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29 th Annual ROTH Conference March 2017

th Annual ROTH Conference - Bovie Medical€¦ · 2,038,000 97,000 1,947,038 695,171 GYN Procedures GYN Oncology Surgical Plas?cs Procedures Aesthe?c Plas?cs Procedures Total GYN/Oncology

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Page 1: th Annual ROTH Conference - Bovie Medical€¦ · 2,038,000 97,000 1,947,038 695,171 GYN Procedures GYN Oncology Surgical Plas?cs Procedures Aesthe?c Plas?cs Procedures Total GYN/Oncology

29thAnnualROTHConferenceMarch2017

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SafeHarborStatement

Certainma;ersdiscussedinthispresenta?onandoralstatementsmadefrom?meto?mebyrepresenta?vesoftheCompanymaycons?tuteforward-lookingstatementswithinthemeaningofthePrivateSecuri?esLi?ga?onReformActof1995andtheFederalsecuri?eslaws.AlthoughtheCompanybelievesthattheexpecta?onsreflectedinsuchforward-lookingstatementsarebaseduponreasonableassump?ons,itcangivenoassurancethatitsexpecta?onswillbeachieved.

Forward-lookinginforma?onissubjecttocertainrisks,trendsanduncertain?esthatcouldcauseactualresultstodiffermateriallyfromthoseprojected.ManyofthesefactorsarebeyondtheCompany’sabilitytocontrolorpredict.ImportantfactorsthatmaycauseactualresultstodiffermateriallyandthatcouldimpacttheCompanyandthestatementscontainedinthispresenta?oncanbefoundintheCompany’sfilingswiththeSecuri?esandExchangeCommissionincludingtheCompany’sReportonForm10-KforthequarterendedDecember31,2016.Forforward-lookingstatementsinthispresenta?on,theCompanyclaimstheprotec?onofthesafeharborforforward-lookingstatementscontainedinthePrivateSecuri?esLi?ga?onReformActof1995.TheCompanyassumesnoobliga?ontoupdateorsupplementanyforward-lookingstatementsasaresultofnewinforma?on,futureevents,orotherwise.

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3

CompanySnapshot

Core OEM

Advanced Energy

•  Privatelabelelectrosurgicalmanufacturing

•  Customers:Largemedical

technologycompanies

•  J-Plasma

•  PlazXact•  Futurenewproducts•  Directandchannelpartners

•  Electrosurgical•  Cauteries•  Ligh?ngSolu?ons•  Soldthroughdistribu?on

2016Revenue:$3.5M

2016Revenue:$27.8M 2016Revenue:$5.3M

CoreProductExamples OEMProductExamples

AdvancedEnergyProductExamples

•  Advancedenergy-basedmedicaldevicecompany•  Specializesindeveloping,manufacturingandmarke?ngofelectrosurgicalproducts

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ExperiencedManagementTeam

Execu=ve JoinedBovie Representa=vePreviousExperience

RobGershonChiefExecu+veOfficer December2013

JayEwersChiefFinancialOfficer June2014

ToddHornsbyVicePresidentofSales August2014

ShawnRomanVicePresidentofResearch&

DevelopmentOctober2014

4

RobSaronPresidentandDirector January1978

MosheCitronowiczSeniorVicePresident October1993

YearsofRelevantExperience

28Yrs.

34Yrs.

15+Yrs.

15Yrs.

35Yrs.

30Yrs. KCRTechnologies Sequen=alInforma=onSystems

JackMcCarthyChiefCommercializa+onOfficer March2014 28Yrs.

