<SEC-DOCUMENT>0001161697-16-000941.txt : 20160627
<SEC-HEADER>0001161697-16-000941.hdr.sgml : 20160627
<ACCEPTANCE-DATETIME>20160627172400
ACCESSION NUMBER:		0001161697-16-000941
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20160624
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
ITEM INFORMATION:		Other Events
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20160627
DATE AS OF CHANGE:		20160627

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			REPRO MED SYSTEMS INC
		CENTRAL INDEX KEY:			0000704440
		STANDARD INDUSTRIAL CLASSIFICATION:	SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
		IRS NUMBER:				133044880
		STATE OF INCORPORATION:			NY
		FISCAL YEAR END:			0228

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-12305
		FILM NUMBER:		161734165

	BUSINESS ADDRESS:	
		STREET 1:		24 CARPENTER RD
		CITY:			CHESTER
		STATE:			NY
		ZIP:			10918
		BUSINESS PHONE:		845-469-2042

	MAIL ADDRESS:	
		STREET 1:		24 CARPENTER RD
		CITY:			CHESTER
		STATE:			NY
		ZIP:			10918
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>form_8-k.htm
<DESCRIPTION>FORM 8-K FOR 06-24-2016
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<P style="margin:0" align=center><B>UNITED STATES</B></P>
<P style="margin:0" align=center><B>SECURITIES AND EXCHANGE COMMISSION</B></P>
<P style="margin:0" align=center><B>Washington, DC 20549</B></P>
<P style="margin:0" align=center>&nbsp;</P>
<P style="margin:0; font-size:12pt" align=center><B>FORM 8-K</B></P>
<P style="margin:0" align=center>&nbsp;</P>
<P style="margin:0; font-size:12pt" align=center><B>CURRENT REPORT</B></P>
<P style="margin:0; font-size:12pt" align=center><B>Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934</B></P>
<P style="margin:0" align=center>&nbsp;</P>
<P style="margin:0" align=center>Date of Report (Date of earliest event reported)&nbsp;&nbsp;&nbsp;<B><U>June 24, 2016</U></B></P>
<P style="margin:0" align=center>&nbsp;</P>
<P style="margin:0; font-size:14pt" align=center><B><U>REPRO MED SYSTEMS, INC.</U></B></P>
<P style="margin:0" align=center>(Exact name of registrant as specified in its charter)</P>
<P style="margin:0" align=center>&nbsp;</P>
<TABLE style="margin-top:0; font-size:10pt" cellpadding=0 cellspacing=0 align=center>
<TR><TD style="margin-top:0" valign=top width=240><P style="margin:0" align=center><B><U>New York</U></B></P>
</TD><TD style="margin-top:0" valign=top width=240><P style="margin:0" align=center><B><U>0-12305</U></B></P>
</TD><TD style="margin-top:0" valign=top width=240><P style="margin:0" align=center><B><U>13-3044880</U></B></P>
</TD></TR>
<TR><TD style="margin-top:0" valign=top width=240><P style="margin:0" align=center>(State or other jurisdiction<BR>
of incorporation)</P>
</TD><TD style="margin-top:0" valign=top width=240><P style="margin:0" align=center>(Commission<BR>
File Number)</P>
</TD><TD style="margin-top:0" valign=top width=240><P style="margin:0" align=center>(IRS Employer<BR>
Identification No.)</P>
</TD></TR>
</TABLE>
<P style="margin:0" align=center><BR></P>
<TABLE style="margin-top:0; font-size:10pt" cellpadding=0 cellspacing=0 align=center>
<TR><TD style="margin-top:0" valign=top width=288><P style="margin:0" align=center><B><U>24 Carpenter Road, Chester, New York</U></B></P>
</TD><TD style="margin-top:0" valign=top width=96><P style="margin:0" align=center><B><U>10918</U></B></P>
</TD></TR>
<TR><TD style="margin-top:0" valign=top width=288><P style="margin:0" align=center>(Address of principal executive offices)</P>
</TD><TD style="margin-top:0" valign=top width=96><P style="margin:0" align=center>(Zip Code)</P>
</TD></TR>
</TABLE>
<P style="margin:0" align=center><BR></P>
<P style="margin:0" align=center>Registrant&rsquo;s telephone number, including area code&nbsp;&nbsp;&nbsp;<B><U>(845) 469-2042</U></B></P>
<P style="margin:0" align=center>&nbsp;</P>
<P style="margin:0" align=center><U>not applicable</U></P>
<P style="margin:0" align=center>(Former name or former address, if changed since last report)</P>
<P style="margin:0" align=center>&nbsp;</P>
<P style="margin:0; text-align: justify">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):</P>
<P style="margin:0; text-align: justify">&nbsp;</P>
<P style="margin:0; text-align: justify">[ &nbsp;] &nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</P>
<P style="margin:0; text-align: justify">&nbsp;</P>
<P style="margin:0; text-align: justify">[ &nbsp;] &nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</P>
<P style="margin:0; text-align: justify">&nbsp;</P>
<P style="margin:0; text-align: justify">[ &nbsp;] &nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</P>
<P style="margin:0; text-align: justify">&nbsp;</P>
<P style="margin:0; text-align: justify">[ &nbsp;] &nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</P>
<P style="margin:0"><BR></P>
<HR noshade align="center" width="100%" size="2"><p style='page-break-before:always'></p><PAGE><BR>


