Scientific Industries Inc 10-Q for FY2023 Q3

Scientific Industries Inc (SCND)

10-Q 2023-11-14 For: 2023-09-30

Added on April 06, 2026

About this 10-Q

Scientific Industries Inc filed this 10-Q on November 14, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.59M; down 3.2% from $2.67M a year earlier
Net loss: $2.2M; compared with a net loss of $1.71M 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	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	22

Item 4.	CONTROLS AND PROCEDURES	22

PART II - Other Information

Item 1.	Legal Proceedings	23

Item 1A.	Risk Factors	23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 3.	Defaults Upon Senior Securities	23

Item 4.	Mine Safety Disclosures	23

Item 5.	Other Information	23

Item 6.	Exhibits	24

SIGNATURE		25

SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2023			December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	515,400		$	1,927,100
Investment securities		809,600			4,272,100
Trade accounts receivable, less allowance for doubtful accounts of $33,600 at September 30, 2023 and December 31, 2022		1,292,600			1,312,900
Inventories		5,282,300			4,859,600
Income tax receivable		52,700			161,400
Prepaid expenses and other current assets		619,600			456,800
Total current assets		8,572,200			12,989,900

Property and equipment, net		1,093,900			1,163,200
Goodwill		115,300			115,300
Other intangible assets, net		1,377,400			1,763,000
Inventories		658,700			606,000
Operating lease right-of-use assets		1,172,400			1,373,600
Other assets		58,200			58,200
Total assets	$	13,048,100		$	18,069,200

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,095,200		$	887,300
Accrued expenses		810,800			821,800
Contract liabilities		20,400			134,400
Lease liabilities, current portion		243,100			276,900
Bank overdraft		13,300			-
Total current liabilities		2,182,800			2,120,400

Lease liabilities, less current portion		987,300			1,156,200
Total liabilities		3,170,100			3,276,600

Shareholders’ equity:
Common stock, $0.05 par value; 20,000,000 shares authorized; 7,003,599 shares issued and outstanding at September 30, 2023 and 7,023,401 shares issued and 7,003,599 shares outstanding at December 31, 2022		350,200			351,200
Additional paid-in capital		34,882,400			32,900,800
Accumulated comprehensive loss		(92,400	)		(8,400	)
Accumulated deficit		(25,262,200	)		(18,398,600	)
		9,878,000			14,845,000
Less common stock held in treasury at cost, 0 shares at September 30, 2023 and 19,802 shares at December 31, 2022		-			52,400
Total shareholders’ equity		9,878,000			14,792,600

Total liabilities and shareholders’ equity	$	13,048,100		$	18,069,200

SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)

	Three Months Ended, September 30						Nine Months Ended, September 30
	2023			2022 (as Restated)			2023			2022

Revenues	$	2,585,500		$	2,670,000		$	8,373,400		$	8,311,900

Cost of revenues		1,404,500			1,320,900			4,504,400			4,148,400

Gross profit		1,181,000			1,349,100			3,869,000			4,163,500

Operating expenses:
General and administrative		896,300			1,607,500			3,765,500			4,592,200
Selling		1,614,200			875,700			4,650,800			3,243,700
Research and development		895,900			560,100			2,371,900			1,916,600
Impairment of goodwill and intangible asset		-			-			-			4,280,100

Total operating expenses		3,406,400			3,043,300			10,788,200			14,032,600

Loss from operations		(2,225,400	)		(1,694,200	)		(6,919,200	)		(9,869,100	)

Other income (expense), net		5,300			(15,000	)		95,700			(296,100	)
Interest income		19,000			-			65,400			27,900
Total other income (expense), net		24,300			(15,000	)		161,100			(268,200	)

Loss from continuing operations before income tax expense		(2,201,100	)		(1,709,200	)		(6,758,100	)		(10,137,300	)

Income tax expense(benefit), current		-			-			108,800			(99,200	)
Income tax expense, deferred		-			-			-			3,227,300
Total Income tax expense		-			-			108,800			3,128,100

Loss from continuing operations		(2,201,100	)		(1,709,200	)		(6,866,900	)		(13,265,400	)

Discontinued operations:

Gain (loss) from discontinued operations, net of tax		-			-			3,300			(6,600	)

Net loss		(2,201,100	)		(1,709,200	)		(6,863,600	)		(13,272,000	)

Comprehensive loss:
Unrealized holding gain (loss) on investment securities, net of tax		-			4,100			1,600			(5,700	)
Foreign currency translation adjustment		(95,700	)		(118,300	)		(85,600	)		(308,500	)
Comprehensive loss		(95,700	)		(114,200	)		(84,000	)		(314,200	)

