Filed by Bowne Pure Compliance
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2008
OR
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o |
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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: 1-10986
MISONIX, INC.
(Exact name of registrant as specified in its charter)
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New York
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11-2148932 |
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.) |
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1938 New Highway, Farmingdale, NY
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11735 |
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(Address of principal executive offices)
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(Zip Code) |
(631) 694-9555
(Registrants telephone number, including area code)
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 þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one):
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company þ |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes o No þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practical date:
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Outstanding at |
Class of Common Stock |
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February 13, 2009 |
Common Stock, $.01 par value
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7,001,369 |
Part I FINANCIAL INFORMATION
Item 1.
Financial Statements.
MISONIX, INC. and Subsidiaries
Consolidated Balance Sheets
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December 31, |
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June 30, |
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2008 |
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2008 |
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(Derived from |
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audited financial |
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(Unaudited) |
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statements) |
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Assets |
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Current assets: |
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Cash |
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$ |
1,510,973 |
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$ |
1,873,863 |
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Accounts receivable, less allowance for doubtful accounts of
$368,212 and $376,998, respectively |
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7,586,072 |
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7,986,802 |
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Inventories, net |
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10,068,516 |
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12,651,564 |
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Deferred income taxes |
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1,040,473 |
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1,562,279 |
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Prepaid expenses and other current assets |
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500,482 |
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904,737 |
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Total current assets |
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20,706,516 |
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24,979,245 |
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Property, plant and equipment, net |
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3,244,885 |
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4,398,867 |
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Deferred income taxes |
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868,657 |
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1,280,217 |
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Goodwill |
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5,709,013 |
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5,784,542 |
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Other assets |
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847,510 |
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807,203 |
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Total assets |
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$ |
31,376,581 |
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$ |
37,250,074 |
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Liabilities and stockholders equity |
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Current liabilities: |
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Revolving credit facilities |
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$ |
3,573,368 |
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$ |
4,470,389 |
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Notes payable |
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11,278 |
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246,888 |
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Accounts payable |
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3,352,167 |
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5,497,541 |
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Accrued expenses and other current liabilities |
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3,185,510 |
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4,760,115 |
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Foreign income taxes payable |
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506,765 |
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696,791 |
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Current portion of deferred gain from sale and leaseback of building |
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122,698 |
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159,195 |
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Current maturities of capital lease obligations |
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226,574 |
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307,325 |
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Total current liabilities |
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10,978,360 |
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16,138,244 |
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Capital lease obligations |
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82,456 |
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225,909 |
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Deferred lease liability |
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311,502 |
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348,502 |
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Deferred income taxes |
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246,892 |
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250,514 |
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Deferred gain from sale and leaseback of building |
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859,324 |
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1,273,772 |
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Deferred income |
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346,596 |
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371,452 |
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Total liabilities |
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12,825,130 |
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18,608,393 |
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Commitments and contingencies |
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Minority interest |
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238,020 |
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199,237 |
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Stockholders equity: |
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Common stock, $.01 par valueshares authorized 20,000,000;
7,079,169 issued and 7,001,369 outstanding |
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70,792 |
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70,792 |
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Additional paidin capital |
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25,140,914 |
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25,052,539 |
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Accumulated deficit |
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(6,116,666 |
) |
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(6,630,170 |
) |
Accumulated other comprehensive (loss) income |
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(369,185 |
) |
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361,707 |
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Treasury stock, 77,800 shares |
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(412,424 |
) |
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(412,424 |
) |
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Total stockholders equity |
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18,313,431 |
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18,442,444 |
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Total liabilities and stockholders equity |
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$ |
31,376,581 |
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$ |
37,250,074 |
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See Accompanying Notes to Consolidated Financial Statements.
3
MISONIX, INC. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
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For the six months ended |
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December 31, |
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2008 |
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2007 |
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Net sales |
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$ |
23,496,412 |
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$ |
22,132,290 |
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Cost of goods sold |
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14,128,232 |
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12,301,921 |
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Gross profit |
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9,368,180 |
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9,830,369 |
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Operating expenses: |
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Selling expenses |
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3,454,744 |
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3,587,185 |
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General and administrative expenses |
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4,850,664 |
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5,126,076 |
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Research and development expenses |
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1,477,982 |
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1,645,552 |
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Litigation expenses |
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100,000 |
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Total operating expenses |
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9,883,390 |
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10,358,813 |
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Loss from operations |
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(515,210 |
) |
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(528,444 |
) |
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Other income (expense): |
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Interest income |
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16,384 |
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24,586 |
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Interest expense |
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(186,440 |
) |
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(251,180 |
) |
Royalty income and license fees |
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315,963 |
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332,718 |
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Royalty expense |
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(99,245 |
) |
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(163,468 |
) |
Recovery of Focus Surgery, Inc. investment |
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1,516,866 |
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Other |
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(57,962 |
) |
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122,124 |
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Total other income |
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1,505,566 |
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64,780 |
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Income (loss) before minority interest and income taxes |
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990,356 |
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(463,664 |
) |
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Minority interest in net income of consolidated
subsidiaries |
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36,328 |
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23,311 |
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Income (loss) before income taxes |
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954,028 |
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(486,975 |
) |
Income tax provision (benefit) |
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440,524 |
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(143,531 |
) |
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Net income (loss) |
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$ |
513,504 |
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$ |
(343,444 |
) |
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Net income (loss) per share Basic |
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$ |
0.07 |
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$ |
(0.05 |
) |
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Net income (loss) per share Diluted |
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$ |
0.07 |
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$ |
(0.05 |
) |
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Weighted average common shares outstanding Basic |
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7,001,369 |
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7,001,369 |
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Weighted average common shares outstanding Diluted |
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7,022,226 |
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7,001,369 |
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See Accompanying Notes to Consolidated Financial Statements.
4
MISONIX, INC. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
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For the three months ended |
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December 31, |
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2008 |
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2007 |
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Net sales |
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$ |
12,189,939 |
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$ |
11,600,053 |
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Cost of goods sold |
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7,247,189 |
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6,435,478 |
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Gross profit |
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4,942,750 |
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5,164,575 |
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Operating expenses: |
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Selling expenses |
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1,617,487 |
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1,898,675 |
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General and administrative expenses |
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2,197,859 |
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2,620,316 |
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Research and development expenses |
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|
701,508 |
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|
935,315 |
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Litigation expenses |
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100,000 |
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Total operating expenses |
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4,616,854 |
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5,454,306 |
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Income (loss) from operations |
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325,896 |
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(289,731 |
) |
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Other income (expense): |
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|
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Interest income |
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4,745 |
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|
6,854 |
|
Interest expense |
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(91,740 |
) |
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(118,871 |
) |
Royalty income and license fees |
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|
139,736 |
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|
146,640 |
|
Royalty expense |
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(50,667 |
) |
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|
(77,498 |
) |
Other |
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|
31,141 |
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|
128,816 |
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Total other income |
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|
33,215 |
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|
85,941 |
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|
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Income (loss) before minority interest and income taxes |
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|
359,111 |
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(203,790 |
) |
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Minority interest in net income of consolidated
subsidiaries |
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|
19,601 |
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|
13,867 |
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|
Income (loss) before income taxes |
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|
339,510 |
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|
(217,657 |
) |
Income tax provision (benefit) |
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|
146,008 |
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(100,477 |
) |
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|
Net income (loss) |
|
$ |
193,502 |
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$ |
(117,180 |
) |
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|
Net income (loss) per share Basic |
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$ |
0.03 |
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|
$ |
(0.02 |
) |
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|
Net income (loss) per share Diluted |
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$ |
0.03 |
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|
$ |
(0.02 |
) |
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|
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|
Weighted average common shares outstanding Basic |
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|
7,001,369 |
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|
7,001,369 |
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|
|
|
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|
Weighted average common shares outstanding Diluted |
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|
7,012,498 |
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|
7,001,369 |
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|
|
|
|
|
|
|
See Accompanying Notes to Consolidated Financial Statements.
