UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (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, 2005. OR o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
  THE SECURITIES EXCHANGE ACT OF 1934 For the
transition period from ___________ to ____________. Commission file number:  000-22673 SCHICK TECHNOLOGIES, INC.(Exact name of registrant as specified in its charter)  Delaware
  
  11-3374812(State or other jurisdiction of
  
  (I.R.S. Employerincorporation or organization)
  
  Identification Number)30-00 47th Avenue
  
  11101Long Island City, New York(Zip Code)(Address of principal executive offices) Registrants telephone number, including area
code:  (718) 937-5765 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   
o Indicate
by check mark whether the registrant is an accelerated filer (as defined in
Rule 12b-2 of the Exchange Act). Yes   x          No   
o As
of August 4, 2005, 16,052,623 shares of common stock, par value $.01 per share,
were outstanding.    SCHICK TECHNOLOGIES, INC.

TABLE OF CONTENTS

PART
  I.
  Financial
  InformationItem
  1.
  Financial
  StatementsConsolidated
  Balance Sheets as of June 30, 2005 (unaudited) and March 31, 2005
  Page 1Consolidated
  Statements of Income for the three months ended June 30, 2005 and 2004
  (unaudited)
  Page 2Consolidated
  Statements of Stockholders Equity as of June 30, 2005 and 2004 (unaudited)
  Page 3Consolidated
  Statements of Cash Flows for the three months ended June 30, 2005 and 2004
  (unaudited)
  Page 4Notes
  to Consolidated Financial Statements (unaudited)
  Page 5Item
  2.
  Managements
  Discussion and Analysis of Financial Condition and Results of Operations
  Page 8Item
  3.
  Quantitative
  and Qualitative Disclosures About Market Risk
  Page 12Item
  4.
  Controls
  and Procedures
  Page 12PART
  II.
  OTHER
  INFORMATION
  Page 12Item
  1.
  Legal
  Proceedings
  Page 12Item
  2.
  Unregistered Sales of Equity
  Securities and Use of Proceeds
  Page 13Item
  3.
  Defaults
  Upon Senior Securities
  Page 13Item
  4.
  Submission
  of Matters to a Vote of Security Holders
  Page 13Item
  5.
  Other
  Information
  Page 13Item
  6.
  Exhibits
  Page 13SIGNATURES
  Page 14CERTIFICATIONSPART I.
  Financial InformationItem 1.
  Financial StatementsSchick Technologies, Inc. and Subsidiary
Consolidated Balance Sheets 
(In thousands, except share amounts)



June
30,
  
  March
31,2005(unaudited)AssetsCurrent
  assetsCash and cash equivalents
  
  $
  45,249
  
  $
  39,725Accounts receivable, net of allowance for
  doubtful accounts of $57
  
  
  6,072
  
  
  5,663Inventories
  
  
  3,785
  
  
  3,545Prepayments and other current assets
  
  
  558
  
  
  780Deferred income taxes
  
  
  5,084
  
  
  5,681Total current assets
  
  
  60,748
  
  
  55,394Equipment,
  net
  
  
  1,330
  
  
  1,317Goodwill
  
  
  266
  
  
  266Deferred
  income taxes
  
  
  284
  
  
  270Other assets
  
  
  292
  
  
  287Total assets
  
  $
  62,920
  
  $
  57,534Liabilities and Stockholders EquityCurrent
  liabilitiesAccounts payable and accrued expenses
  
  $
  2,347
  
  $
  1,903Accrued salaries and commissions
  
  
  1,030
  
  
  1,590Income taxes payable
  
  
  1,561
  
  
  Deposits from customers
  
  
  26
  
  
  30Warranty obligations
  
  
  507
  
  
  446Deferred revenue
  
  
  4,239
  
  
  4,316Total current liabilities
  
  
  9,710
  
  
  8,285Commitments
  and contingencies
  
  
  
  
  
  Stockholders
  equityPreferred stock ($0.01 par value; 2,500,000
  shares authorized; none issued and outstanding)
  
  
  
  
  
  Common stock ($0.01 par value; 50,000,000
  shares authorized:16,046,394 and 16,034,230 shares issued and outstanding,
  respectively)
  