Total comprehensive loss		(2,296,800	)		(1,823,400	)		(6,947,600	)		(13,586,200	)

Basic and diluted loss per common share:

Continuing operations	$	(0.31	)	$	(0.24	)	$	(0.98	)	$	(1.93	)
Discontinued operations		-			-			-			-
Consolidated operations	$	(0.31	)	$	(0.24	)	$	(0.98	)	$	(1.93	)

SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)

							Additional			Accumulated Other												Total
	Common Stock						Paid-in			Comprehensive			Accumulated			Treasury Stock						Stockholders’
	Shares			Amount			Capital			Income (Loss)			Deficit			Shares			Amount			Equity
Balance December 31, 2022		7,023,401		$	351,200		$	32,900,800		$	(8,400)		$	(18,398,600)			19,802		$	52,400		$	14,792,600

Net loss		-			-			-			-			(2,370,500	)		-			-			(2,370,500	)

Foreign currency translation adjustment		-			-			-			40,200						-			-			40,200

Unrealized gain on investment securities, net of tax											3,700												3,700

Stock-based compensation		-			-			602,600			-			-			-			-			602,600

Balance March 31, 2023		7,023,401		$	351,200		$	33,503,400		$	35,500		$	(20,769,100	)		19,802		$	52,400		$	13,068,600

Net loss		-			-			-			-			(2,292,000	)		-			-			(2,292,000	)

Foreign currency translation adjustment		-			-			-			(30,100	)					-			-			(30,100	)

Unrealized loss on investment securities, net of tax											(2,100	)											(2,100	)

Retirement of treasury stock		(19,802	)		(1,000	)		(51,400	)								(19,802	)		(52,400	)		-

Stock-based compensation		-			-			584,700			-			-			-			-			584,700

Balance June 30, 2023		7,003,599		$	350,200		$	34,036,700		$	3,300		$	(23,061,100	)		0		$	0		$	11,329,100

Net loss		-			-			-			-			(2,201,100	)		-			-			(2,201,100	)

Foreign currency translation adjustment		-			-			-			(95,700	)					-			-			(95,700	)

Stock-based compensation		-			-			845,700			-			-			-			-			845,700

Balance September 30, 2023		7,003,599		$	350,200		$	34,882,400		$	(92,400	)	$	(25,262,200	)		0		$	0		$	9,878,000

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

Net loss		-			-			-			-			(10,027,800	)		-			-			(10,027,800	)

Foreign currency translation adjustment		-			-			-			4,300						-			-			4,300

Unrealized loss on investment securities, net of tax											(5,100	)											(5,100	)

Stock-based compensation		-			-			430,500			-			-			-			-			430,500

Balance, June 30, 2022 (as restated)		7,023,401		$	351,200		$	31,664,100		$	(105,600)		$	(14,319,200)			19,802		$	52,400		$	17,538,100

Net loss		-			-			-			-			(1,709,200	)		-			-			(1,709,200	)

Foreign currency translation adjustment		-			-			-			(118,300	)					-			-			(118,300	)

Unrealized gain on investment securities, net of tax											4,100												4,100

Stock-based compensation		-			-			618,100			-			-			-			-			618,100

Balance, September 30, 2022 (as restated)		7,023,401		$	351,200		$	32,282,200		$	(219,800)		$	(16,028,400)			19,802		$	52,400		$	16,332,800

	For the Nine Months Ended September 30,
	2023			2022

Operating activities:
Net loss	$	(6,863,600	)	$	(13,272,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		566,700			549,800
Stock-based compensation		2,033,000			1,702,300
Change in fair value of contingent consideration		-			17,500
Loss on sale of investments		96,500			93,600
Unrealized holding (gain) loss on investments		(147,900	)		213,200
Deferred income taxes		-			3,223,300
Impairment of goodwill and intangible asset		-			4,280,100
Changes in operating assets and liabilities:
Trade accounts receivable		(20,100	)		234,600
Inventories		(532,400	)		(1,415,400	)
Prepaid and other current assets		(162,100	)		48,300
Income tax receivable		108,800			(95,400	)
Other assets		-			100
Carrying value of right of use assets		201,400			(778,900	)
Accounts payable		175,400			(504,500	)
Accrued expenses		39,700			201,100
Contract liabilities		(114,000	)		1,100
Lease liabilities		(203,000	)		775,700
Total adjustments		(506,300	)		(1,533,300	)

Net cash used in operating activities		(4,821,600	)		(4,725,500	)

Investing activities:
Purchase of investment securities		(987,000	)		(1,648,100	)
Redemption of investment securities		4,505,400			2,908,500
Capital expenditures		(117,900	)		(754,300	)
Purchase of other intangible assets		-			(2,000	)

