Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 22, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | BOVIE MEDICAL CORP | |
Entity Central Index Key | 719,135 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 27,194,251 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,016 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 9,324 | $ 11,805 |
Restricted cash | 779 | 839 |
Trade accounts receivable, net | 3,506 | 2,925 |
Inventories, net | 6,415 | 5,957 |
Prepaid expenses and other current assets | 536 | 516 |
Total current assets | 20,560 | 22,042 |
Property and equipment, net | 6,536 | 6,810 |
Brand name and trademark | 1,510 | 1,510 |
Purchased technology and license rights, net | 269 | 323 |
Goodwill | 185 | 185 |
Deposits | 123 | 123 |
Deferred tax asset | 21 | 25 |
Other assets | 386 | 430 |
Total assets | 29,590 | 31,448 |
Current liabilities: | ||
Accounts payable | 1,774 | 1,214 |
Accrued payroll | 378 | 321 |
Accrued vacation | 380 | 228 |
Current portion of mortgage note payable | 239 | 239 |
Accrued and other liabilities | 1,844 | 2,119 |
Total current liabilities | 4,615 | 4,121 |
Mortgage note payable, net of current portion | 2,814 | 2,934 |
Notes payable | 140 | 140 |
Deferred rents | 17 | 18 |
Deferred tax liability | 564 | 564 |
Derivative liabilities | 139 | 267 |
Total liabilities | 8,289 | 8,044 |
Commitments and Contingencies (see Notes 9 and 10) | ||
Stockholders' equity: | ||
Series B convertible preferred stock, par value $.001; 3,588,139 issued and 1,975,639 outstanding as of June 30, 2016 and December 31, 2015, respectively | 2 | 2 |
Common stock, par value $.001 par value; 40,000,000 shares authorized; 27,194,251 issued and 27,051,172 outstanding as of June 30, 2016 and December 31, 2015, respectively | 27 | 27 |
Additional paid-in capital | 43,219 | 42,859 |
Accumulated deficit | (21,947) | (19,484) |
Total stockholders' equity | 21,301 | 23,404 |
Total liabilities and stockholders' equity | $ 29,590 | $ 31,448 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2016 | Dec. 31, 2015 |
Stockholders' equity: | ||
Series B convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Series B convertible preferred stock, shares issued | 3,588,139 | 1,975,639 |
Series B convertible preferred stock, shares outstanding | 3,588,139 | 1,975,639 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 27,194,251 | 27,051,172 |
Common stock, shares outstanding | 27,194,251 | 27,051,172 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Consolidated Statements Of Operations | ||||
Sales | $ 9,295 | $ 7,274 | $ 17,070 | $ 13,402 |
Cost of sales | 4,595 | 4,134 | 9,048 | 7,588 |
Gross profit | 4,700 | 3,140 | 8,022 | 5,814 |
Other costs and expenses: | ||||
Research and development | 592 | 505 | 1,259 | 951 |
Professional services | 396 | 313 | 753 | 644 |
Salaries and related costs | 2,200 | 1,868 | 4,300 | 3,821 |
Selling, general and administrative | 2,022 | 2,002 | 4,213 | 4,219 |
Total other costs and expenses | 5,210 | 4,688 | 10,525 | 9,635 |
Loss from operations | (510) | (1,548) | (2,503) | (3,821) |
Interest expense, net | (50) | (39) | (88) | (80) |
Change in fair value of liabilities, net | 41 | 90 | 128 | 1,534 |
Total other income (expense), net | (9) | 51 | 40 | 1,454 |
Loss before income taxes | (519) | (1,497) | (2,463) | (2,367) |
Income tax benefit, net | (8) | |||
Net loss | (519) | (1,497) | (2,463) | (2,375) |
Accretion on convertible preferred stock | (222) | |||
Gain on conversion of warrants and preferred shares, net | 13,956 | |||
Net income (loss) attributable to common shareholders | $ (519) | $ (1,497) | $ (2,463) | $ 11,359 |
Income (loss) per share | ||||
Basic | $ (0.02) | $ (0.06) | $ (0.09) | $ 0.53 |
Diluted | $ (0.02) | $ (0.06) | $ (0.09) | $ 0.41 |
Weighted average number of shares outstanding- basic | 27,051 | 24,435 | 27,051 | 21,555 |
Weighted average number of shares outstanding - dilutive | 27,051 | 24,435 | 27,051 | 24,251 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) - 6 months ended Jun. 30, 2016 - USD ($) $ in Thousands | Preferred Stock | Common Stock | Additional Paid-In Capital | Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2015 | 1,976 | 27,051 | |||