  
  160
  
  
  160Additional paid-in capital
  
  
  47,094
  
  
  46,765Retained Earnings
  
  
  5,956
  
  
  2,324Total stockholders equity
  
  
  53,210
  
  
  49,249Total liabilities and stockholders
equity
  
  $
  62,920
  
  $
  57,534The accompanying notes are an integral part of these
consolidated financial statements

1


Schick Technologies, Inc. and Subsidiary
Consolidated Statements of Income (unaudited)
(In thousands, except share and per share amounts)

Three
  months ended
  June 30,2005
  
  2004Revenue, net
  
  $
  15,683
  
  $
  10,881Cost of sales
  
  
  4,699
  
  
  3,209Gross profit
  
  
  10,984
  
  
  7,672Operating
  expenses:Selling and marketing
  
  
  2,326
  
  
  1,456General and administrative
  
  
  1,815
  
  
  1,985Research and development
  
  
  1,125
  
  
  1,112Total operating costs
  
  
  5,266
  
  
  4,553Income from operations
  
  
  5,718
  
  
  3,119Other incomeInterest income
  
  
  251
  
  
  93Total other income (expense)
  
  
  251
  
  
  93Income before income taxes
  
  
  5,969
  
  
  3,212Provision for income taxes
  
  
  2,337
  
  
  1,413Net income
  
  $
  3,632
  
  $
  1,799Basic earnings per share
  
  $
  0.23
  
  $
  0.12Diluted earnings per share
  
  $
  0.21
  
  $
  0.10Weighted average common shares (basic)
  
  
  16,035,862
  
  
  15,027,703Weighted average common shares
(diluted)
  
  
  17,701,617
  
  
  17,209,736The
  accompanying notes are an integral part of these consolidated financial
  statements2


Schick Technologies, Inc. and Subsidiary 
Consolidated Statements of Changes in Stockholders Equity (unaudited)
(In thousands, except share amounts)

Common Stock
  
  Additional
  Paid -in
  Capital
  
  Retained
  Earnings
  
  Total
  Stockholders
  EquityShares
  
  AmountBalance at March 31, 2004
  
  
  15,026,470
  
  $
  150
  
  $
  44,626
  
  $
  (9,748
  )
  $
  35,028Issuance of common stock
  
  
  19,924
  
  
  
  
  
  37
  
  
  
  
  
  37Tax benefit of stock options
  exercised
  
  
  
  
  
  
  
  
  26
  
  
  
  
  
  26Non cash compensation
  
  
  
  
  
  
  
  
  307
  
  
  
  
  
  307Net income
  
  
  
  
  
  
  
  
  
  
  
  1,799
  
  
  1,799Balance at June 30, 2004
  
  
  15,046,394
  
  $
  150
  
  $
  44,996
  
  $
  (7,949
  )
  $
  37,197Balance at March 31, 2005
  
  
  16,034,230
  
  $
  160
  
  $
  46,765
  
  $
  2,324
  
  $
  49,249Issuance of common stock
  
  
  13,387
  
  
  
  
  
  38
  
  
  
  
  
  38Tax benefit of stock options
  exercised
  
  
  
  
  
  
  
  
  94
  
  
  
  
  
  94Non cash compensation
  
  
  
  
  
  
  
  
  197
  
  
  
  
  
  197Net income
  
  
  
  
  
  
  
  
  
  
  
  3,632
  
  
  3,632Balance at June 30, 2005
  
  
  16,047,617
  
  $
  160
  
  $
  47,094
  
  $
  5,956
  
  $
  53,210The
  accompanying notes are an integral part of these consolidated financial
  statements3


Schick Technologies, Inc. and Subsidiary
Consolidated Statements of Cash Flows (unaudited)
(In thousands)

Three
  months ended 
  June 30,2005
  
  2004Cash flows
  from operating activitiesNet income
  
  $
  3,632
  
  $
  1,799Adjustments to reconcile net income to net
  cash provided by operating activitiesDeferred taxes
  
  
  583
  
  
  1,173Tax benefit of stock options exercised
  
  
  94
  
  
  26Depreciation and amortization
  
  
  145
  
  
  169Provision for excess and obsolete
inventory
  
  
  138
  
  
  Non-cash compensation
  
  
  197
  
  
  307Changes in assets and liabilities:Accounts receivable
  
  
  (409
  )
  
  1,260Inventories
  
  
  (378
  )
  
  (108
  )Prepayments and other current assets
  
  
  211
  
  
  320Other assets
  
  
  (12
  )
  