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InvestmentHighlights

5

GrowingCoreandOEMBusinessesinElectrosurgerywithGlobalFootprint

Transforma?onalJ-Plasma®SurgicalProductTarge?ngLargeandGrowingMarkets

RobustR&DPipeline

StrongDirectSalesforceandChannelPartnersforAdvancedEnergySegment

HighlyExperiencedManagementTeam

HighGrowth(+24%in2016)andExpandingGrossMargin(up640bpin2016)

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StrongMomentuminCoreBusiness

•  Boviehasuniquebrandposi?onwithglobalnamerecogni?on

•  Long-standingrela?onshipswith“Big7”distributors•  Newproduct&privatelabellaunchesdriveincrementalgrowth

•  Ac?velytarge?ngnewmarketopportuni?es(e.g.,animalhealth)

•  Predictablerevenuegenerator

6

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7

AdvancingOEMBusiness

•  InboundOEMrequestsfromindustry’stopmanufacturers

•  Staggeredcustomercontractstosmoothrevenueinflows

•  Benefitsfromjointdevelopmentac?vi?es

•  Designanddevelopspecstoaddresspartners’innova?ons

•  Producefinishedproducts

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2,038,000

97,000

1,947,038

695,171GYNProcedures

GYNOncology

SurgicalPlas?csProcedures

Aesthe?cPlas?csProceduresTotalGYN/Oncologymarket:$43m

Futuresurgicalspecial?es:-Thoracic-Urology-Cardiac

Sources:CDC,NIH,APGO,ASPS,ASAPS,AHA,ASPS*Assumes$375ASPfordisposablehandpiece,and$25,000ASPperJ-Plasmagenerator 8

-SurgicalOncology

Ini=alTargetedSpecial=es>$2BillionTAM*--U.S.Only

SignificantMarketGrowthOpportuni?es

J-Plasma PlazXact

1,414,900

190,600

27,60022,700

1,257,600

Knee Shoulder Elbow Ankle

FuturePoten=alMarketApplica=on

Arthroplas=cProceduresfor:

U.S.andEUOrthopedicArthroplastyProcedureVolumes

Sources:MeddevicetrackerreportdatedAugust2016Note:2016Eprocedurevolumes

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•  Revolu?onarytechnologyionizesheliumtocreatestreamofplasma•  Precisecuqng,coagula?onandabla?onwithlimitedthermalspread

-  Stable,thin,focusedstreamofionizedheliumgas-  Widerangeofcontrol-  Noconduc?vecurrentsthroughthepa?entduringsurgery

•  Allowssurgeonstosafelyperformproceduresonorarounddelicatestructuressuchas:

-FallopianTubes -Ureters -Bowel

-Esophagus -Ovaries-LymphNodes

•  Protectedby38patents:

-  15USand5foreignissued

-  14USand6foreignpending

RecognizedasanInnova?onoftheYearby

TheSocietyofLaparoendoscopic

Surgeons(SLS)3YearsinaRow

9

J-Plasma®:Transforma?onalProduct

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J-Plasma®EnergyStreamforLimitedThermalDamage*

•  Clinicalstudycomparedlevelsofunintendedthermaldamagetoperitoneal?ssue(membraneliningtheabdominalcavity)amongotherenergy-basedsurgicaltoolsvsJ-Plasma®

•  Redareasrepresentthe

depthofthermalorenergydamageeachtoollesbelowthe?ssuesurface;blueareasrepresentunaffected?ssue

•  J-Plasma®demonstratedfar

lowestamountofcollateralthermalinjurytohealthy?ssuesurroundingtheopera?vesite

*Reference:PedrosoJ,Gu?errezM,VolkerW.J-Plasma,monopolarpencil,argonbeamandCO2laserelectrosurgery:compara?veevalua?onofthermalspreadinaporcine?ssuemodel(whitepaper).BovieMedicalCorpora?on.June2014 10

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J-Plasma®Demonstra=onVideo

11

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J-Plasma®:Compe==veAdvantages

Compara?veCaseStudy:J-Plasma®inEndometriosis600,000proceduresperyearinUS

KeyDifferences CO2Laser J-Plasma®Trea=ngpoten=allesions Treatsvisiblelesionsonly

Treatsvisibleandpoten?allesions

Tac=lefeedback Notac?lecuqngfeedbackormaneuverability

Directtac?lecuqngfeedbackandmaneuverability

Controlofenergy Requireslasersafetybackstop

Controlledenergy:streamdistancelimitedtosurgicalsite

ORrequirements Mul?plespecializedORrequirements(privileges,goggles,

techs,wetdrapes,etc.)

