SCND 10-Q
Scientific Industries Inc (SCND)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
For the transition period from ________to________ Commission file number
(Exact Name of Registrant as specified in Its Charter) |
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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| Name of each exchange on which registered |
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| OTC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
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| Emerging Growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes
The number of shares outstanding of the registrant’s common stock, par value $.05 per share (“Common Stock”) as of May 13, 2025 is
SCIENTIFIC INDUSTRIES, INC.
Table of Contents
| 2 |
| Table of Contents |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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| As of March 31, 2025 |
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| As of December 31, 2024 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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Investment securities |
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Trade accounts receivable, less allowance for doubtful accounts of $ |
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Inventories |
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Income tax receivable |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Other intangible assets, net |
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Inventories |
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Operating lease right-of-use assets |
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Other assets |
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Total assets |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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Accrued expenses |
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Contract liabilities |
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Lease liabilities, current portion |
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Total current liabilities |
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Lease liabilities, less current portion |
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Total liabilities |
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Shareholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive gain (loss) |
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Accumulated deficit |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
| $ |
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| $ |
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See notes to unaudited condensed consolidated financial statements.
| 3 |
| Table of Contents |
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
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| For the Three Months Ended March 31, |
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| 2025 |
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| 2024 |
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Revenues |
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Cost of revenues |
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Gross profit |
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Operating expenses: |
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General and administrative |
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Selling |
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Research and development |
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Total operating expenses |
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Loss from operations |
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Other income: |
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Other income (expense), net |
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Interest income |
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Total other income, net |
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Loss from operations before income tax expense |
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Income tax expense |
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Total income tax expense |
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Net loss |
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Comprehensive gain (loss): |
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Foreign currency translation gain (loss) |
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Comprehensive gain (loss) |
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Total comprehensive loss |
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Basic and Diluted loss per common share |
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| $ | ( | ) |
See notes to unaudited condensed consolidated financial statements.
| 4 |
| Table of Contents |
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)
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| Additional |
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| Accumulated Other |
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| Total |
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| Common Stock |
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| Paid-in |
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| Comprehensive |
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| Accumulated |
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| Shares |
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| Amount |
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| Capital |
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| Income (Loss) |
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| Deficit |
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| Shares |
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| Amount |
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| Equity |
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Balance December 31, 2024 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
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Net loss |
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| - |
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| - |
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Foreign currency translation adjustment |
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Stock-based compensation |
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Balance March 31, 2025 |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
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| - |
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| $ |
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| Common Stock |
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| Additional Paid-in |
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| Accumulated Other Comprehensive |
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| Accumulated |
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| Treasury Stock |
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| Total Stockholders’ |
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| Shares |
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| Amount |
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| Capital |
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| Income (Loss) |
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| Deficit |
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| Shares |
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| Amount |
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| Equity |
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Balance December 31, 2023 |
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| $ |
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Net loss |
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| - |
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| - |
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Issuance of Common Stock and Warrants, net of issuance costs (Note 7) |
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Fair value modification of warrants recorded as stock issuance costs |
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Foreign currency translation adjustment |
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Stock-based compensation |
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Balance March 31, 2024 |
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| $ |
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See notes to unaudited condensed consolidated financial statements
| 5 |
| Table of Contents |
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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| For the Three Months Ended March 31, |
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| 2025 |
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| 2024 |
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Operating activities: |
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Net loss |
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| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Provision for bad debt |
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Loss on sale of investment securities |
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Unrealized holding (gain) on investment securities |
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Noncash lease expense |
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Changes in operating assets and liabilities: |
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Trade accounts receivable |
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Inventories |
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Prepaid and other current assets |
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Other assets |
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Accounts payable |
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Accrued expenses |
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Lease liabilities |
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Net cash used in operating activities |
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Investing activities: |
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Purchase of investment securities |
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Redemption of investment securities |
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Capital expenditures |
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Net cash provided by investing activities |
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Financing activities: |
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Proceeds from issuance of common stock |
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Issuance costs of common stock and warrants |
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Net cash provided by financing activities |
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Effect of changes in foreign currency exchange rates on cash and cash equivalents |
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Net decrease in cash and cash equivalents |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
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See notes to unaudited condensed consolidated financial statements
| 6 |
| Table of Contents |
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of the Business and Basis of Presentation
Scientific Industries, Inc. and its subsidiaries (the “Company”) design, manufacture, and market a variety of benchtop laboratory equipment and bioprocessing products. The Company is headquartered in Bohemia, New York where it produces benchtop laboratory and pharmacy equipment. Additionally, the Company has a location in Baesweiller, Germany, where it designs and produces a variety of bioprocessing products, and administrative facilities in Pearl River, New York and Pittsburgh, Pennsylvania related to sales and marketing. The products, which are sold to customers worldwide, include mixers, shakers, stirrers, refrigerated incubators, pharmacy balances and scales, force gauges, bioprocessing sensors and analytical tools.