  (6
  )Accounts payable and accrued expenses
  
  
  (116
  )
  
  (518
  )Income taxes payable
  
  
  1,561
  
  
  24Deposits from customers
  
  
  (4
  )
  
  11Warranty obligations
  
  
  61
  
  
  60Deferred revenue
  
  
  (77
  )
  
  (661
  )Net cash provided by operating activities
  
  
  5,626
  
  
  3,856Cash flows
  from investing activitiesCapital expenditures
  
  
  (151
  )
  
  (98
  )Net cash used in investing activities
  
  
  (151
  )
  
  (98
  )Cash flows
  from financing activitiesNet proceeds from issuance of common
stock
  
  
  49
  
  
  26Net cash provided by financing activities
  
  
  49
  
  
  26Net increase
  in cash and cash equivalents
  
  
  5,524
  
  
  3,784Cash and
  cash equivalents at beginning of period
  
  
  39,725
  
  
  20,734Cash and
  cash equivalents at end of period
  
  $
  45,249
  
  $
  24,518Interest
  paid
  
  $
  
  
  $
  Income taxes
  paid
  
  $
  50
  
  $
  150The
  accompanying notes are an integral part of these consolidated financial
  statements4


Schick Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements (unaudited)
(in thousands, except share and per share amounts)

1.       Basis
of Presentation

The
consolidated financial statements of Schick Technologies, Inc. (the Company)
have been prepared in accordance with accounting principles generally accepted
in the United States of America (US GAAP) for interim financial information
and the rules of the Securities and Exchange Commission (the SEC) for
quarterly reports on Form 10-Q, and do not include all of the information and
footnote disclosures required by US GAAP for complete financial statements.
These statements should be read in conjunction with the audited consolidated
financial statements and notes thereto for the year ended March 31, 2005
included in the Companys Annual Report on Form 10-K.

In
the opinion of management, the accompanying unaudited consolidated financial
statements include all adjustments (consisting of normal, recurring adjustments)
necessary for a fair presentation of results of operations for the interim
periods. The results of operations for the three months ended June 30, 2005 are
not necessarily indicative of the results to be expected for the full year
ending March 31, 2006.

The
consolidated financial statements of the Company, at June 30, 2005, include the
accounts of the Company and its wholly owned subsidiary. All significant
intercompany balances have been eliminated.

Stock-based compensation

At
June 30, 2005, the Company has stock-based compensation plans. As permitted by
SFAS No. 123, Accounting for Stock-Based Compensation, the Company accounts
for stock-based compensation arrangements with employees under the recognition
and measurement principles of APB Opinion No. 25, Accounting for Stock Issued
to Employees, and related interpretations. No stock-based employee
compensation cost is reflected in net income, as all options granted under
those plans had an exercise price equal to the market value of the underlying
common stock on the date of grant. The following table illustrates the effect
on net income and earnings per share if the Company had applied the fair value
recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation,
to stock-based employee compensation.

Three
  months ended June 30,2005
  
  2004Net income,
  as reported
  
  $
  3,632
  
  $
  1,799Deduct: Total stock-based employee
  compensation expense determined under fair value based method for all awards,
  net of related tax effects
  
  
  244
  
  
  175Proforma net
  income
  
  $
  3,388
  
  $
  1,624Earnings per
share:Basic - as
reported
  
  $
  0.23
  
  $
  0.12Basic 
proforma
  
  $
  0.21
  
  $
  0.11Diluted - as
reported
  
  $
  0.21
  
  $
  0.10Diluted 
proforma
  
  $
  0. 19
  
  $
  0.09Recently
Issued Accounting Standards

Accounting Changes and Error Corrections

In
May 2005, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 154, Accounting Changes and Error
Corrections (a replacement of APB Opinion No. 20 and FASB Statement No. 3).
SFAS No. 154 requires that changes in accounting principles be given retrospective
application to prior periods financial statements. Previously most changes in
accounting principle were recognized by

5


including in
net income of the period of the change the cumulative effect of the change.
SFAS No. 154 is effective for fiscal years beginning after December 15, 2005.
The Company is evaluating the effect of SFAS No. 154 but believes there will
not be any material effect on the financial statements.

