U.S. Securities and Exchange Commission
Washington D.C. 20549
Form 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from to
-
Commission file number 0-12183
--------------
BOVIE MEDICAL CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 11-2644611
-- -------------------
(State or other jurisdiction (IRS Employer of incorporation
or organization) Identification No.)
734 Walt Whitman Rd., Melville, New York 11747
(Address of principal executive offices)
(631) 421-5452
(Issuer's telephone number)
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date: 13,770,334.
<PAGE>
BOVIE MEDICAL CORPORATION.
FORM 10-QSB
QUARTERLY REPORT
JUNE 30, 2000
<PAGE>
BOVIE MEDICAL CORPORATION
INDEX TO FORM 10-QSB
Contents
Part I. Financial Information
Item 1: Consolidated Financial Statements:
Consolidated Balance Sheet - June 30, 2000
Consolidated Statements of Operations for the
six Months Ended June 30, 2000 and 1999
Consolidated Statements of Cash Flows for the
six Months Ended June 30, 2000 and 1999
Consolidated Statements of Operations for the
three Months Ended June 30, 2000 and 1999
Notes to Financial Statements
Item 2: Management's Discussion and Analysis of Financial Conditions and Results
of Operations
Part II. Other Information
Item 1: Legal Proceedings
Item 2: Changes in Securities
Item 3: Defaults Upon Senior Securities
Item 4: Submission of Matters to Vote of Security Holders
Item 5: Exhibits and Reports on Form 8-K
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS
BOVIE MEDICAL CORPORATION
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(UNAUDITED)
Assets
<TABLE>
Current assets:
<S> <C>
Cash $ 579,677
Trade accounts receivable 1,223,522
Inventories 1,876,914
Prepaid expenses 127,874
Deferred tax asset 175,010
Other receivables 116,004
----------
Total current assets 4,099,001
----------
Property and equipment, net 1,496,856
Other assets:
Repair parts 317,698
Trade name 1,650,459
Patent rights, net 237,606
Deposits 26,471
-----------
2,232,234
-----------
$ 7,828,091
</TABLE>
===========
The accompanying notes are an integral part of the financial
statements.
<PAGE>
BOVIE MEDICAL CORPORATION
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(UNAUDITED)
(CONTINUED)
Liabilities and Stockholders' Equity
Current liabilities:
<TABLE>
<S> <C>
Accounts payable $ 502,742
Accrued expense 292,436
Notes payable - current portion 689,282
Due to shareholders 72,569
----------
Total current liabilities 1,557,029
----------
Stockholders' equity:
Preferred Stock, par value $.001
10,000,000 shares authorized
0 issued and outstanding
on June 30, 2000 --
Common stock par value $.001; 40,000,000
shares authorized, issued and outstanding
13,870,334 shares on June 30, 2000 13,940
Additional paid in capital 20,053,366
Accumulated deficit (13,796,244)
-----------
Total stockholders' equity 6,271,062
-----------
Total liabilities and stockholders' equity $ 7,828,091
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
BOVIE MEDICAL CORPORATION.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<S> <C> <C>
2000 1999
Sales $ 4,604,965 $ 4,648,944
Cost of sales 2,489,825 2,683,297
----------- ----------
Gross profit 2,115,140 1,965,647
----------- ----------
Costs and expenses:
Research and development 198,834 118,443
Professional services 220,341 190,878
Salaries and related costs 760,385 662,906
Selling, general and administrative 619,711 862,407
----------- ----------
1,799,271 1,834,634
----------- ----------
Gain (Loss) from operations 315,869 131,013
Other income (expense):
Interest income 18,400 6,091
Interest expense ( 33,996) ( 35,176)
Miscellaneous 15,707 3,530
---------- ----------
111 ( 25,555)
----------- ----------
Income (loss) 315,980 105,458
Provision for income tax ( 113,752) ( 36,910)
Realized benefit of loss carryforward 113,752 36,910
----------- ----------
Net income (loss) $ 315,980 $ 105,458
=========== ==========
Earnings per share
Net income:
Basic $ .02 $ .01
=== ===
Diluted $ .02 $ .01
=== ===
Weighted average number of shares outstanding 13,957,834 14,738,755
========== ==========
Weighted average number of shares adjusted for
dilutive securities 13,957,834 16,738,755
========== ==========
</TABLE>
N/S = Not significant
The accompanying notes are an integral part of the financial statements.