<P style="margin:0"><B>2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.</B></P>
<P style="margin:0"><BR></P>
<P style="margin:0; text-indent:48; text-align: justify">The Company announced that its net revenues for the first quarter ended May 31 of fiscal 2017 were $2,990,166 compared with $2,630,545 for the first quarter of fiscal 2016, a 13.7% increase.  Net loss for the quarter was $233,314 compared to $64,640 for the same period last year.</P>
<P style="margin:0"><BR></P>
<P style="margin:0"><B>5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.</B></P>
<P style="margin:0"><BR></P>
<P style="margin:0; text-indent:48; text-align: justify">The Company announced that Cyril Narishkin resigned as President, Interim Chief Operating Officer and Director, effective June 24, 2016.</P>
<P style="margin:0"><BR></P>
<P style="margin:0"><B>ITEM 8.01 OTHER EVENTS.</B></P>
<P style="margin:0"><BR></P>
<P style="margin:0; text-indent:48; text-align: justify">The Company issued a press release on June 27, 2016 titled &ldquo;RMS Medical Products Posts First Quarter 2017 Results&rdquo;.</P>
<P style="margin:0"><BR></P>
<P style="margin:0"><B>ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.</B></P>
<P style="margin:0"><BR></P>
<P style="margin:0; text-align: justify">(d) Exhibits.</P>
<P style="margin:0"><BR></P>
<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; font: 10pt Times New Roman, Times, Serif; width: 720px">
<TR STYLE="vertical-align: top; text-align: left">
    <TD STYLE="width: 96"><U>Exhibit No.</U></TD>
    <TD STYLE="width: 624"><U>Description</U></TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD>99.1</TD>
    <TD>Press release dated June 27, 2016</TD></TR>
</TABLE>
<P style="margin:0"><BR></P>
<P style="margin:0; text-align: justify">The press release is furnished herewith as Exhibit 99.1.</P>
<P style="margin:0"><BR></P>
<P style="margin:0"><BR></P>
<P style="margin:0" align=center><B>SIGNATURES</B></P>
<P style="margin:0; text-indent:48; text-align: justify">&nbsp;</P>
<P style="margin:0; text-indent:48; text-align: justify">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</P>
<P style="margin:0; text-indent:48">&nbsp;</P>
<TABLE style="margin-top:0; font-size:10pt" cellpadding=0 cellspacing=0 width=100%>
<TR><TD style="margin-top:0" valign=top><P style="margin:0">&nbsp;</P>
</TD><TD style="margin-top:0" valign=top width=360 colspan=2><P style="margin:0">REPRO MED SYSTEMS, INC.<BR>
(Registrant)</P>
</TD></TR>
<TR><TD style="margin-top:0" valign=top><P style="margin:0">&nbsp;</P>
</TD><TD style="margin-top:0" valign=top width=24><P style="margin:0">&nbsp;</P>
</TD><TD style="margin-top:0" valign=top width=336><P style="margin:0">&nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0" valign=top><P style="margin:0">Date: &nbsp;<U>June 27, 2016</U></P>
</TD><TD style="margin-top:0" valign=top width=24><P style="margin:0">By:</P>
</TD><TD style="margin-top:0" valign=top width=336><P style="margin:0"><U>/s/ Andrew I. Sealfon</U></P>
</TD></TR>
<TR><TD style="margin-top:0" valign=top colspan=2><P style="margin:0">&nbsp;</P>
</TD><TD style="margin-top:0" valign=top width=336><P style="margin:0">Andrew I. Sealfon<BR>
President and Chief Executive Officer</P>
</TD></TR>
</TABLE>
<P style="margin:0"><BR></P>
<P style="margin:0" align=center>- 2 -</P>
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<TYPE>EX-99
<SEQUENCE>2
<FILENAME>ex_99-1.htm
<DESCRIPTION>PRESS RELEASE DATED 06-27-2016
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<P style="margin:0px" align=center><B>Exhibit 99.1</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:14pt"><B>RMS Medical Products Posts First Quarter 2017 Results</B></P>
<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:1pt"><TD width=24 ></TD><TD width=696 ></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=24><P style="margin:0px; font-size:12pt">-</P>
</TD><TD style="margin-top:0px" valign=top width=696><P style="margin:0px; font-size:12pt"><B><I>Double digit growth in revenue and adjusted EBITDA the result of accelerated sales and marketing efforts both domestically and international</I></B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=24><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=696><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=24><P style="margin:0px; font-size:12pt">-</P>
</TD><TD style="margin-top:0px" valign=top width=696><P style="margin:0px; font-size:12pt"><B><I>Hosting first International Distributor Meeting in Europe </I></B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=24><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=696><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=24><P style="margin:0px; font-size:12pt">-</P>