5
MISONIX, INC. and Subsidiaries
Consolidated Statement of Stockholders Equity
(Unaudited)
Six months ended December 31, 2008
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Accumulated |
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Common Stock |
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Treasury Stock |
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other |
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Total |
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Number of |
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Number of |
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Additional |
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Accumulated |
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|
comprehensive |
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|
stockholders |
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|
shares |
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Amount |
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|
shares |
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|
Amount |
|
|
paid-in capital |
|
|
deficit |
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|
income (loss) |
|
|
equity |
|
Balance, June 30,
2008 |
|
|
7,079,169 |
|
|
$ |
70,792 |
|
|
|
(77,800 |
) |
|
$ |
(412,424 |
) |
|
$ |
25,052,539 |
|
|
$ |
(6,630,170 |
) |
|
$ |
361,707 |
|
|
$ |
18,442,444 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
513,504 |
|
|
|
|
|
|
|
513,504 |
|
Foreign
currency
translation
adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(730,892 |
) |
|
|
(730,892 |
) |
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(217,388 |
) |
Stock-based
compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88,375 |
|
|
|
|
|
|
|
|
|
|
|
88,375 |
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|
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|
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|
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|
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|
|
|
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|
|
Balance, December
31, 2008 |
|
|
7,079,169 |
|
|
$ |
70,792 |
|
|
|
(77,800 |
) |
|
$ |
(412,424 |
) |
|
$ |
25,140,914 |
|
|
$ |
(6,116,666 |
) |
|
$ |
(369,185 |
) |
|
$ |
18,313,431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Accompanying Notes to Consolidated Financial Statements.
6
MISONIX, INC. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
|
December 31, |
|
|
|
2008 |
|
|
2007 |
|
Operating activities |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
513,504 |
|
|
$ |
(343,444 |
) |
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization and other non-cash items |
|
|
829,809 |
|
|
|
757,224 |
|
Bad debt expense |
|
|
137,820 |
|
|
|
168,798 |
|
Deferred income tax expense (benefit) |
|
|
543,031 |
|
|
|
(164,327 |
) |
Loss on disposal of property, plant and equipment |
|
|
35,237 |
|
|
|
52,408 |
|
Minority interest in net income of subsidiaries |
|
|
36,328 |
|
|
|
23,311 |
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
88,375 |
|
|
|
98,237 |
|
Deferred income (loss) |
|
|
(24,856 |
) |
|
|
(91,026 |
) |
Deferred leasehold costs |
|
|
(106,276 |
) |
|
|
(98,232 |
) |
Recovery of Focus Surgery, Inc. investment |
|
|
(1,516,866 |
) |
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(801,347 |
) |
|
|
(122,351 |
) |
Inventories |
|
|
876,425 |
|
|
|
(134,300 |
) |
Income taxes |
|
|
(22,980 |
) |
|
|
4,882 |
|
Prepaid expenses and other current assets |
|
|
326,683 |
|
|
|
1,146,687 |
|
Accounts payable and accrued expenses |
|
|
(1,871,183 |
) |
|
|
(615,422 |
) |
Foreign income taxes payable |
|
|
90,846 |
|
|
|
|
|
Other assets |
|
|
(132,822 |
) |
|
|
(17,872 |
) |
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities |
|
|
(998,272 |
) |
|
|
664,573 |
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment |
|
|
(163,834 |
) |
|
|
(303,057 |
) |
Recovery of Focus Surgery, Inc. investment |
|
|
1,516,866 |
|
|
|
|
|
Investment in UKHIFU Limited |
|
|
(21,705 |
) |
|
|
(25,414 |
) |
Acquisition of minority interest |
|
|
|
|
|
|
(559,768 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
1,331,327 |
|
|
|
(888,239 |
) |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
Proceeds from short-term borrowings |
|
|
14,211,396 |
|
|
|
9,517,899 |
|
Payments of short-term borrowings |
|
|
(14,836,575 |
) |
|
|
(10,887,510 |
) |
Principal payments on capital lease obligations |
|
|
(145,621 |
) |
|
|
(210,174 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(770,800 |
) |
|
|
(1,579,785 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
74,855 |
|
|
|
10,483 |
|
|
|
|
|
|
|
|
Net decrease in cash |
|
|
(362,890 |
) |
|
|
(1,792,968 |
) |
Cash at beginning of period |
|
|
1,873,863 |
|
|
|
2,900,358 |
|
|
|
|
|
|
|
|
Cash at end of period |
|
$ |
1,510,973 |
|
|
$ |
(1,107,390 |
) |
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
186,797 |
|
|
$ |
259,510 |
|
|
|
|
|
|
|
|
Income taxes |
|
$ |
63,763 |
|
|
$ |
11,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of noncash investing
and financing activities: |
|
|
|
|
|
|
|
|
Capital lease additions |
|
$ |
35,576 |
|
|
$ |
330,503 |
|
|
|
|
|
|
|
|
See Accompanying Notes to Consolidated Financial Statements.
7
MISONIX,
INC. and Subsidiaries
Notes to Consolidated Financial Statements
(Information with respect to interim periods is unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by accounting principles generally accepted in the United
States for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the six months ended December 31, 2008 are not necessarily
indicative of the results that may be expected for the year ending June 30, 2009, or any interim
period.
The balance sheet at June 30, 2008 has been derived from the audited financial statements at that
date, but does not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
For further information, refer to the consolidated financial statements and footnotes thereto
included in the Companys Annual Report on Form 10-K for the year ended June 30, 2008.
2. Net Income (Loss) Per Share of Common Stock
Basic net income (loss) per common share (basic EPS) is computed by dividing net income (loss) by
the weighted average number of common shares outstanding for the period. Diluted net income per
common share (diluted EPS) is computed by dividing net income (loss) by the weighted average
number of common shares and dilutive common share equivalents outstanding (principally outstanding
common stock options) for the period.
The number of weighted average common shares used in the calculation of basic earnings per share
and diluted earnings per share were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
For the three months ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
Basic shares |
|
|
7,001,369 |
|
|
|
7,001,369 |
|
|
|
7,001,369 |
|
|
|
7,001,369 |
|
Dilutive effect of stock options |
|
|
20,857 |
|
|
|
|
|
|
|
11,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares |
|
|
7,022,226 |
|
|
|
7,001,369 |
|
|
|
7,012,498 |
|
|
|
7,001,369 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluded from the calculation of diluted EPS are options to purchase 1,632,841 and 1,828,841 shares
of common stock for the six months and three months ended December 31, 2008, respectively, as
their inclusion would be anti-dilutive.
Diluted EPS for the six months and three months ended December 31, 2007 presented is the same as
basic EPS, as the inclusion of the effect of common share equivalents then outstanding would be
anti-dilutive. For this reason, we excluded from the calculation of diluted EPS all outstanding
options for the six months and three months ended December 31, 2007.
3. Comprehensive Income (Loss)
Total
comprehensive income (loss) was ($217,388) and $346,726 for the six months and three months
ended December 31, 2008 and ($369,535) and ($210,103) for the six and three months ended December
31, 2007, respectively. The components of comprehensive loss are net income (loss) and foreign
currency translation adjustments.
8
MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
(Information with respect to interim periods is unaudited)
4. Stock-Based Compensation
Stock options are granted with exercise prices not less than the fair market value of our common
stock at the time of the grant, with an exercise term (as determined by the Committee administering
the applicable option plan (the Committee)) not to exceed 10 years. The Committee determines the
vesting period for the Companys stock options. Generally, such stock options have vesting periods
of three to four years. Certain option awards provide for accelerated vesting upon meeting
specific retirement, death or disability criteria, and upon a change in control. During the three
month periods ended December 31, 2008 and 2007, the Company granted options to purchase 132,150 and
19,000 shares of the Companys common stock, respectively, and during the six months ended December
31, 2008 and 2007 the Company granted options to purchase 303,150 and 61,850 shares of the
Companys common stock, respectively.
Stock-based compensation expense for the six months periods ended December 31, 2008 and 2007 was
approximately $88,000 and $98,000, respectively. Stock-based compensation expense for the three
month period ended December 31, 2008 and 2007 was $28,000 and $53,000, respectively. Compensation
expense is recognized in the administrative expenses line item of the Companys statements of
operations on a straight-line basis over the vesting periods. As of December 31, 2008, there was
$542,000 of total unrecognized compensation cost related to non-vested share-based compensation
arrangements to be recognized over a weighted-average period of 2.8 years.
