##### Table of Contents



FORM 10-Q
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended December 31, 2009
 OR
 o
    
    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 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)1938 New Highway, Farmingdale, NY
    
    11735(Address of principal executive offices)
    
    (Zip Code)
  (Registrants telephone number, including area code)
 þ o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
  Outstanding atClass of Common Stock
    
    February 16, 2010Common Stock, $.01 par value
    
    7,001,369




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##### 



MISONIX, INC.
 INDEX
 PagePart I  FINANCIAL INFORMATIONItem 1. Financial Statements:Consolidated Balance Sheets as of 

December 31, 2009 (Unaudited) and June 30, 2009
    
    
    3Consolidated Statements of Operations 

Six months ended December 31, 2009 and 2008 (Unaudited)
    
    
    4Consolidated Statements of Operations

Three months ended December 31, 2009 and 2008 (Unaudited)
    
    
    5Consolidated Statement of Stockholders Equity

Six months ended December 31, 2009 (Unaudited)
    
    
    6Consolidated Statements of Cash Flows

Six months ended December 31, 2009 and 2008 (Unaudited)
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4T. Controls and Procedures
    
    
    23Part II  OTHER INFORMATIONItem 1A. Risk Factors
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    24Item 6. Exhibits
    
    
    24Signatures
    
    
    25Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements.
 MISONIX, INC. and Subsidiaries
 
 Consolidated Balance Sheets
 December 31,
    
    
    June 30,2009
    
    
    2009(Unaudited)
    
    
    (Derived fromaudited financialstatements)AssetsCurrent assets:Cash
    
    $
    9,757,428
    
    
    $
    3,415,813Accounts receivable, less allowance for
doubtful accounts of
$396,089 and $334,399, respectively
    
    
    2,243,612
    
    
    
    3,301,551Inventories, net
    
    
    3,177,770
    
    
    
    3,678,743Deferred income taxes
    
    
    1,014,262
    
    
    
    762,429Prepaid expenses and other current assets
    
    
    970,261
    
    
    
    715,589Current assets of discontinued operations
    
    
    
    
    
    
    9,119,435Total current assets
    
    
    17,163,333
    
    
    
    20,993,560Property, plant and equipment, net
    
    
    1,254,294
    
    
    
    588,191Deferred income taxes
    
    
    299,482
    
    
    
    128,183Goodwill
    
    
    2,028,748
    
    
    
    2,016,941Other assets
    
    
    1,675,186
    
    
    
    757,551Assets of discontinued operations
    
    
    
    
    
    
    10,678,980Total assets
    
    $
    22,421,043
    
    
    $
    35,163,406Liabilities and stockholders equityCurrent liabilities:Revolving credit facilities
    
    $
    
    
    
    $
    2,633,059Notes payable
    
    
    11,304
    
    
    
    261,485Accounts payable
    
    
    1,207,052
    
    
    
    690,004Accrued expenses and other current liabilities
    
    
    746,309
    
    
    
    807,691Foreign income taxes payable
    
    
    4,207
    
    
    
    10,363Current maturities of capital lease obligations
    
    
    14,019
    
    
    
    13,523Current liabilities of discontinued operations
    
    
    
    
    
    
    8,809,535Total current liabilities
    
    
    1,982,891
    
    
    
    13,225,660Capital lease obligations
    
    
    20,541
    
    
    
    27,716Deferred lease liability
    
    
    19,305
    
    
    
    38,607Deferred income taxes
    
    
    405,776
    
    
    
    405,776Deferred income
    
    
    189,051
    
    
    
    201,207Liabilities related to discontinued operations
    
    
    
    
    
    
    280,652Total liabilities
    
    
    2,617,564
    
    
    
    14,179,618Commitments and contingenciesStockholders equity:Misonix, Inc. Stockholders equity:Common stock, $.01 par valueshares
authorized 20,000,000;
7,079,169 issued and 7,001,369 outstanding
    
    
    70,792
    
    
    
    70,792Additional paid-in capital
    
    
    25,391,798
    
    
    
    25,251,412Accumulated deficit
    
    
    (4,966,597
    )
    
    
    (3,824,003
    )Accumulated other comprehensive loss
    
    
    (325,166
    )
    
    
    (348,936
    )Treasury stock, 77,800 shares
    
    
    (412,424
    )
    
    
    (412,424
    )Total Misonix, Inc. stockholders equity
    
    
    19,758,403
    
    
    
    20,736,841Noncontrolling interest
    
    
    45,076
    
    
    
