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| EX-23 - CONSENTS OF EXPERTS AND COUNSEL - SCIENTIFIC INDUSTRIES INC | exhibit_231.htm |
As filed with the Securities and Exchange Commission on
August 4, 2021
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SCIENTIFIC INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware
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3826
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04-2217279
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer Identification No.)
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80 Orville Drive, Suite 102
Bohemia, New York 11716
(631) 567-4700
(Address, including zip code, and telephone number, including area
code, of principal executive offices)
Helena Santos
Chief Executive Officer
Scientific Industries, Inc.
80 Orville Drive, Suite 102
Bohemia, New York 11716
(631) 567-4700
(Address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
John F.F. Watkins, Esq.
Reitler Kailas & Rosenblatt LLP
885 Third Avenue
New York, New York 10020
Telephone: (212) 209-3050
Approximate
date of proposed sale to public: As soon as practicable on or after
the effective date of this registration statement.
If any
of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. [x]
If this
Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same offering. [
]
If this
Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same offering. [
]
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of “large accelerated
filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
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Large
accelerated filer
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¨
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Accelerated
filer
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¨
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Non-accelerated
filer
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¨
(Do not check if a smaller reporting company)
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Smaller
reporting company
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x
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of
Securities to Be Registered
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Amount
to Be
Registered
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Proposed
Maximum
Offering Price
per Share (1)
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Proposed
Maximum Aggregate
Offering Price
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Amount of
Registration Fee
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Shares
of common stock, and shares of common stock issuable upon exercise
of warrants, sold to selling stockholders in private
placements
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8,093,513
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$10.32
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$83,525,054
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$9,113
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Total
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8,093,513
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$10.32
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$83,525,054
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$9,113
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(1)
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Estimated solely
for purposes of calculating the registration fee pursuant to Rule
457(c) under the Securities Act, based on average of bid and asked
price per share of the common stock as reported on the Over-the-Counter Bulletin
Board on July 29, 2021.
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The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act, as
amended, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine.
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the Securities and
Exchange Commission declares our registration statement effective.
This prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
Subject to Completion, dated ______, 2021
Preliminary Prospectus
8,093,513 Shares
Common Stock
This
prospectus relates to the resale or other disposition, from time to
time, by the selling stockholders identified in this prospectus
under the caption “Selling Stockholders,” of up to
8,093,513 shares of our common stock, par value $0.05 per share. We
are not selling any shares of our common stock under this
prospectus and will not receive any proceeds from the sale or other
disposition of shares by the selling stockholders. The selling
stockholders will bear all commissions and discounts, if any,
attributable to the sale or other disposition of the shares. We
will bear all costs, expenses and fees in connection with the
registration of the shares.
The
selling stockholders may sell or otherwise dispose of the shares of
our common stock offered by this prospectus from time to time on
terms to be determined at the time of sale through ordinary
brokerage transactions or through any other means described in this
prospectus under “Plan of Distribution.” The prices at
which the selling stockholder may sell the shares will be
determined by the prevailing market price for the shares or in
negotiated transactions.
Our
common stock trades on the Over-the-Counter Bulletin
Board under the symbol “SCND.” The last reported
sale price of our common stock on July 15, 2021 was $9.64 per
share. You are urged to obtain current market quotations for the
common stock.
The
8,093,513 shares of common stock covered by this prospectus were
issued in three separate private placement transactions completed
on June 18, 2020, April 29, 2021 and June 18, 2021. Additional
information about the private placement is provided in the section
entitled “Description of Private Placement” of this
Prospectus.
Neither
the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is ____, 2021
TABLE OF CONTENTS
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Page
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PROSPECTUS SUMMARY
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3
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THE OFFERING
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4
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DESCRIPTION OF PRIVATE PLACEMENT
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5
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RISK FACTORS
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5
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
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5
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USE OF PROCEEDS
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7
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SELLING STOCKHOLDERS
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7
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PLAN OF DISTRIBUTION
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MANAGEMENT'S DISCUSSION AND
ANALYSIS
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LEGAL MATTERS
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EXPERTS
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
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DOCUMENTS INCORPORATED BY REFERENCE
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FINANCIAL STATEMENTS
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F1-F39
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1
This
prospectus is part of a registration statement that we have filed
with the Securities and Exchange Commission (the “SEC”)
pursuant to which the selling stockholders named herein may, from
time to time, offer and sell or otherwise dispose of the shares of
our common stock covered by this prospectus. You should not assume
that the information contained in this prospectus is accurate on
any date subsequent to the date set forth on the front cover of
this prospectus or that any information we have incorporated by
reference is correct on any date subsequent to the date of the
document incorporated by reference, even though this prospectus is
delivered or shares of common stock are sold or otherwise disposed
of on a later date. It is important for you to read and consider
all information contained in this prospectus, including the
documents incorporated by reference therein, in making your
investment decision. You should also read and consider the
information in the documents to which we have referred you under
the captions “Where You Can Find Additional
Information” and “Documents Incorporated by
Reference” in this prospectus.
We
have not authorized any dealer, salesman or other person to give
any information or to make any representation other than those
contained or incorporated by reference in this prospectus. You must
not rely upon any information or representation not contained or
incorporated by reference in this prospectus. This prospectus does
not constitute an offer to sell or the solicitation of an offer to
buy any of our shares of common stock other than the shares of our
common stock covered hereby, nor does this prospectus constitute an
offer to sell or the solicitation of an offer to buy any securities
in any jurisdiction to any person to whom it is unlawful to make
such offer or solicitation in such jurisdiction.
Unless
we have indicated otherwise, or the context otherwise requires,
references in this prospectus to “Scientific,” the
“Company,” “we,” “us” and
“our” refer to Scientific Industries, Inc. and its
subsidiaries.
2
This summary description about us and our business highlights
selected information contained elsewhere in this prospectus or
incorporated by reference into this prospectus. It does not contain
all the information you should consider before investing in our
securities. Important information is incorporated by reference into
this prospectus. To understand this offering fully, you should read
carefully the entire prospectus, including “Risk
Factors”, together with the additional information described
under “Documents Incorporated By
Reference”.
About Scientific Industries, Inc.
General.
Incorporated
in 1954, Scientific Industries, Inc., a Delaware corporation (which
along with its subsidiaries, the “Company”) is engaged
in the design, manufacture, and marketing of standard benchtop
laboratory equipment (“Benchtop Laboratory Equipment”)
and the licensing, development, and marketing of bioprocessing
systems and products (“Bioprocessing Systems
Operations”). 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.
Operating
Segments.
The
Company views its operations as two segments: the manufacture and
marketing of standard Benchtop Laboratory Equipment for research
and sample preparation in university, pharmacy and industrial
laboratories sold primarily through laboratory equipment
distributors and online; and the licensing, development,
manufacture and marketing of bioprocessing products sold primarily
on a direct basis.
Products.
Benchtop Laboratory
Equipment. The Company’s
Benchtop Laboratory Equipment products consist of mixers and
shakers, rotators/rockers, refrigerated and shaking incubators, and
magnetic stirrers sold under the “Genie ™” brand,
and pharmacy and laboratory balances and scales, force gauges, and
moisture analyzers under the “Torbal®” brand.
Sales of the Company’s principal product, the
Vortex-Genie® 2 Mixer, excluding accessories, represented
approximately 36% and 32% of the Company’s total net revenues
for each of the fiscal years ended June 30, 2020 (“fiscal
2020”) and June 30, 2019 (“fiscal 2019”), and 45%
and 46% of the segment’s sales for fiscal 2020 and fiscal
2019, respectively.
The
Company’s vortex mixer is used to mix the contents of test
tubes, beakers, and other various containers by placing such
containers on a rotating cup or other attachments which cause the
contents to be mixed at varying speeds.
The
Company’s additional mixers and shakers include a high-speed
touch mixer, a mixer with an integral timer, a patented cell
disruptor, microplate mixers, two vortex mixers incorporating
digital control and display, a large capacity multi-vessel vortex
mixer and a line of various orbital shakers.
The
Company also offers various benchtop multi-purpose rotators and
rockers, designed to rotate and rock a wide variety of containers,
and a refrigerated incubator and incubated shakers, which are
multi-functional benchtop environmental chambers designed to
perform various shaking and stirring functions under controlled
environmental conditions.
Its
line of magnetic stirrers includes a patented high/low programmable
magnetic stirrer, a four-place high/low programmable magnetic
stirrer, a large volume magnetic stirrer, and a four-place general
purpose stirrer.
The
Company’s Torbal brand line of products includes pharmacy,
laboratory, and industrial digital scales, mechanical balances,
moisture analyzers, pill counters, and force gauges.
Bioprocessing
Systems. The Company, through
its Bioprocessing Systems Operations, sublicenses the patents and
technology it holds relating to bioprocessing products exclusively
under a license with the University of Maryland, Baltimore County
(“UMBC”), for which it receives royalties for patents
expiring in August 2021 and December 2023. The Company is also
engaged in the development and marketing of bioprocessing products,
principally products incorporating disposable sensors which
includes coaster systems and other shaking products using vessels
such as T-Flasks and shake flasks. On April 29, 2021, the
Company’s Bioprocessing Systems Operations was expanded via
the acquisition of all the issued and outstanding shares of
aquila biolabs GmbH (“aquila”), a privately held
German technology developer of smart sensors and state-of-the-art
data analytics software for bioprocessing
applications.
Private
Placements
On June
18, 2020, April 29, 2021 and June 18, 2021, the Company entered
into private placement transactions with the selling stockholders
pursuant to which the selling stockholders acquired shares of
common stock and warrants to purchase additional shares of common
stock, which shares of common stock (including those issuable upon
the exercise of warrants) are being registered hereunder. See
“Description of Private Placements”.
Corporate Information
We were
incorporated in Delaware on July 2, 1954. Our principal executive
offices are located at 80 Orville Drive, Suite 102, Bohemia, New
York 11716, and our telephone number is (631) 567-4700. Our website
address is www.scientificindustries.com. Our website and the
information contained on, or that can be accessed through, our
website will not be deemed to be incorporated by reference in, and
are not considered part of, this prospectus. You should not rely on
our website or any such information in making your decision whether
to purchase our common stock.
3
THE OFFERING
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Shares of Common Stock to be Offered by the Selling
Stockholders
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8,093,513
shares
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Use of Proceeds
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All
proceeds from the sale of the shares of common stock under this
prospectus will be for the account of the selling stockholders. We
will not receive any proceeds from the sale of the common stock by
the selling stockholders pursuant to this prospectus. However, we
will receive proceeds in connection with the applicable exercise
price of the warrant to purchase shares of our common stock, unless
any of such warrants are exercised via cashless exercise to the
extent provided for in the applicable warrant. See “Use of
Proceeds”.
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Over the Counter Common Stock Symbol
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SCND
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Risk Factors
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Investing
in our common stock involves a high degree of risk. See “Risk
Factors” below.
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4
RISK FACTORS
Investment in our
common stock involves risks. Prior to making a decision about
investing in our common stock, you should consider carefully the
risk factors incorporated by reference in this prospectus,
including the risk factors described in the section entitled
“Risk Factors” contained in our most recent Annual
Report on Form 10-K. Those risks and uncertainties are not the only
risks and uncertainties we face. Additional risks and uncertainties
not presently known to us or that we currently deem immaterial also
may impair our business operations. If any of these risks actually
occur, our business, results of operations and financial condition
could suffer. In that event the trading price of our common stock
could decline, and you may lose all or part of your
investment.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and any documents we incorporate by reference herein may
contain “forward-looking statements” (within the
meaning of Section 27A of the Securities Act and Section 21E of the
Securities and Exchange Act of 1934, as amended, or the Exchange
Act. All statements other than statements of historical facts
contained in or incorporated by reference into this prospectus,
including statements regarding the timing of our clinical trials,
our strategy, future operations, future financial position, future
revenue, projected costs, prospects, plans, objectives of
management and expected market growth are forward-looking
statements. These statements involve known and unknown risks,
uncertainties and other important factors that may cause our actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements.
The
Company and its representatives may from time to time make written
or oral forward-looking statements with respect to the
Company’s annual or long-term goals, including statements
contained in its filings with the Securities and Exchange
Commission and in its reports to stockholders.
The
words or phrases "will likely result", “will be”,
“will”, "are expected to", "will continue to", "is
anticipated", "estimate", "project" or similar expressions identify
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from historical earnings and those
presently anticipated or projected. Readers are cautioned not to
place undue reliance on any such forward-looking statements, which
speak only as of the date made.
These
statements reflect our current views with respect to future events
and are based on assumptions and subject to risks and
uncertainties. Given these uncertainties, you should not place
undue reliance on these forward-looking statements. These
forward-looking statements represent our current estimates and
assumptions and, except as required by law, we undertake no
obligation to update or review publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise after the date of this prospectus. We anticipate that
subsequent events and developments will cause our views to change.
You should read this prospectus, the documents incorporated by
reference herein, and the documents filed as exhibits to the
registration statement of which this prospectus is a part
completely and with the understanding that our actual future
results may be materially different from what we expect. Our
forward-looking statements do not reflect the potential impact of
any future acquisitions, merger, dispositions, joint ventures or
investments we may undertake. We qualify all of our forward-looking
statements by these cautionary statements.
DESCRIPTION OF PRIVATE PLACEMENTS
We have
issued and sold shares of our common stock and warrants to purchase
our common stock in private placements pursuant to Securities
Purchase Agreements dated, respectively, June 18, 2020 (the
“June 2020 Private Placement”), April 29, 2021 (the
“April 2021 Private Placement”) and June 18, 2021 (the
“June 2021 Private Placement”).
The June 2020 Private Placement
Pursuant to the
terms of the Securities Purchase Agreement dated June 18, 2020 (the
“2020 Securities Purchase Agreement”), we sold to the
investors an aggregate of 1,349,850 shares of our common stock (the
“2020 Shares”) at a price of $4.50 per share and
warrants (the “2020 Warrants”) to purchase an
additional 1,349,850 shares of our common stock (the “2020
Warrant Shares”) at an exercise price of $9.00 per share. The
2020 Warrants were immediately exercisable as of their date of
issuance and expire five years from their date of issuance. If at
any time commencing 12 months from June 18, 2020, but before the
expiration of the 2020 Warrants, the volume weighted average
pricing of our common stock exceeds $18.00 (subject to adjustment
for forward and reverse stock splits, recapitalizations, stock
dividends and the like) for each of thirty consecutive trading
days, then we may, at any time in our sole discretion, call for the
exercise of the 2020 Warrants, in their entirety. The June 2020
Private Placement closed on June 18, 2020 (the “2020 Closing
Date”).
5
We were
required under the terms of the 2020 Securities Purchase Agreement
to use reasonable efforts to prepare and file with the Securities
and Exchange Commission, or the SEC, a registration statement
covering the resale or other disposition of the 2020 Shares and the
2020 Warrant Shares on or prior to the date ten months after the
2020 Closing Date. We agreed to use our best efforts to have such
registration statement declared effective for a period of one (1)
year following the initial date of effectiveness. On April 13,
2021, we entered into Amendment No. 1 (the “Amendment”)
to the 2020 Securities Purchase Agreement with the holders of a
majority of the 2020 Shares sold by us pursuant to the 2020
Securities Purchase Agreement to amend the text of Section 4.13(a)
of the 2020 Securities Purchase Agreement whereby the requirement
to prepare and file with the SEC a registration statement will be
effected no later than September 30, 2021 and we will use our best
efforts to cause the registration statement to become effective by
December 31, 2021. In addition, the holders of a majority of the
2020 Shares and 2020 Warrant Shares shall have the right,
exercisable at any time prior to the fifth anniversary of the 2020
Closing Date, to request that we file with the SEC a registration
statement for all or part of the 2020 Shares and 2020 Warrant
Shares beneficially owned by the holders of such securities. We
agreed to bear the expenses incurred in complying with these
registration rights provisions. The 2020 Securities Purchase
Agreement also includes customary indemnification provisions
regarding the registration rights.
The April 2021 Private Placement
Pursuant to the
terms of the Securities Purchase Agreement dated April 29, 2021
(the “April 2021 Securities Purchase Agreement”), we
sold to the investors named therein an aggregate of 1,595,880
shares of our common stock (the “April 2021 Shares”) at
a price of $4.75 per share and warrants (the “April 2021
Warrants”) to purchase an additional 797,940 shares of our
common stock (the “April 2021 Warrant Shares”) at an
exercise price of $9.50 per share. The April 2021 Warrants were
immediately exercisable as of their date of issuance and expire
five years from their date of issuance. If at any time commencing
12 months from April 29, 2021, but before the expiration of the
April 2021 Warrants, the volume weighted average pricing of our
common stock exceeds $19.00 (subject to adjustment for forward and
reverse stock splits, recapitalizations, stock dividends and the
like) for each of thirty consecutive trading days, then we may, at
any time in our sole discretion, call for the exercise of the April
2021 Warrants, in their entirety. The April 2021 Private Placement
closed on April 29, 2021.
The June 2021 Private Placement
Pursuant to the
terms of the Securities Purchase Agreement dated June 18, 2021 (the
“June 2021 Securities Purchase Agreement” and, together
with the 2020 Securities Purchase Agreement and the April 2021
Securities Purchase Agreement, the “Securities Purchase
Agreements”), we sold to the investors named therein an
aggregate of 2,000,000 shares of our common stock (the “June
2021 Shares”) at a price of $4.75 per share and warrants (the
“June 2021 Warrants”) to purchase an additional
1,000,000 shares of our common stock, which was reduced to 999,993
shares to avoid fractional shares (the “June 2021 Warrant
Shares”) at an exercise price of $9.50 per share. The June
2021 Warrants were immediately exercisable as of their date of
issuance and expire five years from their date of issuance. If at
any time commencing 12 months from June 18, 2021, but before the
expiration of the June 2021 Warrants, the volume weighted average
pricing of our common stock exceeds $19.00 (subject to adjustment
for forward and reverse stock splits, recapitalizations, stock
dividends and the like) for each of thirty consecutive trading
days, then we may, at any time in our sole discretion, call for the
exercise of the June 2021 Warrants, in their entirety. The June
2021 Private Placement closed on June 18, 2021.
Registration Rights
We were
required under the terms of the 2020 Securities Purchase Agreement
to use reasonable efforts to prepare and file with the Securities
and Exchange Commission, or the SEC, a registration statement
covering the resale or other disposition of the 2020 Shares and the
2020 Warrant Shares on or prior to the date ten months after the
2020 Closing Date. We agreed to use our best efforts to have such
registration statement declared effective for a period of one (1)
year following the initial date of effectiveness. On April 13,
2021, we entered into Amendment No. 1 (the “Purchase
Agreement Amendment”) to the 2020 Securities Purchase
Agreement with the holders of a majority of the 2020 Shares sold by
us pursuant to the 2020 Securities Purchase Agreement to amend the
text of Section 4.13(a) of the 2020 Securities Purchase Agreement
whereby the requirement to prepare and file with the SEC a
registration statement will be effected no later than September 30,
2021 and we will use our best efforts to cause the registration
statement to become effective by December 31, 2021. In addition,
the holders of a majority of the 2020 Shares and 2020 Warrant
Shares shall have the right, exercisable at any time prior to the
fifth anniversary of the 2020 Closing Date, to request that we file
with the SEC a registration statement for all or part of the 2020
Shares and 2020 Warrant Shares beneficially owned by the holders of
such securities. We agreed to bear the expenses incurred in
complying with these registration rights provisions. The 2020
Securities Purchase Agreement also includes customary
indemnification provisions regarding the registration
rights.