<PAGE>
BOVIE MEDICAL CORPORATION.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<S> <C> <C>
2000 1999
Sales $ 2,430,641 $ 2,401,880
Cost of sales 1,358,504 1,342,756
--------- ----------
Gross profit 1,072,137 1,059,124
--------- ----------
Costs and expenses:
Research and development 89,566 67,985
Professional services 112,600 109,296
Salaries and related costs 365,144 313,911
Selling, general and administrative 245,942 455,381
--------- ---------
813,252 946,573
--------- ---------
Gain (Loss) from operations 258,885 112,551
Other income (expense):
Interest income 5,867 6,091
Interest expense ( 16,750) ( 22,229)
Miscellaneous 11,142 --
-------- --------
259 ( 16,138)
-------- --------
Income (loss) before extraordinary items 259,144 96,413
Provision for income tax ( 93,860) ( 33,744)
Realized benefit of loss carryforward 93,860 33,744
--------- ----------
Net income $ 259,144 $ 96,413
========= ==========
Earnings per share
Net income:
Basic $ .02 $ .01
Diluted $ .02 $ .01
Weighted average number of shares outstanding 13,920,334 14,738,755
========== ==========
Weighted average number of shares adjusted for
dilutive securities 13,920,334 16,738,755
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
BOVIE MEDICAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<S> <C> <C>
2000 1999
---- ----
Cash flows from operating activities
Net income $ 315,980 $ 105,458
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 163,868 356,670
Common stock issued for interest -- 7,846
Changes in current assets and liabilities:
Decrease (Increase) in receivables ( 13,474) ( 56,466)
Decrease (Increase) in inventories ( 194,522) 15,490
Increase in prepaid expenses ( 41,429) ( 25,964)
Increase (Decrease) in accounts payable 100,487 ( 6,857)
Increase (Decrease) in accrued expense 28,290 ( 46,601)
Decrease in other assets 15,139 5,875
--------- ---------
Total adjustments 58,359 249,993
--------- ---------
Net cash provided by (used in) operating
activities 374,339 355,451
--------- ---------
Cash flows from investing activities
Increase in fixed assets ( 144,574) ( 63,279)
Decrease (Increase) in patents ( 82,971) ( 15,300)
Increase in deposits ( 21,706) --
--------- --------
Net cash used in investing activities ( 249,251) ( 78,579)
--------- --------
Cash flows from financing activities
Decrease in notes payable ( 196,874) --
Increase in notes payable 323,565 ( 36,776)
Common shares purchased for cash ( 76,000) --
Exercise of stock options 18,650 --
Decrease in loans from shareholders ( 28,410) --
Decrease in subscription receivable ( 1,416) --
---------- ---------
Net cash provided by financing activities 39,515 ( 36,776)
---------- ----------
Net increase (decrease) in cash and cash
equivalents 164,603 240,096
Cash and cash equivalents, beginning of
period 415,074 278,673
--------- --------
Cash and cash equivalents, end of period $ 579,677 $ 518,769
========= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
BOVIE MEDICAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
Cash paid during the six months ended June 30:
2000 1999
---- ----
<TABLE>
<S> <C> <C>
Interest paid $ 29,622 $ 28,488
Income Taxes - 0 - - 0 -
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
There were no non-cash activities for the first six month of the year 2000.
FOR THE SIX MONTHS ENDED JUNE 30, 1999.
1999
During the six months ended June 30, 1999, the Company issued 29,060 restricted
shares to the Krauss Organization in order to be in compliance with the terms of
its purchase agreement for the building it now owns and occupies. The Company
valued the shares at 40% of market value or $7,846 because of the restriction on
its immediate sale.
