SCI Engineered Materials, Inc 10-Q for FY2021 Q2

SCI Engineered Materials, Inc. (SCIA)

10-Q 2021-07-29 For: 2021-06-30

Added on April 11, 2026

About this 10-Q

SCI Engineered Materials, Inc filed this 10-Q on July 29, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).

Headline figures

Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.97M; down 24.3% from $2.61M a year earlier
Net income: $121.55K; up 494.1% from net income of $20.46K a year earlier
Diluted EPS: $0.03; compared with $0.00 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


Ohio	31-1210318
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, without par value	SCIA	OTCQB


Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☒	Emerging growth company ☐


		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020	3

	Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)	5

	Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)	6

	Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020 (unaudited)	7

	Notes to Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	N/A

Item 4.	Controls and Procedures	19

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	N/A

Item 1A.	Risk Factors	N/A

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	N/A

Item 3.	Defaults Upon Senior Securities	N/A

Item 4.	Mine Safety Disclosures	N/A

Item 5.	Other Information	N/A

Item 6.	Exhibits	21

Signatures		22


	June 30,		December 31,
	2021		2020
	(UNAUDITED)
Current Assets
Cash	$	3,497,202	$	2,917,551
Accounts receivable
Trade, less allowance for doubtful accounts of $15,000		427,774		459,471
Tax - Employee Retention Credit		176,252		—
Inventories		4,245,768		1,180,359
Prepaid expenses		282,609		131,333
Total current assets		8,629,605		4,688,714

Property and Equipment, at cost
Machinery and equipment		7,863,346		8,280,611
Furniture and fixtures		132,365		132,365
Leasehold improvements		596,867		592,899
Construction in progress		338,030		3,904
		8,930,608		9,009,779
Less accumulated depreciation		(6,714,701)		(7,121,647)
		2,215,907		1,888,132

Right of use asset, Net		316,604		357,396
Deferred tax asset		888,315		1,019,317
Other assets		91,760		96,623
Total other assets		1,296,679		1,473,336

TOTAL ASSETS	$	12,142,191	$	8,050,182


	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
	2021		2020		2021		2020
Revenue	$	1,972,049	$	2,606,587	$	4,994,359	$	6,045,382

Cost of revenue		1,409,495		2,168,803		3,628,769		5,098,260

Gross profit		562,554		437,784		1,365,590		947,122

General and administrative expense		283,708		272,216		571,589		555,381

Research and development expense		54,377		90,421		92,596		177,325

Marketing and sales expense		46,434		47,387		97,827		99,171

Income from operations		178,035		27,760		603,578		115,245

Gain on extinguishment of debt		—		—		(325,300)		—

Interest expense		9,014		7,300		16,652		11,369

Income before provision for income taxes		169,021		20,460		912,226		103,876

Provision for income taxes		47,473		—		138,093		1,900

Net income		121,548		20,460		774,133		101,976

Dividends on preferred stock		6,038		6,038		12,076		12,076

INCOME APPLICABLE TO COMMON STOCK	$	115,510	$	14,422	$	762,057	$	89,900

Earnings per share - basic and diluted (Note 7)

Income per common share
Basic	$	0.03	$	0.00	$	0.17	$	0.02
Diluted	$	0.03	$	0.00	$	0.17	$	0.02

Weighted average shares outstanding
Basic		4,497,903		4,411,714		4,488,913		4,398,856
Diluted		4,526,062		4,418,325		4,516,478		4,406,478


	Convertible				Additional
	Preferred Stock,		Common		Paid-In		Accumulated
	Series B		Stock		Capital		Deficit		Total
Balance 12/31/2020	$	514,438	$	10,530,669	$	2,246,501	$	(7,740,441)	$	5,551,167

