x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the fiscal year ended September 30,
2010.
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the transition period from ______________ to
______________
|
Delaware
|
22-1734088
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
44
Hunt Street, Watertown, MA
|
02472
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title
of each class
|
Name
of each exchange on which registered
|
|
Common
Stock, $0.0005 par value
|
The
NASDAQ Stock Market LLC
(NASDAQ
Global Market)
|
The
"high" and "low" bid quotations for the Company's Common Stock as reported
by the OTC Bulletin Board for each quarterly period for the fiscal years
ended September 30, 2009 and September 30, 2010:
|
||
Fiscal Quarter
|
High Bid Price
|
Low Bid Price
|
2009
|
||
First
|
$1.40
|
$0.51
|
Second
|
$1.55
|
$0.55
|
Third
|
$1.06
|
$0.64
|
Fourth
|
$2.35
|
$0.85
|
2010
|
||
First
|
$3.10
|
$1.80
|
Second
|
$2.70
|
$2.00
|
Third
|
$2.90
|
$2.00
|
Fourth
|
$4.30
|
$0.51
|
The
above listed quotes reflect inter-dealer prices without retail mark-up,
mark-down, or commissions, and may not represent actual
transactions.
|
||
The
“high” and “low” sale prices for trades of the Company’s Common stock on
the OTC bulletin board were as follows for each quarterly period for the
fiscal years ended September 30, 2009 and September 30,
2010:
|
||
Fiscal Quarter
|
High Sale Price
|
Low Sale Price
|
2009
|
||
First
|
$1.50
|
$0.70
|
Second
|
$1.55
|
$0.55
|
Third
|
$1.35
|
$0.80
|
Fourth
|
$2.45
|
$0.85
|
2010
|
||
First
|
$3.25
|
$1.85
|
Second
|
$2.73
|
$2.01
|
Third
|
$3.00
|
$2.40
|
Fourth
|
$4.50
|
$2.35
|
Plan Category
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants, and rights
( a )
|
Weighted-average
exercise price of
outstanding
options, warrants
and rights
( b )
|
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))
( c )
|
|||||||||
Equity
compensation plans approved by security holders
|
1,855,500 | $ | 2.88 | 5,819,756 | ||||||||
Equity
compensation plans not approved by security holders
|
None
|
None
|
None
|
Results of Operations for the Years Ending September 30
|
||||||||||||||||||||||||
2010
|
2009
|
|||||||||||||||||||||||
Contract
Research
|
Products &
Instruments
|
Total
|
Contract
Research
|
Products &
Instruments
|
Total
|
|||||||||||||||||||
Revenue
|
23,109,847 | 19,859,915 | 42,969,762 | 19,794,281 | 14,569,393 | 34,363,674 | ||||||||||||||||||
Gross
Profit
|
9,445,339 | 8,318,463 | 17,763,802 | 8,244,719 | 5,489,454 | 13,737,173 | ||||||||||||||||||
SG&A
|
7,758,445 | 5,213,195 | 12,971,641 | 6,760,751 | 4,130,345 | 10,891,096 | ||||||||||||||||||
Operating
Income
|
$ | 1,686,894 | $ | 3,105,268 | $ | 4,792,162 | $ | 1,483,968 | $ | 1,359,109 | $ | 2,843,077 |
|
-
|
Medical products such as
probes to help surgeons determine which lymph nodes to remove during
breast cancer surgery.
|
|
-
|
Commercial products such
as handheld x-ray florescence (XRF) instruments to determine whether there
is lead in paint within buildings or
toys.
|
|
-
|
Homeland security
products such as improved sensors for detecting nuclear materials or dirty
bombs at ports and borders.
|
|
-
|
Defense products such as
laser optics for fighter jets.
|
|
-
|
A
track record of consistent growth and profitability – growing from $2
million revenues in fiscal year 2004 to $43 million in fiscal year 2010 –
a 63% compound annual growth rate while being profitable every quarter
since fiscal year 2004.
|
|
-
|
A
profitable research business developing advanced technology to provide
significant upside opportunity where we typically get to retain the
commercial rights to the
technology.
|
|
-
|
A
plan to continue to grow aggressively through acquisitions and technology
commercialization.
|
|
-
|
Dynasil
has a proven track record for delivering results by bringing focus to
businesses and improving their execution. The acquisitions of
Optometrics, EMF, the Precision Optics filter product line, RMD and Hilger
Crystals have been completed since March 2005 and we have significantly
improved operational execution and results in these
businesses.