We
entered into a Registration Rights Agreement with the investors in
the April 2021 Private Placement (the “Registration Rights
Agreement”) pursuant to which we agreed to use reasonable
efforts to prepare and file with SEC a registration statement
covering the resale or other disposition of the April 2021 Shares
and the April 2021 Warrant Shares on or prior to July 31, 2021. We
agreed to use our best efforts to have such registration statement
declared effective on or before the date that is 90 days after July
31, 2021 (or, in the event of a “full review” by the
SEC, the date that is 120 days after July 31, 2021). We also agreed
to shall use our reasonable efforts to keep the registration
statement effective for a period of one (1) year following the date
on which the registration statement is first declared effective by
the SEC or the registration statement otherwise becomes effective.
The investors agreed that we could include in the registration
statement the 2020 Shares and the 2020 Warrant Shares.
6
In
connection with the closing of the June 2021 Private Placement, we
entered into Amendment No. 1 to
Registration Rights Agreement dated June 18, 2021 (the
“Registration Rights Agreement Amendment”) with the
investors holding a majority of the April 2021 Shares, pursuant to
which the investors in the June 2021 Private Placement were allowed
to become a party to the Registration Rights Agreement and have the
June 2021 Shares and June 2021 Warrant Shares included in a
registration statement to be prepared and filed with the SEC. In
addition, the holders of at least twenty per cent (20%) of the
shares eligible for registration under the Registration Rights
Agreement, as amended, shall have the right, exercisable at any
time prior to April 29, 2026, to request that we file with the SEC
a registration statement for all or part of such shares
beneficially owned by the holders of such shares. Each of the
investors in the June 2021 Private Placement executed and delivered
a Joinder Agreement pursuant to which such Investor agreed to
become a party to the Registration Rights Agreement, as amended.
The Registration Rights Agreement, as amended, also contains a
financial penalty clause (“Penalty”) which provides
that in the event that the registration statement of which
this prospectus is a part is was not filed on or before July 31,
2021 (which was effectively August 2, 2021) or not declared
effective on or before the date that is ninety (90) days after the
date of the filing of the registration statement of which this
prospectus is a part (or, in the event of a “full
review” by the SEC, the date that is one hundred twenty (120)
days after the date of the filing (collectively, an
“Event”), then after the occurrence and pendency of an
Event until the Event is cured, the Company shall, upon the demand
of any holder of April 2021 Shares or June 2021 Shares made within
90 days after the occurrence of such Event, pay the Penalty to each
such Holder an amount in cash equal to one per cent (1.0%) per
month (applied ratably for partial months) of the amount paid for
by such holder for the April 2021 Shares or the June 2021 Shares,
as the case may be. Although the Company does not anticipate any
claim demands to be made, any such claim demands would be a maximum
of $5,500 per day.
This
description of the Securities Purchase Agreements, the Purchase
Agreement Amendment, Registration Rights Agreement and the
Registration Rights Agreement Amendment is not complete and is
qualified in its entirety by reference to each of these agreements
which have been filed as an exhibit to the registration statement
of which this prospectus is a part. See “Where You Can Find
Additional Information” and “Documents Incorporated by
Reference.” The representations, warranties and covenants
made by us in the Securities Purchase Agreements and the
Registration Rights Agreement were made solely for the benefit of
the parties to such agreements, including, in some cases, for the
purpose of allocating risk among the parties thereto, and should
not be deemed to be a representation, warranty or covenant to you.
Moreover, such representations, warranties or covenants were made
as of an earlier date. Accordingly, such representations,
warranties and covenants should not be relied on as accurately
representing the current state of our affairs.
USE OF PROCEEDS
We will
not receive any of the proceeds from the sale of the common stock
by the selling stockholders named in this prospectus. All proceeds
from the resale of the shares of our common stock offered by this
prospectus will belong to the selling stockholders identified in
this prospectus under “Selling
Stockholders.”
We
will, however, receive proceeds in connection with the applicable
exercise price of the warrants to purchase shares of our common
stock, unless any of such warrants are exercised via cashless
exercise to the extent provided for in the applicable warrant. We
will use any such proceeds for ordinary course working capital
needs. We have also agreed to bear all fees and expenses incident
to our obligation to register shares of our common stock being
offered by this prospectus.
MARKET FOR COMMON STOCK AND DIVIDEND POLICY
Our
common stock is traded on the Over-the-Counter Bulletin
Board under the symbol “SCND.” The last reported
sale price of our common stock on July 15, 2021 was $9.64 per
share. As of July 23, 2021, there were 288 stockholders of record
of our common stock.
We have
not declared or paid any cash dividends on our common stock since
December 2018. We intend to retain any future earnings and do not
expect to pay dividends in the foreseeable future.
SELLING STOCKHOLDERS
The
common stock being offered by the selling stockholders are those
previously issued and issuable to the selling stockholders upon
exercise of the warrants to purchase shares of our common stock.
For additional information regarding the issuances of those shares
of common stock and warrants, see “Description of Private
Placements”. We are registering the shares of common stock in
order to permit the selling stockholders to offer the shares for
resale or other disposition from time to time. In addition to the
ownership of the shares of our common stock and warrants to
purchase shares of our common stock that is the subject of this
prospectus, certain of the selling stockholders have had material
relationships with us within the past three years as disclosed in
this prospectus and described below under “Relationships with
Certain Selling Stockholders.”
The
table below sets forth information as of the date of this
prospectus, to our knowledge, the selling stockholders and other
information regarding the beneficial ownership (as determined under
Section 13(d) of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder) of the shares of common
stock held by the selling stockholders. The second column lists the
number of shares of common stock beneficially owned by the selling
stockholders, as of July 20, 2021. The third column lists the
maximum number of shares of common stock that may be sold or
otherwise disposed of by the selling stockholders pursuant to the
registration statement of which this prospectus forms a part. The
selling stockholders may sell or otherwise dispose of some, all or
none of their shares. Pursuant to Rules 13d-3 and 13d-5 of the
Exchange Act, beneficial ownership includes any shares of our
common stock as to which a stockholder has sole or shared voting
power or investment power, and also any shares of our common stock
which the stockholder has the right to acquire within 60 days. The
percent of beneficial ownership for the selling stockholders is
based on 6,458,143 shares of common stock outstanding as of the
date of this prospectus
The
shares of common stock being covered hereby may be sold or
otherwise disposed of from time to time during the period the
registration statement of which this prospectus is a part remains
effective, by or for the account of the selling stockholders. After
the date of effectiveness, the selling stockholders may have sold
or transferred, in transactions covered by this prospectus or in
transactions exempt from the registration requirements of the
Securities Act, some or all of their common stock.
7
Unless
otherwise noted below, the address of each selling stockholder
listed on the table is c/o Scientific Industries, Inc., 80 Orville
Drive, Suite 102, Bohemia, New York 11716.
|
|
Shares
Beneficially
Owned
as of the date of
|
Shares
Offered
by
|
Shares
Beneficially
Owned
After the
|
||
|
|
this
Prospectus
|
this
|
Offering(1)
|
||
|
Name
of Selling Stockholder
|
Number
|
Percent
|
Prospectus
|
Number
|
Percent
|
|
Roy T. Eddleman,
Trustee, Roy T. Eddleman Trust UAD 8-7-2000 (2)
|
2,127,264
|
28.93
|
1,999,278
|
127,986
|
1.98
|
|
Veradace Partners
L.P. (3)
|
953,717
|
14.08
|
947,367
|
6,350
|
*
|
|
Sandra F. Pessin
(4)
|
631,579
|
9.47
|
631,579
|
0
|
*
|
|
21 April Fund, Ltd.
(5)
|
600,000
|
9.01
|
600,000
|
0
|
*
|
|
Christopher
Cox(6)
|
444,000
|
6.65
|
444,000
|
0
|
*
|
|
Lyon
Polk(7)
|
444,000
|
6.65
|
444,000
|
0
|
*
|
|
Pinnacle Family
Office Investments, L.P. (8)
|
315,789
|
4.81
|
315,789
|
0
|
*
|
|
Punch Nano Cap
Partners I LLC (9)
|
315,789
|
4.81
|
315,789
|
0
|
*
|
|
Lytton-Kambara
Foundation (10)
|
286,587
|
4.37
|
286,587
|
0
|
*
|
|
21 April Fund, L.P.
(11)
|
236,842
|
3.62
|
236,842
|
0
|
*
|
|
A.G. Family, L.P.
(12)
|
236,842
|
3.62
|
236,842
|
0
|
*
|
|
John A. Moore, TTE,
John A. Moore Revocable Trust UA DTD 12/08/1998 (13)
|
132,450
|
1.50
|
31,578
|
22,200
|
*
|
|
John
Huwiler(14)
|
133,000
|
2.04
|
133,000
|
0
|
*
|
|
Richard
Lamson(15)
|
133,000
|
2.04
|
133,000
|
0
|
*
|
|
Thomas Satterfield
(16)
|
118,420
|
1.82
|
118,420
|
0
|
*
|
|
TomSat Investment
& Trading Co., Inc. (17)
|
118,420
|
1.82
|
118,420
|
0
|
*
|
|
Helena Santos
(18)
|
111,619
|
1.70
|
1,578
|
21,252
|
*
|
|
Eldgarn Family
Trust (19)
|
110,526
|
1.70
|
110,526
|
0
|
*
|
|
Samuel
Rebotsky(20)
|
100,000
|
1.54
|
40,000
|
60,000
|
*
|
|
Starlight
Investments Holdings Limited (21)
|
94,735
|
1.46
|
94,735
|
0
|
*
|
|
The Saxony 1999
Dynastic Trust (22)
|
94,735
|
1.46
|
94,735
|
0
|
*
|
|
James B. Polk
(23)
|
94,039
|
1.44
|
7,893
|
0
|
*
|
|
Pessin
Children’s Trust (24)
|
78,946
|
1.22
|
78,946
|
0
|
*
|
8
|
Bruce C. Conway
(25)
|
75,000
|
1.16
|
75,000
|
0
|
*
|
|
Guillaume Rambourg
(26)
|
63,157
|
*
|
63,157
|
0
|
*
|
|
Josiah T. Austin
(27)
|
63,157
|
*
|
63,157
|
0
|
*
|
|
Nicholas Finegold
(28)
|
63,157
|
*
|
63,157
|
0
|
*
|
|
Sozietat Noah &
Reinhard Vogt GbR (29)
|
49,560
|
*
|
7,893
|
0
|
*
|
|
Stephen Dreier
(30)
|
47,368
|
*
|
47,368
|
0
|
*
|
|
John de
Neufville(31)
|
44,000
|
*
|
44,000
|
0
|
*
|
|
Potter
Polk(32)
|
44,000
|
*
|
44,000
|
0
|
*
|
|
Karl Nowosielski
(33)
|
40,498
|
*
|
6,315
|
9,683
|
*
|
|
Joyce
Grad(34)
|
40,000
|
*
|
40,000
|
0
|
*
|
|
Science Holding
GmbH(35)
|
37,893
|
*
|
37,893
|
0
|
*
|
|
William S.
Lapp(36)
|
33,000
|
*
|
33,000
|
0
|
*
|
|
Harris
Lydon(37)
|
31,578
|
*
|
31,578
|
0
|
*
|
|
Thomas M.
Fitzgerald (38)
|
31,578
|
*
|
31,578
|
0
|
*
|
|
Robert P. Nichols
(39)
|
30,241
|
*
|
3,156
|
19,585
|
*
|
|
Daniela
Winzker-Demes (40)
|
26,526
|
*
|
26,526
|
0
|
*
|
|
Alan Gelband
(41)
|
10,000
|
*
|
10,000
|
0
|
*
|
|
James A. Clancy
(42)
|
7,894
|
*
|
7,894
|
0
|
*
|
|
Kenneth J. Kato
(43)
|
7,893
|
*
|
7,893
|
0
|
*
|
|
James Clancy
(44)
|
4,734
|
*
|
4,734
|
0
|
*
|
|
Henry Hazard Moore
(45)
|
4,737
|
*
|
4,737
|
0
|
*
|
|
Curtis Dupill
(46)
|
4,735
|
*
|
4,735
|
0
|
*
|
|
Daniel Grunes
(47)
|
3,789
|
*
|
3,789
|
0
|
*
|
|
Robert Huber
(48)
|
3,789
|
*
|
3,789
|
0
|
*
|
|
Konrad Herzog
(49)
|
3,789
|
*
|
3,789
|
0
|
*
|
|
David Frank
(50)
|
1,893
|
*
|
1,893
|
0
|
*
|
|
Douglas J. Koebler
(51)
|
1,578
|
*
|
1,578
|
0
|
*
|
9
|
*
|
Less than
1%.
|
|
(1)
|
Assumes the sale of
all shares offered pursuant to this prospectus.
|
|
(2)
|
Based upon form
Schedule 13D filed with the Securities and Exchange Commission
(“SEC”) on July 14, 2021. Includes 894,376 shares
issuable upon exercise of warrants.
|
|
(3)
|
Based upon form
Schedule 13G filed with the SEC on May 7, 2021. Includes 315,789
shares issuable upon exercise of warrants.
|
|
(4)
|
Based upon form
Schedule 13D filed with the SEC on July 13, 2021. Includes 210,526
shares issuable upon exercise of warrants.
|
|
(5)
|
Based upon form
Schedule 13G filed with the SEC on June 25, 2021. Includes 200,000
shares issuable upon exercise of warrants.
|
|
(6)
|
Based upon form
Schedule 13D filed with the SEC on June 29, 2020. Includes 222,000
shares issuable upon exercise of warrants.
|
|
(7)
|
Based upon form
Schedule 13G filed with the SEC on July 9, 2020. Includes 222,000
shares issuable upon exercise of warrants.
|
|
(8)
|
Includes 105,263
shares issuable upon exercise of warrants.
|
|
(9)
|
Includes 105,263
shares issuable upon exercise of warrants.
|
|
(10)
|
Includes 95,529
shares issuable upon exercise of warrants.
|
|
(11)
|
Based upon form
Schedule 13G filed with the SEC on June 25, 2021. Includes 78,947
shares issuable upon exercise of warrants.
|
|
(12)
|
Includes 78,947
shares issuable upon exercise of warrants.
|
|
(13)
|
Includes 10,526
shares issuable upon exercise of warrants and 78,672 shares
issuable upon exercise of options
|
|
(14)
|
Includes 66,500
shares issuable upon exercise of warrants.
|
|
(15)
|
Includes 66,500
shares issuable upon exercise of warrants.
|
|
(16)
|
Includes 39,473
shares issuable upon exercise of warrants.
|
|
(17)
|
Includes 39,473
shares issuable upon exercise of warrants.
|
|
(18)
|
Includes 526 shares
issuable upon exercise of warrants and 88,789 shares issuable upon
exercise of options.
|
|
(19)
|
Includes 36,842
shares issuable upon exercise of warrants.
|
|
(20)
|
Includes 20,000
shares issuable upon exercise of warrants.
|
|
(21)
|
Includes 31,578
shares issuable upon exercise of warrants.
|
|
(22)
|
Includes 31,578
shares issuable upon exercise of warrants.
|
|
(23)
|
Includes 2,631
shares issuable upon exercise of warrants and 86,146 shares
issuable upon exercise of options.
|
|
(24)
|
Based upon form
Schedule 13D filed with the SEC on July 13, 2021. Includes 26,315
shares issuable upon exercise of warrants.
|
|
(25)
|
Includes 25,00
shares issuable upon exercise of warrants.
|
10
|
(26)
|
Includes 21,052
shares issuable upon exercise of warrants.
|
|
(27)
|
Includes 21,052
shares issuable upon exercise of warrants.
|
|
(28)
|
Includes 21,052
shares issuable upon exercise of warrants.
|
|
(29)
|
Includes 2,631
shares issuable upon exercise of warrants and 41,667 shares
issuable upon exercise of options.
|
|
(30)
|
Includes 15,789
shares issuable upon exercise of warrants.
|
|
(31)
|
Includes 22,000
shares issuable upon exercise of warrants.
|
|
(32)
|
Includes 22,000
shares issuable upon exercise of warrants.
|
|
(33)
|
Includes 2,105
shares issuable upon exercise of warrants and 24,500 shares
issuable upon exercise of options.
|
|
(34)
|
Includes 20,000
shares issuable upon exercise of warrants.
|
|
(35)
|
Includes 12,631
shares issuable upon exercise of warrants.
|
|
(36)
|
Includes 11,000
shares issuable upon exercise of warrants.
|
|
(37)
|
Includes 10,526
shares issuable upon exercise of warrants.
|
|
(38)
|
Includes 10,526
shares issuable upon exercise of warrants.
|
|
(39)
|
Includes 1,052
shares issuable upon exercise of warrants and 7,500 shares issuable
upon exercise of options.
|
|
(40)
|
Includes 8,842
shares issuable upon exercise of warrants.
|
|
(41)
|
Includes 5,000
shares issuable upon exercise of warrants.
|
|
(42)
|
Includes 2,631
shares issuable upon exercise of warrants.
|
|
(43)
|
Includes 2,631
shares issuable upon exercise of warrants.
|
|
(44)
|
Includes 1,578
shares issuable upon exercise of warrants.
|
|
(45)
|
Includes 1,579
shares issuable upon exercise of warrants.
|
|
(46)
|
Includes 1,578
shares issuable upon exercise of warrants.
|
|
(47)
|
Includes 1,263
shares issuable upon exercise of warrants.
|
|
(48)
|
Includes 1,263
shares issuable upon exercise of warrants.
|
|
(49)
|
Includes 1,263
shares issuable upon exercise of warrants.
|
|
(50)
|
Includes 631 shares
issuable upon exercise of warrants.
|
|
(51)
|
Includes 526 shares
issuable upon exercise of warrants.
|
11
Relationship with Certain Selling Stockholders
Christopher Cox
Christopher
Cox has served as a Director of the Company since February 26,
2021.
John A. Moore
John
A. Moore was elected to our Board of Directors on January 23, 2019,
and became the Chairman of the Board of Directors on January 29,
2020. Mr. Moore also served as a consultant to the Company from
March 1, 2019 until June 30, 2020.