    246,947Total stockholders equity
    
    
    19,803,479
    
    
    
    20,983,788Total liabilities and stockholders equity
    
    $
    22,421,043
    
    
    $
    35,163,406
 See Accompanying Notes to Consolidated Financial Statements.
  3




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MISONIX, INC. and Subsidiaries
 
 Consolidated Statements of Operations
 (Unaudited)
 For the six months endedDecember 31,2009
    
    
    2008Net sales
    
    $
    6,117,796
    
    
    $
    8,025,474Cost of goods sold
    
    
    3,269,938
    
    
    
    4,751,374Gross profit
    
    
    2,847,858
    
    
    
    3,274,100Operating expenses:Selling expenses
    
    
    2,033,044
    
    
    
    1,445,128General and administrative expenses
    
    
    2,838,572
    
    
    
    2,772,734Research and development expenses
    
    
    946,040
    
    
    
    698,329Total operating expenses
    
    
    5,817,656
    
    
    
    4,916,191Operating loss from continuing operations
    
    
    (2,969,798
    )
    
    
    (1,642,091
    )Other income (expense):Interest income
    
    
    28,082
    
    
    
    35,795Interest expense
    
    
    (45,659
    )
    
    
    (93,132
    )Royalty income and license fees
    
    
    308,883
    
    
    
    315,963Royalty expense
    
    
    (65,056
    )
    
    
    (16,502
    )Recovery of Focus Surgery, Inc. investment
    
    
    
    
    
    
    1,516,866Other
    
    
    (24,085
    )
    
    
    4,161Total other income
    
    
    202,165
    
    
    
    1,763,151(Loss) income from continuing operations before income taxes
    
    
    (2,767,633
    )
    
    
    121,060Income tax (benefit) provision
    
    
    (1,134,044
    )
    
    
    104,401Net (loss) income from continuing operations
    
    
    (1,633,589
    )
    
    
    16,659Discontinued Operations:Net income from discontinued operations, net of tax of $0
and $183,059  Ultrasonics
    
    
    
    
    
    
    252,796Net income from discontinued operations, net of tax of $32,429
and $100,335  Sonora
    
    
    129,717
    
    
    
    138,557Net income from discontinued operations, net of tax of
$437,968 and $52,729  Labcaire
    
    
    514,477
    
    
    
    123,036Net loss on the sale of Labcaire, net of tax of ($100,163)
    
    
    (195,716
    )
    
    
    Gain on sale of net assets of Sonora, net of tax of $885,076
    
    
    82,897
    
    
    
    Total net income from discontinued operations
    
    
    531,375
    
    
    
    514,389Net (loss) income
    
    
    (1,102,214
    )
    
    
    531,048Net income attributable to noncontrolling interest
    
    
    40,380
    
    
    
    17,544Net (loss) income attributable to Misonix, Inc. shareholders
    
    $
    (1,142,594
    )
    
    $
    513,504Net (loss) income per share from continuing operations  Basic
    
    $
    (0.23
    )
    
    $
    Net income per share from discontinued operations  Basic
    
    
    0.08
    
    
    
    0.07Net (loss) income per share  Basic
    
    $
    (0.16
    )
    
    $
    0.07Net (loss) income per share from continuing operations  Diluted
    
    $
    (0.23
    )
    
    $
    Net income per share from discontinued operations  Diluted
    
    
    0.08
    
    
    
    0.07Net (loss) income per share  Diluted
    
    $
    (0.16
    )
    
    $
    0.07Weighted average common shares outstanding  Basic
    
    
    7,001,369
    
    
    
    7,001,369Weighted average common shares outstanding  Diluted
    
    
    7,001,369
    
    
    
    7,022,226
 See Accompanying Notes to Consolidated Financial Statements
  4




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##### Table of Contents



MISONIX, INC. and Subsidiaries
 
 Consolidated Statements of Operations
 (Unaudited)
 For the three months endedDecember 31,2009
    
    
    2008Net sales
    
    $
    3,371,112
    
    
    $
    4,882,275Cost of goods sold
    
    
    1,645,395
    
    
    
    2,837,700Gross profit
    
    
    1,725,717
    
    
    
    2,044,575Operating expenses:Selling expenses
    
    
    1,083,631
    
    
    
    646,802General and administrative expenses
    
    
    1,493,316
    
    
    
    1,269,133Research and development expenses
    
    
    523,571
    
    
    
    377,697Total operating expenses
    
    
    3,100,518
    
    
    