</TD><TD style="margin-top:0px" valign=top width=696><P style="margin:0px; font-size:12pt"><B><I>Continued gross margin expansion as lean initiatives come to fruition</I></B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=24><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=696><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=24><P style="margin:0px; font-size:12pt">-</P>
</TD><TD style="margin-top:0px" valign=top width=696><P style="margin:0px; font-size:12pt"><B><I>Thanks Cyril Narishkin for his service as President, Interim COO and Board Director</I></B></P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt">CHESTER, NY / June 27, 2016 / Repro Med Systems, Inc. dba RMS Medical Products (OTCQX: REPR) today announced its financial results for the first quarter of the fiscal year ending February 28, 2017. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt">For the quarter ended May 31<SUP>st</SUP>, net revenues increased $360 thousand, or 13.7%, compared to the previous year&rsquo;s Q1, led by the Company&rsquo;s sales of proprietary infusion products. &nbsp;Net revenues for the first quarter of fiscal 2017 were $2,990,166 compared with $2,630,545 in the comparable quarter. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt">RMS is benefiting from recent lean manufacturing initiatives to streamline operations, which have resulted in increased capacity and decreased direct assembly labor costs, as well as the moratorium on the medical device tax. Gross profit increased 27.6% to $1,936,812, up more than $400 thousand from $1,517,859 in the comparable quarter. Gross profit margin as a percentage of net sales increased to 64.8% from 57.7% in the first quarter of 2016. Non-GAAP EBITDA increased to over $330 thousand, up from a non-GAAP EBITDA loss of $33 thousand from the comparable quarter.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt">As a result of consulting and professional fees related to regulatory and litigation in the quarter, the Company reported a net loss of $233,314, an increased loss compared to a loss of $64,640 in the same period last year. &nbsp;Excluding consulting and professional fees related to regulatory and litigation (summarized in attached tables), net income would have been $174,853 in the quarter.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt">In addition, effective June 24, 2016, Cyril N. Narishkin has resigned from his positions of President, Interim Chief Operating Officer and Director due to personal reasons.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt">&ldquo;By remodeling operations, and capitalizing on growth opportunities both domestically and internationally, RMS is continuing its upward trend this year,&rdquo; noted Andy Sealfon, CEO of the Company. &nbsp;&ldquo;I&rsquo;d like to thank Cyril Narishkin for his service and support over the last year. &nbsp;We wish him continued success going forward.&rdquo; Mr. Sealfon added. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt">In addition to participating in several industry conferences/exhibitions over the past 6 months, RMS is excited to have hosted an International Distributor Meeting.&nbsp; The meeting, held in Europe, provided a forum and network for representatives from European countries to speak face-to-face about the infusion market as it stands now, developments on the horizon and positioning of RMS products within those markets. &ldquo;By actively listening to distributor feedback and selectively investing in new innovations for delivery systems, I am confident that RMS will continue to be a leader in the industry,&rdquo; commented Mr. Sealfon. </P>
<P style="margin:0px"><BR></P>

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<P style="margin:0px; font-size:12pt">This press release includes non-GAAP financial measures that are not in accordance with, nor an alternate to, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. &nbsp;In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt">Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. &nbsp;They are limited in value because they exclude charges that have a material effect on our reported results and, therefore, should not be relied upon as the sole financial measures to evaluate our financial results. &nbsp;The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results. &nbsp;A reconciliation of our non-GAAP measures is included in an attachment to this press release.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt">The Company manufactures medical products used for infusions and suctioning. The Infusion product portfolio currently includes the FREEDOM60<SUP>(R)</SUP> and our latest FreedomEdge&trade; Syringe Infusion Pumps, RMS Precision Flow Rate Tubing<SUP>(TM)</SUP> and RMS HIgH-Flo<SUP>(TM)</SUP> Subcutaneous Safety Needle Sets. These devices are used for infusions administered in professional healthcare settings as well as at home. The Company&rsquo;s RES-Q-VAC line of medical suctioning products is used by emergency medical service providers in addition to a variety of other healthcare providers. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt">The Company&rsquo;s website may be visited at www.rmsmedicalproducts.com. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt">This press release includes &ldquo;forward-looking statements&rdquo; within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms &ldquo;believes&rdquo;, &ldquo;belief&rdquo;, &ldquo;expects&rdquo;, &ldquo;intends&rdquo;, &ldquo;anticipates&rdquo;, &ldquo;will&rdquo;, or &ldquo;plans&rdquo; to be uncertain and forward looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company&rsquo;s reports and registration statements filed with the Securities and Exchange Commission.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt">For more information please call:</P>
<P style="margin:0px; font-size:12pt">Mike King</P>
<P style="margin:0px; font-size:12pt">702 650 3000</P>
<P style="margin:0px; font-size:12pt">Princeton Research</P>
<P style="margin:0px; font-size:12pt">SOURCE: RMS Medical Products </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center>- 2 -</P>

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<P style="margin:0px; font-size:12pt" align=center><B>SELECTED FINANCIAL RESULTS</B></P>
<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:1pt"><TD width=266.6 ></TD><TD width=17.6 ></TD><TD width=95.933 ></TD><TD width=15.6 ></TD><TD width=17.533 ></TD><TD width=96 ></TD><TD width=18.733 ></TD></TR>
<TR><TD style="margin-top:0px" width=266.6><P style="margin:0px"><B>Reconciliation of GAAP Net Loss</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=242.667 colspan=5><P style="margin:0px" align=center><B>Three Months Ended May 31,</B></P>
</TD><TD style="margin-top:0px" valign=top width=18.733><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=266.6><P style="margin:0px"><B>to Non-GAAP Normalized EBITDA:</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=113.533 colspan=2><P style="margin:0px" align=center><B>2016</B></P>
</TD><TD style="margin-top:0px" valign=top width=15.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=113.533 colspan=2><P style="margin:0px" align=center><B>2015</B></P>
</TD><TD style="margin-top:0px" valign=top width=18.733><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=266.6><P style="margin:0px">GAAP Net Loss</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=17.6><P style="margin:0px">$</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=95.933><P style="margin:0px" align=right>(233,314</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=15.6><P style="margin:0px">)</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=17.533><P style="margin:0px">$</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=96><P style="margin:0px" align=right>(64,640</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=18.733><P style="margin:0px">)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=266.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;Tax Benefit </P>
</TD><TD style="margin-top:0px" valign=bottom width=17.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=95.933><P style="margin:0px" align=right>(119,901</P>
</TD><TD style="margin-top:0px" valign=bottom width=15.6><P style="margin:0px">)</P>
</TD><TD style="margin-top:0px" valign=bottom width=17.533><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=96><P style="margin:0px" align=right>(32,797</P>
</TD><TD style="margin-top:0px" valign=bottom width=18.733><P style="margin:0px">)</P>
</TD></TR>
<TR><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=266.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;Depreciation</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=17.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=95.933><P style="margin:0px" align=right>70,156</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=15.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=17.533><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=96><P style="margin:0px" align=right>64,719</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=18.733><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=266.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;Professional Fees (1)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=17.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=95.933><P style="margin:0px" align=right>618,144</P>
</TD><TD style="margin-top:0px" valign=bottom width=15.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=17.533><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=96><P style="margin:0px" align=right>&mdash;</P>