|
|
-
|
Management
expects the profitable research at RMD to drive our internal growth of
commercial products as well as to lead to acquisitions where RMD
technology can provide a competitive advantage. An example of
our current involvement with commercialization occurred in the third
quarter when the Company’s Board approved investment into dual mode
nuclear detectors for Homeland Security applications. These
detectors are designed to locate nuclear bombs or nuclear materials at
ports and borders and are expected to replace two current detector
subsystems – the gamma radiation detector and also the helium-3
detectors for neutrons, which are in critically short
supply. The initial target product is handheld devices with
volume commercial sales expected during FY
2011.
|
-
|
Providing
overall corporate leadership and
coordination.
|
-
|
Identifying,
structuring, and coordinating acquisition activities to support growth
objectives.
|
-
|
Driving
commercialization of the Company’s extensive research portfolio either
organically or through
acquisitions.
|
-
|
Implementing
key corporate competencies in the business units to support organic growth
by teaching and consulting to
include:
|
|
o
|
Clear
focus by defining a few, key business objectives; prioritizing the
projects to best meet those objectives; setting individual goals;
consistently communicating updates; and sharing in the
profits;
|
|
o
|
Disciplined
manufacturing, sales and business
processes;
|
|
o
|
Market
understanding, strategy process, and identification of a few high growth
projects; and continuous revenue growth and operational
improvements;
|
|
o
|
Providing
cost effective financial reporting, tax compliance, investor relations,
SEC compliance, legal support, and fund raising to support
growth.
|
-
|
Facilitating
cooperation and coordination between business units such as working
together to maximize overall effectiveness of sales and
marketing.
|
-
|
Identifying
transferable skills within the business units and using them to help other
business units.
|
-
|
Purchasing
shared items, such as insurance, where consolidated purchasing delivers
savings.
|
-
|
Coordinating
Human Resource policies, high level recruiting, and supporting business
units with HR issues.
|
|
•
|
Use
profitable research to springboard
growth
|
|
–
|
Internal
growth by commercializing
technology
|
|
–
|
Focused
acquisitions can speed time to
market
|
|
•
|
Continue
Effective Execution
|
|
–
|
People
focused on key goals & the
basics
|
|
–
|
Build
upon strong customer base and
expand
|
|
•
|
Use
acquisitions to capitalize on our
technology
|
|
–
|
Increase
market penetration
|
|
–
|
Gain
complementary capabilities and market
channels
|
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ | 4,111,966 | $ | 3,104,778 | ||||
Accounts
receivable, net of allowance for doubtful accounts of $132,584 for 2010
and $123,853 for 2009 and sales returns of $24,168 for 2010 and $18,916
for 2009
|
6,360,583 | 4,053,742 | ||||||
Inventories
|
3,097,219 | 2,371,516 | ||||||
Deferred
tax asset
|
-0- | 290,100 | ||||||
Cost
in excess of billings
|
135,157 | -0- | ||||||
Prepaid
income taxes
|
410,045 | -0- | ||||||
Prepaid
expenses and other current assets
|
453,418 | 306,848 | ||||||
Total
current assets
|
14,568,388 | 10,126,984 | ||||||
Property,
Plant and Equipment, net
|
3,953,319 | 2,744,724 | ||||||
Other
Assets
|
||||||||
Intangibles,
net
|
6,671,149 | 7,232,035 | ||||||
Goodwill
|
13,591,287 | 11,054,396 | ||||||
Deferred
financing costs, net
|
190,568 | 64,637 | ||||||
Total
other assets
|
20,453,004 | 18,351,068 | ||||||
