8-K/A
SCIENTIFIC INDUSTRIES INC (SCND)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________
FORM 8-K/A
_________________________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
April 28, 2021
_________________________________________________
SCIENTIFIC INDUSTRIES, INC.
_________________________________________________
(Exact name of registrant as specified in its charter)
| Delaware | 000-6658 | 04-2217279 |
|---|---|---|
| (State<br>or other Jurisdiction) | (Commission<br>File Number) | (IRS<br>Employer No.) |
80 Orville Drive
Bohemia, New York 11716
__________________________________________________
(Address of principal executive offices)
(631) 567-4700
__________________________________________________
(Registrant's telephone number, including area code)
Not Applicable
__________________________________________________
(Former name or former address, if changed since last report)
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
As previously reported, on April 28, 2021, Scientific Bioprocessing Holdings, Inc. (“Bioprocessing”), a wholly-owned subsidiary of Scientific Industries, Inc. (the “Company), entered into an Agreement on the Sale and Transfer of all Shares in aquila biolabs GMBH (the “Acquisition Agreement”) with each of the owners (the “Sellers”) of the share capital of aquila biolabs GMBH (“aquila”) pursuant to which Bioprocessing agreed to purchase and the Sellers agreed to sell all the outstanding share capital of aquila (the “Acquisition”). The closing of the purchase and sale (the “Closing”) occurred on April 29, 2021. The aggregate consideration paid for the share capital of aquila was € 6,499,063 (US$7,880,114). The Acquisition Agreement contains customary conditions, representations, warranties, indemnities and covenants by, among, and for the benefit of the parties
This amendment to the Company's Report on Form 8-K filed on April 30, 2021 is being filed to provide the financial statements required in connection with Bioprocessing's acquisition on April 29, 2021 of all the shares in aquila from each of the Sellers. (See Item 9.01).
ITEM 9.01 Financial Statements and Exhibits
Financial Statements. The required financial statements of aquila are attached hereto.
(a)
Financial Statements and Notes of Business Acquired (Attached as Exhibit 99.1)
(b)
Pro forma financial information (attached as exhibit 99.2)
i.
Pro Forma Condensed Balance Sheet as of March 31, 2021
ii.
Pro Forma Condensed Statement of Operations for the nine months ended March 31, 2021and year ended June 30, 2020
(c) Exhibits
| Exhibit No. | Description |
|---|---|
| 4.1 | Form of<br>Warrant (1) |
| 4.2 | Registration<br>Rights Agreement by and among the Company and the Investors<br>(1) |
| 10.1 | Acquisition<br>Agreement by and among the Company and the Sellers (1) |
| 10.2 | Form of<br>Service Agreement (1) |
| 10.3 | Purchase<br>Agreement by and among the Company and the Investors<br>(1) |
| 99 | Financial<br>Statements: |
| 99.1 | Audited<br>Financial Statements of Business Acquired |
| 99.2 | The<br>unaudited Pro Forma Condensed Combined Financial<br>Statements |
(1)
– Previously filed with the Current Report on Form 8-K, dated April 30, 2021.
| 10.2 | Form of<br>Service Agreement (1) |
|---|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SCIENTIFIC INDUSTRIES, INC. | ||
|---|---|---|
| Date: July 12, 2021 | By: | /s/ Helena R. Santos |
| Helena R. Santos, | ||
| President and Chief Executive Officer |
exhibit_99.1
exhibit_992
Exhibit 99.2
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements are based on historical financial statements of Scientific Industries, Inc. (the “Company”) and Scientific Bioprocessing Holdings, Inc., (“Holdings”) a newly formed wholly-owned subsidiary of the Company which owns 100% of Scientific Bioprocessing, Inc. (“SBI”) and 100% of Aquila Biolabs GmbH (“Aquila”) after giving effect to the Company’s acquisition of Aquila through Holdings.