The accompanying (a) unaudited condensed balance sheet as of December 31, 2024, which has been derived from audited financial statements, and (b) unaudited interim condensed consolidated financial statements are prepared pursuant to the Securities and Exchange Commission’s rules and regulations for reporting on Form 10-Q. Accordingly, certain information and notes required by accounting principles generally accepted in the United States for complete financial statements are not included herein. The Company believes all adjustments necessary for a fair presentation of these interim statements have been included and that they are of a normal and recurring nature. These interim statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto, included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The results for the three months ended March 31, 2025, are not necessarily an indication of the results for the full fiscal year ending December 31, 2025.
2. Significant Accounting Policies
Principles of Consolidation
The accompanying unaudited interim condensed consolidated financial statements include the accounts of Scientific Industries, Inc., Scientific Bioprocessing Holdings, Inc. (“SBHI”), a Delaware corporation and wholly-owned subsidiary, which holds 100% of the outstanding stock of Scientific Bioprocessing, Inc. (“SBI”), a Delaware corporation, and aquila biolabs GmbH (“Aquila”), a German corporation and Scientific Packaging Industries, Inc., an inactive wholly-owned subsidiary (all collectively referred to as the “Company”). All material intercompany balances and transactions have been eliminated in consolidation.
Liquidity and Going Concern Considerations
The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the Consolidated Financial Statements are issued. Based upon the recuring losses from operations and continued cash outflow from operating activities (as described below), the Company has concluded that there is substantial doubt about the ability to continue as a going concern for a period of one year from the date that these Consolidated Financial Statements are issued.
For the three months ended March 31, 2025, the Company generated negative cash flows from operations of $
The Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, Consolidated Financial Statements have been prepared on the basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and the commitments in the ordinary course of business.
| 7 |
| Table of Contents |
New Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures. This standard includes enhanced income tax disclosures primarily related to the effective tax rate reconciliation and income taxes paid for annual periods. For public companies, the amendments in this update are effective for annual periods beginning after December 12, 2024, with early adoption permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses and in January 2025, the FASB issued ASU No. 2025-01 Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective date of ASU 2024-04. The ASU requires, among other things, more detailed disclosures about the type of expenses in commonly presented expense captions such as cost of sales and selling, general and administrative expenses and is intended to improve the disclosures about an entity’s expenses including purchases of inventory, employee compensation, depreciation and intangible asset amortization. ASU 2024-03 will also require the Company to disclose both the amount and the Company’s definition of selling expenses. The guidance, clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026, and interim periods for fiscal years beginning after December 15, 2027, on a prospective or retrospective basis. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU on our disclosures.
3. Fair Value of Financial Instruments
The Company follows ASC - Accounting Standards Codification (“ASC 820”), Fair Value Measurement, which has defined the fair value of financial instruments as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements do not include transaction costs.
The accounting guidance also expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are described below:
Level 1 Inputs that are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2 Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.
Level 3 Prices or valuation that require inputs that are both significant to the fair value measurement and unobservable.
In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculated the fair value of its Level 1 and 2 instruments based on the exchange traded price of similar or identical instruments where available or based on other observable instruments. These calculations take into consideration the credit risk of both the Company and its counterparties. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period.
