June 26, 2019
Stavros G. Vizirgianakis
President and Chief Executive Officer
Misonix, Inc.
1938 New Highway
Farmingdale, New York 11735
Re: New Misonix, Inc.
Registration Statement on Form S-4
Filed May 29, 2019
File No. 333-231797
Dear Mr. Vizirgianakis:
We have reviewed your registration statement and have the following
comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by amending your registration statement
and providing the
requested information. If you do not believe our comments apply to your facts
and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.
After reviewing any amendment to your registration statement and the
information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-4 filed May 29, 2019
About this Joint Proxy and Consent Solicitation Statement/Prospectus, page i
1. Please tell us the intended purpose and effect of the last sentence in
this section. Include
in your response whether you believe the named entities are experts for
purposes of
Section 11 of the Securities Act.
What indemnification obligations will I have as Solsys unitholder under the
merger agreement
upon completion of the transactions?, page 8
2. Please clarify if the satisfaction of any of these obligations will be
limited to the shares
held in escrow.
Stavros G. Vizirgianakis
FirstName LastNameStavros G. Vizirgianakis
Misonix, Inc.
Comapany NameMisonix, Inc.
June 26, 2019
June 26, 2019 Page 2
Page 2
FirstName LastName
Description of Support Agreements, page 20
3. We note your reference to the agreements to vote. We also note the
irrevocable proxy like
in section 4 of exhibit 10.2. Please provide us your analysis
supporting your conclusions
regarding whether offers and sales of the securities registered for
sale have already been
made and completed. For guidance, see the Division of Corporation
Finance's Securities
Act Sections Compliance and Disclosure Interpretation 239.13 available
on the
Commission's website.
Risk Factors, page 29
4. Please add a risk factor to address the obligation to pay the
representative's expenses as
mentioned on page 116; clarify when the obligation ends. Also add a
risk factor to
address the material difference in tax consequences of an investment
in Solsys Medical
LLC and New Misonix, Inc; provide us your analysis of whether
Regulation S-K Item
601(b)(8) requires an opinion regarding the disclosure.
New Misonix's operating results may fluctuate..., page 34
5. Please reconcile your fourth bullet point which seems to indicate that
New Misonix may
manufacture TheraSkin with your disclosure on page 135 that TheraSkin
is manufactured
by LifeNet.
New Misonix may not be able to effectively protect its intellectual property
rights, page 41
6. Please tell us when material patents related to the business of New
Misonix and Solsys
Medical expire.
As a privately held entity, Solsys was not required to comply with the
reporting requirements...,
page 46
7. We note the reference to corporate governance reforms in Note 10 to
the financial
statements contained in Misonix's Form 10-Q for the quarterly period
ended March 31,
2019. If material, in an appropriate section of your prospectus,
please disclose whether
New Misonix will be subject to those reforms.
Reasons for the Charter Amendments, page 60
8. Within your disclosure of each amendment, please balance your
discussion of advantages
of each amendment with disclosure of the disadvantages of the
amendment.
The Transactions, page 66
9. You may not disclaim responsibility for your disclosure. Please revise
the penultimate
sentence of the first paragraph of this section accordingly.
Stavros G. Vizirgianakis
FirstName LastNameStavros G. Vizirgianakis
Misonix, Inc.
Comapany NameMisonix, Inc.
June 26, 2019
June 26, 2019 Page 3
Page 3
FirstName LastName
Background of the Transactions, page 67
10. We note the disclosure that on March 8, 2019, the term sheet
contemplated that Solsys'
unitholders would receive 37% of the outstanding shares of Misonix on
a fully-diluted
basis as merger consideration. Revise to indicate the basis for the
percentage of Misonix
that was offered as merger consideration.
11. Please provide us with all materials, including any board books,
provided by the financial
advisors to either the Misonix or Solsys boards.
12. Please provide the disclosure required by Form S-4 Item 4(b) regarding
the report and
opinion of Canaccord mentioned on pages 70 and 78 and the report of
J.P. Morgan
mentioned on pages 77 and 79.
Positive Factors, page 84
13. We note your disclosure that the combined company could achieve annual
cost savings
and synergies. Please provide more detailed disclosure about the cost
savings and
synergies, particularly in light of the transaction structure in which
it appears that Misonix
and Solsys will operate as separate wholly owned subsidiaries of New
Misonix. If that
transaction structure could limit savings and synergies, please
clarify.