Stock-Based Compensation

In
December 2004 the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 123 (revised 2004) (FAS 123R), Share-Based Payment. The
statement supersedes APB Opinion No. 25, Accounting for Stock Issued to
Employees and establishes fair-value-based measurement in accounting for
share-based payment transactions with employees. FAS 123R is effective for
public companies for years beginning after December 31, 2005. The Company is
currently evaluating the effect of FAS 123R on its consolidated financial
position, results of operations and cash flows.

2.       Inventories

Inventories,
net of reserves, are comprised of the following:

June 30,
  
  March 31,2005Raw
  materials
  
  $
  2,280
  
  $
  2,171Work-in-process
  
  
  311
  
  
  218Finished
  goods
  
  
  1,194
  
  
  1,156Total
  inventories
  
  $
  3,785
  
  $
  3,5453.       Earnings
Per Share

Basic
earnings per share are calculated by dividing net income by the average number
of common shares outstanding during the period. Diluted earnings per share are
calculated by dividing net income by the average number of common shares
outstanding assuming dilution, the calculation of which assumes that all stock
options and warrants whose exercise prices are less than the average market
price during the quarter are exercised at the beginning of the period and the
proceeds used by Schick Technologies, Inc. to purchase shares at the average
market price for the period. The following is the reconciliation from basic to
diluted shares for the three months ended June 30, 2005 and 2004:

Three
  months ended June 30,2005
  
  2004Basic shares
  
  
  16,035,862
  
  
  15,027,703Dilutive:Options
  
  
  1,572,170
  
  
  1,392,634Warrants
  
  
  93,585
  
  
  789,399Diluted
  shares
  
  
  17,701,617
  
  
  17,209,736The
Company excluded 76,425 and 133,239 options from the computation of diluted
earnings per share for the three months ended June 30, 2005 and 2004,
respectively, because they are anti-dilutive.

4.       Contingencies,
Commitments and Other

Product Liability

The
Company is subject to the risk of product liability and other liability claims
in the event that the use of its products results in personal injury or other
claims. Although the Company has not experienced any product liability claims
to date, any such claims could have an adverse impact on the Company. The
Company maintains

6


insurance
coverage related to product liability claims, but there can be no assurance
that product or other claims will not exceed its insurance coverage limits, or
that such insurance will continue to be available on commercially acceptable
terms, or at all.

SEC Investigation

In
June 2005, the Securities and Exchange Commission (SEC) civil action, against
the Company, its former chief executive officer, and its former vice president
of sales and marketing, which has previously been reported by the Company, was
settled against all defendants. On June 20, 2005, final judgment was entered by
the court reflecting the terms of the parties settlement, and the SEC action
was dismissed. Under the terms of the settlement, the Company neither admitted
nor denied the allegations contained in the SEC Complaint and consented to the
entry of an order permanently enjoining it from violating the books and
records, periodic reporting and internal control provisions contained in
Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of
1934 and Rules 12b-20, 13a-1 and 13a-13 promulgated thereunder. The settlement
agreement did not require any monetary payment by the Company. The Company
believes that it will not incur any further legal fees or indemnification costs
in connection with this matter.

The
following is a summary of the events leading up to the settlement of the SEC
action:

In
August 1999, the Company, through its outside counsel, contacted the Division
of Enforcement of the SEC to advise it of certain matters related to the
Companys restatement of earnings for interim periods of fiscal 1999. The SEC
subsequently conducted an investigation of the Company and certain individuals,
including current and former officers and employees of the Company, pursuant to
a Formal Order of Investigation. The Company cooperated with the SEC staff
throughout the course of the investigation.

On
November 14, 2003, the SEC filed a civil action in the United States District
Court for the Eastern District of New York against the Company, its former
chief executive officer, and its former vice president of sales &
marketing. The SEC complaint alleged fraud, and books and records and reporting
violations under Sections 10(b), 13(a) and 13(b)(2) of the Securities Exchange
Act and various rules promulgated thereunder in connection with the financial
statements included in the Companys reports on Form 10-Q for the quarters
ended June 30, September 30 and December 31, 1998. The SEC complaint sought to
enjoin the Company from future violations of those provisions of the Exchange
Act and the rules thereunder, as well as disgorgement of any allegedly
ill-gotten gains. With respect to the other defendants, the complaint sought
injunctive relief, civil penalties, disgorgement and an officer/director bar.
In June 2005, this action was settled, as described above.