Helena Santos
Helena
Santos has been a Director of the Company and the President, Chief
Executive Officer, Chief Financial Officer and Treasurer for the
past three years.
James B. Polk
James
B. Polk was elected as the Secretary of the Company’s
wholly-owned subsidiary, Scientific Bioprocessing, Inc., on
February 26, 2021 and its Vice President of Sales for North,
Central, and South America regions.
DESCRIPTION OF COMMON STOCK
The
following description of our common stock, together with the
additional information we include in any applicable prospectus
supplements, summarizes the material terms and provisions of our
common stock that the selling stockholders may offer under this
prospectus. It may not contain all the information that is
important to you. For the complete terms of our common stock,
please refer to our amended certificate of incorporation and our
amended and restated bylaws, which are incorporated by reference
into the registration statement which includes this prospectus. The
Delaware General Corporation Law, or DGCL, may also affect the
terms of our common stock. If we so indicate in a prospectus
supplement, the terms of any security offered under that prospectus
supplement may differ from the terms we describe
below.
Our
amended certificate of incorporation provides for one class of
common stock. Our authorized capital stock consists of 15,000,000
shares of common stock. As of July 23, 2021, we had outstanding
6,458,143 shares of common stock, held by 288 stockholders of
record. As of July 23, 2021, we also had outstanding options to
acquire 1,180,757 shares of our common stock with a weighted
average exercise price of $8.74 per share. In addition, as of July
23, 2021, there were warrants outstanding for the purchase of an
aggregate of 3,147,783 shares of common stock with a weighted
average exercise price of $9.29 per share. Further, as of July 23,
2021, 5,243 shares of our common stock are available for issuance
pursuant to awards made under the Scientific Industries, Inc. 2012
Stock Option Plan, as amended.
Voting Rights
Under
our amended certificate of incorporation, each share of our common
stock entitles the holder to one vote with respect to each matter
presented to our stockholders on which the holders of our common
stock are entitled to vote. Our common stock votes as a single
class on all matters relating to the election and removal of
directors on our board of directors and as provided by law. Holders
of our common stock do not have cumulative voting rights. Except in
respect of matters relating to the election and removal of
directors on our board of directors and as otherwise provided in
our amended certificate of incorporation or required by law, all
matters to be voted on by our stockholders must be approved by a
majority of the shares present in person or by proxy at the meeting
and entitled to vote on the subject matter. In the case of election
of directors, all matters to be voted on by our stockholders must
be approved by a plurality of the votes entitled to be cast by all
shares of our common stock.
12
Dividends
The
holders of our common stock will be entitled to share equally,
identically and ratably in any dividends that our board of
directors may determine to issue from time to time. We have not
paid cash dividends on our common stock since December 14, 2018. We
do not anticipate paying periodic cash dividends on our common
stock for the foreseeable future. Any future determination about
the payment of dividends will be made at the discretion of our
board of directors and will depend upon our earnings, if any,
capital requirements, operating and financial conditions and on
such other factors as the board of directors deems
relevant.
Liquidation Rights
In
the event of any voluntary or involuntary liquidation, dissolution
or winding up of our affairs, holders of our common stock would be
entitled to share ratably in our assets that are legally available
for distribution to stockholders after payment of our debts and
other liabilities.
Other Rights
Our
stockholders have no preemptive, conversion or other rights to
subscribe for additional shares of our common stock. All
outstanding shares of our common stock are, and all shares of our
common stock offered by this prospectus will be, when sold, validly
issued, fully paid and nonassessable. The rights, preferences and
privileges of the holders of our common stock will be subject to,
and may be adversely affected by, the rights of the holders of
shares of any series of our preferred stock that we may designate
and issue in the future.
Listing
Our common stock is listed on the
Over-the-Counter
Bulletin Board under the symbol
“SCND.”
Transfer Agent and Registrar
The
transfer agent for our common stock is Continental Stock Transfer
& Trust Company. Its address is 1 State Street, New York, New
York 10004.
Certain Effects of Authorized but Unissued Stock
We
have shares of common stock available for future issuance without
stockholder approval. We may issue these additional shares for a
variety of corporate purposes, including future public or private
offerings to raise additional capital or to facilitate corporate
acquisitions or for payment as a dividend on our capital
stock.
Anti-Takeover Effects of Provisions of Our Charter
Documents
Our
amended certificate of incorporation provides for our board of
directors to be divided into three classes with staggered
three-year terms. Only one class of directors will be elected at
each annual meeting of our stockholders, with the other classes
continuing for the remainder of their respective three-year terms.
Because our stockholders do not have cumulative voting rights, our
stockholders holding a majority of the shares of our common stock
outstanding will be able to elect all of our directors. Our amended
certificate of incorporation and amended and restated bylaws
provide that only our board of directors, president or secretary of
the holders of 66 2/3 percent in interest of the stockholders
entitled to vote may call a special meeting of
stockholders.
Our
amended certificate of incorporation also provides that a
“Subject Transaction” with a “Related
Party” requires the approval of the holders of 80% of the
Company’s voting stock, unless (i) the Subject Transaction is
approved by 2/3 of our Board of Directors and (ii) our stockholders
receive at least $6.00 per share. A Subject Transaction is (i) a
merger or consolidation of the Company, (ii) the sale, lease,
exchange, transfer or other disposition of all or substantially all
the assets of the Company, or (ii) the sale, lease, exchange,
transfer or other disposition of any assets to the Company in
exchange for voting securities, unless (i) the value of such assets
is less than $1,000,000 (ii) the voting securities issued by the
Company constitute less than 20% of the aggregate voting securities
of the Company. A Related Person is a stockholder (or group of
stockholders that are required under the Securities Exchange Act of
1934, as amended, to file a Form 13D or Form 13G) that is the
beneficial owner of 5% or more of the voting securities of the
Company.
These
provisions may have the effect of deterring hostile takeovers or
delaying changes in our control or management. These provisions are
intended to enhance the likelihood of continued stability in the
composition of our board of directors and its policies and to
discourage certain types of transactions that may involve an actual
or threatened acquisition of us. These provisions are designed to
reduce our vulnerability to an unsolicited acquisition proposal.
The provisions also are intended to discourage certain tactics that
may be used in proxy fights. However, such provisions could have
the effect of discouraging others from making tender offers for our
shares and, as a consequence, they also may inhibit fluctuations in
the market price of our common stock that could result from actual
or rumored takeover attempts.
13
Anti-Takeover Effects of Provisions of Delaware Law
We
are subject to Section 203 of the DGCL, which prohibits a Delaware
corporation from engaging in any business combination with any
interested stockholder for a period of three years after the date
that such stockholder became an interested stockholder, with the
following exceptions:
●
before such date,
the board of directors of the corporation approved either the
business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;
●
upon completion of
the transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time
the transaction began, excluding for purposes of determining the
voting stock outstanding (but not the outstanding voting stock
owned by the interested stockholder) those shares owned (i) by
persons who are directors and also officers and (ii) employee stock
plans in which employee participants do not have the right to
determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer; or
●
on or after such
date, the business combination is approved by the board of
directors and authorized at an annual or special meeting of the
stockholders, and not by written consent, by the affirmative vote
of at least 66 2/3% of the outstanding voting stock that is not
owned by the interested stockholder.
In
general, Section 203 defines business combination to include the
following:
●
any merger or
consolidation involving the corporation and the interested
stockholder;
●
any sale, transfer,
pledge or other disposition of 10% or more of the assets of the
corporation involving the interested stockholder;
●
subject to certain
exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation to the
interested stockholder;
●
any transaction
involving the corporation that has the effect of increasing the
proportionate share of the stock or any class or series of the
corporation beneficially owned by the interested stockholder;
or
●
the receipt by the
interested stockholder of the benefit of any loans, advances,
guarantees, pledges or other financial benefits by or through the
corporation.
In
general, Section 203 defines an “interested
stockholder” as an entity or person who, together with the
person’s affiliates and associates, beneficially owns, or
within three years prior to the time of determination of interested
stockholder status did own, 15% or more of the outstanding voting
stock of the corporation.
Limitation of Liability and Indemnification
We
have adopted provisions in our amended certificate of incorporation
that limit or eliminate the liability of our directors for monetary
damages for breach of their fiduciary duties, except for liability
that cannot be eliminated under the DGCL. Section 102(b)(7) of the
DGCL, provides that a corporation may, in its original certificate
of incorporation or an amendment thereto, eliminate or limit the
personal liability of a director for violations of the
director’s fiduciary duty, except (1) for any breach of the
director’s duty of loyalty to the corporation or its
stockholders, (2) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (3)
pursuant to Section 174 of the DGCL, which provides for liability
of directors for unlawful payments of dividends or unlawful stock
purchases or redemptions or (4) for any transaction from which a
director derived an improper personal benefit. Accordingly, our
directors will not be personally liable for monetary damages for
breach of their fiduciary duties as directors, except with respect
to the following:
●
any breach of their
duty of loyalty to us or our stockholders;
●
acts or omissions
not in good faith or that involve intentional misconduct or a
knowing violation of law;
●
unlawful payments
of dividends or unlawful stock repurchases or redemptions as
provided in Section 174 of the DGCL; or
●
any transaction
from which the director derived an improper personal
benefit.
This
limitation of liability does not apply to liabilities arising under
the federal securities laws and does not affect the availability of
equitable remedies such as injunctive relief or rescission. If
Delaware law is amended to authorize the further elimination or
limiting of director liability, then the liability of our directors
will be eliminated or limited to the fullest extent permitted by
Delaware law as so amended.
Section
145 of the DGCL provides that a corporation may indemnify any
person, including an officer or director, who is, or is threatened
to be made, party to any threatened, pending or completed legal
action, suit or proceeding, whether civil, criminal, administrative
or investigative, other than an action by or in the right of such
corporation, by reason of the fact that such person was an officer,
director, employee or agent of such corporation or is or was
serving at the request of such corporation as an officer, director,
employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action,
suit or proceeding, provided such officer, director, employee or
agent acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the corporation’s best interest
and, for criminal proceedings, had no reasonable cause to believe
that his conduct was unlawful. A Delaware corporation may indemnify
any officer or director in an action by or in the right of the
corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses that such
officer or director actually and reasonably incurred.
14
Our
amended certificate of incorporation and our amended and restated
bylaws provide that we shall indemnify our directors and executive
officers and shall indemnify our other officers and employees and
other agents to the fullest extent permitted by law. We believe
that indemnification under our bylaws covers at least negligence
and gross negligence on the part of indemnified parties. Our bylaws
also permit us to secure insurance on behalf of any officer,
director, employee or other agent for any liability arising out of
his or her actions in this capacity, regardless of whether our
bylaws would permit indemnification.
In
addition, we have entered and intend to continue to enter into
separate indemnification agreements with certain of our directors
and executive officers that are, in some cases, broader than the
specific indemnification provisions provided by Delaware law and
our charter documents, and may provide additional procedural
protection. These agreements will require us, among other things,
to:
●
indemnify officers
and directors against certain liabilities that may arise because of
their status as officers and directors;
●
advance expenses,
as incurred, to officers and directors in connection with a legal
proceeding subject to limited exceptions; and
●
cover officers and
directors under any general or directors’ and officers’
liability insurance policy maintained by us.
We
believe that these provisions and agreements are necessary to
attract and retain qualified persons as directors and executive
officers. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers or
persons controlling our company pursuant to the foregoing
provisions, the opinion of the Securities and Exchange Commission
is that such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
In
addition, we maintain standard policies of insurance under which
coverage is provided to our directors and officers against loss
arising from claims made by reason of breach of duty or other
wrongful act, and to us with respect to payments which may be made
by us to such directors and officers pursuant to the above
indemnification provisions or otherwise as a matter of
law.
PLAN OF DISTRIBUTION
The
selling stockholders may, from time to time, sell any or all of
their shares of common stock on any stock exchange, market or
trading facility on which the shares are traded or in private
transactions. These sales may be at fixed or negotiated prices. The
selling stockholders may use any one or more of the following
methods when selling shares:
●
ordinary brokerage
transactions and transactions in which the broker-dealer solicits
purchasers;
●
block trades in
which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
●
purchases by a
broker-dealer as principal and resale by the broker-dealer for its
account;
●
an exchange
distribution in accordance with the rules of the applicable
exchange;
●
privately
negotiated transactions;
●
short sales
effected after the date the registration statement of which this
Prospectus is a part is declared effective by the SEC;
●
broker-dealers may
agree with the selling stockholders to sell a specified number of
such shares at a stipulated price per share;
●
a combination of
any such methods of sale; and
●
any other method
permitted pursuant to applicable law.
The
selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this
prospectus.
Broker-dealers
engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated. The selling stockholders do
not expect these commissions and discounts to exceed what is
customary in the types of transactions involved. Any profits on the
resale of shares of common stock by a broker-dealer acting as
principal might be deemed to be underwriting discounts or
commissions under the Securities Act. Discounts, concessions,
commissions and similar selling expenses, if any, attributable to
the sale of shares will be borne by a selling stockholder. The
selling stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of
the shares if liabilities are imposed on that person under the
Securities Act.
The
selling stockholders may from time to time pledge or grant a
security interest in some or all of the shares of common stock
owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and
sell the shares of common stock from time to time under this
prospectus after we have filed a supplement to this prospectus
under Rule 424(b)(3) or other applicable provision of the
Securities Act of 1933 supplementing or amending the list of
selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this
prospectus.
15
The
selling stockholders also may transfer the shares of common stock
in other circumstances, in which case the transferees, pledgees or
other successors in interest will be the selling beneficial owners
for purposes of this prospectus and may sell the shares of common
stock from time to time under this prospectus after we have filed a
supplement to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933 supplementing or
amending the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders
under this prospectus.
The
selling stockholders and any broker-dealers or agents that are
involved in selling the shares of common stock may be deemed to be
“underwriters” within the meaning of the Securities Act
in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the
resale of the shares of common stock purchased by them may be
deemed to be underwriting commissions or discounts under the
Securities Act.
We are
required to pay all fees and expenses incident to the registration
of the shares of common stock. We have agreed to indemnify the
selling stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities
Act.
The
selling stockholders have advised us that they have not entered
into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their shares
of common stock, nor is there an underwriter or coordinating broker
acting in connection with a proposed sale of shares of common stock
by any selling stockholder. If we are notified by any selling
stockholder that any material arrangement has been entered into
with a broker-dealer for the sale of shares of common stock, if
required, we will file a supplement to this prospectus. If the
selling stockholders use this prospectus for any sale of the shares
of common stock, they will be subject to the prospectus delivery
requirements of the Securities Act.
In
order to comply with the securities laws of some states, if
applicable, the common stock may be sold in these jurisdictions
only through registered or licensed brokers or dealers. In
addition, in some states the common stock may not be sold unless it
has been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is
complied with.
We have
advised the selling stockholders that the anti-manipulation rules
of Regulation M under the Securities Exchange Act of 1034, as
amended, may apply to sales of shares in the market and to the
activities of the selling stockholders and their affiliates. In
addition, to the extent applicable we will make copies of this
prospectus (as it may be supplemented or amended from time to time)
available to the selling stockholders for the purpose of satisfying
the prospectus delivery requirements of the Securities Act. The
selling stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares
against certain liabilities, including liabilities arising under
the Securities Act.
We have
agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective
until the earlier of (1) such time as all of the shares covered by
this prospectus have been disposed of pursuant to and in accordance
with the registration statement and (2) one year from the date of
this prospectus.
16
MANAGEMENT'S DISCUSSION AND
ANALYSIS
The Company’s financial statements for the years ended June
30, 2020 and 2019 were retrospectively revised due to
an event
that occurred after the end of its fiscal year relating to the
Company’s November 30, 2020 sale of a reporting segment which
became a discontinued operation as
of that date.
For
the Year Ended June 30, 2020 and
2019:
Forward-Looking
statements. 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 information.
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. This Management’s Discussion and
Analysis of Financial Condition and Results of Operations should be
read in conjunction with the Company’s financial statements
and the related notes included elsewhere in this
report.
Overview.
The Company reflected a loss from
continuing operations before income tax benefit of $667,400 for
fiscal 2020 compared to income before income tax expense of
$902,200 for fiscal 2019, primarily due to increased operating
expenses as a result of the Company’s investment in its
Bioprocessing Systems operations, , a non-recurring charge for the
termination of a management employee, and other corporate expenses.
Commencing in the last quarter of the Company’s fiscal year
2019, the Company began to invest heavily in its bioprocessing
business by hiring a new President of SBI, engineering staff,
application scientists, sales and marketing personnel, which is
expected to continue at increased levels into fiscal 2021. In June
2020 the Company raised approximately $6 million through the sale
of its Common Stock and warrants to purchase Common Stock to
finance these efforts. The Company’s results also suffered
from a material decrease in sales of Discontinued Operations’
products due mostly to the COVID-19 pandemic which resulted in a
loss from discontinued operations before income tax benefit of
$472,500 compared to $132,000 loss before income tax benefit for
fiscal 2019, and to a lesser extent, decreased sales of Benchtop
Laboratory Equipment in the last quarter of fiscal 2020, also due
to the pandemic. The results reflect total non-cash amounts for
depreciation, amortization, and adjustments to contingent
consideration liabilities of approximately $273,500 for fiscal 2020
and approximately $778,500 for fiscal 2019.
The
challenges posed by the COVID-19 pandemic on the global economy
began to take effect and impact the Company’s operations at
the end of the third quarter of the year ended June 30, 2020. At
that time, the Company took appropriate action and put plans in
place to diminish the effects of COVID-19 on its operations,
enabling the Company to continue to operate with minor or temporary
disruptions to its operations. The Company took immediate action as
it pertains to COVID-19 preparedness by implementing the Center for
Disease Control’s guidelines for employers in order to
protect the Company’s employees’ health and safety,
with actions such as implementing work from home, social distancing
in the workplace, requiring self quarantine for any employee
showing symptoms, wearing face coverings, and training employees on
maintaining a healthy work environment. However, if an employee
becomes infected in the future, and the Company is forced to shut
down for a period of time, it could have a short-term negative
impact on operations. At the beginning of the pandemic, the
Discontinued Operations and Bioprocessing Systems Operations were
shut down due to state mandates, however, the impact on operations
was immaterial, and the Company has been able to retain its
employees without furloughs or layoffs, in part, due to the
Company’ receipt of $563,800 loan under the Federal
Government’s Paycheck Protection Program. The Company has not
experienced and does not anticipate any material impact on its
ability to collect its accounts receivable due to the nature of its
customers, which are primarily distributors of laboratory equipment
and supplies that have the ability to pay. However, there were some
delays in receiving some accounts receivable due for catalyst
research instruments due to customer shutdowns, and there was a
material negative impact on the revenues of the Discontinued
Operations. The Company has not experienced and does not anticipate
any material impairment to its tangible and intangible assets,
system of internal controls, supply chain, or delivery and
distribution of its products as a result of COVID-19, however the
ultimate impact of COVID-19 on the Company’s business,
results of operations, financial condition and cash flows is
dependent on future developments, including the duration or
worsening of the pandemic and the related length of its impact on
the global economy, which are uncertain and cannot be predicted at
this time.
