Scientific Industries Inc 10-Q for FY2021 Q3

Scientific Industries Inc (SCND)

10-Q 2021-11-15 For: 2021-09-30

Added on April 06, 2026

About this 10-Q

Scientific Industries Inc filed this 10-Q on November 15, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

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

Revenue: $2.85M; up 41.4% from $2.02M a year earlier
Net loss: $1.21M; compared with a net loss of $263.3K a year earlier

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Delaware		04-2217279
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

80 Orville Drive, Suite 102, Bohemia, New York		11716
(Address of principal executive offices)		(Zip Code)

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

PART I - Financial Information

Item 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	#

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations and Comprehensive Loss	4

	Condensed Consolidated Statements of Changes in Shareholders' Equity	5

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15

Item 4.	CONTROLS AND PROCEDURES	16

PART II - Other Information

Item 6.	EXHIBITS AND REPORTS ON FORM 8-K	17

SIGNATURE		18

	September 30, 2021			June 30, 2021
	(Unaudited)

ASSETS

Current assets:
Cash and cash equivalents	$	5,268,700		$	9,675,200
Investment securities		6,985,800			3,744,600
Trade accounts receivable, less allowance for doubtful accounts of $15,600 at September 30, 2021 and June 30, 2021		1,493,200			1,294,700
Inventories		3,094,700			2,977,100
Income tax receivable		66,000			333,300
Prepaid expenses and other current assets		502,100			350,900
Assets of discontinued operations		56,200			55,300
Total current assets		17,466,700			18,431,100

Property and equipment, net		435,300			412,600
Goodwill		4,395,400			4,395,400
Other intangible assets, net		2,418,900			2,557,800
Deferred taxes		2,812,500			2,489,900
Operating lease right-of-use assets		631,300			665,300
Other assets		54,200			54,300

Total assets	$	28,214,300		$	29,006,400

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	620,500		$	453,500
Accrued expenses		542,700			633,500
Contingent consideration, current portion		136,600			136,600
Bank overdraft		-			321,700
Lease liabilities, current portion		234,000			270,500
Payroll Protection Program loan		433,800			433,800
Liabilities of discontinued operations		26,400			37,200
Total current liabilities		1,994,000			2,286,800

Contingent consideration payable, less current portion		23,400			23,400
Lease liabilities, less current portion		469,200			460,500
Other long-term liabilities		-			10,900

Total liabilities		2,486,600			2,781,600

Shareholders’ equity:
Common stock, $.05 par value; 15,000,000 shares authorized; 6,477,945 shares issued; 6,458,143 shares outstanding at September 30, 2021 and June 30, 2021		324,000			324,000
Additional paid-in capital		27,288,900			26,613,500
Accumulated comprehensive gain (loss)		27,100			(9,200	)
Accumulated deficit		(1,859,900	)		(651,100	)
		25,780,100			26,277,200
Less common stock held in treasury at cost, 19,802 shares		52,400			52,400
Total shareholders’ equity		25,727,700			26,224,800

Total liabilities and shareholders’ equity	$	28,214,300		$	29,006,400

	For the Three Month Period Ended September 30, 2021			For the Three Month Period Ended September 30, 2020

Revenues	$	2,854,500		$	2,019,200

Cost of revenues		1,340,900			962,500

Gross profit		1,513,600			1,056,700

Operating expenses:
General and administrative		1,465,700			519,200
Selling		935,800			493,900
Research and development		636,500			244,300

Total operating expenses		3,038,000			1,257,400

Loss from operations		(1,524,400	)		(200,700	)

Other income (expense):
Other income (expense), net		(7,900	)		11,500

Loss from continuing operations before income tax benefit		(1,532,300	)		(189,200	)

Income tax benefit, deferred		(322,600	)		(35,600	)

Loss from continuing operations		(1,209,700	)		(153,600	)

Discontinued operations (Note 9):

Gain (loss) from discontinued operations, net of tax		900			(109,700	)

Net loss		(1,208,800	)		(263,300	)

Comprehensive gain:
Unrealized holding gain on investment securities, net of tax		2,200			-
Foreign currency translation adjustment		34,100			-
Comprehensive gain		36,300			-

Total comprehensive loss	$	(1,172,500	)	$	(263,300	)

Basic loss per common share:

Continuing operations	$	(.19	)	$	(.05	)
Discontinued operations	$	.00		$	(.04	)
Consolidated operations	$	(.19	)	$	(.09	)

