Exhibit 99.1
PUMP ENGINEERING, LLC |
AUDITED CONSOLIDATED FINANCIAL STATEMENTS |
DECEMBER 20, 2009 |
CONTENTS
PAGE | |
INDEPENDENT AUDITOR’S REPORT | 3 |
CONSOLIDATED BALANCE SHEET | 4 |
CONSOLIDATED STATEMENT OF OPERATIONS | 5 |
CONSOLIDATED STATEMENT OF MEMBERS’ EQUITY | 6 |
CONSOLIDATED STATEMENT OF CASH FLOWS | 7 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | 8-15 |
SUPPLEMENTARY INFORMATION: | |
CONSOLIDATED SCHEDULE OF COST OF SALES | 16 |
CONSOLIDATED SCHEDULE OF SELLING EXPENSES | 17 |
CONSOLIDATED SCHEDULE OF ADMINISTRATIVE EXPENSES | 18 |
CONSOLIDATED SCHEDULE OF RESEARCH AND DEVELOPMENT EXPENSES | 19 |
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Pump Engineering, LLC
New Boston, MI
We have audited the accompanying consolidated balance sheet of Pump Engineering, LLC (the Company) as of December 20, 2009, and the related consolidated statement of operations, members’ equity and cash flows for the period from January 1, 2009 through December 20, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based upon our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 20, 2009, and the results of its consolidated operations and its consolidated cash flows for the period from January 1, 2009 through December 20, 2009 in conformity with accounting principles generally accepted in the United States of America.
February 10, 2010
Gilmore, Jasion & Mahler LTD
PUMP ENGINEERING, LLC |
CONSOLIDATED BALANCE SHEET |
December 20, 2009 |
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | $ | 845,008 | ||
Accounts receivable - trade, net of allowance for doubtful | ||||
accounts of $65,743 | 742,086 | |||
Inventories | 2,942,612 | |||
Prepaid expenses and other assets | 249,757 | |||
Total current assets | 4,779,463 | |||
Property and equipment | ||||
Building and building improvements | 3,194,447 | |||
Machinery and equipment | 2,546,036 | |||
Patterns, tools, jigs and fixtures | 772,130 | |||
Office equipment and fixtures | 592,922 | |||
Total cost | 7,105,535 | |||
Less: allowance for depreciation and amortization | (2,283,100 | ) | ||
Net property and equipment | 4,822,435 | |||
Other assets | ||||
Construction in process | 656,970 | |||
Patents, net of accumulated amortization of $202,347 | 87,734 | |||
Total other assets | 744,704 | |||
Total assets | $ | 10,346,602 |
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LIABILITIES AND MEMBERS' EQUITY | ||||
Current liabilities | ||||
Checks in excess of bank balance | $ | 70,705 | ||
Accounts payable | 1,302,368 | |||
Current portion of long-term debt | 271,244 | |||
Current portion of capital lease obligations | 175,047 | |||
Accrued liabilities | ||||
Accrued compensation and related payroll taxes | 182,356 | |||
Accrued warranty | 266,721 | |||
Customer deposits | 3,574,233 | |||
Total current liabilities | 5,842,674 | |||
Long-term liabilities | ||||
Long-term commitment | 45,000 | |||
Long-term debt - net of current portion | 1,577,902 | |||
Capital lease obligations - net of current portion | 371,044 | |||
Net long-term liabilities | 1,993,946 | |||
Total liabilities | 7,836,620 | |||
Equity | ||||
Members' equity | 2,509,982 | |||
Total liabilities and members' equity | $ | 10,346,602 |
The accompanying notes are an integral part of these financial statements.