Accelerated Vesting of Series F Profits Interest Awards, page 86
14. Disclose how the number of shares of New Misonix common stock will be
determined
given any changes in the share price of Misonix common stock as of the
closing date.
Opinion of Misonix's Financial Advisor, page 87
15. Please clarify if BRG reviwed the new Distribution and Supply
Agreement referred to in
the second to last paragraph on page 134.
16. Please quantify the fees mentioned in the first and second paragraphs
under the heading
"Miscellaneous" on page 95. Also, please file the financial advisor's
consent to the
references to it in the section under the heading "Certain Unaudited
Prospective Financial
Information Regarding Misonix and Solsys."
Discounted Cash Flow Analysis, page 90
17. Please revise this section to explain how BRG determined the estimated
ranges of
weighted average cost of capital used in its analysis. Please also
revise to provide
additional detail on the "beta and financial metrics reflecting the
broader financial
markets" used in the capital asset pricing model.
Stavros G. Vizirgianakis
FirstName LastNameStavros G. Vizirgianakis
Misonix, Inc.
Comapany NameMisonix, Inc.
June 26, 2019
June 26, 2019 Page 4
Page 4
FirstName LastName
Certain Unaudited Prospective Financial Information Regarding Misonix and
Solsys, page 95
18. We note your disclosures on page 97 and 109.
Please be advised that, notwithstanding the inclusion of general
disclaimers, you are
responsible for considering whether additional specific disclosures
of material
information are required to make the information included in your
filing not
misleading.
Please reconcile your statement on page 97 that J.P. Morgan and
Canaccord disclaim
any association with the information with your disclosure on page 96
that portions of
the information were prepared with the assistance of those entities,
and provide us
your analysis of whether the consent of those entities must be filed
with your
registration statement.
Selected Unaudited Prospective Financial Information, page 98
19. We note that the prospective financial information is subject to
assumptions and
estimates. Please disclose the principal material assumptions and
estimates underlying
this information, and the key operating assumptions underlying the
projections through
2029 mentioned on page 90.
20. Please tell us how the Misonix projections disclosed here differ from
the projections
mentioned in the first paragraph on page 71. Also:
disclose the cash flow and cash needs projections mentioned on page
73 and 74, the
quarterly projections mentioned on page 74, and the key cash flow
items mentioned on
page 90.
clarify whether your statement on page 96 regarding "certain
significant elements"
means that you have disclosed all of the material projections.
Financing Related to the Transactions, page 100
21. Please provide us your analysis of whether the $4 million offering of
Series E units
requires investors to make an investment decision in your common stock
registered for
sale on this registration statement.
Material U.S. Federal Income Tax Consequences of the Mergers, page 102
22. Please revise to clarify why counsel carves out "the unearned income
Medicare
contribution tax" in this context. Also, clarify (1) the tax
consequences of the
"distribution" mentioned on page 105, and (2) how consideration placed
in escrow affects
the disclosure in this section. For example, will the equity holders
be deemed to have
received the shares placed in escrow at the time of the closing of the
merger? What is the
effect of those shares being released back to the issuer?
23. Your disclosure in the last full paragraph on page 103 suggests that
counsel's tax opinions
may not contain the assumptions that are described in the first
sentences under "U.S.
Stavros G. Vizirgianakis
FirstName LastNameStavros G. Vizirgianakis
Misonix, Inc.
Comapany NameMisonix, Inc.
June 26, 2019
June 26, 2019 Page 5
Page 5
FirstName LastName
Federal Income Tax Consequences to U.S. Holders of Misonix's Shares"
and "U.S.
Federal Income Tax Consequences to U.S. Holders of Solsys Membership
Interests."
Since it is not clear if counsel will be making those assumptions, and
those assumptions
appear to assume away legal determinations necessary for the ultimate
opinions on the tax
consequences, please tell us why the disclosed assumptions are
appropriate.
The Agreement and Plan of Merger, page 106
24. We note your disclosure that the merger agreement and the "Description
of the Merger
Agreement" discussion are not intended to provide any other factual
information about
Misonix, Solsys or New Misonix, Merger Sub One, or Merger Sub Two, and
that
information can be found elsewhere. We also note your disclosure on
page 109 regarding
assertions made solely for the purposes of the contract. Please revise
to remove any
potential implication that the referenced merger agreement and
discussion do not
constitute public disclosure under the federal securities laws.
