##### Table of Contents



FORM 10-Q
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedMarch 31, 2010
 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
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)1938 New Highway, Farmingdale, NY
    
    11735(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
  þ o
  o 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
    
    May 12, 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 March 31, 2010 (Unaudited) and June 30, 2009
    
    
    3Consolidated Statements of Operations Nine months ended March 31, 2010 and 2009 (Unaudited)
    
    
    4Consolidated Statements of Operations Three months ended March 31, 2010 and 2009 (Unaudited)
    
    
    5Consolidated Statement of Stockholders Equity Nine months ended March 31, 2010 (Unaudited)
    
    
    6Consolidated Statements of Cash Flows Nine months ended March 31, 2010 and 2009 (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 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
 March 31,
    
    
    June 30,2010
    
    
    2009(Derived fromaudited financial(Unaudited)
    
    
    statements)AssetsCurrent assets:Cash
    
    $
    9,179,233
    
    
    $
    3,415,813Accounts receivable, less allowance for doubtful accounts of
$348,689 and $334,399, respectively
    
    
    2,386,365
    
    
    
    3,301,551Inventories, net
    
    
    3,329,518
    
    
    
    3,678,743Deferred income taxes
    
    
    1,028,098
    
    
    
    762,429Prepaid expenses and other current assets
    
    
    1,186,808
    
    
    
    715,589Current assets of discontinued operations
    
    
    
    
    
    
    9,119,435Total current assets
    
    
    17,110,022
    
    
    
    20,993,560Property, plant and equipment, net
    
    
    1,180,191
    
    
    
    588,191Deferred income taxes
    
    
    
    
    
    
    128,183Goodwill
    
    
    2,028,413
    
    
    
    2,016,941Other assets
    
    
    1,752,821
    
    
    
    757,551Assets of discontinued operations
    
    
    
    
    
    
    10,678,980Total assets
    
    $
    22,071,447
    
    
    $
    35,163,406Liabilities and stockholders equityCurrent liabilities:Revolving credit facilities
    
    $
    
    
    
    $
    2,633,059Notes payable
    
    
    258,784
    
    
    
    261,485Accounts payable
    
    
    756,405
    
    
    
    690,004Accrued expenses and other current liabilities
    
    
    822,888
    
    
    
    807,691Foreign income taxes payable
    
    
    2,785
    
    
    
    10,363Current maturities of capital lease obligations
    
    
    14,274
    
    
    
    13,523Current liabilities of discontinued operations
    
    
    
    
    
    
    8,809,535Total current liabilities
    
    $
    1,855,136
    
    
    $
    13,225,660Capital lease obligations
    
    
    16,855
    
    
    
    27,716Deferred lease liability
    
    
    9,654
    
    
    
    38,607Deferred income taxes
    
    
    405,776
    
    
    
    405,776Deferred income
    
    
    182,973
    
    
    
    201,207Liabilities related to discontinued operations
    
    
    
    
    
    
    280,652Total liabilities
    
    $
    2,470,394
    
    
    $
    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
    
    
    25,449,237
    
    
    
    25,251,412Accumulated deficit
    
    
    (5,232,416
    )
    
    
    (3,824,003
    )Accumulated other comprehensive loss
    
    
    (340,838
    )
    
    
    (348,936
    )Treasury stock, 77,800 shares
    
    
    (412,424
    )
    
    
    (412,424
    )Total Misonix, Inc. stockholders equity
    
    
    19,534,351
    
    
    
    20,736,841Noncontrolling interest
    
    
    66,702
    
    
    
    246,947Total stockholders equity
    
    
    19,601,053
    
    
    
    20,983,788Total liabilities and stockholders equity
    
    $
    22,071,447
    
    
    $
    35,163,406
 See Accompanying Notes to Consolidated Financial Statements.
  3




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##### Table of Contents



MISONIX, INC. and Subsidiaries
 
 Consolidated Statements of Operations
 (Unaudited)
 For the nine months endedMarch 31,2010
    
    
    2009Net sales
    
    $
    9,647,399
    
    
    $
    10,750,421Cost of goods sold
    
    
    4,867,432
    
    
    
    6,239,087Gross profit
    
    
    4,779,967
    
    
    
    4,511,334Operating expenses:Selling expenses
    
    
    3,237,194
    
    
    
    2,068,519General and administrative expenses
    
    
    3,878,095
    
    
    
    3,954,159Research and development expenses
    
    
    1,387,133
    
    
    
    1,057,679Litigation settlement expenses
    
    
    
