Scientific Industries Inc 10-Q, filed Feb 16, 2022

Scientific Industries Inc (SCND)

10-Q 2022-02-16 For: 2021-12-31

Added on April 06, 2026

About this 10-Q

Scientific Industries Inc filed this 10-Q on February 16, 2022, covering the quarter ended December 31, 2021.

Headline figures

Quarter ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.9M; up 6.9% from $2.72M a year earlier
Net loss: $896.5K; compared with a net loss of $612.5K a year earlier

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

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	8

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19

Item 4.	CONTROLS AND PROCEDURES	21

PART II - Other Information

Item 6.	EXHIBITS AND REPORTS ON FORM 8-K	22

SIGNATURE		23

	December 31, 2021			June 30, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	4,297,000		$	9,675,200
Investment securities		6,873,500			3,744,600
Trade accounts receivable, less allowance for doubtful accounts of $15,600 at December 31, 2021 and June 30, 2021		1,344,800			1,294,700
Inventories		3,615,000			2,977,100
Income tax receivable		66,000			333,300
Prepaid expenses and other current assets		580,600			350,900
Assets of discontinued operations		10,500			55,300
Total current assets		16,787,400			18,431,100

Property and equipment, net		522,600			412,600
Goodwill		4,395,400			4,395,400
Other intangible assets, net		2,350,400			2,557,800
Deferred taxes		3,223,200			2,489,900
Operating lease right-of-use assets		1,511,000			665,300
Other assets		62,500			54,300

Total assets	$	28,852,500		$	29,006,400

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	914,800		$	453,500
Accrued expenses		601,600			633,500
Contingent consideration		100,000			136,600
Bank overdraft		158,300			321,700
Lease liabilities, current portion		175,700			270,500
Paycheck Protection Program loan		-			433,800
Liabilities of discontinued operations		13,200			37,200
Total current liabilities		1,963,600			2,286,800

Contingent consideration payable, less current portion		-			23,400
Lease liabilities, less current portion		1,399,400			460,500
Other long-term liabilities		-			10,900

Total liabilities		3,363,000			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 December 31, 2021 and June 30, 2021		324,000			324,000
Additional paid-in capital		27,879,900			26,613,500
Accumulated comprehensive gain (loss)		94,400			(9,200	)
Accumulated deficit		(2,756,400	)		(651,100	)
		25,541,900			26,277,200
Less common stock held in treasury at cost, 19,802 shares		52,400			52,400
Total shareholders’ equity		25,489,500			26,224,800

Total liabilities and shareholders’ equity	$	28,852,500		$	29,006,400

	For the Three Month Period Ended December 31,			For the Three Month Period Ended December 31,			For the Six Month Period Ended December 31,			For the Six Month Period Ended December 31,
	2021			2020			2021			2020

Revenues	$	2,904,200		$	2,717,400		$	5,758,600		$	4,736,500

Cost of revenues		1,495,400			1,311,300			2,836,300			2,273,700

Gross profit		1,408,800			1,406,100			2,922,300			2,462,800

Operating expenses:
General and administrative		1,366,200			536,900			2,831,900			1,056,100
Selling		1,007,100			778,900			1,942,800			1,272,800
Research and development		880,300			329,700			1,516,800			574,000

Total operating expenses		3,253,600			1,645,500			6,291,500			2,902,900

Loss from operations		(1,844,800	)		(239,400	)		(3,369,200	)		(440,100	)

Other income:
Other income, net		496,800			18,200			466,200			16,200
Interest income		26,700			35,300			49,400			48,900
Total other income, net		523,500			53,500			515,600			65,100

Loss from continuing operations before income tax benefit		(1,321,300	)		(185,900	)		(2,853,600	)		(375,000	)

Income tax benefit, deferred		(414,700	)		(47,600	)		(737,300	)		(94,100	)

Loss from continuing operations		(906,600	)		(138,300	)		(2,116,300	)		(280,900	)

Discontinued operations (Note 9):