17
Results of Operations. Net
revenues for fiscal 2020 decreased $600,500 (7.1%) to $7,784,400
from $8,384,900 for fiscal 2019, reflecting a decrease of $305,300
in royalties earned by the Bioprocessing Systems operations due to
lack of royalties under a previous European patent, and a decrease
of $295,200 in sales of Benchtop Laboratory Equipment due to
COVID-19.
Sales
of products related to Discontinued Operations are comprised of a
small number of large orders, while sales of Benchtop Laboratory
Equipment are comprised of a large number of small orders. As of
June 30, 2020, the order backlog for Discontinued Operations’
products was $176,500, all of which is expected to be shipped
during the fiscal year ending June 30, 2021, compared to $124,200
as of June 30, 2019.
The
gross profit percentage for fiscal 2020 was 51% compared to 48.2%
for fiscal 2019. The current year reflected higher gross profit
margin percentage for the Bioprocessing Systems operations, and a
slightly lower gross margin percentage for the Benchtop Laboratory
Equipment Operations due in part to higher material costs including
tariffs and fixed overhead.
General
and administrative expenses for fiscal 2020 increased by
approximately $562,400 (32.8%) to $2,275,400 compared to $1,713,000
for fiscal 2019 due primarily to non-recurring termination costs
for a management employee, director fees, and increased
administrative costs incurred by the Bioprocessing Systems
operations.
Selling expenses for fiscal 2020 increased
approximately $293,200 (32.8%) to $1,185,800 from $892,600 for
fiscal 2019, primarily due to increased sales and marketing
expenses incurred by the Bioprocessing Systems
operations.
Research
and development expenses amounted to $1,139,700 for fiscal 2020
compared to $530,500 for fiscal 2019, due to increased product
development expenditures of both labor and materials by the
Bioprocessing Systems operations. During the last quarter of fiscal
2019, the Company's Bioprocessing Systems operations began to
expand its product development efforts with the hiring of several
engineers.
Total
other income (loss), net was $(3,900) for fiscal 2020 compared to
$(4,500) in fiscal 2019.
The
Company reflected income tax benefit for continuing operations of
$214,000 for fiscal 2020 compared to income tax expense of $160,600
for fiscal 2019, primarily due to the loss incurred.
As a
result of the foregoing, the Company recorded a net loss from
continuing operations of $453,400 for fiscal 2020 compared to net
income from continuing operations of $741,600 for fiscal
2019.
The
Company reflected a loss from discontinued operations of $472,500
for fiscal 2020, compared to a $132,000 loss for fiscal 2019,
primarily due to reduction in sales as a result of the
Pandemic.
The
Company reflected income tax benefit for fiscal 2020 of $222,600
compared to $36,000 for fiscal due primarily to the increased loss
during the current year period.
As a
result, the net loss from discontinued operations was $249,900 for
fiscal 2020 compared to net loss of $96,000 for fiscal
2019.
The
Company recorded a net loss of $703,300 for fiscal 2020 compared to
net income of $645,600 for fiscal 2019.
Liquidity and
Capital Resources. Cash and cash
equivalents increased by $5,966,100 to $7,559,700 as of June 30,
2020 from $1,593,600 as of June 30, 2019.
18
Net cash used in operating activities was 168,100
for fiscal 2020 compared to net cash provided by operating
activities of $1,159,500 for fiscal 2019, primarily due to the net
loss for the current year. Net cash used in investing
activities was $84,100 for fiscal 2020 compared to $218,400 for
fiscal 2019 due mainly to decreased capital expenditures in the
current year. Net cash provided by financing activities was
$6,209,400 for fiscal 2020 compared to $391,700 used by the Company
during fiscal 2019 due mainly to the equity financing and the
proceeds from the Payroll Protection Program loan.
The
Company's working capital increased by $5,088,300 to $10,548,500 as
of June 30, 2020 compared to $5,460,200, as of June 30, 2019,
primarily due to the cash received from the equity
financing.
The
Company has a Demand Line of Credit through December 2020 with
First National Bank of Pennsylvania which provides for borrowings
of up to $300,000 for regular working capital needs, bearing
interest at prime, currently 3.25% at June 30, 2020. Advances on
the line are secured by a pledge of the Company’s assets
including inventory, accounts receivable, chattel paper, equipment
and general intangibles of the Company. As of June 30, 2020, no
borrowings were outstanding under such line. On April 14, 2020 the
Company received a loan, all of which is outstanding, under the
Federal Government’s Paycheck Protection Program with its
bank, First National Bank, amounting to $563,700 at an interest
rate of 1% with a maturity date of April 17, 2022, a majority of
which is expected to be forgiven under the program.
In
June 2020, the Company raised $6,004,400 (net of issuance costs)
through the sale of 1,349,850 shares of the Company’s common
stock and 1,349,850 warrants to purchase Common Stock. The sale was
made in a private placement transaction, pursuant to the exemption
provided by Section 4(2) of the Securities Act and certain rules
and regulations promulgated under that section and pursuant to
exemptions under state securities laws, as a sale to
“accredited investors” as defined in Rule 501(a) of the
Securities Act. The Company intends to use the net proceeds from
the sale of the securities for the development of the business of
its Bioprocessing Systems operations.
Management
believes that the Company will be able to meet its cash flow needs
during the next 12 months from its available financial resources
including the cash raised in June, cash from operations, its
investments, and the line of credit. Commencing in the fourth
quarter of fiscal 2019 the Company began committing significant
resources to the Bioprocessing Systems operations for staffing,
sales and marketing, and administration.
Capital
Expenditures. During fiscal
2020, the Company incurred $50,900 in capital expenditures. The
Company expects that based on its current operations, its capital
expenditures will be approximately the same for the fiscal year
ending June 30, 2021.
Off-Balance Sheet
Arrangements.
None.
For
Three and Nine Months Ended March 31, 2021 and
2020:
Forward-Looking statements.
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 information.
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. This Management’s Discussion and
Analysis of Financial Condition and Results of Operations should be
read in conjunction with the Company’s financial statements
and the related notes included elsewhere in this
report.
Overview.
The Company
reflected a loss from continuing operations before income tax
benefit of $1,830,200 and $2,205,200 for the three and nine months
ended March 31, 2021 compared to a loss of $276,900 and $88,900 for
the three and nine months ended March 31, 2020, primarily due to
increased operating expenses incurred by the Company’s
Bioprocessing Systems Operations, stock options expense amounting
to $1,292,000 and $1,429,400 for the three and nine months ended
March 31, 2021 compared to $14,600 and $50,000 for the three and
nine months ended March 31 2020, and expenses related to mergers
and acquisitions (“M&A”) activities. The results
reflected the Company’s continued expansion of its
Bioprocessing Systems Operations with increased personnel and
expenditures for product development, sales, and marketing
activities, and M&A activity, partially offset by the profits
generated by increased sales of the Benchtop Laboratory Equipment
Operations.
The Company’s
results for the nine months ended March 31, 2021, reflect
discontinued operations of the Catalyst Research Instruments
Operations due to the sale of substantially all its assets at an
approximate $405,400 loss at the end of the second quarter, which
is reflected in Income (loss) from discontinued operations of
$758,400, compared to an operating loss from discontinued
operations of $360,300 for the nine months ended March 31, 2020.
Income from discontinued operations for the three months ended
March 31, 2021 was $16,400 compared to a loss of $99,600 for the
three months ended March 31, 2020, primarily due to a product sale
that was delivered to a customer in March 2021 after the
sale.
Results of Operations
The Three Months Ended March 31, 2021 Compared With The Three
Months Ended March 31, 2020
Net revenues for
the three months ended March 31, 2021 increased $372,400 (17.4%) to
$2,508,600 from $2,136,200 for the three months ended March 31,
2020, reflecting an increase of $565,000 in sales of benchtop
laboratory equipment, partially offset by decreased earned
royalties of $193,600 by the Bioprocessing Systems Operations. The
Company’s benchtop laboratory equipment sales reflected
$466,200 and $430,400 of Torbal
brand product gross sales for the three months ended March 31, 2021
and 2020, respectively.
The overall gross
profit percentage for the three months ended March 31, 2021 was
54.3% compared to 51.5% for the
three months ended March 31, 2020, reflecting increased margins for
the Benchtop Laboratory Equipment Operations due to increased
sales. The gross profit for the
Bioprocessing Systems Operations was positively impacted by the
recording of an amount related to expected lower future contingent
consideration payments resulting from expected lower future
royalties.
General and
administrative expenses for the three months ended March 31, 2021
increased by $875,900 (171.8%) to $1,385,600 compared to $509,700
for the three months ended March 31, 2020, due to the expansion of
the Scientific Bioprocessing Systems Operations, stock options
expense, and expenses related to M&A activities.
Selling expenses
for the three months ended March 31, 2021 increased $1,041,200
(301.9%) to $1,386,100 from $344,900 for the three months ended
March 31, 2020, due to increased sales and marketing costs related
to personnel (including stock options expense), websites, market
research, and advertising expenses incurred by the Bioprocessing
Systems Operations, and to a lesser extent increased online
marketing for the Benchtop Laboratory Equipment Operations’
Torbal pill counter product line.
Research and
development expenses increased by $151,100 (50.6%) to $450,000 for
the three months ended March 31, 2021 compared to $298,900 for the
three months ended March 31, 2020, primarily due to the ramp up in
product development activities by the Bioprocessing Systems
Operations which included staffing, facilities, and materials and
to new product development costs related to the Benchtop Laboratory
Equipment Operations.
23
In the three months
ended March 31, 2020, the Company reflected a non-recurring charge
of termination costs for the severance pay and related payroll
costs, pertaining to the early termination in February 2020 of the
Company's Vice President of Corporate Strategy and Vice President
of Sales for the Company's wholly-owned subsidiary, Altamira
Instruments, Inc. which was sold at the end of the second
quarter.
Total other income
(expense), net was $28,600 for the three months ended March 31,
2021 compared to ($41,900) for the three months ended March 31,
2020, primarily due to increased interest and dividend income
generated from investment securities, and holding losses on
investments in the prior year period.
The Company
reflected an income tax benefit related to continuing operations of
$378,200 for the three months ended March 31, 2021 compared to
$45,500 for the three months ended March 31, 2020 due to the
increased loss for the period.
The Company
reflected income from discontinued operations of $16,400 for the
three months ended March 31, 2021, compared to a $99,600 loss for
the three months ended March 31, 2020, primarily due to revenue
generated post-sale of substantially all the assets of Altamira
Instruments, Inc.
The Company
reflected no income tax expense or benefit for the three months
ended March 31, 2021 and an income tax benefit related to
discontinued operations of $16,400 for the three months ended March
31, 2020 due to the loss during the prior year period.
The net income from
discontinued operations was $16,400 for the three months ended
March 31, 2021 compared to net loss of $83,200 for the three months
ended March 31, 2020, primarily due to revenue generated post-sale
of substantially all the assets of Altamira Instruments,
Inc.
As a result of the
foregoing, the Company recorded a net loss of $1,435,600 for the
three months ended March 31, 2021 compared to a net loss of
$314,600 for the three months ended March 31, 2020.
The Nine Months Ended March 31, 2021 Compared With The Nine Months
Ended March 31, 2020
Net revenues for
the nine months ended March 31, 2021 increased $1,010,600 (16.2%)
to $7,245,100 from $6,234,500 for the nine months ended March 31,
2020, reflecting a $1,483,000 increase in net sales of benchtop
laboratory equipment, and a decrease of $632,800 in earned
royalties by the Bioprocessing Systems Operations due to terminated
patents. The Benchtop Laboratory Equipment sales reflected
$1,560,700 of Torbal brand gross product sales for the nine months
ended March 31, 2021, compared to $1,428,900 in the nine months ended March
31, 2020.
The overall gross
profit percentage for the nine months ended March 31, 2021 was
52.8% and 52.2% for the nine months ended March 31, 2020, which
reflected a higher gross profit margin percentage for the Benchtop
Laboratory Equipment Operations due to fixed overhead on increased
sales.
General and
administrative expenses for the nine months ended March 31, 2021
increased $983,600 (67.5%) to $2,441,700 from $1,458,100 for the
nine months ended March 31, 2020, due to the expansion of the
Scientific Bioprocessing Systems Operations, stock options expense,
and expenses related to M&A activities.
Selling expenses
for the nine months ended March 31, 2021 increased $1,778,600
(202.0%) to $2,658,900 from $880,300 for the nine months ended
March 31, 2020, due to increased sales and marketing costs related
to personnel (including stock options expense), websites, market
research, and advertising expenses incurred by the Bioprocessing
Systems Operations, and to a lesser extent increased online
marketing for the Benchtop Laboratory Equipment Operations’
Torbal pill counter product line.
24
Research and
development expenses increased by $228,700 (28.8%) to $1,024,000
for the nine months ended March 31, 2021 compared to $795,300 for
the nine months ended March 31, 2020, primarily due to the ramp up
in product development activities by the Bioprocessing Systems
Operations which included staffing, facilities, and materials and
to new product development costs related to the Benchtop Laboratory
Equipment Operations.
In the nine months
ended March 31, 2020, the Company reflected a non-recurring charge
of termination costs for the severance pay and related payroll
costs, pertaining to the early termination in February 2020 of the
Company's Vice President of Corporate Strategy and Vice President
of Sales for the Company's wholly-owned subsidiary, Altamira
Instruments, Inc. which was sold at the end of the second
quarter.
Total other income
(expense), net was $93,700 for the nine months ended March 31, 2021
compared to ($30,100) for the nine months ended March 31, 2020,
primarily due to increased interest and dividend income generated
from investment securities, and holding losses on investments in
the prior year period.
The Company
reflected an income tax benefit related to continuing operations of
$472,300 for the nine months ended March 31, 2021 compared to
$15,000 for the nine months ended March 31, 2020 due to the
increased loss for the current year period.
The Company
reflected a loss from discontinued operations of $758,400 for the
nine months ended March 31, 2021, compared to $360,300 for the nine
months ended March 31, 2020, due to the loss on disposal in the
current year period.
The Company
reflected an income tax benefit related to discontinued operations
of $179,900 for the nine months ended March 31, 2021 compared to
$67,000 for the nine months ended March 31, 2020 due to the
increased loss during the current year period.
The net loss from
discontinued operations was $578,500 for the nine months ended
March 31, 2021 compared to $293,300 for the nine months ended March
31, 2020, primarily due to the loss on disposal during the current
year period.
As a result of the
foregoing, the Company recorded a net loss of $2,311,400 for the
nine months ended March 31, 2021 compared to a net loss of $367,200
for the nine months ended March 31, 2020.
Liquidity and Capital
Resources. Cash and cash equivalents decreased by $6,932,200
to $627,500 as of March 31, 2021 from $7,559,700 as of June 30,
2020, primarily due to converting cash on-hand to short term liquid
investment securities and the loss for the period.
Net cash used in operating activities was
$2,592,500 for the nine months ended March 31, 2021 compared to net
cash used of $803,800 during the nine months ended March 31, 2020,
primarily due to the increased loss for the period. Net cash used
in investing activities was $4,763,100 for the nine months ended
March 31, 2021 compared to $66,300 used during the nine months
ended March 31, 2020, principally due to net purchases of investments, and to a lesser extent
new capital equipment purchases by the Bioprocessing Systems
Operations during the current
period, partially offset by the cash received from the sale of the
subsidiary. Net cash
provided by financing activities was $423,400 for the nine months
ended March 31, 2021, due to a Payroll Protection Program loan
received by the Federal Government,
compared to $7,000 provided during the nine months ended March 31,
2020 from cash proceeds related to the exercises of stock
options.
The
Company's working capital decreased by $1,222,600 to $9,325,900 as
of March 31, 2021 compared to $10,548,500, as of June 30, 2020
mainly due to the loss during the period.
The
Company has a Demand Line of Credit through December 2021 with
First National Bank of Pennsylvania which provides for borrowings
of up to $300,000 for regular working capital needs, bearing
interest at prime, 3.25% currently. Advances on the line, are
secured by a pledge of the Company’s assets including
inventory, accounts, chattel paper, equipment and general
intangibles of the Company. As of March 31, 2021, no borrowings
were outstanding under such line.
Management
believes that the Company will be able to meet its cash flow needs
during the 12 months ending March 31, 2022 from its available
financial resources including, its cash and investment securities,
operations and the line of credit.
19
LEGAL MATTERS
The
validity of the shares of common stock offered in this prospectus
is being passed upon for us by Reitler Kailas & Rosenblatt LLP,
New York, New York.
EXPERTS
Nussbaum Berg Klein & Wolpow, CPAs LLP,
our independent registered public accounting firm, has audited our
consolidated financial statements included in our Annual Report on
Form 10-K for the fiscal year ended June 30, 2020, as set
forth in their report, which is included in our Annual Report on
Form 10-K for the fiscal year ended June 30, 2020, which financial
statements are incorporated herewith in this prospectus, and by
reference. Our consolidated financial statements are incorporated
by reference in reliance on Nussbaum Berg Klein & Wolpow, CPAs
LLP’s report, given on their authority as experts in
accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are
subject to the information requirements of the Exchange Act and we
therefore file periodic reports, proxy statements and other
information with the SEC relating to our business, financial
statements and other matters. The reports, proxy statements and
other information we file may be inspected and copied at prescribed
rates at the SEC’s Public Reference Room located at 100 F
Street, N.E., Washington, D.C. 20549. You may obtain information on
the operation of the SEC’s Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains a website that
contains reports, proxy and information statements and other
information regarding issuers like us that file electronically with
the SEC. The address of the SEC’s website is http://www.sec.gov.
This
prospectus constitutes part of a registration statement on Form S-1
filed under the Securities Act with respect to the shares of common
stock covered hereby. As permitted by the SEC’s rules, this
prospectus omits some of the information, exhibits and undertakings
included in the registration statement. You may read and copy the
information omitted from this prospectus but contained in the
registration statement, as well as the periodic reports and other
information we file with the SEC, at the public reference room and
web site of the SEC referred to above. You may also access our
filings with the SEC on our web site is located at
http://www.scientificindustries.com. The information contained on
our web site is not part of this prospectus.
Statements
contained in this prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance
we refer you to the copy of the contract or other document filed or
incorporated by reference as an exhibit to the registration
statement or as an exhibit to our Exchange Act filings, each such
statement being qualified in all respects by such
reference.