Litigation

The
Company is named as a party in other legal proceedings which are not described
herein because they are not material. In addition, the Company could become a
party to a variety of legal actions, such as employment and employment
discrimination-related suits, employee benefit claims, breach of contract
actions, tort claims and intellectual property related litigation. In addition,
because of the nature of its business, the Company is subject to a variety of
legal actions relating to its business operations. Recent court decisions and
legislative activity may increase the Companys exposure for any of these types
of claims. In some cases, substantial punitive damages may be sought. The
Company currently has insurance coverage for some of these potential
liabilities. Other potential liabilities may not be covered by insurance,
insurers may dispute coverage, or the amount of insurance may not be sufficient
to cover the damages awarded. In addition, certain types of damages, such as
punitive damages, may not be covered by insurance and insurance coverage for
all or certain forms of liability may become unavailable or prohibitively
expensive in the future.

Other

Sales
to a single customer approximated 66% and 55% of net revenue for the three
months ended June 30, 2005 and 2004, respectively. Amounts due from that
customer approximated 52% and 49% of net accounts receivable at June 30, 2005
and March 31, 2005, respectively, substantially all of which have been
collected subsequent to those dates.

7


5.       Income
Taxes

Income
tax expense for the three months ended June 30, 2005 and 2004 are summarized as
follows:




June 30,2005
  
  2004Current taxes
  
  $
  1,754
  
  $
  212Deferred taxes
  
  
  583
  
  
  1,201Total tax expense
  
  $
  2,337
  
  $
  1,413Item 2.
  Managements
  Discussion and Analysis of Financial Condition and Results of OperationsThis
Quarterly Report on Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Exchange Act. The words or phrases believes, may, should,
will likely result, estimates, projects, anticipates,
expects or
similar expressions and variations thereof are intended to identify such
forward-looking statements. Actual results, events and circumstances could
differ materially from those set forth in such statements due to various
factors. Such factors include risks and uncertainties relating to the Companys
dependence on its products, its exclusive North American distributor, its
foreign distributors, its key personnel and key suppliers; the possibility of
changing economic and competitive conditions; technological developments;
competition; market uncertainties; fluctuation in results and seasonality;
litigation; control of the Company by certain stockholders; and other risks and
uncertainties, including those detailed in the Companys filings with the
Securities and Exchange Commission.

General

The
Company designs, develops and manufactures digital imaging systems for the
worldwide dental and medical markets. In the field of dentistry, the Company
currently manufactures and markets a variety of digital imaging products
including an intra-oral digital radiography system (CDR® and CDR Wireless), a
digital panoramic radiography sensor (CDRPan®) and integrated device
(CDRPanX), an intra-oral camera system (USBCam®), and a DC dental x-ray
generator (SDX). The Company also manufactures and sells a bone mineral
density assessment device (accuDEXA®) which it developed to assist in the
diagnosis and treatment of osteoporosis.

Critical
Accounting Policies

The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the Company to make estimates
and assumptions that affect amounts reported in the accompanying consolidated
financial statements and related footnotes. These estimates and assumptions are
evaluated on an ongoing basis based on historical developments, market
conditions, industry trends and other information the Company believes to be
reasonable under the circumstances. There can be no assurance that actual
results will conform to the Companys estimates and assumptions, and that
reported results of operations will not be materially adversely affected by the
need to make accounting adjustments to reflect changes in these estimates and
assumptions from time to time. The following policies are those that the
Company believes to be the most sensitive to estimates and judgments.

Accounts
Receivable

The
Company reports accounts receivable net of allowance for uncollectible
accounts.  The Company primarily sells
on open credit terms to its exclusive domestic distributor, Patterson Dental
Company (Patterson) and to the U.S. Government, and upon signed purchase
orders to hospitals and universities. The majority of the Companys accounts
receivable (63% and 58%, at June 30, 2005 and March 31, 2005, respectively) are
due from Patterson.  The Companys
international sales are generally prepaid, guaranteed by irrevocable letter of
credit or underwritten by credit insurance. In a limited number of cases,
international dealers are granted open credit terms. Warranty shipments are
prepaid. Revenue from customers is subject to agreements allowing limited
rights of return.

8


Accordingly, the Company reduces revenue recognized
for estimated future returns. The estimate of future returns is adjusted
periodically based upon historical rates of return. The Company provides an
allowance for doubtful accounts based upon its analysis of aged accounts
receivable.