Effective April 29, 2021, Holdings consummated the acquisition of all of the outstanding capital stock of Aquila, a German bioprocessing company, for $7,880,100 in cash. The acquisition of Aquila was funded through the sale of the Company’s Common Stock and warrants as previously disclosed on current Form 8-k filed on April 30, 2021. The unaudited pro forma condensed consolidated balance sheet as of March 31, 2021 is presented as if the acquisition occurred on March 31, 2021. The unaudited pro forma condensed consolidated statement of operations for the year ended June 30, 2020 is presented as if the acquisition of Aquila had taken place on July 1, 2019. The unaudited pro forma condensed consolidated statements of operations for the nine months ended March 31, 2021 are presented as if the acquisition of Aquila had taken place on July 1, 2020.
In the unaudited pro forma condensed consolidated statements of operations, a provision for amortization of identified intangible assets including technology, patents, IPR&D, customer relationships, and non-compete agreements has been made. The amounts allocated to acquired assets and liabilities in the unaudited pro forma condensed consolidated financial statements are based on management’s valuation estimates.
The unaudited pro forma condensed consolidated financial statements also include certain purchase accounting adjustments, including items expected to have a continuing impact on the consolidated results, such as increased amortization expense on acquired intangible assets.
The unaudited pro forma condensed consolidated financial information reflecting the combination of the Company and Aquila is provided for informational purposes only. It is not intended to represent or be indicative of the consolidated results of the operations that would have been achieved if the acquisition had been completed as of the dates presented. In addition, the unaudited pro forma condensed consolidated financial information does not purport to project the future financial position or operating results of the condensed companies.
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes of the Company included in its annual report on Form 10-K and quarterly reports on Form 10-Q, and historical financial information of Aquila and accompanying notes included in Exhibit 99.1 of this report.
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2021
| Scientific<br>Industries, Inc.(Historical) | Aquila<br>Biolabs GmbH<br><br><br>(Historical) | Pro<br>Forma<br><br><br>Adjustments | Pro<br>Forma<br>Combined | |
|---|---|---|---|---|
| Assets | ||||
| Current<br>assets | ||||
| Cash and cash<br>equivalents | $627,500 | $97,200 | $- | 724,700 |
| Investment securities | 5,325,700 | 1,200 | (360,000) | 4,966,900 |
| Trade accounts<br>receivable, less allowance for doubtful accounts as of March 31,<br>2021 | 1,822,500 | 155,700 | - | 1,978,200 |
| Inventories | 2,885,200 | 179,000 | - | 3,064,200 |
| Income tax<br>receivable | 336,300 | - | - | 336,300 |
| Prepaid expenses<br>and other current assets | 62,600 | 23,000 | - | 85,600 |
| Total current<br>assets | 11,059,800 | 456,100 | (360,000) | 11,155,900 |
| Property and<br>equipment, net | 383,700 | 40,100 | - | 423,800 |
| Intangible assets,<br>net | 121,500 | - | 2,517,300 | 2,638,800 |
| Goodwill | 257,300 | - | 3,847,300 | 4,104,600 |
| Other<br>assets | 48,400 | - | - | 48,400 |
| Deferred<br>taxes | 1,189,400 | 3,200 | 1,858,800 | 3,051,400 |
| Operating lease<br>right-of-use assets | 715,600 | - | - | 715,600 |
| Total<br>assets | $13,775,700 | $499,400 | $7,863,400 | 22,138,500 |
| Liabilities<br>and Stockholders' Equity | ||||
| Current<br>liabilities | ||||
| Accounts<br>payable | $477,200 | $47,800 | $- | 525,000 |
| Accrued<br>expenses | 456,500 | 68,100 | - | 524,600 |
| Contract<br>liabilities | - | 15,900 | - | 15,900 |
| Contingent<br>consideration, current portion | 195,800 | - | - | 195,800 |
| Bank<br>overdraft | 50,600 | - | - | 50,600 |
| Operating lease<br>liabilities, current portion | 50,300 | - | - | 50,300 |
| Payroll Protection<br>Program loan, current portion | 563,800 | - | - | 563,800 |
| Total current<br>liabilities | 1,794,200 | 131,800 | - | 1,926,000 |
| Payroll Protection<br>Program loan, less current portion | 433,800 | - | - | 433,800 |
| Contingent<br>consideration payable, less current portion | 30,300 | - | - | 30,300 |
| Operating lease<br>liabilities, less current portion | 735,300 | - | - | 735,300 |
| Retention bonus<br>pay | - | - | 59,400 | 59,400 |
| Deferred tax<br>liability | - | - | 767,500 | 767,500 |
| Other Long-term<br>liabilities | - | 760,400 | - | 760,400 |
| Total<br>liabilities | 2,993,600 | 892,200 | 826,900 | 4,712,700 |
| Shareholders'<br>equity: | ||||
| Common<br>stock | 144,200 | 68,600 | - | 212,800 |
| Additional paid-in<br>capital | 10,040,600 | 2,226,100 | 4,349,000 | 16,615,700 |
| Retained<br>earnings | 649,800 | (2,687,500) | 2,687,500 | 649,800 |
| Less common stock<br>held in treasury at cost | (52,500) | - | - | (52,500) |
| Total stockholders'<br>equity | 10,782,100 | (392,800) | 7,036,500 | 17,425,800 |
| Total liabilities<br>and stockholders' equity | $13,775,700 | $499,400 | $7,863,400 | 22,138,500 |
All values are in US Dollars.