Accretion of cumulative dividends		6,038		—		(6,038)		—		—

Stock based compensation expense (Note 4)		—		—		1,183		—		1,183

Common stock issued (Note 4)		—		20,705		—		—		20,705

Net income		—		—		—		652,585		652,585

Balance 3/31/2021	$	520,476	$	10,551,374	$	2,241,646	$	(7,087,856)	$	6,225,640

Accretion of cumulative dividends		6,038		—		(6,038)		—		—

Payment of cumulative dividends (Note 5)		(24,152)		—		—		—		(24,152)

Stock based compensation expense (Note 4)		—		—		1,182		—		1,182

Common stock issued (Note 4)		—		7,493		—		—		7,493

Net income		—		—		—		121,548		121,548

Balance 6/30/2021	$	502,362	$	10,558,867	$	2,236,790	$	(6,966,308)	$	6,331,711

Balance 12/31/2019	$	514,438	$	10,410,677	$	2,265,925	$	(9,242,204)	$	3,948,836

Accretion of cumulative dividends		6,038		—		(6,038)		—		—

Stock based compensation expense (Note 4)		—		—		1,182		—		1,182

Common stock issued (Note 4)		—		29,998		—		—		29,998

Net income		—		—		—		81,516		81,516

Balance 3/31/2020	$	520,476	$	10,440,675	$	2,261,069	$	(9,160,688)	$	4,061,532

Accretion of cumulative dividends		6,038		—		(6,038)		—		—

Payment of cumulative dividends (Note 5)		(24,152)		—		—		—		(24,152)

Stock based compensation expense (Note 4)		—		—		1,182		—		1,182

Common stock issued (Note 4)		—		30,000		—		—		30,000

Net income		—		—		—		20,460		20,460

Balance 6/30/2020	$	502,362	$	10,470,675	$	2,256,213	$	(9,140,228)	$	4,089,022


	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	774,133	$	101,976
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and accretion		230,689		226,956
Amortization of right of use asset		40,792		37,806
Amortization of patents		2,207		1,724
Stock based compensation		30,563		62,362
Loss (gain) on disposal of equipment		3,224		(3,063)
Deferred tax asset		131,002		—
Gain on extinguishment of debt		(325,300)		—
Inventory reserve		600		33,629
Changes in operating assets and liabilities:
Accounts receivable		(144,555)		(39,814)
Inventories		(3,066,009)		1,844,385
Prepaid expenses		(151,276)		(50,569)
Other assets		2,656		(6,488)
Accounts payable		286,866		(74,390)
Operating lease obligations		(43,565)		(39,456)
Accrued expenses and customer deposits		3,477,435		(2,086,240)
Net cash provided by operating activities		1,249,462		8,818

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of equipment		591		3,063
Purchases of property and equipment		(558,828)		(167,999)
Net cash used in investing activities		(558,237)		(164,936)

CASH FLOWS FROM FINANCING ACTIVITIES
Payment of cumulative dividends on preferred stock		(24,152)		(24,152)
Proceeds from SBA Paycheck Protection Program		—		325,300
Principal payments on finance lease obligations and notes payable		(87,422)		(48,620)
Net cash (used in) provided by financing activities		(111,574)		252,528

NET INCREASE IN CASH		579,651		96,410

CASH - Beginning of period		2,917,551		1,828,397

CASH - End of period	$	3,497,202	$	1,924,807

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	5,895	$	5,826
Income taxes		138,093		1,900
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
Increase in asset retirement obligation		3,450		1,800


		Weighted
		Average
	Stock Options	Exercise Price
Outstanding at January 1, 2020	76,037	$	1.03
Outstanding at December 31, 2020	76,037	$	1.03
Exercised	(30,181)		0.96
Outstanding at June 30, 2021	45,856	$	1.07
Options exercisable at December 31, 2020	55,208	$	0.94
Options exercisable at June 30, 2021	31,970	$	0.99


	Three months ended				Six months ended
	June 30,				June 30,
	2021		2020		2021		2020
Federal - deferred	$	43,160	$	—	$	131,002	$	—
State and local		4,313		—		7,091		1,900
	$	47,473	$	—	$	138,093	$	1,900


