Attached files
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| EX-99.1 - EXHIBIT 99.1 - MEDIA SCIENCES INTERNATIONAL INC | exhibit991.htm |
| 8-K - FORM 8-K - MEDIA SCIENCES INTERNATIONAL INC | form8k.htm |
EXHIBIT 99.2
MEDIA SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended
December 31,
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Six Months Ended
December 31,
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2010
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2009
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2010
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2009
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NET REVENUES
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$ | 2,759,004 | $ | 2,242,104 | $ | 4,844,638 | $ | 4,527,538 | ||||||||
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COST OF GOODS SOLD:
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Cost of goods sold, excluding depreciation and
amortization, product warranty, shipping and freight
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1,141,162 | 499,029 | 1,953,055 | 1,226,151 | ||||||||||||
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Depreciation and amortization
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55,463 | 60,983 | 112,877 | 159,541 | ||||||||||||
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Product warranty
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146,767 | 519,491 | 409,951 | 987,863 | ||||||||||||
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Shipping and freight
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66,701 | 108,698 | 207,087 | 267,252 | ||||||||||||
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Total cost of goods sold
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1,410,093 | 1,188,201 | 2,682,970 | 2,640,807 | ||||||||||||
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GROSS PROFIT
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1,348,911 | 1,053,903 | 2,161,668 | 1,886,731 | ||||||||||||
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OTHER COSTS AND EXPENSES:
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Research and development
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147,225 | 270,715 | 270,175 | 490,283 | ||||||||||||
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Selling, general and administrative, excluding
depreciation and amortization and severance
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1,072,564 | 1,716,060 | 2,749,558 | 3,319,429 | ||||||||||||
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Severance
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1,682,427 | – | 1,682,427 | – | ||||||||||||
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Depreciation and amortization
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34,608 | 62,956 | 77,191 | 137,798 | ||||||||||||
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Total other costs and expenses
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2,936,824 | 2,049,731 | 4,779,351 | 3,947,510 | ||||||||||||
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LOSS FROM OPERATIONS
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(1,587,913 | ) | (995,828 | ) | (2,617,683 | ) | (2,060,779 | ) | ||||||||
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Interest expense
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(59,769 | ) | (89,914 | ) | (135,224 | ) | (176,769 | ) | ||||||||
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Interest income
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2,663 | 51 | 2,687 | 71 | ||||||||||||
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Gain (loss) on change in fair value of warrant liabilities
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– | 14,205 | – | (4,962 | ) | |||||||||||
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Amortization of debt discount on convertible debt
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(47,200 | ) | (35,173 | ) | (91,053 | ) | (67,852 | ) | ||||||||
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LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
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(1,692,218 | ) | (1,106,659 | ) | (2,841,273 | ) | (2,310,291 | ) | ||||||||
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Benefit for income taxes
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1,141,615 | 16,169 | 1,303,260 | 98,588 | ||||||||||||
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NET LOSS FROM CONTINUING OPERATIONS
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(550,603 | ) | (1,090,490 | ) | (1,538,013 | ) | (2,211,703 | ) | ||||||||
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INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES
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(128,003 | ) | 1,039,634 | 174,465 | 1,901,618 | |||||||||||
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GAIN ON SALE OF DISCONTINUED OPERATIONS, NET OF INCOME TAXES
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2,869,440 | – | 2,869,440 | – | ||||||||||||
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NET INCOME (LOSS)
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$ | 2,190,834 | $ | (50,856 | ) | $ | 1,505,892 | $ | (310,085 | ) | ||||||
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BASIC EARNINGS (LOSS) PER SHARE
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Continuing operations
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$ | (0.04 | ) | $ | (0.09 | ) | $ | (0.12 | ) | $ | (0.19 | ) | ||||
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Discontinued operations
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$ | 0.21 | $ | 0.09 | $ | 0.24 | $ | 0.16 | ||||||||
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Net income (loss)
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$ | 0.17 | $ | 0.00 | $ | 0.12 | $ | (0.03 | ) | |||||||
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DILUTED EARNINGS (LOSS) PER SHARE
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Continuing operations
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$ | (0.04 | ) | $ | (0.09 | ) | $ | (0.12 | ) | $ | (0.19 | ) | ||||
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Discontinued operations
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$ | 0.21 | $ | 0.09 | $ | 0.24 | $ | 0.16 | ||||||||
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Net income (loss)
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$ | 0.17 | $ | 0.00 | $ | 0.12 | $ | (0.03 | ) | |||||||
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WEIGHTED AVERAGE SHARES USED TO COMPUTE LOSS PER SHARE
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Basic and diluted
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13,101,699 | 11,945,712 | 12,919,001 | 11,891,969 | ||||||||||||
The above results of operations and following Balance Sheets and Statements of Cash Flows, as reported under U.S. Generally Accepted Accounting Principles (U.S. GAAP), will be presented in the Company’s 10-Q for the quarter ended December 31, 2010. We encourage you to review the accompanying notes to these condensed consolidated statements, found in that filing.
