FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
--------------
OR
[ ] 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)
New York 11-2148932.
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1938 New Highway, Farmingdale, NY 11735
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(631) 694-9555
--------------
(Registrant's 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 X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Outstanding at
Class of Common Stock May 1, 2002
---------------------------- --------------
Common Stock, $.01 par value 6,103,365
1
MISONIX, INC.
-------------
INDEX
-----
Part I - FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Consolidated Balance Sheets as of
March 31, 2002 (Unaudited) and June 30, 2001 3
Consolidated Statements of Operations
Nine months ended March 31, 2002
and 2001 (Unaudited) 4
Consolidated Statements of Operations
Three months ended March 31, 2002
and 2001 (Unaudited) 5
Consolidated Statements of Cash Flows
Nine months ended March 31, 2002 6
and 2001 (Unaudited)
Notes to Consolidated Financial Statements 7-13
Item 2. Management's Discussion and Analysis of Financial Condition 14-18
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 21
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
MISONIX, INC.
CONSOLIDATED BALANCE SHEETS
===========================
MARCH 31, JUNE 30,
2002 2001
ASSETS (UNAUDITED) AUDITED
------------ ------------
Current assets:
Cash and cash equivalents $ 4,704,908 $ 3,774,573
Investments held to maturity - 2,015,468
Accounts receivable, net of allowance for doubtful
accounts of $211,206 and $157,761, respectively 6,439,241 7,210,461
Inventories 7,889,549 7,874,372
Deferred income taxes 2,612,382 2,598,538
Prepaid expenses and other current assets 880,381 787,765
------------ ------------
Total current assets 22,526,461 24,261,177
Property, plant and equipment, net 3,000,829 3,195,748
Deferred income taxes 1,539,470 1,550,769
Goodwill 4,241,319 4,069,497
Other assets 339,171 143,597
------------ ------------
Total assets $31,647,250 $33,220,788
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 707,101 $ 542,532
Accounts payable 2,623,786 3,527,449
Accrued expenses and other current liabilities 643,920 1,308,692
Litigation settlement liabilities 6,053,129 6,176,000
Income taxes payable 306,816 499,827
Current maturities of long-term debt and capital
lease obligations 212,919 204,176
------------ ------------
Total current liabilities 10,547,671 12,258,676
Long-term debt and capital lease obligations 934,890 1,027,921
Deferred income 386,596 569,843
Minority interest 231,899 257,530
Stockholders' equity:
Common stock, $.01 par value-shares authorized
10,000,000: 6,177,665 and 6,121,915 issued and
6,103,365 and 6,055,115 outstanding, respectively 61,777 61,219
Additional paid-in capital 22,306,341 21,924,987
Accumulated deficit (2,190,927) (2,197,720)
Treasury stock, 74,300 shares at March 31, 2002 and
66,800 shares at June 30, 2001, respectively (401,974) (358,237)
Accumulated other comprehensive loss (229,023) (323,431)
------------ ------------
Total stockholders' equity 19,546,194 19,106,818
------------ ------------
Commitments and contingencies (notes 2, 9 and 11)
Total liabilities and stockholders' equity $31,647,250 $33,220,788
============ ============
See accompanying Notes to Consolidated Financial Statements.
3
MISONIX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
================================
FOR THE NINE MONTHS ENDED
MARCH 31,
2002 2001
------------ ----------------
Net sales $21,697,278 $ 21,812,405
Cost of goods sold 12,138,803 10,385,568
------------ ----------------
Gross profit 9,558,475 11,426,837
Operating expenses:
Selling expenses 3,221,775 2,904,166
General and administrative expenses 4,556,949 4,578,679
Research and development expenses 1,611,305 1,376,016
Litigation settlement expenses - 5,450,000
------------ ----------------
Total operating expenses 9,390,029 14,308,861
------------ ----------------
Income (loss) from operations 168,446 (2,882,024)
Other income (expense):
Interest income 249,433 446,032
Interest expense (103,469) (111,850)
Option/license fees 18,234 18,235
Royalty income 614,551 515,902
Amortization of investments - (173,175)
Foreign exchange loss (408) 384
Miscellaneous income - 720
Equity in loss of Focus Surgery, Inc. - (256,780)
Equity in loss of Hearing Innovations, Inc. - (32,144)
Loss on impairment of loans to affiliated entities (767,426) -
------------ ----------------
Total other income 10,915 407,324
Income (loss) before minority interest and income taxes 179,361 (2,474,700)
Minority interest in net income of consolidated subsidiaries (25,631) (20,206)
------------ ----------------
Loss before income taxes 204,992 (2,454,494)
Income tax expense (benefit) 198,199 (2,631,169)
------------ ----------------
Net income $ 6,793 $ 176,675
============ ================
Net income per share-Basic $ - $ .03
============ ================
Net income per share - Diluted $ - $ . 03
============ ================
Weighted average common shares outstanding - Basic 6,068,272 5,991,087
============ ================
Weighted average common shares outstanding - Diluted 6,247,761 6,549,124
============ ================
See accompanying Notes to Consolidated Financial Statements.