Beginning Balance, Amount at Dec. 31, 2015 | $ 2 | $ 27 | $ 42,859 | $ (19,484) | $ 23,404 |
Stock based compensation | 360 | 360 | |||
Net loss | (2,463) | (2,463) | |||
Ending Balance, Shares at Jun. 30, 2016 | 1,976 | 27,051 | |||
Ending Balance, Amount at Jun. 30, 2016 | $ 2 | $ 27 | $ 43,219 | $ (21,947) | $ 21,301 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities | ||
Net loss | $ (2,463) | $ (2,375) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 355 | 421 |
Provision for (recovery of) inventory obsolescence | 334 | (138) |
Gain on disposal of property and equipment, net | 14 | |
Stock-based compensation | 360 | 242 |
Non cash other (income) loss - warrants | (128) | (1,534) |
Changes in current assets and liabilities: | ||
Trade receivables | (581) | (49) |
Prepaid expenses | (20) | (159) |
Inventories | (792) | (486) |
Deposits and other assets | 44 | (128) |
Accounts payable | 560 | 190 |
Accrued and other liabilities | (63) | (105) |
Net cash used in operating activities | (2,380) | (4,121) |
Cash flows from investing activities | ||
Purchases of property and equipment | (41) | (462) |
Net cash used in investing activities | (41) | (462) |
Cash flows from financing activities | ||
Proceeds from stock options/warrants exercised | 1,466 | |
Change in restricted cash | 60 | 60 |
Change in mortgage note payable | (120) | (120) |
Proceeds from issuance of common shares, net | 11,531 | |
Net cash provided by (used in) financing activities | (60) | 12,937 |
Net change in cash and cash equivalents | (2,481) | 8,354 |
Cash and cash equivalents, beginning of period | 11,805 | 5,733 |
Cash and cash equivalents, end of period | 9,324 | 14,087 |
Cash paid for: | ||
Interest | 50 | 80 |
Income taxes |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 1. BASIS OF PRESENTATION | Unless the context otherwise indicates, the terms "we," "our," "us," "Bovie," and similar terms refer to Bovie Medical Corporation and its consolidated subsidiaries. The accompanying unaudited consolidated financial statements have been prepared based upon SEC rules that permit reduced disclosure for interim periods. For a more complete discussion of significant accounting policies and certain other information, please refer to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015. These financial statements reflect all adjustments that are necessary for a fair presentation of results of operations and financial condition for the interim periods shown, including normal recurring accruals and other items. The results for the interim periods are not necessarily indicative of results for the full year. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 2. INVENTORIES | Inventories are stated at the lower of cost or market. Finished goods and work-in-process inventories include material, labor, and overhead costs. Factory overhead costs are allocated to inventory manufactured in-house based upon labor hours. Inventories at June 30, 2016 and December 31, 2015 were as follows (in thousands): June 30, December 31, 2016 2015 Raw materials $ 5,563 $ 4,627 Work in process 481 483 Finished goods 1,938 2,080 Gross inventories 7,982 7,190 Less: reserve for obsolescence (1,567 ) (1,233 ) Net inventories $ 6,415 $ 5,957 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 3. INTANGIBLE ASSETS | At June 30, 2016 and December 31, 2015, intangible assets consisted of the following (in thousands): June 30, December 31, 2016 2015 Brand name and trademark (life indefinite) $ 1,510 $ 1,510 Purchased technology (9-17 year lives) 1,441 1,441 Less: accumulated amortization (1,172 ) (1,118 ) Purchased technology, net $ 269 $ 323 With respect to our trademark and brand name, we continue to market products, release new products and product extensions and maintain and promote these trademarks and brand name in the marketplace through legal registration and such methods as advertising, medical education and trade shows. It is our belief that these trademarks and brand names will generate cash flow for an indefinite period of time. Therefore, we believe our trademarks and brand name intangible assets are not impaired. Amortization of intangibles, which is included in depreciation and amortization in the accompanying statements of cash flows, was approximately $54,000 during each of the respective six month periods ended June 30, 2016 and 2015. |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 4. NEW ACCOUNTING PRONOUNCEMENTS | In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers No other new accounting pronouncement issued or effective during the period had or is expected to have a material impact on our consolidated financial statements or disclosures. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 5. FAIR VALUE MEASUREMENTS | Certain assets and liabilities that are measured at fair value on a recurring basis are measured in accordance with FASB ASC Topic 820-10-05, Fair Value Measurements The statement requires fair value measurement be classified and disclosed in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. Our derivative financial instruments that are measured at fair value on a recurring basis are all measured at fair value using Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following represents a reconciliation of the changes in fair value of warrants measured at fair value using Level 3 inputs during the six months ended June 30, 2016: (in $ thousands) 2013 Placement Agent Warrants Balance, December 31, 2015 $ 267 Change in fair value (128 ) Balance, June 30, 2016 (1) $ 139 (1) The warrants are valued using a trinomial lattice valuation methodology because that model embodies all of the relevant assumptions that address the features underlying these instruments. Significant assumptions used in the model at June 30, 2016 included the market price of our common stock, an expected dividend yield of zero, the remaining period to the expiration date of the warrants, expected volatility of our common stock over the remaining life of the warrants of 49.5%, estimated based on a review of our historical volatility, and risk-free rates of return of 0.7% for the 2013 warrants based on constant maturity rates published by the U.S. Federal Reserve, applicable to the remaining life of the warrants. We also take into consideration a probability assumption for anti-dilution. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 6. EARNINGS PER SHARE | We compute basic earnings per share ("basic EPS") by dividing the net income or loss 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. The following table provides the computation of basic and diluted earnings per share for the three and six month periods ending June 30, 2016 and 2015: Three Months Ended Six Months Ended June 30, June 30, (in thousands, except per share data) 2016 2015 2016 2015 Numerator: Net income (loss) available to common shareholders $ (519 ) $ (1,497 ) $ (2,463 ) $ 11,359 Effect of dilutive securities Derivative liability - warrants $ (41 ) $ - $ (128 ) $ (1,534 ) Accretion on convertible preferred stock - - - 222 Numerator for diluted income (loss) per common share $ (560 ) $ (1,497 ) $ (2,591 ) $ 10,047 Denominator: Weighted average shares used to compute basic income (loss) per common share 27,051 24,435 27,051 21,555 Effect of dilutive securities: Derivative liability - warrants - - - 82 Convertible preferred stock - - - 2,305 Stock options - - - 309 Denominator for diluted income (loss) per common share 27,051 24,435 27,051 24,251 Basic income (loss) per common share $ (0.02 ) $ (0.06 ) $ (0.09 ) $ 0.53 Diluted income (loss) per common share $ (0.02 ) $ (0.06 ) $ (0.09 ) $ 0.41 For the three months ended June 30, 2016, the potential conversion of Series B Preferred Stock into 3,951,278 shares of common stock was excluded from the computation of diluted earnings per share as the effect is anti-dilutive. For the three months ended June 30, 2016, approximately $41,000 of the gain on the fair market valuation of the derivative liability was excluded in the computation of diluted earnings per share as the effect is anti-dilutive. For the six months ended June 30, 2016, the exercise of warrants, preferred stock, and options were excluded from the computation of fully diluted earnings per share because their effect was antidilutive. For the three months ended June 30, 2015, options and warrants to purchase approximately 277,000 shares of common stock and approximately $90,000 of the gain on the fair market valuation of the