20
DOCUMENTS INCORPORATED BY REFERENCE
The SEC
allows us to “incorporate by reference” information
into this document. This means that we can disclose important
information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference
is considered to be a part of this document, except for any
information superseded by information that is included directly in
this document or incorporated by reference subsequent to the date
of this document.
This
prospectus incorporates by reference the documents listed
below:
●
our Annual Report
on Form 10-K for the year ended June 30, 2020, filed with the SEC
on October 9, 2020;
●
our Quarterly
Reports on Form 10-Q filed with the SEC on November 23, 2020,
February 23, 2021 and May 17, 2021;
●
our Current Reports
on Form 8-K filed with the SEC on December 1, 2020, January 8,
2021, March 1, 2021, March 8, 2021, April 13, 2021, April 30, 2021,
June 18, 2021 and our Current Report on Form 8-K/A filed on July
12, 2021; and
●
the description of
our common stock contained on Form 8-A, filed with the SEC
approximately in December 1954, including any amendments or reports
filed for the purpose of updating the description.
In
addition, all documents subsequently filed by us with the SEC
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
prior to the termination of the offering, shall be deemed to be
incorporated by reference into this prospectus; provided, however,
that all reports, exhibits and other information that we
“furnish” to the SEC will not be considered
incorporated by reference into this prospectus. Any statement
contained in a document incorporated by reference in this
prospectus or any prospectus supplement shall be deemed to be
modified or superseded to the extent that a statement contained
herein, therein or in any other subsequently filed document that
also is incorporated by reference herein or therein modifies or
supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus or any prospectus
supplement.
We will
provide to you at no cost a copy of any and all of the information
incorporated by reference into the registration statement of which
this prospectus is a part. You may make a request for copies of
this information in writing or by telephone. Requests should be
directed to:
Scientific
Industries, Inc.
80
Orville Drive, Suite 102
Bohemia,
New York 11716
Attn:
Corporate Secretary
Exhibits
to the filings will not be sent, however, unless those exhibits
have specifically been incorporated by reference in this
prospectus.
Copies
of the documents incorporated by reference may also be found on our
website at www.scientificindusties.com. Except with respect to the
documents expressly incorporated by reference above which are
accessible at our website, the information contained on our website
is not a part of and should not be construed as being incorporated
by reference into, this prospectus.
21
SCIENTIFIC INDUSTRIES, INC.
AND SUBSIDIARIES
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
AS OF AND FOR THE YEARS ENDED
JUNE 30, 2020 AND 2019
22
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
CONTENTS
|
|
Page
|
|
|
|
|
Report of
independent registered public accounting firm
|
F-1
|
|
|
|
|
Consolidated
financial statements:
|
|
|
|
|
|
Balance
sheets
|
F-2
|
|
|
|
|
Statements of
operations
|
F-3
|
|
|
|
|
Statements of
changes in stockholders’ equity
|
F-4
|
|
|
|
|
Statements of cash
flows
|
F-5
|
|
|
|
|
Notes to financial
statements
|
F-6 – F-25
|
23
Report of Independent Registered Public Accounting
Firm
To the Stockholders and the Board of Directors of Scientific
Industries, Inc. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of
Scientific Industries, Inc. and subsidiaries (the Company) as of
June 30, 2020 and 2019, the related consolidated statements of
operations, changes in stockholders’ equity and cash flows,
for the years then ended, and the related notes and schedules
(collectively, the financial statements). In our opinion, the
financial statements present fairly, in all material respects, the
financial position of the Company as of June 30, 2020 and 2019, and
the results of its operations and its cash flows for the years then
ended in conformity with accounting principles generally accepted
in the United States of America.
Discontinued Operations
As discussed in Note 16 to the financial statements,
the Company sold all
of the assets of its wholly-owned subsidiary, Altamira Industries,
Inc., subsequent to the date of
our report on the 2020 financial statements.
Basis for Opinion
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the
Company's financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
We have served as the Company's auditor since 1991.
Melville, New York
October 9, 2020, except for Notes 16 and 17, as to
F-1
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
AS OF JUNE 30, 2020 AND 2019
ASSETS
|
|
2020
|
2019
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$7,559,700
|
$1,602,500
|
|
Investment
securities
|
331,800
|
330,900
|
|
Trade accounts
receivable, less allowance for doubtful accounts of $11,600 and
$15,000, respectively
|
1,064,000
|
1,974,200
|
|
Inventories
|
2,541,000
|
2,383,600
|
|
Income tax
receivable
|
334,800
|
-
|
|
Prepaid expenses
and other current assets
|
112,400
|
95,000
|
|
Assets held for
disposal
|
793,000
|
659,300
|
|
Total current
assets
|
12,736,700
|
7,045,500
|
|
|
|
|
|
Property and
equipment, net
|
278,300
|
316,100
|
|
|
|
|
|
Intangible assets,
net
|
128,700
|
175,000
|
|
|
|
|
|
Goodwill
|
257,300
|
257,300
|
|
|
|
|
|
Operating lease
right-of-use assets
|
803,300
|
-
|
|
|
|
|
|
Other
assets
|
56,000
|
51,000
|
|
|
|
|
|
Deferred
taxes
|
537,100
|
431,100
|
|
|
|
|
|
Total
assets
|
$14,797,400
|
$8,276,000
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$334,600
|
$484,500
|
|
Accrued
expenses
|
679,000
|
430,800
|
|
Contract
liabilities
|
20,000
|
-
|
|
Contingent
consideration, current portion
|
111,000
|
268,000
|
|
Bank
overdraft
|
43,100
|
140,000
|
|
Liabilities held
for disposal
|
240,900
|
262,000
|
|
Lease liabilities,
current portion
|
195,800
|
-
|
|
Payroll Protection
Program loan
|
563,800
|
-
|
|
Total current
liabilities
|
2,188,200
|
1,585,300
|
|
|
|
|
|
Lease liabilities,
less current portion
|
640,800
|
-
|
|
Contingent consideration payable, less current
portion
|
247,000
|
350,000
|
|
|
|
|
|
Total
liabilities
|
3,076,000
|
1,935,300
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
|
Common stock, $.05
par value; 7,000,000 shares authorized; 2,881,065 and 1,513,914 shares issued; 2,861,263
and 1,494,112 shares outstanding in 2020 and 2019,
respectively
|
144,100
|
75,700
|
|
Additional paid-in
capital
|
8,608,300
|
2,592,700
|
|
Retained
earnings
|
3,021,400
|
3,724,700
|
|
|
11,773,800
|
6,393,100
|
|
Less common stock
held in treasury at cost, 19,802 shares
|
52,400
|
52,400
|
|
|
|
|
|
Total
stockholders’ equity
|
11,721,400
|
6,340,700
|
|
|
|
|
|
Total liabilities
and stockholders’ equity
|
$14,797,400
|
$8,276,000
|
See
notes to consolidated financial statements.
F-2
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
|
2020
|
2019
|
|
|
|
|
|
Revenues
|
$7,784,400
|
$8,384,900
|
|
|
|
|
|
Cost of
revenues
|
3,847,000
|
4,342,100
|
|
|
|
|
|
Gross
profit
|
3,937,400
|
4,042,800
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
General and
administrative
|
2,275,400
|
1,713,000
|
|
Selling
|
1,185,800
|
892,600
|
|
Research and
development
|
1,139,700
|
530,500
|
|
|
|
|
|
Total operating
expenses
|
4,600,900
|
3,136,100
|
|
|
|
|
|
Income (loss) from
operations
|
(663,500)
|
906,700
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
Interest
income
|
12,600
|
3,400
|
|
Other income
(expense), net
|
(16,500)
|
(7,800)
|
|
Interest
expense
|
-
|
(100)
|
|
|
|
|
|
Total other income
(expense), net
|
(3,900)
|
(4,500)
|
|
|
|
|
|
Income (loss)
before income tax expense (benefit)
|
(667,400)
|
902,200
|
|
|
|
|
|
Income tax expense
(benefit):
|
|
|
|
Current
|
-
|
166,600
|
|
Deferred
|
(214,000)
|
(6,000)
|
|
|
|
|
|
Total income tax
expense (benefit)
|
(214,000)
|
160,600
|
|
|
|
|
|
Net income (loss)
from continuing operations
|
$(453,400)
|
$741,600
|
|
|
|
|
|
Discontinued
operations (Note 16):
|
|
|
|
|
|
|
|
Loss from
discontinued operations
|
(472,500)
|
(132,000)
|
|
|
|
|
|
Income tax benefit,
deferred
|
(222,600)
|
(36,000)
|
|
|
|
|
|
Net loss from
discontinued operations
|
(249,900)
|
(96,000)
|
|
|
|
|
|
Net income
(loss)
|
$(703,300)
|
$645,600
|
|
|
|
|
|
Basic and diluted
earnings (loss) per common share:
|
|
|
|
|
|
|
|
Continuing operations (basic and fully diluted for each
period)
|
$(.30)
|
$.49
|
|
|
|
|
|
Discontinued
operations (basic and fully diluted each period)
|
$(.16)
|
$(.06)
|
|
|
|
|
|
Consolidated
operations (basic and fully diluted each period)
|
$(.46)
|
$.43
|
See
notes to consolidated financial statements.
F-3
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY
FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
|
|
Additional
|
Accumulated
Other
|
|
|
Total
|
||
|
|
Common
Stock
|
Paid-in
|
Comprehensive
|
Retained
|
Treasury
Stock
|
Stockholders’
|
||
|
|
Shares
|
Amount
|
Capital
|
Income
(Loss)
|
Earnings
|
Shares
|
Amount
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 1,
2018
|
1,513,914
|
$75,700
|
$2,545,900
|
$1,200
|
$3,131,800
|
19,802
|
$52,400
|
$5,702,200
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect
of the adoption of Accounting Standards Update (“ASU”)
2016-01 - Financial Instruments
|
-
|
-
|
-
|
(22,000)
|
22,000
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
-
|
-
|
-
|
-
|
645,600
|
-
|
-
|
645,600
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividend
declared and paid, $.05
|
-
|
-
|
-
|
-
|
(74,700)
|
-
|
-
|
(74,700)
|
|
|
|
|
|
|
|
|
|
|
|
Holding loss on
investment securities, net of tax
|
-
|
-
|
-
|
20,800
|
-
|
-
|
-
|
20,800
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
-
|
-
|
46,800
|
-
|
-
|
-
|
-
|
46,800
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30,
2019
|
1,513,914
|
75,700
|
2,592,700
|
-
|
3,724,700
|
19,802
|
52,400
|
6,340,700
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
-
|
-
|
-
|
-
|
(703,300)
|
-
|
-
|
(703,300)
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Common
Stock and Warrants, net of issuance costs (Note
15)
|
1,349,850
|
67,500
|
5,936,900
|
-
|
-
|
-
|
-
|
6,004,400
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
exercised
|
17,301
|
900
|
12,900
|
-
|
-
|
-
|
-
|
13,800
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
-
|
-
|
65,800
|
-
|
-
|
-
|
-
|
65,800
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30,
2020
|
2,881,065
|
$144,100
|
$8,608,300
|
$-
|
$3,021,400
|
19,802
|
$52,400
|
$11,721,400
|
See
notes to consolidated financial statements.
F-4
SCIENTIFIC
INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
|
2020
|
2019
|
|
Operating
activities:
|
|
|
|
Net income
(loss)
|
$(703,300)
|
$645,600
|
|
Adjustments to
reconcile net income (loss) to net cash provided by
(used in) operating
activities:
|
|
|
|
(Gain) loss on sale
of investment securities
|
(4,400)
|
13,200
|
|
Depreciation and
amortization
|
160,900
|
257,300
|
|
Deferred income tax
(benefit) expense
|
(106,000)
|
(38,500)
|
|
Unrealized holding
(gain) loss on investment securities
|
12,400
|
(3,000)
|
|
Bad debt
recovery
|
3,400
|
-
|
|
Gain on sale of
fixed assets
|
(300)
|
-
|
|
Stock-based
compensation
|
65,800
|
46,800
|
|
Change in fair
value of contingent consideration
|
112,600
|
521,200
|
|
Changes in
operating assets and liabilities:
|
|
|
|
Trade accounts
receivable
|
906,800
|
(6,500)
|
|
Inventories
|
(292,400)
|
(324,400)
|
|
Income tax
receivable
|
(334,800)
|
-
|
|
Prepaid expenses
and other assets
|
(22,400)
|
(60,100)
|
|
Right-of-use
assets
|
(803,300)
|
-
|
|
Accounts
payable
|
(214,400)
|
141,000
|
|
Lease
liabilities
|
867,700
|
-
|
|
Accrued expenses
and taxes
|
191,500
|
(109,300)
|
|
Contract
liabilities
|
89,000
|
(63,800)
|
|
Bank
overdraft
|
(96,900)
|
140,000
|
|
|
|
|
|
Total
adjustments
|
535,200
|
513,900
|
|
|
|
|
|
Net cash (used in)
provided by operating activities
|
(168,100)
|
1,159,500
|
|
|
|
|
|
Investing
activities:
|
|
|
|
Purchase of
investment securities
|
(63,400)
|
(157,900)
|
|
Redemption of
investment securities
|
55,000
|
151,900
|
|
Proceeds from sale
of fixed assets
|
1,000
|
-
|
|
Capital
expenditures
|
(50,900)
|
(187,800)
|
|
Purchase of
intangible assets
|
(25,800)
|
(24,600)
|
|
|
|
|
|
Net cash used in
investing activities
|
(84,100)
|
(218,400)
|
|
|
|
|
|
Financing
activities:
|
|
|
|
Principal payments
on notes payable
|
-
|
(5,800)
|
|
Cash dividend
declared and paid
|
-
|
(74,700)
|
|
Proceeds from
Payroll Protection Program loan
|
563,800
|
-
|
|
Line of credit
proceeds
|
-
|
50,000
|
|
Issuance of common
stock and warrants, net of issuance costs
|
6,004,400
|
-
|
|
Line of credit
repayments
|
-
|
(50,000)
|
|
Proceeds from
exercise of stock options
|
13,800
|
-
|
|
Payments for
contingent consideration
|
(372,600)
|
(311,200)
|
|
|
|
|
|
Net cash provided
by (used in) financing activities
|
6,209,400
|
(391,700)
|
|
|
|
|
|
Net increase in
cash and cash equivalents
|
5,957,200
|
549,400
|
|
|
|
|
|
Cash and cash
equivalents, beginning of year
|
1,602,500
|
1,053,100
|
|
|
|
|
|
Cash and cash
equivalents, end of year
|
$7,559,700
|
$1,602,500
|
|
|
|
|
|
Supplemental
disclosures:
|
|
|
|
Cash paid during
the period for:
|
|
|
|
Income
taxes
|
$40,900
|
$56,700
|
|
Interest
|
$-
|
$1,500
|
See
notes to consolidated financial statements.
F-5
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
1.
|
Summary of Significant Accounting Policies
|
Scientific
Industries, Inc. and its subsidiaries (the “Company”)
design, manufacture, and market a variety of benchtop laboratory
equipment, bioprocessing products and catalyst research
instruments. The Company is headquartered in Bohemia, New York
where it produces benchtop laboratory equipment. Additionally, the
Company has two other locations in Pittsburgh, Pennsylvania, where
it produces a variety of custom-made catalyst research instruments
and designs bioprocessing products, and an administrative facility
in Orangeburg, New York 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, catalyst characterization instruments,
reactor systems and high throughput systems. The Company also
sublicenses certain patents and technology under a license with the
University of Maryland, Baltimore County, and receives royalty fees
from the sublicenses.
COVID-19 Pandemic
The
challenges posed by the COVID-19 pandemic on the global economy
began to take effect and impact the Company’s operations at
the end of the third quarter of the year ended June 30, 2020. At
that time, the Company took appropriate action and put plans in
place to diminish the effects of COVID-19 on its operations,
enabling the Company to continue to operate with minor or temporary
disruptions to its operations. The Company took immediate action as
it pertains to COVID-19 preparedness by implementing the Center for
Disease Control’s guidelines for employers in order to
protect the Company’s employees’ health and safety,
with actions such as implementing work from home, social distancing
in the workplace, requiring self quarantine for any employee
showing symptoms, wearing face coverings, and training employees on
maintaining a healthy work environment. However, if an employee
becomes infected in the future, and the Company is forced to shut
down for a period of time, it could have a short-term negative
impact on operations. At the beginning of the pandemic, the
Catalyst Research Instruments and Bioprocessing Systems Operations
were shut down due to state mandates, however, the impact on
operations was immaterial, and the Company has been able to retain
its employees without furloughs or layoffs, in part, due to the
Company’ receipt of $563,800 loan under the Federal
Government’s Paycheck Protection Program. The Company has not
experienced and does not anticipate any material impact on its
ability to collect its accounts receivable due to the nature of its
customers, which are primarily distributors of laboratory equipment
and supplies that have the ability to pay. However, there were some
delays in receiving some accounts receivable due for catalyst
research instruments due to customer shutdowns, and there was a
material negative impact on the revenues of the Catalyst Research
Instruments. The Company has not experienced and does not
anticipate any material impairment to its tangible and intangible
assets, system of internal controls, supply chain, or delivery and
distribution of its products as a result of COVID-19, however the
ultimate impact of COVID-19 on the Company’s business,
results of operations, financial condition and cash flows is
dependent on future developments, including the duration or
worsening of the pandemic and the related length of its impact on
the global economy, which are uncertain and cannot be predicted at
this time.
F-6
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
1.
|
Summary of Significant Accounting Policies (Continued)
|
Principles of Consolidation
The
accompanying consolidated financial statements include the accounts
of Scientific Industries, Inc., Scientific Packaging Industries,
Inc., an inactive wholly-owned subsidiary, Altamira Instruments,
Inc. (“Altamira”), a Delaware corporation and
wholly-owned subsidiary which was discontinued as of November 30,
2020, and Scientific Bioprocessing, Inc. (“SBI”), a
Delaware corporation and wholly-owned subsidiary, (all collectively
referred to as the “Company”). All material
intercompany balances and transactions have been
eliminated.
Revenue Recognition
On July 1, 2018 the Company adopted Accounting
Standards Codification (“ASC”) Topic 606 “Revenue
from Contracts with Customers, as amended” (“ASC Topic
606”), using the modified retrospective method applied to
those contracts which were not completed as of the adoption
date. The adoption of the
standard did not have a material impact on how the Company
recognizes its revenues. In accordance with Topic 606, the Company
accounts for a customer contract when both parties have approved
the contract and are committed to perform their respective
obligations, each party’s rights can be identified, payment
terms can be identified, the contract has commercial substance, and
it is probable that the Company will collect substantially all of
the consideration to which it is entitled. Revenue is recognized
when, or as, performance obligations are satisfied by transferring
control of a promised product or service to a
customer.
