
|
|
|
|
| ||
Options
exercised |
(397,600) |
-- |
-- |
397,600 |
399 |
294,312 |
-- |
294,711 |
|
|
|
|
|
|
| ||
Options
forfeited |
(
10,000) |
-- |
-- |
-- |
-- |
-- |
||
|
|
|
|
|
|
| ||
Income
for period |
-- |
-- |
-- |
-- |
-- |
-- |
1,511,993 |
1,511,993 |
|
|
|
|
|
|
| ||
December
31, 2004 |
3,951,200 |
-- |
-- |
13,862,128 |
$13,881 |
$20,391,407 |
$(11,148,757) |
$9,256,531 |
|
|
|
|
|
|
|
|
|
|
|
2004 |
2003 |
| |||
Cash
flows from operating activities: |
|
|
|
|
| ||
|
|
|
|
|
| ||
Net
income |
|
$ |
1,511,993 |
|
$ |
681,317 |
|
Adjustments
to reconcile |
|
|
|
|
|
|
|
net
income to net cash provided |
|
|
|
|
|
|
|
by
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
|
395,119 |
|
|
314,682 |
|
Cancel
recission liability |
|
|
|
|
|
18,788 |
|
Promotion
cost paid with shares |
|
|
|
|
|
1,340 |
|
Write
down of inventories and parts |
|
|
303,872 |
|
|
352,295 |
|
Write
down development cost |
|
|
|
|
|
112,471 |
|
Involuntary
conversion of fixed assets |
|
|
(
245,264 |
) |
|
-- |
|
|
|
|
|
|
|
|
|
Change
in assets and liabilities: |
|
|
|
|
|
|
|
Trade
receivables |
|
|
(322,106 |
) |
|
(357,694 |
) |
Prepaid
expenses |
|
|
61,260 |
|
|
(225,761 |
) |
Inventories
and parts |
|
|
249,503 |
|
|
(392,419 |
) |
Other
receivables |
|
|
-- |
|
|
45,044 |
|
Accounts
payable |
|
|
(59,641 |
) |
|
201,124 |
|
Accrued
expenses |
|
|
149,251 |
|
|
164,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
adjustments |
|
|
531,994 |
|
|
233,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by operations |
|
$ |
2,043,987 |
|
$ |
915,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of the financial
statements. |
|
|
|
|
|
|
|
|
|
2004 |
2003 |
| |||
Net
cash provided by operating activities |
|
$ |
2,043,987 |
|
$ |
915,313 |
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase)
in fixed assets |
|
|
(606,505 |
) |
|
(565,915 |
) |
Decrease(Increase)in
security deposits |
|
|
(
4,975 |
) |
|
-- |
|
Purchase
of technology |
|
|
-- |
|
|
(
88,926 |
) |
Involuntary
conversion of fixed assets |
|
|
296,735 |
|
|
-- |
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) investing activities |
|
|
(314,745 |
) |
|
(654,841 |
) |
|
|
|
|
|
|
|
|
Cash
flows from financing activities; |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
from shareholders |
|
|
|
|
|
(
37,215 |
) |
Sale
of common stock |
|
|
290,425 |
|
|
251,000 |
|
Reduction
in subscription receivable |
|
|
4,286 |
|
|
6,131 |
|
Reduction
in mortgage |
|
|
(35,344 |
) |
|
(
31,668 |
) |
Bonds
payable |
|
|
-- |
|
|
(
20,000 |
) |
Short
