|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
Delaware
|
11-2644611
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
|
734
Walt Whitman Road
Melville, New York
|
11747
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
Yes x
|
No o
|
|
Yes x
|
No o
|
|
Large
accelerated filer o
|
Accelerated
filer x
|
||
|
Non-accelerated
filer o
(Do
not check if a smaller reporting company)
|
Smaller
reporting company o
|
|
Yes o
|
No x
|
|
Page
|
||
|
Part
I.
|
Financial
Information
|
2
|
|
Item
1.
|
Financial
Statements
|
|
|
Consolidated
Balance Sheets - September 30, 2009 and December 31, 2008
|
2
|
|
|
Consolidated
Statements of Operations for the Three and Nine Months Ended
September 30, 2009 and 2008
|
4
|
|
|
Consolidated
Statements of Stockholders’ Equity and Comprehensive Income for the Year
Ended December 31, 2008 and the nine months ended September 30,
2009
|
5
|
|
|
Consolidated
Statements of Cash Flows for the Nine Months Ended September 30, 2009
and 2008
|
6
|
|
|
Notes
to Consolidated Financial Statements
|
7
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
15
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
24
|
|
Item
4.
|
Controls
and Procedures
|
25
|
|
Part
II.
|
Other
Information
|
25
|
|
Item
1.
|
Legal
Proceedings
|
25
|
|
Item
1A.
|
Risk
Factors
|
26
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
26
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
26
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
26
|
|
Item
5.
|
Other
Information
|
26
|
|
Item
6.
|
Exhibits
|
26
|
|
Signatures
|
27
|
|
2009
|
2008
|
|||||||
|
Cash
flows from operating activities
|
||||||||
|
Net
income
|
$ | 568,136 | $ | 1,793,021 | ||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
|
Depreciation
and amortization of property and equipment:
|
562,402 | 590,798 | ||||||
|
Amortization
of intangible assets
|
204,606 | 120,457 | ||||||
|
Provision
for (recovery of) inventory obsolescence
|
6,498 | (13,401 | ) | |||||
|
Loss
on disposal of property and equipment
|
1,628 | 2,692 | ||||||
|
Stock
based compensation
|
103,333 | 125,391 | ||||||
|
Non-cash
reclassification
|
- | 10,325 | ||||||
|
Provision
for deferred taxes
|
(14,733 | ) | 714,934 | |||||
|
Gain
on cancellation of agreement
|
– | (1,495,634 | ) | |||||
|
Changes
in current assets and liabilities:
|
||||||||
|
Trade
receivables
|
746,757 | (95,642 | ) | |||||
|
Prepaid
expenses
|
226,778 | (197,720 | ) | |||||
|
Inventories
|
(1,740,104 | ) | (907,749 | ) | ||||
|
Deposits
and other assets
|
(16,069 | ) | (6,488 | ) | ||||
|
Accounts
payable
|
(556,468 | ) | 167,715 | |||||
|
Accrued
and other liabilities
|
127,788 | 545,044 | ||||||
|
Accrued
payroll
|
105,764 | – | ||||||
|
Accrued
vacation
|
28,128 | – | ||||||
|
Income
taxes payable
|
(77,943 | ) | 136,053 | |||||
|
Customer
Deposits
|
– | (35,909 | ) | |||||
|
Accrued
litigation settlement
|
160,000 | – | ||||||
|
Deferred
revenues
|
(15,408 | ) | (23,886 | ) | ||||
|
Net
cash provided by operating activities
