Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - MEDIA SCIENCES INTERNATIONAL INC | form8k.htm |
| EX-2.1 - EXHIBIT 2.1 - MEDIA SCIENCES INTERNATIONAL INC | exhibit21.htm |
| EX-10.1 - EXHIBIT 10.1 - MEDIA SCIENCES INTERNATIONAL INC | exhibit101.htm |
| EX-10.2 - EXHIBIT 10.2 - MEDIA SCIENCES INTERNATIONAL INC | exhibit102.htm |
EXHIBIT 99.1
Unaudited Pro Forma Financial Information as of and for the Year Ended
June 30, 2010 and for the year ended June 30, 2009
Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statements
On November 8, 2010, Media Sciences, Inc. (“Media Sciences”), a subsidiary of Media Sciences International, Inc., entered into an asset purchase agreement with Katun Corporation and one of its Subsidiaries (“Katun”) pursuant to which Media Sciences sold to Katun its toner business and all of its related assets for approximately $11 million in cash.
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2010 is presented as if the transaction had occurred as of that date. The unaudited pro forma condensed consolidated statement of operations for the year ended June 30, 2010 and for the year ended June 30, 2009 are presented as if the transaction had occurred at the beginning of each period.
The pro forma adjustments represent, in the opinion of management, all adjustments necessary to present the Media Sciences International, Inc. and subsidiaries pro forma results of operations and financial position in accordance with Article 11 of Securities and Exchange Commission Regulation S-X and are based upon available information and certain assumptions considered reasonable under the circumstances.
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with Media Sciences International, Inc. and Subsidiaries’ consolidated financial statements and notes thereto included in Media Sciences International, Inc. and Subsidiaries Annual Report on Form 10-K for the period ended June 30, 2010.
The unaudited pro forma condensed consolidated financial information is for informational purposes only and may not necessarily be indicative of what Media Sciences International, Inc. and Subsidiaries results of operations or financial position for any future period or date. The pro forma adjustments are based upon available information and certain assumptions that Media Sciences International, Inc. and Subsidiaries believes are reasonable under circumstances. The actual amounts could differ.
MEDIA SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
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As of June 30, 2010
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ASSETS
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Historical
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Adjustments
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Pro forma
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CURRENT ASSETS:
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Cash and cash equivalents
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$ | 317,611 | $ | 9,262,500 | A | $ | 9,580,111 | |||||
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Accounts receivable, net
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2,674,918 | 2,674,918 | ||||||||||
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Inventories, net
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5,476,041 | (4,483,647 | ) | C | 992,394 | |||||||
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Taxes receivable
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50,506 | 50,506 | ||||||||||
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Prepaid expenses and other current assets
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244,841 | 244,841 | ||||||||||
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Total Current Assets
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8,763,917 | 4,778,853 | 13,542,770 | |||||||||
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PROPERTY AND EQUIPMENT, NET
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1,852,131 | (826,870 | ) | C | 1,025,261 | |||||||
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OTHER ASSETS:
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Goodwill and other intangible assets, net
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3,584,231 | (2,464,000 | ) | D | 1,120,231 | |||||||
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Restricted Cash
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– | 1,100,000 | B | 1,100,000 | ||||||||
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Other assets
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85,984 | 85,984 | ||||||||||
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Total Other Assets
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3,670,215 | (1,364,000 | ) | 2,306,215 | ||||||||
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TOTAL ASSETS
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$ | 14,286,263 | $ | 2,587,983 | $ | 16,874,246 | ||||||
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES:
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Accounts payable
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$ | 1,201,154 | $ | 1,201,154 | ||||||||
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Accrued compensation and benefits
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555,136 | 555,136 | ||||||||||
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Other accrued expenses and current liabilities
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443,641 | 443,641 | ||||||||||
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Accrued product warranty costs
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432,548 | 432,548 | ||||||||||
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Deferred rent liability
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28,493 | 28,493 | ||||||||||
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Deferred revenue
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20,097 | 20,097 | ||||||||||
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Total Current Liabilities
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2,681,069 | 2,681,069 | ||||||||||
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OTHER LIABILITIES:
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Long-term debt, less current maturities
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2,340,863 | 2,340,863 | ||||||||||
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Deferred rent liability