Noaddi?onalORresourcesrequired

Price Es?matedCapitalASP:$100,000+

Es?mateddisposablehandpieceASP:$425+

Es?matedCapitalASP:$25,000

Es?mateddisposablehandpieceASP:$375

12

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ArthroscopicAblator

•  Sterile,single-usedeviceforcuqng,coagula?ngandabla?onofsos?ssue•  Orthopedicsportsmedicinefocus•  Efficient?pdesigntranslatesintothefollowingadvantages:

–  Lowpowerrequirementtoini?ateabla?on–  Lowerpower=lowerheat=saferforthepa?ent–  Compa?blewithanygenerator

•  FDAclearanceAugust2016

PlazXact™

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CurrentGrowthChannelPartners

•  Privatelyheldmedicaldevicecompanywithdeepexperience,exper?seandrela?onshipsintheplas?csurgery/aesthe?csspace

•  Non-exclusive4yearAgreementsignedJune30,2016

Plas=cSurgery/Aesthe=cs:J-Plasma®

•  Medicaltechcompanyprovidessurgicaldevicesandequipmentforminimallyinvasiveprocedures;directsellingpresencein17countries

•  GlobalsaleschannelpartnershipagreementsignedforBVX’sPlazXact™Ablator,tobemarketedastheUltrAblatorBipolar®seriesstar?ngMarch2017

Minimallyinvasive&orthopedicsurgery:PlazXact™

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15

ClinicalResearchPipelineforJ-Plasma

LymphoceleReduc?on

PediatricHeartSurgery

DermalResurfacing

GYNOncology

VulvarDysplasia

ChronicWoundReduc?on

GeneralSurgeryOncology

Studies in Progress Planned Studies

Es=matedTimingCategory

2017

2017

2017–2018

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Targe?ngNewSpecial?es:MedicalAdvisoryBoard

•  Comprisedofsurgeonthought-leaderstoadviseonadvancedenergyproductlaunchesincludingJ-Plasma®applica?onforspecialtyprocedures

•  Ini?altargetspecial?esincluding:urology,cardiacandthoracic.Progressinrobo?cs

•  Expecttohave6-9surgeonmembers

16

Dr.HusamBalkhy,Director,MinimallyInvasive&RobotCardiacSurgery,DuhossoisCenterforAdvancedMedicine

Dr.RobertJ.Cerfolio,Sec?onChief,ThoracicSurgeryUniversityofAlabamaHospital

Foundingmember:Dr.VipulPatel,worldrenownedrobo?csurgeon,MedicalDirectorofGlobalRobo?csIns?tute,Florida

Dr.CraigMcCoy,Women’sWellnessCenter,ColumbiaMO.Obstetrics&GynecologySpecialist

Dr.DennisChi,DeputyChiefandHeadofOvarianCancerSurgery,GynecologyServiceatMemorialSloanKe;eringCancerCenter

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•  DevelopingadvancedenergyproductstocomplementJ-Plasma®andPlazXact™andboostgrowthincorebusiness

•  Cadenceofproductlaunches

J-PlasmaPrecise360™

BovieUl=mate®

IDS-310™

DERM101™DERM102™

17

PlazXact™Ablator

World-ClassR&DCapabilityasGrowthCatalyst

J-PlasmaPrecise

•  NewAdvancedEnergyproducts

•  SelectnewCoreproducts•  FDAclearancesfornewindica?ons

•  J-Plasmalineextensions

2014 2015 2016 2017

J-PlasmaFlexibleRobo=cHP

J-PlasmaOpenHPRedesign

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18

State-of-the-ArtManufacturingFootprint

Clearwater,FL Sofia,Bulgaria China

Size 60,000sq.s. 16,000sq.s. •  70,000sq.s.