|
421,093 | 1,430,001 | ||||||
|
Cash
flows from investing activities
|
||||||||
|
Purchases
of property and equipment
|
(2,232,983 | ) | (3,850,060 | ) | ||||
|
Proceeds
from sale of property and equipment
|
- | 10,573 | ||||||
|
Purchased
technology
|
- | (57,283 | ) | |||||
|
Net
cash used in investing activities
|
(2,232,983 | (3,896,770 | ) | |||||
|
Cash
flows from financing activities
|
||||||||
|
Proceeds
from escrow account
|
1,249,481 | – | ||||||
|
Net
increase in line of credit
|
1,000,000 | 2,850,000 | ||||||
|
Payments
on mortgage note payable
|
(93,750 | ) | – | |||||
|
Proceeds
from issuance of common shares
|
78,750 | 220,400 | ||||||
|
Net
cash provided by financing activities
|
2,234,481 | 3,070,400 | ||||||
|
Effect
of exchange rate changes on cash and cash equivalents
|
(62,379 | ) | (54,484 | ) | ||||
|
Net
change in cash equivalents
|
360,212 | 549,147 | ||||||
|
Cash
and cash equivalents, beginning of period
|
2,564,443 | 3,534,759 | ||||||
|
Cash
and cash equivalents, end of period
|
$ | 2,924,655 | $ | 4,083,906 | ||||
|
Cash
paid during the nine months ended September 30, 2009 and
2008:
|
||||||||
|
Interest
paid, net of amounts capitalized
|
$ | 71,136 | $ | 24,755 | ||||
|
Income
taxes
|
$ | 229,843 | $ | 37,128 | ||||
|
(
in thousands)
|
Three
months ended September 30,
|
Percent
of sales
|
Percent
|
Nine
months ended September 30,
|
Percent
of sales
|
Percent
|
||||||||||||||||||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
change
|
2009
|
2008
|
2009
|
2008
|
change
|
|||||||||||||||||||||||||||||||
|
Salaries
& related cost
|
$ | 759 | $ | 727 | 11.9 | % | 10.0 | % | 4.5 | % | $ | 2,304 | $ | 2,253 | 11.3 | % | 10.8 | % | 2.3 | % | ||||||||||||||||||||
|
|
·
|
a
$29,000 increase in staffing costs to support the domestic direct sales of
the SEER product line;
|
|
|
·
|
a
$17,000 increase in staff infrastructure
costs;
|
|
|
·
|
a
$12,000 increase in overall employee benefits and health insurance related
costs; and
|
|
|
·
|
a
$6,000 increase in the accrual for vacation pay related to higher-level
employees.
|
|
|
·
|
a
$12,000 reduction in annual
bonuses;
|
|
|
·
|
a
$14,000 reduction of our company match to our employees’ 401(k)
contributions; and
|
|
|
·
|
a
$6,000 reduction due to the elimination of a position in Bovie Canada as a
result of cost cutting measures by
management.
|
|
|
·
|
a
$56,000 increase in staffing costs to support the domestic direct sales of
the SEER product line;
|
|
|
·
|
a
$25,000 increase in staff infrastructure
costs;
|
|
|
·
|
a
$36,000 increase in overall employee benefits and health insurance related
costs; and
|
|
|
·
|
a
$14,000 increase in the accrual for vacation pay related to higher-level
employees.
|
|
|
·
|
a
$37,000 reduction in annual
bonuses;
|
|
|
·
|
a
$37,000 reduction of our company match to our employees’ 401(k)
contributions; and
|
|
|
·
|
a
$6,000 reduction due to the elimination of a position in Bovie Canada as a
result of cost cutting measures by
management.