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PUMP ENGINEERING, LLC |
STATEMENT OF CONSOLIDATED OPERATIONS |
For the Period from January 1, 2009 through December 20, 2009 |
Sales | $ | 7,460,718 | ||
Cost of sales | 4,787,485 | |||
Gross profit | 2,673,233 | |||
Selling, administrative and research | ||||
and development expenses | ||||
Selling expenses | 1,831,546 | |||
Administrative expenses | 1,628,002 | |||
Research and development expenses | 622,420 | |||
Total selling, administrative, and | ||||
research and development expenses | 4,081,968 | |||
Operating loss | (1,408,735) | |||
Other income (expense) | ||||
Interest expense | (101,318) | |||
Interest income | 10,914 | |||
Net other expense | (90,404) | |||
Net loss | $ | (1,499,139) |
The accompanying notes are an integral part of these financial statements.
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PUMP ENGINEERING, LLC |
CONSOLIDATED STATEMENT OF MEMBERS' EQUITY |
For the Period Ended December 20, 2009 |
Preferred | Common | Total | |||||||||||
Member Equity | Member Equity | Equity | |||||||||||
Balance, January 1, 2009 | $ | 0 | $ | 0 | $ | 0 | |||||||
Capital contributions | 2,410,000 | 2,148,429 | 4,558,429 | ||||||||||
Retirement of common | |||||||||||||
member units | (35,200 | ) | (35,200 | ) | |||||||||
Distributions | (196,268 | ) | (317,840 | ) | (514,108 | ) | |||||||
Net loss | (179,094 | ) | (1,320,045 | ) | (1,499,139 | ) | |||||||
Balance, December 20, 2009 | $ | 2,034,638 | $ | 475,344 | $ | 2,509,982 |
The accompanying notes are an integral part of these financial statements.
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PUMP ENGINEERING, LLC |
CONSOLIDATED STATEMENT OF CASH FLOWS |
For the Period from January 1, 2009 through December 20, 2009 |
Cash flows from operating activities | ||||
Net loss | (1,499,139 | ) | ||
Adjustments to reconcile net loss to net cash | ||||
provided by operating activities: | ||||
Depreciation and amortization | 393,707 | |||
Change in provision for doubtful accounts | 4,160 | |||
Changes in operating assets and liabilities: | ||||
(Increase) decrease in: | ||||
Accounts receivable - trade | 380,403 | |||
Inventories | (1,052,343 | ) | ||
Prepaid expenses and other assets | (219,283 | ) | ||
Deposits | 77,166 | |||
Increase in: | ||||
Accounts payable | 784,879 | |||
Accrued liabilities | 171,202 | |||
Customer deposits | 3,293,300 | |||
Other long-term liabilities | 45,000 | |||
Net cash provided by operating activities | 2,379,052 | |||
Cash flows from investing activities | ||||
Purchases of property and equipment | (3,863,245 | ) | ||
Payments for construction in process | (656,970 | ) | ||
Net cash used in investing activities | (4,520,215 | ) | ||
Cash flows from financing activities | ||||
Checks in excess of bank balance | 70,705 | |||
Proceeds from long-term debt | 1,964,530 | |||
Payments on long-term debt | (881,010 | ) | ||
Payments on capital lease obligations | (167,131 | ) | ||
Line of credit - net | (234,807 | ) | ||
Member contributions | 2,410,000 | |||
Distributions to members | (269,796 | ) | ||
Retirement of common member units | (35,200 | ) | ||
Net cash provided by financing activities | 2,857,291 | |||
Net increase in cash | 716,128 | |||
Cash and cash equivalents at beginning of period | 128,880 | |||
Cash and cash equivalents at end of period | 845,008 | |||
Supplemental disclosure of cash flow information | ||||
Cash paid during the period for interest | 101,318 | |||
Supplemental disclosure of non-cash financing transactions: | ||||
Distribution of building to common members | 244,312 | |||
Contribution of common members' capital as a result of a change in equity structure | 2,148,429 |
The accompanying notes are an integral part of these financial statements.
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PUMP ENGINEERING, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 20, 2009
Note 1–Significant accounting policies |
Principles of consolidation
Pump Engineering, LLC (the Company) is a Michigan Limited Liability Company. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary: PEI Agent Inc. All material intercompany balances and transactions have been eliminated.
