<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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 0-11625
------------------------------
MICROFLUIDICS INTERNATIONAL CORPORATION
---------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2793022
-------- ----------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
30 Ossipee Road, P.O. Box 9101, Newton, Massachusetts 02164
-----------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(617)969-5452
-------------
(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
--- ---
Registrant had 5,156,983 shares of Common Stock, par value $.01 per share,
outstanding on August 13, 1998.
Page 1
<PAGE>
MICROFLUIDICS INTERNATIONAL CORPORATION
INDEX
-----
PAGE
NUMBER
------
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets as of June 30, 3
1998 (unaudited) and December 31, 1997
Consolidated Statements of Income for the 5
three and six months ended June 30,1998 and
June 30,1997 (unaudited)
Consolidated Statements of Cash Flows for the 6
six months ended June 30, 1998 and June 30, 1997
(unaudited)
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of 10
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
ITEM 4. Submission of matters to a vote of 15
security holders
ITEM 5. Other Information 15
ITEM 6. Exhibits and Reports on Form 8-K 16
Signatures 17
Exhibit Index 18
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MICROFLUIDICS INTERNATIONAL CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
- ----------
June 30, 1998 December 31,1997
------------- ----------------
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $3,705,472 $4,083,214
Marketable securities 48,483 55,638
Accounts receivable (less
allowance for doubtful accounts
of $55,000 and $40,000 at June
30, 1998 and December 31, 1997) 1,563,966 1,396,088
Other receivables 73,479 140,989
Inventory 2,163,708 2,436,938
Prepaid expense 95,876 26,764
---------- ----------
Total current assets 7,650,984 8,139,631
Equipment and leasehold
improvements, at cost
Furniture, fixtures and
Office equipment 342,187 335,467
Machinery and equipment 272,334 261,592
Leasehold improvements 156,704 125,322
---------- ----------
771,225 722,381
Less:accumulated
depreciation
and amortization (603,555) (570,555)
---------- ----------
167,670 151,826
Patents, licenses and other
intangible assets (net of
accumulated amortization of
$401,509 at June 30, 1998 and
$379,549 at December 31, 1997) 145,171 167,131
Deferred income taxes 413,630 413,630
---------- ----------
Total assets $8,377,455 $8,872,218
========== ==========
</TABLE>
(See notes to consolidated financial statements)
Page 3
<PAGE>
MICROFLUIDICS INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS (continued)
---------------------------------------
<TABLE>
<CAPTION>
June 30, 1998 December 31,1997
------------- ----------------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable and accrued
expenses $ 648,599 $ 939,796
Accrued compensation 24,339 76,269
Accrued vacation pay 37,295 37,294
Customer advances 11,104 280,716
----------- -----------
Total current liabilities 721,337 1,334,075
Stockholders' equity
Common Stock, par value $.01 per
share, 20,000,000 shares authorized;
5,156,983 and 5,136,804 shares
issued and outstanding at June 30,
1998 and at December 31,1997
respectively 51,570 51,368
Additional paid-in-capital 10,475,221 10,442,840
Accumulated deficit (2,267,812) (2,360,359)
Unrealized appreciation on
marketable securities 48,483 55,638
Less: Treasury Stock, at cost,
220,719 shares at June 30,
1998 and December 31,
1997 respectively ( 651,344) ( 651,344)
----------- -----------
Total stockholders' equity 7,656,118 7,538,143
----------- -----------
Total liabilities and
stockholders' equity $ 8,377,455 $ 8,872,218
=========== ===========
</TABLE>
(See notes to consolidated financial statements)
Page 4
<PAGE>
MICROFLUIDICS INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
--------- --------
1998 1997 1998 1997
---------- ---------- ---------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $1,732,309 $1,749,489 $3,543,974 $3,464,823
Cost of goods sold 709,461 804,480 1,735,992 1,625,768
---------- ---------- ---------- ----------
Gross profit on
revenues 1,022,848 945,009 1,807,982 1,839,055