    
    
    
    (2,000
    )Total operating expenses
    
    
    8,502,422
    
    
    
    7,078,357Operating loss from continuing operations
    
    
    (3,722,455
    )
    
    
    (2,567,023
    )Other income (expense):Interest income
    
    
    28,188
    
    
    
    37,876Interest expense
    
    
    (48,176
    )
    
    
    (127,061
    )Royalty income and license fees
    
    
    481,417
    
    
    
    464,416Royalty expense
    
    
    (83,926
    )
    
    
    (16,802
    )Recovery of Focus Surgery, Inc. debt
    
    
    693,044
    
    
    
    1,516,866Other
    
    
    (52,849
    )
    
    
    7,473Total other income
    
    
    1,017,698
    
    
    
    1,882,768Loss from continuing operations before income taxes
    
    
    (2,704,757
    )
    
    
    (684,255
    )Income tax benefit
    
    
    (1,088,199
    )
    
    
    (496,026
    )Net loss from continuing operations
    
    
    (1,616,558
    )
    
    
    (188,229
    )Discontinued Operations:Net income from discontinued operations, net of tax of $0
and $534,889  Ultrasonics
    
    
    
    
    
    
    371,872Net income from discontinued operations, net of tax of $32,429
and $159,012  Sonora
    
    
    129,717
    
    
    
    219,588Net income from discontinued operations, net of tax of $437,968
and $102,335  Labcaire
    
    
    514,477
    
    
    
    238,780Net loss on the sale of Labcaire, net of tax benefit of $100,163
    
    
    (195,716
    )
    
    
    Loss on sale of net assets of Sonora, net of tax of $1,058,100
    
    
    (174,132
    )
    
    
    Total net income from discontinued operations
    
    
    274,346
    
    
    
    830,240Net (loss) income
    
    
    (1,342,212
    )
    
    
    642,011Net income attributable to noncontrolling interest
    
    
    66,201
    
    
    
    13,040Net (loss) income attributable to Misonix, Inc. shareholders
    
    $
    (1,408,413
    )
    
    $
    628,971Net loss per share from continuing operations attributable to Misonix, Inc. shareholders  Basic
    
    $
    (0.24
    )
    
    $
    (0.03
    )Net income per share from discontinued operations  Basic
    
    
    0.04
    
    
    
    0.12Net (loss) income per share attributable to Misonix, Inc.,
shareholders  Basic
    
    $
    (0.20
    )
    
    $
    0.09Net loss per share from continuing operations attributable to Misonix, Inc. shareholders  Diluted
    
    $
    (0.24
    )
    
    $
    (0.03
    )Net income per share from discontinued operations  Diluted
    
    
    0.04
    
    
    
    0.12Net (loss) income per share attributable to Misonix, Inc.,
shareholders  Diluted
    
    $
    (0.20
    )
    
    $
    0.09Weighted 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
  4




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##### Table of Contents



MISONIX, INC. and Subsidiaries
 
 Consolidated Statements of Operations
 (Unaudited)
 For the three months endedMarch 31,2010
    
    
    2009Net sales
    
    $
    3,529,603
    
    
    $
    2,724,947Cost of goods sold
    
    
    1,597,495
    
    
    
    1,487,713Gross profit
    
    
    1,932,108
    
    
    
    1,237,234Operating expenses:Selling expenses
    
    
    1,204,150
    
    
    
    623,391General and administrative expenses
    
    
    1,039,523
    
    
    
    1,181,425Research and development expenses
    
    
    441,093
    
    
    
    359,350Litigation settlement expenses
    
    
    
    
    
    
    (2,000
    )Total operating expenses
    
    
    2,684,766
    
    
    
    2,162,166Operating loss from continuing operations
    
    
    (752,658
    )
    
    
    (924,932
    )Other income (expense):Interest income
    
    
    106
    
    
    
    2,081Interest expense
    
    
    (2,517
    )
    
    
    (33,929
    )Royalty income and license fees
    
    
    172,534
    
    
    
    148,453Royalty expense
    
    
    (18,870
    )
    
    
    (300
    )Recovery of Focus Surgery, Inc. debt
    
    
    693,044
    
    
    
    Other
    
    
    (28,763
    )
    
    
    3,312Total other income
    
    
    815,534
    
    
    
    119,617Income (loss) from continuing operations before income taxes
    
    
    62,876
    
    
    
    (805,315
    )Income tax provision (benefit)
    
    
    45,845
    
    
    
