Scientific Industries Inc 10-Q for FY2022 Q1

Scientific Industries Inc (SCND)

10-Q 2022-05-16 For: 2022-03-31

Added on April 06, 2026

About this 10-Q

Scientific Industries Inc filed this 10-Q on May 16, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.86M; up 14.2% from $2.51M a year earlier
Net loss: $1.54M; compared with a net loss of $1.44M 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)	3

	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	7

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20

Item 4.	CONTROLS AND PROCEDURES	22

PART II - Other Information

Item 6.	EXHIBITS AND REPORTS ON FORM 8-K	23

SIGNATURE		24

	March 31, 2022			June 30, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	4,068,000		$	9,675,200
Investment securities		7,768,600			3,744,600
Trade accounts receivable, less allowance for doubtful accounts of $15,600 at March 31, 2022 and June 30, 2021		1,712,900			1,294,700
Inventories		4,367,900			2,977,100
Income tax receivable		161,100			333,300
Prepaid expenses and other current assets		312,800			350,900
Assets of discontinued operations		600			55,300
Total current assets		18,391,900			18,431,100

Property and equipment, net		566,900			412,600
Goodwill		4,395,400			4,395,400
Other intangible assets, net		2,216,300			2,557,800
Deferred taxes		3,445,300			2,489,900
Operating lease right-of-use assets		1,448,600			665,300
Other assets		62,400			54,300

Total assets	$	30,526,800		$	29,006,400

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,051,100		$	453,500
Accrued expenses		661,100			633,500
Contingent consideration		117,500			136,600
Bank overdraft		40,600			321,700
Lease liabilities, current portion		124,300			270,500
Paycheck Protection Program loan		-			433,800
Liabilities of discontinued operations		7,900			37,200
Total current liabilities		2,002,500			2,286,800

Contingent consideration payable, less current portion		-			23,400
Lease liabilities, less current portion		1,388,100			460,500
Other long-term liabilities		-			10,900

Total liabilities		3,390,600			2,781,600

Shareholders’ equity:
Common stock, $0.05 par value; 20,000,000 and 15,000,000 shares authorized; 7,023,401 and 6,477,945 shares issued; 7,003,599 and 6,458,143 shares outstanding at March 31, 2022 and June 30, 2021		351,200			324,000
Additional paid-in capital		31,233,600			26,613,500
Accumulated comprehensive loss		(104,800	)		(9,200	)
Accumulated deficit		(4,291,400	)		(651,100	)
		27,188,600			26,277,200
Less common stock held in treasury at cost, 19,802 shares		52,400			52,400
Total shareholders’ equity		27,136,200			26,224,800

Total liabilities and shareholders’ equity	$	30,526,800		$	29,006,400

	For the Three Month Period Ended March 31,			For the Three Month Period Ended March 31,			For the Nine Month Period Ended March 31,			For the Nine Month Period Ended March 31,
	2022			2021			2022			2021

Revenues	$	2,864,900		$	2,508,600		$	8,623,500		$	7,245,100

Cost of revenues		1,318,300			1,145,700			4,154,600			3,419,400

Gross profit		1,546,600			1,362,900			4,468,900			3,825,700

Operating expenses:
General and administrative		1,610,400			1,385,600			4,442,300			2,441,700
Selling		1,054,000			1,386,100			2,996,800			2,658,900
Research and development		624,500			450,000			2,141,300			1,024,000

Total operating expenses		3,288,900			3,221,700			9,580,400			6,124,600

Loss from operations		(1,742,300	)		(1,858,800	)		(5,111,500	)		(2,298,900	)

Other income (expense):
Other income (expense), net		(102,700	)		6,100			363,500			22,300
Interest income		400			22,500			49,800			71,400
Total other income (expense), net		(102,300	)		28,600			413,300			93,700

Loss from continuing operations before income tax benefit		(1,844,600	)		(1,830,200	)		(4,698,200	)		(2,205,200	)

Income tax benefit, current		(95,100	)		-			(95,100	)		-
Income tax benefit, deferred		(222,100	)		(378,200	)		(959,400	)		(472,300	)
Total income tax benefit		(317,200	)		(378,200	)		(1,054,500	)		(472,300	)

Loss from continuing operations		(1,527,400	)		(1,452,000	)		(3,643,700	)		(1,732,900	)

Discontinued operations (Note 9):

Gain (loss) from discontinued operations, net of tax		(7,600	)		16,400			3,400			(578,500	)

Net loss	$	(1,535,000	)	$	(1,435,600	)	$	(3,640,300	)	$	(2,311,400	)

Comprehensive loss:

Unrealized holding loss on investment securities, net of tax		(4,700	)		-			(5,100	)		-
Foreign currency translation adjustment		(194,500	)		-			(90,500	)		-
Comprehensive loss		(199,200	)		-			(95,600	)		-

Total comprehensive loss	$	(1,734,200	)	$	(1,435,600	)	$	(3,735,900	)	$	(2,311,400	)

Basic loss per common share:

