Good afternoon and welcome to Bovie Medical Corporation's fourth quarter and full-year 2013 earnings call. Hosting today's call will be Rob Gershon, Chief Executive Officer of Bovie Medical Corporation. As a reminder, all participants will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. (Operator Instructions). For your information, today's conference is being recorded. Before we begin, I would like to make the following Safe Harbor statement. Today's call will relate to Bovie's fourth quarter and full-year 2013 earnings release and will contain forward-looking statements regarding predictions about future events. Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Important factors that may cause actual results to differ materially and could impact the company and the statements contained in this news release can be found in the company's filings with the Securities and Exchange Commission including the company's report on Form 10-K for the year ended December 31, 2013. The company assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise. I would now like to turn the conference call over to Mr. Rob Gershon. Sir, you may begin.

Thank you, operator, and thank you all for joining us for an update on Bovie Medical. I know many of you have been long time supporters of Bovie and others are new to the company. So we welcome you all to the call. I opened my presentation at our most recent board meeting saying that when I started in mid-December, I knew this opportunity would be great, but what I didn't realize at the time is just how exhilarating it is. Since I joined the company as CEO in mid-December, I think it would be most productive for me to spend the allotted time today talking about the future strategy, rather than going through the details of the 2013 financials. We filed our 10-K after the close: today. So you will have access to additional financial details, and our CFO, Gary Pickett is sitting next to me and will be available to help answer any financial question at the end of this call. Before we talk about our future strategies though, I have a couple of broad based comments on 2013. As you saw from the news release we issued after the close of the market today, our reported results included a number of special items, which we believed mask the stable, profitable performance of our core business. I won't spend too much time going into the details but I think it is important to note that our core medical device business which we define as sales of distributed, branded and private label products were $22.1 million in 2013, up from $21.8 million in 2012 and $20.4 million in 2011, representing average growth over those periods of 4.12%, in line with industry average for this sub-sector of the device market. Also, I am pleased to report that in the fourth…

The floor is now open for questions. (Operator Instructions). Our first question will come from Russell Cleveland of RENN Capital Group.

Hello, Rob, and first of all, welcome to Bovie from many, many shareholders. We are very excited about you and your team and what we can do with J-Plasma and other things. So welcome.

Thank you, Russell.

Two quick questions. The first one is, and you alluded to this, are we getting traction now as we speak in J-Plasma? The second question is a broad one and that is are we going to have an investor relations program to acquaint investors and others about the progress of the company? So those are my two questions.

Yes. Okay, thank you, Russell. Very fair and thoughtful question. The answer to the first in terms of gaining traction now, unequivocally we are. We are in the early stages of assembling the requisite essentials to build sustainable and long-term growth, and in doing that we are getting some early wins. So I mentioned that we have 10 accounts right now that are ordering immediately right to this day, and there are several more in the pipeline. In terms of going forward, from investor relations firm, we have a very important story to tell the industry and the marketplace about Bovie Medical and to do so effectively, we must partner with an investor relations firm. So I am taking this call right now from our investor relations partner and we will continue working with this organization on a go forward basis.

Good. Thank you.

The next question will come from Alison Peck of Peck Wealth Management.

Hello, and thank you for the very informative call. My question is, what is the size of the J-Plasma market for the initial target markets that you are considering such as GYN, plastic surgery and dermatology?

Yes, our estimate is that this market size for those three specialties GYN, plastics and dermatology, is about $1.55 billion in the United States alone.

And as far as competing technology, what can you say about that?

So there certainly are other competing technologies out there, you know, primarily the competing technology is the various CO2 laser companies. So that's the fairest comparison. This product also fits in unmet need of the marketplace. So some of the proprietary features of it doesn't exist in the marketplace today. So it meets an unmet need.

Okay, one last question. The breakeven revenue level in the core businesses you are anticipating?

So your question is what is the breakeven in the core business itself? Or is this related to J-Plasma?

J-Plasma. In the targeted areas, I should say.

In the targeted areas, so right now it's a little bit hard to say, because we are in the investment mode, in the early stages of commercialization. So I don't know if you have any additional --

Right. I understand. As far as the margins, do you have a sense that you can share with us regarding the margins on the J-Plasma relative to your core business?