There was no cash received from the exercise of stock options for the six and three month periods
ended December 31, 2008 and 2007. SFAS No. 123 (revised 2004), Share-Based Payment, requires that
cash flows from tax benefits attributable to tax deductions in excess of the compensation cost
recognized for those options (excess tax benefits) be classified as financing cash flows.
The fair values of the options granted during the three month periods ended December 31, 2008 and
2007 were estimated on the date of the grant using the Black-Scholes option-pricing model on the
basis of the following weighted average assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
For the three months ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
Risk-free interest rate |
|
|
3.1 |
% |
|
|
4.3 |
% |
|
|
2.8 |
% |
|
|
4.3 |
% |
Expected option life in years |
|
|
6.5 |
|
|
|
6.5 |
|
|
|
6.5 |
|
|
|
6.5 |
|
Expected stock price volatility |
|
|
54.5 |
% |
|
|
54.7 |
% |
|
|
54.9 |
% |
|
|
54.9 |
% |
Expected dividend yield |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
Weighted-average fair value of options
granted |
|
$ |
1.14 |
|
|
$ |
2.51 |
|
|
$ |
0.93 |
|
|
$ |
2.90 |
|
The expected life was based on historical exercises and terminations. The expected volatility for
the periods with the expected life of the options is determined using historical volatilities based
on historical stock prices. The expected dividend yield is 0% as the Company has historically not
declared dividends and does not expect to declare any in the future.
9
MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
(Information with respect to interim periods is unaudited)
Changes in outstanding stock options during the six months ended December 31, 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
Remaining |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Contractual |
|
|
Aggregate |
|
|
|
Number of |
|
|
Exercise |
|
|
Life |
|
|
Intrinsic |
|
|
|
Shares |
|
|
Price |
|
|
(years) |
|
|
Value(a) |
|
Outstanding as of June 30, 2008 |
|
|
1,822,841 |
|
|
$ |
5.71 |
|
|
|
4.9 |
|
|
|
|
|
Granted |
|
|
303,150 |
|
|
|
2.02 |
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
(500 |
) |
|
|
4.04 |
|
|
|
|
|
|
|
|
|
Expired |
|
|
(264,500 |
) |
|
|
5.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding as of December 31, 2008 |
|
|
1,860,991 |
|
|
$ |
5.18 |
|
|
|
5.6 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable and vested at December 31, 2008 |
|
|
1,431,738 |
|
|
$ |
5.87 |
|
|
|
4.5 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for grant at December 31, 2008 |
|
|
445,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Intrinsic value for purposes of this table represents the amount by which the fair value of the
underlying stock, based on the respective market prices at December 31, 2008 or if exercised, the
exercise dates, exceeds the exercise prices of the respective options. |
5. Focus Surgery, Inc.
On March 3, 2008, the Company, USHIFU, LLC (USHIFU), FS Acquisition Company and certain other
stockholders of Focus Surgery, Inc. (Focus) entered into a Stock Purchase Agreement (the Focus
Agreement). Pursuant to the Focus Agreement, the Company agreed to sell to USHIFU the 2,500
shares of Series M Preferred Stock of Focus owned by the Company for a cash payment of $837,500.
The Company was also to receive at the closing of the transactions contemplated by the Focus
Agreement (the Closing) fifty percent (50%) of the outstanding principal and accrued interest of
loans previously made by the Company to Focus with the remaining fifty percent (50%) of such amount
due eighteen (18) months from the Closing. The balance of the debt owed to the Company by Focus at
March 31, 2008 was approximately $1,335,000.
The Companys investments in Focus for both equity and debt were totally written down in 2001 as a
result of both the debt and equity being deemed impaired. Under the impairment treatment, the
equity and debt have been carried on our balance sheet at a zero value since 2001.
On July 1, 2008, the Company received $1,516,866 from USHIFU pursuant to the Focus Agreement. This
payment consisted of $837,500 for the 2,500 shares of Series M Preferred Stock of Focus owned by
the Company and 50% of the outstanding principal and accrued interest on loans previously made by
the Company to Focus. The balance of such loans is now represented by a promissory note payable by
USHIFU and Focus and is secured by certain of USHIFUs and Focus assets. The Company recorded a
non-recurring pretax gain of $1,516,866 in other income during the six months ended December 31,
2008.
10
MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
(Information with respect to interim periods is unaudited)
6. Income Taxes
The Company adopted the provisions of Financial Accounting Standards Board (FASB) interpretation
No. 48 Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109
(FIN 48), an interpretation of SFAS No. 109, Accounting for Income Taxes, effective July 1,
2007. In response to the issuance of FIN 48, the Company reviewed its uncertain tax positions in
accordance with the recognition standards established by FIN 48. As a result of this review at
July 1, 2007, the Company adjusted its estimate of its uncertain tax positions by recognizing an additional liability
of approximately $235,000 (including interest of $32,000) through a charge to accumulated deficit.
An additional $12,000 of interest expense was accrued during the six months ended December 31,
2008. The liability at December 31, 2008 and June 30, 2008 totaled $261,000 and $251,000,
respectively, and is included in accrued expenses and other liabilities. The Company does not
expect any material changes to the estimated amount of liability associated with its uncertain tax
positions through June 30, 2009. The statute of limitations for the tax return that contains the
uncertain tax position expires in fiscal 2009.
The Company generally recognizes interest and penalties related to uncertain tax positions through
the income tax provision. As of December 31, 2008, the Company had accrued approximately $63,000
for the payment of tax-related interest.
There are no federal, state or foreign audits in process as of December 31, 2008. The Company
files state tax returns in New York and Colorado and its tax returns in those states have never
been examined. The Companys foreign subsidiaries, Labcaire Systems Ltd. (Labcaire), Misonix,
Ltd. and UKHIFU Limited (UKHIFU) file tax returns in England. The England Inland Revenue Service
has not examined these tax returns.
In June 2006, the FASB ratified the consensus reached by the Emerging Issues Tax Force in Issue No.
06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be
Presented in the Income Statement (That is, Gross versus Net Presentation) (EITF 06-3). The
scope of EITF 06-3 includes any tax assessed by a governmental authority that is directly imposed
on a revenue-producing activity between a seller and a customer and may include, but is not limited
to, sales, use, value added and some excise taxes. EITF 06-3 also concluded that the presentation
of taxes within its scope on either a gross (included in revenues and costs) or net (excluded from
revenues) basis is an accounting policy decision subject to appropriate disclosure. The Company
currently presents these taxes on a net basis and has elected not to change its presentation
method.
7. Inventories
Inventories are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
June 30, |
|
|
|
2008 |
|
|
2008 |
|
Raw materials |
|
$ |
6,832,308 |
|
|
$ |
6,234,467 |
|
Workinprocess |
|
|
2,257,094 |
|
|
|
3,375,878 |
|
Finished goods |
|
|
2,939,611 |
|
|
|
4,983,593 |
|
|
|
|
|
|
|
|
|
|
|
12,029,013 |
|
|
|
14,593,938 |
|
Less valuation reserve |
|
|
1,960,497 |
|
|
|
1,942,374 |
|
|
|
|
|
|
|
|
|
|
$ |
10,068,516 |
|
|
$ |
12,651,564 |
|
|
|
|
|
|
|
|
11
MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
(Information with respect to interim periods is unaudited)
8. Accrued Expenses and Other Current Liabilities
The following summarizes accrued expenses and other current liabilities:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
June 30, |
|
|
|
2008 |
|
|
2008 |
|
Customer deposits and deferred contracts |
|
$ |
941,144 |
|
|
$ |
1,765,827 |
|
Accrued payroll and vacation |
|
|
960,739 |
|
|
|
945,933 |
|
Accrued VAT and sales tax |
|
|
233,799 |
|
|
|
359,172 |
|
Accrued commissions and bonuses |
|
|
356,033 |
|
|
|
675,069 |
|
Accrued professional fees |
|
|
96,540 |
|
|
|
43,352 |
|
Litigation |
|
|
424,000 |
|
|
|
324,000 |
|
Other |
|
|
173,255 |
|
|
|
646,762 |
|
|
|
|
|
|
|
|
|
|
$ |
3,185,510 |
|
|
$ |
4,760,115 |
|
|
|
|
|
|
|
|
9. Revolving Credit Facilities
On December 29, 2006, the Company and its subsidiaries, Acoustic Marketing Research, Inc. d/b/a
Sonora Medical Systems (Sonora) and Hearing Innovations, Inc. (collectively referred to as the
Borrowers) and Wells Fargo Bank entered into a (i) Credit and Security Agreement and a (ii)
Credit and Security Agreement Export-Import Subfacility (collectively referred to as the Credit
Agreements). The aggregate credit limit under the Credit Agreements is $8,000,000 consisting of a
revolving facility in the amount of up to $8,000,000. Up to $1,000,000 of the revolving facility
is available under the Export-Import Agreement as a subfacility for Export-Import working capital
financing. All credit facilities under the Credit Agreements mature on December 29, 2009. Payment of amounts outstanding under the Credit
Agreements may be accelerated upon the occurrence of an Event of Default (as defined in the Credit
Agreements). All loans and advances under the Credit Agreements are secured by a first priority
security interest in all of the Borrowers accounts receivable, letter-of-credit rights, and all
other business assets. The Borrowers have the right to terminate or reduce the credit facility
prior to December 29, 2008 by paying a fee based on the aggregate credit limit (or reduction, as
the case may be) as follows: (i) during year one of the Credit Agreements, 3%; (ii) during year two
of the Credit Agreements, 2%; and (iii) during year three of the Credit Agreements, 1%.