Certificate of Incorporation, page 107
25. We note your reference to two versions of the certificate of
incorporation attached as
Annex B; however, Annex B appears to include one version. Please
clarify.
Directors and Officers of New Misonix, page 107
26. We note your disclosure regarding who will serve as directors of New
Misonix. Please
file all consents required by Securities Act Rule 438.
Consideration in the Solsys Merger, page 108
27. Please clarify the consideration to be issued for each membership
interest, including units,
equity appreciation rights, profit interest units, warrants, and any
other relevant interest or
right to an interest. The consideration should be stated in terms of
the lowest amount that
is assured to be issued. Disclosure may be included that there is a
possibility of an
increase in the stated consideration if amounts remain in the escrow
account after the
occurrence of stated events.
Clarify how this consideration is based on the relative economic
rights as mentioned on
the prospectus cover, and how fractional shares will be addressed.
Also clarify:
how the consideration to be received may differ based on the price
of Misonix
common stock and the terms of the units as mentioned on page 8.
Include as
appropriate an illustrative table using a reasonable range of
prices of Misonix common
stock with columns indicating the respective exchange ratios and
other relevant
information. In this regard, given that it appears that the
formula is based on the
trading price of Misonix stock after the vote, please (1) disclose
when the actual value
of the consideration and number of shares to be issued per
membership interest will be
determined, and disclose, if true, that the actual value of the
consideration and the
Stavros G. Vizirgianakis
FirstName LastNameStavros G. Vizirgianakis
Misonix, Inc.
Comapany NameMisonix, Inc.
June 26, 2019
Page 6
June 26, 2019 Page 6
FirstName LastName
number of shares to be issued may differ from the examples, and
(2) disclose on the
cover page that security holders will not know at the time they
return their consents
the number of shares they will receive.
the anticipated time period between the vote and closing.
the amount of partnership liabilities attributable to each of the
membership interests
exchanged by the Solsys members as mentioned on page 45. In this
regard, given
your reference to partnership liabilities here and the required
dissolution mentioned on
page F-16, please provide us your analysis of whether your
agreement involves a roll-
up transaction as defined in Regulation S-K Item 901(c).
how the shares remaining in the escrow account will be distributed
among each
membership unit under the terms of the operating agreement as
mentioned on page 67.
If managers and executive officers disproportionately own interests
that are subject to an
exchange ratio that materially differs from ratio to be received by
holders of other
interests, clarify the extent of this difference.
Lock-up, page 117
28. Please disclose the number of shares subject to the lock up mentioned
here and on page
122. Also, tell us which exhibit represents the lock-up agreement.
Indemnification by the Solsys Unitholders, page 121
29. Clarify how the shares held in escrow will be valued if they are used
to satisfy any
indemnification claims.
Note 2 - Financing Transactions and Revenue Recognition, page 129
30. We note that you performed a preliminary review of Solsys' revenue
streams and
determined that no pro forma adjustments related to ASC Topic 606 were
necessary for
the nine months ended March 31, 2019. We also note from Solsys'
disclosures on page F-
30 that the company is still in the process of determining the effect
related to ASC 606. In
light of this disclosure, please explain to us how management
concluded no pro forma
adjustments were necessary. Clearly describe to us the procedures
management
performed in making this determination.
Note 3 - Pro Forma Adjustments
a) Preliminary Purchase Price Adjustments, page 129
31. We note intangible assets have been assigned a fair value of
approximately $21.8 million
and a weighted average useful life of approximately 20 years. Please
revise your filing to
disclose how you determined the fair value and useful lives assigned
to intangible assets
acquired, including any significant uncertainties associated with
valuations and useful
lives.
Stavros G. Vizirgianakis
Misonix, Inc.
June 26, 2019
Page 7
32. As a related matter, we note from the disclosures on page F-28 that
Solsys' supply and
distribution agreement for TheraSkin has a current term through
October 26, 2027 and a
three year renewal option. Please tell us how these contractual
restrictions were
considered in determining the fair value and useful life of the
TheraSkin trade name.