4
MISONIX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
================================
FOR THE THREE MONTHS ENDED
MARCH 31,
2002 2001
----------- -------------
Net sales $7,371,220 $ 7,404,556
Cost of goods sold 4,323,252 3,529,115
----------- -------------
Gross profit 3,047,968 3,875,441
Operating expenses:
Selling expenses 1,164,287 1,121,859
General and administrative expenses 1,551,239 1,534,121
Research and development expenses 647,108 552,499
Litigation settlement expenses - 5,450,000
----------- -------------
Total operating expenses 3,362,634 8,658,479
----------- -------------
Loss from operations (314,666) (4,783,038)
Other income (expense):
Interest income 4,510 116,248
Interest expense (31,609) (36,996)
Option/license fees 6,078 6,079
Royalty income 173,414 108,222
Amortization of investments - (57,725)
Foreign exchange loss (149) (2,928)
Equity in loss of Focus Surgery, Inc. - (85,593)
Equity in loss of Hearing Innovations, Inc. - (10,558)
Loss on impairment of loans to affiliated entities (226,084) -
----------- -------------
Total other (expense) income (73,840) 36,749
Loss before minority interest and income taxes (388,506) (4,746,289)
Minority interest in net income of consolidated subsidiaries 5,099 6,037
----------- -------------
Loss before income taxes (393,605) (4,752,326)
Income tax benefit (182,833) (1,832,997)
----------- -------------
Net loss $ (210,772) $ (2,919,329)
=========== =============
Net loss per share-Basic $ (.03) $ (.48)
=========== =============
Net loss per share - Diluted $ (.03) $ (.48)
=========== =============
Weighted average common shares outstanding - Basic 6,096,887 6,079,002
=========== =============
Weighted average common shares outstanding - Diluted 6,096,887 6,079,002
=========== =============
See accompanying Notes to Consolidated Financial Statements.
5
MISONIX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
================================
FOR THE NINE MONTHS ENDED
MARCH 31,
2002 2001
------------ ------------
OPERATING ACTIVITIES
Net income $ 6,793 $ 176,675
Adjustments to reconcile net income to net cash
used in operating activities:
Bad debt expense 69,218 6,730
Deferred income tax benefit (2,545) (1,601,763)
Depreciation and amortization 424,030 803,455
Deferred income (183,247) 153,669
Foreign currency loss (gain) 408 (384)
Minority interest in net loss of consolidated subsidiaries (25,631) (20,206)
Equity in loss of Focus Surgery, Inc. - 256,780
Equity in loss of Hearing Innovations, Inc. - 32,144
Loss on impairment of loans made to affiliates 767,426 -
Change in operating assets and liabilities:
Accounts receivable 619,529 (260,512)
Inventories 1,487 (3,684,788)
Litigation settlement liabilities (122,871) 5,450,000
Prepaid expenses and other current assets (52,492) (14,436)
Other assets (200,503) 426,742
Accounts payable and accrued expenses (1,463,557) (1,759,012)
Income taxes payable (195,931) (1,300,378)
------------ ------------
Net cash used in operating activities (357,886) (1,335,284)
------------ ------------
INVESTING ACTIVITIES
Purchase of Labcaire stock (99,531) (117,349)
Acquisition of property, plant and investment (94,480) (316,621)
Redemption of investments held to maturity 2,015,468 2,099,976
Purchase of investments held to maturity - (1,066,562)
Costs paid for acquisition of Sonic Technologies Laboratory Services - (318,636)
Costs paid for acquisition of CraMar Technologies, Inc. (309,531)
Costs paid for acquisition of Fibra Sonics, Inc., net of cash acquired (72,291) (1,723,191)
Purchase of convertible debentures - Focus Surgery, Inc. - (305,166)
Purchase of convertible debentures - Hearing
Innovations, Inc. - (202,827)
Loans made to and debentures purchased from affiliates (767,426) (200,332)
Cash paid for acquisition of Sonora Medical Systems,
Inc., net of cash acquired - (169,713)
------------ ------------
Net cash provided by (used in) investing activities 981,740 (2,629,952)
------------ ------------
FINANCING ACTIVITIES
Proceeds from short-term borrowings, net 158,037 53,461
Principal payments on capital lease obligations (159,078) (145,154)
Proceeds from exercise of stock options 381,912 124,559
Purchase of treasury stock (43,737) -
Payment of long-term debt (44,477) (31,746)
------------ ------------
Net cash provided by financing activities 292,657 1,120
------------ ------------
Effect of exchange rates on cash and cash equivalents 13,824 1,309
------------ ------------
Net increase (decrease) in cash and cash equivalents 930,335 (3,962,807)
Cash and cash equivalents at beginning of period 3,774,573 7,069,502
------------ ------------
Cash and cash equivalents at end of period 4,704,908 $ 3,106,695
============ ============
Supplemental disclosure of cash flow information
Cash paid for: Interest $ 103,469 $ 111,850
============ ============
Income taxes $ 366,251 $ 1,832,416
============ ============
Non-Cash investments activities:
Conversion of notes receivable from Hearing Innovations, Inc. to
convertible debentures and common stock $ - $ 192,250
============ ============
See accompanying Notes to Consolidated Financial Statements.
6
MISONIX, INC.
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 generally accepted accounting
principles for complete financial statements. In the opinion of the
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and nine months ended March 31, 2002 are not
necessarily indicative of the results that may be expected for the year
ending June 30, 2002.
The balance sheet at June 30, 2001 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 Company's Annual Report on Form 10-K for
the year ended June 30, 2001.
2. Litigation Settlement
----------------------
The Company, Medical Device Alliance Inc. ("MDA") and MDA's wholly-owned
subsidiary, Lysonix, Inc. ("Lysonix"), were defendants in an action
alleging patent infringement filed by Mentor Corporation ("Mentor"). On
June 10, 1999, the United States District Court, Central District of
California, found for the defendants that there was no infringement upon
Mentor's patent. Mentor subsequently filed an appeal. The issue concerned
whether Mentor's patent is enforceable against the Company and does not
govern whether the Company's patent in reference is invalid. On April 11,
2001, the United States Court of Appeals for the Federal Circuit Court
issued a decision reversing in large part the decision of the trial court
and granting the motion by Mentor against MDA, Lysonix and the Company for
violation of Mentor's U.S. Patent No. 4886491. This patent covers Mentor's
license for ultrasonic assisted liposuction. Damages were asserted in favor
of Mentor for approximately $4,900,000 and $688,000 for interest. The court
also granted a permanent injunction enjoining further sales of the Lysonix
2000 in the United States for the use of liposuction. The Court affirmed
that the lower court did not have the ability to increase damages or award
attorneys' fees. Each defendant is jointly and severally liable as each
defendant was deemed to infringe proportionally. Mentor requested further
relief in the trial court for additional damages. Accordingly, the Company
accrued an aggregate of $6,176,000 for damages, interest and other costs
during the third and fourth quarters of fiscal 2001. The Company paid
approximately $123,000 of these accrued costs during fiscal 2002. See
further discussion in Note 11.