    (582,121
    )Net income (loss) from continuing operations
    
    
    17,031
    
    
    
    (223,194
    )Discontinued Operations:Net income from discontinued operations, net of tax of $0 and
$333,524  Ultrasonics
    
    
    
    
    
    
    137,382Net income from discontinued operations, net of tax of $0 and
$58,677  Sonora
    
    
    
    
    
    
    81,031Net income from discontinued operations, net of tax of $0
and $49,046  Labcaire
    
    
    
    
    
    
    115,744Loss on sale of net assets of Sonora, net of tax of $173,024
    
    
    (257,029
    )
    
    
    Total net (loss) income from discontinued operations
    
    
    (257,029
    )
    
    $
    334,157Net (loss) income
    
    
    (239,998
    )
    
    
    110,963Net income (loss) attributable to noncontrolling interest
    
    
    25,821
    
    
    
    (4,504
    )Net (loss) income attributable to Misonix, Inc. shareholders
    
    $
    (265,819
    )
    
    $
    115,467Net loss per share from continuing operations attributable to Misonix, Inc. shareholders  Basic
    
    $
    
    
    
    $
    (0.03
    )Net (loss) income per share from discontinued operations  Basic
    
    
    (0.04
    )
    
    
    0.05Net (loss) income per share attributable to Misonix, Inc.,
shareholders   Basic
    
    $
    (0.04
    )
    
    $
    0.02Net loss income per share from continuing operations attributable to Misonix, Inc. shareholders  Diluted
    
    $
    
    
    
    $
    (0.03
    )Net (loss) income per share from discontinued operations  Diluted
    
    
    (0.04
    )
    
    
    0.05Net (loss) income per share attributable to Misonix, Inc.,
shareholders  Diluted
    
    $
    (0.04
    )
    
    $
    0.02Weighted average common shares outstanding  Basic
    
    
    7,001,369
    
    
    
    7,001,369Weighted average common shares outstanding  Diluted
    
    
    7,038,385
    
    
    
    7,001,369
 See Accompanying Notes to Consolidated Financial Statements
  5




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MISONIX, INC. and Subsidiaries
 
 Consolidated Statement of Stockholders Equity
 (Unaudited)
 Nine months ended March 31, 2010
 Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated$.01 Par Value
    
    
    Treasury Stock
    
    
    Additional
    
    
    
    
    
    
    other
    
    
    
    
    
    
    TotalNumber
    
    
    
    
    
    
    Number
    
    
    
    
    
    
    paid-in
    
    
    Accumulated
    
    
    comprehensive
    
    
    Noncontrolling
    
    
    stockholdersof shares
    
    
    Amount
    
    
    of shares
    
    
    Amount
    
    
    capital
    
    
    deficit
    
    
    (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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,408,413
    )
    
    
    
    
    
    
    66,201
    
    
    
    (1,342,212
    )Foreign
currency
translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,098
    
    
    
    
    
    
    
    8,098Comprehensive
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,334,114
    )Purchase of
remaining
5% interest
in Sonora
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (246,446
    )
    
    
    (246,446
    )Stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    197,825
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    197,825Balance, March 31,
2010
    
    
    7,079,169
    
    
    $
    70,792
    
    
    
    (77,800
    )
    
    $
    (412,424
    )
    
    $
    25,449,237
    
    
    $
    (5,232,416
    )
    
    $
    (340,838
    )
    
    $
    66,702
    
    
    $
    19,601,053
 See Accompanying Notes to Consolidated Financial Statements.
  6




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MISONIX, INC. and Subsidiaries
 
 Consolidated Statements of Cash Flows
 (Unaudited)
 For the nine months endedMarch 31,2010
    
    
    2009Operating activitiesNet loss from continuing operations
    
    $
    (1,616,558
    )
    
    $
    (188,229
    )Adjustments to reconcile net (loss) from continuing operations to net cash
used in continuing operating activities:Depreciation and amortization and other non-cash items
    
    
    354,851
    
    
    
    305,511Bad debt expense
    
    
    (6,475
    )
    
    
    181,479Deferred income tax (benefit) expense
    
    
    (1,078,655
    )
    
    
    335,604Loss on disposal of property, plant and equipment
    
    
    13,809
    
    
    
    Stock-based compensation
    
    
    197,825
    
    
    
    141,400Deferred income (loss)
    
    
    (18,234
    )
    
    
    (18,234
    )Deferred leasehold costs
    
    
    (28,953
    )
    