Total
Assets
|
$ | 38,974,711 | $ | 31,222,776 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Current
portion of long-term debt
|
$ | 1,870,779 | $ | 1,749,524 | ||||
Accounts
payable
|
1,482,250 | 773,837 | ||||||
Accrued
expenses and other liabilities
|
1,823,222 | 1,111,342 | ||||||
Income
taxes payable
|
-0- | 507,122 | ||||||
Deferred
tax liability
|
91,100 | -0- | ||||||
Billings
in excess of costs
|
-0- | 60,448 | ||||||
Dividends
payable
|
131,400 | 149,150 | ||||||
Total
current liabilities
|
5,398,751 | 4,351,423 | ||||||
Long-term
Liabilities
|
||||||||
Long-term
debt, net
|
10,833,334 | 6,386,796 | ||||||
Note
payable to related party
|
-0- | 2,000,000 | ||||||
Contingent
consideration
|
750,000 | -0- | ||||||
Total
long-term liabilities
|
11,583,334 | 8,386,796 | ||||||
Temporary
Equity
|
||||||||
Redeemable
common stock, at redemption value of $2,000,000; put option on 1,000,000
shares issued and outstanding in 2010 and 2009
|
2,000,000 | 2,000,000 | ||||||
Stockholders'
Equity
|
||||||||
Common
Stock, $0.0005 par value, 40,000,000 shares authorized, 12,482,356 and
11,250,257 shares issued, 11,672,196 and 10,440,097 shares outstanding for
2010 and 2009, respectively
|
$ | 6,241 | $ | 6,125 | ||||
Preferred
Stock, $.001 par value, 15,000,000 shares authorized, 5,256,000 and
5,966,000 shares issued and outstanding for 2010 and 2009, respectively,
10% cumulative, convertible
|
5,256 | 5,966 | ||||||
Additional
paid in capital
|
15,186,029 | 14,364,388 | ||||||
Deferred
compensation - common stock
|
(160,088 | ) | -0- | |||||
Accumulated
other comprehensive income
|
150,162 | -0- | ||||||
Retained
earnings
|
5,791,368 | 3,094,420 | ||||||
20,978,968 | 17,470,899 | |||||||
Less
810,160 shares of treasury stock - at cost
|
(986,342 | ) | (986,342 | ) | ||||
Total
stockholders' equity
|
19,992,626 | 16,484,557 | ||||||
Total
Liabilities and Stockholders' Equity
|
$ | 38,974,711 | $ | 31,222,776 |
2010
|
2009
|
|||||||
Net
revenues
|
$ | 42,969,762 | $ | 34,363,674 | ||||
Cost
of revenues
|
25,205,960 | 20,629,501 | ||||||
Gross
profit
|
17,763,802 | 13,734,173 | ||||||
Selling,
general and administrative expenses
|
12,971,640 | 10,891,096 | ||||||
Income
from operations
|
4,792,162 | 2,843,077 | ||||||
Interest
expense, net
|
628,120 | 735,317 | ||||||
Income
before income taxes
|
4,164,042 | 2,107,760 | ||||||
Income
tax expense, net of $793,200 of tax benefits resulting from QTDP tax
credits
|
929,661 | 556,462 | ||||||
Net
income
|
$ | 3,234,381 | $ | 1,551,298 | ||||
Net
Income
|
$ | 3,234,381 | $ | 1,551,298 | ||||
Other
comprehensive income, net of $77,400 and $-0- income taxes in 2010 and
2009
|
||||||||
Foreign
currency translation
|
150,162 | -0- | ||||||
Total
comprehensive income
|
$ | 3,384,543 | $ | 1,551,298 | ||||
Net
income
|
$ | 3,234,381 | $ | 1,551,298 | ||||
Dividends
on preferred stock
|
537,433 | 589,740 | ||||||
Net
income applicable to common shareholders
|
2,696,948 | 961,558 | ||||||
Dividend
add back due to assumed preferred stock conversion
|
537,433 | 71,000 | ||||||
Net
income for diluted income per common share
|
$ | 3,234,381 | $ | 1,032,558 | ||||
Basic
net income per common share
|
$ | 0.22 | $ | 0.08 | ||||
Diluted
net income per common share
|
$ | 0.22 | $ | 0.08 | ||||
Weighted
average shares outstanding
|
||||||||
Basic
|
12,404,701 | 11,373,837 | ||||||
Diluted
|
14,937,575 | 12,328,261 |
Additional
|
Deferred
|
Accumulated
Other
|
Total
|
|||||||||||||||||||||||||||||||||||||||||
Common
|
Common
|
Preferred
|
Preferred
|
Paid-in
|
Stock
|
Retained
|
Comprehensive
|
Treasury Stock
|