Nature of operations
The Company, develops and produces pumping equipment and turbines designed to desalinate salt water. These products are sold to customers throughout Europe, Australia, India, Asia, the Caribbean, the Middle East and the United States.
Effective January 1, 2009 Pump Engineering, Inc. converted the organizational structure from a Corporation, to a Limited Liability Corporation (LLC), Pump Engineering, LLC. At this time, Pump Engineering, Inc. entered into an agreement exchanging all of its assets net of the Corporation's liabilities, in exchange for 1749 class A common units or 87.45% of the LLC. New members were granted 241 preferred units and 10 class A common units equal to 12.55% of the LLC in exchange for $2,410,000 in cash.
On March 13, 2009, the Company retired 18.91 Class A common units with the payment totaling $35,200.
The Company issued 87.46 class B common units to key members of management as profit only interest during the period of January 1, 2009 through December 20, 2009. The profit only interest require no capital contributions upon issuance, but entitles each Class B common unit holders to participate in the allocation of profits and losses and distributions identical to a Class A common unit holder who contributed capital.
PEI Agent, Inc. was organized in 2006 for the manufacturing and distribution of the Company’s product to its foreign customers.
Estimates and assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company maintains deposits in federally insured financial institutions. At times, these deposits exceed federally insured limits; however, management monitors the soundness of these financial institutions and believes the Company’s risk is negligible. At December 20, 2009, the Company’s bank balance was approximately $574,000 in excess of Federal Deposit Insurance Corporation insured limits.
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PUMP ENGINEERING, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -CONTINUED
December 20, 2009
Note 1–Significant accounting policies – continued |
Investments
Investments are recorded at quoted market prices. Current investments represent money market funds.
Accounts receivable
The Company extends credit to its customers. Payment terms from customers may provide for a 10% retainage due upon successful installation of the pump. Bad debts are provided for using the allowance method based on management’s evaluation of the collectibility of outstanding accounts receivable at the end of the year, which evaluation is based on historical losses and current economic conditions. The Company does not accrue interest on past due receivable balances.
Inventories
Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out method. At December 20, 2009, inventories consisted of the following:
2009 | ||||
Raw materials | $ | 1,970,303 | ||
Work in process | 972,309 | |||
Total inventory | $ | 2,942,612 |
Property and equipment
Property and equipment are carried at cost. Costs that materially add to the productive capacity or extend the life of an asset are capitalized while maintenance and repair costs are expensed as incurred.
The Company provides for depreciation and amortization using straight-line and accelerated methods over the estimated useful lives of the depreciable assets.
Patents |
Costs incurred to obtain patents with the United States government are being amortized using the straight-line method over the estimated useful lives of 17 years. Amortization expense for the period from January 1, 2009 through December 20, 2009 was $9,842 Amortization expense for the next five years is as follows:
2010 | $ | 9,260 | ||
2011 | 9,260 | |||
2012 | 9,260 | |||
2013 | 9,260 | |||
2014 | 9,260 | |||
Thereafter | 41,434 | |||
Total | $ | 87,734 |
Revenue
Revenue is recognized when it is earned. Advance receipts of revenue which are recorded as customer deposits are deferred and classified as liabilities until earned.
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PUMP ENGINEERING, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -CONTINUED
December 20, 2009
Note 1–Significant accounting policies – continued |
Advertising |
The Company charges advertising costs to expense in the year incurred. Advertising expenses were $96,235 for the period from January 1, 2009 through December 20, 2009.
Research and development
The Company reports the costs of planning, designing and establishing the technological feasibility of a new process as research and development cost and such costs are expensed when incurred.
Income taxes
As a limited liability company, the Company’s taxable income or loss is allocated to members in accordance with their respective percentage ownership. Therefore, no provision or liability for income taxes has been included in the financial statements.
The Financial Accounting Standards Board issued new guidance on accounting for uncertainty in income taxes. The Company adopted new guidance for the year ended December 31, 2009. Management evaluated the Company’s tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statement to comply with the provisions of this guidance. With few exceptions, the Company is no longer subject to income tax examinations by the U.S. federal, tax authorities for years before 2006 and state or local tax authorities for years before 2005.