							Accumulated
	Common Stock				Additional Paid-in		other Comprehensive Income			Retained Earnings (Accumulated			Treasury Stock				Total Shareholders’
Fiscal Year 2022	Shares		Amount		Capital		(Loss)			Deficit)			Shares		Amount		Equity

Balances, July 1, 2021		6,477,945	$	324,000	$	26,613,500	$	(9,200	)	$	(651,100	)		19,802	$	52,400	$	26,224,800

Net loss		-		-		-		-			(1,208,800	)		-		-		(1,208,800	)

Foreign currency translation adjustment		-		-		-		34,100			-			-		-		34,100

Unrealized holding gain on investment securities, net of tax		-		-		-		2,200			-			-		-		2,200

Stock-based compensation		-		-		675,400		-			-			-		-		675,400

Balances, September 30, 2021		6,477,945	$	324,000	$	27,288,900	$	27,100		$	(1,859,900	)		19,802	$	52,400	$	25,727,700

	For the Three Month Period Ended September 30, 2021			For the Three Month Period Ended September 30, 2020
Operating activities:
Net loss	$	(1,208,800	)	$	(263,300	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		165,100			40,600
Deferred income tax benefit		(322,600	)		(61,100	)
Stock-based compensation		675,400			61,300
(Gain) loss on sale of investments		200			(16,800	)
Unrealized holding loss of investments		32,800			20,900
Changes in operating assets and liabilities:
Trade accounts receivable		(198,500	)		(107,300	)
Income tax receivable		267,300			3,300
Right -of- use assets		34,000			(23,300	)
Lease liabilities		(27,800	)		36,600
Inventories		(117,600	)		(56,500	)
Prepaid and other current assets		(151,200	)		(24,300	)
Accounts payable		167,000			177,200
Contract liabilities		-			(6,300	)
Bank overdraft		(321,700	)		66,300
Other long-term liabilities		(10,800	)		-
Accrued expenses		(90,700	)		(261,700	)

Total adjustments		100,900			(151,100	)

Net cash used in operating activities		(1,107,900	)		(414,400	)

Investing activities:
Purchase of investment securities		(3,982,400	)		(3,723,500	)
Redemption of investment securities		708,200			33,800
Capital expenditures		(48,900	)		(70,500	)
Purchase of other intangible assets		-			(16,200	)

Net cash used in investing activities		(3,323,100	)		(3,776,400	)

Financing activities:
Payments of contingent consideration		-			(13,400	)

Net cash used in financing activities		-			(13,400	)

Effect of changes in foreign currency exchange rates and gain on investment securities		24,500			-

Net decrease in cash and cash equivalents		(4,406,500	)		(4,204,200	)

Cash and cash equivalents, beginning of year		9,675,200			7,559,700

Cash and cash equivalents, end of period	$	5,268,700		$	3,355,500

Supplemental disclosures:
Cash paid during the period for:
Income taxes	$	-		$	500

	Benchtop Laboratory Equipment		Bioprocessing Systems		Consolidated
Three Months Ended September 30, 2021:

Revenues	$	2,529,900	$	324,600	$	2,854,500

Foreign Sales		1,071,800		91,500		1,163,300

	Benchtop Laboratory Equipment		Bioprocessing Systems		Consolidated
Three Months Ended September 30, 2020:

Revenues	$	1,930,300	$	88,900	$	2,019,200

Foreign Sales		631,900		86,300		718,200

	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate And Other			Consolidated
Three Months Ended September 30, 2021:

Revenues	$	2,529,900	$	324,600		$	-		$	2,854,500

Foreign Sales		1,071,800		91,500			-			1,163,300

Income (Loss) From Operations		561,600		(1,685,500	)		(400,500	)		(1,524,400	)

Assets		9,689,700		8,670,100			9,854,500			28,214,300

Long-Lived Asset Expenditures		33,800		15,100			-			48,900

Depreciation and Amortization		22,800		142,300			-			165,100

	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate And Other			Consolidated
Three Months Ended September 30, 2020:

Revenues	$	1,930,300	$	88,900		$	-		$	2,019,200

Foreign Sales		631,900		86,300			-			718,200

Income (Loss) From Operations		383,800		(532,300	)		(52,200	)		(200,700	)

Assets		5,871,900		775,700			7,946,500			14,594,100

Long-Lived Asset Expenditures		21,800		64,900			-			86,700

Depreciation and Amortization		26,300		14,000			-			40,300

	Fair Value at		Fair Value Measurements Using Inputs Considered as
	September 30, 2021		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	5,268,700	$	5,268,700	$	-	$	-
Investment securities		6,985,800		6,878,200		107,600		-