7
MISONIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with respect to interim periods is unaudited) (CONTINUED)
======================================================================
3. Inventories
-----------
Inventories are summarized as follows:
MARCH 31, 2002 JUNE 30, 2001
--------------- --------------
Raw materials $ 3,882,823 $ 3,617,258
Work-in-process 1,267,676 860,834
Finished goods 2,739,050 3,396,280
--------------- --------------
$ 7,889,549 $ 7,874,372
=============== ==============
4. Accrued Expenses and Other Current Liabilities
---------------------------------------------------
The following summarizes accrued expenses and other current liabilities:
MARCH 31, 2002 JUNE 30, 2001
--------------- -------------
Accrued payroll and vacation $ 150,945 $ 135,651
Accrued sales tax 13,804 1,305
Accrued commissions and bonuses 21,006 440,603
Customer deposits 22,595 260,767
Accrued professional fees 4,897 45,889
Warranty 399,130 365,198
Other 31,543 59,279
--------------- -------------
$ 643,920 $ 1,308,692
=============== =============
5. Income Taxes
-------------
The Company recorded a deferred tax asset relating to the loss on
impairment of equity investments for the notes and debentures issued to the
Company by Hearing Innovations, Inc. ("Hearing Innovations") and Focus
Surgery, Inc. ("Focus Surgery") (See Note 6) during the third fiscal
quarter of 2002 and nine months ended March 31, 2002 in the amounts of
$88,172 and $299,296, respectively. A full valuation allowance was recorded
against the asset in accordance with the provisions of FASB Statement No.
109 "Accounting for Income Taxes." The valuation allowance was determined
by assessing the recoverability of the deferred tax asset. In assessing the
recoverability of the deferred tax asset, management considered whether it
is more likely than not whether some portion or all of the deferred tax
asset would be realized. Based upon the nature of the deferred tax asset
and the Company's projections for future capital gains against which the
deferred tax asset would be deductible, management did not deem the asset
to be recoverable as of March 31, 2002.
8
MISONIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with respect to interim periods is unaudited) (CONTINUED)
======================================================================
6. Convertible Debentures from and Loans to Affiliates
---------------------------------------------------------
Focus Surgery, Inc.
-------------------
The Company purchased a second $300,000 6% Secured Cumulative Convertible
Debenture from Focus Surgery due May 25, 2003 (the "Focus Debenture"). The
Focus Debenture is convertible into 250 shares of Focus Surgery preferred
stock at the option of the Company at any time up until the due date at a
purchase price of $1,200 per share. The Focus Debenture also contains
warrants to purchase an additional 125 shares to be exercised at the option
of the Company. Interest accrues and is payable at maturity or is
convertible on the same terms as the Focus Debenture's principal amount.
The Focus Debenture is secured by a lien on all of Focus Surgery's right,
title, and interest in accounts receivable, inventory, property, plant and
equipment and process of specified products whether now existing or arising
after the date of the Focus Debenture. If the Company were to convert the
Focus Debenture and exercise all warrants, the Company would hold an
interest in Focus Surgery of approximately 27%. The Company recorded an
allowance against the Focus Debenture of $300,000 and accrued interest of
$12,000 since the Company does not anticipate that the Focus Debenture will
be paid in accordance with the contractual terms of the loan agreement. The
related expense has been included in loss on impairment of loans to
affiliated entities in the accompanying consolidated statements of
operations. In addition, the Company also recorded a valuation allowance
against the deferred tax asset associated with the Focus Debenture and
related interest.
During fiscal 2002, the Company entered into a loan agreement whereby Focus
Surgery borrowed $60,000 from the Company. This loan matures on May 30,
2002. The loan bears interest at 8% per annum and contain warrants to
acquire additional shares. The loan is secured by a lien on all of Focus
Surgery's right, title and interest in accounts receivable, inventory,
property, plant and equipment and processes of specified products whether
now existing or arising after the date of the loan. The Company recorded an
allowance against the entire balance of $60,000 due at March 31, 2002. The
related expense has been included in loss on impairment of loans to
affiliated entities in the accompanying consolidated statements of
operations. The Company believes that this loan is impaired since the
Company does not anticipate that this loan will be paid in accordance with
the contractual terms of the loan agreement. In addition, the Company also
recorded a valuation allowance against the deferred tax asset associated
with the above loan.
The Company recorded an allowance against the interest accrued during
fiscal year 2002 of $24,975 for the $300,000, 5.1% Secured Cumulative
Convertible Debenture due December 22, 2002 and the first $300,000, 6%
Secured Cumulative Convertible Debenture due May 25, 2003 from Focus
Surgery. The above debentures were purchased in fiscal year 2001. The
Company does not anticipate that these debentures will be paid in
accordance with the contractual terms of the loan agreements. The related
expense has been included in loss on impairment of loans to affiliated
entities in the accompanying consolidated statement of operations. In
addition, the Company also recorded a valuation allowance against the
deferred tax asset associated with the above interest.
9
MISONIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with respect to interim periods is unaudited) (CONTINUED)
======================================================================
Hearing Innovations, Inc.