Note 2–Allocation of members’ profits, losses and distributions
Preferred distributions
Each outstanding preferred unit shall accrue a preferred distribution at a rate equal to eight percent cumulative but not compounded annually on the outstanding balance on each preferred unit equal to the original purchase price for the preferred unit. The contributed value of the Company’s preferred units was $2,410,000 as of December 20, 2009. These units had earned and were paid a preferred distribution totally $186,334 for the period of January 1, 2009 through December 20, 2009.
Required tax distributions
To the extent of available excess cash, the Company shall distribute to all of the members, on a quarterly basis, required tax distributions attributable to their membership interests in the Company. The required tax distributions will be based upon the estimated taxable income multiplied times the highest individual federal tax rate and two thirds of the maximum individual state income tax rate for the state of Michigan. If after the close of a fiscal period it is determined that the amount of the quarterly required tax distributions exceeded the amount actually to be paid based upon the final taxable income, the members are not obligated to refund the amount of the excess tax distribution, but instead adjust any excess cash distributions as discussed below. For the period of January 1, 2009 through December 20, 2009, the Company paid required tax distributions totaling $83,462.
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PUMP ENGINEERING, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -CONTINUED
December 20, 2009
Note 2–Allocation of members’ profits, losses and distributions – continued
Distributions of excess cash
The Company shall distribute, on a discretionary basis, the Company’s excess cash as follows: first, to all of the members, any required tax distribution; second, to the preferred members, the amount of their cumulative accrued, but unpaid preferred return; third, to the preferred members, an amount equal to their preferred adjusted capital contribution; and fourth, to all of the members pro rata among them in accordance with their proportionate shares of all units on a combined basis.
Distributions in the event of liquidation
If the Company shall liquidate then the proceeds of such liquidation shall be applied in the following order of priority: first, to the expenses of such liquidation; second, to the debts and liabilities of the Company to third parties, if any, in the order of priority provided by law; third, a reasonable reserve shall be set up to provide for any contingent or unforeseen liabilities or obligations of the Company to third parties and at the expiration of such period as the Company may deem advisable, the balance remaining in such reserve shall be distributed as provided herein; fourth, to debts of the Company to the members or their affiliates and any fees and reimbursements payable; fifth, to pay any amount of past due required tax distributions (including, without limitation, required tax distributions arising from the liquidation of the Company's assets and/or units); sixth, to the preferred members to satisfy any accrued but unpaid preferred return; seventh, to the preferred members in an amount equal to their preferred adjusted capital contribution; and eighth, to all of the members on a pro rata basis in accordance with their units (both common and preferred units combined).
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PUMP ENGINEERING, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -CONTINUED
December 20, 2009
Note 3–Debt
Long-term debt
Long-term debt at December 20, 2009 consisted of the following:
Note payable to a bank, payable in monthly installments of $6,000 plus interest equal to 3.00% per annum in excess of LIBOR (effective rate of 3.28%) through August 2014 when the remaining unpaid principal and interest become due and payable. This note was paid off in full subsequent to period end. (see Note 9) | $ | 1,476,000 | ||
Note payable in monthly installments of $11,337 including fixed interest at 7.00%, through February 2011, when the remaining unpaid principal and interest become due and payable. The obligation is collateralized by a security interest in the building. | 157,347 | |||
Note payable to a bank, payable in monthly installments of $5,208, including fixed interest at 4.45% through March 2013, when the remaining unpaid principal and interest become due and payable. This note was paid off in full subsequent to period end. (see Note 9) | 203,125 | |||
Vehicle loan to a bank, payable in monthly installments of $289, including fixed interest at 7.25% through February 2014, when the remaining unpaid principal and interest become due and payable. The loan is collateralized by a security interest in the vehicle. | 12,674 | |||
Total | 1,849,146 | |||
Less current portion of long-term debt | (271,244 | ) | ||
Net long-term debt | $ | 1,577,902 |
The Company’s notes payable above to a bank are cross-collateralized on all bank borrowings obligations, debts and liabilities and are secured by all assets of the Company.