Continuing operations	$	(0.23	)	$	(0.51	)	$	(0.56	)	$	(0.61	)
Discontinued operations	$	(0.00	)	$	0.01		$	0.00		$	(0.20	)
Consolidated operations	$	(0.23	)	$	(0.50	)	$	(0.56	)	$	(0.81	)

	Common Stock				Additional		Accumulated Other Comprehensive						Treasury Stock				Total
	Shares		Amount		Paid-in Capital		Income (Loss)			Accumulated Deficit			Shares		Amount		Stockholders' Equity

Balance 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

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

Net loss		-		-		-		-			(896,500	)		-		-		(896,500	)

Foreign currency translation adjustment		-		-		-		69,900			-			-		-		69,900

Unrealized holding gain on investment securities, net of tax		-		-		-		(2,600	)		-			-		-		(2,600	)

Stock-based compensation		-		-		591,000		-			-			-		-		591,000
Balance, December 31, 2021		6,477,945		324,000		27,879,900		94,400			(2,756,400	)		19,802		52,400		25,489,500

Net loss		-		-		-		-			(1,535,000	)		-		-		(1,535,000	)

Issuance of Common Stock and Warrants, net of issuance costs		545,456		27,200		2,700,000		-			-			-		-		2,727,200

Foreign currency translation adjustment		-		-				(194,500	)		-			-		-		(194,500	)

Unrealized holding loss on investment securities, net of tax		-		-		-		(4,700	)		-			-		-		(4,700	)

Stock-based compensation		-		-		653,700		-			-			-		-		653,700

Balance, March 31, 2022		7,023,401	$	351,200	$	31,233,600	$	(104,800	)	$	(4,291,400	)		19,802	$	52,400	$	27,136,200

	Common Stock				Additional Paid-in		Retained			Treasury Stock				Total Stockholders'
	Shares		Amount		Capital		Earnings			Shares		Amount		Equity

Balance July 1, 2020		2,881,065	$	144,100	$	8,608,300	$	3,021,400			19,802	$	52,400	$	11,721,400

Net loss		-		-		-		(263,300	)		-		-		(263,300	)

Stock-based compensation		-		-		61,300		-			-		-		61,300

Balance, September 30, 2020		2,881,065		144,100		8,669,600		2,758,100			19,802		52,400		11,519,400

Net loss		-		-		-		(612,500	)		-		-		(612,500	)

Stock-based compensation		-		-		76,100		-			-		-		76,100
Balance, December 31, 2020		2,881,065		144,100		8,745,700		2,145,600			19,802		52,400		10,983,000

Net loss		-		-		-		(1,435,600	)		-		-		(1,435,600	)

Stock-based compensation		-		-		1,292,000		-			-		-		1,292,000

Stock options exercised		1,000		100		2,900		-			-		-		3,000

Balance, March 31, 2021		2,882,065	$	144,200	$	10,040,600	$	710,000			19,802	$	52,400	$	10,842,400

	For the Nine Month Period March 31, 2022			For the Nine Month Period March 31, 2021
Operating activities:

Net loss	$	(3,640,300	)	$	(2,311,400	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss/(Gain) on sale of investments		11,100			(34,600	)
Unrealized holding loss on investments		102,800			18,900
Extinguishment of debt		(433,800	)		-
Depreciation and amortization		581,800			126,700
Deferred income taxes		(955,400	)		(652,300	)
Loss on disposal of subsidiary		-			405,400
Stock-based compensation		1,920,100			1,429,400
Change in fair value of contingent consideration		(42,500	)		(118,500	)
Changes in operating assets and liabilities:
Trade accounts receivable		(328,700	)		(758,500	)
Inventories		(1,383,900	)		(697,700	)
Carrying value of right of use assets		(783,300	)		87,700
Income tax receivable		172,200			(1,500	)
Prepaid and other current assets		(127,700	)		57,400
Accounts payable		585,500			142,600
Contract liabilities		796,100			(20,000	)
Lease liabilities		-			(51,000	)
Bank overdraft		(281,100	)		7,500
Other assets		107,100			-
Discontinued operations		25,400			-
Accrued expenses		(20,700	)		(222,600	)
Total adjustments		(55,000	)		(281,100	)
Net cash used in operating activities		(3,695,300	)		(2,592,500	)

Investing activities:

Redemption of investment securities		1,278,500			1,631,000
Purchase of investment securities		(5,422,700	)		(6,609,200	)
Proceeds from sale of assets of discontinued operations		-			440,000
Capital expenditures		(337,400	)		(183,700	)
Purchase of other intangible assets		(67,000	)		(41,200	)
Net cash used in investing activities		(4,548,600	)		(4,763,100	)

Financing activities:

Proceeds from issuance of common stock		3,000,000			-
Issuance costs of common stock and warrants		(272,800	)		-
Payments of contingent consideration		-			(13,400	)
Proceeds from Payroll Protection Program		-			433,800
Proceeds from stock options exercised		-			3,000
Net cash provided by financing activities		2,727,200			423,400