Operating expenses:
Research and
development 192,700 116,742 344,903 229,982
Selling, general and
administrative 779,765 759,603 1,455,126 1,425,432
---------- ---------- ---------- ----------
Total operating
expenses 972,465 876,345 1,800,029 1,655,414
Income from
operations 50,383 68,664 7,953 183,641
Interest income 37,884 38,721 84,596 65,910
Other income - 12,503 - 25,006
---------- ---------- ---------- ----------
Net Income $ 88,267 $ 119,888 $ 92,549 $ 274,557
========== ========== ========== ==========
Basic Earnings
per share:
Average shares
outstanding: basic 4,925,390 4,999,868 4,923,180 4,999,841
Net income per share $ .02 $ .02 $ .02 $ .05
========== ========== ========== ==========
Diluted Earnings
per share:
Average shares
outstanding: diluted 5,023,410 4,999,868 5,025,620 4,999,841
Net income per share $ .02 $ .02 $ .02 $ .05
========== ========== ========== ==========
</TABLE>
(See notes to consolidated financial statements)
Page 5
<PAGE>
MICROFLUIDICS INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
-------
1998 1997
---- ----
<S> <C> <C>
Cash flows (used by) provided by operations:
Net income $ 92,549 $ 274,557
Reconciliation of net income to cash (used by)
provided by operations:
Depreciation and amortization 54,960 51,960
Common Stock employee compensation 0 30,000
Bad debt expense 15,000 15,000
Increase (decrease) in cash due to change in:
Trade and other receivables (115,368) 363,828
Inventories 273,230 220,437
Prepaid expenses (69,112) (62,850)
Current liabilities (612,740) 154,977
---------- ----------
Net cash(used by) provided by operations (361,481) 1,047,909
Cash flows (used by) investing activities -
Capital equipment (48,844) (41,924)
---------- ----------
Net cash (used by) investing activities (48,844) (41,924)
Cash flows from (used by) financing activities
Proceeds from issuance of Common Stock 32,583 12,577
Treasury stock purchased (13,467)
---------- ----------
Net cash from (used by) financing activities 32,583 (890)
Net increase (decrease) in cash (377,742) 1,005,095
Cash and cash equivalents at beginning 4,083,214 2,786,554
---------- ----------
Cash and cash equivalents at end $3,705,472 $3,791,649
========== ==========
</TABLE>
(See notes to consolidated financial statements)
Page 6
<PAGE>
MICROFLUIDICS INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(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 for Form 10-Q. 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 management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation have been included. The results of
operations for the six months ended June 30, 1998 and 1997 are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the consolidated financial statements and related notes
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
2. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards ("SFAS")No. 128, "Earnings per Share", which the
Company adopted in the fourth quarter of 1997, as required. Basic Earnings Per
Share (EPS) is computed by dividing income available to common stockholders by
the weighted average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if securities or
other obligations to issue common stock were exercised or converted into common
stock or resulted in the issuance of common stock. In accordance with the
standard, 1997 EPS data has been restated to conform to SFAS No. 128.
Page 7
<PAGE>
MICROFLUIDICS INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
3. INVENTORY
The components of inventories on the following dates were:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
<S> <C> <C>
Raw Material $1,381,813 $1,277,094
Work in Progress 530,223 649,946
Finished Goods 251,672 509,898
---------- ----------
Total $2,163,708 $2,436,938
========== ==========
</TABLE>
4. TAXES
For 1997, the Company utilized net operating loss carry forwards to
substantially offset taxes computed at statutory rates. At December 31,
1997, the Company had available approximately $2.1 million in Federal Net
Operating Loss carryforwards to offset future taxable income. The Company
established a valuation allowance against a portion of the deferred tax
asset due to the uncertainty of earning sufficient taxable income to
realize the full benefit of these assets.
5. NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS and
interim operating segment information and is effective for the determined
that it has one business segment, and is reviewing the No.131, "Disclosure
about Information". SFAS No 131 Segments of an Enterprise establishes
standards for beginning in 1999. The Company has and Related reporting
annual reviewed this new Company's 1998 annual financial standard and has
additional disclosure statements and interim requirements of this reporting
statement.
6. COMMITMENTS AND CONTINGENCIES
On June 22, 1998, the Company entered into a definitive asset purchase
agreement with two established U.S. manufacturing firms, Epworth
Manufacturing Company, Inc. of South Haven, Michigan and Morehouse- Cowles,
Inc of Fullerton, California. The Company is proceeding with
Page 8
<PAGE>
its due diligence investigation and financing arrangements and anticipates
a mid-August closing. Although there can be no assurance that the
transaction will be completed, if the transaction is completed, the
Company's cash and cash equivalents will be reduced and stockholders'
equity and debt will be increased.
7. COMPREHENSIVE INCOME
During the first quarter of 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income." Comprehensive income for the six months
ended June 30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Six months ended
June 30,
----------------
1998 1997
------- -------
<S> <C> <C>
Other comprehensive income:
Unrealized gains (losses)on securities $7,155 $64,618
------ -------
Other comprehensive income $7,155 $64,618
====== =======
</TABLE>
The accumulated other comprehensive income balance is as follows:
Unrealized loss
---------------
on securities
-------------
Beginning balance $55,638
Current-period change (7,155)
-------
Ending balance $48,483
=======
These amounts have not been tax effected due to the availability of Net
Operating Loss carryovers to offset the unrealized gains.
Page 9
<PAGE>
MICROFLUIDICS INTERNATIONAL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1. RESULTS OF OPERATIONS
Total Company revenues for the quarter ended June 30, 1998 were $1,732,309,as
compared to revenues of $1,749,489 in the corresponding period last year,
representing a decrease of $17,180, or 1.0%. For the six month period ended
June 30, 1998, revenues increased 2.3% to $3,543,974 from $3,464,823 for the
first six months of 1997. The decrease in revenue for the three months ended
June 30, 1998 is principally due to a decrease in sales of machines of
approximately $125,000 offset by an increase in sales of spare parts of
approximately $120,000. The increase in revenue for the six month period ended
June 30, 1998 is principally due to an increase in machine sales of
approximately $242,000 offset by a decrease in spare parts of approximately
$81,000. North American sales for the three month period ended June 30, 1998
increased to $1,148,703, or 29.5%, from $887,111 for the three months ended June
30, 1997. This increase in North American Sales was principally due to an
increase in machine sales of approximately $198,000 compared to the comparable
quarter in 1997. For the six months ended June 30, 1998, North American sales
increased to $2,257,804, or 4.7%, from $2,157,013 for the six months ended June
30, 1997. This increase in North American Sales was principally due to an
increase in machine sales of approximately $306,000, offset by a decrease in
spare parts sold of approximately $123,000. Foreign sales were $583,606 for the
quarter ended June 30,1998, compared to $862,378 for the quarter ended June 30,
1997, a decrease of approximately $279,000, or 32.4%. This decrease in foreign
sales was principally due to a decrease in the sale of large volume units of
approximately $404,000 compared to the comparable quarter in 1997. Foreign
sales for the six months ended June 30, 1998 decreased to $1,286,170, or 1.7%,
from $1,307,810 for the six months ended June 30, 1997. This decrease was due
to a decrease in sales of machinery of approximately $65,000. Management
believes that the increased North American revenues were due to an increase in
demand in North America for the company's products. There can be no assurance
that these market conditions will continue to generate increased revenues.