2021	$	55,319
2022		112,611
2023		114,857
2024		102,550
Total minimum lease payments		385,337
Less debt discount		37,068
Total operating lease obligations	$	348,269


Operating cash outflows from operating leases	$	197,050
Weighted average remaining lease term		3.4	years
Weighted average discount rate		5.5	%


2021	$	79,279
2022		105,154
2023		101,675
2024		49,859
Total minimum lease payments		335,967
Less amount representing interest		19,755
Present value of minimum lease payments		316,212
Less current portion		120,820
Finance lease obligations, net of current portion	$	195,392


	June 30, 2021		Dec. 31, 2020
Machinery and equipment	$	745,289	$	745,289
Less accumulated depreciation and amortization		194,750		157,486
Net book value	$	550,539	$	587,803


3(a)		Certificate of Second Amended and Restated Articles of Incorporation of Superconductive Components, Inc. (Incorporated by reference to Exhibit 3(a) to the Company’s initial Form 10-SB, filed on September 28, 2000)

3(b)		Restated Code of Regulations of Superconductive Components, Inc. (Incorporated by reference to Exhibit 3(b) to the Company’s initial Form 10-SB, filed on September 28, 2000)

3(c)		Amendment to Articles of Incorporation recording the change of the corporate name to SCI Engineered Materials, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-QSB filed November 7, 2007).

4(a)		SCI Engineered Materials, Inc. 2011 Stock Incentive Plan (Incorporated by reference to the Company’s Definitive Proxy Statement for the 2011 Annual Meeting of Shareholders held on June 10, 2011, filed April 28, 2011).

4(b)		Superconductive Components, Inc. 2006 Stock Incentive Plan (Incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement for the 2006 Annual Meeting of Shareholders held on June 9, 2006, filed May 1, 2006).

10(c)		Description of Unsecured Promissory Note administered by the U.S. Small Business Administration for funds received April 24, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K, dated April 29, 2020).

14(a)		SCI Engineered Materials Code of Ethics for the Chief Executive Officer and Chief Financial Officer (Incorporated by reference to the Company’s Current Report via the Company’s website at www.sciengineeredmaterials.com)

31.1	*	Rule 13a-14(a) Certification of Principal Executive Officer.

31.2	*	Rule 13a-14(a) Certification of Principal Financial Officer.

32.1	*	Section 1350 Certification of Principal Executive Officer.

32.2	*	Section 1350 Certification of Principal Financial Officer.

99.1		Press Release dated July 29, 2021, entitled “SCI Engineered Materials, Inc., Reports 2021 Second Quarter and Year-to-Date Results.”

101		The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at June 30, 2021 and December 31, 2020 (ii) Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020, (iii) Consolidated Statement of Changes in Equity for the three and six months ended June 30, 2021 and 2020, (iv) Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020, and (v) Notes to Financial Statements.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


	June 30,		December 31,
	2021		2020
	(unaudited)
Raw materials	$	2,717,901	$	206,668
Work-in-process		1,393,580		877,812
Finished goods		159,105		120,097
Inventory reserve		(24,818)		(24,218)
	$	4,245,768	$	1,180,359


		SCI ENGINEERED MATERIALS, INC.

Date: July 29, 2021		/s/ Jeremiah R. Young
		Jeremiah R. Young, President and Chief Executive Officer
		(Principal Executive Officer)

		/s/ Gerald S. Blaskie
		Gerald S. Blaskie, Vice President and Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

Date: July 29, 2021	/s/ Jeremiah R. Young
	Jeremiah R. Young
	President and Chief Executive Officer
	(Principal Executive Officer)

Date: July 29, 2021	/s/ Gerald S. Blaskie
	Gerald S. Blaskie
	Vice President and Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

	/s/ Jeremiah R. Young
	Jeremiah R. Young
	President and Chief Executive Officer of
	SCI Engineered Materials, Inc.
	(Principal Executive Officer)
	July 29, 2021