Inventories

Inventories
are stated at the lower of cost (determined on a first-in, first-out basis) or
market value. Cost is determined principally on the standard cost method for
manufactured goods and on the average cost method for other inventories, each
of which approximates actual cost on the first-in, first-out method. The
Company establishes reserves for inventory estimated to be obsolete,
unmarketable or slow moving inventory equal to the difference between the cost
of inventory and estimated market value based upon assumptions about future
demand and market conditions. If actual market conditions are less favorable
than those anticipated or if changes in technology affect the Companys products,
additional inventory reserves may be required.

Revenue
Recognition

The
Company recognizes revenue when each of the following four criteria is met: 1)
a contract or sales arrangement exists; 2) products have been shipped and title
has been transferred or services have been rendered; 3) the price of the
products or services is fixed or determinable; and 4) collectibility is
reasonably assured. Revenues from sales of the Companys hardware and software
products are recognized at the time of shipment to customers, and when no
significant obligations exist and collectibility is probable. The Company
provides its exclusive domestic distributor with a 30-day return policy but
allows for an additional 15 days, and accordingly recognizes allowances for
estimated returns pursuant to such policy at the time of shipment. Revenue from
shipments to foreign customers is recognized at the time of shipment in
accordance with foreign sales orders. With respect to products shipped to its
exclusive domestic distributor, the Company defers revenue until Patterson
ships such inventory from its distribution centers. Amounts received from
customers in advance of product shipment are classified as deposits from
customers. The Company records as revenue shipping and handling charges
invoiced to customers. The cost of shipping and handling is recorded in cost of
sales. Revenues from the sale of extended warranties on the Companys products
are recognized on a straight-line basis over the life of the extended warranty,
which is generally a one-year period. Deferred revenues relate to extended
warranty fees paid by customers prior to the performance of extended warranty
services and to shipments to Patterson described above.

Warranties

The
Company records a liability for an estimate of costs that it expects to incur
under its basic limited warranty when product revenue is recognized. Factors
affecting the Companys warranty liability include the number of units sold and
historical and anticipated rates of claims and costs per claim. The Company
periodically assesses the adequacy of its warranty liability based on changes
in these factors.

The
following table reconciles warranty liability for the three months ended June
30, 2005 and 2004:

2005
  
  2004Beginning balance
  
  $
  446
  
  $
  210Warranties charged in period
  
  
  976
  
  
  622Warranties paid in period
  
  
  (915
  )
  
  (562
  )Balance end of period
  
  $
  507
  
  $
  270The
Company records revenues on extended warranties on a straight-line basis over
the term of the related warranty contracts (generally one year). Deferred
revenues related to extended warranty were $2.3 and $2.2 million at June 30,
2005 and March 31, 2005, respectively. Services costs are expensed as incurred.

9


Income
Taxes

Income
taxes are accounted for under the asset and liability method. Deferred income
taxes are recorded for temporary differences between financial statement
carrying amounts and the tax basis of assets and liabilities. Deferred tax
assets and liabilities reflect the tax rates expected to be in effect for the
years in which the differences are expected to reverse.

Goodwill
and Other Intangible Assets

Effective
April 1, 2002, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other Intangible Assets, which established
financial accounting and reporting for acquired goodwill and other intangible
assets and superseded Accounting Principles Board Opinion (APB) No. 17,
Intangible Assets. Under SFAS No. 142, goodwill and indefinite-lived
purchased intangible assets are no longer amortized but are reviewed at least
annually for impairment. The Company has elected to perform this review
annually as of February 28.

Identifiable
intangible assets that have finite lives continue to be amortized over their
estimated useful lives. Other intangible assets include costs incurred to
secure patents and deferred financing costs, and are included in other assets.
Finite-lived purchased intangible assets are amortized principally by the
straight-line method over their expected period of benefit. Costs incurred to
secure patents are amortized by the straight-line method over periods of five
years.

Long-lived
assets and intangibles are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the assets to the future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the assets.

