<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1998
------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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, N.Y. 11735
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code...(516) 694-9555
--------------
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 and 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 February 10, 1999
--------------------- -----------------
$.01 par value 5,925,220
Transitional small business disclosure format (check one):
YES NO X
--- ---
<PAGE>
MISONIX, INC.
-------------
Index
PART I. FINANCIAL INFORMATION Page
Financial Statements:
Consolidated Balance Sheet
December 31, 1998(Unaudited) 3
Consolidated Statements of Operations
Six Months Ended December 31, 1998
and 1997 (Unaudited) 4
Consolidated Statements of Operations
Three Months Ended December 31, 1998
and 1997 (Unaudited) 5
Consolidated Statements of Cash Flows
Six Months Ended December 31, 1998
and 1997 (Unaudited) 6
Notes to Consolidated Financial Statements 7-8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-11
PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K 12
Signatures 13
2
<PAGE>
MISONIX, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
December 31,
ASSETS 1998
------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 1,006,424
Investments held to maturity 11,858,309
Accounts receivable, net of allowance
for doubtful accounts of $2,330,759 (Note 4) 4,099,610
Inventories (Note 3) 2,535,163
Prepaid expenses and other current assets 961,383
----------
TOTAL CURRENT ASSETS 20,460,889
PROPERTY, PLANT AND EQUIPMENT, at cost,
less accumulated depreciation and
amortization of $1,973,694 1,234,747
PATENTS, at cost, less accumulated
amortization of $8,602 35,222
DEFERRED INCOME TAXES 529,012
GOODWILL, less accumulated amortization
of $76,767 514,990
OTHER 86,238
----------
$22,861,098
===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
-----------------------------
CURRENT:
Note payable to bank $ 67,734
Accounts payable 1,388,480
Accrued expenses and other current liabilities 779,467
Current maturities of capital lease obligations 123,271
----------
TOTAL CURRENT LIABILITIES 2,358,952
CAPITAL LEASE OBLIGATIONS 56,463
DEFERRED INCOME 788,979
MINORITY INTEREST (Notes 1 and 6) 140,860
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; shares authorized
10,000,000; issued and outstanding 5,925,220 58,652
Additional paid-in capital 21,465,591
Deficit (2,006,061)
Cumulative foreign currency translation adjustment (2,338)
----------
TOTAL STOCKHOLDERS' EQUITY 19,515,844
----------
$22,861,098
===========
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
MISONIX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six months ended
December 31,
-----------------------------------
1998 1997
---- ----
NET SALES $11,423,780 $10,837,508
COST OF GOODS SOLD 5,807,852 4,895,606
---------- ----------
Gross profit 5,615,928 5,941,902
---------- ----------
OPERATING EXPENSES:
Selling, general and
administrative expenses 3,548,903 3,382,804
Bad debt expense 2,099,903 11,000
Research and development 442,509 447,703
--------- ----------
Total operating expenses 6,091,315 3,841,507
---------- ----------
(Loss) income from operations (475,387) 2,100,395
---------- ----------
OTHER INCOME (EXPENSE):
Interest income 327,273 259,564
Interest expense (26,784) (24,808)
Option/license fees 37,929 35,685
Royalty income 409,786 229,754
Foreign exchange loss (5,632) (12,583)
Miscellaneous expense (2,489) (1,475)
---------- ----------
Total other income 740,083 486,137
---------- ----------
Income before minority interest
and income taxes 264,696 2,586,532
Minority interest in net income of
consolidated subsidiary (19,738) (9,475)
---------- ----------
Income before income taxes 244,958 2,577,057
Income taxes (59,935) (725,231)
------- ----------
NET INCOME $ 185,023 $ 1,851,826
========== ==========
NET INCOME PER SHARE - BASIC $0.03 $ 0.33
==== =====
NET INCOME PER SHARE - DILUTED $0.03 $ 0.28
==== =====
WEIGHTED AVERAGE COMMON SHARES 5,807,351 5,674,437
========== ==========
WEIGHTED AVERAGE COMMON SHARES AND
SHARE EQUIVALENTS OUTSTANDING 6,604,308 6,724,552
========== ==========
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
MISONIX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six months ended
December 31,
-------------------------------
1998 1997
---- ----