Cost of goods sold for the three months ended June 30, 1998 was $709,461, or
41.0% of revenue, compared to $804,480, or 46.0% of revenue, for the same period
last year. For the six month period ended June 30, 1998, cost of goods sold
increased to $1,735,992, or 49.0% of revenue, from $1,625,768, or 46.9% of
revenue, for the comparable period in 1997. For the three month period ended
June 30, 1998, the decrease in the cost of goods sold as a percentage of
Page 10
<PAGE>
sales was primarily due to the increase in sales of spare parts which have a
higher gross profit margin. For the six month period, the increase in the cost
of goods sold both as a percentage of revenue and in the absolute dollars
primarily reflects the sale of large volume production units.
The Company's three major product lines and spare parts have different profit
margins, as well as multiple profit margins within each product line. In the
course of the periods compared, there may be significant changes in the cost of
revenues as a percentage of revenue depending on the mix of product sold. Also,
the cost of sales as a percent of revenue will differ between laboratory and
pilot plant units sold due to the difference in costs between air driven and
electric-hydraulic units.
Operating expenses for the three months ended June 30, 1998 were $972,465, or
56.1% of revenue, as compared to $876,345, or 50.1% of revenue,for the same
period last year, which is an increase of $96,120, or 11.0%. Operating expenses
for the six months ended June 30, 1998 were $1,800,029, or 50.8% of revenue, as
compared to $1,655,414, or 47.8% of revenue, for the same period last year, an
increase of $144,615, or 8.7%. Research and development expenses for the three
months ended June 30, 1998 increased to $192,700 from $116,742 for the three
months ended June 30, 1997, primarily due to an increase in payroll costs of
approximately $26,000, an increase in research and development costs of
approximately $10,000, and a decrease in grant reimbursement funds of
approximately $22,000. For the six months ended June 30,1998, research and
development expenses increased by $114,921, primarily due to an increase in
payroll costs of approximately $54,000, an increase in research and development
costs of approximately $17,000,and a decrease in grant reimbursement funds of
approximately $27,000. Marketing and sales expenses for the three months ended
June 30, 1998 decreased to $415,661 from $440,570 for the three months ended
June 30, 1997, primarily due to the Company employing fewer sales personnel,
consequently meaning less payroll costs of $18,000 during the period. For the
six months ended June 30, 1998, the cost of marketing and sales increased by
approximately $37,000, from $825,578 to $862,920, due to an increase in payroll
and related costs of approximately $25,000,and an increase in delivery and
freight of approximately $27,000. General and administrative expenses increased
by approximately $45,000, to $364,105 from $319,033, for the three months ended
June 30, 1997, due to an increase in corporate expenses of approximately
$19,000, and in corporate acquisition costs of approximately $22,000. General
and administrative expenses for the six months ended June 30, 1998 were flat
when compared to the six months ended June 30, 1997, decreasing to $592,206 from
$599,854, or $7,648.
Interest income for the three months ended June 30, 1998 decreased 2.2% to
$37,884 from $38,721 for the three months ended June 30, 1997. Interest income
increased for the six months ended June 30, 1998 to $84,596 from $65,910 in the
same period last year, an increase of $18,686, or 28.4%. This increase is due to
an increase in the amount of cash available for investment during the six month
period over the comparable period for 1997.
Page 11
<PAGE>
The Company received other income of $12,503 and $25,006 for the three and six
months ended June 30, 1997 respectively. The other income resulted from royalty
income of $4,168 per month due to the sale of the Company's Dermasome/(R)/
product line in December, 1995. The Company had a backlog of $293,121 and
$847,166 at June 30, 1998 and June 30, 1997, respectively, consisting of
purchase commitments for Microfluidizer equipment.
2. LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations primarily through the use of cash and
cash equivalents on hand and cash flows from operations.
The Company utilized cash of $361,481 and generated cash of $1,047,909 from
operations for the six months ended June 30, 1998 and 1997, respectively. For
the first six months of 1998, this amount was principally the result of net
income from operations and decreases in inventories, offset by a decrease in
current liabilities and an increase in trade and other receivables and prepaid
expenses. For the first six months of 1997, this amount was principally the
result of net income from operations, decreases in trade and other receivables
and inventories and an increase in current liabilities, partially offset by an
increase in prepaid expenses.