Total	$	12,254,500	$	12,146,900	$	107,600	$	-

Liabilities:
Contingent consideration	$	160,000	$	-	$	-	$	160,000

	Fair Value at		Fair Value Measurements Using Inputs Considered as
	June 30, 2021		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	9,675,200	$	9,675,200	$	-	$	-
Investment securities		3,744,600		2,920,600		824,000		-

Total	$	13,419,800	$	12,595,800	$	824,000	$	-

Liabilities:
Contingent consideration	$	160,000	$	-	$	-	$	160,000

	Cost		Fair Value		Unrealized Holding Gain
At September 30, 2021:
Equity securities	$	112,100	$	159,200	$	47,100
Mutual funds		6,714,600		6,719,000		4,400
Debt securities		105,400		107,600		2,200

	$	6,932,100	$	6,985,800	$	53,700

	Cost		Fair Value		Unrealized Holding Gain (Loss)
At June 30, 2021:
Equity securities	$	102,200	$	154,100	$	51,900
Mutual funds		2,752,400		2,766,500		14,100
Debt securities		832,700		824,000		(8,700	)

	$	3,687,300	$	3,744,600	$	57,300

	September 30, 2021		June 30, 2021
Raw materials	$	2,139,200	$	2,170,400
Work-in-process		91,900		39,600
Finished goods		863,600		767,100
	$	3,094,700	$	2,977,100

	Useful Lives	Cost		Accumulated Amortization		Net
At September 30, 2021:
Technology, trademarks	5-10 yrs.	$	364,700	$	363,000	$	1,700
Trade names	3-6 yrs.		592,300		171,500		420,800
Websites	3-7 yrs.		210,000		210,000		-
Customer relationships	4-10 yrs.		372,200		112,600		259,600
Sublicense agreements	10 yrs.		294,000		290,300		3,700
Non-compete agreements	4-5 yrs.		1,060,500		357,500		703,000
IPR&D	3-5 yrs.		852,100		172,000		680,100
Patents	5-7 yrs.		591,500		241,500		350,000

		$	4,337,300	$	1,918,400	$	2,418,900

	Useful Lives	Cost		Accumulated Amortization		Net
At June 30, 2021:
Technology, trademarks	5-10 yrs.	$	364,700	$	362,200	$	2,500
Trade names	3-6 yrs.		592,300		152,600		439,700
Websites	3-7 yrs.		210,000		210,000		-
Customer relationships	4-10 yrs.		372,200		102,400		269,800
Sublicense agreements	10 yrs.		294,000		283,000		11,000
Non-compete agreements	4-5 yrs.		1,060,500		308,600		751,900
IPR&D	3-5 yrs.		852,100		134,800		717,300
Patents	5-7 yrs.		591,500		225,900		365,600

		$	4,337,300	$	1,779,500	$	2,557,800

Fiscal year ending June 30,	Amount
Remainder of 2022	$	209,000
2023		261,100
2024		195,900
2025		91,600

Total future minimum payments	$	757,600
Less imputed interest		(54,400	)

Total Present Value of Operating Lease Liabilities	$	703,200

	September 30, 2021			September 30, 2020

Weighted average number of common shares outstanding		6,458,143			2,861,263
Effect of dilutive securities:		-			-
Weighted average number of dilutive common shares outstanding		6,458,143			2,861,263

Basic loss per common share:

Continuing operations	$	(.19	)	$	(.05	)
Discontinued operations	$	(.00	)	$	(.04	)
Consolidated operations	$	(.19	)	$	(.09	)

	Amount			Useful life
Fair value of assets acquired:
Current assets:
Cash and cash equivalents	$	201,100
Accounts receivable		159,200
Inventory		187,500
Prepaid expenses and other current assets		25,400
Property, plant and equipment		40,200
Deferred tax asset		800,300
Tradename		452,300		6 years
Non-compete agreements		784,500		4 years
IPR&D		742,100		5 years
Customer relationships		252,200		9 years
Patents and other intangibles		286,200		7 years
Total assets acquired	$	3,931,000

Fair value of liabilities assumed:
Accounts payable	$	(39,300	)
Accrued expenses		(90,300	)
Other current liabilities		(59,400	)
Total liabilities assumed	$	(189,000	)

Total identifiable net assets	$	3,742,000
Fair value of consideration transferred		7,880,100
Goodwill	$	4,138,100

Exhibit Number		Description

31.		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

		SCIENTIFIC INDUSTRIES, INC. (Registrant)

Date: November 15, 2021		/s/ Helena R. Santos
		Helena R. Santos President, Chief Executive Officer, Chief Financial Officer and Treasurer