derivative liabilities were excluded in the computation of diluted earnings per share because their effects were anti-dilutive, while the potential conversion of Series B Preferred Stock into 3,951,278 shares of common stock was excluded from the computation of diluted earnings per share as the effect is anti-dilutive. For the six months ended June 30, 2015, warrants to purchase approximately 82,000 shares of common stock and approximately $1,534,000 of the gain on the fair market valuation of the derivative liabilities were included in the computation of dilutive earnings per share and options to purchase approximately 309,000 shares of common stock were included in the computation of dilutive earnings per share because their effect was dilutive. The conversion of Series B Preferred Stock into 2,305,000 shares of common stock was included in the computation of diluted earnings per share as the effect is dilutive. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 7. STOCK-BASED COMPENSATION | Under our stock option plans, our board of directors may grant options to purchase common shares to our key employees, officers, non-employees, directors and consultants. We account for stock options in accordance with FASB ASC Topic 718, Compensation – Stock Compensation Activity in our stock options during the period ended June 30, 2016 was as follows: Number of Options Weighted Average Exercise (in thousands) Price Outstanding at December 31, 2015 3,131 $ 3.38 Granted 626 $ 1.74 Outstanding at June 30, 2016 3,757 $ 3.09 The grant date fair value of options granted during the first six months of 2016 were estimated on the grant date using a trinomial lattice option-pricing model and the following assumptions: expected volatility of 49.5%, expected term of between 5-8 years, risk-free interest rate of 0.71%, and expected dividend yield of 0%. On June 30, 2016, the Company entered into a sales channel partnership agreement with Arteriocyte LLC. As part of the agreement, Arteriocyte was granted 240,000 ten-year options with a four year performance based vesting schedule and an exercise price of $1.64 per option. Expected volatility is based on a five year average of the historical volatility of the Company's stock. The risk-free rate is based on the rate of U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of the options. The Company uses historical data to estimate pre-vesting forfeiture rates. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 8. INCOME TAXES | The Company's income tax provision was $0 with an effective tax rate of 0% for the three and six months ended June 30, 2016. The Company's effective tax rate differs from the statutory rate primarily due to the valuation allowance on the Company's net deferred tax assets with finite life. As a result of historical losses, the Company recorded a valuation allowance on the net deferred tax asset with a finite life and does not anticipate recording an income tax benefit related to these deferred tax assets. The Company reassesses the realization of deferred tax assets each reporting period and will be able to reduce the valuation allowance to the extent that the financial results of these operations improve and it becomes more likely than not that the deferred tax assets are realizable. For the three and six months ended June 30, 2016, we do not believe we had any significant uncertain tax positions nor did we have any interest or penalties related to any significant uncertain tax positions. The Company is subject to U.S. federal income tax, state income tax and Bulgarian income tax. Until the respective statutes of limitations expire (which may be as much as 20 years while we have unused NOL's), we are subject to income tax audits in the jurisdictions in which we operate. |
COMMITMENTS, CONTINGENCIES AND
COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 9. COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS | In March 2014, we entered into a lease for offices located in Purchase, New York, where we are obligated to pay $9,277 per month for the lease expiring June 14, 2019. The lease is for 3,650 square feet of office space. In October 2015, pursuant to our acquisition of Bovie Bulgaria, we are obligated to pay approximately $6,350 per month for the lease expiring on December 31, 2016. The following is a schedule of approximate future minimum lease payments under operating leases having remaining terms in excess of one year as of June 30, 2016 for the calendar years ending December 31, 2016 and thereafter (in thousands): 2016 $ 95 2017 114 2018 117 2019 120 Thereafter 30 Total $ 476 Rent expense approximated $82,280 and $52,925 for the six month periods ending June 30, 2016 and 2015, respectively. Other future contractual obligations for other agreements with initial terms greater than one year and agreements to purchase materials in the normal course of business are summarized as follows (in thousands): Year Ending December 31, Description 2016 2017 2018 2019 Thereafter Purchase commitments $ 3,482 $ - $ - $ - $ - Mortgage debt 239 239 239 2,336 - Total $ 3,721 $ 239 $ 239 $ 2,336 $ - Litigation In the normal course of business, we are subject, from time to time, to legal proceedings, lawsuits and claims. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. If any of these matters arise in the future, it could affect the operating results of any one or more quarters. We expense costs of litigation related to contingencies in the periods in which the costs are incurred. Concentrations Our ten largest customers accounted for approximately 56.2% and 57.1% of revenues for the six months ended June 30, 2016 and 2015, respectively. For the six months ended June 30, 2016, McKesson and NDC accounted for 16.5% and 9.6% of our sales, while for the same six month period ended in 2015, McKesson and NDC accounted for 17.7% and 13.2% of our sales, respectively. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 10. RELATED PARTY TRANSACTIONS | Several relatives of Nikolay Shilev, Bovie Bulgaria's Managing Director, are considered related parties. Teodora Shileva, Mr. Shilev's spouse is an employee of the company working in the Accounting department in Bulgaria. Antoaneta Dimitrova Shileva-Toromanova, Mr. Shilev's sister is the Manager of Production and Human Resources. Svetoslav Shilev, Mr. Shilev's son is an Engineer in the Quality Assurance department in Bulgaria. A relative of Moshe Citronowicz, Bovie's Senior Vice President, is considered a related party. Arik Zoran is a consultant of the Company doing business as AR Logic, Inc., a consulting firm owned by Arik Zoran, Mr. Citronowicz's brother. On March 1, 2013 the Company amended the Consulting Services Agreement dated January 2011, extending the term of the existing agreement until December 31, 2014. The agreement shall automatically renew for additional one year periods, unless either party gives written notice of its desire not to renew at least one year prior to the expiration of the initial Term or renewal term. The agreement with AR Logic provides for a monthly retainer for engineering support for our existing generator product line and a separate hourly based fee structure for additional consulting related to new product lines. AR Logic has a royalty contract with us related to the creation and design of proprietary technology that is used in some of our generators. AR Logic was paid consulting fees of approximately $76,662 and $178,410 during the six months ended June 30, 2016 and 2015, respectively. A second relative of Mr. Citronowicz is considered a related party. Yechiel Tsitrinovich is also a brother of Mr. Citronowicz, and acts as a consultant to the Company related to research and development of certain products. Mr. Tsitrinovich has a royalty contract with us related to the creation and design of a proprietary technology that is used in some of our generators. On June 6, 2016, the Company notified Mr. Tsitrinovich of our intent to terminate his contract effective January 31, 2017. Mr. Tsitrinovich was paid a combination of consulting fees and royalties on previous product designs approximating $36,798 and $38,817 during the six months ended June 30, 2016 and 2015, respectively. |
LONG TERM DEBT