| 8 |
| Table of Contents |
The following tables set forth by level within the fair value hierarchy, the Company’s financial assets that were accounted for at fair value on a recurring basis as of March 31, 2025, and December 31, 2024, according to the valuation techniques the Company used to determine their fair values:
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| Fair Value Measurement as of March 31, 2025 |
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| Level 1 |
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| Level 2 |
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| Level 3 |
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| Total |
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Investment securities - mutual funds |
| $ |
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| $ |
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| $ |
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| $ |
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
| Fair Value Measurement as of December 31, 2024 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Investment securities - mutual funds |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Investments in marketable securities by security type as of March 31, 2025, and December 31, 2024, consisted of the following:
As of March 31, 2025: |
| Cost |
|
| Fair Value |
|
| Unrealized Holding Gain |
| |||
Mutual funds |
| $ |
|
| $ |
|
| $ |
| |||
Total |
| $ |
|
| $ |
|
| $ |
| |||
As of December 31, 2024: |
| Cost |
|
| Fair Value |
|
| Unrealized Holding Gain |
| |||
Mutual funds |
| $ |
|
| $ |
|
| $ |
| |||
Total |
| $ |
|
| $ |
|
| $ |
| |||
| 9 |
| Table of Contents |
4. Inventories
|
| As of March 31, 2025 |
|
| As of December 31, 2024 |
| ||
Raw materials |
| $ |
|
| $ |
| ||
Work-in-process |
|
|
|
|
|
| ||
Finished goods |
|
|
|
|
|
| ||
Total Inventories |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Inventories - Current Asset |
| $ |
|
| $ |
| ||
Inventories - Noncurrent Asset |
| $ |
|
| $ |
| ||
5. Goodwill and Finite Lived Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in connection with the Company’s acquisitions. Goodwill amounted to $
Finite lived intangible assets are as follows:
As of March 31, 2025 |
| Useful Lives |
| Cost |
|
| Accumulated Amortization |
|
| Net |
| |||
Technology, trademarks |
|
| $ |
|
| $ |
|
| $ |
| ||||
Trade names |
|
|
|
|
|
|
|
|
|
| ||||
Websites |
|
|
|
|
|
|
|
|
|
| ||||
Customer relationships |
|
|
|
|
|
|
|
|
|
| ||||
Sublicense agreements |
|
|
|
|
|
|
|
|
|
| ||||
Non-compete agreements |
|
|
|
|
|
|
|
|
|
| ||||
Patents |
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
| $ |
|
| $ |
|
| $ |
| |||
As of December 31, 2024 |
| Useful Lives |
| Cost |
|
| Accumulated Amortization |
|
| Net |
| |||
Technology, trademarks |
|
| $ |
|
| $ |
|
| $ |
| ||||
Trade names |
|
|
|
|
|
|
|
|
|
| ||||
Websites |
|
|
|
|
|
|
|
|
|
| ||||
Customer relationships |
|
|
|
|
|
|
|
|
|
| ||||
Sublicense agreements |
|
|
|
|
|
|
|
|
|
| ||||
Non-compete agreements |
|
|
|
|
|
|
|
|
|
| ||||
Patents |
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
| $ |
|
| $ |
|
| $ |
| |||
| 10 |
| Table of Contents |
Total amortization expense was $
Estimated future fiscal year amortization expense of intangible assets as of March 31, 2025, is as follows:
As of March 31, 2025 |
| Amount |
| |
Remainder of year ending 2025 |
| $ |
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 |
|
|
| |
Thereafter |
|
|
| |
Total |
| $ |
| |
6. Commitment and Contingencies
Legal Matters
During the normal course of business, the Company may be named from time to time as a party to claims and litigations arising in the ordinary course of business. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with ASC 450, Contingencies. Litigation and contingency accruals are based on our assessment, including advice of legal counsel, regarding the expected outcome of litigation or other dispute resolution proceedings. If the Company determines that an unfavorable outcome is probable and can be reasonably assessed, it establishes the necessary accruals. As of March 31, 2025 and December 31, 2024, the Company is not aware of any contingent legal liabilities that should be reflected in the consolidated financial statements.