Stockholders'
|
|||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Compensation
|
Earnings
|
Income
|
Shares
|
Amount
|
Equity
|
||||||||||||||||||||||||||||||||||
Balance,
October 1, 2008 as previously reported
|
12,142,849 | $ | 6,072 | 5,966,000 | $ | 5,966 | $ | 16,122,185 | $ | 0 | $ | 2,132,862 | $ | 0 | 810,160 | $ | (986,342 | ) | $ | 17,280,743 | ||||||||||||||||||||||||
Reclassification
adjustment
|
(1,000,000 | ) | (500 | ) | -0- | -0- | (1,999,500 | ) | $ | 0 | $ | 0 | $ | 0 | 0 | $ | 0 | (2,000,000 | ) | |||||||||||||||||||||||||
Balance,
October 1, 2008 as restated
|
11,142,849 | 5,572 | 5,966,000 | 5,966 | 14,122,685 | 0 | 2,132,862 | 0 | 810,160 | (986,342 | ) | 15,280,743 | ||||||||||||||||||||||||||||||||
Issuance
of shares of common stock under employee stock purchase
plan
|
3,333 | 2 | -0- | -0- | 3,541 | -0- | -0- | -0- | -0- | -0- | 3,543 | |||||||||||||||||||||||||||||||||
Issuance
of shares of common stock in lieu of compensation to
directors
|
40,075 | 20 | -0- | -0- | 50,145 | -0- | -0- | -0- | -0- | -0- | 50,165 | |||||||||||||||||||||||||||||||||
Issuance
of shares of common stock under stock option plan
|
53,000 | 26 | -0- | -0- | 27,024 | -0- | -0- | -0- | -0- | -0- | 27,050 | |||||||||||||||||||||||||||||||||
Compensation
costs recognized in connection with stock options
|
-0- | -0- | -0- | -0- | 133,998 | -0- | -0- | -0- | -0- | -0- | 133,998 | |||||||||||||||||||||||||||||||||
Issuance
of shares of common stock in lieu of Series C preferred stock
dividends
|
11,000 | 5 | -0- | -0- | 27,495 | -0- | -0- | -0- | -0- | -0- | 27,500 | |||||||||||||||||||||||||||||||||
Preferred
stock dividends
|
-0- | -0- | -0- | -0- | -0- | -0- | (589,740 | ) | -0- | -0- | -0- | (589,740 | ) | |||||||||||||||||||||||||||||||
Net
income
|
-0- | -0- | -0- | -0- | -0- | -0- | 1,551,298 | -0- | -0- | -0- | 1,551,298 | |||||||||||||||||||||||||||||||||
Balance,
September 30, 2009
|
11,250,257 | $ | 5,625 | 5,966,000 | $ | 5,966 | $ | 14,364,888 | $ | 0 | $ | 3,094,420 | $ | 0 | 810,160 | $ | (986,342 | ) | $ | 16,484,557 | ||||||||||||||||||||||||
Issuance
of shares of common stock under employee stock purchase
plan
|
20,546 | 10 | -0- | -0- | 43,818 | -0- | -0- | -0- | -0- | -0- | 43,828 | |||||||||||||||||||||||||||||||||
Issuance
of shares of common stock in lieu of compensation to
directors
|
81,179 | 41 | -0- | -0- | 221,602 | (102,314 | ) | -0- | -0- | -0- | -0- | 119,329 | ||||||||||||||||||||||||||||||||
Issuance
of shares of common stock under stock option plan
|
121,459 | 61 | -0- | -0- | 226,469 | -0- | -0- | -0- | -0- | -0- | 226,530 | |||||||||||||||||||||||||||||||||
Compensation
costs recognized in connection with employee bonuses
|
6,500 | 3 | -0- | -0- | 18,254 | -0- | -0- | -0- | -0- | -0- | 18,257 | |||||||||||||||||||||||||||||||||
Compensation
costs recognized in connection with employment contract
|
7,500 | 4 | -0- | -0- | 22,871 | (22,875 | ) | -0- | -0- | -0- | -0- | -0- | ||||||||||||||||||||||||||||||||
Compensation
costs recognized in connection with stock options
|
-0- | -0- | -0- | -0- | 166,913 | (34,899 | ) | -0- | -0- | -0- | -0- | 132,014 | ||||||||||||||||||||||||||||||||
Issuance
of shares of common stock in lieu of advisor fees
|
4,484 | 2 | -0- | -0- | 10,999 | -0- | -0- | -0- | -0- | -0- | 11,001 | |||||||||||||||||||||||||||||||||
Issuance
of shares of common stock for conversion of Series B preferred
stock
|
946,431 | 473 | (710,000 | ) | (710 | ) | 237 | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||||||||||
Foreign
currency translation adjustment