Yes. So while we are not breaking down our margins in the business, what I can tell you is the J-Plasma margins relative to the core business are significantly higher. So the hierarchy of margins for us is -- I guess I will leave it at that. I am sorry. So absolutely significantly higher than our core business.

Good. Well, thank you very much.

(Operator Instructions). Our next question will come from Len Ruediger of Ruediger Trust Management.

Yes. Again, a good update. I have a question concerning revenue per operating room. If hospital gives approval, I understand that they will go into usually one or two operating rooms first. What would be the continuing revenue first of all for the generator, obviously the generator has to go in first, and then how many procedures per day or per week? What would you look at as revenue to Bovie for each system that goes in?

You are exactly right. Initially, the generator goes in. The revenue stream, really will come, this is very similar to other types of energy-based devices. The ongoing revenue comes from the disposable handpieces.

Right.

So those handpieces will be priced at about $325. That's the average selling price right now of the handpieces and a typical surgeon, and it really varies, will use handpiece per procedure, and perhaps will do as many as anywhere from two to six procedures a day that they operate. And the average GYN surgeon, for example, will operate about two to three days a week.

Thanks. So your revenue stream then, if you have kind of a general number for that, will there actually be revenue for the generator going in and then the add-on of the handpieces?

Yes. So there will be modest revenue from the generator going in and like most capital equipment purchases, we will have a few different ways that a customer can get the generator into the hospital. So in some cases they may buy it outright and if they do it will be a one-time cost. In other cases, for budgeting purposes, some of our customers prefer to pay on a per use basis. So in those cases that's how they do it. So we would put a per use premium on each handpiece that we sell, so that they would simply utilize the generator that way. Then we will also have a lease to own option. So lease to purchase option. So there are different ways of doing it. But the real revenue stream, make no mistake about it, comes from the disposable handpieces, not so much the generator.

So the razor blades are the key to your profitability. I guess my follow-up question would be, do you have any research firms that are currently writing research on Bovie? I have been very hard pressed to try to find any research other than things coming out of your own investor relations. Are there any like the RedChip Reporter or any of the regional firms like Raymond James or anybody like that, following the company?

Not at this time.

Okay. So you are virgin territory right now.

Right.

All right. Well, thank you very much.

Our next question today will come from Bill Bowerman [ph].

Hi, thanks for taking my call. I am really excited to hear what you have planned for Bovie. It's a really neat new role. And I am excited for that. So welcome aboard.

Thank you.

On the 12/24 sites that you are in end-of-year currently, are those production sites where the doctors are actually using procedures on the regular production or are they more test sites?

Yes. I am glad you asked that question. There are no test sites. Right now we are going full bore on commercialization. So no, these products are being used on patients, not in a test site forum.

Okay, great, and then the next question, I actually almost asked, I have two, and if you don't want to answer the last one that's fine.

Okay.

But direct sales model, I have always thought that it would be a better way than distributors, because it's hard to get distributors to push your product. Is that a reasonable model for a company of Bovie's size and do you feel that with the cash you have on the balance sheet today that you have enough to roll that out? And then, in the press release, you talked about innovative products in the pipeline. If there's new products, if you can talk about anything about that, I would appreciate it. Thanks.

Sure, absolutely. So this product, J-Plasma is absolutely worthy of a being in the hands of a direct sales force. For us, we are at the early stages of building a direct sales force. Being in the early stages, it is important to continue building momentum in the marketplace and to do so, we will continue utilizing the independent distributor reps. However, as I commented in the opening statement, we have done a critical review of these independent distributor reps and pruned them down from 48 to 28. And the 28 that remain are ones that focus on J-Plasma. This is their tip of the spear product, their A product in their bag, and that is very important. Now I also mentioned that we are putting together a world-class training, and we are taking all of these reps through this training. So we are making an investment, and with respect to, can we fund it? We can, and that is in large part, you know what the infusion of capital from great point is being earmarked for, which is the full commercialization of J-Plasma. With respect to the pipeline, there are a few J-Plasma related products that I will comment on. One is, we are getting ready to submit a 510K clearance on a new generator for J-Plasma. We are calling it at the moment, the hybrid. The hybrid actually combines the IDS-310 which is a newly 510 cleared generator, our top-of-the-line generator with the J-Plasma generator. So together in one box, we will have this new hybrid and it will be cleared, CE marked and so forth to sell worldwide. In addition to that, very important for J-Plasma, is developing a new ergonomically designed handpiece. We call it the pistol grip and it is simply a ask of our surgeon customers that will really, really resonate with the surgeons in a big way. So those are two guys that we are prepared to comment on today.