See accompanying notes to unaudited pro forma condensed consolidated financial statements
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For The Nine Months Ended March 31, 2021
| Scientific<br>Industries, Inc.(Historical) | Pro<br>Forma<br><br><br>Adjustment | Pro<br>Forma Combined | |
|---|---|---|---|
| Revenue | 7,245,100 | $- | 7,846,700 |
| Cost of<br>revenues | 3,419,400 | - | 3,520,600 |
| Gross<br>profit | 3,825,700 | - | 4,326,100 |
| Operating<br>expenses: | |||
| General<br>and administrative | 2,441,700 | 366,300 | 3,219,800 |
| Selling | 2,659,900 | - | 2,996,300 |
| Research<br>and development | 1,024,000 | - | 1,418,200 |
| Total<br>operating expenses | 6,124,700 | 366,300 | 7,634,300 |
| Loss from<br>operations | (2,299,000) | (366,300 | (3,308,200) |
| Other Income<br>(expense): | |||
| Other income<br>(expense), net | 22,300 | - | 3,300 |
| Interest<br>income | 71,500 | - | 74,600 |
| Total<br>other income (expense), net | 93,800 | - | 77,900 |
| Loss before income<br>tax (benefit) | (2,205,200) | (366,300) | (3,230.300) |
| Income tax<br>(benefit), deferred: | (482,100) | (115,400) | (597,500) |
| Net loss from<br>continuing operations | (1,723,100) | (250,900) | (2,632,800) |
| Net<br>loss | (1,723,100) | $(250,900) | (2,632,800) |
| Basic and diluted<br>income (loss)<br><br><br>per common<br>share: | |||
| Continuing<br>operations | (1.14) | (0.59) | |
| Consolidated<br>operations | (1.14) | (0.59) | |
| Weighted average<br>common shares, basic | 1,515,103 | 4,458,143 | |
| Weighted average<br>common shares outstanding | 1,515,103 | 4,458,143 |
All values are in US Dollars.
See accompanying notes to unaudited pro forma condensed consolidated financial statements
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For The Year Ended June 30, 2020
| Scientific<br>Industries, Inc.(Historical) | Pro<br>Forma<br><br><br>Adjustment | Pro<br>Forma Combined | |
|---|---|---|---|
| Revenue | 8,570,300 | $- | 9,346,400 |
| Cost of<br>revenues | 4,716,900 | - | 4,837,200 |
| Gross<br>profit | 3,853,400 | - | 4,509,200 |
| Operating<br>expenses: | |||
| General<br>and administrative | 2,412,300 | 782,700 | 3,541,700 |
| Selling | 1,436,400 | - | 1,810,400 |
| Research<br>and development | 1,140,000 | - | 1,486,800 |
| Total<br>operating expenses | 4,988,700 | 782,700 | 6,839,000 |
| Loss from<br>operations | (1,136,300) | (782,700) | (2,330,700) |
| Other Income<br>(expense): | |||
| Other income<br>(expense), net | (16,200) | - | (16,300) |
| Interest<br>income | 12,600 | - | 13,400 |
| Total<br>other income (expense), net | (3,600) | - | (2,900) |
| Loss before income<br>tax (benefit) | (1,139,900) | (782,700) | (2,330,600) |
| Income tax<br>(benefit), deferred: | (436,600) | (246,600) | (683,200) |
| Net<br>loss | (703,300) | $(536,100) | (1,650,400) |
| Basic earnings<br>(loss) per common share | (.46) | (0.37) | |
| Diluted earnings<br>(loss) per common share | (.46) | (0.37) | |
| Weighted average<br>common shares, basic | 1,515,103 | 4,458,143 | |
| Weighted average<br>common shares outstanding | 1,515,103 | 4,458,143 |
All values are in US Dollars.