---------------------------
During fiscal 2002, the Company entered into eleven loan agreements whereby
Hearing Innovations was required to pay the Company the aggregate amount of
$322,679 due May 30, 2002. All notes bear interest at 8% per annum and
contain warrants to acquire additional shares. The notes are secured by a
lien on all of Hearing Innovations' right, title and interest in accounts
receivable, inventory, property, plant and equipment and processes of
specified products whether now existing or arising after the date of these
agreements. If the Company were to exercise all warrants, the Company would
hold an interest in Hearing Innovations of approximately 35%. The Company
recorded an allowance against the entire balance of $322,679 and accrued
interest of $32,022 for the above loans in addition to interest accrued for
loans issued during fiscal year 2001. The related expense has been included
in loss on impairment of loans to affiliated entities in the accompanying
consolidated statement of operations. The Company believes the loans and
related interest are impaired since the Company does not anticipate that
these loans will be paid in accordance with the contractual terms of the
loan agreements. In addition, the Company also recorded a valuation
allowance against the deferred tax asset associated with the above loans
and related interest.
The Company recorded an allowance against the interest accrued during
fiscal year 2002 of $15,750 for the $300,000 7% Secured Convertible
Debenture due August 27, 2002 from Hearing Innovations, since the Company
does not anticipate that this debenture will be paid in accordance with the
contractual terms of the loan agreement. The related expense has been
included in loss on impairment of loans to affiliated entities in the
accompanying consolidated statement of operations. In addition, the Company
also recorded a valuation allowance against the deferred tax asset
associated with the above interest.
7. Business Segments
------------------
The Company operates in two business segments, which are organized by
product types: industrial products and medical devices. Industrial products
include the Sonicator ultrasonic liquid processor, Aura ductless fume
enclosure, the Autoscope and Guardian endoscope disinfectant system from
Labcaire and the Mystaire scrubber. Medical devices include the Auto Sonix
for ultrasonic cutting and coagulatory system, refurbishing revenues of
high-performance ultrasound systems and replacement transducers for the
medical diagnostic ultrasound industry, ultrasonic lithotriptor and
ultrasonic neuro aspirator. The Company evaluates the performance of the
segments based upon income (loss) from operations less general and
administrative expenses, bad debt expense and litigation settlement
expenses. The accounting policies of the segments are the same as those
described in the summary of significant accounting policies (Note 1) in the
Company's Annual Report on Form 10-K for the year ended June 30, 2001.
Certain items are maintained at the corporate headquarters (corporate) and
are not allocated to the segments. They primarily include general and
administrative expenses, bad debt expense and litigation settlement
expenses. The Company does not allocate assets by segment as such
information is not provided to the chief operating decision maker.
Summarized financial information for each of the segments for the three and
nine months ended March 31, 2002 are as follows:
10
MISONIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with respect to interim periods is unaudited) (CONTINUED)
======================================================================
For the nine months ended March 31, 2002:
(a)
MEDICAL INDUSTRIAL CORPORATE AND
DEVICES PRODUCTS UNALLOCATED TOTAL
---------- ----------- --------------- ------------
Net sales $8,139,343 $13,557,935 $ $ 21,697,278
Cost of goods sold 4,591,768 7,547,035 12,138,803
---------- ----------- ------------
Gross profit 3,547,575 6,010,900 9,558,475
Selling expenses 812,806 2,408,969 3,221,775
Research and
development 1,205,684 405,621 1,611,305
---------- ----------- ------------
Total operating
expenses 2,018,490 2,814,590 4,556,949 9,390,029
---------- ----------- --------------- ------------
Income (loss) from
operations $1,529,085 $ 3,196,310 $ (4,556,949) $ 168,446
========== =========== =============== ============
(a) Amount represents general and administrative.
For the three months ended March 31, 2002:
(a)
MEDICAL INDUSTRIAL CORPORATE AND
DEVICES PRODUCTS UNALLOCATED TOTAL
---------- ----------- --------------- -----------
Net sales $2,335,242 $ 5,035,978 $ $7,371,220
Cost of goods sold 1,439,075 2,884,177 4,323,252
---------- ----------- -----------
Gross profit 896,167 2,151,801 3,047,968
Selling expenses 272,636 891,651 1,164,287
Research and
development 527,095 120,013 647,108
---------- ----------- -----------
Total operating
expenses 799,731 1,011,664 1,551,239 3,362,634
---------- ----------- --------------- -----------
Income (loss) from
operations $ 96,436 $ 1,140,137 $ (1,551,239) $ (314,666)
========== =========== =============== ===========
(a) Amount represents general and administrative.
The Company's revenues are generated from various geographic regions. The
following is an analysis of net sales by geographic region:
For the nine months ended March 31:
2002 2001
----------- -----------
United States $14,502,406 $15,655,760
Canada and Mexico 55,086 190,217
United Kingdom 5,294,053 4,056,726
Europe 806,070 1,212,506
Asia 637,709 560,792
Middle East 99,191 48,953
Other 302,763 87,451
----------- -----------
$21,697,278 $21,812,405
=========== ===========
11
MISONIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with respect to interim periods is unaudited) (CONTINUED)
======================================================================
8. Goodwill and Other Intangible Assets
----------------------------------------
In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards Nos. 141 and 142 (SFAS 141 and SFAS 142),
"Business Combinations" and "Goodwill and Other Intangible Assets,"
respectively. SFAS 141 replaces APB 16 and requires the use of the purchase
method for all business combinations initiated after June 30, 2001. It also
provides guidance on purchase accounting related to the recognition of
intangible assets and the accounting for negative goodwill. SFAS 142
requires goodwill and intangible assets with indefinite useful lives to no
longer be amortized, but instead be tested for impairment at least annually
and whenever events or circumstances occur that indicate goodwill might be
impaired.