Nature of Products and Services
We
generate revenues from the following sources: (1) Benchtop
Laboratory Equipment, (2) Catalyst Research Instruments, and (3)
Royalties.
|
|
Benchtop Laboratory
Equipment
|
Bioprocessing
Systems
|
Corporate and
Other
|
Consolidated
|
|
June 30,
2020:
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$6,783,600
|
$1,000,800
|
$-
|
$7,784,400
|
|
|
|
|
|
|
|
Foreign
Sales
|
2,589,800
|
1,000,400
|
586,500
|
4,176,700
|
|
|
Benchtop Laboratory
Equipment
|
Bioprocessing
Systems
|
Corporate and
Other
|
Consolidated
|
|
June 30,
2019:
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$7,078,800
|
$1,306,100
|
$-
|
8,384,900
|
|
|
|
|
|
|
|
Foreign
Sales
|
2,680,300
|
1,301,200
|
1,102,300
|
5,083,800
|
F-7
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
1.
|
Summary of Significant Accounting Policies (Continued)
|
Revenue Recognition (Continued)
Nature of Products and Services (Continued)
Benchtop
laboratory equipment sales comprise primarily of standard benchtop
laboratory equipment from its stock to laboratory equipment
distributors, or to end users primarily via e-commerce. The sales
cycle from time of receipt of order to shipment is very short
varying from a day to a few weeks. Customers either pay by credit
card (online sales) or Net 30-90, depending on the customer. Once
the item is shipped under the FOB terms specified in the order,
which is primarily “FOB Factory”, other than a standard
warranty, there are no other obligations to the customer. Warranty
usually comprises of one to two year parts and labor and is deemed
immaterial.
The
Discontinued Operations's catalyst research instrument sales
related primarily to large instruments which begin with a standard
model and then are customized to a customer’s specifications.
The sales cycle can be quite long, typically ranging from one to
three months, from the time an order is received to the time the
instrument is shipped to the customer. Payment terms vary from
customer to customer and can include advance payments which are
recorded as contract liabilities. Some contracts call for training
and installation, which is considered ancillary and not a material
part of the contract. Due to the size and nature of the
instruments, the Company subjects the instruments to an extensive
factory acceptance testing process prior to shipment to ensure that
they are fully operational once they reach the customer’s
site. Normally, the Company warrantees its instruments for a period
of twelve months for parts and labor which normally consists of
replacement of small components or software support. Catalyst
research instruments are never returned for repairs.
Royalty
revenues pertain to royalties earned by the Company, which are paid
to the Company on a calendar year basis, under a licensing
agreement from a single licensee and its sublicensees. The license
pertained to royalties received under a United States patent and a
European Union patent. As of January 2020, the European Union
patent which was due to expire in August 2021, was terminated and
the Company will only receive royalties under the United States
patent, which will have a material reduction in total royalties
expected to be received. The Company is then obligated to pay 50%
of all royalties received to the entity that licenses the
intellectual property to the Company. During the year, the
Company’s management uses its best judgement to estimate the
royalty revenues earned during the period.
The Company determines revenue recognition through the following
steps:
|
●
|
Identification
of the contract, or contracts, with a customer
|
|
●
|
Identification
of the performance obligations in the contract
|
|
●
|
Determination
of the transaction price
|
|
●
|
Allocation
of the transaction price to the performance obligations in the
contract
|
|
●
|
Recognition
of revenue when, or as, a performance obligation is
satisfied
|
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
1.
|
Summary of Significant Accounting Policies (Continued)
|
Revenue Recognition (Continued)
Nature of Products and Services (Continued)
The
Company has made the following accounting policy elections and
elected to use certain practical expedients, as permitted by the
Financial Accounting Standards Board (“FASB”), in
applying ASC Topic 606: 1) All revenues are recorded net of
returns, allowances, customer discounts, and incentives; 2)
Although sales and other taxes are immaterial, the Company accounts
for amounts collected from customers for sales and other taxes, if
any, net of related amounts remitted to tax authorities; 3) the
Company expenses costs to obtain a contract as they are incurred if
the expected period of benefit, and therefore the amortization
period, is one year or less; 4) the Company accounts for shipping
and handling activities that occur after control transfers to the
customer as a fulfillment cost rather than an additional promised
service and these fulfillment costs fall within selling expenses;
5) the Company is always considered the principal and never an
agent, because it has full control and responsibility until title
is transferred to the customer; 6) the Company does not assess
whether promised goods or services are performance obligations if
they are immaterial in the context of the contract with the
customer such as is the case with catalyst
instruments.
Cash and Cash Equivalents
The
Company considers all highly liquid debt instruments purchased with
original maturities of 90 days or less to be cash equivalents. At
times, cash balances may be in excess of the Federal Deposit
Insurance Corporation (“FDIC”) insurance limit. As of
June 30, 2020, and 2019, $6,729,300 and $1,328,600, respectively of
cash balances were in excess of such limit.
Accounts Receivable
In
order to record the Company’s accounts receivable at their
net realizable value, the Company must assess their collectability.
A considerable amount of judgment is required in order to make this
assessment, including an analysis of historical bad debts and other
adjustments, a review of the aging of the Company’s
receivables, and the current creditworthiness of the
Company’s customers. The Company has recorded allowances for
receivables which it considered uncollectible, including amounts
for the resolution of potential credit and other collection issues
such as disputed invoices, customer satisfaction claims and pricing
discrepancies. However, depending on how such potential issues are
resolved, or if the financial condition of any of the
Company’s customers was to deteriorate and its ability to
make required payments became impaired, increases in these
allowances may be required. The Company actively manages its
accounts receivable to minimize credit risk. The Company does not
obtain collateral for its accounts receivable. Based on its
assessment, the Company concluded that there are no collection
issues related to the COVID-19 Pandemic.
F-9
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
1.
|
Summary of Significant Accounting Policies (Continued)
|
Contract Liabilities
Contract
liabilities consists of billings or payments received in advance of
revenue recognition and is recognized as the revenue recognition
criteria are met. Amounts that have been invoiced are initially
recorded in accounts receivable and contract liabilities. The
Company invoices its customers in accordance with the terms of the
underlying contract. Accordingly, the contract liabilities balance
does not represent the total contract value of outstanding
arrangements. Contract liabilities that are expected to be
recognized during the subsequent 12-month period are recorded as
current and the remaining portion as noncurrent. Contract
liabilities amounted to $20,000 and $0 at June 30, 2020 and 2019,
respectively.
Investment Securities
Investment
securities consist of equity securities and mutual funds with
realized gains and losses recorded using the specific
identification method. Changes in fair value are recorded as
unrealized holding gains or losses in other income (loss), net on
the statement of operations. We determine the cost of the
investment sold based on an average cost basis at the individual
security level, and record the interest income and realized gains
or losses on the sale of these investments in other income (loss),
net.
Inventories
Inventories are
valued at the lower of cost (determined on a first-in, first-out
basis) or net realizable value, and have been reduced by an
allowance for excess and obsolete inventories. The estimate is
based on management’s review of inventories on hand compared
to estimated future usage and sales. Cost of work-in-process and
finished goods inventories include material, labor and
manufacturing overhead.
Property and Equipment
Property and
equipment are stated at cost. Depreciation of property and
equipment is provided for primarily by the straight-line method
over the estimated useful lives of the assets. Leasehold
improvements are amortized by the straight-line method over the
remaining term of the related lease or the estimated useful lives
of the assets, whichever is shorter.
Intangible Assets
Intangible assets
consist primarily of acquired technology, customer relationships,
non-compete agreements, patents, licenses, websites, intellectual
property and research and development (“IPR&D”),
trademarks and trade names. All intangible assets are amortized on
a straight-line basis over the estimated useful lives of the
respective assets, generally 3 to 10 years. The Company continually
evaluates the remaining estimated useful lives of intangible assets
that are being amortized to determine whether events or
circumstances warrant a revision to the remaining period of
amortization.
F-10
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
1.
|
Summary
of Significant Accounting Policies (Continued)
|
Goodwill and Long-Lived Assets
Goodwill represents
the excess of purchase price over the fair value of identifiable
net assets acquired in a business combination. Goodwill and
long-lived intangible assets are tested for impairment at least
annually in accordance with the provisions of ASC No. 350,
“Intangibles-Goodwill and Other” (“ASC No.
350”). ASC No. 350 requires that goodwill be tested for
impairment at the reporting unit level (operating segment or one
level below an operating segment) on an annual basis and between
annual tests if an event occurs or circumstances change that would
more likely than not reduce the fair value of a reporting unit
below its carrying value. Application of the goodwill impairment
test requires judgment, including the identification of reporting
units, assignment of assets and liabilities to reporting units,
assignment of goodwill to reporting units, and determination of the
fair value of each reporting unit. The Company tests goodwill and
long-lived assets annually as of June 30, the last day of its
fiscal year, unless an event occurs that would cause the Company to
believe the value is impaired at an interim date. The Company
concluded as of June 30, 2020 and 2019, there was no impairment of
goodwill.
Impairment of Long-Lived Assets
The
Company follows the provisions of ASC No. 360-10, “Property,
Plant and Equipment - Impairment or Disposal of Long-Lived Assets
(“ASC No. 360-10”). ASC No. 360-10 which requires
evaluation of the need for an impairment charge relating to
long-lived assets whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable. If an evaluation for impairment is required, the
estimated future undiscounted cash flows associated with the asset
would be compared to the asset’s carrying amount to determine
if a write down to a new depreciable basis is required. If
required, an impairment charge is recorded based on an estimate of
future discounted cash flows. The Company concluded as of June 30,
2020 and 2019, there was no impairment of long-lived
assets.
Income Taxes
The
Company and its subsidiaries file a consolidated U.S. federal
income tax return. Income taxes are accounted for under the asset
and liability method. The Company provides for federal, and state
income taxes currently payable, as well as for those deferred due
to timing differences between reporting income and expenses for
financial statement purposes versus tax purposes. Deferred tax
assets and liabilities are recognized for the future tax
consequences attributed to temporary differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted income tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect of
a change in income tax rates is recognized as income or expense in
the period that includes the enactment date.
The
Company recognizes the effect of income tax positions only if those
positions are more likely than not of being sustained. Recognized
income tax positions are measured at the largest amount that is
greater than 50% likely of being realized. Changes in recognition
or measurement are reflected in the period in which the change in
judgment occurs.
F-11
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
1.
|
Summary of Significant Accounting Policies (Continued)
|
Advertising
Advertising costs
are expensed as incurred. Advertising expense amounted to $218,700
and $207,500 for the years ended June 30, 2020 and 2019,
respectively.
Research and Development
Research and
development costs consisting of expenses for activities that are
useful in developing and testing new products, as well as expenses
that may significantly improve existing products, are expensed as
incurred.
Stock Compensation Plan
The
Company has a ten-year stock option plan (the “2012
Plan”) which provides for the grant of options to purchase up
to 250,000 shares of the Company’s Common Stock, par value
$.05 per share (“Common Stock”), plus up to 57,000
shares under options previously granted under the 2002 Stock Option
Plan of the Company (the “Prior Plan”).
The
2012 Plan provides for the granting of incentive or non-incentive
stock options as defined in the 2012 Plan and options under the
2012 Plan may be granted until 2022. Incentive stock options may be
granted to employees at an exercise price equal to 100% (or 110% if
the optionee owns directly or indirectly more than 10% of the
outstanding voting stock) of the fair market value of the shares of
Common Stock on the date of the grant. Non-incentive stock options
shall be granted at the fair market value of the shares of Common
Stock on the date of grant. At June 30, 2020 and 2019, 147,414 and
20,795 shares respectively, of Common Stock were available for
grant of options under the 2012 Plan. The
Company has a ten-year stock option plan (the "2012 Plan") which
provided for the grant of options to purchase up to 100,000 shares
of the Company's Common Stock, par value $.05 per share ("Common
Stock") and was further amended in January 2020 to increase the
number of options to 250,000 shares of common
stock.
Stock-based
compensation is accounted for in accordance with ASC No. 718
“Compensation-Stock Compensation” (“ASC No.
718”) which requires compensation costs related to
stock-based payment transactions to be recognized. With limited
exceptions, the amount of compensation cost is measured based on
the grant-date fair value of the equity or liability instruments
issued. In addition, liability awards are measured at each
reporting period. Compensation costs are recognized over the period
that an employee provides service in exchange for the award. During
the years ended June 30, 2020 and 2019, the Company granted 25,881
and 6,705 options, respectively, to employees that had a fair value
of $144,500 and $12,000, respectively. The fair value of the
options granted during the years ended June 30, 2020 and 2019, were
determined using the Black-Scholes-Merton option-pricing model. The
weighted average assumptions used for the years ended June 30, 2020
and 2019, was an expected life of 10 years; risk free interest rate
of .89% and 2.44%; volatility of 74% and 35%, and dividend yield of
.08% and 1.29%, respectively. The Company declared a dividend of
$0.05 per share during the year ended June 30, 2019 and none in
2020. The weighted-average value per share of the options granted
during the years ended June 30, 2020 and 2019, was $5.58 and $1.79,
respectively, and total stock-based compensation costs were $65,800
and $46,800 for the years ended June 30, 2020 and 2019,
respectively. Stock-based compensation costs related to nonvested
awards expected to be recognized in the future are $113,400 and
$38,600 as of June 30, 2020 and 2019, respectively.
F-12
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2019 AND 2018
|
1.
|
Summary of Significant Accounting Policies (Continued)
|
Use of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America and
pursuant to the rules and regulations of the U.S. Securities and
Exchange Commission requires management to make estimates and
judgments that affect the amounts reported in the financial
statements and accompanying notes. Estimates are used for, but not
limited to, the allowance for doubtful accounts, slow-moving
inventory reserves, depreciation and amortization, assumptions made
in valuing equity instruments issued for services, and the fair
values of intangibles and goodwill. The actual results experienced
by the Company may differ materially from management’s
estimates.
Earnings (Loss) Per Common Share
Basic
earnings or loss per common share is computed by dividing net
income (loss) by the weighted-average number of shares outstanding.
Diluted earnings per common share includes the dilutive effect of
stock options, if any.
Recent Accounting Pronouncements
In
August 2018, the FASB issued Accounting Standards Update ("ASU")
2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework
Changes to the Disclosure Requirements for Fair Value Measurement",
which is part of the FASB disclosure framework project to improve
the effectiveness of disclosures in the notes to the financial
statements. The amendments in the new guidance remove, modify, and
add certain disclosure requirements related to fair value
measurements covered in Topic 820, "Fair Value Measurement." The
new standard is effective for fiscal years beginning after December
15, 2019. Early adoption is permitted for either the entire
standard or only the requirements that modify or eliminate the
disclosure requirements, with certain requirements applied
prospectively, and all other requirements applied retrospectively
to all periods presented. The Company is currently evaluating the
impact of adopting this guidance.
In
December 2019, the FASB issued ASU No. 2019-12, Simplifying the
Accounting for Income Taxes, which is designed to simplify the
accounting for income taxes by removing certain exceptions to the
general principles in Topic 740. ASU No. 2019-12 is effective for
fiscal years beginning after December 15, 2020, including interim
periods within those fiscal years; this ASU allows for early
adoption in any interim period after issuance of the update. The
Company is currently evaluating the impact of adopting this
guidance.
Adopted Accounting Pronouncement
In
February 2016, the FASB issued ASU No. 2016-02, Leases, which
replaces previous lease guidance in its entirety with ASC 842 and
requires lessees to recognize lease assets and lease liabilities
for those arrangements classified as operating leases under
previous guidance, with the exception of leases with a term of
twelve months or less. The Company adopted ASU No. 2016-02 on July
1, 2019 using the additional transition method, which allows prior
periods to be presented under previous lease accounting guidance.
Refer to Note 11, "Leases", for related disclosures.
F-13
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
2.
|
Segment Information
|
The
Company views its operations as two 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 design and marketing of bioprocessing
systems and products and related royalty income
(“Bioprocessing Systems”).
Segment
information is reported as follows:
|
|
Benchtop Laboratory
Equipment
|
Bioprocessing
Systems
|
Corporate and
Other
|
Consolidated
|
|
June 30,
2020:
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$6,783,600
|
$1,000,800
|
$-
|
$7,784,400
|
|
|
|
|
|
|
|
Foreign
Sales
|
2,589,800
|
1,000,400
|
586,500
|
4,176,700
|
|
|
|
|
|
|
|
Income (Loss) From
Operations
|
449,700
|
(727,500)
|
(385,700)
|
(663,500)
|
|
|
|
|
|
|
|
Assets
|
12,232,600
|
546,100
|
2,018,700
|
14,797,400
|
|
|
|
|
|
|
|
Long-Lived Asset
Expenditures
|
36,000
|
40,700
|
-
|
76,700
|
|
|
|
|
|
|
|
Depreciation and
Amortization
|
116,900
|
42,700
|
1,300
|
160,900
|
|
|
Benchtop Laboratory
Equipment
|
Bioprocessing
Systems
|
Corporate and
Other
|
Consolidated
|
|
June 30,
2019:
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$7,078,800
|
$1,306,100
|
$-
|
$8,384,900
|
|
|
|
|
|
|
|
Foreign
Sales
|
2,680,300
|
$1,301,200
|
1,102,300
|
5,083,800
|
|
|
|
|
|
|
|
Income (Loss) From
Operations
|
449,800
|
365,000
|
91,900
|
906,700
|
|
|
|
|
|
|
|
Assets
|
5,280,700
|
790,100
|
2,205,200
|
8,276,000
|
|
|
|
|
|
|
|
Long-Lived Asset
Expenditures
|
194,500
|
15,700
|
2,200
|
212,400
|
|
|
|
|
|
|
|
Depreciation and
Amortization
|
217,800
|
38,500
|
1,000
|
257,300
|
F-14
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
3.
|
Fair Value of Financial Instruments
|
The
FASB defines 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.
The
fair value of the contingent consideration obligations is based on
a probability weighted approach derived from the estimates of
earn-out criteria and the probability assessment with respect to
the likelihood of achieving those criteria. The measurement is
based on significant inputs that are not observable in the market,
therefore, the Company classifies this liability as Level 3 in the
following table.