The Company utilized $48,844 and $41,924 for investing activities for the six
months ended June 30, 1998 and 1997, respectively. Net cash used for investing
activities in each period related to the purchase of capital equipment. As of
June 30, 1998, the Company had no material commitments for capital expenditures.
For financing activities, the Company received cash of $32,583 and utilized cash
of $890 for the six months ended June 30,1998 and 1997, respectively. The
Company generated cash from financing activities from the issuance of Common
Stock of $32,583 in 1998 and $12,577 in 1997 pursuant to the exercise of stock
option agreements pursuant to the Company's employee stock purchase plan and
stock option plan, partially offset by the purchase of treasury stock of $13,467
for the six months ended June 30, 1997.
The cash and cash equivalents balance of the Company was $3,705,472 at June 30,
1998, a decrease of $377,740 from the December 31, 1997 balance of $4,083,214.
The Company continues to maintain a line of credit with a bank. The line of
credit facility provides for maximum borrowing equal to the lesser of: $750,000
or 80% of the domestic accounts receivable less than 60 days old. As of June 30,
1998 and August 7,1998, the Company had no borrowings outstanding under its line
of credit.
Page 12
<PAGE>
Assuming that there is no significant change in the Company's business, the
Company believes that cash flows from operations, together with existing cash
balances, will be sufficient to meet its working capital requirements for at
least the next twelve months.
The Company may, from time to time, consider an acquisition of complementary
businesses, products, or technologies. On June 22, 1998, the Company entered
into a definitive asset purchase agreement with two established U.S.
manufacturing firms, Epworth Manufacturing Company, Inc. of South Haven,
Michigan and Morehouse-Cowles, Inc of Fullerton, California. The Company is
proceeding with its due diligence investigation and financing arrangements and
anticipates a mid-August closing. Although there can be no assurance that the
transaction will be completed, if the transaction is completed, the Company's
cash and cash equivalents will be reduced and stockholders' equity and debt will
be increased.
3. NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS No.131,
"Disclosure about Segments of an Enterprise and Related Information". SFAS No
131 establishes standards for reporting annual and interim operating segment
information and is effective for the Company's 1998 annual financial statements
and interim reporting beginning in 1999. The Company has reviewed this new
standard and has determined that it has one business segment, and is reviewing
the additional disclosure requirements of this statement.
4. YEAR 2000 DISCLOSURE
The Company has considered the potential problems that may arise because of the
Year 2000 as it relates to the Company's internal information systems. It is
the Company's opinion that, having considered the systems that the company
presently utilizes, the Year 2000 should not present material problems nor
material costs with respect to its own internal information systems. To date,
the Company is unaware of any situations of noncompliance that would materially
adversely affect its operations or financial condition. There can be no
assurance, however, that instances of noncompliance which could have a material
adverse effect on the Company's operations or financial condition will not be
identified; that the systems of other companies with which the Company transacts
business will be corrected on a timely basis; or that a failure by such entities
to correct a year 2000 problem or a correction which is incompatible with the
Company's information systems would not have a material adverse effect on the
Company's operations or financial condition.
Page 13
<PAGE>
5. BUSINESS OUTLOOK
The Company believes that this report may contain forward-looking statements
that are subject to certain risks and uncertainties. These forward-looking
statements include statements regarding the Company's liquidity and potential
strategic arrangements. Such statements are based on management's current
expectations and are subject to a number of factors and uncertainties that could
cause actual results to differ materially from those described in the forward-
looking statements. Such factors and uncertainties include, but are not limited
to, the uncertainty that the performance advantages of the Microfluidizer
equipment will be realized commercially or that a commercial market for
Microfluidizer equipment will continue to develop; the dependence by the Company
on key customers; the loss of the services of one or more of the Company's key
employees, which could have a material adverse impact on the Company; the
development of competing or superior technologies and products from other
manufacturers, many of which have substantially greater financial, technical and
other resources than the Company; the cyclical nature of the materials
processing industry, which has historically negatively affected the Company's
sales of Microfluidizer equipment during industry downturns and which could do
so in the future; the impact of government regulation, the uncertainty that
existing patents will be held valid if challenged, that any additional patents
will be issued or that the scope of any patent protection will exclude
competitors; the availability of alternate manufacturing sources and suppliers;
the availability of additional capital to fund expansion on acceptable terms, if
at all; and general market and economic conditions.