    2,293,632Operating loss from continuing operations
    
    
    (1,374,801
    )
    
    
    (249,057
    )Other income (expense):Interest income
    
    
    14,054
    
    
    
    4,744Interest expense
    
    
    (17,571
    )
    
    
    (46,870
    )Royalty income and license fees
    
    
    152,260
    
    
    
    139,736Royalty expense
    
    
    (65,056
    )
    
    
    (12,918
    )Other
    
    
    (34,250
    )
    
    
    28,403Total other income
    
    
    49,437
    
    
    
    113,095Loss from continuing operations before income taxes
    
    
    (1,325,364
    )
    
    
    (135,962
    )Income tax benefit
    
    
    (888,280
    )
    
    
    (45,035
    )Net loss from continuing operations
    
    
    (437,084
    )
    
    
    (90,927
    )Discontinued Operations:Net income from discontinued operations, net of tax of $0
and $97,159  Ultrasonics
    
    
    
    
    
    
    134,172Net income from discontinued operations, net of tax of $0
and $67,006  Sonora
    
    
    
    
    
    
    92,531Net income from discontinued operations, net of tax of $0
and $26,879  Labcaire
    
    
    
    
    
    
    62,720Gain on sale of net assets of Sonora, net of tax of $885,076
    
    
    82,897
    
    
    
    Total net income from discontinued operations
    
    $
    82,897
    
    
    $
    289,423Net (loss) income
    
    
    (354,187
    )
    
    
    198,496Net income attributable to noncontrolling interest
    
    
    12,748
    
    
    
    4,994Net (loss) income attributable to Misonix, Inc. shareholders
    
    $
    (366,935
    )
    
    $
    193,502Net loss per share from continuing operations  Basic
    
    $
    (0.06
    )
    
    $
    (0.01
    )Net income per share from discontinued operations  Basic
    
    
    0.01
    
    
    
    0.04Net (loss) income per share  Basic
    
    $
    (0.05
    )
    
    $
    0.03Net loss per share from continuing operations  Diluted
    
    $
    (0.06
    )
    
    $
    (0.01
    )Net income per share from discontinued operations  Diluted
    
    
    0.01
    
    
    
    0.04Net (loss) income per share  Diluted
    
    $
    (0.05
    )
    
    $
    0.03Weighted average common shares outstanding  Basic
    
    
    7,001,369
    
    
    
    7,001,369Weighted average common shares outstanding  Diluted
    
    
    7,001,369
    
    
    
    7,001,369
 See Accompanying Notes to Consolidated Financial Statements
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##### Table of Contents



MISONIX, INC. and Subsidiaries
 
 Consolidated Statement of Stockholders Equity
 (Unaudited)   Six months ended December 31, 2009
 Common Stock$.01 Par Value
    
    
    Treasury StockAccumulatedAdditional
    
    
    
    
    
    
    other
    
    
    
    
    
    
    TotalNumber
    
    
    
    
    
    
    Number
    
    
    
    
    
    
    paid-in
    
    
    Accumulated
    
    
    comprehensive
    
    
    Noncontrolling
    
    
    stockholdersof shares
    
    
    Amount
    
    
    of shares
    
    
    Amount
    
    
    capital
    
    
    deficit
    
    
    income (loss)
    
    
    interest
    
    
    equityBalance, June 30, 2009
    
    
    7,079,169
    
    
    $
    70,792
    
    
    
    (77,800
    )
    
    $
    (412,424
    )
    
    $
    25,251,412
    
    
    $
    (3,824,003
    )
    
    $
    (348,936
    )
    
    $
    246,947
    
    
    $
    20,983,788Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,142,594
    )
    
    
    
    
    
    
    40,380
    
    
    
    (1,102,214
    )Foreign
currency
translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,770
    
    
    
    
    
    
    
    23,770Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,078,444
    )Purchase of remaining
5% interest in Sonora
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (242,251
    )
    
    
    (242,251
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    140,386
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    140,386Balance, December 31, 2009
    
    
    7,079,169
    
    
    $
    70,792
    
    
    
    (77,800
    )
    
    $
    (412,424
    )
    
    $
    25,391,798
    
    
    $
    (4,966,597
    )
    
    $
    (325,166
    )
    
    $
    45,076
    
    
    $
    19,803,479
 See Accompanying Notes to Consolidated Financial Statements.
  6




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##### Table of Contents



MISONIX, INC. and Subsidiaries
 
 Consolidated Statements of Cash Flows
 (Unaudited)
 For the six months endedDecember 31,2009
    