    
    (13,911
    )Recovery of Focus Surgery, Inc. debt
    
    
    (693,044
    )
    
    
    (1,516,866
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    809,209
    
    
    
    433,318Inventories
    
    
    358,591
    
    
    
    333,927Income taxes
    
    
    (105,327
    )
    
    
    (27,607
    )Prepaid expenses and other current assets
    
    
    (471,220
    )
    
    
    (214,987
    )Accounts payable and other accrued liabilities
    
    
    124,677
    
    
    
    (1,251,462
    )Foreign income taxes payable
    
    
    (4,184
    )
    
    
    Other assets
    
    
    (932,008
    )
    
    
    (178,744
    )Net cash used in operating activities
    
    
    (3,095,696
    )
    
    
    (1,678,801
    )Investing activitiesAcquisition of property, plant and equipment
    
    
    (906,013
    )
    
    
    (186,290
    )Recovery of Focus Surgery, Inc. debt
    
    
    693,044
    
    
    
    1,516,866Investment in UKHIFU Limited
    
    
    (32,411
    )
    
    
    (30,721
    )Net cash (used in) provided by investing activities
    
    
    (245,380
    )
    
    
    1,299,855Financing activitiesProceeds from short-term borrowings
    
    
    9,514,892
    
    
    
    21,020,765Payments of short-term borrowings
    
    
    (12,150,652
    )
    
    
    (21,392,317
    )Principal payments on capital lease obligations
    
    
    (10,110
    )
    
    
    (10,422
    )Net cash used in financing activities
    
    
    (2,645,870
    )
    
    
    (381,974
    )Cash flows from discontinued operationsNet cash provided by operating activities
    
    
    567,283
    
    
    
    338,202Net cash provided by investing activities
    
    
    12,600,000
    
    
    
    Net cash used in financing activities
    
    
    (1,400,000
    )
    
    
    Net cash provided by discontinued operations
    
    
    11,767,283
    
    
    
    338,202Effect of exchange rate changes on cash
    
    
    (16,917
    )
    
    
    29,270Net increase (decrease) in cash
    
    
    5,763,420
    
    
    
    (393,448
    )Cash at beginning of period
    
    
    3,415,813
    
    
    
    1,532,983Cash at end of period
    
    $
    9,179,233
    
    
    $
    1,139,535Supplemental disclosure of cash flow information:Cash paid for:Interest
    
    $
    54,677
    
    
    $
    254,152Income taxes
    
    $
    2,832
    
    
    $
    63,763
 See Accompanying Notes to Consolidated Financial Statements.
  7




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##### Table of Contents



MISONIX, INC. and Subsidiaries
 
 Notes to Consolidated Financial Statements
  Basis of Presentation
    Reclassification
  Discontinued Operations
     8




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##### Table of Contents



MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
  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 nine months ended
    
    
    For the three months endedMarch 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues
    
    $
    3,923,161
    
    
    $
    21,861,938
    
    
    $
    
    
    
    $
    6,391,000Income from discontinued
operations, before tax
    
    $
    1,114,591
    
    
    $
    1,626,476
    
    
    $
    
    
    
    $
    775,964Loss on sale of Labcaire
    
    
    (295,879
    )
    
    
    
    
    
    
    
    
    
    
    Gain on sale of Sonora
    
    
    883,968
    
    
    
    
    
    
    
    (84,005
    )
    
    
    Income tax expense
    
    
    (1,428,334
    )
    
    
    (796,236
    )
    
    
    (173,024
    )
    
    
    (441,807
    )Income from discontinued
operations, net of tax
    
    $
    274,346
    
    
    $
    830,240
    
    
    $
    (257,029
    )
    
    $
    334,157
 Net Income (Loss) Per Share of Common Stock
   For the nine months ended
    
    
    For the three months endedMarch 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Basic shares
    
    
    7,001,369
    
    
    
    7,001,369
    
    
    
    7,001,369
    
    
    
    7,001,369Dilutive effect of stock options
    
    
    
    
    
    
    
    
    
    
    37,016
    
    
    
    Diluted shares
    
    
    7,001,369
    
    
    
    7,001,369
    
    
    
    7,038,385
    
    
    
    7,001,369
    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 nine months
    
    
    For the three monthsended
    
    
    endedMarch 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Risk-free interest rate
    
    
    3.1
    %
    
    
    3.1
    %
    
    
    
    
    
    
    Expected option life in years
    
    
    6.5
    
    
    
    6.5
    
    
    
    
    
    
    