NET SALES $ 5,860,564 $ 5,824,945
COST OF GOODS SOLD 3,049,386 2,737,008
---------- ----------
Gross profit 2,811,178 3,087,937
---------- ----------
OPERATING EXPENSES:
Selling, general and
administrative expenses 1,883,926 1,841,452
Bad debt expense 384,903 9,000
Research and development 188,611 170,967
---------- ----------
Total operating expenses 2,457,440 2,021,419
---------- ----------
Income from operations 353,738 1,066,518
---------- ----------
OTHER INCOME (EXPENSE):
Interest income 148,403 148,269
Interest expense (10,239) (13,256)
Option/license fees 18,965 18,298
Royalty income 220,795 108,199
Foreign exchange gain (loss) 9,960 (1,818)
Miscellaneous expense (1,213) (941)
---------- ----------
Total other income 386,671 258,751
---------- ----------
Income before minority interest
and income taxes 740,409 1,325,269
Minority interest in net income of
consolidated subsidiary (7,647) (7,930)
---------- ----------
Income before income taxes 732,762 1,317,339
Income taxes (268,092) (373,141)
---------- ----------
NET INCOME $ 464,670 $ 944,198
========== ==========
NET INCOME PER SHARE - BASIC $ .08 $ .17
==== ====
NET INCOME PER SHARE - DILUTED $ .07 $ .14
==== ====
WEIGHTED AVERAGE COMMON SHARES 5,837,095 5,676,149
========== ==========
WEIGHTED AVERAGE COMMON SHARES AND
SHARE EQUIVALENTS OUTSTANDING 6,581,843 6,751,109
=========== ==========
See accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
MISONIX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six months ended
December 31,
----------------------------
1998 1997
------------ ------------
OPERATING ACTIVITIES:
Net income $ 185,023 $ 1,851,826
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Bad debt expense 2,099,903
Depreciation and amortization 187,968 224,781
Minority interest in net income
of subsidiary 19,738 9,475
Foreign currency loss 3,783 12,294
Changes in operating assets and
liabilities:
Accounts receivable 1,889,313 (2,920,102)
Inventory 473,164 (724,773)
Prepaid expenses and other
receivables (67,298) (5,550)
Deposits and other assets (36,213) (164,058)
Accounts payable and accrued
expenses (706,513) 46,243
Deferred income (37,929) 67,785
Income taxes payable (1,420,438) 250,661
------------ ------------
Net cash provided by (used in)
operating activities 2,590,501 (1,351,418)
------------ ------------
INVESTING ACTIVITIES:
Sales of investment held to maturity 6,575,000 795,803
Purchases of investments held to maturity (12,025,837) (3,398,153)
Purchase of additional stock in Labcaire (129,172) (119,187)
Acquisition of property and equipment (165,267) (187,254)
------------ ------------
Net cash used in investing activities (5,745,276) (2,908,791)
------------ ------------
FINANCING ACTIVITIES:
Proceeds from note payable to bank -- 55,997
Repayment of note payable to bank (465,612) --
Exercise of stock options and warrants 83,075 13,500
Increase in capital lease obligations -- 22,910
Principal payments on capital lease
obligation (48,333) (15,162)
------------ ------------
Net cash (used in) provided by
financing activities (430,870) 77,245
------------ ------------
Effect of exchange rates (842) (273)
------------ ------------
NET DECREASE IN CASH (3,586,487) (4,183,237)
CASH, beginning of period 4,592,911 5,409,830
------------ ------------
CASH, end of period $ 1,006,424 $ 1,226,593
============ ============
See accompanying Notes to Consolidated Financial Statements.
6
<PAGE>
MISONIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with respect to interim periods is unaudited)
==========================================================
1. Basis of Presentation
The consolidated financial statements of Misonix, Inc. include the accounts of
Misonix, Inc., its 86.7% owned subsidiary, Labcaire Systems Ltd. ("Labcaire"),
and its 100% owned subsidiary, Misonix, Ltd. All significant intercompany
balances and transactions have been eliminated.
2. Interim Periods
The financial statements for the six months ended December 31, 1998 and 1997
are unaudited, but, in the opinion of management, include all adjustments,
consisting of normal recurring accruals, necessary for fair presentation of
financial position and results of operations. Results for the interim periods
are not necessarily indicative of the results for a full year. For further
information refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report for the year ended June 30,
1998.