Net cash provided by investing activities		3,400,500			504,100

Financing activities:
Proceeds from issuance of common stock		-			3,000,000
Issuance costs of common stock and warrants		-			(272,800	)
Payments of contingent consideration		-			(98,800	)
Bank overdraft		13,300			(74,300	)

Net cash provided by financing activities		13,300			2,554,100

Effect of changes in foreign currency exchange rates		(3,900	)		(192,000	)

Net decrease in cash and cash equivalents		(1,411,700	)		(1,859,300	)
Cash and cash equivalents, beginning of period		1,927,100			4,297,000
Cash and cash equivalents, end of period	$	515,400		$	2,437,700

SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Income taxes	$	-		$	-
Noncash financing activities:
Record right-of-use assets	$	-		$	110,700
Record lease liabilities	$	-		$	107,900

See notes to consolidated financial statements

	Fair Value Measurements as of September 30, 2023
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	515,400	$	-	$	-	$	515,400
Investment securities		809,600		-		-		809,600

Total	$	1,325,000	$	-	$	-	$	1,325,000

	Fair Value Measurements as of December 31, 2022
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	1,927,100	$	-	$	-	$	1,927,100
Investment securities		4,035,500		236,600		-		4,272,100

Total	$	5,962,600	$	236,600	$	-	$	6,199,200

As of September 30, 2023:	Cost		Fair Value		Unrealized Holding Gain (Loss)

Equity securities	$	95,700	$	124,200	$	28,500
Mutual funds		626,500		685,400		58,900
Total	$	722,200	$	809,600	$	87,400

As of December 31, 2022:	Cost		Fair Value		Unrealized Holding Gain (Loss)

Equity securities	$	118,900	$	154,600	$	35,700
Mutual funds		4,063,100		3,880,900		(182,200	)
Debt securities		235,400		236,600		1,200
Total	$	4,417,400	$	4,272,100	$	(145,300	)

	As of September 30,		As of December 31,
	2023		2022
Raw materials	$	3,628,900	$	3,703,900
Work-in-process		92,100		66,700
Finished goods		2,220,000		1,695,000
Total Inventories	$	5,941,000	$	5,465,600

Inventories - Current Asset	$	5,282,300	$	4,859,600
Inventories - Noncurrent Asset		658,700		606,000

As of September 30, 2023:	Useful Lives	Cost		Accumulated Amortization		Net
Technology, trademarks	3-10 yrs.	$	1,216,800	$	833,600	$	383,200
Trade names	3-6 yrs.		592,300		322,700		269,600
Websites	3-7 yrs.		210,000		210,000		-
Customer relationships	4-10 yrs.		372,200		186,700		185,500
Sublicense agreements	10 yrs.		294,000		294,000		-
Non-compete agreements	4-5 yrs.		1,060,500		748,700		311,800
Patents	5-7 yrs.		595,800		368,500		227,300
		$	4,341,600	$	2,964,200	$	1,377,400

				Accumulated
As of December 31, 2022	Useful Lives	Cost		Amortization		Net
Technology, trademarks	3-10 yrs.	$	1,216,800	$	721,700	$	495,100
Trade names	3-6 yrs.		592,300		266,000		326,300
Websites	3-7 yrs.		210,000		210,000		-
Customer relationships	4-10 yrs.		372,200		163,800		208,400
Sublicense agreements	10 yrs.		294,000		294,000		-
Non-compete agreements	4-5 yrs.		1,060,500		602,000		458,500
Patents	5-7 yrs.		595,800		321,100		274,700
		$	4,341,600	$	2,578,600	$	1,763,000

As of September 30, 2023	Amount
Remainder of fiscal year ending 2023	$	131,000
2024		506,100
2025		371,500
2026		193,800
2027		92,600
Thereafter		82,400
Total	$	1,377,400

	For the three months ended September 30,						For the nine months ended September 30,
	2023			2022 (as restated)			2023			2022
Weighted average number of common shares outstanding		7,003,599			7,003,599			7,003,599			6,881,720
Effect of dilutive securities:		-			-			-			-
Weighted average number of dilutive common shares outstanding		7,003,599			7,003,599			7,003,599			6,881,720

Basic and diluted loss per common share:
Continuing operations	$	(0.31	)	$	(0.24	)	$	(0.98	)	$	(1.93	)
Discontinued operations		-			-			-			-
Consolidated operations	$	(0.31	)	$	(0.24	)	$	(0.98	)	$	(1.93	)

Three Months Ended September 30, 2023:	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate And Other			Consolidated
Revenues	$	2,161,300	$	424,200		$	-		$	2,585,500