Leases
The Company’s approximate future minimum rental payments under all operating leases as of March 31, 2025, were as follows:
As of March 31, 2025: |
| Amount |
| |
Remainder of fiscal year ending 2025 |
| $ |
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
Total future minimum payments |
| $ |
| |
Less: Imputed interest |
|
| ( | ) |
Total Present Value of Operating Lease Liabilities |
| $ |
| |
| 11 |
| Table of Contents |
7. Stockholders’ Equity
Issuance of Common Stock and Warrants
On January 17, 2024, the Company completed the last closing of its sale of securities pursuant to the Securities Purchase Agreement (the “2024 Purchase Agreement”) entered on December 13, 2023, as filed in the Company’s Form 8-K on December 15, 2023. At this closing,
As an incentive to certain 2024 Investors of the Company who participated in previous private placements (“Existing Investors”) and received as part of those financings, warrants (“Outstanding Warrants”) to purchase shares of Common Stock, the Company agreed that if any Existing Investor were to purchase 2024 Units at a certain level in the 2024 Offering, the Company would reduce the exercise price of the Outstanding Warrants held by such Existing Investor to $
Salary for Equity Incentive Options
On April 1, 2024 and May 17, 2024, as part of the Company’s strategic initiatives to reduce operating costs and conserve cash for operations, the Company offered a voluntary Salary/Compensation Waiver Program pursuant to which each director, officer and employee of the Company and its subsidiaries could elect to waive a portion of his or her salary/compensation for twelve months and receive instead options to purchase shares of Common Stock of the Company (the “stock options”). Under this program, the Company issued
Equity Cancel and Replacement Options
On April 1, 2024, as part of the Company’s strategic initiatives to incentivize current employees, the Company entered into a cancellation and replacement agreement regarding certain out-of-the money outstanding employee stock options (the “replacement stock options”), whereby employees surrendered out-of-the-money outstanding stock options (“cancelled option awards") and the Company granted replacement stock options in the same number, having an exercise price of $
Board of Director Stock Options
On April 12, 2024, the Board of Directors of the Company (the “Board”) appointed Michael Blechman (“Mr. Blechman”) as (i) a Class B Director of the Company, (ii) a member of the Board’s audit committee, (iii) a member of the Board’s compensation committee, and (iv) the Chair and a member of the Company’s Nominating Committee. On May 17, 2024, in connection with such appointment, the Company granted and issued to Mr. Blechman stock options to purchase
| 12 |
| Table of Contents |
On July 1, 2024, the Company granted and issued stock options to purchase
On July 1, 2024, the Company granted and issued stock options to purchase
8. Loss Per Common Share
The Company presents the computation of earnings per share (“EPS”) on a basic basis. Basic EPS is computed by dividing net income or loss by the weighted average number of shares outstanding during the reported period. Diluted EPS is computed similarly to basic EPS, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential additional common shares that were dilutive had been issued. Common shares are excluded from the calculation if they are determined to be anti-dilutive. The following table sets forth the weighted average number of common shares outstanding for each period presented.
|
| For the three months ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Weighted average number of common shares outstanding |
|
|
|
|
|
| ||
Effect of dilutive securities: |
|
|
|
|
|
| ||
Weighted average number of common shares outstanding |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Basic and Diluted loss per common share: |
| $ | ( | ) |
| $ | ( | ) |
Approximately
Approximately
| 13 |
| Table of Contents |
9. Related Parties
Consulting Agreements
During the three months ended March 31, 2025, and March 31, 2024, respectively, the Company paid $
10. Segment Information and Concentration
The Company views its operations as two operating segments: the manufacture and marketing of standard benchtop laboratory equipment for research in university, hospital and industrial laboratories sold primarily through laboratory equipment distributors and laboratory and pharmacy balances and scales (“Benchtop Laboratory Equipment Operations”), and the manufacture, design, and marketing of bioprocessing systems and products (“Bioprocessing Systems”). The Company also has included a non-operating Corporate segment. All inter-segment revenues are eliminated.
Three Months Ended March 31, 2025 |
| Benchtop Laboratory Equipment |
|
| Bioprocessing Systems |
|
| Corporate and Other |
|
| Consolidated |
| ||||
Revenues |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Foreign Sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income (Loss) From Operations |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |
Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Long-Lived Asset Expenditures |
|
|
|
|
| - |
|
|
|
|
|
|
| |||
Depreciation and Amortization |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Three Months Ended March 31, 2024 |
| Benchtop Laboratory Equipment |
|
| Bioprocessing Systems |
|
| Corporate and Other |
|
| Consolidated |
| ||||
Revenues |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Foreign Sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income (Loss) From Operations |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |
Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Long-Lived Asset Expenditures |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and Amortization |
|
|
|
|
|
|
|
| - |
|
|
|
| |||
Segment information is reported as follows.