3. Inventories
Inventories are summarized as follows:
December 31,
1998
----------
Raw materials $1,495,241
Work-in-process 725,213
Finished goods 314,709
----------
$2,535,163
==========
4. Bad Debt Expense
On October 22, 1998, the Company announced that it had reserved for possible
bad debts of $1,700,000 against accounts receivable due and owing by Medical
Device Alliance, Inc. and its wholly-owned subsidiary, Lysonix, Inc., as
Licensees for the Misonix ultrasonic soft tissue aspirator. In December of
1998, an additional reserve was taken against all remaining receivables from
Medical Device Alliance, Inc. and Lysonix, Inc. totaling $369,903 A notice of
default on the license agreement with these parties has been transmitted by the
Company pursuant to which the license agreement was terminated on January 11,
1999. (See Note 7)
5. Stock Based Compensation
On October 7 1998, the Board of Directors adopted, and on January 13, 1999, the
shareholders approved the 1998 Employee Stock Option Plan covering an aggregate
of 500,000 common shares of the Company. The Board has granted 250,000 options
to the chief executive officer, 85,000 under
7
<PAGE>
this plan and 165,000 under the 1996 Stock Option Plan.
6. Acquisition
In October 1998, under the terms of the revised purchase agreement (the
"Agreement") with Labcaire (as discussed in the Form 10-KSB at June 30, 1998,
the Company paid (pounds)73,638 (approximately $129,172) for 9,286 shares
(2.65%) of Labcaire's common stock. This represents the fiscal 1998 buy-back
portion, as defined in the Agreement.
7. Commitments and Contingencies
Employee Agreements
The Company has entered into an employee agreement with its chief executive
officer which expires on October 31, 2000. This agreement provides for an
annual base compensation of $250,000 with an annual bonus at the discretion of
the Board of Directors. The agreement also provides for a guaranteed initial
bonus of $225,000 to be paid in January 2000 and the award of stock options as
described in Note 5.
Legal Proceedings
The Company, Medical Device Alliance, Inc. ("MDA"), and MDA's wholly-owned
subsidiary, Lysonix, Inc., were sued for alleged patent infringement by Mentor
Corporation. The case was heard in U.S. District Court in January 1999. On
February 5, 1999, the jury found for the plaintiff. As a result of this
outcome, the Company and its licensee may be precluded from selling the
ultrasonic soft tissue aspirator. The amount of damages that may be awarded, if
any, is still pending. However, management believes that significant defenses
against the claim of patent infringement are still sustainable. It is too early
to reasonably predict the range of potential loss in the event of an outcome
unfavorable to the Company.
8. Subsequent Events
Purchase Commitment
On January 22, 1999, Labcaire purchased a manufacturing facility in North
Somerset, England to house their operations. The transaction totaled
(pounds)1,218,034 or approximately $2,000,000 and was financed with a
(pounds)780,000 mortgage loan from Midland Bank plc. Midland Bank plc also
reduced their line of credit agreement with Labcaire. The revised agreement,
dated December 4, 1998, reduces the available credit from (pounds)525,000 to
(pounds)350,000 and requires that Labcaire pay the existing loan balance down to
(pounds)350,000 by January 31, 1999 which was paid. On December 11, 1998 the
Company transferred (pounds)200,000 to Labcaire to satisfy this requirement. The
new terms also stipulate that Labcaire=s accounts receivable must be at least
175% of the outstanding balance on the line of credit at all times, and that
Labcaire must show an after tax profit of at least (pounds)100,000 for any
twelve month period. As of December 31, 1998, (pounds)40,816 or $67,734 was
outstanding under this facility.
8
<PAGE>
MISONIX, INC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Six months and three months ended December 31, 1998 and 1997
Net Sales: Net sales of the Company's medical, scientific and industrial
products, increased $586,272 or 5.4% over the prior year for the six months
ended December 31, 1998, increased from $10,837,508 in 1997 to $11,423,780 in
1998. Net sales for the Company=s medical, scientific and industrial products
for the three months ended December 31, 1998 remained consistent with the net
sales for the three months ended December 31, 1997. The increase in sales is
due to an increase in the Mystaire Division offset partially by a decrease in
the Medical Products Division. The backlog for unfilled orders as of December
31, 1998 was $9,157,054.
Gross Profit: Gross Profit decreased from 54.8% of sales for the six months
ended December 31, 1997 to 49.2% of sales for the six months ended December 31,
1998 due change in product mix. Gross Profit decreased from 53.0% of sales for
the three months ended December 31, 1998 to 48.0% of sales for the three months
ended December 31, 1997. The decrease is due to an unfavorable mix of high and
low margin product deliveries and the disposal of obsolete inventory.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses increased from $3,382,804 (31.2% of sales) for the six
months ended December 31, 1997 to 3,548,903 (31.1% of sales) for the six months
ended December 31, 1998. Selling General and administrative expenses increased
from $1,841,452 (31.6% for sales) in the three months ended December 31, 1998
to $1,883,926 (32.1% of sales) for the three months ended December 31, 1997.