Pro Forma Adjustments to the Statement of Operations for the Year Ended June
30, 2018 , page
131
33. Reference is made to adjustments (j) and (p). Please revise to
disclose the gross impact of
the interest expense adjustments.
34. Reference is made to adjustments (l) and (r). Please revise to explain
how you determined
the depreciation expense adjustments related to your step-up of
property, plant and
equipment including the useful lives.
35. Reference is made to adjustments (n) and (u). Please explain to us why
the elimination of
the Solsys interest expense charges for financing exit fees of
$118,000 and $63,000 for the
year ended June 30, 2018 and nine months ended March 31, 2019,
respectively, are
presented as additions to interest expense.
Business of Solsys, page 133
36. Please tell us whether you or Solsys paid for the studies,
publications or data mentioned in
this section, and whether there have been material adverse results
from use of the product
reported in studies or otherwise. If Misonix or Solsys were affiliated
with the preparation
of any of the data included in the prospectus, please ensure that your
disclosure clearly
indicates the nature of all such affiliations.
Dependence on LifeNet, page 139
37. We note the second paragraph of this section. Please disclose the
material termination
provisions. Also disclose in this section the duration of the
agreement.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of
Solsys
Results of Operations, page 145
38. We note in the discussion of your revenue that you present a measure of
"if all sales of
TheraSkin were reported as net sales, whether by LifeNet or Solsys as
vendor of record."
FirstNamethis appears to be aG. Vizirgianakis
As LastNameStavros non-GAAP measure, please tell us how you considered
the
Comapany NameMisonix, Inc.of Regulation S-K and Question 100.04 of the
Compliance
guidance of Item 10(e)
June 26, 2019 Page 7Interpretations on the use of Non-GAAP Financial Measures.
& Disclosure
FirstName LastName
Stavros G. Vizirgianakis
FirstName LastNameStavros G. Vizirgianakis
Misonix, Inc.
Comapany NameMisonix, Inc.
June 26, 2019
June 26, 2019 Page 8
Page 8
FirstName LastName
Revenue, page 146
39. Please clarify the extent of the price increases absent the effect of
product size mix and
contractual price erosion. Also clarify what you mean by contractual
price erosion, and
describe any known trends related to your contractual prices, shipping
and handling costs,
or otherwise as required by Regulation S-K Item 303.
General and Administrative Expenses, page 147
40. Please expand your disclosure to discuss the magnitude of the increase
absent the
modification fee mentioned on page F-18.
Liquidity and Capital Resources, page 147
41. Please address the $2.1 million obligation mentioned on page F-38.
Borrowing Arrangements, page 148
42. Please clarify whether Solsys is currently in default under the terms
of its debt
arrangements.
Summary Compensation Table, page 152
43. Please provide the disclosure required by the Instructions to
Regulation S-K Item
402(c)(2)(v) and (vi) or Item 402(n)(2)(v) and (n)(2)(vi), as
appropriate.
Security Ownership of Certain Beneficial Owners and Management of Solsys, page
157
44. Please provide the information required by Regulation S-K Item 403(a)
for each class of
Solsys voting securities and Item 403(b) for each class of equity
securities. Also disclose
(1) the natural person or persons who exercise the sole or shared
voting and/or dispositive
powers with respect to the Solsys securities held by the legal
entities listed in the table,
and (2) the effect of the transactions as required by Regulation S-K
Item 201(b)(2).
Management of New Misonix, page 159
45. Please provide the information required by Regulation S-K Item 407(a)
as required by
Form S-4 Item 18(a)(7). Also, disclose all periods during which your
CEO served as a
director of Misonix.
Description of New Misonix's Capital Stock, page 161
46. Please tell us the authority on which you rely to qualify your
disclosure by reference to
statutes as you do in the first paragraph of this section.
Stavros G. Vizirgianakis
FirstName LastNameStavros G. Vizirgianakis
Misonix, Inc.
Comapany NameMisonix, Inc.
June 26, 2019
June 26, 2019 Page 9
Page 9
FirstName LastName
Classified Board; Election and Removal of Directors; Filling Directors, page
163
47. We note Section 5 of Article VI of Annex B. Please disclose the terms
for removing
directors and clarify, if true, that removal of directors would only
be for cause and require
approval by a shareholder vote by the holders of at least a 66-2/3% of
the voting power of
the then outstanding voting stock of New Misonix. Please ensure your
disclosure
regarding removal of directors on page 175 is consistent in this
regard.