For the three months ending March 31, 2025, two customers accounted for approximately
| 14 |
| Table of Contents |
A reconciliation of the Company’s consolidated segment income (loss) from operations to consolidated loss from operations before income taxes and net loss for the three months ended March 31, 2025 and 2024, respectively are as follows:
Three Months Ended March 31, 2025 |
| Benchtop Laboratory Equipment |
|
| Bioprocessing Systems |
|
| Corporate and Other |
|
| Consolidated |
| ||||
Income (Loss from Operations) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income, net |
|
| ( | ) |
|
|
|
|
|
|
|
|
| |||
Interest income |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total other income, net |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from operations before operations and income taxes |
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |
Three Months Ended March 31, 2024 |
| Benchtop Laboratory Equipment |
|
| Bioprocessing Systems |
|
| Corporate and Other |
|
| Consolidated |
| ||||
Income (Loss from Operations) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net |
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | ||
Interest income |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total other income, net |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from operations before operations and income taxes |
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |
11. Subsequent Events
On April 18, 2025, the Company entered into a Securities Purchase Agreement (the “2025 Purchase Agreement”) with certain investors (the “2025 Investors”) pursuant to which the Company sold in a private placement (the “Private Placement”), and the Investors purchased, an aggregate of
Each 2025 Warrant is exercisable for the purchase of one share of Common Stock at an exercise price of $
| 15 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking statements. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024. Certain statements contained in this report are not based on historical facts, but are forward-looking statements that are based upon various assumptions about future conditions. Actual events in the future could differ materially from those described in the forward-looking statements. Numerous unknown factors and future events could cause such differences, including but not limited to, product demand, market acceptance, success of marketing strategy, success of expansion efforts, impact of competition, adverse economic conditions, and other factors affecting the Company’s business that are beyond the Company’s control, which are discussed elsewhere in this report. Consequently, no forward-looking statement can be guaranteed. The Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. Throughout this Quarterly Report on Form 10-Q, the terms the “Company,” “Scientific,” “we,” “our” or “us,” refer to Scientific Industries, Inc. and its subsidiaries on a consolidated basis, unless stated or the context implies otherwise.
Overview.
Scientific Industries, Inc., a Delaware corporation (“SI” and along with its subsidiaries, the “Company”, “we”, “our”), is engaged in the design, manufacture, and marketing of standard benchtop laboratory equipment (“Benchtop Laboratory Equipment”), and through its wholly-owned subsidiary, Scientific Bioprocessing Holdings, Inc., a Delaware corporation (“SBHI”), the design, manufacture, and marketing of bioprocessing systems and products (“Bioprocessing Systems”). SBHI has two wholly-owned subsidiaries – Scientific Bioprocessing, Inc., a Delaware corporation (“SBI”), and aquila biolabs GmbH, a German corporation (“Aquila”). The Company’s products are used primarily for research purposes by universities, pharmaceutical companies, pharmacies, national laboratories, medical device manufacturers, and other industries performing laboratory-scale research. The Company’s results reflect those of the Benchtop Laboratory Equipment Operations and the Bioprocessing Systems Operations and its corporate operation.
Results of Operations.
The Company realized a loss from continuing operations before income tax expense of $1,778,500 for the three months ended March 31, 2025 compared to a $2,051,600 loss from continuing operations before income tax expense for the three months ended March 31, 2024, primarily due to cost cutting initiatives in the Bioprocessing Systems Operations segment which were initiated at the beginning of the second quarter of the fiscal year ended December 31, 2024 (“fiscal 2024”).
Revenue
Net revenues for the three months ended March 31, 2025 decreased $77,000 (3.1%) to $2,406,500 from $2,483,500 for the three months ended March 31, 2024, primarily due to a $182,600 decrease in the Bioprocessing Systems Operations revenues, which was offset by an increase of $105,600 in the Benchtop Laboratory Equipment Operations in both sales of Genie and Torbal divisions’ products.
Gross profit
The gross profit percentage for the three months ended March 31, 2025, and 2024, was 42.2% and 41.9%, respectively. The increase is due primarily to higher gross margin percentage in the Bioprocessing Systems Operations.
General and administrative
General and administrative expenses for the three months ended March 31, 2025, and 2024, were $1,251,300 and $1,521,800, respectively. The decrease of $270,500 (17.8%) is due primarily to decreased employee-related costs associated with a reduction in force in the Bioprocessing Systems Operations during the second quarter of fiscal 2024.
Selling
Selling expenses for the three months ended March 31, 2025 and 2024, were $924,200 and $897,800, respectively. The increase of $26,400 (2.9%) is due primarily to commissions incurred by the Laboratory Equipment Operations.
| 16 |
| Table of Contents |
Research and development
Research and development expenses for the three months ended March 31, 2025, and 2024, were $652,000 and $710,700, respectively. The decrease of $58,700 (8.3%) is due primarily to the reduction of research and development expenditures in the Bioprocessing Systems Operations.