|
|
(in
thousands)
|
Three
months ended September 30,
|
Percent
of sales
|
Percent
|
Nine
months ended September 30,
|
Percent
of sales
|
Percent
|
||||||||||||||||||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
change
|
2009
|
2008
|
2009
|
2008
|
change
|
|||||||||||||||||||||||||||||||
|
SG
& A costs
|
$ | 1,312 | $ | 1,061 | 20.6 | % | 14.5 | % | 23.6 | % | $ | 3,532 | $ | 3,221 | 17.3 | % | 15.4 | % | 9.6 | % | ||||||||||||||||||||
|
|
·
|
a
$160,000 accrual for the settlement of the Erbe
lawsuit;
|
|
|
·
|
a
$58,000 increase in property taxes related to our new facility in
Clearwater, Florida;
|
|
|
·
|
a
$33,000 increase in electricity costs related to the new larger
facility;
|
|
|
·
|
a
$25,000 increase in amortization expense related to new
products;
|
|
|
·
|
a
$20,000 increase in insurance expense due to the new larger facility as
well as insurance on our old building listed for
sale;
|
|
|
·
|
a
$16,000 increase in write down in obsolete
inventory;
|
|
|
·
|
a
$12,000 increase in promotion costs related to the SEER product
line;
|
|
|
·
|
a $
45,000 increase in show costs resulting from timing of shows versus the
prior period;
|
|
|
·
|
a
$14,000 increase in telephone expense due to an expansion of our
communication infrastructure and related costs;
and
|
|
|
·
|
a
$5,000 increase in depreciation expense attributable to Bovie Canada
during the 2009 period versus 2008.
|
|
|
·
|
a
$52,000 decrease in travel costs as a result of cost cutting measures by
management;
|
|
|
·
|
a
$9,000 decrease in commission expense due to reduced distribution
sales;
|
|
|
·
|
a
$36,000 decrease in advertising costs as a result of cost cutting measures
by management; and
|
|
|
·
|
a
$40,000 decrease in administrative costs in Bovie Canada as a result of
cost cutting measures by
management.
|
|
|
·
|
a
$160,000 accrual for the settlement of the Erbe
lawsuit;
|
|
|
·
|
a
$94,000 increase in taxes related to our new facility in Clearwater
Florida;
|
|
|
·
|
an
$86,000 increase in electricity costs related to the new larger
facility;
|
|
|
·
|
an
$84,000 increase in amortization expense related to new
products;
|
|
|
·
|
a
$58,000 increase in a one time moving expense related to the new
facility;
|
|
|
·
|
a
$47,000 increase in telephone expense due to an expansion of our
communication infrastructure and related
costs;
|
|
|
·
|
a $
38,000 increase in write down in obsolete
inventory;
|
|
|
·
|
a
$33,000 increase in insurance expense due to the new larger facility as
well as insurance on our old building listed for sale;
and
|
|
|
·
|
a
$29,000 increase in depreciation expense attributable to Bovie Canada
during the 2009 period versus 2008.
|
|
|
·
|
a
$118,000 decrease in travel costs as a result of cost cutting measures by
management;
|
|
|
·
|
a
$50,000 decrease in commissions expense due to reduced distribution
sales;
|
|
|
·
|
a
$14,000 decrease in consulting costs related to our European distribution
channel;
|
|
|
·
|
an
$85,000 decrease in advertising costs as a result of cost cutting measures
by management; and
|
|
|
·
|
a
$52,000 decrease in administrative costs in Bovie Canada as a result of
cost cutting measures by
management.
|
|
Amended
Employment Agreement dated November 30, 2009 between Andrew Makrides and
Bovie Medical Corporation.
|
||
|
Amended
Employment Agreement dated November 30, 2009 between Moshe
Citronowicz and Bovie Medical Corporation.
|
||
|
Amended
Employment Agreement dated November 30, 2009 between J. Robert Saron and
Bovie Medical Corporation.
|
||
|
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
of Andrew Makrides, President and Chief Executive Officer of Registrant,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002. This exhibit is not “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934 but is
instead furnished as provided by applicable rules of the Securities and
Exchange Commission.
|
||
|
Certification
of Gary D. Pickett, Chief Financial Officer of Registrant, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. This exhibit is not “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934 but is
instead furnished as provided by applicable rules of the Securities and
Exchange Commission.
|
|
Bovie
Medical Corporation
|
||
|
Dated: November
30, 2009
|
By:
|
/s/
Andrew Makrides
|
|
Andrew
Makrides
|
||
|
Chief
Executive Officer
|
||
|
Dated: November
30, 2009
|
By:
|
/s/
Gary D. Pickett
|
|
Gary
D. Pickett
|
||
|
Chief
Financial Officer
|
||