LONG TERM DEBT | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 11. LONG TERM DEBT | On June 28, 2016, the Company entered into a transaction with Bank of Tampa, a Florida banking corporation ("Lender") wherein Lender amended the terms of a mortgage loan ("the Loan") originally executed on March 20, 2014 with a principal amount of $3,592,000. The Initial Maturity Date of the Loan was extended to July 20, 2019 from March 19, 2017, and the Extended Maturity Date was amended to July 20, 2024 from March 20, 2022. In addition, the Lender released as collateral to the Loan, the Company's working capital accounts in exchange for a negative covenant limited to $2,000,000 of the aggregate indebtedness secured by these accounts. The obligations under the Loan are secured by a first mortgage and security interest in the Company's Clearwater, Florida facility. In addition, the Company has pledged an interest in a certificate of deposit in the amount of $779,000 as additional collateral. The amount of the additional collateral required declines on a pro rata basis as principal is paid. Borrowings under the Loan bear interest at LIBOR plus 3.5%, with a fixed monthly principal payment of $19,956. The interest rate at June 30, 2016 was 3.965%. The Loan documents contain customary financial covenants, including a covenant that the Company maintains a minimum liquidity of $750,000. Should we desire to extend the Loan beyond July 20, 2019, we must maintain a Debt Service Coverage Ratio for each of the preceding four quarters of not less than 1.0 to 1.0. |
GEOGRAPHIC AND PRODUCT LINE INF
GEOGRAPHIC AND PRODUCT LINE INFORMATION | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 12. GEOGRAPHIC AND PRODUCT LINE INFORMATION | International sales represented approximately 16.6% and 15.9% of total revenues for the three and six months ended June 30, 2016, respectively, as compared with 13.2% and 13.9% of total revenues for the three and six months ending June 30, 2015. Three months ended Six months ended June 30, June 30, 2016 2015 2016 2015 Sales by Domestic and International (in 000's) Domestic $ 7,757 $ 6,312 $ 14,364 $ 11,537 International 1,538 962 2,706 1,865 Total $ 9,295 $ 7,274 $ 17,070 $ 13,402 Although we have only one reporting segment, management analyzes revenue and other operating metrics across three operating categories. Three months ended Six months ended June 30, June 30, 2016 2015 2016 2015 Sales by Operating Category (in 000's) Core $ 6,881 $ 6,407 $ 13,359 $ 11,932 OEM 1,648 697 2,589 1,017 J-Plasma 766 170 1,122 453 Total $ 9,295 $ 7,274 $ 17,070 $ 13,402 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Inventories Tables | |
Schedule of inventory | June 30, December 31, 2016 2015 Raw materials $ 5,563 $ 4,627 Work in process 481 483 Finished goods 1,938 2,080 Gross inventories 7,982 7,190 Less: reserve for obsolescence (1,567 ) (1,233 ) Net inventories $ 6,415 $ 5,957 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Intangible Assets Tables | |
Schedule of intangible assets | June 30, December 31, 2016 2015 Brand name and trademark (life indefinite) $ 1,510 $ 1,510 Purchased technology (9-17 year lives) 1,441 1,441 Less: accumulated amortization (1,172 ) (1,118 ) Purchased technology, net $ 269 $ 323 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Measurements Tables | |
Activity in Level 3 assets | (in $ thousands) 2013 Placement Agent Warrants Balance, December 31, 2015 $ 267 Change in fair value (128 ) Balance, June 30, 2016 (1) $ 139 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share Tables | |
Basic and diluted earnings per share | Three Months Ended Six Months Ended June 30, June 30, (in thousands, except per share data) 2016 2015 2016 2015 Numerator: Net income (loss) available to common shareholders $ (519 ) $ (1,497 ) $ (2,463 ) $ 11,359 Effect of dilutive securities Derivative liability - warrants $ (41 ) $ - $ (128 ) $ (1,534 ) Accretion on convertible preferred stock - - - 222 Numerator for diluted income (loss) per common share $ (560 ) $ (1,497 ) $ (2,591 ) $ 10,047 Denominator: Weighted average shares used to compute basic income (loss) per common share 27,051 24,435 27,051 21,555 Effect of dilutive securities: Derivative liability - warrants - - - 82 Convertible preferred stock - - - 2,305 Stock options - - - 309 Denominator for diluted income (loss) per common share 27,051 24,435 27,051 24,251 Basic income (loss) per common share $ (0.02 ) $ (0.06 ) $ (0.09 ) $ 0.53 Diluted income (loss) per common share $ (0.02 ) $ (0.06 ) $ (0.09 ) $ 0.41 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Stock-based Compensation Tables | |