<PAGE>
BOVIE MEDICAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements include the accounts of Bovie Medical
Corporation and its wholly owned subsidiary Aaron Medical Industries, Inc. In
the opinion of management, the interim financial statements reflect all
adjustments, consisting of only normal recurring items, which are necessary for
a fair presentation of the results for the interim periods presented.
The results for interim periods are not necessarily indicative of results for
the full year. These financial statements should be read in conjunction with the
significant accounting policies and the other notes to the financial statements
included in the Corporation's 1998 Annual Report to the SEC on Form 10-KSB.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates in the Preparation of Financial Statements
The preparation of consolidated financial statements, in conformity with
generally accepted accounting principles, requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Fair Values of financial instruments
Cash and cash equivalents. Holdings of highly liquid investments with maturity
of three months or less, when purchased, are considered to be cash equivalents.
The carrying amount reported in the balance sheet for cash and cash equivalents
approximates its fair values.
Accounts receivable and accounts payable. The carrying amount of accounts
receivable and accounts payable on the balance sheet approximates fair value.
Short term and long term debt. The carrying amount of the bonds and notes
payable and amounts due to shareholders approximates fair value.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
principally on the average cost method. Inventories at June 30, 2000 were as
follows:
<TABLE>
<S> <C>
Raw materials $ 1,171,511
Work in process 469,254
Finished goods 236,149
----------
Total $ 1,876,914
=========
</TABLE>
<PAGE>
BOVIE MEDICAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
Long-Lived Assets
Long-lived and assets consist of property, plant and equipment, and intangible
assets.
Property, plant and equipment are recorded at cost less depreciation and
amortization. Depreciation and amortization are accounted for on the
straight-line method based on estimated useful lives. The amortization of
leasehold improvements is based on the shorter of the lease term or the life of
the improvement. Betterment and large renewals, which extend the life of the
asset, are capitalized whereas maintenance and repairs and small renewals are
expenses, as incurred. The estimated useful lives are: machinery and equipment,
7-15 years; buildings, 30 years; and leasehold improvements; 10-20 years.
Intangible assets consist of patent rights and goodwill. Goodwill represents the
excess of the cost of assets of the acquired companies over the values assigned
to net tangible assets. These intangibles are being amortized by the
straight-line method over a 5 to 20 year period.
Effective January 1, 1996, the Company adopted the Statement of Financial
Accounting Standards (SFAS) No.121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of. In accordance with SFAS
No.121, the Company reviews long-lived assets for impairment whenever events or
changes in business circumstances occur that indicate that the carrying amount
of the assets may not be recovered.
The Company assesses the recoverability of long-lived assets held, and to be
used, based on undiscounted cash flows and measures the impairment, if any,
using discounted cash flows. Adoption of SFAS No.121 did not have a material
impact on the Company's consolidated financial position, operating results or
cash flows.
Revenue Recognition and Product Warranty
Revenue from sales of products is generally recognized upon shipment to
customers. The Company warrants its products for one year. The estimated future
costs of warranties are not material.
Income is recognized in the financial statements (and the customer billed) when
products are shipped from stock. Net sales are arrived at by deducting discounts
and freight from gross sales.
Environmental Remediation
The Company accrues environmental remediation costs if it is probable that an
asset has been impaired or a liability incurred at the financial statement date
and the amount can be reasonably estimated. Environmental compliance costs are
expenses, as incurred. Certain environmental costs are capitalized based on
estimates and depreciated over their useful lives.
<PAGE>
BOVIE MEDICAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Earnings Per Common and Common Equivalent Share
In February 1997, the Financial Accounting Standards Board issued SFAS 128.
"Earnings Per Share." SFAS 128 establishes new standards for computing and
presenting earnings per share ("EPS"). Specifically, SFAS 128 replaces the
previously required presentation of primary EPS with a presentation of basic
EPS, requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures, and requires
a reconciliation of the numerator and denominator of the basic EPS computation
to the financial statements issued for periods ending after December 15, 1997.