The Credit Agreements contain financial covenants requiring that the Borrowers on a consolidated
basis (a) not have a net loss of more than $185,000 for the fiscal quarter ended December 31, 2008,
(b) have net income of not less than (i) $100,000 for the fiscal quarter ended March 31, 2009 and
(ii) $130,000 for the fiscal quarter ending June 30, 2009, and (c) not incur or contract to incur
Capital Expenditures (as defined in the Credit Agreements) of more than $1,000,000 in the aggregate
in any fiscal year or more than $1,000,000 in any one transaction. At December 31, 2008, the
Borrowers were in compliance with these financial covenants.
The available amount under the Credit Agreements is the lesser of $8,000,000 or the amount
calculated under the Borrowing Base (as defined in the Credit Agreements). The Borrowers must
maintain a minimum outstanding amount of $1,250,000 under the Credit Agreements at all times and
pay a fee equal to the interest rate set forth on any such shortfall. Interest on amounts borrowed
under the Credit Agreements is payable at Wells Fargos prime rate of interest plus 1% per annum
floating, payable monthly in arrears. The default rate of interest is 3% higher than the rate
otherwise payable. A fee of 1/2% per annum on the Unused Amount (as defined in the Credit
Agreements) is payable monthly in arrears. At December 31, 2008, the balance outstanding under the
Credit Agreement is $2,150,777. An additional $1,609,227 was available to be borrowed at December
31, 2008.
12
MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
(Information with respect to interim periods is unaudited)
On September 29, 2008, Labcaire entered into a debt purchase agreement (the RBS Agreement) with
The Royal Bank of Scotland (RBS). The RBS Agreement replaced the debt purchase agreement with
Lloyds TSB Commercial Finance which expired September 28, 2008. The amount of this facility bears
interest at the RBS base rate plus 2.0%. The RBS Agreement expires September 30, 2010. The
available amount under the RBS Agreement is the lesser of $3,000,000 or the amount calculated under
the borrowing base provided for by the RBS Agreement. The RBS Agreement covers all United Kingdom
and European sales. At December 31, 2008, the balance outstanding under this credit facility was
$1,422,591 and Labcaire was not in violation of the financial covenants contained in the RBS
Agreement.
10. Commitments and Contingencies
A jury in the District Court of Boulder County, Colorado has returned a verdict against Sonora and
in favor of Technics LLC (Technics) in the amount of $419,000 which was recorded by the Company during the
fourth quarter of fiscal 2005. In fiscal 2008, the judgment was decreased to $324,000 and the
$95,000 reduction is included in other income. The case involved royalties claimed on recoating of
transesophogeal probes, which is a process performed by Sonora. Approximately 80% of the judgment
was based on the jurys estimate of royalties for potential sales of the product in the future.
Sonora moved for judgment notwithstanding the verdict based on, among other things, the award
of damages for future royalties. On December 2, 2008 the Colorado Supreme Court affirmed the
judgment of the Colorado Court of Appeals in favor of Technics. On January 21, 2009, the case was
returned to the County of Boulder for entry of judgment in favor of Technics in the amount of
$324,000 together with costs along with prejudgment and post judgment interest. The Company has
accrued the entire judgment of $324,000 plus $100,000 of pre-judgment and post-judgment interest.
The Company is a defendant in claims and lawsuits arising in the ordinary course of business. The
Company believes that it has meritorious defenses to such claims and lawsuits and is vigorously
contesting them. Although the outcome of litigation cannot be predicted with certainty, the Company
believes that these actions will not have a material adverse effect on the Companys consolidated
financial position or results of operations.
11. Business Segments
The Company operates in two business segments which are organized by product types: medical devices
and laboratory and scientific products. Medical devices include the AutoSonix ultrasonic cutting
and coagulatory system, the Sonablate 500® (used to treat prostate cancer), refurbishing of
high-performance ultrasound systems and replacement transducers for the medical diagnostic
ultrasound industry, ultrasonic lithotriptor, ultrasonic neuroaspirator (used for neurosurgery),
soft tissue aspirator (used primarily for the cosmetic surgery market) and the wound debrider.
Laboratory and scientific products include the Sonicator Ultrasonic liquid processor, Aura ductless
fume enclosure, and Labcaire ISIS and Guardian endoscope disinfectant systems. The Company
evaluates the performance of the segments based upon income from operations before general and
administrative expenses. The accounting policies of the
segments are the same as those described in the summary of significant accounting policies (Note 1)
in the Companys Annual Report on Form 10-K for the year ended June 30, 2008.