</TD><TD style="margin-top:0px" valign=bottom width=18.733><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=266.6><P style="margin:0px">Non-GAAP Normalized EBITDA&nbsp;&nbsp;&nbsp; </P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9; border-bottom:1px solid #000000" valign=bottom width=17.6><P style="margin:0px">$</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9; border-bottom:1px solid #000000" valign=bottom width=95.933><P style="margin:0px" align=right>335,085</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=15.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; background-color:#D9D9D9; border-bottom:1px solid #000000" valign=bottom width=17.533><P style="margin:0px">$</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9; border-bottom:1px solid #000000" valign=bottom width=96><P style="margin:0px" align=right>(32,718</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=18.733><P style="margin:0px">)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=266.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=242.667 colspan=5><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=18.733><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=266.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=242.667 colspan=5><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=18.733><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=266.6><P style="margin:0px"><B>Reconciliation of GAAP Net Loss</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=242.667 colspan=5><P style="margin:0px" align=center><B>Three Months Ended May 31,</B></P>
</TD><TD style="margin-top:0px" valign=top width=18.733><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=266.6><P style="margin:0px"><B>to Non-GAAP Normalized EBITDA:</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=113.533 colspan=2><P style="margin:0px" align=center><B>2016</B></P>
</TD><TD style="margin-top:0px" valign=top width=15.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=113.533 colspan=2><P style="margin:0px" align=center><B>2015</B></P>
</TD><TD style="margin-top:0px" valign=top width=18.733><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px; background-color:#D9D9D9" width=266.6><P style="margin:0px">GAAP Net Loss</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=17.6><P style="margin:0px">$</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" width=95.933><P style="margin:0px" align=right>(233,314</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=15.6><P style="margin:0px">)</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=17.533><P style="margin:0px">$</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" width=96><P style="margin:0px" align=right>(64,640</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=18.733><P style="margin:0px">)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=266.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;Professional Fees (1)</P>
</TD><TD style="margin-top:0px" valign=bottom width=17.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" width=95.933><P style="margin:0px" align=right>618,144</P>
</TD><TD style="margin-top:0px" valign=bottom width=15.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=17.533><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" width=96><P style="margin:0px" align=right>&mdash;</P>
</TD><TD style="margin-top:0px" valign=bottom width=18.733><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px; background-color:#D9D9D9" width=266.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;Tax Expense on Professional Fees </P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9; border-bottom:1px solid #000000" valign=bottom width=17.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; background-color:#D9D9D9; border-bottom:1px solid #000000" width=95.933><P style="margin:0px" align=right>(209,977</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=15.6><P style="margin:0px">)</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9; border-bottom:1px solid #000000" valign=bottom width=17.533><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; background-color:#D9D9D9; border-bottom:1px solid #000000" width=96><P style="margin:0px" align=right>&mdash;</P>
</TD><TD style="margin-top:0px; background-color:#D9D9D9" valign=bottom width=18.733><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=266.6><P style="margin:0px">Non-GAAP Normalized Net Income</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=17.6><P style="margin:0px">$</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=95.933><P style="margin:0px" align=right>174,853</P>
</TD><TD style="margin-top:0px" valign=bottom width=15.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=17.533><P style="margin:0px">$</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=96><P style="margin:0px" align=right>(64,640</P>
</TD><TD style="margin-top:0px" valign=bottom width=18.733><P style="margin:0px">)</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px">(1) Includes consulting and professional fees related to regulatory and litigation.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center>- 3 -</P>

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