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 at June 30, 2020 and 2019 according
to the valuation techniques the Company used to determine their
fair values:
|
|
|
Fair
Value Measurements Using Inputs Considered as
|
||
|
|
Fair
Value at June 30, 2020
|
Level
1
|
Level
2
|
Level
3
|
|
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$7,559,700
|
$7,559,700
|
$-
|
$-
|
|
Investment
securities
|
331,800
|
331,800
|
-
|
-
|
|
|
|
|
|
|
|
Total
|
$7,891,500
|
$7,891,500
|
$-
|
$-
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Contingent
consideration
|
$358,000
|
$-
|
$-
|
$358,000
|
F-15
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
3.
|
Fair Value of Financial Instruments (Continued)
|
|
|
|
Fair
Value Measurements Using Inputs Considered as
|
||
|
|
Fair
Value at June 30, 2019
|
Level
1
|
Level
2
|
Level
3
|
|
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$1,602,500
|
$1,602,500
|
$-
|
$-
|
|
Investment
securities
|
330,900
|
330,900
|
-
|
-
|
|
|
|
|
|
|
|
Total
|
$1,933,400
|
$1,933,400
|
$-
|
$-
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Contingent
consideration
|
$618,000
|
$-
|
$-
|
$618,000
|
The
following table sets forth an analysis of changes during the years
ended June 30, 2020 and 2019, respectively, in Level 3 financial
liabilities of the Company:
|
|
2020
|
2019
|
|
|
|
|
|
Beginning
balance
|
$618,000
|
$408,000
|
|
Increase in
contingent consideration liability
|
112,600
|
521,200
|
|
Payments and
accruals
|
(372,600)
|
(311,200)
|
|
|
|
|
|
Ending
balance
|
$358,000
|
$618,000
|
The
Company’s contingent obligations require cash payments to the
sellers of certain acquired operations based on royalty payments
received or operating results achieved. These contingent
considerations are classified as liabilities and the liabilities
are remeasured to an estimated fair value at each reporting date.
During the years ended June 30, 2020 and 2019, the Company recorded
an increase in the estimated fair value of contingent liabilities
of approximately $112,600 and $521,200, respectively related to its
Bioprocessing Systems Operations segment.
Investments in
marketable securities classified as available-for-sale by security
type at June 30, 2020 and 2019 consisted of the
following:
|
|
Cost
|
Fair
Value
|
Unrealized Holding
Gain (Loss)
|
|
At June 30,
2020:
|
|
|
|
|
|
|
|
|
|
Equity
securities
|
$77,600
|
$101,900
|
$24,300
|
|
Mutual
funds
|
250,300
|
229,900
|
(20,400)
|
|
|
|
|
|
|
|
$327,900
|
$331,800
|
$3,900
|
|
|
Cost
|
Fair
Value
|
Unrealized Holding
Gain (Loss)
|
|
At June 30,
2019:
|
|
|
|
|
|
|
|
|
|
Equity
securities
|
$47,100
|
$72,000
|
$24,900
|
|
Mutual
funds
|
292,300
|
258,900
|
(33,400)
|
|
|
|
|
|
|
|
$339,400
|
$330,900
|
$(8,500)
|
F-16
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
4.
|
Inventories
|
|
|
2020
|
2019
|
|
|
|
|
|
Raw
materials
|
$1,726,400
|
$1,597,100
|
|
Work-in-process
|
35,700
|
77,700
|
|
Finished
goods
|
778,900
|
708,800
|
|
|
|
|
|
|
$2,541,000
|
$2,383,600
|
|
5.
|
Property
and Equipment
|
|
|
Useful
Lives
|
|
|
|
|
(Years)
|
2020
|
2019
|
|
|
|
|
|
|
Automobiles
|
5
|
$22,000
|
$22,000
|
|
Computer
equipment
|
3-5
|
215,300
|
200,300
|
|
Machinery and
equipment
|
3-7
|
847,500
|
823,400
|
|
Furniture and
fixtures
|
4-10
|
142,300
|
138,500
|
|
Leasehold
improvements
|
3-10
|
50,300
|
42,300
|
|
|
|
1,277,400
|
1,226,500
|
|
Less accumulated
depreciation and amortization
|
|
999,100
|
910,400
|
|
|
|
|
|
|
|
|
$278,300
|
$316,100
|
Depreciation
expense was $88,700 and $67,300 for the years ended June 30, 2020
and 2019, respectively.
|
6.
|
Goodwill and Other 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 $257,300 at June 30, 2020 and
2019, all of which is expected to be deductible for tax
purposes.
The
components of other intangible assets are as follows:
|
|
Useful
Lives
|
Cost
|
Accumulated
Amortization
|
Net
|
|
At June 30,
2020:
|
|
|
|
|
|
|
|
|
|
|
|
Technology,
trademarks
|
5/10
yrs.
|
$664,700
|
$662,000
|
$2,700
|
|
Trade
names
|
6 yrs.
|
140,000
|
140,000
|
-
|
|
Websites
|
5 yrs.
|
210,000
|
210,000
|
-
|
|
Customer
relationships
|
9/10
yrs.
|
357,000
|
321,400
|
35,600
|
|
Sublicense
agreements
|
10
yrs.
|
294,000
|
253,600
|
40,400
|
|
Non-compete
agreements
|
5 yrs.
|
384,000
|
384,000
|
-
|
|
IPR&D
|
3 yrs.
|
110,000
|
110,000
|
-
|
|
Other intangible
assets
|
5 yrs.
|
246,600
|
196,600
|
50,000
|
|
|
|
|
|
|
|
|
$2,406,300
|
$2,277,600
|
$128,700
|
|
F-17
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
6.
|
Goodwill and Other Intangible Assets (Continued)
|
|
|
Useful
Lives
|
Cost
|
Accumulated
Amortization
|
Net
|
|
At June 30,
2019:
|
|
|
|
|
|
|
|
|
|
|
|
Technology,
trademarks
|
5/10
yrs.
|
$663,800
|
$661,700
|
$2,100
|
|
Trade
names
|
6 yrs.
|
140,000
|
124,400
|
15,600
|
|
Websites
|
5 yrs.
|
210,000
|
210,000
|
-
|
|
Customer
relationships
|
9/10
yrs.
|
357,000
|
308,100
|
48,900
|
|
Sublicense
agreements
|
10
yrs.
|
294,000
|
224,100
|
69,900
|
|
Non-compete
agreements
|
5 yrs.
|
384,000
|
384,000
|
-
|
|
IPR&D
|
3 yrs.
|
110,000
|
110,000
|
-
|
|
Other intangible
assets
|
5 yrs.
|
221,700
|
183,200
|
38,500
|
|
|
|
|
|
|
|
|
$2,380,500
|
$2,205,500
|
$175,000
|
|
Total
amortization expense was $72,000 and $190,000 in 2020 and 2019,
respectively.
Estimated future
amortization expense of intangible assets as of June 30, 2020 is as
follows:
|
Year Ended June
30,
|
|
|
|
|
|
2021
|
$59,800
|
|
2022
|
36,800
|
|
2023
|
20,200
|
|
2024
|
8,400
|
|
2025
|
3,500
|
|
|
|
|
Total
|
$128,700
|
|
7.
|
Line of Credit
|
The
Company has a Demand Line of Credit through December 2020 with
First National Bank of Pennsylvania which provides for borrowings
of up to $300,000 for regular working capital needs, bearing
interest at prime, currently 3.25%. The agreement does not contain
a financial covenants and borrowings are also secured by a pledge
of the Company’s assets including inventory, accounts
receivable, chattel paper, equipment and general intangibles of the
Company. As of June 30, 2020 and 2019, there were no borrowings
outstanding under the line.
|
8.
|
Payroll Protection Program Loan
|
The
Company had a $563,800 Payroll Protection Program loan for proceeds
received in April 2020 pursuant to the Paycheck Protection
Program loan (“PPP”) administered by the U.S. Small
Business Administration through its bank. The Company applied for
forgiveness in June 2021 and $531,100 was
forgiven.
F-18
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
9.
|
Employee Benefit Plans
|
The
Company has a 401(k) profit sharing plan covering all its
employees, which provides for voluntary employee salary
contributions not to exceed the statutory limitations provided by
the Internal Revenue Code. The plan provides for Company matching
contribution equal to 100% of employee’s deferral up to 3% of
pay, plus 50% of employee’s deferral over 3% of pay up to 5%.
Total matching contributions amounted to $84,100 and $69,600 for
the years ended June 30, 2020 and 2019, respectively.
|
10.
|
Commitments and Contingencies
|
The
Company has a three-year employment contract with its President,
effective July 1, 2017, which was extended by mutual agreement for
a one year period ending June 30, 2021. The agreement provided for
an annual base salary of $175,000 for the year ended June 30, 2018,
with subsequent annual increases of 3% or percentage increase in
Consumer Price Index (“CPI”), whichever is higher, plus
$25,000 cash bonus for the year ended June 30, 2018, and a
discretionary bonus for subsequent years. A bonus of $50,000 was
awarded for the year ended June 30, 2020 and none in 2019. The
agreement also provided for a grant of options to purchase 25,000
shares of the Company’s stock, which were granted during the
year ended June 30, 2018. No shares were granted during the year
ended June 30, 2019, and 215,366 shares were authorized to be
granted by the Board of Directors during the year ended June 30,
2020 which are subject to amendment to the Company’s 2012
Stock Option Plan. The
agreement also contains a provision that within one year of a
change of control, if either the Company terminates the employment
for any reason other than for "cause" or the Presidents terminates
her employment for "good reason", the President will have the right
to receive a lump sum payment equal to three times the average of
her total annual compensation paid for the last five years
preceding such termination, minus $1.00.
The
Company has a three-year employment contract with its President of
the Genie Products Division of the Benchtop Laboratory Equipment
Operations and Corporate Secretary effective July 1, 2017, which
was extended by mutual agreement for a one year period ending June
30, 2021. The agreement provides for an annual base salary of
$153,000 for the year ended June 30, 2018, with subsequent annual
increases of 3% or percentage increase in the CPI, whichever is
higher, plus $10,000 cash bonus for the year ended June 30, 2018,
and a discretionary bonus for subsequent years. A bonus of $5,000
was awarded for the year ended June 30, 2020 and none in 2019. The
agreement also provides for a grant of options to purchase 7,500
shares of the Company’s stock, which were granted during the
year ended June 30, 2018. No options were granted during the year
ended June 30, 2020 or 2019.
The
Company has a three-year employment contract with its President of
Torbal Products Division of the Benchtop Laboratory Equipment
Operations and Director of Marketing effective July 1, 2017, which
was extended by mutual agreement for a one year period ending June
30, 2021. The agreement provides for an annual base salary of
$157,000 for the year ended June 30, 2018, with subsequent annual
increases of 4% or percentage increase in the CPI, whichever is
higher, plus $10,000 cash bonus for the year ended June 30, 2018
and subsequent years, subject to a minimum increase of 5% in the
divisions’ EBITDA for the related year. The agreement also
provides for a grant of options to purchase 7,500 shares of the
Company’s stock, which were granted during the year ended
June 30, 2018. No options were granted during the year ended June
30, 2020 or 2019. A performance-based bonus of $10,000 was awarded
for each of the years ended June 30, 2018, 2019, and
2020.
F-19
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
10.
|
Commitments and Contingencies (Continued)
|
The
Company has a three-year employment contract with its President of
Scientific Bioprocessing, Inc., effective July 1, 2020. The
agreement provides for an annual base salary of $175,000 for the
year ended June 30, 2021, with subsequent annual increases of 3% or
percentage increase in Consumer Price Index (“CPI”),
whichever is higher, plus discretionary bonuses. The agreement also
provides for a grant of options to purchase 215,366 shares which
were authorized to be granted by the Board of Directors during the
year ended June 30, 2020, and are subject to amendment to the
Company’s 2012 Stock Option Plan. Prior to July 1, 2020, the
officer had a consulting agreement through June 30, 2020.
Consulting fees paid under this agreement amounted to $145,000 and
$40,000 for the years ended June 30, 2020 and 2019, respectively.
In addition stock options valued at $36,000 and $12,000 were
granted as part of the total compensation under the consulting
agreement, for the years ended June 30, 2020 and 2019,
respectively. In
addition to the fees paid and stock options granted under the
consulting agreement, a bonus of $50,000 was awarded during the
year ended June 30, 2020 and none in 2019. The agreement contains
termination provisions stipulating that if the Company terminates
the employment other than for death, disability, or cause (as such
term is defined therein), or if employee resigns for "good reason"
(as such term is defined there), the Company shall pay severance
payments equal to either one year's salary at the rate of the
compensation at the time of termination is employee is terminated
within 12 months of the date of the agreement or six months' salary
is the employee is terminated after 12 months of the date of the
agreement, continue to pay the regular benefits provided by the
Company for the period equal tot he length of the severance
payments and pay a pro rata portion of any bonus achieved prior to
such termination of employment.
The
Company had a two-year agreement with its President of Altamira
Instruments, Inc. effective July 1, 2017, which was extended by
mutual agreement through June 30, 2020, and has not yet been
renewed. The agreement provided for an annual base salary of
$130,000 and $120,000 for the years ended June 30, 2020 and 2019,
respectively, plus incentive pay based on achievement of certain
revenue and income levels, which were not achieved in both fiscal
years and therefore there was no incentive pay. The agreement also
provided for a grant of options for an aggregate of 10,000 shares
of the Company’s common stock, which were granted during the
year ended June 30, 2018. No shares were granted during the year
ended June 30, 2020 or 2019.
The
Company had a three-year employment contract with its Vice
President of Corporate Development and Strategy and Vice president
of Sales and Marketing of Altamira Instruments, Inc. effective July
1, 2017. This agreement was terminated by the Company in February
2020 with termination costs of $180,700, of which $110,900 remains
unpaid as of June 30, 2020 and is expected to be paid by February
2021.
The
Company has a consulting agreement, which expires on December 31,
2020, with a Director of the Company and his affiliate for product
development consulting services. The agreement provides that the
consultant be paid a monthly retainer fee of $9,000, plus a grant
of 20,000 options during the year ended June 30, 2020. Consulting
expense related to this agreement amounted to $76,200 and $43,200
for the years ended June 30, 2020 and 2019,
respectively.
On July
20, 2020, the Company entered into a two-year consulting agreement
with a new member of the Board of Directors and his affiliate for
consulting on strategic matters of the Company’s wholly-owned
SBI’s operations. The agreement provides that the consultant
be paid a monthly retainer of 5,000 euros, an annual bonus of up to
2% of net sales of the subsidiary’s net sales over mutually
agreed upon sales targets, plus the issuance of 125,000 stock
options of the Company.
The
Company is required to make payments of 30% of the net royalties
received from the license and sublicense acquired in the SBI
acquisition in fiscal 2014. Total contingent consideration payments
made for this acquisition amounted to $372,600 and $311,200 for the
years ended June 30, 2020 and 2019, respectively.
F-20
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
10.
|
Commitments and Contingencies (Continued)
|
The
fair value of contingent consideration estimated to be paid as of
June 30, 2020 is as follows:
|
Year ended June
30,
|
Amount
|
|
|
|
|
2021
|
$111,000
|
|
2022
|
95,000
|
|
2023
|
82,000
|
|
2024
|
70,000
|
|
|
|
|
|
$358,000
|
|
11.
|
Leases
|
On July
1, 2019, the Company adopted the new accounting pronouncement as it
relates to its leases which requires a lessee to recognize all
long-term leases on its balance sheet as a liability for its lease
obligation, measured at the present value of lease payments not yet
paid, and a corresponding asset representing its right to use the
underlying asset over the lease term and expands disclosure of key
information about leasing arrangements.
The
Company leases certain properties consisting principally of a
facility in Bohemia, New York (headquarters) through January 2025,
a facility in Pittsburgh, Pennsylvania for its Catalyst Research
Instrument Operations through November 2020 and on a month to month
thereafter, and another facility in Pittsburgh, Pennsylvania for
its Bioprocessing Systems Operations through May 2021. In addition,
the Company had a lease for its Torbal Division of the Benchtop
Laboratory Equipment Operations which was mutually terminated early
effective as of October 31, 2019 and a new lease for a similar
sales and administration office in Orangeburg, New York was entered
into as of November 1, 2019 through October 2022. There are no
renewal options with any of the leases, no residual values or
significant restrictions or covenants other than those customary in
such arrangements, and no non-cash activities, and any rent
escalations incorporated within the leases are included in the
calculation of the future minimum lease payments, as further
described below. All of the Company’s leases are deemed
operating leases.
The
Company determines whether an agreement contains a lease at
inception based on the Company’s right to obtain
substantially all of the economic benefits from the use of the
identified asset and its right to direct the use of the identified
asset. Lease liabilities represent the present value of future
lease payments and the Right-Of-Use (“ROU”) assets
represent the Company’s right to use the underlying assets
for the respective lease terms. ROU assets and lease liabilities
are recognized at the lease commencement date based on the present
value of the lease payments over the lease term. The ROU asset is
further adjusted to account for previously recorded lease expenses
such as deferred rent and other lease liabilities. As the
Company’s leases do not provide an implicit rate, the Company
used its incremental borrowing rate of 5.0% as the discount rate to
calculate the present value of future lease payments, which was the
interest rate that its bank would charge for a similar
loan.
F-21
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
11.
|
Leases (Continued)
|
The
Company elected not to recognize a ROU asset and a lease liability
for leases with an initial term of twelve months or less. In
addition to minimum lease payments, certain leases require payment
of a proportionate share of real estate taxes and certain building
operating expenses or payments based on an excess of a specified
base. These variable lease costs are not included in the
measurement of the ROU asset or lease liability due to
unpredictability of the payment amount and are recorded as lease
expenses in the period incurred. The Company’s lease
agreements do not contain residual value guarantees.
The
Company elected available practical expedients for existing or
expired contracts of lessees wherein the Company is not required to
reassess whether such contracts contain leases, the lease
classification or the initial direct costs. The Company is not
utilizing the practical expedient which allows the use of hindsight
by lessees and lessors in determining the lease term and in
assessing impairment of its ROU assets. The Company utilized the
transition method allowing entities to only apply the new lease
standard in the year of adoption.
As of
June 30, 2020, the weighted-average remaining lease term for
operating lease liabilities was approximately 3.85 years and the
weighted-average discount rate was 5.0%. Total cash payments under
these leases were $295,700 for the year ended June 30, 2020, of
which $293,500 was recorded as leases expense.
The
Company’s approximate future minimum rental payments under
all leases existing at June 30, 2020, through January 2025 are as
follows:
|
Year ended June
30,
|
Amount
|
|
2021
|
$234,300
|
|
2022
|
210,600
|
|
2023
|
198,900
|
|
2024
|
195,900
|
|
2025
|
91,600
|
|
Total future
minimum payments
|
$931,300
|
|
Less: Imputed
interest
|
94,700
|
|
|
|
|
Total Present
Value of Operating Lease Liabilities
|
$836,600
|
|
12.
|
Income Taxes
|
The
reconciliation of the provision for income taxes at the federal
statutory rate of 21% to the actual tax expense or benefit for the
applicable fiscal year was as follows:
|
|
2020
|
2019
|
|
|
|
|
|
Computed
“expected” income tax (benefit)
|
$(239,400)
|
$161,700
|
|
Research and
development credits
|
(89,400)
|
(24,300)
|
|
Rate changes and
NOL carrybacks
|
(122,600)
|
-
|
|
Other,
net
|
14,800
|
(12,800)
|
|
|
|
|
|
Income tax expense
(benefit)
|
$(436,600)
|
$124,600
|
F-22
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
12.
|
Income Taxes (Continued)
|
Deferred tax assets
and liabilities consist of the following:
|
|
2020
|
2019
|
|
Deferred tax
assets:
|
|
|
|
Amortization of
intangible assets
|
$329,700
|
$303,900
|
|
Research and
development credits
|
89,400
|
-
|
|
Various
accruals
|
150,700
|
173,600
|
|
Other
|
19,400
|
13,300
|
|
|
589,200
|
490,800
|
|
Deferred tax
liability:
|
|
|
|
Depreciation of
property and amortization of goodwill
|
(52,100)
|
(59,700)
|
|
|
|
|
|
Net deferred tax
assets
|
$537,100
|
$431,100
|
ASC No.