See accompanying notes to unaudited pro forma condensed consolidated financial statements
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- Basis of Pro Forma Presentation
The unaudited pro forma condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States and pursuant to U.S. Securities and Exchange Commission Regulation S-X Article 11, and present the pro forma financial position and results of operations of the combined companies based upon the historical information after giving effect to the acquisition and adjustments described in these footnotes. The unaudited pro forma condensed consolidated balance sheet is presented as if the acquisition had occurred on March 31, 2021; and the unaudited pro forma condensed consolidated statements of operations for the year ended June 30, 2020 and the nine months ended March 31, 2021 are presented as if the acquisition had occurred on July 1, 2019.
The historical results of Aquila have been derived from its financial statements, as further described in “Accounting Periods Presented” in Note 2.
The unaudited pro forma condensed consolidated financial information does not reflect pro forma adjustments for ongoing cost savings that the Company expects to and/or has achieved as a result of the Aquila acquisition or the costs necessary to achieve these costs savings or synergies.
- Acquisition of Aquila Biolabs GmbH
Effective April 29, 2021 the Company acquired all the outstanding capital stock of Aquila biolabs GmbH, a German start-up company engaged from its facility in Baesweiler, Germany in the design, production, and sale of bioprocessing systems and products which focus on the control and analysis of bioprocesses in bioreactors and incubation shakers. The acquisition was pursuant to a Stock Purchase Agreement (“SPA”) dated April 28, 2021 with official closing occurring on April 29, 2021 whereby the Company paid an aggregate of $7,880,100 in cash upon closing to the sellers. Aquila’s principal customers are universities, pharmaceutical companies, and industrial companies. The products are sold primarily on a direct basis and to a lesser extent, through distributors.
In connection with the acquisition, on April 28, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Investors”) pursuant to which the Company sold, and the Investors purchased, an aggregate of 1,595,880 shares of common stock (the “Shares”) and warrants (the “Warrants”) to purchase up to an additional 797,940 shares of common stock (the “Warrant Shares”), at an offering price of $4.75 per share, for a total consideration of $7,580,430. The closing under the Purchase Agreement occurred on April 29, 2021, and the Company contributed the net proceeds from the sale of the securities to Bioprocessing for application to the purchase price under the acquisition Agreement.
The acquisition has been reflected in the unaudited pro forma condensed consolidated financial statements as being accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”) in which the Company is treated as the accounting acquirer. In accordance with ASC 805, the assets acquired and liabilities assumed have been measured at fair value based on various preliminary estimates. Due to the fact that the unaudited pro forma condensed consolidated financial information has been prepared based on preliminary estimates, the final amounts recorded for the acquisition may differ materially from the information presented herein. These estimates are subject to change pending further review of the fair value of assets acquired and liabilities assumed.
For purposes of measuring the estimated fair value, where applicable, of the assets acquired and liabilities assumed, as reflected in the unaudited pro forma condensed consolidated financial information, the guidance in ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) has been applied, which establishes a framework for measuring fair value. In accordance with ASC 820, fair value is an exit price and is defined as “the price 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.” Under ASC 805, acquisition-related transaction costs and acquisition-related restructuring charges are not included as components of consideration transferred but are accounted for as expenses in the period in which the costs are incurred.