Owned/Contracted

Owned Owned Contracted

Capabili?es

•  Assembly•  Integra?on•  FinalTes?ng•  Packaging•  Steriliza?onManagement

•  Manufacturing•  ComplexComponent

Assembly•  Ini?alTes?ng

•  ComponentManufacturing•  Sub-Assemblies•  FinishedMedicalDevices

(Electrodes)

Thecompanyalsorentsofficespaceof3,650sq.G.inPurchase,NY

Capacitytoincreaseoutputfromexis2ngfacili2es

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StrongFinancialPerformance

•  24%revenuegrowthforFY2016–drivenbyJ-Plasma•  850basispointgrossmarginimprovementin4Q16

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20

HistoricalFinancials

($in000's)2015 2016 2015 2016

Revenue $8,295 $9,494 $29,520 $36,627RevenueGrowth 11.1% 14.5% 6.6% 24.1%

CostofGoodsSold 4,781 4,664 16,963 18,712

GrossProfit $3,514 $4,830 $12,557 $17,915GrossMargin 42.4% 50.9% 42.5% 48.9%

OperatingExpenses 4,867 5,874 19,543 21,707

LossfromOperations ($1,353) ($1,044) ($6,986) ($3,792)

CashonhandasofDecember31,2016 $14,456

Q4 FY

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ExpectedShisinBusinessMix

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FinancialAppendix

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FinancialPosi=on:Assets

*Allfiguresinthousands

23

December 31, 2016 December 31, 2015

ASSETS

Current assets:

Cash and cash equivalents $ 14,456 $ 11,805

Restricted cash 779 839

Trade accounts receivable, net 4,733 2,925

Inventories, net 6,158 5,957

Prepaid expenses and other current assets 413 516

Total current assets 26,539 22,042

Property and equipment, net 6,449 6,810

Brand name and trademark 1,510 1,510

Purchased technology and license rights, net 215 323

Goodwill 185 185

Deposits 109 123

Deferred tax asset — 25

Other assets 103 430

Total assets $ 35,110 $ 31,448

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FinancialPosi=on:Liabili=esandStockholders’Equity

24

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:

Accounts payable $ 1,606 $ 1,214Accrued payrollAccrued vacationCurrent portion of mortgage note payableAccrued and other liabilities

Total current liabilitiesMortgage note payable, net of current portionNote payableDeferred rentsDeferred tax liabilityDerivative liabilities

Total liabilitiesEQUITY

Series A 6% convertible preferred stock, par value $0.001; 3,500,000 shares authorized, zero issued and outstanding as of December 31, 2016 and December 31, 2015STOCKHOLDERS' EQUITY

Series B convertible preferred stock, $0.001 par value; 3,588,139 authorized and 975,639 issued and outstanding as of December 31, 2016 and 3,588,139 authorized and 1,975,639 issued and outstanding as of December 31, 2015, respectively

Common stock, $0.001 par value; 40,000,000 shares authorized; 31,002,832 issued and 30,859,753 outstanding as of December 31, 2016 and 27,194,251 issued and 27,051,172 outstanding as of December 31, 2015, respectivelyAdditional paid-in capitalAccumulated deficit

Total stockholders' equityTotal liabilities and stockholders' equity $ 35,110 $ 31,448

1 2

— —

26,223 23,404

31 27

49,625 42,859 (23,434) (19,484)

5,272 4,121

8,887 8,044

2,694 2,934140 14014 18

564 564203 267

404 228239 239

2,604 2,119

419 321

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IncomeStatement

25

2016 2015 2016 2015Sales $ 9,494 $ 8,295 $ 36,627 $ 29,520 Cost of sales 4,664 4,781 18,712 16,963 Gross profit 4,830 3,514 17,915 12,557 Other costs and expenses:Research and development 676 626 2,618 2,160 Professional services 441 413 1,486 1,484 Salaries and related costs 2,546 1,733 9,038 7,482 Selling, general and administrative 2,211 2,095 8,565 8,417 Total other costs and expenses 5,874 4,867 21,707 19,543 Loss from operations (1,044) (1,353) (3,792) (6,986)Interest expense, net (35) (40) (158) (158)Change in fair value of derivative liabilities, net 620 — 64 1,799 Total other (expense) income, net 585 (40) (94) 1,641 Loss before income taxes (459) (1,393) (3,886) (5,345)Income tax expense 64 17 64 25 Net loss $ (523) $ (1,410) $ (3,950) $ (5,370)Accretion on convertible preferred stock — — — (222)Gain on conversion of warrants and preferred shares, net — — — 13,956 Net (loss) income attributable to common shareholders (523) (1,410) (3,950) 8,364