term notes |
|
|
-- |
|
|
(501,792 |
) |
|
|
|
|
|
|
|
|
Net
cash (used in) financing activities |
|
|
259,367 |
|
|
(333,544 |
) |
|
|
|
|
|
|
|
|
Net
increase(decrease) in cash |
|
|
1,988,609 |
|
|
(
73,072 |
) |
|
|
|
|
|
|
|
|
Cash
at beginning of year |
|
|
306,137 |
|
|
379,209 |
|
|
|
|
|
|
|
|
|
Cash
at end of year |
|
$ |
2,294,746 |
|
$ |
306,137 |
|
|
|
|
|
|
|
|
|
Cash
paid during the twelve months ended December 31: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
Interest |
|
$ |
11,625 |
|
$ |
34,060 |
|
|
|
|
|
|
|
|
|
Income
Taxes |
|
|
-- |
|
|
-- |
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
2003 |
| |||
Raw
materials (net of reserves) |
|
$ |
705,188 |
|
$ |
1,332,742 |
|
Work
in process |
|
|
742,289 |
|
|
616,837 |
|
Finished
goods |
|
|
554,160 |
|
|
501,570 |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,001,637 |
|
$ |
2,451,149 |
|
|
|
2004 |
2003 |
| |||
Raw
materials |
|
$ |
317,615 |
|
$ |
317,614 |
|
Allowance
for excess or obsolete parts |
|
|
(193,252 |
) |
|
(89,388 |
) |
Total |
|
$ |
124,363 |
|
$ |
228,226 |
|
|
|
2004 |
2003 |
| |||
Net
earnings: |
|
|
|
|
| ||
As
reported |
|
$ |
1,512 |
|
$ |
681 |
|
Deduct:
Compensation expense -- |
|
|
|
|
|
|
|
fair
value method |
|
|
(522 |
) |
|
(999 |
) |
Pro
forma |
|
$ |
990 |
|
$ |
(318 |
) |
Basic
net earnings per share: |
|
|
|
|
| ||
As
reported |
|
$ |
.11 |
|
$ |
.05 |
|
Pro
forma |
|
$ |
.07 |
|
$ |
(
.03 |
) |
|
|
|
|
|
| ||
Diluted
net earnings per share: |
|
|
|
|
| ||
As
reported |
|
$ |
.09 |
|
$ |
.05 |
|
Pro
forma |
|
$ |
.06 |
|
$ |
(.02 |
) |
|
2004 |
2003 |
Risk-free
interest rate |
4.18% |
6.34% |
Expected
dividend yield |
0.00% |
0.00% |
Expected
stock price volatility |
43% |
50.0% |
Expected
option life |
10
years |
10
years |
|
|
2004 |
2003 |
| |||
Trade
accounts receivable |
|
$ |
2,131,445 |
|
$ |
1,917,694 |
|
Less:allowance
for doubtful accts |
|
|
(
112,392 |
) |
|
(
116,952 |
) |
Allowance
for discounts |
|
|
(
64,766 |
) |
|
(
92,561 |
) |
|
|
|
|
|
|
|
|
Trade
accounts receivable, net |
|
$ |
1,954,287 |
|
$ |
1,708,181 |
|
|
|
2004 |
2003 |
| |||
|
|
|
|
|
| ||
Equipment |
|
$ |
992,542 |
|
$ |
714,222 |
|
Building
|
|
|
573,736 |
|
|
637,485 |
|
Furniture
and Fixtures |
|
|
969,948 |
|
|
903,711 |
|
Leasehold
Improvements |
|
|
626,804 |
|
|
531,694 |
|
Molds
|
|
|
516,689 |
|
|
398,589 |
|
|
|
|
3,679,719 |
|
|
3,185,701 |
|
|
|
|
|
|
|
|
|
Less:accumulated
depreciation |
|
|
(1,563,395
|
) |
|
(1,285,686 |
) |
|
|
|
|
|
|
|
|
Net
property, plant, and equipment |
|
$ |
2,116,324 |
|
$ |
1,900,015