    
    2008Operating activitiesNet income (loss) from continuing operations
    
    
    (1,633,589
    )
    
    
    16,659Adjustments to reconcile net (loss) income from
continuing operations to net cash
used in continuing operating activities:Depreciation and amortization and other non-cash items
    
    
    204,775
    
    
    
    245,696Bad debt expense
    
    
    31,525
    
    
    
    81,992Deferred income tax (benefit) expense
    
    
    (788,734
    )
    
    
    367,364Loss on disposal of property, plant and equipment
    
    
    1,017
    
    
    
    Stock-based compensation
    
    
    140,386
    
    
    
    88,375Deferred income (loss)
    
    
    (12,156
    )
    
    
    (12,156
    )Deferred leasehold costs
    
    
    (19,302
    )
    
    
    (9,273
    )Recovery of Focus Surgery, Inc. investment
    
    
    
    
    
    
    (1,516,866
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    1,072,863
    
    
    
    (485,068
    )Inventories
    
    
    502,044
    
    
    
    907,851Income taxes
    
    
    (103,608
    )
    
    
    (16,413
    )Prepaid expenses and other current assets
    
    
    (253,747
    )
    
    
    206,584Accounts payable and other accrued liabilities
    
    
    213,840
    
    
    
    (826,147
    )Foreign income taxes payable
    
    
    (3,147
    )
    
    
    Other assets
    
    
    (835,010
    )
    
    
    (130,897
    )Net cash used in operating activities
    
    
    (1,482,843
    )
    
    
    (1,082,299
    )Investing activitiesAcquisition of property, plant and equipment
    
    
    (833,763
    )
    
    
    (125,688
    )Recovery of Focus Surgery, Inc. investment
    
    
    
    
    
    
    1,516,866Investment in UKHIFU Limited
    
    
    (16,502
    )
    
    
    Acquisition of minority interest
    
    
    
    
    
    
    (21,705
    )Net cash (used in) provided by investing activities
    
    
    (850,265
    )
    
    
    1,369,473Financing activitiesProceeds from short-term borrowings
    
    
    9,229,418
    
    
    
    14,007,047Payments of short-term borrowings
    
    
    (12,112,658
    )
    
    
    (14,836,575
    )Principal payments on capital lease obligations
    
    
    (6,679
    )
    
    
    (7,230
    )Net cash used in financing activities
    
    
    (2,889,919
    )
    
    
    (836,758
    )Cash flows from discontinued operationsNet cash provided by operating activities
    
    
    371,098
    
    
    
    152,462Net cash provided by investing activities
    
    
    12,600,000
    
    
    
    Net cash used in financing activities
    
    
    (1,400,000
    )
    
    
    Net cash provided by discontinued operations
    
    
    11,571,098
    
    
    
    152,462Effect of exchange rate changes on cash
    
    
    (6,456
    )
    
    
    51,130Net increase (decrease) in cash
    
    
    6,341,615
    
    
    
    (345,992
    )Cash at beginning of period
    
    
    3,415,813
    
    
    
    1,532,983Cash at end of period
    
    
    9,757,428
    
    
    
    1,186,991Supplemental disclosure of cash flow information:Cash paid for:Interest
    
    $
    49,962
    
    
    $
    186,797Income taxes
    
    $
    25
    
    
    $
    63,763
 See Accompanying Notes to Consolidated Financial Statements.
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MISONIX, INC. and Subsidiaries
 