Maturities of long-term debt subsequent to December 20, 2009 are as follows:
Year ending December 31, | ||||
2010 | $ | 271,244 | ||
2011 | 160,617 | |||
2012 | 137,570 | |||
2013 | 90,926 | |||
2014 | 1,188,789 | |||
Total | $ | 1,849,146 |
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PUMP ENGINEERING, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -CONTINUED
December 20, 2009
Note 4–Lease, rental, and other commitments |
Capital leases |
The Company leases certain equipment under capital leases. The following is a schedule by years of the future minimum lease payments under the capitalized leases together with the present value of the net minimum lease payments at December 20, 2009:
Year ending December 31, | ||||
2010 | $ | 214,118 | ||
2011 | 206,363 | |||
2012 | 137,600 | |||
2013 | 64,512 | |||
Total minimum lease payments | 622,593 | |||
Less: Amount representing interest | (76,502 | ) | ||
Present value of minimum lease payments | 546,091 | |||
Less: Current portion of capital lease obligations | (175,047 | ) | ||
Net long-term capital lease obligations | $ | 371,044 |
At December 20, 2009, the cost of machinery and equipment under capital lease obligations is as follows:
2009 | ||||
Machinery and equipment | $ | 1,325,387 | ||
Accumulated depreciation | (750,676 | ) | ||
$ | 574,711 |
Operating leases |
The Company leases various pieces of equipment under noncancelable operating leases expiring through the year 2014.
The following is a schedule of future minimum rental payments required under operating leases that have an initial or remaining noncancelable lease term in excess of one year as of December 20, 2009:
Year ending December 31, | ||||
2010 | $ | 162,706 | ||
2011 | 157,995 | |||
2012 | 154,630 | |||
2013 | 154,630 | |||
2014 | 103,087 | |||
Total | $ | 733,048 |
Total rent expense under operating leases was $56,959 for the period from January 1, 2009 through December 20, 2009.
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PUMP ENGINEERING, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -CONTINUED
December 20, 2009
Note 4–Lease, rental, and other commitments – continued |
Other lease
The Company is obligated under a noncancelable Master Equipment Lease Agreement to a financial institution. Future minimum lease payments under these leases are $249,374.
Purchase commitment
The Company has entered into a commitment to join an industry association for the amount of$56,250. This payment is to be made in three annual installments ending in 2012. The correspondingliability has been recorded as a current liability of $11,250 and a long term commitment liability of $45,000.
Note 5–Warranty reserve
The Company warrants all products for a period of the earlier of one year after the product has been placed in service or eighteen months from the date of shipment. The Company estimates future warranty costs based on management’s evaluation of the sales of products covered under the warranty. |
Changes in the Company’s warranty reserve at December 20, 2009:
2009 | ||||
Balance at January 1, 2009 | $ | 93,480 | ||
Warranties issued | 271,362 | |||
Settlements | (98,121 | ) | ||
Balance at December 20, 2009 | $ | 266,721 |
Note 6–Employee retirement plan
The Company has a 401(k) profit-sharing plan for all employees who fulfill a minimum age and length of service requirement. Contributions to the profit sharing plan are discretionary by the Company, up to the maximum permitted by the Internal Revenue Code and are determined annually by the Board of Directors. The 401(k) profit sharing plan provides for the Company to match a uniform percentage of employee contributions to the plan as determined annually by the Board of Directors. There were no Company contributions made in the period from January 1, 2009 through December 20, 2009.
Note 7–Major customers |
Sales include approximately $974,000 to one customer representing approximately 13% of the Company’s sales for the period from January 1, 2009 through December 20, 2009.
At December 20, 2009, accounts receivable from four customers were approximately $532,000 representing 66% of the Company’s receivables at December 20, 2009.