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29,517 | 29,517 | ||||||||||
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10% subordinated debt, net of discount of $255,376 in 2010 and $401,830 in 2009
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994,624 | 994,624 | ||||||||||
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Deferred tax liabilities
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904,922 | 904,922 | ||||||||||
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Total Other Liabilities
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4,269,926 | 4,269,926 | ||||||||||
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TOTAL LIABILITIES
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$ | 6,950,995 | $ | 6,950,995 | ||||||||
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COMMITMENTS AND CONTINGENCIES
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SHAREHOLDERS' EQUITY:
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Preferred Stock, $.001 par value
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Authorized 5,000,000 shares; none issued
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– | – | ||||||||||
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Common Stock, $.001 par value 25,000,000 shares authorized;
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issued and outstanding, respectively, 13,292,374 and 12,699,914
shares in 2010 and 12,397,757 and 11,771,966 shares in 2009
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12,700 | 12,700 | ||||||||||
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Additional paid-in capital
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13,277,405 | 13,277,405 | ||||||||||
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Accumulated other comprehensive income
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1,402 | 1,402 | ||||||||||
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Accumulated deficit
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(5,956,239 | ) | 2,587,983 | E | (3,368,256 | ) | ||||||
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Total Shareholders' Equity
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7,335,268 | 2,587,983 | 9,923,251 | |||||||||
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
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$ | 14,286,263 | $ | 2,587,983 | $ | 16,874,246 | ||||||
MEDIA SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
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Year Ended June 30, 2010
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Historical
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Adjustments
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Pro forma
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NET REVENUES
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$ | 21,941,931 | $ | (13,835,757 | ) | F | $ | 8,106,174 | ||||
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COST OF GOODS SOLD:
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13,333,954 | (7,687,330 | ) | G | 5,646,624 | |||||||
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GROSS PROFIT
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8,607,977 | (6,148,427 | ) | 2,459,550 | ||||||||
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OTHER COSTS AND EXPENSES:
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Research and development
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1,324,616 | 1,324,616 | ||||||||||
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Selling, general and administrative, excluding depreciation
and amortization
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8,452,747 | 8,452,747 | ||||||||||
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Depreciation and amortization
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227,642 | 227,642 | ||||||||||
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Total other costs and expenses
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10,005,005 | 10,005,005 | ||||||||||
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LOSS FROM OPERATIONS
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(1,397,028 | ) | (6,148,427 | ) | (7,545,455 | ) | ||||||
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Other income
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212,707 | 212,707 | ||||||||||
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Interest expense
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(351,730 | ) | (351,730 | ) | ||||||||
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Interest income
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145 | 145 | ||||||||||
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Loss on change in fair value of warrant liabilities
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(38 | ) | (38 | ) | ||||||||
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Amortization of debt discount on convertible debt
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(146,453 | ) | (146,453 | ) | ||||||||
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LOSS BEFORE INCOME TAXES
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(1,682,397 | ) | (6,148,427 | ) | (7,830,824 | ) | ||||||
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(Provision) benefit for income taxes
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(1,936,415 | ) | (1,936,415 | ) | ||||||||
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NET LOSS
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$ | (3,618,812 | ) | $ | (6,148,427 | ) | $ | (9,767,239 | ) | |||
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LOSS PER SHARE
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Basic
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$ | (0.30 | ) | $ | ( 0.80 | ) | ||||||
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Diluted
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$ | (0.30 | ) | $ | ( 0.80 | ) | ||||||
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WEIGHTED AVERAGE SHARES USED TO COMPUTE LOSS PER SHARE
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Basic and diluted
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12,192,419 | 12,192,419 | ||||||||||
MEDIA SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
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Year ended June 30, 2009
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Historical
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Adjustments