 Notes to Consolidated Financial Statements
  1.
    Basis of PresentationThe 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 accounting principles generally accepted in the
United States for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair presentation have
been included. Operating results for the three and six months ended December 31, 2009 are not
necessarily indicative of the results that may be expected for the year ending June 30, 2010, or
any interim period.
 The balance sheet at June 30, 2009 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, 2009.Subsequent Events
 We evaluated events or transactions which occurred subsequent to the balance sheet date but prior
to February 16, 2010, the issuance date of the financial statements, for recognition or
disclosure.Reclassification
 Certain prior period amounts in the accompanying financial statements and related notes have been
reclassified to conform to the current periods presentation.Discontinued Operations
 On April 7, 2009, the Company sold the assets of its Ultrasonics
Laboratory Products business (Ultrasonics) to
iSonix LLC, a wholly owned subsidiary of Sonics and Materials, Inc., for a cash payment of $3.5
million. The results of operations from the Ultrasonic Laboratory Products business are shown net
of tax from discontinued operations. Results of Ultrasonics for all periods presented are
classified as a discontinued operation.
 On August 5, 2009, the Company sold its Labcaire Systems, Ltd. (Labcaire) subsidiary to
PuriCore International Limited for a total purchase price of up to $5.6 million. The Company
received $3.6 million at closing and a promissory note in the principal amount of $1 million,
payable in equal installments of $250,000 on the next four anniversaries of the closing. The note
receivable was discounted over the four years using a 4% imputed interest rate. This rate is
consistent with published discounts. The discounted value of the note ($900,000) is used to
determine gain or loss on the sale, and is included in other assets in the consolidated balance
sheet. The Company will also receive a commission paid on sales for the period commencing on the
date of closing and ending on December 31, 2013 of 8% of the pass through Automated Endoscope
Reprocessing (AER) and Drying Cabinet products, and 5% of license fees from any chemical
licenses marketed by Labcaire directly associated with sale of AERs, specifically for the
disinfection of the endoscope. The aggregate commission payable to the Company is subject to a
maximum payment of $1,000,000. The aggregate commission will have a zero value in determining the
current gain or loss on the sale of Labcaire until the commission is paid. As of December 31,
2009, there were no commissions paid. For the six months ended December 31, 2009, the Company
recorded an after tax loss on the sale of Labcaire of $195,716. Results of Labcaire for all
periods presented are classified as discontinued operations.
  8




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MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
 On October 2, 2009, Acoustic Marketing Research, Inc. d/b/a Sonora Medical Systems (Sonora)
sold substantially all of its assets to Medical Imaging Holdings, Inc. for a cash payment of
$8,000,000 (subject to a future adjustment based on net working capital at the closing).
The Company also purchased at the closing of such transaction,
utilizing $1,200,000 of the proceeds, the remaining outstanding 5% of
Sonoras shares. Sonora is engaged in the business of
(i) selling, repairing and servicing new and used diagnostic ultrasound systems and consumable
accessories used in conjunction therewith, (ii) selling, repairing, servicing
and testing diagnostic ultrasound transducers, (iii) developing and selling equipment for
testing ultrasound transducers, (iv) selling equipment used for cleaning and disinfecting
ultrasound transducers including, but not limited to, transesophogeal echocardiography probes,
(v) selling equipment used for testing endoscopic probes, (vi) repairing and servicing MRI
systems and parts and subsystems used therein, and (vii) performing training for the service and
maintenance of diagnostic ultrasound and MRI systems, in each instance throughout the world.
Results of Sonora for all periods presented are classified as discontinued operation.
 The following amounts related to the Sonora and Labcaire businesses have been segregated from the
Companys continuing operations and are in the consolidated balance sheets:
 Sonora
 June 30,2009Cash
    
    $
    175,369Accounts receivable
    
    
    1,734,761Inventory
    
    
    1,502,076Other current assets
    
    
    247,177Property, plant and equipment  net
    
    
    816,200Goodwill
    
    
    2,924,970Total assets of discontinued operations
    
    $
    7,400,553Accounts payable
    
    $
    355,962Accrued expenses and other current liabilities
    
    
    356,294Deferred lease
    
    
    235,894Other liabilities
    
    
    44,758Total liabilities of discontinued operations
    
    $
    992,908
 Labcaire
 June 30,2009Cash
    
    $
    99,840Accounts receivable
    
    
    3,622,248Inventory
    
    
    1,446,497Other current assets
    
    
    291,467Property, plant and equipment  net
    
    
    4,142,303Deferred taxes
    
    
    1,160,363Other assets
    
    
    116,466Goodwill
    
    
    1,518,678Total assets of discontinued operations
    
    $
    12,397,862Revolving credit facility
    
    $
    1,820,891Accounts payable
    
    
    1,932,543Accrued expenses and other current liabilities
    
    
    2,336,389Tax payable
    
    
    785,466Gain from sale of building
    
    
    1,054,543Capital leases
    
    
    167,447Total liabilities of discontinued operations
    
    $
    8,097,279
  9




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##### Table of Contents



MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
  For the six months ended
    
    
    For the three months endedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    3,923,161
    
    
    $
    15,470,938
    
    
    $
    
    
    
    $
    7,307,664Income from discontinued
operations, before tax
    
    $
    1,113,861
    
    
    $
    850,512
    
    
    $
    
    
    
    $
    480,466Loss on sale of Labcaire
    
    
    (295,149
    )
    
    
    
    
    
    
    
    
    
    
    Gain on sale of Sonora
    
    
    967,973
    
    
    
    
    
    
    
    967,973
    
    
    
    Income tax expense
    
    
    (1,255,310
    )
    
    
    (336,123
    )
    
    
    (885,076
    )
    
    
    (191,043
    )Income from discontinued
operations, net of tax
    
    $
    531,375
    
    
    $
    514,389
    
    
    $
    82,897
    
    
    $
    289,423
 2.