(Loss) income per share attributable to common shareholdersBasic $ (0.02) $ (0.05) $ (0.14) $ 0.34 Diluted $ (0.04) $ (0.05) $ (0.15) $ 0.24

Weighted average number of shares outstanding - basic 28,574 27,051 27,433 24,333 Weighted average number of shares outstanding - dilutive 28,618 27,051 27,449 27,747

Year Ended December 31,Three Months Ended December 31,

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Reconcilia=onBetweenGAAPandNon-GAAP

26

2016 2015 2016 2015Net loss GAAP Basis $ (523) $ (1,410) $ (3,950) $ (5,370)Accretion on convertible preferred stock — — — (222)Gain on conversion of warrants and Series A convertible preferred to Series B convertible preferred stock — — — 13,956

Net (loss) income attributable to common shareholders $ (523) $ (1,410) $ (3,950) $ 8,364 Net (loss) income per share - basic (GAAP basis) $ (0.02) $ (0.05) $ (0.14) $ 0.34

Other non-GAAP adjustments:(Gain) loss on change in fair value of derivative liabilities $ (620) $ 1 $ (64) $ (1,799)Accretion on convertible preferred shares — — — 222 Gain on conversion of warrants and Series A convertible preferred to Series B convertible preferred stock — — — (13,956)

Adjusted non-GAAP net loss $ (1,143) $ (1,409) $ (4,014) $ (7,169)

Income/(loss) per share - basic on: $ (0.02) — — $ (0.07)Other administrative expenses — — — $ 0.01 Gain on conversion of warrants and Series A convertible preferred to Series B convertible preferred stock — — — $ (0.57)

Adjusted non-GAAP net (loss) per share -basic $ (0.04) $ (0.05) $ (0.14) $ (0.29)Adjusted non-GAAP net (loss) per share -diluted $ (0.04) $ (0.05) $ (0.15) $ (0.26)

Weighted average number of shares outstanding - basic 28,574 27,051 27,433 24,333 Weighted average number of shares outstanding - diluted 28,618 27,051 27,449 27,747

Three Months Ended December 31, Year Ended December 31,(Unaudited)(Inthousands,exceptpersharedata)

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J-Plasma®US-OnlyMarket

Sources:CDC,NIH,APGO,ASPS,ASAPS,AHA*(5,000hospitals)27

GYNMarketProcedures #ofAnnualProcedures ASP

Endometriosis 600,000 $375 $225,000,000

Adhesiolysis 300,000 $375 $112,500,000

Myomectomy 65,000 $375 $24,375,000

Condylomas 360,000 $375 $135,000,000

Cesarean(Repeat) 280,000 $375 $105,000,000

Hysterectomy 433,000 $375 $162,000,000TotalGYNProcedures 2,038,000 $375 $764,250,000

Capital* 5,000 $25,000 $125,000,000TotalGYNAvailableMarket $889,250,000

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J-Plasma®US-OnlyMarket

Sources:CDC,NIH,APGO,ASPS,ASAPS,AHA*(5,000hospitals) 28

Plas?cMarketProcedureType #ofAnnualProcedures ASP

SurgicalPlas?csProcedures 1,947,038 $375 $730,139,250Aesthe?csPlas?csProcedures 695,171 $375 $260,689,125

TotalPlas?csProcedures 2,642,209 $375 $990,828,375

Capital* 5,000 $25,000 125,000,000TotalPlas?cAvailableMarket $1,115,828,375

GYNONCMarket

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J-Plasma®US-OnlyMarket

Sources:CDC,NIH,APGO,ASPS,ASAPS,AHA*(5,000hospitals) 29

TotalAvailableMarket