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
2005 |
|
$ |
145,974 |
|
2006 |
|
|
141,952 |
|
2007 |
|
|
135,308 |
|
2008 |
|
|
115,150 |
|
2009 |
|
|
-0- |
|
|
|
|
|
|
|
|
$ |
538,384 |
|
|
|
2004 |
2003 |
| |||
Indefinite
life assets: |
|
|
|
|
| ||
Brand
name/Trademark (life indefinite) |
|
$ |
1,509,662 |
|
$ |
1,509,662 |
|
Other
intangibles: |
|
|
|
|
|
|
|
License
rights (20yr life) |
|
|
350,000 |
|
|
360,000 |
|
Purchased
technology (5 yr life) |
|
$ |
278,763 |
|
$ |
278,763 |
|
Less:
Accumulated amortization |
|
|
(190,191 |
) |
|
(133,796 |
) |
|
|
|
|
|
|
|
|
Net
carrying amount |
|
$ |
88,572 |
|
$ |
144,967 |
|
|
|
2004 |
2003 |
| |||
Mortgage
payable |
|
$ |
379,994 |
|
$ |
411,664 |
|
Term
loan |
|
|
-- |
|
|
3,675 |
|
Line
of credit- bank |
|
|
-- |
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
$ |
379,994 |
|
$ |
415,339 |
|
Year |
|
Amount |
| |
|
|
|
| |
2005 |
|
$ |
31,668 |
|
2006 |
|
|
348,325 |
|
|
|
$ |
379,993 |
|
|
2004 |
2003 | ||
|
Weighted |
Weighted | ||
|
average |
average | ||
|
Number
of |
exercise |
Number
of |
exercise |
|
Shares |
price |
Shares |
price |
|
|
|
|
|
Balance
January 1, |
3,988,800 |
1.00 |
2,909,000 |
.703 |
|
|
|
|
|
Exercised |
(397,000) |
.74 |
(350,000) |
.71 |
Cancelled
& forfeited |
(
10,000) |
.50 |
(361,200) |
.86 |
Granted |
370,000
|
2.32 |
1,791,000 |
1.40 |
|
|
|
|
|
Balance
December 31, |
3,951,200 |
1.15 |
3,988,800 |
1.00 |
Number
of Options
Currently
Exercisable |
Weighted
Average
Remaining
Estimated Life |
Exercise
Price |
470,000 |
8.5 |
$
3.25 |
95,000 |
8.5 |
1.30 |
143,000 |
3.0 |
1.125 |
50,000 |
3.0 |
1.15 |
1,311,000 |
3.5 |
.75 |
500,000 |
8.0 |
.70 |
1,062,200 |
6.5 |
.50 |
35,000 |
9.5 |
2.95 |
225,000 |
9.5 |
2.13 |
60,000 |
9.5 |
2.41 |
3,951,200 |
5.7 |
$1.13(a) |
|
|
|
|
|
| ||
|
|
2004 |
2003 |
| |||
|
|
|
|
|
| ||
Accounts
receivable(allowances) |
|
$ |
177,158 |
|
$ |
53,300 |
|
Inventories(reserves) |
|
|
1,011,060 |
|
|
874,380 |
|
Net
operating loss carry forwards |
|
|
2,392,000 |
|
|
2,922,000 |
|
Patent
rights, primarily due to |
|
|
|
|
|
|
|
amortization |
|
|
(118,439 |
) |
|
(73,633 |
) |
|
|
|
|
|
|
|
|
Total
gross deferred tax assets |
|
|
3,461,779 |
|
|
3,776,047
|
|
Less:
Valuation allowance |
|
|
(3,075,579 |
) |
|
(3,389,847 |
) |
|
|
|
|
|
|
|
|
Net
deferred tax assets - current |
|
$ |
386,200 |
|
$ |
386,200 |
|
Year
loss |
Expiration |
Loss |
Estimated |
Incurred |
Date |
Amount |
Tax
Asset |
|
|
|
|
1990 |
2010 |
$38,000 |
$13,000 |
1991 |
2011 |
246,000 |
86,000 |
1992 |
2012 |
1,004,000 |