    Net Income (Loss) Per Share of Common StockBasic net income (loss) per common share (basic EPS) is computed by dividing net income (loss) by
the weighted average number of common shares outstanding for the period. Diluted net income per
common share (diluted EPS) is computed by dividing net income (loss) by the weighted average
number of common shares and dilutive common share equivalents outstanding (principally outstanding
common stock options) for the period.The number of weighted average common shares used in the calculation of basic EPS and diluted EPS
were as follows:
 For the six months ended
    
    
    For the three months endedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Basic shares
    
    
    7,001,369
    
    
    
    7,001,369
    
    
    
    7,001,369
    
    
    
    7,001,369Dilutive effect of stock options
    
    
    
    
    
    
    20,857
    
    
    
    
    
    
    
    Diluted shares
    
    
    7,001,369
    
    
    
    7,022,226
    
    
    
    7,001,369
    
    
    
    7,001,369
 Diluted EPS for the six and three months ended December 31 2009 presented is the same as basic
EPS, as the inclusion of the effect of common share equivalents then outstanding would be
anti-dilutive. For this reason, we excluded from the calculation of diluted EPS all outstanding
options for the three and six months ended December 31, 2009 were 1,936,708. Excluded from the
calculation of diluted EPS are outstanding options for 1,840,134 and
1,860,991 shares for the three and six months ended December 31,
2008, respectively.
  10




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##### Table of Contents



MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
 Comprehensive Income (Loss)
  Stock-Based Compensation
     For the six months ended
    
    
    For the three months endedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Risk-free interest rate
    
    
    3.1
    %
    
    
    3.1
    %
    
    
    
    
    
    
    2.8
    %Expected option life in years
    
    
    6.5
    
    
    
    6.5
    
    
    
    
    
    
    
    6.5Expected stock price volatility
    
    
    81.94
    %
    
    
    54.5
    %
    
    
    
    
    
    
    54.9
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    
    
    
    
    0
    %Weighted-average fair value of options granted

    
    $
    2.02
    
    
    $
    1.14
    
    
    
    
    
    
    $
    0.93
  11




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##### Table of Contents



MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
   OptionsWeightedAverageWeighted
    
    
    RemainingAverage
    
    
    Contractual
    
    
    AggregateNumber of
    
    
    Exercise
    
    
    Life
    
    
    IntrinsicShares
    
    
    Price
    
    
    (years)
    
    
    Value (a)Outstanding as of June 30, 2009
    
    
    1,799,918
    
    
    
    5.21
    
    
    
    5.4Granted
    
    
    148,300
    
    
    
    2.44Forfeited
    
    
    (11,510
    )
    
    
    5.34Expired
    
    
    
    
    
    
    Outstanding as of December 31, 2009
    
    
    1,936,708
    
    
    
    5.00
    
    
    
    5.3
    
    
    $
    7.596Exercisable and vested at December 31, 2009
    
    
    1,500,076
    
    
    
    5.71
    
    
    
    4.9
    
    
    $
    1.899Available for grant at December 31, 2009
    
    
    884,161
 (a)
    
    Intrinsic value for purposes of this table represents the amount by which the fair value
of the underlying stock, based on the respective market prices at December 31, 2009
or if exercised, the exercise dates, exceeds the exercise prices of the respective
options. Focus Surgery, Inc.
   12




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##### Table of Contents



MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
 Income Taxes
   Inventories
  December 31,
    
    
    June 30,2009
    
    
    2009Raw materials
    
    $
    2,420,164
    
    
    $
    2,380,827Work-in-process
    
    
    1,084,938
    
    
    
    876,918Finished goods
    
    
    438,567
    
    
    
    1,199,2303,943,669
    
    
    
    4,456,975Less valuation reserve
    
    
    765,899
    
    
    
    778,232$
    3,177,770
    
    
    $
    3,678,743
 Accrued Expenses and Other Current Liabilities
  December 31,
    
    
    June 30,2009
    
    
    2009Accrued payroll and vacation
    
    $
    360,418
    
    
    $
    378,933Accrued VAT and sales tax
    
    
    45,490
    
    
    
    30,227Accrued commissions and bonuses
    
    
    160,482
    
    
    