With the adoption of SFAS 142, the Company reassessed the useful lives and
residual values of all acquired intangible assets to make any necessary
amortization period adjustments. Based on that assessment, only goodwill
was determined to have an indefinite useful life and no adjustments were
made to the amortization period or residual values of other intangible
assets. Amortization of goodwill for the comparable three and nine months
periods ended March 31, 2001 was $182,299 and $466,344, respectively.
Included in the amortization of goodwill for the comparable three and nine
month periods ended March 31, 2001 was $57,725 and $173,175 for amortizing
the investments in Focus Surgery and Hearing Innovations, respectively.
These investments were written down to zero at June 30, 2001.
SFAS 142 provides a six-month transitional period from the effective date
of adoption for the Company to perform an assessment of whether there is an
indication that goodwill is impaired. To the extent that an indication of
impairment exists, the Company must perform a second test to measure the
amount of impairment. The second test must be performed as soon as
possible, but no later that the end of the fiscal year. Any impairment
measured as of the date of adoption will be recognized as the cumulative
effect of a change in accounting principle. The Company performed the first
test and has determined that there is no indication that the goodwill
recorded is impaired and, therefore, the second test is not required.
9. Acquisition
-----------
Labcaire Systems Ltd.
-----------------------
In October 2001, under the terms of the revised purchase agreement (the
"Labcaire Agreement") with Labcaire (as discussed in the Company's Annual
Report on Form 10-K for the year ended June 30, 2001), the Company paid
$99,531 for 9,286 shares (2.65%) of the outstanding common stock of
Labcaire bringing the acquired interest to 97.35 %. This represents the
fiscal 2002 buy-back portion, as defined in the Labcaire Agreement. The
Company is obligated to purchase 2.65% in the next fiscal year at which
time the Company will own 100% of Labcaire.
12
MISONIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with respect to interim periods is unaudited) (CONTINUED)
======================================================================
10. Revolving Line of Credit
---------------------------
The Company secured a $5,000,000 revolving credit facility with Fleet Bank
on January 18, 2002 for working capital requirements. The revolving credit
facility expires January 18, 2005 and has interest rate options ranging
from Libor plus 1.0% per annum to prime rate plus .25% per annum. This
facility is secured by the assets of the Company. This credit facility
contains certain financial covenants, including: a covenant requiring that
the Company maintain a ratio of debt to earnings before interest,
depreciation, taxes and amortization of not greater than to 2.00 to 1; that
the Company maintain a working capital ratio of not less than 1.5 to 1; and
that the Company maintain a tangible net worth of $14,500,000. The terms
provide for the repayment of the debt in full on its maturity date. On
March 31, 2002, the Company had $5,000,000 available on its line of credit.
11. Subsequent Event
-----------------
On April 24, 2002, the Company resolved all issues related to the lawsuit
brought by Mentor (see Note 2 for discussion). Under the terms of the
settlement, the Company paid Mentor $2,700,000 for its share of a combined
$5,400,000 settlement with Mentor in exchange for a complete release from
any monetary liability in connection with the lawsuit and judgment.
In April 2002, the Company and MDA/LySonix mutually agreed to terminate the
license agreement between the parties. In addition, the Company paid
$1,000,000 to purchase certain assets of MDA/LySonix which the Company
expects to utilize in the future.
13
MISONIX, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
================================================
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Nine Months Ended March 31, 2002 and 2001.
NET SALES: Net sales of the Company's medical devices and industrial products
- -----------
decreased $115,127 from $21,812,405 for the nine months ended March 31, 2001 to
$21,697,278 for the nine months ended March 31, 2002. This difference in net
sales is due to an increase in industrial products of $763,373 offset by lower
medical device sales of $878,500. The increase in industrial products is
predominately due to an increase in fume enclosure sales of $853,117 and
Labcaire sales of $1,393,252 offset by lower wet scrubber sales of $1,447,985.
The decrease in medical devices is due to decreased sales of therapeutic medical
devices of $1,489,048 offset by an increase in sales of diagnostic medical
devices of $610,548.
GROSS PROFIT: Gross profit decreased to 44.1% in the nine months ended March 31,
- -------------
2002 from 52.4% in the nine months ended March 31, 2001. The decrease in gross
profit is predominantly due to the unfavorable mix of high and low margin
product deliveries caused by increased sales of diagnostic medical devices and
sales by Labcaire, which traditionally carry lower gross margins.
SELLING EXPENSES: Selling expenses increased $317,609 from $2,904,166 for the
- ------------------
nine months ended March 31, 2001 to $3,221,775 for the nine months ended March
31, 2002. Medical device selling expenses increased $191,739 predominantly due
to additional sales and marketing efforts of diagnostic medical devices.
Industrial selling expenses increased $125,870 predominantly due to increased
marketing efforts, advertising initiatives and personnel additions.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses
- --------------------------------------
decreased $21,730 from $4,578,679 in the nine months ended March 31, 2001 to
$4,556,949 in the nine months ended March 31, 2002. The decrease is
predominantly due to increased accounting and legal fees and facility and
administration costs in Longmont, Colorado, partially offset due to the adoption
in the first quarter of fiscal 2002 of FASB Statement No. 142, "Goodwill and
Other Intangible Assets" (SFAS 142). In accordance with SFAS 142, the Company
is no longer amortizing goodwill. Amortization of goodwill for the comparable
period in fiscal 2001 was $293,159.
RESEARCH AND DEVELOPMENT EXPENSES: Research and development expenses increased
- ------------------------------------
$235,289 from $1,376,016 for the nine months ended March 31, 2001 to $1,611,305
for the nine months ended March 31, 2002. The increase is predominantly due to
increased research and development on medical device products in the amount of
$355,435 partially offset by reduced efforts for industrial products in the
amount of $120,146.