Okay, can I quickly follow-up on that hybrid? Do you mean that it will be both electrocautery and J-Plasma? Is that what you are talking about?

That is correct.

Okay, great. Thank you. And I will jump ahead.

Yes, that's it.

Okay, great. Well, thank you and any day I am looking forward to seeing what you are able to do this year.

Okay. Thank you.

(Operator Instructions). Our next question will come from John Sheehan [ph]. Mr. Sheehan, your line is live.

Thank you. I would like to ask two questions. The first question, sir, would be, last year you said our revenues were $22 million or so. I was wondering if you could give us a ball park figure for this current year? And my second question would be, I believe you said the market, worldwide market for J-Plasma is $1.5 billion. So what would be in a best scenario would be, how much of that could we capture ourselves, 10%, 5%, 20%? Thank you.

Okay. Thank you. With respect to revenue, at this time we are not giving guidance.

Okay.

So I won't comment on the revenue. The $1.55 billion is actually not a worldwide number, but that's a U.S. only.

Okay.

And that's our initial focus is U.S. and then certainly we are preparing ourselves for worldwide launch, but U.S. first. That's our priority. With respect to market share, it's hard to say at this time.

I know that. Yes.

What market we are going to capture. What we do know is this is a product that is worthy of a big commercial launch and we will see where it goes. It really meets a need in the marketplace and we expect it to grow quite significantly. It's just hard to say right now how significant that will be.

Okay, and the next question would be, how soon you think we would capture the Asian market and the European market or am I going to fast?

Yes. So right now our focus in commercialization is U.S.

Okay. Thank you.

Stay tuned for the oUS, outside U.S. markets.

Okay. Well, thank you so much.

Okay. Thank you.

The next question is from Clay Mahaffey of Venture Research.

Hi there. Very nice presentation and I am new to the company, but pretty interested in it.

Thank you.

You describe a lot of benefits for your product but could you briefly describe the problem with the current established mature products, say CO2 laser products that enjoy $1.5 billion in sales, I presume? And could you briefly describe the problem that you see with those existing products?

Right. So I think the best way to answer that is to talk about what J-Plasma can do that's different. So I will do it if you can indulge in a minute, I will do it with a clinical example. One of the most popular procedures, our biggest target area right now, is endometriosis. So for those of you familiar with this, there are lesions that exist on the uterus. The current modality for treatment, such as the CO2 laser is very effective and what it does is you simply take the lesions that you can see. So you see a lesion, you zap it and it's an effective treatment. One of the outcomes and it's generally accepted in the principles of GYN surgery is because of the high thermal heat you do end up breaking through a layer called the peritoneum and at times you can do incidental damage to the uterus. Now this is generally accepted. It is not that problematic. The difference with J-Plasma is it has very low thermal heat. So what that means is you are able to paint the uterus and go after lesions that you can see and lesions that you can't see very confidently without breaking through that thin layer called peritoneum. And that allows the surgeon to just do more than they would otherwise. So I hope that example provides a little bit of insight.

I mean is there a better outcome for the patient because of the use of your device rather than the CO2 device?

So there are clinical studies that are underway that will do a comparison. So instead of me commenting on that, I would suggest that we all stay tuned and that is our first paper comparing J-Plasma to other modalities. That is very, very close to being published.

Okay, good. You know, I have seen in other medical devices, the papers that work best come from doctors that have used the device.

Right.

Is that your plan? Or you are going to write these inhouse?

Our plan exclusively is to have these written by surgeons. None of them are being written by Bovie.

Practicing, right. Okay, very good.

Yes, they are all clinical papers that are based upon clinical experience written by the surgeons that have performed the procedures.

Thank you. Very good.

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Okay, thank you. Thank you all for your interest in Bovie Medical. We hope that our enthusiasm for the company and its products came through and we look forward to keeping you up-to-date on our continued progress.

Thank you. The conference has now concluded. We thank you for attending today's presentation. You may now disconnect.