    245,852Accrued professional fees
    
    
    24,172
    
    
    
    11,762Other
    
    
    155,747
    
    
    
    140,917$
    746,309
    
    
    $
    807,691
  13




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##### Table of Contents



MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
 Revolving Credit Facilities
  Commitments and Contingencies
  Business Segments
 ®
  14




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##### Table of Contents



MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
   Medical Device
    
    
    Laboratory and
    
    
    Corporate andProducts
    
    
    Scientific Products
    
    
    Unallocated
    
    
    TotalNet sales
    
    $
    4,836,131
    
    
    $
    1,281,665
    
    
    $
    
    
    
    $
    6,117,796Cost of goods sold
    
    
    2,296,901
    
    
    
    973,037
    
    
    
    
    
    
    
    3,269,938Gross profit
    
    
    2,539,230
    
    
    
    308,628
    
    
    
    
    
    
    
    2,847,858Selling expenses
    
    
    1,780,109
    
    
    
    252,935
    
    
    
    
    
    
    
    2,033,044Research and development
expenses
    
    
    780,537
    
    
    
    165,503
    
    
    
    
    
    
    
    946,040General and administrative
expenses
    
    
    
    
    
    
    
    
    
    
    2,838,572
    
    
    
    2,838,572Total operating expenses
    
    
    2,560,646
    
    
    
    418,438
    
    
    
    2,838,572
    
    
    
    5,817,656Operating loss from
continuing operations
    
    $
    (21,416
    )
    
    $
    (109,810
    )
    
    $
    (2,838,572
    )
    
    $
    (2,969,798
    )Net income from
discontinued operations
    
    $
    212,614
    
    
    $
    318,761
    
    
    $
    
    
    
    $
    531,375
  Medical Device
    
    
    Laboratory and
    
    
    Corporate andProducts
    
    
    Scientific Products
    
    
    Unallocated
    
    
    TotalNet sales
    
    $
    6,518,951
    
    
    $
    1,506,523
    
    
    $
    
    
    
    $
    8,025,474Cost of goods sold
    
    
    3,610,059
    
    
    
    1,141,315
    
    
    
    
    
    
    
    4,751,374Gross profit
    
    
    2,908,892
    
    
    
    365,208
    
    
    
    
    
    
    
    3,274,100Selling expenses
    
    
    1,207,785
    
    
    
    237,343
    
    
    
    
    
    
    
    1,445,128Research and development
expenses
    
    
    603,176
    
    
    
    95,153
    
    
    
    
    
    
    
    698,329General and administrative
expenses
    
    
    
    
    
    
    
    
    
    
    2,772,734
    
    
    
    2,772,734Total operating expenses
    
    
    1,810,961
    
    
    
    332,496
    
    
    
    2,772,734
    
    
    
    4,916,191Operating income (loss) from
continuing operations
    
    $
    1,097,931
    
    
    $
    32,712
    
    
    $
    (2,772,734
    )
    
    $
    (1,642,091
    )Net income from
discontinued operations
    
    $
    138,557
    
    
    $
    375,832
    
    
    $
    
    
    
    $
    514,389
  15




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MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
  Medical Device
    
    
    Laboratory and
    
    
    Corporate andProducts
    
    
    Scientific Products
    
    
    Unallocated
    
    
    TotalNet sales
    
    $
    2,717,180
    
    
    $
    653,932
    
    
    $
    
    
    
    $
    3,371,112Cost of goods sold
    
    
    1,199,552
    
    
    
    445,843
    
    
    
    
    
    
    
    1,645,395Gross profit
    
    
    1,517,628
    
    
    
    208,089
    
    
    
    
    
    
    
    1,725,717Selling expenses
    
    
    951,148
    
    
    
    132,483
    
    
    
    
    
    
    
    1,083,631Research and development
expenses
    
    
    443,842
    
    
    
    79,729
    
    
    
    
    
    
    
    523,571General and administrative
expenses
    
    
    
    
    
    
    
    
    
    
    1,493,316
    
    
    
    1,493,316Total operating expenses
    
    
    1,394,990
    
    
    
    212,212
    
    
    
    1,493,316
    
    
    
    3,100,518Operating income (loss) from
continuing operations
    
    $
    122,638
    
    
    $
    (4,123
    )
    
    $
    (1,493,316
    )
    
    $
    (1,374,801
    )Net income from
discontinued operations
    
    $
    82,897
    
    
    $
    
    
    
    $
    
    
    