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | 150,162 | -0- | -0- | 150,162 | |||||||||||||||||||||||||||||||||
Issuance
of shares of common stock in lieu of Series C preferred stock
dividends
|
44,000 | 22 | -0- | -0- | 109,978 | -0- | -0- | -0- | -0- | -0- | 110,000 | |||||||||||||||||||||||||||||||||
Preferred
stock dividends
|
-0- | -0- | -0- | -0- | -0- | -0- | (537,433 | ) | -0- | -0- | -0- | (537,433 | ) | |||||||||||||||||||||||||||||||
Net
income
|
-0- | -0- | -0- | -0- | -0- | -0- | 3,234,381 | -0- | -0- | -0- | 3,234,381 | |||||||||||||||||||||||||||||||||
Balance,
September 30, 2010
|
12,482,356 | $ | 6,241 | 5,256,000 | $ | 5,256 | $ | 15,186,029 | $ | (160,088 | ) | $ | 5,791,368 | $ | 150,162 | 810,160 | $ | (986,342 | ) | $ | 19,992,626 |
2010
|
2009
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 3,234,381 | $ | 1,551,298 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities
|
||||||||
Stock
compensation expense
|
329,686 | 184,163 | ||||||
Provision
for doubtful accounts and sales returns
|
1,886 | 64,404 | ||||||
Depreciation
and amortization
|
1,040,132 | 946,932 | ||||||
Deferred
income taxes
|
303,800 | (56,600 | ) | |||||
(Increase)
decrease in:
|
||||||||
Accounts
Receivable
|
(1,689,793 | ) | (727,443 | ) | ||||
Inventories
|
198,241 | 538,214 | ||||||
Prepaid
expenses and other current assets
|
(64,565 | ) | (38,589 | ) | ||||
Increase
(decrease) in:
|
||||||||
Accounts
payable and accrued expenses
|
845,151 | (396,145 | ) | |||||
Income
taxes payable
|
(894,217 | ) | 470,646 | |||||
Billings
in excess of cost
|
(195,605 | ) | (156,445 | ) | ||||
Net
cash provided by operating activities
|
3,109,097 | 2,380,435 | ||||||
Cash
flows from investing activities:
|
||||||||
Purchases
of property, plant and equipment
|
(363,406 | ) | (445,646 | ) | ||||
Decrease
in other assets
|
(71 | ) | -0- | |||||
Cash
paid for acquisition
|
(4,002,946 | ) | -0- | |||||
Net
cash used in investing activities
|
(4,366,423 | ) | (445,646 | ) | ||||
Cash
flows from financing activities
|
||||||||
Issuance
of common stock
|
271,255 | 30,593 | ||||||
Repayment
of long term debt
|
(2,058,892 | ) | (1,691,202 | ) | ||||
Repayment
of short term debt
|
-0- | (490,117 | ) | |||||
Proceeds
from debt refinancing
|
626,685 | -0- | ||||||
Proceeds
from long term debt
|
4,000,000 | -0- | ||||||
Deferred
financing costs incurred
|
(146,055 | ) | -0- | |||||
Preferred
stock dividends paid
|
(445,183 | ) | (562,240 | ) | ||||
Net
cash used in financing activities
|
2,247,810 | (2,712,966 | ) | |||||
Effect
of exchange rates on cash and cash equivalents
|
16,704 | -0- | ||||||
Net
increase (decrease) in cash and cash equivalents
|
1,007,188 | (778,177 | ) | |||||
Cash
and cash equivalents, beginning
|
3,104,778 | 3,882,955 | ||||||
Cash
and cash equivalents, ending
|
$ | 4,111,966 | $ | 3,104,778 |
Weighted average shares outstanding
|
||||||||
Basic
|
12,404,701 | 11,373,837 | ||||||
Effect
of dilutive securities
|
||||||||
Stock
Options
|
430,474 | 10,124 | ||||||
Convertible
Preferred Stock
|
2,102,400 | 944,300 | ||||||
Dilutive
Average Shares Outstanding
|
14,937,575 | 12,328,261 |
Purchase
price:
|
||||
Purchase
price
|
$ | 4,000,000 | ||
Contingent
consideration
|
750,000 | |||
Working
Capital Adjustment
|
2,946 | |||
$ | 4,752,946 |
Purchase
price allocation:
|
||||
Accounts
receivable
|
$ | 618,938 | ||
Inventories
|
923,944 | |||
Prepaid
expenses and other current assets
|
127,831 | |||
Property
and equipment
|
1,111,728 | |||
Goodwill
|
2,513,054 | |||
Current
liabilities assumed
|
(542,549 | ) | ||
Net
fair value of assets acquired
|
$ | 4,752,946 |
For the year ended