Certain items are maintained at the corporate headquarters (corporate) and are not allocated to the
segments. They primarily include general and administrative expenses. General and administrative
expenses at the Companys Sonora, Labcaire, UKHIFU and Misonix, Ltd. subsidiaries are included in
corporate and unallocated amounts in the tables below. The Company does not allocate assets by
segment. Summarized financial information for each of the segments is as follows:
13
MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
(Information with respect to interim periods is unaudited)
For the six months ended December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical Device |
|
|
Laboratory and |
|
|
Corporate and |
|
|
|
|
|
|
Products |
|
|
Scientific Products |
|
|
Unallocated |
|
|
Total |
|
Net sales |
|
$ |
12,399,442 |
|
|
$ |
11,096,970 |
|
|
$ |
|
|
|
$ |
23,496,412 |
|
Cost of goods sold |
|
|
6,751,782 |
|
|
|
7,376,450 |
|
|
|
|
|
|
|
14,128,232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
5,647,660 |
|
|
|
3,720,520 |
|
|
|
|
|
|
|
9,368,180 |
|
Selling expenses |
|
|
2,285,424 |
|
|
|
1,169,320 |
|
|
|
|
|
|
|
3,454,744 |
|
Research and development
expenses |
|
|
966,660 |
|
|
|
511,322 |
|
|
|
|
|
|
|
1,477,982 |
|
General and administrative
expenses |
|
|
|
|
|
|
|
|
|
|
4,850,664 |
|
|
|
4,850,664 |
|
Litigation
expense |
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
3,352,084 |
|
|
|
1,680,642 |
|
|
|
4,850,664 |
|
|
|
9,883,390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
$ |
2,295,576 |
|
|
$ |
2,039,878 |
|
|
$ |
(4,850,664 |
) |
|
$ |
(515,210 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended December, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical Device |
|
|
Laboratory and |
|
|
Corporate and |
|
|
|
|
|
|
Products |
|
|
Scientific Products |
|
|
Unallocated |
|
|
Total |
|
Net sales |
|
$ |
11,336,320 |
|
|
$ |
10,795,970 |
|
|
$ |
|
|
|
$ |
22,132,290 |
|
Cost of goods sold |
|
|
5,663,322 |
|
|
|
6,638,599 |
|
|
|
|
|
|
|
12,301,921 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
5,672,998 |
|
|
|
4,157,371 |
|
|
|
|
|
|
|
9,830,369 |
|
Selling expenses |
|
|
2,295,628 |
|
|
|
1,291,557 |
|
|
|
|
|
|
|
3,587,185 |
|
Research and development
expenses |
|
|
1,119,065 |
|
|
|
526,487 |
|
|
|
|
|
|
|
1,645,552 |
|
General and administrative
expenses |
|
|
|
|
|
|
|
|
|
|
5,126,076 |
|
|
|
5,126,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
3,414,693 |
|
|
|
1,818,044 |
|
|
|
5,126,076 |
|
|
|
10,358,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
$ |
2,258,305 |
|
|
$ |
2,339,327 |
|
|
$ |
(5,126,076 |
) |
|
$ |
(528,444 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
14
MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
(Information with respect to interim periods is unaudited)
For the three months ended December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical Device |
|
|
Laboratory and |
|
|
Corporate and |
|
|
|
|
|
|
Products |
|
|
Scientific Products |
|
|
Unallocated |
|
|
Total |
|
Net sales |
|
$ |
6,947,616 |
|
|
$ |
5,242,323 |
|
|
$ |
|
|
|
$ |
12,189,939 |
|
Cost of goods sold |
|
|
3,728,874 |
|
|
|
3,518,315 |
|
|
|
|
|
|
|
7,247,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
3,218,742 |
|
|
|
1,724,008 |
|
|
|
|
|
|
|
4,942,750 |
|
Selling expenses |
|
|
1,037,633 |
|
|
|
579,854 |
|
|
|
|
|
|
|
1,617,487 |
|
Research and development
expenses |
|
|
483,728 |
|
|
|
217,780 |
|
|
|
|
|
|
|
701,508 |
|
General and administrative
expenses |
|
|
|
|
|
|
|
|
|
|
2,197,859 |
|
|
|
2,197,859 |
|
Litigation
expense |
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
1,621,361 |
|
|
|
797,634 |
|
|
|
2,197,859 |
|
|
|
4,616,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
$ |
1,597,381 |
|
|
$ |
926,374 |
|
|
$ |
(2,197,859 |
) |
|
$ |
325,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical Device |
|
|
Laboratory and |
|
|
Corporate and |
|
|
|
|
|
|
Products |
|
|
Scientific Products |
|
|
Unallocated |
|
|
Total |
|
Net sales |
|
$ |
6,038,203 |
|
|
$ |
5,561,850 |
|
|
$ |
|
|
|
$ |
11,600,053 |
|
Cost of goods sold |
|
|
2,956,296 |
|
|
|
3,479,182 |
|
|
|
|
|
|
|
6,435,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
3,081,907 |
|
|
|
2,082,668 |
|
|
|
|
|
|
|
5,164,575 |
|
Selling expenses |
|
|
1,215,457 |
|
|
|
683,218 |
|
|
|
|
|
|
|
1,898,675 |
|
Research and development
expenses |
|
|
650,220 |
|
|
|
285,095 |
|
|
|
|
|
|
|
935,315 |
|
General and administrative
expenses |
|
|
|
|
|
|
|
|
|
|
2,620,316 |
|
|
|
2,620,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
1,865,677 |
|
|
|
968,313 |
|
|
|
2,620,316 |
|
|
|
5,454,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
$ |
1,216,230 |
|
|
$ |
1,114,355 |
|
|
$ |
(2,620,316 |
) |
|
$ |
(289,731 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
15
MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
(Information with respect to interim periods is unaudited)
The Companys revenues are generated from various geographic regions. The following is an
analysis of net sales by geographic region:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended December 31, |
|
|
Three months ended December 31, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
United States |
|
$ |
12,387,241 |
|
|
$ |
11,894,476 |
|
|
$ |
6,600,534 |
|
|
$ |
6,250,743 |
|
United Kingdom |
|
|
7,229,607 |
|
|
|
7,037,648 |
|
|
|
3,299,097 |
|
|
|
3,589,682 |
|
Europe |
|
|
1,906,228 |
|
|
|
1,190,475 |
|
|
|
1,379,813 |
|
|
|
798,875 |
|
Asia |
|
|
796,626 |
|
|
|
1,143,351 |
|
|
|
409,694 |
|
|
|
460,741 |
|
Canada and Mexico |
|
|
374,017 |
|
|
|
270,886 |
|
|
|
161,892 |
|
|
|
162,743 |
|
Middle East |
|
|
190,657 |
|
|
|
136,911 |
|
|
|
74,255 |
|
|
|
108,990 |
|
Other |
|
|
612,036 |
|
|
|
458,543 |
|
|
|
264,654 |
|
|
|
228,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
23,496,412 |
|
|
$ |
22,132,290 |
|
|
$ |
12,189,939 |
|
|
$ |
11,600,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12. Recent Accounting Pronouncements
Effective July 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements (SFAS 157).
SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with
generally accepted accounting principles in the United States (GAAP), and expands disclosures
about fair value measurements. SFAS 157 applies whenever other standards require, or permit,
assets or liabilities to be measured at fair value. The adoption of SFAS 157 did not have a
material impact on our consolidated results of operations, financial position and cash flows.
Effective July 1, 2008, the Company adopted SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115 (SFAS 159).
SFAS 159 permits entities to elect to measure many financial instruments and certain other items at
fair value. Unrealized gains and losses on items for which the fair value option has been elected
will be recognized in earnings at each subsequent reporting date. The adoption of SFAS 159 did not
have a material impact on our consolidated operations, financial position and cash flows.
In December 2007, the FASB issued SFAS No. 141(R), Business Combination (SFAS 141R). This
Statement significantly changes the financial accounting and reporting of business combination
transactions in the Companys consolidated financial statements. SFAS 141R is effective for fiscal
years beginning after December 15, 2008 and prohibits early adoption. The Company is currently
evaluating the impact of adopting SFAS 141R on our consolidated results of operations, financial
position and cash flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No. 51 (SFAS 160). SFAS 160 significantly changes the accounting
for and reporting of noncontrolling (minority) interests in the Companys consolidated financial
statements. SFAS 160 is effective for fiscal years beginning after December 15, 2008 and prohibits
early adoption. The Company is currently evaluating the impact of adopting SFAS 160 on our
consolidated results of operations, financial position and cash flows.
In April 2008, the FASB issued Staff Position No. FAS 142-3, Determination of the Useful Life of
Intangible Assets (FSP FAS 142-3). FSP FAS 142-3 amends the factors that should be considered
in developing renewal or extension assumptions used to determine the useful life of a recognized
intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142). FSP FAS
142-3 is intended to improve the consistency between the useful life of a recognized intangible
asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the
asset under SFAS 141R, and other U.S. GAAP. FSP FAS 142-3 applies to all intangible assets and is
effective for financial statements issued for fiscal years beginning after December 15, 2008 and
interim periods within those
fiscal years. The Company is currently evaluating the impact of adopting FSP FAS 142-3 on our
consolidated results of operations, financial position and cash flows.
16
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
Six months ended December 31, 2008 and 2007.
Net sales: Net sales of the Companys medical device products and laboratory and
scientific products increased $1,364,122 to $23,496,412 for the six months ended December 31, 2008
from $22,132,290 for the six months ended December 31, 2007. This difference in net sales is due
to an increase in sales of medical device products of $1,063,122 to $12,399,442 for the six months
ended December 31, 2008 from $11,336,320 for the six months ended December 31, 2007. This
difference in net sales is also due to an increase in laboratory and scientific products sales of
$301,000 to $11,096,970 for the six months ended December 31, 2008 from $10,795,970 for the six
months ended December 31, 2007. The increase in sales of medical device products is due to an
increase in sales of therapeutic medical device products of $1,072,374 which was partially offset
by a decrease of $9,252 in sales of diagnostic medical device products. The increase in sales of
therapeutic medical device products was primarily attributable to the increase in sales of the
Companys bone scalpel product, AutoSonix, and the SonicOne wound debridement system. The decrease
in sales of diagnostic medical device products was not attributable to a single customer,
distributor or any other specific factor. The increase in sales of laboratory and scientific
products was primarily due to a $561,000 increase in Labcaire Systems Ltd. (Labcaire) products
sales, partially offset by a decrease in ultrasonic laboratory products sales of $26,000 and a
decrease of $234,000 in ductless fume enclosure products sales. Labcaire sales increased
$1,821,000 due to shipments of its new ISIS endoscope cleaning system, endoscope storage cabinet
and increased service revenue, partially offset by the strengthening of the U.S. Dollar against the
English Pound during the six months ended December 31, 2008 as compared to the six months ended
December 31, 2007 which had the impact of reducing Labcaire sales reported in U.S. Dollars by
approximately $1,260,000.