OTHER INCOME (EXPENSE): Other income during the nine months ended March 31, 2002
- -----------------------
was $10,915. During the nine months ended March 31, 2001, other income was
$407,324. The decrease of $396,409 was principally due to the $767,426 reserve
recorded for loans impaired with regard to the loans made to both Focus Surgery,
Inc. ("Focus Surgery") and Hearing Innovations, Inc. ("Hearing Innovations").
The Company is no longer amortizing the investments or recording the equity in
loss for its investments in Focus Surgery and Hearing Innovations for the nine
months ended March 31, 2002 since the investments were written down to zero at
June 30, 2001. Amortization of the investments for the comparable period in
fiscal 2001 was $173,175 and the equity in loss on the investments was $288,924.
14
MISONIX, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
============================================================
INCOME TAXES: The effective tax rate is 96.4% for the nine months ended March
- --------------
31, 2002 as compared to an effective tax rate of 107.2% for the nine months
ended March 31, 2001. The current effective tax rate is a mixture of the
Labcaire tax expense offset by domestic entities benefits which also incorporate
the valuation allowance recorded. The Company recorded a valuation allowance in
the amount of $299,296 for the nine months ended March 31, 2002 against the
deferred tax asset relating to the loss on the loans and debentures issued by
Hearing Innovations and Focus Surgery. The valuation allowance was recorded in
accordance with the provisions of FASB Statement No. 109 "Accounting for Income
Taxes".
Three Months Ended March 31, 2002 and 2001.
NET SALES: Net sales of the Company's medical devices and industrial products
- -----------
decreased $33,336 from $7,404,556 for the three months ended March 31, 2001 to
$7,371,220 for the three months ended March 31, 2002. This decrease in net
sales is due to a $900,226 decrease in medical devices partially offset by an
increase of $866,890 in industrial products. The increase in industrial
products is predominately due to an increase in fume enclosure sales of $138,856
and Labcaire sales of $1,119,024 offset by lower wet scrubber sales of $445,287.
The decrease in medical devices is due to decreased sales of therapeutic medical
devices of $1,303,075 offset by an increase in sales of diagnostic medical
devices of $402,849.
GROSS PROFIT: Gross profit decreased to 41.4% in the three months ended March
- --------------
31, 2002 from 52.3% in the three months ended March 31, 2001. The decrease in
gross profit is predominantly due to the unfavorable mix of high and low margin
product deliveries caused by increased sales of diagnostic medical devices and
sales by Labcaire, which traditionally carry lower gross margins.
SELLING EXPENSES: Selling expenses increased $42,428 from $1,121,859 for the
- ------------------
three months ended March 31, 2001 to $1,164,287 for the three months ended March
31, 2002. Medical device selling expenses decreased $41,763. Industrial
selling expenses increased $84,191 predominantly due to marketing efforts and
advertising initiatives.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses
- --------------------------------------
increased $17,118 from $1,534,121 in the three months ended March 31, 2001 to
$1,551,239 in the three months ended March 31, 2002. The increase is
predominantly due to increased accounting and legal fees and facility and
administration costs in Longmont, Colorado, partially offset by the adoption in
the first quarter of fiscal 2002 of FASB Statement No. 142, "Goodwill and Other
Intangible Assets" (SFAS 142). In accordance with SFAS 142, the Company is no
longer amortizing goodwill. Amortization of goodwill for the comparable period
in fiscal 2001 was $124,574.
RESEARCH AND DEVELOPMENT EXPENSES: Research and development expenses increased
- ------------------------------------
$94,609 from $552,499 for the three months ended March 31, 2001 to $647,108 for
the three months ended March 31, 2002. The increases are predominantly due to
increased research and development on medical device products of $166,791 offset
by decreased efforts for industrial products in the amount of $72,182.
15
MISONIX, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
=========================================================
OTHER INCOME (EXPENSE): Other expense during the three months ended March 31,
- -------------------------
2002 was $73,840. During the three months ended March 31, 2001 other income was
$36,749. The decrease of $110,589 was principally due to the $226,084 reserve
recorded for loans impaired with regard to the loans made to both Focus Surgery
and Hearing Innovations. The Company is no longer amortizing goodwill or
recording the equity in loss for its investments in Focus Surgery and Hearing
Innovations for the three months ended March 31, 2002 since the investments were
written down to zero at June 30, 2001. Amortization of goodwill for the
comparable period in fiscal 2001 was $57,725 and the equity in loss on the
investments was $96,151.
INCOME TAXES: For the three months ended March 31, 2002, the Company's effective
- -------------
tax rate is 46.5% as compared to an effective tax rate of 38.6% for the three
months ended March 31, 2001. The current effective tax rate is a mixture of the
Labcaire tax expense offset by domestic entities benefits which also incorporate
the valuation allowance recorded. The Company recorded a valuation allowance in
the amount of $88,172 for the three months ended March 31, 2002 against the
deferred tax asset relating to the loss on the loans and debentures issued by
Hearing Innovations and Focus Surgery. The valuation allowance was recorded in
accordance with the provisions of FASB Statement No. 109 "Accounting for Income
Taxes".
LIQUIDITY AND CAPITAL RESOURCES:
Working capital at March 31, 2002 and June 30, 2001 was $12,194,795 and
$12,002,501, respectively. Cash flow from operations for the nine months ended
March 31, 2002 was negatively impacted by the payment of litigation settlement
liabilities, payment of accounts payable and lower accrued expenses partially
offset by increased accounts receivable collections.