In 1997, the Company adopted SFAS 128.
Research and Development Costs
Only the development costs that are purchased from another enterprise and have
alternative future use are capitalized and amortized over five years.
Income Taxes
The Company and its wholly-owned subsidiary file a consolidated federal income
tax return.
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
Nonmonetary Transactions
The accounting for non-monetary assets is based on the fair values of the assets
involved. Cost of a non-monetary asset acquired in exchange for another
non-monetary asset is recorded at the fair value of the asset surrendered to
obtain it. The difference in the costs of the assets exchanged is recognized as
a gain or loss. The fair value of the asset received is used to measure the
cost, if it is more clearly evident than the fair value of asset surrendered.
Stock-Based Compensation
The Company has adopted Accounting Principles Board Opinion 25 for its
accounting for stock based compensation. Under this policy:
1. Compensation costs are recognized as an expense over the period of employment
attributable to the employee stock options.
<PAGE>
BOVIE MEDICAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
Stock-Based Compensation (Continued)
2. Shares issued in accordance with a plan for past or future services of an
employee are allocated between the expired costs and future costs. Future costs
are charged to the periods in which the services are performed. The pro forma
amounts of the difference between compensation cost included in net income and
related cost measured by the fair value based method, including tax effects, are
disclosed.
New Accounting Standards
In June 1997, the Financial Accounting Standards Board issued SFAS 130,
"Reporting Comprehensive Income". SFAS 130 establishes standards for reporting
and display of comprehensive income and its components (revenues, expenses,
gains, and losses) in a full set of general purpose financial statements.
Specifically, SFAS 130 requires that all items that meet the definition of
components of comprehensive income be reported in a financial statement for the
period in which they are recognized. However, SFAS 130 does not specify when to
recognize or how to measure the items that make up comprehensive income. SFAS
130 is effective for fiscal years beginning after December 15, 1997, and early
application is permitted.
Management believes the application of SFAS 130 will not have a material effect
on the Company's future financial statements.
In April 1998, the FASB issued SOP 98-5, "Reporting on the Costs of Start-up
Activities," which will become effective for the Company in fiscal 2000. It
requires costs of start-up activities and organization costs to be expressed, as
incurred. The Company currently follows this approach and such costs have been
minimal in the past.
In June 1997, the Financial Accounting Standards Board issued SFAS 131,
"Financial Reporting for Segments of Business Enterprise." SFAS 131 supersedes
the "industry segment" concept of SFAS 14 with a "management approach" concept
as the basis for identifying reportable segments. SFAS 131 is effective for
fiscal years beginning after December 15, 1997 and early application is
permitted. Management believes the application of SFAS 131 will not have a
material effect on the Company's future financial statements.
Results of Operations
The results of operations over the six months ended June 30, 2000 show decreased
sales of 43,979 and increased profitability, as compared to the first six months
of 1999. The Company's sales revenues decreased by 1%, from $4,648,944 to
$4,604,964. Gross profit percentage of 44% was up from 40% for the same period
in 1999. Gross profit increased from $1,965,647 to $2,115,140. Increased gross
profit was mainly attributable to increased sales of cauteries and a decrease in
cost of materials on Bovie generators (product line purchased). For the first
six months of 2000 and 1999, cauteries accounted for 44% and 41% of sales,
respectively.
Operating salaries and related expenses increased by 15%, from $662,906 to
$760,385, in the six months ended June 30, 2000 as compared to the same period
in 1999. A significant area of increase was in quality control personnel.
<PAGE>
BOVIE MEDICAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations (Continued)
Research and development costs increased by 68% from $118,443 to $198,834 from
the six months ended June 30, 1999 to the six months ending June 30, 2000. The
increase was mainly attributable to engineering costs on the new generator
models being developed.