Contractual
Obligations and Commercial Commitments

The
following table summarizes contractual obligations and commercial commitments
at June 30, 2005:

PAYMENTS
  DUE BY PERIODCONTRACTUAL
  OBLIGATIONS
  
  Total
  
  Less Than
  1 year
  
  1-3
  years
  
  4-5
  years
  
  After 5
  yearsOperating leases
  
  $
  1,041
  
  $
  510
  
  $
  531
  
  
  
  
  
  Consulting and
  non-compete 
  agreement
  
  
  666
  
  
  340
  
  
  326Employment
  agreements
  
  
  922
  
  
  587
  
  
  335
  
  
  
  
  
  Total
  Contractual Cash Obligations
  
  $
  2,629
  
  $
  1,437
  
  $
  1,192
  
  $
  
  
  $
  Results
of Operations

Net
revenues for the three months ended June 30, 2005 increased $4.8 million (44%)
to $15.7 million from $10.9 million in fiscal 2005. The increase was due to
increased sales of the CDR® radiography and intraoral camera products. CDR®
product sales increased $5.0 million (53%) to $14.4 million (92% of the
Companys net revenues) from $9.4 million (87% of the Companys net revenues)
in fiscal 2005. The Company believes that the increase in sales is a result of
growing acceptance of its products by dental customers and sales of the
Companys new panoramic product. CDR® warranty revenue for the three months
ended June 30, 2005 declined 6% to $1.2 million (8% of the Companys net
revenues compared to 12% in fiscal 2005). Domestic product revenue for the
three months ended June 30, 2005 increased $4.3 million (67%) to $10.7 million
(68% of the Companys net revenues) from $6.4 million in fiscal 2005 (59% of
the Companys net revenues). International revenue for the three

10


months ended June 30, 2005 increased $0.6 million
(19%) to $3.8 million (24% of the Companys net revenues) from $3.2 million in
fiscal 2005 (29% of the Companys net revenues).

Cost
of sales for the three months ended June 30, 2005 increased $1.5 million (46%)
to $4.7 million (30.0% of net revenue) from $3.2 million (29.5% of net revenue)
in fiscal 2005. The increase in the relative total cost of sales (0.5%) was due
primarily to the success of the Companys newest product offerings which have
relatively lower gross margins.

Selling
and marketing expenses for the three months ended June 30, 2005 increased $0.9
million (60%) to $2.3 million (15% or net revenue) from $1.5 million (13% of
net revenue) in fiscal 2005. Increases were primarily related to sales commissions, trade shows,
and training events.

General
and administrative expenses for the three months ended June 30, 2005, decreased
$0.2 million (9%) to $1.8 million (12% of net revenue) from $2.0 million (18%
of net revenue) in fiscal 2005. The decrease in general and administrative
expenses was primarily attributable to reduced non-cash charges to payroll and
insurance cost reductions.

Research
and development expenses for the three months ended June 30, 2005 were unchanged
at $1.1 million (7% and 10% of net revenue in fiscal 2006 and 2005,
respectively).

Income
from operations for the three months ended June 30, 2005 increased $2.6 million
(83%) to $5.7 million from $3.1 million in fiscal 2005.

Interest
income for the three months ended June 30, 2005 increased $0.2 million to $0.3
million from $0.1 million in fiscal 2005 as a result of an increase in the
Companys cash available for investment.

Income
before income taxes for the three months ended June 30, 2005 increased $2.8
million (86%) to $6.0 million from $3.2 million in fiscal 2005.

Income
tax expense for the three months ended June 30, 2005 increased $0.9 million
(65%) to $2.3 million from $1.4 million in fiscal 2005. The increase in income
tax is the result of the increase in taxable income.

As
a result of the above items, the Companys net income increased $1.8 million
(102%) to $3.6 million (23% of revenue) for the three months ended June 30,
2005 from $1.8 million (17% of revenue) in fiscal 2005.

Liquidity
and Capital Resources

At
June 30, 2005, the Company had $45.2 million in cash and cash equivalents and
working capital of $51.0 million, as compared to $39.7 million in cash and cash
equivalents and working capital of $47.1 million at March 31, 2005.

During
the three months ended June 30, 2005 cash provided by operations increased $1.8
million (46%) to $5.6 million from $3.9 million during the same period in
fiscal 2005. Increases in cash were primarily provided by improved operating
performance. Sales to a single customer approximated 66% and 55% of net revenue
for the three months ended June 30, 2005 and 2004, respectively. Amounts due from
that customer approximated 61 % and 49% of net accounts receivable at June 30,
2005 and March 31, 2005, respectively, substantially all of which have been
collected subsequent to those dates. The increase in net accounts receivable is
the result of increased sales activity during the three months ended June 30,
2005. Capital expenditures for the three months ended June 30, 2005 increased
$0.1 million to $0.2 million from $0.1 million in fiscal 2005.