This increase relates to sales costs associated with higher sales volume and an
increase in legal fees associated with the MDA suit. (see Note 7)
Bad Debt Expense: Bad debt expense increased from $11,000, for the six months
ended December 31, 1997 to $2,099,903, for the six months ended December 31,
1998. On October 22, 1998 the Company announced that it had reserved for
possible bad debts of $1,700,000 against accounts receivable due and owing by
Medical Device Alliance, Inc. and its wholly-owned subsidiary, Lysonix, Inc.,
as Licensees for the Misonix Ultrasonic soft tissue aspirator. In December of
1998, an additional reserve of $369,903 was provided for all remaining
receivables from Medical Device Alliance, Inc. and Lysonix, Inc., to bring the
reserve to $2,069,903. A notice of default on the license agreement with these
parties has been transmitted by the Company which declared the license
agreement was terminated on January 11, 1999. Without the effects of this
charge, the Company would have reported net income of $1,465,964, or $.22
diluted earnings per share for the six months ended December 31, 1998 as
compared to net income of $1,851,826 or $.28 diluted earnings per share for the
six months ended December 31, 1997. Due to this charge, the Company reported a
net profit of $185,023 or $.03 diluted earnings per share for the six months
ended December 31, 1998.
Research and Development Expenses: Medical product research and development
expenses were $287,269 for the six months ended December 31, 1997 and $261,487
for the six months ended December 31, 1998. Industrial product research and
development expenses were $160,434 for the six months ended December 31, 1997
and $181,022 for the six months ended December 31, 1998. Medical product
research and development expenses were $97,319 for the three months ended
December 31, 1997 and $97,694 for the three months ended December 31, 1998.
Industrial product research and development expenses were $73,648 for the three
months ended December 31, 1997 and $90,917 for the three months ended December
31, 1998.
9
<PAGE>
MISONIX, INC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Other Income (Expense): Other income during the six months ended December 31,
1997 was $486,137. For the six months ended December 31, 1998, other income was
$740,083. Other income for the three months ended December 31, 1997 was
$258,751 as compared to $368,671 for the three months ended December 31, 1998.
This increase was principally due to increased royalty income received from the
Company=s licensee on sales of medical devices and interest income on
investments.
Income Taxes: The tax provision for the six months ended December 31, 1998 was
$59,935 as compared to a tax provision of $725,231 for December 31, 1997. The
tax provision for the three months ended December 31, 1998 was $268,092 as
compared to a tax provision of $373,141 for the three months ended December 31,
1997. This decrease is the result of a decrease in Income Before Taxes which is
primarily due to a $2,099,903 charge to bad debt expense in the current year.
Since the provision was low in the first six months, the estimated payments
made to date exceed the income tax provision and result in an Prepaid Income
taxes rather than Income Taxes Payable which is classified in the balance sheet
as prepaid expenses and other current assets. Future payments will be adjusted
to account for these unanticipated deductions.
Liquidity and Capital Resources: At December 31, 1998, the Company had a cash
balance of $1,006,424 and investments held to maturity of $11,858,309 compared
with a cash balance of $1,226,593 and investments held to maturity of
$8,969,945 at June 30, 1998. This overall increase is due to royalties received
from the Company=s licensees on sales of medical devices and to increased cash
flow from operations. The Company has a revolving credit facility, which
expires on June 30, 1999, in the amount of $500,000 available to the Company
for short term borrowings and letters of credit. Borrowings under the facility
bear interest at prime plus 2% and are collateralized by a security interest in
all assets of the Company. There are no outstanding borrowing under this
facility.
On January 22, 1999, Labcaire Systems LTD ("Labcaire"), the Company's 86.7%
owned subsidiary, purchased a manufacturing facility in North Somerset, England
to house their operations. The transaction, totaling (pounds)1,218,034
(approximately $2 million), consisted of a purchase price of (pounds)1 million,
closing costs of (pounds)71,000 and refundable VAT of (pounds)175,000. The
purchase was financed in part by an intercompany loan of (pounds)200,000
($336,902) and by a (pounds)780,000 mortgage loan from Midland Bank plc in North
Somerset. Borrowings under the facility bear interest at prime plus 2% and are
collateralized by a security interest in all assets of the company. The loan is
payable in monthly installments of (pounds)7,757 per month, including interest,
over a term of fifteen years starting in February of 1999. There is also a 1%
prepayment penalty for early retirement of the loan.