Foreign Sales		625,000		242,900			-			867,900

Income (Loss) From Operations		73,600		(2,105,500	)		(193,500	)		(2,225,400	)

Assets		7,137,200		5,101,300			809,600			13,048,100

Long-Lived Asset Expenditures		-		11,700			-			11,700

Depreciation and Amortization		20,700		167,500			-			188,200

Three Months Ended September 30, 2022 (as Restated):	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate And Other			Consolidated
Revenues	$	2,357,600	$	312,400		$	-		$	2,670,000

Foreign Sales		749,600		241,100			-			990,700

Income (Loss) From Operations		306,900		(1,515,800	)		(485,300	)		(1,694,200	)

Assets		8,962,000		4,874,600			5,298,600			19,135,200

Long-Lived Asset Expenditures		11,300		150,300			-			161,600

Depreciation and Amortization		25,200		163,700			-			188,900

Nine Months Ended September 30, 2023:	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate And Other			Consolidated
Revenues	$	7,357,800	$	1,015,600		$	-		$	8,373,400

Foreign Sales		2,204,800		478,700			-			2,683,500

Income (Loss) From Operations		555,200		(5,972,600	)		(1,501,800	)		(6,919,200	)

Assets		7,137,200		5,101,300			809,600			13,048,100

Long-Lived Asset Expenditures		25,200		92,700			-			117,900

Depreciation and Amortization		64,400		502,300			-			566,700

Nine Months Ended September 30, 2022:	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate And Other			Consolidated
Revenues	$	7,307,600	$	1,004,300		$	-		$	8,311,900

Foreign Sales		2,420,900		821,000			-			3,241,900

Income (Loss) From Operations		923,000		(9,445,700	)		(1,346,400	)		(9,869,100	)

Assets		8,962,000		4,874,600			5,298,600			19,135,200

Long-Lived Asset Expenditures		37,200		719,100			-			756,300

Depreciation and Amortization		74,900		474,900			-			549,800

Three months ended September 30, 2023	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate			Consolidated
Income (Loss) from Operations	$	73,600	$	(2,105,500	)	$	(193,500	)	$	(2,225,400	)

Other income (expense), net		5,300		(1,800	)		1,800			5,300
Interest income		-		-			19,000			19,000
Total other (expense) income, net		5,300		(1,800	)		20,800			24,300

Income (Loss) from operations before discontinued operations and income taxes	$	78,900	$	(2,107,300	)	$	(172,700	)	$	(2,201,100	)

Three months ended September 30, 2022	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate			Consolidated
Income (Loss) from Operations	$	306,900	$	(1,515,800	)	$	(485,300	)	$	(1,694,200	)

Other (expense) income, net		1,600		13,500			(30,100	)		(15,000	)
Interest income		-		-			-			-
Total other (expense) income, net		-		13,500			(30,100	)		(15,000	)

Income (Loss) from operations before discontinued operations and income taxes	$	308,500	$	(1,502,300	)	$	(515,400	)	$	(1,709,200	)

Nine months ended September 30, 2023	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate			Consolidated
Income (Loss) from Operations	$	555,200	$	(5,972,600	)	$	(1,501,800	)	$	(6,919,200	)

Other income (expense), net		7,700		9,300			78,700			95,700
Interest income		-		-			65,400			65,400
Total other (expense) income, net		7,700		9,300			144,100			161,100

Income (Loss) from operations before discontinued operations and income taxes	$	562,900	$	(5,963,300	)	$	(1,357,700	)	$	(6,758,100	)

Nine months ended September 30, 2022	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate			Consolidated
Income (Loss) from Operations	$	923,000	$	(9,445,700	)	$	(1,346,400	)	$	(9,869,100	)

Other (expense) income, net		2,900		(42,100	)		(256,900	)		(296,100	)
Interest income		-		-			27,900			27,900
Total other (expense) income, net		2,900		(42,100	)		(229,000	)		(268,200	)

Income (Loss) from operations before discontinued operations and income taxes	$	925,900	$	(9,487,800	)	$	(1,575,400	)	$	(10,137,300	)

Exhibit Number		Description of document
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	SCIENTIFIC INDUSTRIES, INC. (Registrant)

Date: November 14, 2023	By:	/s/ Helena R. Santos
		Helena R. Santos
		President, Chief Executive Officer, and Treasurer

	SCIENTIFIC INDUSTRIES, INC. (Registrant)

Date: November 14, 2023	By:	/s/ Reginald Averilla
		Reginald Averilla
		Chief Financial Officer

	Scientific Industries, Inc.

Date: November 14, 2023	By:	/s/ Helena R. Santos
		Helena R. Santos
		Chief Executive Officer