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Pro forma
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NET REVENUES
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$ | 21,718,141 | $ | (12,966,742 | ) | F | $ | 8,751,399 | ||||
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COST OF GOODS SOLD:
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12,823,251 | (7,434,394 | ) | G | 5,388,857 | |||||||
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GROSS PROFIT
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8,894,890 | (5,532,348 | ) | 3,365,542 | ||||||||
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OTHER COSTS AND EXPENSES:
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Research and development
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1,359,270 | 1,359,270 | ||||||||||
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Selling, general and administrative, excluding depreciation
and amortization
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9,163,416 | 9,163,416 | ||||||||||
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Depreciation and amortization
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359,040 | 359,040 | ||||||||||
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Impairment charge
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1,009,088 | 1,009,088 | ||||||||||
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Litigation settlement
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(1,500,000 | ) | (1,500,000 | ) | ||||||||
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Total other costs and expenses
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10,390,814 | 10,390,814 | ||||||||||
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LOSS FROM OPERATIONS
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(1,495,924 | ) | (5,532,348 | ) | (7,028,272 | ) | ||||||
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Interest expense
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(273,169 | ) | (273,169 | ) | ||||||||
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Interest income
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3,039 | 3,039 | ||||||||||
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Amortization of debt discount on convertible debt
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(84,785 | ) | (84,785 | ) | ||||||||
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LOSS BEFORE INCOME TAXES
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(1,850,839 | ) | (5,532,348 | ) | (7,383,187 | ) | ||||||
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Benefit for income taxes
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(175,566 | ) | (524,785 | ) | H | (700,351 | ) | |||||
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NET LOSS
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$ | (1,675,273 | ) | $ | (5,007,563 | ) | $ | (6,682,836 | ) | |||
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LOSS PER SHARE
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Basic
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$ | (0.14 | ) | $ | (0.57 | ) | ||||||
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Diluted
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$ | (0.14 | ) | $ | (0.57 | ) | ||||||
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WEIGHTED AVERAGE SHARES USED TO COMPUTE LOSS PER SHARE
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Basic and diluted
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11,727,175 | 11,727,175 | ||||||||||
Notes to Pro Forma Condensed Consolidated Financial Statements
Basis of Presentation
The unaudited pro forma condensed consolidated financial statements present financial information for Media Sciences International, Inc. giving effect to the sale of its toner business to Katun Corp. and one of its Subsidiaries (“Katun”) for approximately $11 million in cash which was effective as of November 8, 2010. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2010 is presented as if the transaction occurred on that date. The unaudited pro forma condensed consolidated statements of operations for the years ended June 30, 2009 and June 30, 2010 are presented as if the transaction had occurred at the beginning of each period, respectively.
Unaudited Pro Forma Condensed Consolidated Financial Adjustments:
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A)
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This pro forma adjustment reflects proceeds from the sale to Katun.
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B)
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This pro forma adjustment reflects the establishment of the escrow account as contemplated in the agreement.
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C)
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This pro forma adjustment removes the inventory and fixed assets that were sold to Katun.
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D)
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This adjustment reflects the elimination of the goodwill associated with the toner business.
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E)
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This adjustment reflects the gain on the sale of the assets to Katun net of the right off of the goodwill and approximately$680 thousand of transaction costs. These costs are reflected in the unaudited pro forma condensed consolidated balance sheet, but are not reflected in the unaudited pro forma condensed consolidated statements of operations included herein since these adjustments are non recurring and directly attributable to the transaction.
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F)
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These adjustments reflect the elimination of revenue in connection with the toner business.
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G)
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These adjustments reflect the elimination of the cost of goods sold for toner related products.
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H)
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This adjustment reflects the tax effect of pro forma adjustments at the effective tax rate for 2009. No adjustment was required in 2010 because of the establishment of a 100% valuation allowance by the Company during that year.
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