    Expected stock price volatility
    
    
    81.9
    %
    
    
    54.5
    %
    
    
    
    
    
    
    Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    
    
    
    
    Weighted-average fair value of options
granted
    
    $
    2.02
    
    
    $
    1.14
    
    
    
    
    
    
    
    
  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
    
    
    (99,708
    )
    
    
    5.10Expired
    
    
    
    
    
    
    Outstanding as of March 31, 2010
    
    
    1,848,510
    
    
    
    4.99
    
    
    
    5.3
    
    
    $
    2,492Exercisable and vested at March 31, 2010
    
    
    1,459,948
    
    
    
    5.69
    
    
    
    4.8
    
    
    $
    623Available for grant at March 31, 2010
    
    
    959,384
 (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 March 31, 2010 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
  March 31,
    
    
    June 30,2010
    
    
    2009Raw materials
    
    $
    2,248,643
    
    
    $
    2,380,827Work-in-process
    
    
    1,357,806
    
    
    
    876,918Finished goods
    
    
    400,913
    
    
    
    1,199,2304,007,362
    
    
    
    4,456,975Less valuation reserve
    
    
    677,844
    
    
    
    778,232$
    3,329,518
    
    
    $
    3,678,743
 Accrued Expenses and Other Current Liabilities
  March 31,
    
    
    June 30,2010
    
    
    2009Accrued payroll and vacation
    
    $
    410,637
    
    
    $
    378,933Accrued VAT and sales tax
    
    
    47,738
    
    
    
    30,227Accrued commissions and bonuses
    
    
    160,482
    
    
    
    245,852Accrued professional fees
    
    
    44,174
    
    
    
    11,762Accrued royalty expense
    
    
    69,458
    
    
    
    300Other
    
    
    90,399
    
    
    
    140,617$
    822,888
    
    
    $
    807,691
  13




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##### Table of Contents



MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
 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
    
    $
    7,687,570
    
    
    $
    1,959,829
    
    
    $
    
    
    
    $
    9,647,399Cost of goods sold
    
    
    3,413,693
    
    
    
    1,453,739
    
    
    
    
    
    
    
    4,867,432Gross profit
    
    
    4,273,877
    
    
    
    506,090
    
    
    
    
    
    
    
    4,779,967Selling expenses
    
    
    2,857,966
    
    
    
    379,228
    
    
    
    
    
    
    
    3,237,194Research and development
expenses
    
    
    1,137,682
    
    
    
    249,451
    
    
    
    
    
    
    
    1,387,133General and administrative
expenses
    
    
    
    
    
    
    
    
    
    
    3,878,095
    
    
    
    3,878,095Total operating expenses
    
    
    3,995,648
    
    
    
    628,679
    
    
    
    3,878,095
    
    
    
    8,502,422Operating income (loss) from
continuing operations
    
    $
    278,229
    
    
    $
    (122,589
    )
    
    $
    (3,878,095
    )
    
    $
    (3,722,455
    )Net income (loss) from
discontinued operations
    
    $
    (44,415
    )
    
    $
    318,761
    
    
    $
    
    
    
    $
    274,346
  Medical Device
    
    
    Laboratory and
    
    
    Corporate andProducts
    
    
    Scientific Products
    
    
    Unallocated
    
    
    TotalNet sales
    
    $
    8,466,678
    
    
    $
    2,283,743
    
    
    $
    
    
    
    $
    10,750,421Cost of goods sold
    
    
    4,596,933
    
    
    
    1,642,154
    
    
    
    
    
    
    
    6,239,087Gross profit
    
    
    3,869,745
    
    
    
    641,589
    
    
    
    
    
    
    
    4,511,334Selling expenses
    
    
    1,704,396
    
    
    
    364,123
    
    
    
    
    
    
    
    2,068,519Research and development
expenses
    
    
    892,199
    
    
    
    165,480
    
    
    
    
    
    
    
    1,057,679General and administrative
expenses
    
    
    
    
    
    
    
    
    
    
    3,952,159
    
    
    
    3,952,159Total operating expenses
    
    
    2,596,595
    
    
    
    529,603
    
    
    
    3,952,159
    
    
    
    7,078,357Operating income (loss) from
continuing operations
    
    $
    1,273,150
    
    
    $
    111,986
    
    
    $
    (3,952,159
    )
    
    $
    (2,567,023
    )Net income from
discontinued operations
    
    $
    219,588
    
    
    $
    610,652
    
    
    $
    
    
    
    $
    830,240
  15




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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
    