|
||||
September 30, 2010
|
||||
Statement of Operations
|
(Unaudited)
|
|||
Revenues
|
$ | 45,087,896 | ||
Cost
of revenues
|
26,468,238 | |||
Gross
profit
|
18,619,658 | |||
Operating
Expense
|
13,885,262 | |||
Income
from operations
|
4,734,396 | |||
Interest
and other expense
|
(626,246 | ) | ||
Income
before income taxes
|
4,108,150 | |||
Income
taxes
|
(986,829 | ) | ||
Net
income
|
$ | 3,121,321 | ||
Earnings
per share:
|
||||
Basic
|
$ | 0.21 | ||
Diluted
|
$ | 0.21 |
2010
|
2009
|
|||||||
Raw
Materials
|
$ | 2,386,255 | $ | 1,374,134 | ||||
Work-in-Process
|
416,525 | 550,151 | ||||||
Finished
Goods
|
294,439 | 447,231 | ||||||
$ | 3,097,219 | $ | 2,371,516 |
2010
|
2009
|
|||||||
Land
|
$ | 182,812 | $ | 40,450 | ||||
Building
and improvements
|
2,387,256 | 1,812,658 | ||||||
Machinery
and equipment
|
5,982,594 | 5,163,255 | ||||||
Office
furniture and fixtures
|
325,155 | 278,135 | ||||||
Transportaion
equipment
|
60,828 | 60,828 | ||||||
8,938,645 | 7,355,326 | |||||||
Less
accumulated depreciation
|
4,985,426 | 4,610,602 | ||||||
$ | 3,953,219 | $ | 2,744,724 |
Useful
|
Gross
|
Accumulated
|
|||||||||
September 30, 2010
|
Life (years)
|
Amount
|
Amortization
|
||||||||
Acquired
Customer Base
|
5-15
|
$ | 7,025,413 | $ | 1,104,648 | ||||||
Know
How
|
15
|
512,000 | 76,800 | ||||||||
Trade
Names
|
15
|
219,000 | 32,850 | ||||||||
Backlog
|
4
|
182,000 | 52,966 | ||||||||
$ | 7,938,413 | $ | 1,267,264 |
Useful
|
Gross
|
Accumulated
|
|||||||||
September 30, 2009
|
Life (years)
|
Amount
|
Amortization
|
||||||||
Acquired
Customer Base
|
5-15
|
$ | 7,025,413 | $ | 630,294 | ||||||
Know
How
|
15
|
512,000 | 42,667 | ||||||||
Trade
Names
|
15
|
219,000 | 18,250 | ||||||||
Backlog
|
4
|
182,000 | 15,167 | ||||||||
$ | 7,938,413 | $ | 706,378 |
2011
|
$ | 596,815 | ||
2012
|
$ | 578,392 | ||
2013
|
$ | 523,087 | ||
2014
|
$ | 523,087 | ||
2015
|
$ | 523,087 |
2010
|
2009
|
|||||||
Note
payable to bank in monthly installments of $107,143 through July, 2015
followed by a balloon payment of the remaining principal
amount. The interest rate is fixed at 5.58% for the life of the
loan, secured by substantially all assets.
|
$ | 8,785,714 | $ | -0- | ||||
Note
payable to bank in monthly installments of $47,619 through July, 2015
followed by a balloon payment of the remaining principal
amount. The interest rate in floating based on one month LIBOR
plus 3.5%. The rate at September 30, 2010 was 3.76%, secured by
substantially all assets.
|
3,904,762 | -0- | ||||||
Note
payable to bank in monthly installments of $8,727 including interest of
7.8% through October 2011 (after October 2011, the interest rate will
adjust every five years to the Federal Home Loan Bank of NY Advance Rate
plus 2.8%), maturing on October 1, 2026, secured by a mortgage on the
Ithaca, New York real estate, repaid July 9, 2010 with
refinancing.
|
-0- | 979,187 | ||||||
Note
payable to Ithaca Urban Renewal Agency for Lease of land in Ithaca, New
York for 99 years with the options to purchase said land for $26,640 after
May 2008
|
13,636 | 16,389 | ||||||
Note
payable to bank in monthly installments of $174,359 including interest at
6.0%, through June 2013, secured by substantially all Dynasil and
subsidiary assets except EMF real estate, repaid July 9, 2010 with
refinancing.
|
-0- | 7,140,744 | ||||||
Note
payable to related party in which the former owners of RMD and current
officers of RMD have a financial interest, bears interest at 8% through
September 30, 2009, increased to 9% effective October 1, 2009, due October
1, 2009, unsecured, repaid July 9, 2010 with refinancing.