Other income, net
Other income, net, for the three months ended March 31, 2025 and 2024, were $32,400 and $37,900, respectively. The decrease is due primarily to the decrease in interest income.
Income tax
Income tax for the three months ended March 31, 2025, and 2024, was $0 and $0, respectively. The Company maintains a full valuation allowance of $10,512,500 against its consolidated net deferred tax asset as the Company determined the net deferred tax assets, which includes net operating loss carry-forwards and other tax credits, are not more likely than not to be realized in the future.
Liquidity and Capital Resources.
Our primary sources of liquidity are existing cash and cash equivalents, and cash generated from operating activities of the Benchtop Laboratory Equipment Operations. We assess our liquidity in terms of our ability to generate cash to fund our short and long-term cash requirements. For the three months ending March 31, 2025, the Company generated negative cash flows from operations of $1,331,300 and has an accumulated deficit of $35,709,900 as of March 31, 2025. We believe that our operating cash flow derived primarily from the Benchtop Laboratory Operations, our cash and investment securities on hand, the availability of our line of credit and latest financing efforts are not sufficient to fund our cash requirements over the next twelve months. The accompanying unaudited condensed financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The following table discloses our cash flows for the periods presented:
|
| For the three months ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Net cash used in operating activities |
| $ | (1,331,100 | ) |
| $ | (1,565,100 | ) |
Net cash provided in investing activities |
|
| 1,204,000 |
|
|
| 480,600 |
|
Net cash provided in financing activities |
|
| - |
|
|
| 645,700 |
|
Effect of changes in foreign currency exchange rates |
|
| 9,300 |
|
|
| (5,600 | ) |
Decrease in cash and cash equivalents |
|
| (117,800 | ) |
|
| (444,400 | ) |
Net cash used in operating activities was $1,331,100 for the three months ended March 31, 2025 compared to $1,565,100 for the three months ended March 31, 2024. The net change of $234,000 is primarily due to a lower net loss in March 31, 2025.
Net cash provided by investing activities was $1,204,000 for the three months ended March 31, 2025 compared to $480,600 provided in the three months ended March 31, 2024. The net increase of $723,400 is primarily due to the net redemption of investment securities in the three months ended March 31, 2025.
Net cash provided by financing activities was zero for the three months ended March 31, 2025 compared to $645,700 for the three months ended March 31, 2024. The net change of $645,700, is primarily due to the issuance of common stock in the three months ended March 31, 2024.
| 17 |
| Table of Contents |
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires us to make judgments, assumptions, and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. “Note 2-Summary of significant accounting policies” to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 Form 10-K”) describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. Our critical accounting estimates are identified in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our fiscal 2024 Form 10-K. Such accounting policies and estimates require significant judgments and assumptions to be used in the preparation of the consolidated financial statements, and actual results could differ from our assumptions and estimates, and such differences could be material.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, our management, with the participation and supervision of our Chief Executive Officer and Chief Financial Officer, have evaluated the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and that we are required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. Based on the evaluation of our disclosure controls and procedures and internal controls over financial reporting as of March 31, 2025, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective. Our management has concluded that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the periods disclosed in accordance with U.S. GAAP.
Changes in Internal Controls Over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 18 |
| Table of Contents |
PART II – OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 1A. Risk Factors
Not required for smaller reporting companies.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Refer to Current Report on Form 8-K filed with the SEC on April 22, 2025 as incorporated by reference for recent sales of unregistered securities.
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Mine Safety Disclosures
Not applicable
ITEM 5. Other Information
None
| 19 |
| Table of Contents |
ITEM 6. Exhibits
| 20 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of Section13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SCIENTIFIC INDUSTRIES, INC. (Registrant) | ||
|
|
|
|
Date: May 13, 2025 | By: | /s/ Helena R. Santos | |
|
| Helena R. Santos |
|
|
| President, Chief Executive Officer, and Treasurer |
|
| SCIENTIFIC INDUSTRIES, INC. (Registrant) | ||
|
|
|
|
Date: May 13, 2025 | By: | /s/ Nicholas Lavacca | |
|
| Nicholas Lavacca |
|
|
| Chief Financial Officer |
|
| 21 |