Effect of changes in foreign currency exchange rates		(90,500	)		-

Net decrease in cash and cash equivalents		(5,607,200	)		(6,932,200	)
Cash and cash equivalents, beginning of year		9,675,200			7,559,700
Cash and cash equivalents, end of period	$	4,068,000		$	627,500

	For the Nine Month Period March 31, 2022		For the Nine Month Period March 31, 2021
SUPPLEMENTAL DISCLOSURES:

Cash paid during the period for:
Income taxes	$	-	$	2,500
Noncash financing activities:
Record right-of-use assets	$	941,300	$	-
Record lease liabilities	$	941,300	$	-

	Benchtop Laboratory Equipment		Bioprocessing Systems		Consolidated
Three Months Ended March 31, 2022:

Revenues	$	2,434,600	$	430,300	$	2,864,900

Foreign Sales		783,600		269,700		1,053,300

	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate And Other			Consolidated
Three Months Ended March 31, 2022:

Revenues	$	2,434,600	$	430,300		$	-		$	2,864,900

Foreign Sales		783,600		269,700			-			1,053,300

Income (Loss) From Operations		247,300		(1,651,700	)		(337,900	)		(1,742,300	)

Assets		10,231,100		10,024,261			10,271,439			30,526,800

Long-Lived Asset Expenditures		16,500		158,000			-			174,500

Depreciation and Amortization		24,600		229,900			-			254,500

	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate And Other			Consolidated
Nine Months Ended March 31, 2022:

Revenues	$	7,465,700	$	1,157,800		$	-		$	8,623,500

Foreign Sales		2,814,700		791,200			-			3,605,900

Income (Loss) From Operations		1,107,000		(5,091,300	)		(1,127,200	)		(5,111,500	)

Assets		10,231,100		10,024,261			10,271,439			30,526,800

Long-Lived Asset Expenditures		83,100		321,300			-			404,400

Depreciation and Amortization		71,200		510,600			-			581,800

	Fair Value at		Fair Value Measurements Using Inputs Considered as
	March 31, 2022		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	4,068,000	$	4,068,000	$	-	$	-
Investment securities		7,768,600		6,796,500		972,100		-

Total	$	11,836,600	$	10,864,500	$	972,100	$	-

Liabilities:
Contingent consideration	$	117,500	$	-	$	-	$	117,500

	Cost		Fair Value		Unrealized Holding Gain (Loss)
At March 31, 2022:
Equity securities	$	118,900	$	176,900	$	58,000
Mutual funds		6,708,300		6,619,600		(88,700	)
Debt securities		977,200		972,100		(5,100	)
	$	7,804,400		7,768,600		(35,800	)

	March 31, 2022		June 30, 2021
Raw materials	$	3,058,100	$	2,170,400
Work-in-process		106,400		39,600
Finished goods		1,203,400		767,100
	$	4,367,900	$	2,977,100

	Useful Lives	Cost		Accumulated Amortization		Net
At March 31, 2022:
Technology, trademarks	5-10 yrs.	$	817,000	$	431,800	$	385,200
Trade names	3-6 yrs.		140,000		140,000		-
Websites	3-7 yrs.		210,000		210,000		-
Customer relationships	4-10 yrs.		372,200		133,100		239,100
Sublicense agreements	10 yrs.		294,000		294,000		-
Non-compete agreements	4-5 yrs.		1,060,500		455,300		605,200
In-process research and development	3-5 yrs.		917,600		249,600		668,000
Patents	5-7 yrs.		593,000		274,200		318,800

		$	4,404,300	$	2,188,000	$	2,216,300

Fiscal year ending June 30,	Amount
Remainder of 2022	$	82,200
2023		311,400
2024		247,600
2025		255,000
2026		262,700
Thereafter		609,600
Total future minimum payments		1,768,500
Less imputed interest		(256,100	)
Total Present Value of Operating Lease Liabilities	$	1,512,400

	Three Months Ended					Nine Months Ended
	March 31,2022			March 31,2021		March 31,2022		March 31,2021
Revenues	$	-		$	107,800	$	20,600	$	387,700
Cost of goods sold		6,900			78,800		10,300		458,500
Gross profit (loss)		(6,900	)		29,000		10,300		(70,800	)
Selling, general and administrative expenses		700			12,600		2,900		282,200
Income (loss) from operations		(7,600	)		16,400		7,400		(353,000	)
Loss on disposal		-			-		-		(405,400	)
Income (loss) before income tax benefit		(7,600	)		16,400		7,400		(758,400	)
Income tax expense (benefit)		-			-		4,000		(179,900	)
Net income (loss) attributable to discontinued operations	$	(7,600	)	$	16,400	$	3,400	$	(578,500	)

	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
In-process research and development		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 Acting Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.		Certification of Chief Executive Officer and Acting Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

		SCIENTIFIC INDUSTRIES, INC. (Registrant)

Date: May 16, 2022		/s/ Helena R. Santos
		Helena R. Santos President, Chief Executive Officer, Acting Chief Financial Officer and Treasurer