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of the preliminary estimated fair values of the net assets acquired as if the acquisition had occurred on March 31, 2021:
| Amount | |
|---|---|
| Fair value of<br>assets acquired | |
| Current<br>assets: | |
| Cash and cash<br>equivalents | 97,300 |
| Accounts<br>receivable | 163,300 |
| Inventory | 179,000 |
| Prepaid expenses<br>and other current assets | 44,000 |
| Tax loss<br>carryforwards | 1,858,800 |
| Identifiable<br>intangible assets | |
| Covenant not to<br>compete | 784,500 |
| In process research<br>and development | 742,100 |
| Tradename | 452,300 |
| Patents | 286,200 |
| Customer<br>relationships | 252,200 |
| Total assets<br>acquired | 4,859,700 |
| Fair value of<br>liabilities assumed | |
| Accounts<br>payable | - |
| Accrued expenses<br>and other current liabilities | 59,400 |
| Deferred tax<br>liability | 767,500 |
| Total liabilities<br>assumed | 826,900 |
| Total identifiable<br>net assets | 4,032,800 |
| Fair value of<br>consideration transferred | 7,880,100 |
| Goodwill | 3,847,300 |
All values are in US Dollars.
Management has made preliminary allocation estimates based on currently available information. The final determination of the accounting for the business combination is anticipated to be completed as soon as practicable, but no later than one year from the date of the acquisition.
The amounts allocated to intangible assets in the acquisition could differ materially from the preliminary amounts presented in these unaudited pro forma condensed consolidated financial statements. A decrease in the fair value of the assets acquired or an increase in the liabilities assumed from those preliminary valuations presented in these unaudited pro forma condensed consolidated financial statements would result in a dollar-for-dollar corresponding increase in the amount of goodwill that will result from the acquisition. In addition, if the value of the acquired intangible assets is higher than the preliminary indication, it may result in higher amortization or depreciation expense than is presented in these unaudited pro forma condensed consolidated financial statements.
Accounting Periods Presented
Aquila’s fiscal year ended on December 31. Its historical results have been aligned to more closely conform to the Company’s June 30 fiscal year end by taking Aquila’s interim financial results for six months ended December 31, 2019 and for the six months ended June 30, 2020. In addition, certain historical Aquila balances have been reclassified to conform to the pro forma consolidated presentation. There were no transactions between the two companies during the periods presented. No pro forma adjustments were made to conform Aquila’s accounting policies which follow Germany’s generally accepted accounting principles (“German GAAP”) to the Company’s accounting principles, as any differences were deemed immaterial.
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- Pro Forma Adjustments
A.
The following pro forma adjustments are included in the unaudited pro forma condensed consolidated balance sheet:
(a)
Reflects the amount the Company would have transferred to Aquila in order to fund their operating losses during the periods presented
(b)
Reflects the fair value of the German tax loss carryforwards acquired
(c)
Reflects the fair values of the intangible assets acquired
(d)
Reflects the fair value of the goodwill acquired
(e)
Reflects the amount for the retention bonus accrued to be paid to the selling officers of Aquila
(f)
Reflects the fair value of the deferred tax liability recorded with the acquisition
(g)
Reflects the value of the stock sold in order to fund the acquisition
(h)
Reflects the elimination of the accumulated deficit of the acquired entity
The pro forma adjustments to the Company’s financial statements as of the periods presented will differ from those as of the acquisition date due to differences in net book values of the underlying assets and liabilities of Aquila as of the end of each period.
B.
The following pro forma adjustments are included in the unaudited pro forma condensed consolidated statements of operations for the nine months ended March 31, 2021:
(i)
Reflects the value of amortization of the acquired intangible assets
(j)
Reflects the value of a taxes calculated using the German tax rate of 31.5%
C.
The following pro forma adjustments are included in the unaudited pro forma condensed consolidated statements of operations for the year ended June 30, 2020:
(k)
Reflects the value of amortization of the acquired intangible assets
(l)
Reflects the total acquisitions costs paid (consisting of substantially legal fees) totaling approximately $294.3k
(m)
Reflects the value of a taxes calculated using the German tax rate of 31.5%