The Company secured a $5,000,000 revolving credit facility with Fleet Bank on
January 18, 2002 to cover any potential shortfalls of the Company's cash
position as well as to support future working capital needs. The revolving
credit facility expires January 18, 2005 and has interest rate options ranging
from Libor plus 1.0% per annum to prime rate plus .25% per annum. This facility
is secured by the assets of the Company. This credit facility contains certain
financial covenants, including: a covenant requiring that the Company maintain a
ratio of debt to earnings before interest, depreciation, taxes and amortization
of not greater than 2.00 to 1; and that the Company maintain a working capital
ratio of not less than 1.5 to 1; and that the Company maintain a tangible net
worth of $14,500,000. The terms provide for the repayment of the debt in full on
its maturity date. On March 31, 2002, the Company had $5,000,000 available on
its line of credit.
In October 2001, under the terms of the revised purchase agreement (the
"Labcaire Agreement") with Labcaire (as discussed in the Company's Annual Report
on Form 10-K for the year ended June 30, 2001), the Company paid $99,531 for
9,286 shares (2.65%) of the outstanding common stock of Labcaire. This
represents the fiscal 2002 buy-back portion, as defined in the Labcaire
Agreement.
16
MISONIX, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
=========================================================
During fiscal 2002, the Company entered into eleven loan agreements whereby
Hearing Innovations is required to pay the Company an aggregate amount of
$322,679 due May 30, 2002. All notes bear interest at 8% per annum and contain
warrants to acquire additional shares. The notes are secured by a lien on all
of Hearing Innovations' right, title and interest in accounts receivable,
inventory, property, plant and equipment and processes of specified products
whether now existing or arising after the date of these agreements. If the
Company were to exercise all warrants, the Company would hold an interest in
Hearing Innovations of approximately 35%. The Company recorded an allowance
against the entire balance of $322,679 and accrued interest of $32,022 for the
above loans in addition to interest accrued for loans issued during fiscal year
2001. The related expense has been included in loss on impairment of loans to
affiliated entities in the accompanying consolidated statements of operations.
The Company believes the loans and related interest are impaired since the
Company does not anticipate that these loans will be paid in accordance with the
contractual terms of the loan agreements. In addition, the Company also recorded
a valuation allowance against the deferred tax asset associated with the above
loans and related interest.
On August 3, 2001, the Company purchased a $300,000 6% Secured Cumulative
Convertible Debenture from Focus Surgery due May 25, 2003 (the "Focus
Debenture"). The Focus Debenture is convertible into 250 shares of Focus
Surgery preferred stock at the option of the Company at any time up until the
due date at a purchase price of $1,200 per share. The Focus Debenture also
contains warrants to purchase an additional 125 shares to be exercised at the
option of the Company. Interest accrues and is payable at maturity or is
convertible on the same terms as the Focus Debenture's principal amount. The
Focus Debenture is secured by a lien on all of Focus Surgery's right, title, and
interest in accounts receivable, inventory, property, plant and equipment and
process of specified products whether now existing or arising after the date of
the Focus Debenture. If the Company were to convert the Focus Debenture and
exercise all warrants, the Company would hold an interest in Focus Surgery of
approximately 27%. The Company recorded an allowance against the Focus
Debenture of $300,000 and accrued interest of $12,000 since the Company does not
anticipate that the Focus Debenture will be paid in accordance with the
contractual terms of the loan agreement. The related expense has been included
in loss on impairment of loans to affiliated entities in the accompanying
consolidated statements of operations. In addition, the Company also recorded
a valuation allowance against the deferred tax asset associated with the Focus
Debenture and related interest.
During fiscal 2002, the Company entered into a loan agreement whereby Focus
Surgery borrowed $60,000 from the Company. This loan matures on May 30, 2002.
The loan bears interest at 8% per annum and contain warrants to acquire
additional shares. The loan is secured by a lien on all of Focus Surgery's
right, title and interest in accounts receivable, inventory, property, plant and
equipment and processes of specified products whether now existing or arising
after the date of the loan. The Company recorded an allowance against the
entire balance of $60,000 due at March 31, 2002. The related expense has been
included in loss on impairment of loans to affiliated entities in the
accompanying consolidated statement of operations. The Company believes that
this loan is impaired since the Company does not anticipate that this loan will
be paid in accordance with the contractual terms of the loan agreement. In
addition, the Company also recorded a valuation allowance against the deferred
tax asset associated with the above loan.
17
MISONIX, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
=========================================================
The Company, Medical Device Alliance Inc. ("MDA") and MDA's wholly-owned
subsidiary, LySonix, Inc. ("LySonix") were defendants in an action alleging
patent infringement filed by Mentor Corporation ("Mentor"). On June 10, 1999,
the United States District Court, Central District of California, found for the
defendants that there was no infringement upon Mentor's patent. Mentor
subsequently filed an appeal. The issue concerned whether Mentor's patent is
enforceable against the Company and does not govern whether the Company's patent
in reference is invalid. On April 11, 2001, the United States Court of Appeals
for the Federal Circuit Court issued a decision reversing in large part the
decision of the trial court and granting the motion by Mentor against MDA,
LySonix and the Company for violation of Mentor's U.S. Patent No. 4886491. This
patent covers Mentor's license for ultrasonic assisted liposuction. Damages
were asserted in favor of Mentor for approximately $4,900,000 and $688,000 for
interest. The court also granted a permanent injunction enjoining further sales
of the LySonix 2000 in the United States for the use of liposuction. The Court
affirmed that the lower court did not have the ability to increase damages or
award attorneys' fees. Each defendant is jointly and severally liable as each
defendant was deemed to infringe proportionally. Mentor requested further
relief in the trial court for additional damages. Accordingly, the Company
accrued an aggregate of $6,176,000 for damages, interest and other costs during
the third and fourth quarters of fiscal 2001. The Company paid approximately
$123,000 of these accrued costs during the first nine months of fiscal 2002.