352,000 |
1993 |
2013 |
465,000 |
163,000 |
1994 |
2014 |
1,197,000 |
419,000 |
1995 |
2015 |
637,000 |
223,000 |
1998 |
2018 |
548,000 |
192,000 |
1999 |
2019 |
2,184,000 |
764,000 |
2002 |
2022 |
515,000 |
180,000 |
|
|
|
|
Total |
|
$
6,834,000 |
$
2,392,000 |
Tax
at statutory rate |
34.0% |
State
income taxes, net of U.S. federal benefit |
2.4% |
Tax
benefit of loss carry forward |
(36.2%) |
|
|
Effective
tax rate |
-0-% |
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
Cauteries |
Electrosurgical |
Other |
Total |
|
|
|
|
|
Year
ended December 31, 2004 |
|
|
|
|
Net
sales |
5,460 |
12,684 |
2,351 |
20,495 |
Interest
income |
1 |
2 |
-- |
3 |
Interest
expense |
4 |
9 |
1 |
14 |
Depreciation
& amortization |
158 |
186 |
51 |
395 |
Income
taxes |
194 |
216 |
46 |
456 |
Income
tax benefit |
(194) |
(216) |
(46) |
(456) |
Segment
net earnings(basic) |
538 |
602 |
127 |
1,267 |
Total
assets |
2,975 |
6,832 |
1,212 |
11,019(1) |
Capital
expenditures |
164 |
375 |
67 |
606 |
Other
Income |
|
|
245 |
245 |
|
|
|
|
|
|
|
|
|
|
Year
ended December 31, 2003 |
|
|
|
|
Net
sales |
5004 |
8,957 |
2,156 |
16,117 |
Interest
income |
1 |
2 |
-- |
3 |
Interest
expense |
10 |
19 |
5 |
34 |
Depreciation
& Amortization |
138 |
151 |
26 |
315 |
Income
taxes |
100 |
109 |
19 |
228 |
Income
tax benefit |
(100) |
(109) |
(19) |
(228) |
Segment
net earnings(basic) |
277 |
296 |
60 |
633 |
Total
Assets |
2,863 |
5,171 |
1,200 |
9,234(1) |
Capital
expenditures |
203 |
367 |
85 |
655 |
Gain
on sale of segment |
|
|
48 |
48 |
|
|
|
|
|
Net
Sales |
Long
Lived Assets |
||||||
Year
ended December 31, 2004 |
|||||||
|
|
||||||
United
States |
$17,448 |
$2,167 |
|||||
Europe |
1,348 |
|
|||||
Asia |
597 |
|
|||||
South
America |
586 |
|
|||||
Other |
516 |
- |
|||||
Total |
$ |
20,495 |
$ |
2,167 |
|||
Year
ended December 31, 2003 |
|||||||
United
States |
$ |
13,714 |
$ |
1,900 |
|||
Europe |
1,238 |
-- |
|||||
Asia |
357 |
||||||
South
America |
279 |
-- |
|||||
Other |
529 |
-- |
|||||
Total |
$ |
16,117 |
$ |
1,900 |
|||
|
|
2004 |
2003 |
| |||
|
|
|
|
|
| ||
Total
assets |
|
$ |
411 |
|
$ |
187 |
|
Total
liabilities |
|
|
-0-
|
|
|
-0-
|
|
Net
property, plant and equipment |
|
|
29 |
|
|
-0- |
|
|
|
|
|
|
|
|
|
|
|
2004 |
2003 |
| |||
Amounts:
|
|
|
|
|
| ||
Revenue
from development in progress |
|
$ |
230,120 |
|
$ |
304,461 |
|
|
|
|
|
|
|
|
|
Revenues
included in Gross Sales |
|
$ |
230,120 |
|
$ |
304,461 |
|
|
|
|
|
|
|
|
|
Cost
of Research and Development contracts |
|
|
|
|
|
|
|
included
in gross profit |
|
$ |
230,120 |
|
$ |
304,461 |
|