Page 14
<PAGE>
MICROFLUIDICS INTERNATIONAL CORPORATION
PART II- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 26, 1998, the Company held its annual meeting of its stockholders.
The following matters were voted on at the annual meeeting:
1. The election of, Irwin J. Gruverman, Vincent B. Cortina, Michael
A.Lento and James N. Little; and
2. The ratification of the appointment of Deloitte & Touche LLP
as auditors for the Company for the fiscal year ending
December 31,1998.
The following chart shows the number of votes cast for or against, as well
as the number of abstentions and broker nonvotes, as to each matter voted on at
the special meeting:
<TABLE>
<CAPTION>
Matter For Against Abstain Broker Nonvotes
- ------ --- --------- ------- ---------------
<S> <C> <C> <C> <C>
Election of Mr. Gruverman 4,716,431 45,352 N/A N/A
Election of Mr. Cortina 4,716,681 45,102 N/A N/A
Election of Mr. Lento 4,709,893 51,890 N/A N/A
Election of Mr. Little 4,716,781 45,002 N/A N/A
Appointment of Deloitte &
Touche LLP 4,741,943 12,952 6,888 N/A
</TABLE>
ITEM 5. Other Information
Stockholders who wish to have their proposals presented at the 1999 Annual
Meeting of Stockholders must deliver such proposals in writing to the
Secretary of the Company at the Company's principal executive offices no
later than December 29, 1998 for inclusion in the Company's proxy statement
and form of proxy relating to that meeting. Stockholders who do not wish to
include their proposals in such proxy statement and form of proxy but who
wish to present proposals at the Company's 1999 Annual Meeting of
Stockholders must notify the Secretary of the Company in writing at the
Company's principal executive offices no later than March 14, 1999 in order
for their proposals to be considered timely for purposes of Rule 14a-4
under the Securities Exchange Act of 1934, as amended.
Page 15
<PAGE>
MICROFLUIDICS INTERNATIONAL CORPORATION
PART II- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 11 Statement regarding computation of Per Share Earnings
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
On June 22, 1998, the Company filed a Form 8-K in connection with its
announcement that it had entered into a definitive asset purchase
agreement with two established U.S. Manufacturing firms, Epworth
Manufacturing Company, Inc. of South Haven, Michigan and Morehouse-
Cowles, Inc of Fullerton, California.
Page 16
<PAGE>
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.
MICROFLUIDICS INTERNATIONAL CORPORATION
/s/ Michael A. Lento
---------------------
Michael A. Lento
President and Treasurer
(Principal Financial and Accounting Officer)
Date: August 13, 1998
Page 17
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
11 Statement regarding
computation of per share
earnings.
27 Financial Data Schedule
Page 18
<PAGE>
Exhibit 11
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Six Months Ended June 30
------------------------
1998 1997
---- ----
<S> <C> <C>
Average shares outstanding:Basic 4,923,180 4,999,841
========== ==========
Net income 92,549 274,557
========== ==========
Net income per share $ .02 $ .05
========== ==========
Effect of dilutive stock
options 102,440 -0-
---------- ----------
Average shares outstanding:
Diluted 5,025,620 4,999,841
========== ==========
Net income per share $ .02 $ .05
========== ==========
</TABLE>
Page 19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,705,472
<SECURITIES> 48,483
<RECEIVABLES> 1,563,966
<ALLOWANCES> 0
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