|
-0- | 2,000,000 | ||||||
$ | 12,704,112 | $ | 10,136,320 | |||||
Less
current portion
|
1,870,779 | 1,749,524 | ||||||
$ | 10,833,333 | $ | 8,386,796 |
For
the years ending:
|
||||
September
30, 2012
|
$ | 1,857,142 | ||
September
30, 2013
|
1,857,142 | |||
September
30, 2014
|
1,857,142 | |||
September
30, 2015
|
5,261,907 | |||
Thereafter
|
-0- | |||
$ | 10,833,333 |
2010
|
2009
|
|||||||
Current
|
||||||||
Federal
|
$ | 1,423,575 | $ | 479,600 | ||||
State
|
404,036 | 178,662 | ||||||
Utilization
of NOL carryforwards
|
-0- | (45,200 | ) | |||||
Utilization
of QTDP tax credits
|
(1,201,750 | ) | -0- | |||||
$ | 625,861 | $ | 613,062 | |||||
Deferred
|
||||||||
Federal
|
233,400 | (67,500 | ) | |||||
State
|
70,400 | 10,900 | ||||||
303,800 | (56,600 | ) | ||||||
Income
tax expense
|
$ | 929,661 | $ | 556,462 |
2010
|
2009
|
|||||||
Taxes
at statutory rates applied to income before income taxes
|
$ | 1,354,300 | $ | 716,600 | ||||
Increase
(reduction) in tax resulting from:
|
||||||||
Depreciation
|
(22,600 | ) | (39,500 | ) | ||||
Amortization
|
(238,900 | ) | (251,700 | ) | ||||
Accounts
receivable
|
(1,300 | ) | 18,700 | |||||
Inventories
|
(22,700 | ) | 70,200 | |||||
Vacation
pay
|
34,600 | 1,400 | ||||||
Unfunded
pension liability
|
-0- | (9,700 | ) | |||||
Deferred
compensation
|
(3,700 | ) | 3,700 | |||||
Other
|
18,100 | 12,500 | ||||||
State
income taxes
|
301,261 | 136,062 | ||||||
Net
benefit of net operating loss carryforwards
|
-0- | (45,200 | ) | |||||
Net
benefit of QTDP tax credits
|
(793,200 | ) | -0- | |||||
Deferred
income taxes
|
303,800 | (56,600 | ) | |||||
$ | 929,661 | $ | 556,462 |
2010
|
2009
|
|||||||
Inventories
|
$ | 239,100 | $ | 259,800 | ||||
Vacation
pay
|
110,500 | 79,000 | ||||||
Unfunded
pension liability
|
20,200 | 20,200 | ||||||
Deferred
compensation
|
-0- | 3,400 | ||||||
Accounts
receivable
|
44,600 | 44,200 | ||||||
Depreciation
|
(449,000 | ) | (207,800 | ) | ||||
Net
operating loss carryforwards
|
-0- | -0- | ||||||
State
deferred taxes
|
20,900 | 91,300 | ||||||
Foreign
currency translation
|
(77,400 | ) | -0- | |||||
$ | (91,100 | ) | $ | 290,100 |
Shares
|
Exercise Price
per Share
|
||||||
Options
outstanding at October 1, 2008
|
843,725 |
$0.40
- $4.00
|
|||||
Granted
in 2009
|
707,116 |
$1.40
- $2.65
|
|||||
Exercised
in 2009
|
(53,000 | ) |
$0.40
- $0.85
|
||||
Cancelled
in 2009
|
(147,000 | ) |
$0.85
- $2.89
|
||||
Options
outstanding at September 30, 2009
|
1,350,841 |
$0.51
- $4.00
|
|||||
Granted
in 2010
|
671,118 |
$3.19
- $4.06
|
|||||
Exercised
in 2010
|
(121,459 | ) |
$0.51
- $2.00
|
||||
Cancelled
in 2010
|
(45,000 | ) |
$1.54
- $2.93
|
||||
Options
outstanding at September 30, 2010
|
1,855,500 |
$1.40
- $4.06
|
|||||
Options
exercisable at September 30, 2010
|
1,220,488 |
$1.50
- $4.00
|
2010
|
2009
|
|||||||
Expected
life in years
|
3 | 3 | ||||||
Risk-free
interest rate
|
4.23 | % | 4.02 | % | ||||
Expected
volatility
|
68.33 | % | 29.96 | % | ||||
Dividend
yield
|
0.00 | % | 0.00 | % |
2010
|
2009
|
|||||||
Pension
benefit obligation as of September 30
|
$ | 344,241 | $ | 369,683 | ||||
Fair
value of plan assets as of September 30
|
(295,468 | ) | (308,350 | ) | ||||
$ | 48,773 | $ | 61,333 | |||||
Amounts
recognized on the balance sheet as:
|
||||||||
Accured
benefit costs (in accrued expenses)
|
$ | 65,395 | $ | 61,333 | ||||
Discount