As a result of the mortgage loan described above, Midland Bank plc revised their
line of credit agreement with Labcaire. The revised agreement, dated December 4,
1998, reduces the available credit from (pounds)525,000 to (pounds)350,000 and
requires Labcaire to pay the existing loan balance down to (pounds)350,000 by
January 31, 1999. On December 11, 1998 the Company transferred (pounds)200,000
to Labcaire to satisfy this requirement. As of December 31, 1998, (pounds)40,816
or $67,734 was outstanding under this facility.
The Company believes that its existing capital resources will enable it to
maintain its current and planned operations for a least 12 months from the date
hereof.
Year 2000 Compliance: The Company utilizes and is dependent upon data
processing systems and software to conduct its business. The data processing
systems and software include those developed and maintained by the Company=s
third-party data processing vendors and software which is run on in-house
computer networks. During the first quarter of fiscal 1998, the Company
initiated a review and assessment of all hardware and software to confirm that
it will function properly in the year 2000. With
10
<PAGE>
MISONIX, INC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
respect to internal systems, the results of that evaluation to date have not
revealed any year 2000 issues that, in the Company=s opinion, cannot be
remediated in a timely manner; and therefore are not expected to create a
material risk of disruption of operations. With respect to outside vendors,
those vendors that have been contacted have indicated that their hardware of
software is or will be year 2000 compliant in time frames that meet regulatory
requirements. Evaluations of these issues is continuing and there can be no
assurance that additional issues, not presently known to the Company, will not
be discovered which could present a material risk of disruption to the
Company=s operations.
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, future
economic, competitive and market conditions, the outcome of legal proceedings,
as well as management business decisions.
11
<PAGE>
MISONIX, INC.
PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended
December 31, 1998.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Quarterly Report to be signed on its
behalf by the undersigned thereunto duly authorized.
Date: February 19, 1999
MISONIX, INC.
---------------------------------
(Registrant)
By: /s/ Michael A. McManus, Jr.
---------------------------------
Michael A. McManus, Jr.
President, Chief Executive Officer
February 19, 1999
By: /s/ Richard Zaremba
---------------------------------
Richard Zaremba
Vice President and
Chief Financial Officer
February 19, 1999
13
<PAGE>
MISONIX, INC.
COMPUTATION OF EPS-TREASURY STOCK METHOD
SIX MONTH CALCULATION
12/31/98
- --------------------------------------------------------------------------------
Avg. number of common shares o/s 5,807,351
Net income for the period $ 188,979
- --------------------------------------------------------------------------------
Diluted EPS
-----------
Average # of shares under options/
warrants outstanding 1,015,833
Option price per share $0.50 - $6.00
Proceeds upon exercise of options $1,343,907
Market price of stock:
Average $ 6.14
----------
Treasury shares that could be
repurchased with proceeds
(proceeds/avg. price) 218,877
(proceeds/closing price) ==========
Excess of shares under option over
treasury shares that could be
repurchased 796,956
==========
Common stock equivalent shares
(incremental shares) 796,956
Average number of common shares
outstanding 5,807,351
----------
Total average number of common
and common equivalent shares 6,604,308
==========
Diluted EPS $ 0.03
==========
======================================================
DATE AVERAGE
PRICE
COMMON
STOCK
======================================================
8.16
07/31/98 7.00
08/31/98 5.25
09/30/98 5.88
10/31/98 5.06
11/30/98 5.75
12/31/98 5.88
---------
Total 42.98
=========
Average 6.14
=========
Net Income 188,979.00
-------------
Plus:
First Quarter A/R Write-Off 1,700,000.00
Second Qtr. A/R Write-Off 369,903.00
-------------
Total Write-off 2,069,903.00
Less:
Tax Effect of Write-Off @39% (807,262.17)
-------------
Net Adjustment 1,262,640.83
Adjusted Net Income 1,451,619.83
=============
Diluted EPS $0.22
=============
% of Assumed
Granted Period o/s Wghtd Avg Exercise $ Proceeds
------- ---------- --------- ---------- --------
J. LIBRIZZI 90,000 50% 45,000 $0.50 $ 22,500
R. SWEEZEY 2,250 100% 2,250 $0.50 $ 1,125
A. GERSTENFELD 3,000 100% 3,000 $2.17 $ 6,510
R. LEE 30,000 100% 30,000 $0.96 $ 28,800
G. GELMAN 688,500 100% 688,500 $0.73 $ 502,605
H. ALLIGER 75,000 100% 75,000 $0.73 $ 54,750
A. GERSTENFELD 15,000 100% 15,000 $0.73 $ 10,950
J. LIBRIZZI 60,000 100% 60,000 $4.00 $ 240,000
P. GERSTHEIMER 7,500 83% 6,250 $4.00 $ 25,000
R. MANNA 7,500 100% 7,500 $4.00 $ 30,000
M. McMANUS 250,000 33% 83,333 $5.06 $ 421,667
--------- --------- ---------
TOTALS 1,228,750 1,015,833 1,343,907
========= ========= =========
Page 1
<PAGE>
MISONIX, INC.