Summary of stock options | Number of Options Weighted Average Exercise (in thousands) Price Outstanding at December 31, 2015 3,131 $ 3.38 Granted 626 $ 1.74 Outstanding at June 30, 2016 3,757 $ 3.09 |
COMMITMENTS, CONTINGENCIES AN24
COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Commitments Contingencies And Concentrations Tables | |
Future minimum lease payments under operating leases | 2016 $ 95 2017 114 2018 117 2019 120 Thereafter 30 Total $ 476 |
Future minimum payments under these agreements | Year Ending December 31, Description 2016 2017 2018 2019 Thereafter Purchase commitments $ 3,482 $ - $ - $ - $ - Mortgage debt 239 239 239 2,336 - Total $ 3,721 $ 239 $ 239 $ 2,336 $ - |
GEOGRAPHIC AND PRODUCT LINE I25
GEOGRAPHIC AND PRODUCT LINE INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Geographic And Product Line Information Tables | |
Analyzing International sales represented | Three months ended Six months ended June 30, June 30, 2016 2015 2016 2015 Sales by Domestic and International (in 000's) Domestic $ 7,757 $ 6,312 $ 14,364 $ 11,537 International 1,538 962 2,706 1,865 Total $ 9,295 $ 7,274 $ 17,070 $ 13,402 |
Analyzing revenue and other operating metrics across three operating segments | Three months ended Six months ended June 30, June 30, 2016 2015 2016 2015 Sales by Operating Category (in 000's) Core $ 6,881 $ 6,407 $ 13,359 $ 11,932 OEM 1,648 697 2,589 1,017 J-Plasma 766 170 1,122 453 Total $ 9,295 $ 7,274 $ 17,070 $ 13,402 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Inventories Details | ||
Raw materials | $ 5,563 | $ 4,627 |
Work in process | 481 | 483 |
Finished goods | 1,938 | 2,080 |
Gross inventories | 7,982 | 7,190 |
Less: reserve for obsolescence | (1,567) | (1,233) |
Net inventories | $ 6,415 | $ 5,957 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | |
Purchased technology, net | $ 269 | $ 323 |
Brand name and trademark (life indefinite) [Member] | ||
Indefinite-lived intangible assets | 1,510 | 1,510 |
Purchased Technology [Member] | ||
Indefinite-lived intangible assets | 1,441 | 1,441 |
Less: accumulated amortization | (1,172) | (1,118) |
Purchased technology, net | $ 269 | $ 323 |
Purchased Technology [Member] | Minimum [Member] | ||
Useful life | 9 years | |
Purchased Technology [Member] | Maximum [Member] | ||
Useful life | 17 years |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Intangible Assets Details Narrative | ||
Amortization of intangibles | $ 54,000 | $ 54,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - 2013 Placement Agent Warrants [Member] $ in Thousands | 6 Months Ended | |
Jun. 30, 2016USD ($) | ||
Beginning balance | $ 267 | |
Change in fair value | (128) | |
Ending Balance | $ 139 | [1] |
[1] | The warrants are valued using a trinomial lattice valuation methodology because that model embodies all of the relevant assumptions that address the features underlying these instruments. Significant assumptions used in the model at June 30, 2016 included the market price of our common stock, an expected dividend yield of zero, the remaining period to the expiration date of the warrants, expected volatility of our common stock over the remaining life of the warrants of 49.5%, estimated based on a review of our historical volatility, and risk-free rates of return of 0.7% for the 2013 warrants based on constant maturity rates published by the U.S. Federal Reserve, applicable to the remaining life of the warrants. We also take into consideration a probability assumption for anti-dilution. |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Earnings Per Share Details | ||||
Net income (loss) available to common shareholders | $ (519) | $ (1,497) | $ (2,463) | $ 11,359 |
Effect of dilutive securities | ||||
Derivative liability - warrants | (41) | (128) | (1,534) | |
Accretion on convertible preferred stock | 222 | |||
Numerator for diluted income (loss) per common share | $ (560) | $ (1,497) | $ (2,591) | $ 10,047 |
Weighted average shares used to compute basic income (loss) per common share | 27,051 | 24,435 | 27,051 | 21,555 |