Expenses for professional services increased by 15% to $220,341 in the six
months ended June 30, 2000, as compared to $190,878 in the same period of the
previous year. The main reason for this increase was professional fees
associated with public relations.
Selling, General and Administrative expenses decreased by $242,696 or 39%. These
expenses were $862,407 in the six month period ended June 30, 1999 as compared
to $619,711 for the six months ended June 30, 2000. The decrease was mainly due
to a decrease in amortization expense of $192,802 attributed to the cost of the
ART manufacturing license, which was sold effective December 30, 1999.
Interest expense decreased from $35,176 in the six months ended June 30, 1999 to
$33,996 in 2000. The $1,180 (3%) decrease in interest expense was mainly
attributable to the decrease in interest in the Company's line of credit. The
term loan to the Company's commercial bank was paid off in the first quarter of
2000.
The operating gain was $315,869 in the first six months of 2000 as compared to
an operating gain of $131,013 in the same period in 1999, an increase of
$184,856 or 141%.
The Company had a net gain of $315,980 for the six months ended June 30, 2000 as
compared to net gain of $105,458 in 1999 for the same period. The main reason
for the increase of $184,856 in the operating income and $210,522 in net income
is: $149,493 increase in gross profit, attributable to cautery and
electrosurgical product sales and a decrease of $192,802 in amortization expense
related to the sale of the ART license.
The Company sells its products mostly through distributors and independent
representatives to service the distributors, both in the international market
and in the USA. Distributors are contacted through response to company
advertising in international medical journals or at domestic or international
trade shows. The main focus for export sales has been Western Europe.
The Company has distributors in all major markets in Europe. The Company intends
to continue marketing its products internationally while concentrating on major
markets for increased market exposure and the introduction of new products. The
Company is in the process of setting up a sales office in Western Europe to
promote the sale of electrosurgical devices.
During the first six months of 2000, international sales of the Aaron Medical
product line increased. These sales were $ 928,452, which represented 19% of
total sales, while in 1999 total international sales were $768,235 and 16% of
total sales. The Company expects sales to continue to increase since it received
its ISO 9000 certification in the 3rd quarter of 1998.
<PAGE>
BOVIE MEDICAL CORPORATION
PART I. FINANCIAL INFORMATION (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Financial Condition
As of June 30, 2000, the amount of cash was $579,677 as compared to $518,769 at
June 30, 1999. Cash provided by operating activities was $374,339 in the first
six months of 2000 as compared to $355,451 provided by operations in 1999. Net
working capital of the Company on June 30, 2000 was $2,541,972 as compared to
$2,123,876 in 1999.
Investing activities utilized $249,251 in cash during the first six months of
2000, compared to $78,579 in the first six months of 1999. In 2000, the Company
continued its policy of investing in property, plant and equipment needed for
future business requirements, including manufacturing capacity.
The Company's ten largest customers accounted for approximately 58% of net sales
for the first six months of 2000. At June 30, 2000, the same ten customers
accounted for approximately 67% of outstanding accounts receivable.
Cash flows from financing activity provided $342,215 and used $301,284 in the
first six months of 2000. In 1999 cash flows form financing activities used
$36,776. The most significant financing activities in the six months ended June
30, 2000 were the purchase of Company shares from a former major shareholder
($76,000) and net borrowing of $100,000 on the Company credit line.
The Company believes that it has the financial resources needed to meet business
requirements in the foreseeable future, including capital expenditures for the
expansion of its manufacturing site, working capital requirements, and product
development programs.
Outlook
The Company continues to believe that the world market for disposal medical and
electrosurgical products, such as the Company's battery-operated cauteries and
electrosurgical generators, has significant growth potential because these types
of products have not been affordable in the case of cauteries or effectively
marketed outside the U.S. Because of these factors, the Company has designed
certain disposable products to be reusable. The Company presently has a
significant portion of the U.S. cautery market and does not expect a dramatic
growth in sales of cautery-related products domestically unless an OEM
arrangement can be obtained with a co-leader in this market.