COMPUTATION OF EPS-TREASURY STOCK METHOD
THREE MONTH CALCULATION
12/31/98
- --------------------------------------------------------------------------------
Avg. number of common shares o/s 5,837,095
Net income for the period $468,626
- --------------------------------------------------------------------------------
Diluted EPS
-----------
Average # of shares under options/
warrants outstanding 1,052,917
Option price per share $0.50 - $6.00
Proceeds upon exercise of options $1,738,075
Market price of stock:
Average $ 5.64
----------
Treasury shares that could be
repurchased with proceeds
(proceeds/avg. price) 308,169
(proceeds/closing price) ==========
Excess of shares under option over
treasury shares that could be
repurchased 744,748
==========
Common stock equivalent shares
(incremental shares) 744,748
Average number of common shares
outstanding 5,837,095
----------
Total average number of common
and common equivalent shares 6,581,843
==========
EPS $ 0.07
==========
======================================================
DATE AVERAGE
PRICE
COMMON
STOCK
======================================================
09/30/98 5.88
10/31/98 5.06
11/30/98 5.75
12/31/98 5.88
---------
Total 22.57
=========
Average 5.64
=========
Net Income 468,626.00
-------------
Plus:
First Quarter A/R Write-Off 1,700,000.00
Second Qtr. A/R Write-Off 369,903.00
-------------
Total Write-off 2,069,903.00
Less:
Tax Effect of Write-Off @39% (807,262.17)
-------------
Net Adjustment 1,262,640.83
Adjusted Net Income 1,731,266.83
=============
Diluted EPS $0.26
=============
% of Assumed
Granted Period o/s Wghtd Avg Exercise $ Proceeds
------- ---------- --------- ---------- --------
R. SWEEZEY 2,250 100% 2,250 $0.50 $1,125
A. GERSTENFELD 3,000 100% 3,000 $2.17 $6,510
R. LEE 30,000 100% 30,000 $0.96 $28,800
G. GELMAN 688,500 100% 688,500 $0.73 $502,605
H. ALLIGER 75,000 100% 75,000 $0.73 $54,750
A. GERSTENFELD 15,000 100% 15,000 $0.73 $10,950
J. LIBRIZZI 60,000 100% 60,000 $4.00 $240,000
P. GERSTHEIMER 7,500 67% 5,000 $4.00 $20,000
R. MANNA 7,500 100% 7,500 $4.00 $30,000
M. McMANUS 250,000 67% 166,667 $5.06 $843,335
--------- --------- ----------
TOTALS 1,138,750 1,052,917 $1,738,075
========= ========= ==========
Page 1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,006,424
<SECURITIES> 11,858,309
<RECEIVABLES> 6,430,369
<ALLOWANCES> 2,330,759
<INVENTORY> 2,535,163
<CURRENT-ASSETS> 20,460,889
<PP&E> 3,208,441
<DEPRECIATION> 1,973,694
<TOTAL-ASSETS> 22,861,098
<CURRENT-LIABILITIES> 2,358,952
<BONDS> 0
0
0
<COMMON> 58,652
<OTHER-SE> 19,457,192
<TOTAL-LIABILITY-AND-EQUITY> 22,861,098
<SALES> 11,423,780
<TOTAL-REVENUES> 11,423,780
<CGS> 5,807,852
<TOTAL-COSTS> 11,899,167
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,784
<INCOME-PRETAX> 244,958
<INCOME-TAX> 59,935
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 185,023
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