Management
believes that its existing capital resources and potential sources of credit
are adequate to meet its current cash requirements.

11


Item 3.
  Quantitative and Qualitative
  Disclosures About Market RiskNone

Item 4.
  Controls and Proceduresa)
  Under the supervision and with the participation of
  the Companys management, including its principal executive officer and principal
  financial officer, the Company has evaluated the effectiveness of the
  Companys disclosure controls and procedures as of June 30, 2005.They have concluded that these disclosure controls
  provide reasonable assurance that the Company can collect, process and
  disclose, within the time periods specified in the SECs rules and forms, the
  information required to be disclosed in its periodic Exchange Act reports.b)
  There have been no significant changes in the
  Companys internal controls or in other factors that could significantly
  affect its internal controls subsequent to the date of their most recent
  evaluation.PART II.
  OTHER INFORMATIONItem 1.
  Legal ProceedingsIn
June 2005, the Securities and Exchange Commission (SEC) civil action, against
the Company, its former chief executive officer, and its former vice president
of sales and marketing, which has previously been reported by the Company, was
settled against all defendants. On June
20, 2005, final judgment was entered by the court reflecting the terms of the
parties settlement, and the SEC action was dismissed. Under the terms of the settlement, the
Company neither admitted nor denied the allegations contained in the SEC
Complaint and consented to the entry of an order permanently enjoining it from
violating the books and records, periodic reporting and internal control
provisions contained in Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the
Securities Exchange Act of 1934 and Rules 12b-20, 13a-1 and 13a-13 promulgated
thereunder. The settlement agreement
did not require any monetary payment by the Company. The Company believes that
it will not incur any further legal fees or indemnification costs in connection
with this matter.

The
following is a summary of the events leading up to the settlement of the SEC
action:

In
August 1999, the Company, through its outside counsel, contacted the Division
of Enforcement of the SEC to advise it of certain matters related to the
Companys restatement of earnings for interim periods of fiscal 1999. The SEC subsequently conducted an
investigation of the Company and certain individuals, including current and
former officers and employees of the Company, pursuant to a Formal Order of
Investigation. The Company cooperated
with the SEC staff throughout the course of the investigation.

On
November 14, 2003, the SEC filed a civil action in the United States District
Court for the Eastern District of New York against the Company, its former
chief executive officer, and its former vice president of sales &
marketing. The SEC complaint alleged
fraud, and books and records and reporting violations under Sections 10(b),
13(a) and 13(b)(2) of the Securities Exchange Act and various rules promulgated
thereunder in connection with the financial statements included in the
Companys reports on Form 10-Q for the quarters ended June 30, September 30 and
December 31, 1998. The SEC complaint
sought to enjoin the Company from future violations of those provisions of the
Exchange Act and the rules thereunder, as well as disgorgement of any allegedly
ill-gotten gains. With respect to the other defendants, the complaint sought
injunctive relief, civil penalties, disgorgement and an officer/director bar. In June 2005, this action was settled, as
described above.

12


Item 2.
  Unregistered Sales of Equity
  Securities and Use of ProceedsNot Applicable.Item 3.
  Defaults Upon Senior SecuritiesNot Applicable.Item 4.
  Submission of Matters to a Vote of
  Security HoldersNot Applicable.Item 5.
  Other InformationNot Applicable.Item 6.
  Exhibits10.1
  Amendment to Distributorship Agreement by and
  between Schick Technologies, Inc.
  and Patterson Companies, Inc.,
  made and entered into as of July 1, 2005.
  (This copy omits information for which confidential treatment has been
  requested.)31.1
  Certification of Principal Executive Officer
  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
  Certification of Principal Financial Officer
  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
  Certification of Principal Executive Officer
  Pursuant to 18 U.S.C. § 1350.32.2
  Certification of Principal Financial Officer
  Pursuant to 18 U.S.C. § 1350.13


SCHICK
TECHNOLOGIES, INC.

SIGNATURES

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this Report to be signed on its behalf by the undersigned thereunto
duly authorized.

SCHICK TECHNOLOGIES, INC.Date: August
  9, 2005
  
  By:
  /S/ Jeffrey T. SlovinJeffrey T. SlovinChief Executive OfficerBy:
  /S/ Ronald RosnerRonald RosnerDirector of Finance and Administration(Principal Financial Officer)14