Export sales from the United States are remitted in U.S. dollars and export sales for Labcaire are
remitted in English Pounds. UKHIFU Limited (UKHIFU) sales are remitted in English Pounds and
Misonix, Ltd. sales to date have been remitted in Euros. To the extent that the Companys revenues
are generated in English Pounds, its operating results were translated for reporting purposes into
U.S. dollars using weighted average rates of 1.74 and 2.03 for the six months ended December 31,
2008 and 2007, respectively. A strengthening of the English Pound, in relation to the U.S. dollar,
will have the effect of increasing recorded revenues and profits, while a weakening of the English
Pound will have the opposite effect. Since the Companys operations in England generally set
prices and bids for contracts in English Pounds, a strengthening of the English Pound, while
increasing the value of its UK assets, might place the Company at a pricing disadvantage in bidding
for work from manufacturers based overseas. The Company collects its receivables predominately in
the currency of the country the subsidiary resides in. The Company has not engaged in foreign
currency hedging transactions, which include forward exchange agreements. See Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
Gross profit: Gross profit decreased to 39.9% for the six months ended December 31, 2008
from 44.4% for the six months ended December 31, 2007. Gross profit for medical device products
decreased to 45.5% for the six months ended December 31, 2008 from 50.0% for the six months ended
December 31, 2007. Gross profit for laboratory and scientific products decreased to 33.5% for the
six months ended December 31, 2008 from 38.5% for the six months ended December 31, 2007. Gross
profit for medical device products was unfavorably impacted in the six months ended December 31,
2008 predominately due to a fee per use sale of the SB500® product for prostate cancer in Europe,
which carried a very small initial margin and an unfavorable mix of high and low margin product
deliveries. As the product is used and we collect our proportionate share of the fee, the margins
from that fee will be as a percentage of revenue very favorable. The decrease in gross profit in
the December 2008 period for laboratory and scientific products is due to lower margins at Labcaire
due to higher costs related to ISIS units.
17
Selling expenses: Selling expenses decreased $132,441 to $3,454,744 for the six months
ended December 31, 2008 from $3,587,185 for the six months ended December 30, 2007. Laboratory and
scientific products selling expenses decreased $122,237. Selling expenses for medical device
products decreased $10,204, primarily due to a reduction in expenses attributable to our European
sales efforts. Selling expenses for laboratory products decreased principally at Labcaire,
primarily due to a reduction in exchange rate.
General
and administrative expenses: General and administrative expenses decreased $275,412
from $5,126,076 in the six months ended December 31, 2007 to $4,850,664 in the six months ended
December 31, 2008. General and administrative expenses decreased for the six months ended December
31, 2008, principally due to lower employment fees, corporate insurance and salaries.
Research and development expenses: Research and development expenses decreased $167,570
from $1,645,552 for the six months ended December 31, 2007 to $1,477,982 for the six months ended
December 31, 2008. Laboratory and scientific products research and development expenses decreased
approximately $15,000 due to decreased product support related to the Ultrasonic and Labcaire
products. Research and development expense for medical device products decreased $152,000,
primarily due to a reduced milestone payment to Focus Surgery, Inc. (Focus) related to our HIFU
kidney/liver product development efforts.
Litigation expenses: Litigation expenses increased to $100,000 for the six months ended
December 31, 2008, as compared to no litigation expenses for the six months ended December 31,
2007. The increased expense relates to interest expense on pending litigation at Acoustic
Marketing Research, Inc. d/b/a Sonora Medical Systems (Sonora).
Other income (expense): Other income for the six months ended December 31, 2008 was
$1,505,566 as compared to $64,780 for the six months ended December 31, 2007. The increase of
$1,440,786 was due to the receipt of $1,516,866 from USHIFU, LLC (USHIFU) pursuant to the Focus
transaction between the Company and USHIFU. This payment consisted of $837,500 for the 2,500 shares
of Series M Preferred Stock of Focus owned by the Company and fifty (50%) percent of the
outstanding principal and accrued interest of loans previously made by the Company to Focus. The
gain from the Focus transaction was partially offset by $131,000 of exchange losses related to the
weakening of the English Pound against the U.S. Dollar.
Income
taxes: The effective tax rate was 46.2% for the six months ended December 31, 2008,
as compared to an effective tax rate of 29.5% for the six months ended December 31, 2007. The
December 2008 effective income tax rate differs from the statutory rate due to the impact of
permanent differences between accounting and taxable income for non cash compensation and
entertainment expenses.
Three months ended December 31, 2008 and 2007
Net sales: Net sales of the Companys medical device products and laboratory and
scientific products increased $589,886 to $12,189,939 for the three months ended December 31, 2008
from $11,600,053 for the three months ended December 31, 2007. This difference in net sales is due
to an increase in sales of medical device products of $909,413 to $6,947,616 for the three months
ended December 31, 2008 from $6,038,203 for the three months ended December 31, 2007. This
difference in net sales is also due to a decrease in laboratory and scientific products sales of
$319,527 to $5,242,323 for the three months ended December 31, 2008 from $5,561,850 for the three
months ended December 31, 2007. The increase in sales of medical device products is due to an
increase in sales of therapeutic medical device products of approximately $900,000 and an increase
of $9,000 in sales of diagnostic medical device products. The increase in sales of therapeutic
medical device products was primarily attributable to the increase in the Bone Scalpel and the
SonicOne wound debridement system. The increase in sales of diagnostic medical device products was
not attributable to a single customer, distributor or any other specific factor. The decrease in
sales of laboratory and scientific products was primarily due to an $186,000 decrease in Labcaire
products sales, a decrease in ultrasonic laboratory products sales of $110,000 and a decrease of
$24,000 in ductless fume enclosure products sales. Labcaire sales increased by $795,000 due to
shipments of its new ISIS endoscope cleaning system, endoscope storage cabinet and increased
service revenue, offset by the strengthening of the U.S. Dollar against the English Pound during
the three months ended December 31, 2008 as compared to the three months ended December 31, 2007
which had the impact of reducing Labcaire sales reported in U.S. Dollars by approximately $981,000.
18
Export sales from the United States are remitted in U.S. dollars and export sales for Labcaire are
remitted in English Pounds. UKHIFU sales are remitted in English Pounds and Misonix, Ltd. sales to
date have been remitted in Euros. To the extent that the Companys revenues are generated in
English Pounds, its operating results were translated for reporting purposes into U.S. dollars
using weighted average rates of 1.74 and 2.04 for the three months ended December 31, 2008 and
2007, respectively. A strengthening of the English Pound, in relation to the U.S. dollar, will
have the effect of increasing recorded revenues and profits, while a weakening of the English Pound
will have the opposite effect. Since the Companys operations in England generally set prices and
bids for contracts in English Pounds, a strengthening of the English Pound, while increasing the
value of its UK assets, might place the Company at a pricing disadvantage in bidding for work from
manufacturers based overseas. The Company collects its receivables predominately in the currency
of the country the subsidiary resides in. The Company has not engaged in foreign currency hedging
transactions, which include forward exchange agreements. See Item 3. Quantitative and
Qualitative Disclosures About Market Risk.
Gross profit: Gross profit decreased to 40.5% for the three months ended December 31, 2008
from 44.5% for the three months ended December 31, 2007. Gross profit for medical device products
decreased to 46.3% for the three months ended December 31, 2008 from 51.0% for the three months
ended December 31, 2007. Gross profit for laboratory and scientific products decreased to 32.9%
for the three months ended December 31, 2008 from 37.4% for the three months ended December 31,
2007. Gross profit for medical device products was unfavorably impacted in the three months ended
December 31, 2008 due to a fee per use sale of the SB500 product for prostate cancer in Europe,
which carried no initial margin and an unfavorable mix of high and
low product margin deliveries. As the product is used and we collect our proportionate share of
the fee, the margins for that fee will be as a percentage very favorable. The decrease in gross
profit in the December 2008 quarter for laboratory and scientific products is due to lower margins
at Labcaire due to higher costs related to ISIS units.