    $
    2,851,439
    
    
    $
    678,164
    
    
    $
    
    
    
    $
    3,529,603Cost of goods sold
    
    
    1,116,793
    
    
    
    480,702
    
    
    
    
    
    
    
    1,597,495Gross profit
    
    
    1,734,646
    
    
    
    197,462
    
    
    
    
    
    
    
    1,932,108Selling expenses
    
    
    1,077,857
    
    
    
    126,293
    
    
    
    
    
    
    
    1,204,150Research and development
expenses
    
    
    357,145
    
    
    
    83,948
    
    
    
    
    
    
    
    441,093General and administrative
expenses
    
    
    
    
    
    
    
    
    
    
    1,039,523
    
    
    
    1,039,523Total operating expenses
    
    
    1,435,002
    
    
    
    210,241
    
    
    
    1,039,523
    
    
    
    2,684,766Operating income (loss) from
continuing operations
    
    $
    299,644
    
    
    $
    (12,779
    )
    
    $
    (1,039,523
    )
    
    $
    (752,658
    )Net (loss) from
discontinued operations
    
    $
    (257,029
    )
    
    $
    
    
    
    $
    
    
    
    $
    (257,029
    )
  Medical Device
    
    
    Laboratory and
    
    
    Corporate andProducts
    
    
    Scientific Products
    
    
    Unallocated
    
    
    TotalNet sales
    
    $
    1,947,727
    
    
    $
    777,220
    
    
    $
    
    
    
    $
    2,724,947Cost of goods sold
    
    
    986,874
    
    
    
    500,839
    
    
    
    
    
    
    
    1,487,713Gross profit
    
    
    960,853
    
    
    
    276,381
    
    
    
    
    
    
    
    1,237,234Selling expenses
    
    
    496,611
    
    
    
    126,780
    
    
    
    
    
    
    
    623,391Research and development
expenses
    
    
    289,023
    
    
    
    70,327
    
    
    
    
    
    
    
    359,350General and administrative
expenses
    
    
    
    
    
    
    
    
    
    
    1,179,425
    
    
    
    1,179,425Total operating expenses
    
    
    785,634
    
    
    
    197,107
    
    
    
    1,179,425
    
    
    
    2,162,166Operating income (loss) from
continuing operations
    
    $
    175,219
    
    
    $
    79,274
    
    
    $
    (1,179,425
    )
    
    $
    (924,932
    )Net income from
discontinued operations
    
    $
    81,031
    
    
    $
    253,126
    
    
    $
    
    
    
    $
    334,157
  16




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##### Table of Contents



MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
  Nine months ended March 31,
    
    
    Three months ended March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009United States
    
    $
    6,988,004
    
    
    $
    7,761,487
    
    
    $
    2,216,915
    
    
    $
    2,444,930United Kingdom
    
    
    436,191
    
    
    
    399,759
    
    
    
    150,713
    
    
    
    5,440Europe
    
    
    1,035,781
    
    
    
    1,561,944
    
    
    
    485,814
    
    
    
    274,577Asia
    
    
    598,184
    
    
    
    432,880
    
    
    
    341,144
    
    
    
    Canada and Mexico
    
    
    72,997
    
    
    
    154,512
    
    
    
    13,135
    
    
    
    Middle East
    
    
    239,454
    
    
    
    141,243
    
    
    
    150,492
    
    
    
    Other
    
    
    276,788
    
    
    
    298,596
    
    
    
    171,390
    
    
    
    $
    9,647,399
    
    
    $
    10,750,421
    
    
    $
    3,529,603
    
    
    $
    2,724,947
 Fair Value of Financial Instruments
      March 31, 2010
    
    Carrying Amount
    
    
    Fair ValueCash
    
    $
    9,179,233
    
    
    $
    9,179,233Trade accounts receivable
    
    
    2,386,365
    
    
    
    2,386,365Trade accounts payable
    
    
    756,405
    
    
    
    756,405Note receivable
    
    
    610,065
    
    
    
    610,065Note payable
    
    
    258,784
    
    
    
    258,784
  Cash
  Trade Accounts Receivable
   17




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##### Table of Contents



MISONIX, INC. and Subsidiaries
Notes to Consolidated Financial Statements
 Trade Accounts Payable
  Note Receivable
  Note Payable
  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 :
  20




---



##### Table of Contents



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




---



##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



Part II  OTHER INFORMATION
 
 Item 1A. Risk Factors.
  
 Item 6. Exhibits.
      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