Gain (loss) from discontinued operations, net of tax		10,100			(474,200	)		11,000			(594,900	)

Net loss		(896,500	)		(612,500	)		(2,105,300	)		(875,800	)

Comprehensive gain (loss):
Unrealized holding loss on investment securities, net of tax		(2,600	)		-			(400	)		-
Foreign currency translation adjustment		69,900			-			104,000			-
Comprehensive gain		67,300			-			103,600			-

Total comprehensive loss	$	(829,200	)	$	(612,500	)	$	(2,001,700	)	$	(875,800	)

Basic loss per common share

Continuing operations	$	(.14	)	$	(.05	)	$	(.33	)	$	(.10	)
Discontinued operations	$	.00		$	(.17	)	$	.00		$	(.21	)
Consolidated operations	$	(.14	)	$	(.22	)	$	(.33	)	$	(.31	)

							Accumulated
	Common Stock				Additional Paid-in		other Comprehensive Income			Retained Earnings (Accumulated			Treasury Stock				Total Shareholders’
	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

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

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

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

Stock-based compensation		-		-		591,000		-			-			-		-		591,000

Balances, December 31, 2021		6,477,945	$	324,000	$	27,879,900	$	94,400		$	(2,756,400	)		19,802	$	52,400	$	25,489,500

					Additional									Total
	Common Stock				Paid-in		Retained			Treasury Stock				Shareholders’
	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

	For the Six Month Period Ended December 31,			For the Six Month Period Ended December 31,
	2021			2020
Operating activities:
Net loss	$	(2,105,300	)	$	(875,800	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on sale of investments		(4,000	)		(33,300	)
Unrealized holding loss on investments		32,600			25,700
Extinguishment of debt		(433,800	)		-
Depreciation and amortization		327,300			83,000
Deferred income taxes		(733,300	)		(274,000	)
Loss on disposal of subsidiary		-			405,400
Stock-based compensation		1,266,400			137,400
Change in fair value of contingent consideration		(60,000	)		-
Changes in operating assets and liabilities:
Trade accounts receivable		(50,100	)		(490,500	)
Inventories		(637,900	)		(53,500	)
Carrying value of right of use assets		(1,600	)		9,800
Income tax receivable		267,300			1,200
Prepaid and other current assets		(229,700	)		(205,600	)
Accounts payable		461,300			266,900
Contract liabilities		-			(20,000	)
Bank overdraft		(163,400	)		181,900
Other assets		(8,200	)		-
Discontinued operations		20,800			-
Other long-term liabilities		(10,900	)		-
Accrued expenses and taxes		(31,900	)		(376,400	)
Total adjustments		10,900			(342,000	)

Net cash used in operating activities		(2,094,400	)		(1,217,800	)

Investing activities:

Redemption of investment securities		844,300			544,800
Purchase of investment securities		(4,001,200	)		(5,990,200	)
Proceeds from sale of discontinued operations		-			342,400
Capital expenditures		(163,400	)		(82,900	)
Purchase of other intangible assets		(66,500	)		(31,300	)
Net cash used in investing activities		(3,386,800	)		(5,217,200	)

Financing activities:

Payments of contingent consideration		-			(13,400	)

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

Effect of changes in foreign currency exchange rates		103,000			-

Net decrease in cash and cash equivalents		(5,378,200	)		(6,448,400	)
Cash and cash equivalents, beginning of year		9,675,200			7,559,700
Cash and cash equivalents, end of period	$	4,297,000		$	1,111,300

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 December 31, 2021:

Revenues	$	2,501,300	$	402,900	$	2,904,200

Foreign Sales		959,300		430,000		1,389,300

	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate And Other			Consolidated
Three Months Ended December 31, 2021:

Revenues	$	2,501,300	$	402,900		$	-		$	2,904,200

Foreign Sales		959,300		430,000			-			1,389,300

Income (Loss) From Operations		290,100		(1,890,700	)		(244,200	)		(1,844,800	)