rate on the benefit obligation - based on
|
||||||||
24-month
average segmented rates
|
6.74 | % | 6.01 | % | ||||
Rate
of expected return on the plan assets
|
5.00 | % | 5.00 | % | ||||
Pension
expense (benefit)
|
-0- | $ | (26,631 | ) | ||||
Company
contributions
|
-0- | $ | 6,093 |
Years ending September 30,
|
||||
2011
|
$ | 1,158,552 | ||
2012
|
$ | 1,193,873 | ||
2013
|
$ | 886,458 | ||
2014
|
$ | 31,750 |
2010
|
2009
|
|||||||
Cash
paid during the year for:
|
||||||||
Interest
|
$ | 607,080 | $ | 721,343 | ||||
Income
taxes
|
$ | 1,510,183 | $ | 142,416 |
Fair
market value of current assets acquired
|
$ | 1,670,713 | ||
Property,
plant and equipment
|
1,111,728 | |||
Goodwill
|
2,513,054 | |||
Fair
market value of liabilities assumed
|
(542,549 | ) | ||
Total
cost of acquisition
|
$ | 4,752,946 | ||
Less
contingent consideration
|
(750,000 | ) | ||
Net
cash paid for Hilger acquisition
|
$ | 4,002,946 |
2010
|
2009
|
|||||||
Contract
Research
|
||||||||
Revenues
|
$ | 23,109,847 | $ | 19,794,281 | ||||
Income
from Operations
|
1,686,894 | 1,483,968 | ||||||
Income
as a percent of revenues
|
7.3 | % | 7.5 | % | ||||
Photonics
Products and Instruments
|
||||||||
Revenues
|
$ | 19,859,915 | $ | 14,569,393 | ||||
Income
from Operations
|
3,105,268 | 1,359,109 | ||||||
Income
as a percent of revenues
|
15.6 | % | 9.3 | % | ||||
Total
|
||||||||
Revenues
|
$ | 42,969,762 | $ | 34,363,674 | ||||
Income
from Operations
|
4,792,162 | 2,843,077 | ||||||
Income
as a percent of revenues
|
11.2 | % | 8.3 | % | ||||
Goodwill
|
||||||||
Contract
Research
|
$ | 4,754,825 | $ | 4,754,825 | ||||
Photonics
Products and Instruments
|
$ | 8,836,462 | $ | 6,299,571 |
Geographic Location
|
Revenues
|
% of
Total
|
||||||
United
States
|
$ | 36,488,505 | 84.9 | % | ||||
Europe
|
3,285,957 | 7.7 | % | |||||
Other
|
3,195,300 | 7.4 | % | |||||
$ | 42,969,762 | 100.0 | % |
Page
|
||
1.
Financial Statements
|
following
14
|
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
|
Consolidated
Financial Statements:
|
||
Balance
Sheet as of September 30, 2010 and 2009
|
F-2
|
|
Statements
of Operations for the years ended September 30, 2010 and
2009
|
F-4
|
|
Statements
of Stockholders’ Equity for the years ended September 30, 2010 and
2009
|
F-5
|
|
Statements
of Cash Flows for the years ended September 30, 2010 and
2009
|
F-6
|
|
Notes
to Consolidated Financial Statements
|
F-7
|
BY:
|
/s/
Craig Dunham
|
Craig
Dunham, President, CEO (Principal Executive
Officer)
|
DATED:
|
December
17, 2010
|
Signature |
Title
|
Date
|
|||
BY:
|
/s/ Peter Sulick
|
Chairman
of the Board of Directors,
|
December 17, 2010
|
||
Peter Sulick
|
Chairman
of the Audit Committee
|
||||
BY:
|
/s/ Cecil Ursprung
|
Director
|
December 17, 2010
|
||
Cecil Ursprung
|
|||||
BY:
|
/s/ James Saltzman
|
Director,
Vice-Chairman
|
December 17, 2010
|
||
James Saltzman
|
|||||
BY:
|
/s/ Gerald Entine
|
Director,
President RMD Research
|
December 17, 2010
|
||
Gerald Entine
|
|||||
BY:
|
/s/
Michael Joyner
|
Director
|
December 17, 2010
|
||
Michael Joyner
|
|||||
BY:
|
/s/ David Kronfeld
|
Director
|
December 17, 2010
|
||
David Kronfeld
|
|||||
BY:
|
/s/ Craig T. Dunham
|
Director,
President and CEO
|
December 17, 2010
|
||
Craig T. Dunham
|
(Principal
Executive Officer)
|
||||
BY:
|
/s/ Richard A. Johnson
|
CFO,
Principal Financial and
|
December 17, 2010
|
||
Richard A. Johnson
|
Accounting
Officer
|