The Company has focused on expanding its line of electrosurgical products both
domestically and abroad. Electrosurgical products sold by the Company include
standard stainless steel electrodes, and the Aaron 800 and 1200 high frequency
desiccators. The Aaron 1200 was introduced in 1998 as well as the Bovie product
line of generators and accessories.
Aaron, through its private label capacity, sees unique opportunities in the
domestic market as most of its competitors do not private label. The
electrosurgical product line is a larger market than the Company has normally
sold into and is dominated by two main competitors, VallyeLab and Conmed.
Electrosurgical product sales moved from fifth to second place in total Company
sales by product line in 1997 and has remained in that position. The Company
believes that in the next two years electrosurgical products will be the
dominant product line of the Company in relationship to sales.
<PAGE>
BOVIE MEDICAL CORPORATION
PART I. FINANCIAL INFORMATION (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Liquidity and Future Plans
Since the acquisition of Aaron Medical Industries, Inc., the Company has
partially changed its direction from acquiring ownership interest in companies
to acquiring new product technology and expanding manufacturing capabilities
through Aaron. The Aaron 800 and Aaron 1200 are examples of this new direction.
Other electrosurgical products and technologies are being developed by the
Company through the use of its own engineering staff and by out sourcing
engineering development.
In order to maintain and strive for international sales growth and its ability
to sell in Europe, management has implemented an ISO 9000/EN46001 quality system
and is certified and has received its CE mark (International Quality Control) in
1998. The Company had obtained a one-year line of credit with a local commercial
bank for $600,000 and a three-year $150,000 loan for capital improvements.
Interest on these loans is to be paid at 1% over prime. Balances on these loans
were $ 200,000 on the credit line and $-0- on the term loan as of June 30, 2000,
respectively.
Bovie Medical Corporation believes that it has the product mix, facilities,
personnel, and competitive and financial resources for continued business
success, but future revenues, costs, margins, product mix and profits are all
subject to the influence of a number of factors, as discussed above.
Forward-looking Statements
This Report on Form 10-QSB contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including statements regarding the Company's
expectations, hopes, intentions, beliefs or strategies regarding the future.
Such forward-looking statements include, but are not limited to, the Company's
anticipated expense levels for research and development, and selling general and
administrative, anticipated capital expenditures, and expectations regarding
inventory balances, liquidity and adequacy of cash resources under the
sub-headings inventory balances, liquidity and adequacy of cash resources under
the sub-headings "Results of Operations" and "Liquidity and Capital Resources".
Actual results could differ materially form those projected in any
forward-looking statements for the reasons detailed below and in other sections
of this Report on Form 10-QSB.
All forward-looking statements included in this Form 10-QSB are based on
information available to the Company on the date of this Report. The Company
assumes no obligation to update the forward-looking statements. Investors should
also consult the risk factors listed from time to time in the Company's Reports
on Form 10-K and Annual Report to Stockholders.
<PAGE>
BOVIE MEDICAL CORPORATION
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company has instituted an action for breach of contract against Advanced
Refractory Technology, Inc. (ART) - (A former major shareholder) to recover a
deposit of $125,000 .
Also see Form 10-KSB for the year ended December 31, 1999. Part I, Item 3.
ITEM 2. CHANGES IN SECURITIES
There have been no changes in the instruments defining the rights or rights
evidenced by any class of registered securities.
There have been no dividends declared.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
In February of 1997, the 10-year notes came due and the Company offered each
bond holder 2,200 shares of common stock for their $1,000 bond and accrued
interest of $550. Nineteen bondholders accepted the offer and forty-three
bondholders received cash for their bonds and accrued interest. The balance of
the bondholders have not redeemed their bonds or accepted the shares offered.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
There has not been a meeting of shareholders and therefore, no matters have been
submitted to a vote of security holders.
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
A) Exhibits
28 None
<PAGE>
SIGNATURES:
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Bovie Medical Corporation.
(Registrant)
Date: _________________
-------------------------
Chief Executive Officer - Andrew Makrides,