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PUMP ENGINEERING, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -CONTINUED
December 20, 2009
Note 8–Subsequent event |
The Company has evaluated all events subsequent to the balance sheet date of December 20, 2009 through February 10, 2010, which is the date these consolidated financial statements were issued, and has determined that except as set forth below, there are no subsequent events that require disclosure under the FASB Accounting Standards Codification Topic, Subsequent Events. |
On December 21, 2009, the Company was merged with Energy Recovery Inc (ERI). At this time the separate corporate existence of the Company ceased. As a result of the merger, any holder of a Company unit at the time of the transaction received the right to both a per unit cash payment, net of the cost of the transaction which totaled approximately $1,229,000, and per unit stock payment of ERI common stock. In total, the cash unit payments were $20 million and the stock unit payments amounted to 1,000,000 shares.
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SUPPLEMENTARY INFORMATION
PUMP ENGINEERING, LLC |
CONSOLIDATED SCHEDULE OF COST OF SALES |
For the Period from January 1, 2009 through December 20, 2009 |
Materials | $ | 2,464,605 | ||
Salaries and wages | 994,919 | |||
Depreciation | 356,390 | |||
Outside shop services | 349,404 | |||
Freight | 234,824 | |||
Payroll taxes | 94,219 | |||
Employee insurance | 89,477 | |||
Shop supplies | 52,668 | |||
Equipment rental | 50,205 | |||
Utilities | 30,140 | |||
Repairs and maintenance | 23,343 | |||
Education and training | 18,652 | |||
Amortization | 9,842 | |||
Property taxes | 8,511 | |||
Telephone | 6,754 | |||
Travel | 3,532 | |||
Total cost of sales | $ | 4,787,485 |
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PUMP ENGINEERING, LLC |
CONSOLIDATED SCHEDULE OF SELLING EXPENSES |
For the Period from January 1, 2009 through December 20, 2009 |
Commissions | $ | 804,340 | ||
Salaries | 466,333 | |||
Travel and meals | 232,562 | |||
Advertising and promotions | 96,235 | |||
Consulting fees | 89,924 | |||
Conference expense | 44,914 | |||
Payroll taxes | 36,859 | |||
Employee insurance | 23,001 | |||
Office | 16,449 | |||
Telephone | 17,182 | |||
Utilities | 3,747 | |||
Total selling expenses | $ | 1,831,546 |
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PUMP ENGINEERING, LLC |
CONSOLIDATED SCHEDULE OF ADMINISTRATIVE EXPENSES |
For the Period from January 1, 2009 through December 20, 2009 |
Salaries | $ | 599,263 | ||
Professional fees | 468,889 | |||
Employee insurance | 92,485 | |||
Bank charges | 87,177 | |||
Outside services | 61,537 | |||
Payroll taxes | 52,915 | |||
Office supplies | 40,919 | |||
Bad debts | 38,295 | |||
Travel and meals | 27,989 | |||
Depreciation | 27,475 | |||
Insurance | 24,403 | |||
Repairs and maintenance | 23,373 | |||
Utilities | 13,281 | |||
Contributions | 12,540 | |||
Property taxes | 11,937 | |||
Dues and subscriptions | 8,235 | |||
Telephone | 7,768 | |||
Auto | 6,145 | |||
Equipment rental | 3,304 | |||
Postage | 1,992 | |||
Retirement plans | 930 | |||
Other | 17,150 | |||
Total administrative expenses | $ | 1,628,002 |
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PUMP ENGINEERING, LLC |
CONSOLIDATED SCHEDULE OF RESEARCH AND DEVELOPMENT EXPENSES |
For the Period from January 1, 2009 through December 20, 2009 |
Salaries | $ | 426,651 | ||
Outside shop services | 84,694 | |||
Miscellaneous | 45,082 | |||
Payroll taxes | 35,932 | |||
Employee insurance | 22,318 | |||
Utilities | 7,743 | |||
Total research and development expenses | $ | 622,420 |
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