Comparison of Shareholder Rights, page 164
48. Please address sections 10 and 11 of the New Misonix bylaws.
49. Please present separately on your form of proxy each material
provision in New Misonix's
organizational documents that represents a material change from
Misonix's organizational
documents if the change would require approval of Misonix shareholders
under state law,
the rules of a national securities exchange, or the Misonix
organizational documents if
proposed to be made directly in its own organizational documents.
Consider for example
the multiple amendments currently presented as one proposal beginning
on page 59, the
increase in authorized shares mentioned on page 167, and Article VIII
Section 2 on page
B-5. For guidance, see the Division of Corporation Finance's
"Compliance and
Disclosure Interpretations (Regarding Unbundling under Rule
14a-4(a)(3) in the M&A
Context)" available on the Commission's website.
Incorporation of Certain Documents by Reference, page 185
50. We note your disclosure that you are incorporating by reference the
referenced documents
filed after the date of your document and prior to the date of the
special meeting of the
Misonix shareholders. Since a meeting is not being held for the
security holders of
Solsys, please provide us with your analysis as to why you should not
incorporate by
reference the filings made by Misonix prior to the date on which the
contemplated
transactions are consummated. Also, please revise the reference to the
Form 8-K filed on
"January 22, 2019" to reflect its actual filing date.
51. We note your incorporation by reference of the description of "our
common stock"
contained in Misonix's Form 8-A and subsequent amendments. Please tell
us if this is
intended to supersede the description of New Misonix's capital stock
included in the S-4
or revise your disclosure as appropriate.
52. Please reconcile the last paragraph on page 185 with the documents
filed under Rule 425.
Stavros G. Vizirgianakis
FirstName LastNameStavros G. Vizirgianakis
Misonix, Inc.
Comapany NameMisonix, Inc.
June 26, 2019
Page 10
June 26, 2019 Page 10
FirstName LastName
Solsys Medical, LLC Financial Statements for the Years Ended December 31, 2018
and
December 31, 2017
Note 1 Nature of Business and Significant Accounting Policies
Revenue Recognition, page F-10
53. We note that beginning in July 2018 you began recognizing sales of
Theraskin on a gross
basis. Please describe to us the material changes in your agreement
with LifeNet Health
that changed your revenue recognition from a net to gross basis.
Clearly explain to us the
factors you considered in determining to report sales from TheraSkin
as a principal.
Solsys Medical LLC Financial Statements for the Three Month Periods Ended March
31, 2019
and 2018
Note 10 Subsequent Events, page F-37
54. We note that the fair value equity appreciation rights and Profit
Interest Units were valued
at $0 and that you were unable to reasonably estimate a fair value.
Please tell us why you
were unable to reasonably estimate a fair value and explain how these
rights were
accounted for in your pro forma financial statements.
Exhibit Index, page II-5
55. We note the last footnote on page II-6. Revise your index to mark
which exhibits
omit schedules, annexes or exhibits. Also, with respect to your
reference to Item
601(b)(2) of Regulation S-K in your last footnote, please tell us if
you are redacting
information from any of your exhibits. If you are relying on Item
601(a)(5) to omit
schedules (or similar attachments) to your exhibits, please revise as
appropriate.
Exhibits
56. Please file the employment agreements mentioned on page 22. Also,
please show us how
the proxy statement complies with Regulation S-K Item 402(t) and Rule
14a-21(c).
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
Stavros G. Vizirgianakis
Misonix, Inc.
June 26, 2019
Page 11
You may contact Eric Atallah at (202) 551-3663 or Kevin Kuhar,
Accounting Branch
Chief, at (202) 551-3662 if you have questions regarding comments on the
financial statements
and related matters. Please contact Tim Buchmiller at (202) 551-3635 or Russell
Mancuso,
Legal Branch Chief, at (202) 551-3617 with any other questions.
Sincerely,
FirstName LastNameStavros G. Vizirgianakis
Division of
Corporation Finance
Comapany NameMisonix, Inc.
Office of Electronics
and Machinery
June 26, 2019 Page 11
cc: Jonn R. Beeson, Esq.
FirstName LastName