On April 24, 2002, the Company resolved all issues related to the lawsuit
brought by Mentor (see "Legal Proceedings" for discussion). Under the terms of
the settlement, the Company paid Mentor $2,700,000 for its share of a combined
$5,400,000 settlement with Mentor in exchange for a complete release from any
monetary liability in connection with the lawsuit and judgment.
In April 2002, the Company and MDA/LySonix mutually agreed to terminate the
license agreement between the parties. In addition, the Company paid $1,000,000
to purchase certain assets of MDA/LySonix which the Company expects to utilize
in the future.
The Company believes that its existing capital resources will enable it to
maintain its current and planned operations for at least 18 months from the date
hereof.
Recent Accounting Pronouncements
- ----------------------------------
In August 2001, the Financial Accounting Standards Board issued FASB Statement
No. 144, "Accounting for the Impairment of Disposal of Long-Lived Assets"
(Statement 144), which supersedes both FASB Statement No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
(Statement 121) and the accounting and reporting provisions of APB Opinion No.
30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions" (Opinion 30), for the disposal of a segment of a
business (as previously defined in that Opinion). Statement 144 retains the
fundamental provisions in Statement 121 for recognizing and measuring impairment
losses on long-lived assets held for use and long-lived assets to be disposed of
by sale, while also resolving significant implementation issues associated with
Statement 121. For example, Statement 144 provides guidance on how a long-lived
asset that is used as part of a group should be evaluated for impairment,
establishes criteria for when a long-lived asset is held for sale, and
prescribes the accounting for a long-lived asset that will be disposed of other
than by sale. Statement 144 retains the basic provisions of Opinion 30 on how
to present discontinued operations in the income statement but broadens that
presentation to include a component of an entity (rather than a segment of a
business). Unlike Statement 121, Statement 144 does not address the impairment
of goodwill. Rather, goodwill is evaluated for impairment under Statement No.
142, "Goodwill and Other Intangible Assets".
18
MISONIX, INC.
QUANTATIVE AND QUALITATIVE
DISCLOSURE ABOUT MARKET RISK
============================
The Company is required to adopt Statement 144 no later than the fiscal year
beginning after December 15, 2001. Management does not expect the adoption of
Statement 144 for long-lived assets held for use to have a material impact on
the Company's financial statements because the impairment assessment under
Statement 144 is largely unchanged from Statement 121. The provisions of the
Statement for assets held for sale or other disposal generally are required to
be applied prospectively after the adoption date to newly initiated disposal
activities. Therefore, management cannot determine the potential effects that
adoption of Statement 144 will have on the Company's financial statements.
Forward Looking Statements: This report contains certain forward looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of 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 venture and investment in related entities,
future economic, competitive and market conditions, the outcome of legal
proceedings as well as management business decisions.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Currency Risk:
Approximately 29% of the Company's revenues for the nine months ended March 31,
2002 were received in English Pounds Sterling currency. To the extent that the
Company's revenues are generated in English Pounds, its operating results are
converted into U.S. Dollars using rates of 1.43 and 1.45 for the three months
ended March 31, 2002 and 2001, 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 of the English Pound will have
the opposite effect. Since the Company's 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.
19
MISONIX, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company, Medical Device Alliance Inc. ("MDA") and MDA's wholly-owned
subsidiary, Lysonix, Inc. ("Lysonix"), were defendants in an action
alleging patent infringement filed by Mentor Corporation ("Mentor"). On
June 10, 1999, the United States District Court, central District of
California, found for the defendants that there was no infringement upon
Mentor's patent. Mentor subsequently filed an appeal. The issue concerned
whether Mentor's patent is enforceable against the Company and does not
govern whether the Company's patent in reference is invalid. On April 11,
2001, the United States Court of Appeals for the Federal Circuit Court
issued a decision reversing in large part the decision of the trial court
and granting the motion by Mentor against MDA, Lysonix and the Company for
violation of Mentor's U.S. Patent No. 4886491. This patent covers Mentor's
license for ultrasonic assisted liposuction. Damages were asserted in favor
of Mentor for approximately $4,900,000 and $688,000 for interest. The court
also granted a permanent injunction enjoining further sales of the Lysonix
2000 in the United States for the use of liposuction. The Court affirmed
that the lower court did not have the ability to increase damages or award
attorneys' fees. Each defendant is jointly and severally liable as each
defendant was deemed to infringe proportionally. Mentor requested further
relief in the trial court for additional damages. Accordingly, the Company
accrued an aggregate of $6,176,000 for damages, interest and other costs
during the third and fourth quarters of fiscal 2001. The Company paid
approximately $123,000 of these accrued costs during the first nine months
of fiscal 2002.
On April 24, 2002, the Company resolved all issues related to the lawsuit
brought by Mentor. Under the terms of the settlement, the Company paid
Mentor $2,700,000 for its share of a combined $5,400,000 settlement with
Mentor in exchange for a complete release from any monetary liability in
connection with the lawsuit and judgment.
In April 2002, the Company and MDA/LySonix mutually agreed to terminate the
license agreement between the parties. In addition, the Company paid
$1,000,000 to purchase certain assets of MDA/LySonix which the Company
expects to utilize in the future.
Item 6. Exhibits and Reports on Form 8-K.
(a) None.
(b) There were no reports on Form 8-K filed during the quarter ended March
31, 2002.
20
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: May 13, 2002
MISONIX, INC.
-------------------------------------------
(Registrant)
By: /s/ Michael A. McManus, Jr.
---------------------------------------
Michael A. McManus, Jr.
President, Chief Executive Officer
By: /s/ Richard Zaremba
---------------------------------------
Richard Zaremba
Vice President Chief Financial Officer,
Treasurer and Secretary
21