    $
    82,897
  Medical Device
    
    
    Laboratory and
    
    
    Corporate andProducts
    
    
    Scientific Products
    
    
    Unallocated
    
    
    TotalNet sales
    
    $
    4,022,914
    
    
    $
    859,361
    
    
    $
    
    
    
    $
    4,882,275Cost of goods sold
    
    
    2,192,182
    
    
    
    645,518
    
    
    
    
    
    
    
    2,837,700Gross profit
    
    
    1,830,732
    
    
    
    213,843
    
    
    
    
    
    
    
    2,044,575Selling expenses
    
    
    516,130
    
    
    
    130,672
    
    
    
    
    
    
    
    646,802Research and development
expenses
    
    
    331,702
    
    
    
    45,995
    
    
    
    
    
    
    
    377,697General and administrative
expenses
    
    
    
    
    
    
    
    
    
    
    1,269,133
    
    
    
    1,269,133Total operating expenses
    
    
    847,832
    
    
    
    176,667
    
    
    
    1,269,133
    
    
    
    2,293,632Operating income (loss) from
continuing operations
    
    $
    982,900
    
    
    $
    37,176
    
    
    $
    (1,269,133
    )
    
    $
    (249,057
    )Net income from
discontinued operations
    
    $
    92,531
    
    
    $
    196,892
    
    
    $
    
    
    
    $
    289,423
  16




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MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
  Six months ended December 31,
    
    
    Three months ended December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008United States
    
    $
    4,787,804
    
    
    $
    5,316,557
    
    
    $
    2,642,750
    
    
    $
    3,117,386United Kingdom
    
    
    285,479
    
    
    
    394,318
    
    
    
    169,070
    
    
    
    217,898Europe
    
    
    549,967
    
    
    
    1,287,367
    
    
    
    302,788
    
    
    
    1,060,611Asia
    
    
    240,530
    
    
    
    432,880
    
    
    
    77,109
    
    
    
    234,152Canada and Mexico
    
    
    59,861
    
    
    
    154,512
    
    
    
    8,805
    
    
    
    79,336Middle East
    
    
    88,962
    
    
    
    141,243
    
    
    
    88,962
    
    
    
    43,907Other
    
    
    105,193
    
    
    
    298,597
    
    
    
    81,628
    
    
    
    128,985$
    6,117,796
    
    
    $
    8,025,474
    
    
    $
    3,371,112
    
    
    $
    4,882,275
 Fair Value of Financial Instruments
  Cash
  Trade Accounts Receivable
  Trade Accounts Payable
  Note Receivable
  December 31, 2009
    
    Carrying Amount
    
    Fair ValueCash
    
    $
    9,757,428
    
    $
    9,757,428Trade accounts receivable
    
    
    2,243,612
    
    
    2,243,612Trade accounts payable
    
    
    1,207,052
    
    
    1,207,052Note receivable
    
    
    900,000
    
    
    900,000
  17




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MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
 Recent Accounting Pronouncements
       18




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##### Table of Contents



MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
       19




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Forward Looking Statements
   Net sales :
 Gross profit :
 Selling expenses :
 General and administrative expenses :
  20




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##### Table of Contents



Research and development expenses :
 Other income (expense) :
 Income taxes :
  Net sales :
 Gross profit :
 Selling expenses :
 General and administrative expenses :
  21




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##### Table of Contents



Research and development expenses :
 Other income (expense) :
 Income taxes :
 Liquidity and Capital Resources
   Revolving Credit Facilities
  Off-Balance Sheet Arrangements
  Other
   22




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##### Table of Contents



New Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
 Market Risk:
  Interest Rate Risk:
  
 Item 4T. Controls and Procedures.
  Changes in Internal Control Over Financial Reporting:
   23




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Part II  OTHER INFORMATION
 
 Item 1A. Risk Factors.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
    
 Item 6. Exhibits.
 Exhibit 31.1 
  
  Rule 13a-14(a)/15d-14(a) CertificationExhibit 31.2 
  
  Rule 13a-14(a)/15d-14(a) CertificationExhibit 32.1 
  
  Section 1350 Certification of Chief Executive OfficerExhibit 32.2 
  
  Section 1350 Certification of Chief Financial Officer
  24




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##### Table of Contents



SIGNATURES
   MISONIX,
INC.(Registrant)By:
    /s/ Michael A. McManus, Jr.Michael A. McManus, Jr.President and Chief Executive OfficerBy:
    /s/ Richard ZarembaRichard ZarembaSenior Vice President, Chief Financial Officer,
Treasurer and Secretary  25