At sec.yahoo.com :
November 13, 1997
MISONIX INC (MSON)
Quarterly Report (SEC form 10QSB)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS Results of Operations
Three Months Ended September 30, 1997 and 1996 Net Sales: Net sales of
the Company's medical, scientific and industrial products, increased
$2,222,729 (79.7%) from $2,789,834 in the three months ended September
30, 1996 to $5,012,563 in the three months ended September 30, 1997.
Parent Company sales for the three months ended September 30, 1997
increased 112.8 % while sales at the Company's foreign subsidiary
(Labcaire) increased 19.3% . The Company's backlog of unfilled orders
increased from $1,966,372 at September 30, 1996 to $6,349,585 at
September 30, 1997. This increase is due to increasing demand for the
Company's scientific and industrial product lines and new orders relative
to the Company's medical devices. Gross Profit: Gross profit increased
from 51.3% of sales in the three months ended September 30, 1996 to
56.9% of sales in the three months ended September 30, 1997 primarily
due to the continued medical device sales, significant growth in the
domestic sales of the Company and economies of scale relative to this
growth. Selling, General and Administrative Expenses: Selling, general
and administrative expenses increased from $1,083,813 (38.8 % of sales) in
the three months ended September 30, 1996 to $1,543,352 (30.8% of sales)
in the three months ended September 30, 1997. This dollar increase relates
to sales costs associated with higher sales volume and hiring of additional
personnel, but reflects a percentage decrease due to higher sales volume.
Research and Development Expenses: Medical product research and
development expenses were $6,456 in the three months ended September
30, 1996 and $189,950 in the three months ended September 30, 1997. The
increase in this area is due to non-funded development costs associated
with the Company's medical devices, under its agreements with Medical
Device Alliance, Inc. and U.S. Surgical Corporation. Industrial product
research and development expenses were $28,750 in the three months
ended September 30, 1996 and $86,786 in the three months ended
September 30, 1997. This increase is due to upgrades in the fume enclosure
product group. Other Income (Expense): Other income during the three
months ended September 30, 1996 was $113,892. During the three months
ended September 30, 1997, other income was $227,386. This increase was
principally due to $121,555 of royalty income received from Medical
Device Alliance, Inc. on sales of the ultrasonic soft tissue aspirator, as per
the terms of its licensing agreement with the Company. Income Taxes:
The Company is currently providing for income taxes at a rate of
approximately 28%. This rate reflects the benefit of deferred tax assets that
could not be used until the Company was profitable. Liquidity and Capital
Resources: At September 30, 1997, the Company had a cash balance of
$884,594 and investments held to maturity of $9,273,905 compared with a
cash balance of $1,048,278 and investments held to maturity of $469,324 at
September 30, 1996. This increase is due to royalties received from
Medical Device Alliance, Inc., the $5,687,198 received upon the exercise of
warrants in February 1997, and to cash flow from operations. Inventories
have increased from $1,503,124 at September 30, 1996 to $2,713,467 at
September 30, 1997 reflecting, in part, the establishment of an inventory
for the ultrasonic soft tissue aspirator. 7 MISONIX, INC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued) In
addition, the Company has a revolving credit facility, which expires on
June 30, 1998, 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 borrowings under
this facility. A revolving credit facility from a U.K. bank in the amount of
approximately $560,000 was available to Labcaire for short term
borrowings. This facility expires in August 1998 when all unpaid principal
and interest is due. This facility bears interest at U.K. prime plus 2% and is
collateralized by a security interest in all the assets of Labcaire and a
guarantee by Labcaire's directors. As of September 30, 1997, $541,950 was
outstanding under this facility. The Company believes that its existing
capital resources will enable it to maintain its current and planned
operations for at least 12 months from the date hereof. 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 or higher than historical costs incurred in
performance of contracts or in conducting other activities. 8 MISONIX,
INC. |