Assets		9,715,400		10,064,500			9,072,600			28,852,500

Long-Lived Asset Expenditures		32,800		148,200			-			181,000

Depreciation and Amortization		23,800		138,400			-			162,200

	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate And Other			Consolidated
Six Months Ended December 31, 2021:

Revenues	$	5,031,100	$	727,500		$	-		$	5,758,600

Foreign Sales		2,031,100		521,500			-			2,552,600

Income (Loss) From Operations		851,700		(3,712,700	)		(508,200	)		(3,369,200	)

Assets		9,715,400		10,064,500			9,072,600			28,852,500

Long-Lived Asset Expenditures		66,600		163,300			-			229,900

Depreciation and Amortization		46,600		280,700			-			327,300

	Fair Value at		Fair Value Measurements Using Inputs Considered as
	December 31, 2021		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	4,297,000	$	4,297,000	$	-	$	-
Investment securities		6,873,500		6,873,500		-		-

Total	$	11,170,500	$	11,170,500	$	-	$	-

Liabilities:
Contingent consideration	$	100,000	$	-	$	-	$	100,000

	Cost		Fair Value		Unrealized Holding Gain (Loss)
At December 31, 2021:
Equity securities	$	119,500	$	178,900	$	59,400
Mutual funds		6,705,700		6,694,600		(11,100	)

	$	6,825,200	$	6,873,500	$	48,300

	December 31, 2021		June 30, 2021
Raw materials	$	2,372,500	$	2,170,400
Work-in-process		94,300		39,600
Finished goods		1,148,200		767,100
	$	3,615,000	$	2,977,100

	Useful Lives	Cost		Accumulated Amortization		Net
At December 31, 2021:
Technology, trademarks	5-10 yrs.	$	817,000	$	412,800	$	404,200
Trade names	3-6 yrs.		140,000		140,000		-
Websites	3-7 yrs.		210,000		210,000		-
Customer relationships	4-10 yrs.		372,200		122,800		249,400
Sublicense agreements	10 yrs.		294,000		294,000		-
Non-compete agreements	4-5 yrs.		1,060,500		406,400		654,100
In-process research and development	3-5 yrs.		918,600		209,200		709,400
Patents	5-7 yrs.		591,500		258,200		333,300

		$	4,403,800	$	2,053,400	$	2,350,400

	For the Three Month Period Ended December 31, 2021			For the Three Month Period Ended December 31, 2020			For the Six Month Period Ended December 31, 2021			For the Six Month Period Ended December 31, 2020

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

Basic loss per common share:

Continuing operations	$	(.14	)	$	(.05	)	$	(.33	)	$	(.10	)
Discontinued operations	$	.00		$	(.17	)	$	.00		$	(.21	)
Consolidated operations	$	(.14	)	$	(.22	)	$	(.33	)	$	(.31	)

Fiscal year ending June 30,	Amount
Remainder of 2022	$	164,200
2023		311,400
2024		247,600
2025		255,000
2026		262,700
Thereafter		609,600

Total future minimum payments	$	1,850,500
Less imputed interest		(275,400	)

Total Present Value of Operating Lease Liabilities	$	1,575,100

	Three Months Ended					Six Months Ended
	December 31, 2021		December 31, 2020			December 31, 2021		December 31, 2020

Revenues	$	19,400	$	142,700		$	20,600	$	279,900
Cost of goods sold		3,400		195,500			3,400		379,700
Gross profit		16,000		(52,800	)		17,200		(99,800	)
Selling, general and administrative expenses		1,900		181,300			2,200		269,600
Gain (loss) from operations		14,100		(234,100	)		15,000		(369,400	)
Loss on disposal		-		(405,400	)		-		(405,400	)
Income (loss) from operations before income tax benefit		14,100		(639,500	)		15,000		(774,800	)
Income tax expense, all deferred		4,000		165,300			4,000		179,900
Net income (loss) attributable to discontinued operations	$	10,100	$	(474,200	)	$	11,000	$	(594,900	)

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