Selling expenses: Selling expenses decreased $281,188 to $1,617,487 for the three months
ended December 31, 2008 from $1,898,675 for the three months ended December 31, 2007. Laboratory
and scientific products selling expenses decreased $103,364. Selling expenses for medical device
products decreased $177,824, primarily due to reduced expenses in
European sales efforts.
Selling expenses for laboratory products decreased principally at Labcaire due to lower exchange
rates.
General
and administrative expenses: General and administrative expenses decreased $422,457
from $2,620,316 in the three months ended December 31, 2007 to $2,197,859 in the three months ended
December 31, 2008. General and administrative expenses decreased for the three months ended
December 31, 2008, principally due to lower employment fees, corporate insurance and salaries.
Research and development expenses: Research and development expenses decreased $233,807
from $935,315 for the three months ended December 31, 2007 to $701,508 for the three months ended
December 31, 2008. Laboratory and scientific products research and development expenses decreased
approximately $67,315 due to lower exchange rates for Labcaire expenses. Research and development
expense for medical device products decreased $166,492, primarily due to reduced milestone payments
to Focus relating to our HIFU kidney/liver product development efforts.
19
Litigation expenses: Litigation expenses increased to $100,000 for the three months ended
December 31, 2008, as compared to no litigation expenses for the three months ended December 31,
2007. The increased expense relates to interest expense on pending litigation at Sonora.
Other income (expense): Other income for the three months ended December 31, 2008 was
$33,215 as compared to $85,941 for the three months ended December 31, 2007. The decrease of
$52,726 was primarily due to $55,000 of exchange losses related to the weakening of the English
Pound against the U.S. Dollar.
Income taxes: The effective tax rate was 46.2% for the three months ended December 31,
2007, as compared to an effective tax rate of 43.0% for the three months ended December 31, 2008.
The December 2008 effective income tax rate differs from the statutory rate due to the impact of
permanent differences between accounting and taxable income for non cash compensation and
entertainment expenses.
Critical Accounting Policies
The Company prepares its consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America. Certain of these accounting policies require
the Company to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and the related disclosure of contingent assets and
liabilities, revenues and expenses. On an ongoing basis, the Company bases its estimates on
historical data and experience, when available, and on various other assumptions that are believed
to be reasonable under the circumstances, the combined results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from
other sources.
The Company evaluates its goodwill for impairment triggering events at each reporting period in
accordance with FAS No. 142. The Companys stock price has been trading below its book value and
tangible book value for two consecutive quarters. The Company attributes this low stock price to
both the overall market conditions and company specific factors, including low trading volume of
the Companys stock. As of December 31, 2008, the Company believes that based on operations to
date and measures implemented, the amounts used in the discount cash flow model used in its June
30, 2008 annual impairment test are reasonable. Based on our evaluation, there was no impairment
of goodwill in the second fiscal quarter ended December 31, 2008. Due to the recent economic
volatility, including fluctuations in interest rates, growth rates and changes in demand for our
products, there could be a change in the valuation of goodwill when the Company conducts its annual
impairment test.
Actual results may differ from these estimates. There have been no material changes in the
Companys critical accounting policies and estimates from those discussed in Item 7 of the
Companys Annual Report on Form 10-K for the year ended June 30, 2008.
Recent Accounting Pronouncements
Effective July 1, 2008, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes a
framework for measuring fair value in accordance with generally accepted accounting principles in
the United States (GAAP), and expands disclosures about fair value measurements. SFAS 157
applies whenever other standards require, or permit, assets or liabilities to be measured at fair
value. The adoption of SFAS 157 did not have an impact on our consolidated results of operations,
financial position and cash flows.
Effective July 1, 2008, the Company adopted SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115 (SFAS 159).
SFAS 159 permits entities to elect to measure many financial instruments and certain other items at
fair value. Unrealized gains and losses on items for which the fair value option has been elected
will be recognized in earnings at each subsequent reporting date. The adoption of SFAS 159 did not
have an impact on our consolidated results of operations, financial position and cash flows.
20
In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 141(R),
Business Combination (SFAS 141R). This Statement significantly changes the financial
accounting and reporting of business combination transactions in the Companys consolidated
financial statements. SFAS 141R is effective for fiscal years beginning after December 15, 2008
and prohibits early adoption. The Company is currently evaluating the impact of adopting SFAS 141R
on our consolidated results of operations, financial position and cash flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No. 51 (SFAS 160). SFAS 160 significantly changes the accounting
for and reporting of noncontrolling (minority) interests in the Companys consolidated financial
statements. SFAS 160 is effective for fiscal years beginning after December 15, 2008 and prohibits
early adoption. The Company is currently evaluating the impact of adopting SFAS 160 on our
consolidated results of operations, financial position and cash flows.
In April 2008, the FASB issued Staff Position No. FAS 142-3, Determination of the Useful Life of
Intangible Assets (FSP FAS 142-3). FSP FAS 142-3 amends the factors that should be considered
in developing renewal or extension assumptions used to determine the useful life of a recognized
intangible asset under SFAS 142. FSP FAS 142-3 is intended to improve the consistency between the
useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows
used to measure the fair value of the asset under SFAS 141R, and other U.S. GAAP. FSP FAS 142-3
applies to all intangible assets and is effective for financial statements issued for fiscal years
beginning after December 15, 2008 and interim periods within those fiscal years. The Company is
currently evaluating the impact of adopting FSP FAS 142-3 on our consolidated results of
operations, financial position and cash flows.
Forward Looking Statements
This Report contains certain forward looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended (the Exchange Act), which are intended to be covered by the safe harbors created thereby.
Although the Company believes that the assumptions underlying the forward looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there
can be no assurance that the forward looking statements contained in this Report will prove to be
accurate. Factors that could cause actual results to differ from the results specifically
discussed in the forward looking statements include, but are not limited to, the absence of
anticipated contracts, higher than historical costs incurred in performance of contracts or in
conducting other activities, product mix in sales, results of joint ventures and investments in
related entities, future economic, competitive and market conditions, and the outcome of legal
proceedings as well as management business decisions.
Liquidity and Capital Resources
Working capital at December 31, 2008 and June 30, 2008 was $9,828,156 and $8,841,000,
respectively. For the six months ended December 31, 2008, cash used in operations totaled
$998,272. Cash used in operations was primarily due to a reduction in customer deposits and VAT
payable at Labcaire. For the six months ended December 31, 2008, cash provided by investing
activities totaled $1,331,327. The major source of cash from investing activities was the receipt
of $1,516,866 from USHIFU pursuant to the Focus transaction between the Company and USHIFU. This
payment consisted of $837,500 for the 2,500 shares of Series M Preferred Stock of Focus owned by
the Company and fifty percent (50%) of the outstanding principal and accrued interest of loans
previously made by the Company to Focus. The cash received from the Focus transaction was
partially offset by the purchase of property, plant and equipment during the regular course of
business. For the six months ended December 31, 2008, cash used in financing activities was
$770,800, primarily consisting of principal payments on capital lease obligations and short-term
borrowings of $14,982,196, partially offset by proceeds from short-term borrowings of
$14,211,396.
21
We regularly review our cash funding requirements and attempt to meet those requirements through
a combination of cash on hand, cash provided by operations, available borrowings under bank
lines of credit and possible future public or private debt and/or equity offerings. At times, we
evaluate possible acquisitions of, or investments in, businesses that are complementary to ours,
which may require the use of cash. We believe that our cash, other liquid assets, credit arrangements, and access to equity capital markets, taken together, provide
adequate resources to fund ongoing operating expenditures. In the event that they do not, we may
require additional funds in the future to support our working capital requirements or for other
purposes and may seek to raise such additional funds through the sale of public or private equity
and/or debt financings, divestiture of current business lines as well as from other sources. No
assurance can be given that additional financing will be available in the future or that if
available, such financing will be obtainable on terms favorable when required.
Revolving Credit Facilities
On December 29, 2006, the Company and its subsidiaries, Sonora and Hearing Innovations, Inc.