MEDIA SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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December 31, 2010
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June 30,
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ASSETS
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(Unaudited)
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2010
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CURRENT ASSETS:
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Cash and cash equivalents
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$ | 5,516,024 | $ | 317,611 | ||||
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Accounts receivable, net
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2,409,845 | 2,674,918 | ||||||
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Inventories, net
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1,015,546 | 1,420,806 | ||||||
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Taxes receivable
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– | 50,506 | ||||||
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Prepaid expenses and other current assets
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99,655 | 205,423 | ||||||
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Assets of discontinued operations
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– | 7,281,721 | ||||||
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Total Current Assets
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9,041,070 | 11,950,985 | ||||||
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PROPERTY AND EQUIPMENT, NET
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1,003,271 | 1,129,222 | ||||||
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OTHER ASSETS:
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Goodwill and other intangible assets, net
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1,120,072 | 1,120,072 | ||||||
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Restricted cash held in escrow account
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1,100,028 | – | ||||||
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Other assets
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72,436 | 85,984 | ||||||
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Total Other Assets
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2,292,536 | 1,206,056 | ||||||
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TOTAL ASSETS
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$ | 12,336,877 | $ | 14,286,263 | ||||
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES:
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Accounts payable
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659,007 | 1,201,154 | ||||||
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Accrued compensation and benefits
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106,109 | 555,136 | ||||||
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Accrued severance expense
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536,725 | – | ||||||
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Other accrued expenses and current liabilities
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389,063 | 443,641 | ||||||
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Income tax payable
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1,474 | – | ||||||
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Accrued product warranty costs
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285,548 | 432,548 | ||||||
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Deferred rent liability
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42,726 | 28,493 | ||||||
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10% subordinated debt, net of discount of $164,324 at December 31, 2010
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1,085,676 | – | ||||||
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Deferred revenue
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847 | 20,097 | ||||||
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Total Current Liabilities
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3,107,175 | 2,681,069 | ||||||
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OTHER LIABILITIES:
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Long-term debt
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– | 2,340,863 | ||||||
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Deferred rent liability
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– | 29,517 | ||||||
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10% subordinated debt, net of discount of $255,376 in June
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– | 994,624 | ||||||
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Deferred tax liabilities
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– | 904,922 | ||||||
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Total Other Liabilities
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– | 4,269,926 | ||||||
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TOTAL LIABILITIES
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3,107,175 | 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, $.001 par value 25,000,000 shares authorized;
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issued and outstanding, respectively, 13,492,374 and 13,342,374 shares at
December 31, 2010 and 13,292,374 and 12,699,914 shares at June 30, 2010
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13,342 | 12,700 | ||||||
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Additional paid-in capital
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13,620,874 | 13,277,405 | ||||||
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Accumulated other comprehensive income (loss)
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45,833 | 1,402 | ||||||
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Accumulated deficit
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(4,450,347 | ) | (5,956,239 | ) | ||||
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Total Shareholders' Equity
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9,229,702 | 7,335,268 | ||||||
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
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$ | 12,336,877 | $ | 14,286,263 | ||||
MEDIA SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Six Months Ended
December 31,
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2010
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2009
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net income (loss)
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$ | 1,505,892 | $ | (310,085 | ) | |||
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Adjustments to reconcile net loss to net cash used in operating
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activities:
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Depreciation and amortization
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247,588 | 394,220 | ||||||
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Stock-based compensation expense
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342,704 | 345,602 | ||||||
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Deferred income taxes
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(1,149,630 | ) | (98,588 | ) | ||||
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Provision for (reduction of) inventory obsolescence reserves
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3,012 | (58,319 | ) | |||||
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Provision for returns and doubtful accounts allowance
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(111,586 | ) | 90,063 | |||||
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Amortization of debt discount on convertible debt
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91,052 | 67,852 | ||||||
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Loss on change in fair value of warrant liabilities
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– | 4,962 | ||||||
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Gain on sale of toner business
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(2,869,440 | ) | – | |||||
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Changes in operating assets and liabilities:
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Accounts receivable
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439,617 | 370,662 | ||||||
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Inventories
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(42,270 | ) | (439,308 | ) | ||||
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Income taxes
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51,980 | (29,074 | ) | |||||
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Prepaid expenses and other current assets
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28,029 | 110,598 | ||||||
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Accounts payable
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(542,112 | ) | (66,043 | ) | ||||
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Accrued compensation and benefits
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(449,027 | ) | (266,793 | ) | ||||
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Accrued severance
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536,725 | – | ||||||
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Other accrued expenses and current liabilities
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(28,817 | ) | (244,740 | ) | ||||
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Accrued product warranty costs
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(147,000 | ) | 11,389 | |||||
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Deferred rent liability
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(15,284 | ) | (43,498 | ) | ||||
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Deferred revenue
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(19,250 | ) | (162,115 | ) | ||||
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Net cash used in operating activities
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(2,127,818 | ) | (323,215 | ) | ||||
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CASH FLOWS FROM INVESTING ACTIVITIES
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Increase in restricted cash
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(1,100,028 | ) | – | |||||
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Purchases of property and equipment
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(231,011 | ) | (83,207 | ) | ||||
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Proceeds from sale of operating toner business
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11,042,500 | – | ||||||
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Net cash provided (used) in investing activities
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9,711,461 | (83,207 | ) | |||||
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CASH FLOWS FROM FINANCING ACTIVITIES
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Decrease in restricted cash
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– | 18,450 | ||||||
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Bank credit line proceeds (repayments), net
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(840,863 | ) | 366,734 | |||||
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Bank term loan repayments
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(1,500,000 | ) | – | |||||
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Capital lease obligation repayments
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– | (69,815 | ) | |||||
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Net cash used in financing activities
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(2,340,863 | ) | 315,369 | |||||
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Effect of exchange rate changes on cash and cash equivalents
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(44,367 | ) | (21,386 | ) | ||||
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
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5,198,413 | (112,439 | ) | |||||
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CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
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317,611 | 550,602 | ||||||
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CASH AND CASH EQUIVALENTS, END OF PERIOD
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$ | 5,516,024 | $ | 438,163 | ||||
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SUPPLEMENTAL CASH FLOW INFORMATION
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Interest paid
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$ | 83,680 | $ | 158,426 | ||||
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Income taxes paid (refunded)
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$ | (44,500 | ) | $ | 49,160 | |||