Effect of dilutive securities: | ||||
Derivative liability - warrants | 82 | |||
Convertible preferred stock | 2,305 | |||
Stock options | 309 | |||
Denominator for diluted income (loss) per common share | 27,051 | 24,435 | 27,051 | 24,251 |
Basic income (loss) per common share | $ (0.02) | $ (0.06) | $ (0.09) | $ 0.53 |
Diluted income (loss) per common share | $ (0.02) | $ (0.06) | $ (0.09) | $ 0.41 |
EARNINGS PER SHARE (Details Nar
EARNINGS PER SHARE (Details Narrative) | 3 Months Ended |
Jun. 30, 2016USD ($)shares | |
Earnings Per Share Details Narrative | |
Gain on the fair market valuation of the derivative liabilities | $ | $ 41,000 |
Conversion of Series B Preferred Stock | shares | 3,951,278 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) | 6 Months Ended |
Jun. 30, 2016$ / sharesshares | |
Number of options, outstanding | |
Outstanding, beginning of period (in shares) | shares | 3,131 |
Granted | shares | 626 |
Outstanding, end of period (in shares) | shares | 3,757 |
Weighted average exercise price | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 3.38 |
Granted (in dollars per share) | $ / shares | 1.74 |
Outstanding, end of period (in dollars per share) | $ / shares | $ 3.09 |
STOCK-BASED COMPENSATION (Det33
STOCK-BASED COMPENSATION (Details Narrative) | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Stock-based compensation | $ 360,000 |
Expected volatility rate | 49.50% |
Risk free interest rate | 0.71% |
Expected dividend yield | 0.00% |
Minimum [Member] | |
Expected term | 5 years |
Maximum [Member] | |
Expected term | 8 years |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Taxes Details Narrative | ||||
Income tax provision | $ 8 | |||
Effective tax rate | 0.00% | 0.00% |
COMMITMENTS, CONTINGENCIES AN35
COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS (Details) $ in Thousands | Jun. 30, 2016USD ($) |
Future minimum lease payments under operating leases | |
2,016 | $ 95 |
2,017 | 114 |
2,018 | 117 |
2,019 | 120 |
Thereafter | 30 |
Total | $ 476 |
COMMITMENTS, CONTINGENCIES AN36
COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS (Details 1) $ in Thousands | Jun. 30, 2016USD ($) |
2,016 | $ 3,721 |
2,017 | 239 |
2,018 | 239 |
2,019 | 2,336 |
Thereafter | |
Purchase Commitments [Member] | |
2,016 | 3,482 |
2,017 | |
2,018 | |
2,019 | |
Thereafter | |
Mortgage debt [Member] | |
2,016 | 239 |
2,017 | 239 |
2,018 | 239 |
2,019 | 2,336 |
Thereafter |
COMMITMENTS, CONTINGENCIES AN37
COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Rent expense | $ 82,280 | $ 52,925 |
Ten largest Customers [Member] | ||
Net revenues | 56.20% | 57.10% |
McKesson [Member] | ||
Net revenues | 16.50% | 17.70% |
NDC [Member] | ||
Net revenues | 9.60% | 13.20% |
RELATED PARTY TRANSACTION (Deta
RELATED PARTY TRANSACTION (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
AR Logic [Member] | ||
Consulting fees | $ 76,662 | $ 178,410 |
Mr. Tsitrinovich [Member] | ||
Consulting fees | $ 36,798 | $ 38,817 |
LONG TERM DEBT (Details Narrati
LONG TERM DEBT (Details Narrative) | Jun. 30, 2016 |
Long Term Debt Details Narrative | |
Interest rate | 3.965% |
GEOGRAPHIC AND PRODUCT LINE I40
GEOGRAPHIC AND PRODUCT LINE INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Sales by Domestic and International | $ 9,295 | $ 7,274 | $ 17,070 | $ 13,402 |
Domestic [Member] | ||||
Sales by Domestic and International | 7,757 | 6,312 | 14,364 | 11,537 |
International [Member] | ||||
Sales by Domestic and International | $ 1,538 | $ 962 | $ 2,706 | $ 1,865 |
GEOGRAPHIC AND PRODUCT LINE I41
GEOGRAPHIC AND PRODUCT LINE INFORMATION (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Sales by Operating Category | $ 9,295 | $ 7,274 | $ 17,070 | $ 13,402 |
Core [Member] | ||||
Sales by Operating Category | 6,881 | 6,407 | 13,359 | 11,932 |
OEM [Member] | ||||
Sales by Operating Category | 1,648 | 697 | 2,589 | 1,017 |
J-Plasma [Member] | ||||
Sales by Operating Category | $ 766 | $ 170 | $ 1,122 | $ 453 |
GEOGRAPHIC AND PRODUCT LINE I42
GEOGRAPHIC AND PRODUCT LINE INFORMATION (Details Narrative) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Geographic And Product Line Information Details Narrative | ||||
Percentage of International sales of sales | 16.60% | 13.20% | 15.90% | 13.90% |