(collectively referred to as the Borrowers) and Wells Fargo Bank entered into a (i) Credit and
Security Agreement and a (ii) Credit and Security Agreement Export-Import Subfacility (collectively
referred to as the Credit Agreements). The aggregate credit limit under the Credit Agreements is
$8,000,000 consisting of a revolving facility in the amount of up to $8,000,000. Up to $1,000,000
of the revolving facility is available under the Export-Import Agreement as a subfacility for
Export-Import working capital financing. All credit facilities under the Credit Agreements mature
on December 29, 2009. Payment of amounts outstanding under the Credit Agreements may be accelerated
upon the occurrence of an Event of Default (as defined in the Credit Agreements). All loans and
advances under the Credit Agreements are secured by a first priority security interest in all of
the Borrowers accounts receivable, letter-of-credit rights, and all other business assets. The
Borrowers have the right to terminate or reduce the credit facility prior to December 29, 2008 by
paying a fee based on the aggregate credit limit (or reduction, as the case may be) as follows: (i)
during year one of the Credit Agreements, 3%; (ii) during year two of the Credit Agreements, 2%;
and (iii) during year three of the Credit Agreements, 1%.
The Credit Agreements contain financial covenants requiring that the Borrowers on a consolidated
basis (a) not have a net loss of more than $185,000 for the fiscal quarter ending December 31,
2008, (b) have net income of not less than (i) $100,000 for the fiscal quarter ending March 31,
2009 and (ii) $130,000 for the fiscal quarter ended June 30, 2009, and (c) not incur or contract
to incur Capital Expenditures (as defined in the Credit Agreements) of more than $1,000,000 in the
aggregate in any fiscal year or more than $1,000,000 in any one transaction. At December 31, 2008,
the Borrowers were in compliance with these financial covenants.
The available amount under the Credit Agreements is the lesser of $8,000,000 or the amount
calculated under the Borrowing Base (as defined in the Credit Agreements). The Borrowers must
maintain a minimum outstanding amount of $1,250,000 under the Credit Agreements at all times and
pay a fee equal to the interest rate set forth on any such shortfall. Interest on amounts borrowed
under the Credit Agreements is payable at Wells Fargos prime rate of interest plus 1% per annum
floating, payable monthly in arrears. The default rate of interest is 3% higher than the rate
otherwise payable. A fee of 1/2% per annum on the Unused Amount (as defined in the Credit
Agreements) is payable monthly in arrears. At December 31, 2008, the balance outstanding under the
Credit Agreement is $2,150,777. An additional $1,609,227 was available to be borrowed at December
31, 2008.
On September 29, 2008, Labcaire entered into a debt purchase agreement with RBS (the RBS
Agreement). The RBS Agreement replaced the debt purchase agreement with Lloyds TSB Commercial
Finance which expired September 28, 2008. The amount of this facility bears interest at the RBS
base rate plus 2.0%. The RBS Agreement expires December 31, 2010. The available amount under the
RBS Agreement is the lesser of $3,000,000 or the amount calculated under the borrowing base
provided for by the RBS Agreement. The agreement covers all United Kingdom and European sales. At
December 31, 2008, the balance outstanding under this credit facility was $1,422,591 and Labcaire
was not in violation of the financial covenants contained in the RBS Agreement.
22
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on the Companys financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources
that is material to the Company.
Other
In the opinion of management, inflation has not had a material effect on the operations of the
Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Market Risk:
The principal market risks (i.e., the risk of loss arising from adverse changes in market rates and
prices) to which the Company is exposed are interest rates on short-term investments and foreign
exchange rates, which generate translation gains and losses due to the English Pound to U.S. Dollar
conversion of Labcaire, Misonix, Ltd. and UKHIFU.
Foreign Exchange Rates:
Approximately 37.1% of the Companys revenues in the six month period ended December 31, 2008 were
received in English Pounds currency. To the extent that the Companys revenues are generated in
English Pounds, its operating results are translated for reporting purposes into U.S. Dollars using
rates of 1.74 and 2.03 for the six months ended December 31, 2008 and 2007, respectively, and 1.74
and 2.04 for the three months ended December 31, 2008 and 2007, respectively. A strengthening of
the English Pound, in relation to the U.S. Dollar, will have the effect of increasing its reported
revenues and profits, while a weakening will have the opposite effect. Since the Companys
operations in England generally sets prices and bids for contracts in English Pounds, a
strengthening of the English Pound, while increasing the value of its UK assets, might place the
Company at a pricing disadvantage in bidding for work from manufacturers based overseas. The
Company collects its receivables predominately in the currency of the country the subsidiary
resides in. Misonix, Ltd. invoices certain customers in Euros and as a result there is an exchange
rate exposure between the English Pound and the Euro. The Company has not engaged in foreign
currency hedging transactions, which include forward exchange agreements.
Interest Rate Risk:
The Company earns interest on cash balances and pays interest on debt incurred. In light of the
Companys existing cash, results of operations, the term of its debt obligations and projected
borrowing requirements, the Company does not believe that a 10% change in interest rates would have
a significant impact on its consolidated financial position.
Item 4. Controls and Procedures.
Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act) are designed to ensure that information required to be disclosed in the reports that
we file or submit under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Securities and Exchange Commission. The
Company carried out an evaluation, under the supervision and with the participation of the
Companys management, including the Companys Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and
operation of the Companys disclosure controls and procedures as of December 31, 2008 and, based on
their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the
Companys disclosure controls and procedures are effective.
There has been no change in the Companys internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the three months ended
December 31, 2008 that has materially affected, or is reasonable likely to materially affect, the
Companys internal control over financial reporting.
23
Part
II OTHER INFORMATION
Item 1A. Risk Factors
Risks and uncertainties that, if they were to occur, could materially adversely affect our business
or that could cause our actual results to differ materially from the results contemplated by the
forward-looking statements contained in this Report and other public statements were set forth in
the Item 1A. Risk Factors section of our Annual Report on Form 10-K for the year ended June 30,
2008. There have been no material changes from the risk factors disclosed in that Form 10-K.
Item 4. Submissions of Matters to a Vote of Security Holders
At the Companys Annual Meeting of Shareholders, held on December 11, 2008 (the Annual Meeting),
Messrs. Howard Alliger, John W. Gildea, Michael A. McManus, Jr., Dr. Charles Miner III, T. Guy
Minetti and Thomas F. ONeill were elected as Directors for a one-year term. The votes were as
follows: Mr. Alliger votes for 6,169,381; votes withheld 165,529. Mr. Gildea votes for
6,120,125; votes withheld 214,785. Mr. McManus votes for 5,457,390; votes withheld 877,520. Dr.
Miner votes for 6,120,075; votes withheld 214,835. Mr. Minetti votes for 6,118,812; votes
withheld 216,098. Mr. ONeill votes for 6,120,125; votes withheld 214,785.
At the Annual Meeting, an amendment of the Companys Certificate of Incorporation increasing the
total number of authorized shares of common stock, par value $.01 per share, from ten (10) million
shares to twenty (20) million shares (the Amendment) was approved. Shareholders cast (i)
5,105,685 shares in favor of the Amendment and (ii) 1,191,768 shares against the Amendment.
Shareholders holding 37,457 shares abstained from voting on the Amendment.
Item 6. Exhibits
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Exhibits 31.1-
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Rule 13a-14(a)/15d-14(a) Certification |
Exhibits 31.2-
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Rule 13a-14(a)/15d-14(a) Certification |
Exhibits 32.1-
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Section 1350 Certification of Chief Executive Officer |
Exhibits 32.2-
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Section 1350 Certification of Chief Financial Officer |
24
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.
Date: February 13, 2009
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MISONIX, INC.
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(Registrant)
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By: |
/s/ Michael A. McManus, Jr.
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Michael A. McManus, Jr. |
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President and Chief Executive Officer |
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By: |
/s/ Richard Zaremba
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Richard Zaremba |
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Senior Vice President, Chief Financial Officer,
Treasurer and Secretary |
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25
EXHIBIT INDEX
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Exhibits 31.1-
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Rule 13a-14(a)/15d-14(a) Certification |
Exhibits 31.2-
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Rule 13a-14(a)/15d-14(a) Certification
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Exhibits 32.1-
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Section 1350 Certification of Chief Executive Officer |
Exhibits 32.2-
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Section 1350 Certification of Chief Financial Officer |
26