740 clarifies the accounting for uncertainty in income taxes
recognized in an enterprise’s financial statements and
prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. ASC No. 740
also provides guidance on derecognition, classification, interest
and penalties, accounting in interim periods, disclosure, and
transition. As of June 30, 2020 and 2019, the Company did not have
any unrecognized tax benefits related to various federal and state
income tax matters.
The
Company’s policy is to recognize interest and penalties on
any unrecognized tax benefits as a component of income tax expense.
The Company does not have any accrued interest or penalties
associated with any unrecognized tax benefits. The Company is
subject to U.S. federal income tax, as well as various state
jurisdictions. The Company is currently open to audit under the
statute of limitations by the federal and state jurisdictions for
the years ended June 30, 2017 and after. The Company does not
anticipate any material amount of unrecognized tax benefits within
the next 12 months.
|
13.
|
Stock Options
|
Option
activity is summarized as follows:
|
|
June
30, 2020
|
June
30, 2019
|
||
|
|
|
|
|
|
|
|
|
Weighted-
|
|
Weighted-
|
|
|
|
Average
|
|
Average
|
|
|
|
Exercise
|
|
Exercise
|
|
|
Shares
|
Price
|
Shares
|
Price
|
|
Shares under
option:
|
|
|
|
|
|
Outstanding,
beginning of year
|
97,205
|
$3.24
|
92,000
|
$3.15
|
|
Granted
|
25,881
|
7.47
|
6,705
|
4.54
|
|
Exercised
|
(24,000)
|
3.35
|
-
|
-
|
|
Forfeited
|
(2,500)
|
3.08
|
1,500
|
3.27
|
|
|
|
|
|
|
|
Outstanding, end of
year
|
96,586
|
$4.35
|
97,205
|
$3.24
|
|
|
|
|
|
|
|
Options exercisable
at year-end
|
49,236
|
$3.29
|
50,167
|
$3.29
|
|
|
|
|
|
|
|
Weighted average
fair value per share of options granted during the fiscal
year
|
|
$5.58
|
|
$1.79
|
F-23
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
13.
|
Stock Options (Continued)
|
|
|
|
As
of June 30, 2020 Exercisable
|
|||
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
Average
|
Weighted-
|
|
Weighted-
|
|
Range
|
|
Remaining
|
Average
|
|
Average
|
|
Exercise
|
Number
|
Contractual
|
Exercise
|
Number
|
Exercise
|
|
Prices
|
Outstanding
|
Life
(Years)
|
Price
|
Outstanding
|
Price
|
|
|
|
|
|
|
|
|
$5.35 - $ 11.30
|
25,881
|
9.87
|
$7.47
|
-
|
$0.00
|
|
|
|
|
|
|
|
|
$2.91 - $ 4.65
|
70,705
|
6.46
|
$3.33
|
49,236
|
$3.29
|
|
|
|
|
|
|
|
|
|
96,586
|
|
|
49,236
|
|
|
|
|
As
of June 30, 2019 Exercisable
|
|||
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
Average
|
Weighted-
|
|
Weighted-
|
|
Range
|
|
Remaining
|
Average
|
|
Average
|
|
Exercise
|
Number
|
Contractual
|
Exercise
|
Number
|
Exercise
|
|
Prices
|
Outstanding
|
Life
(Years)
|
Price
|
Outstanding
|
Price
|
|
|
|
|
|
|
|
|
$2.91 - $ 3.08
|
70,500
|
7.81
|
$3.07
|
30,167
|
$2.80
|
|
|
|
|
|
|
|
|
$3.65 - $ 4.65
|
26,705
|
5.57
|
$4.02
|
20,000
|
$3.84
|
|
|
|
|
|
|
|
|
|
97,205
|
|
|
50,167
|
|
|
14.
|
Earnings (Loss) Per Common Share
|
Earnings (loss) per
common share data was computed as follows:
|
|
2020
|
2019
|
|
|
|
|
|
Weighted average
common shares outstanding
|
1,515,103
|
1,494,112
|
|
Effect of dilutive
securities
|
-
|
18,066
|
|
|
|
|
|
Weighted average
dilutive common shares outstanding
|
1,515,103
|
1,512,178
|
|
|
|
|
|
Basic and diluted
earnings (loss) per common share:
|
|
|
|
Continuing
operations
|
$(.30)
|
$.49
|
|
Discontinued
operations
|
$(.16)
|
$(.06)
|
|
Consolidated
operations
|
$(.46)
|
$.43
|
Approximately
54,513 and 1,349,850 shares of the Company's common stock issuable
upon the exercise of stock options and warrants, respectively, were
excluded from the calculation because the effect would be
anti-dilutive due to the loss for the year ended June 30, 2020.
Approximately 1,600 shares of the Company's common stock issuable
upon the exercise of outstanding options were excluded from the
calculation of diluted earnings per share for the year ended June
30, 2019, because they were anti-dilutive.
F-24
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
15.
|
Equity
|
On June
18, 2020 the Company entered into a securities purchases agreement
with several accredited investors for the sale and issuance of
1,349,850 shares of the Company’s Common Stock at an offering
of $4.50 per share and warrants to purchase up to 1,349,850 shares
of the Company’s Common Stock at $9.00 per share for total
proceeds of $6,074,400. The Company incurred approximately $70,000
in issuance related costs. The proceeds are earmarked for the
operations of the Company’s SBI operations. The warrants are
immediately exercisable and expire five years from the date of
issuance. If at any time commencing twelve months from the date of
the agreement, but before the expiration of the warrant, the volume
weighted average price of the Company’s Common Stock exceeds
$18 per share for each of thirty consecutive days, the Company may
at any time in its sole discretion, call for the exercise of the
Warrants, in their entirety.
Effective November 30, 2020, the Company, as part of its strategic
shift to becoming a life sciences tool provider, sold its Catalyst
Research Instruments Operations reporting segment through the sale
by Altamira of substantially all of its assets, which comprised of
fixed assets, and inventory to Beijing JWGB Sci. & Tech. Co.
Ltd., a corporation formed under the laws of the People’s
Republic of China (“JWGB”) for $440,000 payable in cash
through January 2021, resulting in a $405,400 pre-tax loss. The
Company retained all its receivables and payables related to sales
made prior to November 30, 2020, certain inventory related to two
work-in-process orders which will be shipped by the end of the
fiscal year ending June 30, 2021, product warranty and other
miscellaneous liabilities related to certain employee benefits, and
expenses related to the closure of the Altamira facility, which was
substantially completed at the end of December 2020.
As a result of the disposal described above, the operating results
of the former Catalyst Research Instruments Operations segment have
been presented as discontinued operations in the balance sheets,
the statements of operations, and the statements of cash flows, as
detailed below.
|
|
2020
|
2019
|
|
Assets:
|
|
|
|
Inventories
|
$343,700
|
$208,700
|
|
Property and
equipment, net
|
1,400
|
2,700
|
|
Goodwill
|
447,900
|
447,900
|
|
|
|
|
|
Discontinued
operations
|
$793,000
|
$659,300
|
|
|
June
30, 2020
|
June
30, 2019
|
|
Accounts
payable
|
$20,100
|
$84,500
|
|
Accrued
expenses and taxes
|
120,700
|
177,500
|
|
Contract
liabilities
|
69,000
|
-
|
|
Operating
lease liabilities, current portion
|
31,100
|
-
|
|
|
$240,900
|
$262,000
|
|
Revenues
|
$785,900
|
$1,814,900
|
|
Cost of
goods sold
|
869,900
|
1,490,600
|
|
Gross
profit
|
(84,000)
|
324,300
|
|
Selling,
general and administrative expenses
|
388,500
|
456,300
|
|
Loss
from operations before income tax benefit
|
(472,500)
|
(132,000)
|
|
Income
tax benefit, all deferred
|
(222,600)
|
(36,000)
|
|
Net
loss attributable to discontinued operations
|
$(249,900)
|
$(96,000)
|
In our Consolidated Statements of Cash Flows, the cash flows from
discontinued operations are not separately classified. Cash
provided by and (used in) operating activities from discontinued
operations for fiscal 2020 and fiscal 2019 was $66,100 and
($131,600), respectively. Cash used by investing activities from
discontinued operations for fiscal 2020 was $2,200 and none for
fiscal 2019. There was no cash provided or used by the discontinued
operations for financing activities for both the current and prior
year periods.
|
17.
|
Subsequent Events
|
On April 29, 2021, the Company received proceeds of approximately
$7,580,500 from the sale of its securities to private investors
upon the issuance of 1,595,880 shares of the Company’s Common
Stock at an offering price of $4.75 per share which included
warrants to purchase up to 797,940 shares of the Company’s
Common Stock at $9.50 per share. These warrants are exercisable
immediately and expire five years from date of issuance. Using the
proceeds received, the Company, through its newly organized wholly
owned subsidiary Scientific Bioprocessing Holdings, Inc., purchased
100% of the capital stock in aquila biolabs, GmbH
(“Aquila”), a German bioprocessing company, for
approximately $7,880,000.
On June 18, 2021, the Company received proceeds of approximately
$9,500,000 from the sale of its securities to private investors
upon the issuance of 2,000,000 shares of the Company’s Common
Stock at an offering price of $4.75 per share which included
warrants to purchase up to 999,993 shares of the Company’s
Commons Stock at $9.50 per share. These warrants are exercisable
immediately and expire five years from date of
issuance.
F-25
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF AND FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2021 AND
2020
ASSETS
|
|
March 31,
2021
|
June
30, 2020
|
|
Current
assets:
|
(Unaudited)
|
|
|
Cash and cash
equivalents
|
$627,500
|
$7,559,700
|
|
Investment
securities
|
5,325,700
|
331,800
|
|
Trade accounts
receivable, less allowance for doubtful accounts of $11,600 at
March 31, 2021 and June 30, 2020
|
1,822,500
|
1,064,000
|
|
Inventories
|
2,885,200
|
2,541,000
|
|
Income tax
receivable
|
336,300
|
334,800
|
|
Prepaid expenses
and other current assets
|
62,600
|
112,400
|
|
Assets of
discontinued operations
|
124,600
|
793,000
|
|
Total current
assets
|
11,184,400
|
12,736,700
|
|
|
|
|
|
Property and
equipment, net
|
383,700
|
278,300
|
|
|
|
|
|
Intangible assets,
net
|
121,500
|
128,700
|
|
|
|
|
|
Goodwill
|
257,300
|
257,300
|
|
|
|
|
|
Other
assets
|
48,400
|
56,000
|
|
|
|
|
|
Deferred
taxes
|
1,189,400
|
537,100
|
|
|
|
|
|
Operating lease
right-of-use assets
|
715,600
|
803,300
|
|
|
|
|
|
Total
assets
|
$13,900,300
|
$14,797,400
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$477,200
|
$334,600
|
|
Accrued
expenses
|
456,400
|
679,000
|
|
Contract
liabilities
|
-
|
20,000
|
|
Contingent
consideration, current portion
|
195,800
|
111,000
|
|
Bank
overdraft
|
50,600
|
43,100
|
|
Liabilities of
discontinued operations
|
64,400
|
240,900
|
|
Operating lease
liabilities, current portion
|
50,300
|
195,800
|
|
Payroll Protection
Program loan, current portion
|
563,800
|
563,800
|
|
Total current
liabilities
|
1,858,500
|
2,188,200
|
|
|
|
|
|
Payroll Protection
Program loan, less current portion
|
433,800
|
-
|
|
Contingent
consideration payable, less current portion
|
30,300
|
247,000
|
|
Operating lease
liabilities, less current portion
|
735,300
|
640,800
|
|
|
|
|
|
Total
liabilities
|
3,057,900
|
3,076,000
|
|
Shareholders’
equity:
Common stock, $.05 par
value; 10,000,000 and 7,000,000 shares authorized;
2,882,065
and 2,881,065 shares issued; 2,862,263 and 2,861,263 shares
outstanding at March 31, 2021 and June 30,
2020
|
144,200
|
144,100
|
|
|
|
|
|
Additional paid-in
capital
|
10,040,600
|
8,608,300
|
|
Retained
earnings
|
710,000
|
3,021,400
|
|
|
10,894,800
|
11,773,800
|
|
Less common stock
held in treasury at cost, 19,802 shares
|
52,400
|
52,400
|
|
|
|
|
|
Total
shareholders’ equity
|
10,842,400
|
11,721,400
|
|
|
|
|
|
Total liabilities
and shareholders’ equity
|
$13,900,300
|
$14,797,400
|
F-26
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
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,
|
|
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
|
|
Revenues
|
$2,508,600
|
$2,136,200
|
$7,245,100
|
$6,234,500
|
|
|
|
|
|
|
|
Cost of
revenues
|
1,145,700
|
1,037,000
|
3,419,400
|
2,978,900
|
|
|
|
|
|
|
|
Gross
profit
|
1,362,900
|
1,099,200
|
3,825,700
|
3,255,600
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
General and
administrative
|
1,385,600
|
509,700
|
2,441,700
|
1,458,100
|
|
Selling
|
1,386,100
|
344,900
|
2,658,900
|
880,300
|
|
Research and
development
|
450,000
|
298,900
|
1,024,000
|
795,300
|
|
Termination
costs
|
-
|
180,700
|
-
|
180,700
|
|
|
|
|
|
|
|
Total operating
expenses
|
3,221,700
|
1,334,200
|
6,124,600
|
3,314,400
|
|
|
|
|
|
|
|
Loss from
operations
|
(1,858,800)
|
(235,000)
|
(2,298,900)
|
(58,800)
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
Other income
(expense), net
|
6,100
|
(42,200)
|
22,300
|
(40,100)
|
|
Interest
income
|
22,500
|
300
|
71,400
|
10,000
|
|
Total other income
(expense), net
|
28,600
|
(41,900)
|
93,700
|
(30,100)
|
|
|
|
|
|
|
|
Loss before income
tax (benefit)
|
(1,830,200)
|
(276,900)
|
(2,205,200)
|
(88,900)
|
|
|
|
|
|
|
|
Income tax
(benefit), deferred:
|
(378,200)
|
(45,500)
|
(472,300)
|
(15,000)
|
|
|
|
|
|
|
|
Net loss from
continuing operations
|
(1,452,000)
|
(231,400)
|
(1,732,900)
|
(73,900)
|
|
|
|
|
|
|
|
Discontinued
operations (Note 9):
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
discontinued operations (including loss on
disposal of
$405,400), in 2021 period
|
16,400
|
(99,600)
|
(758,400)
|
(360,300)
|
|
Income tax
(benefit), deferred
|
-
|
(16,400)
|
(179,900)
|
(67,000)
|
|
|
|
|
|
|
|
Net income (loss)
from discontinued operations
|
16,400
|
(83,200)
|
(578,500)
|
(293,300)
|
|
|
|
|
|
|
|
Net
loss
|
$(1,435,600)
|
$(314,600)
|
$(2,311,400)
|
$(367,200)
|
|
|
|
|
|
|
|
Basic and diluted
income (loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$(.51)
|
$(.15)
|
$(.61)
|
$(.05)
|
|
|
|
|
|
|
|
Discontinued
operations
|
$.01
|
$(.06)
|
$(.20)
|
$(.20)
|
|
|
|
|
|
|
|
Consolidated
operations
|
$(.50)
|
$(.21)
|
$(.81)
|
$(.25)
|
|
|
|
|
|
|
|
|
|
|
|
|
See
notes to unaudited condensed consolidated financial
statements.
F-27
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY (UNAUDITED)
|
|
|
Additional
|
|
|
Total
|
||
|
|
Common
Stock
|
Paid-in
|
Retained
|
Treasury
Stock
|
Shareholders’
|
||
|
Fiscal Year
2021:
|
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
|
|
|
|
Additional
|
|
|
Total
|
||
|
|
Common
Stock
|
Paid-in
|
Retained
|
Treasury
Stock
|
Shareholders’
|
||
|
Fiscal Year
2020:
|
Shares
|
Amount
|
Capital
|
Earnings
|
Shares
|
Amount
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Balance, July 1,
2019
|
1,513,914
|
$75,700
|
$2,592,700
|
$3,724,700
|
19,802
|
$52,400
|
$6,340,700
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
-
|
-
|
-
|
(56,200)
|
-
|
-
|
(56,200)
|
|
|
|
|
|
|
|
|
|
|
Stock options
exercised
|
2,000
|
100
|
6,900
|
-
|
-
|
-
|
7,000
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
-
|
-
|
17,700
|
-
|
-
|
-
|
17,700
|
|
|
|
|
|
|
|
|
|
|
Balance, September
30, 2019
|
1,515,914
|
75,800
|
2,617,300
|
3,668,500
|
19,802
|
52,400
|
6,309,200
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
-
|
-
|
-
|
3,600
|
-
|
-
|
3,600
|
|
|
|
|
|
|
|
|
|
|
Stock options
exercised
|
6,661
|
300
|
(300)
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
-
|
-
|
17,700
|
-
|
-
|
-
|
17,700
|
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2019
|
1,522,575
|
$76,100
|
$2,634,700
|
$3,672,100
|
19,802
|
$52,400
|
$6,330,500
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
-
|
-
|
-
|
(314,600)
|
-
|
-
|
(314,600)
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
-
|
|
14,600
|
-
|
-
|
-
|
14,600
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31,
2020
|
1,522,575
|
$76,100
|
$2,649,300
|
$3,357,500
|
19,802
|
$52,400
|
$6,030,500
|
F-28
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
For
the Nine Month Period March 31,
|
For
the Nine Month Period March 31,
|
|
|
2021
|
2020
|
|
Operating
activities:
|
|
|
|
Net
loss
|
$(2,311,400)
|
$(367,200)
|
|
Adjustments to
reconcile net loss to cash used in operating
activities:
|
|
|
|
Gain on sale of
investments
|
(34,600)
|
(4,000)
|
|
Unrealized holding
loss on investments
|
18,900
|
42,700
|
|
Depreciation and
amortization
|
126,700
|
123,300
|
|
Deferred income
taxes
|
(652,300)
|
(82,100)
|
|
Loss on disposal of
subsidiary
|
405,400
|
-
|
|
Stock-based
compensation
|
1,429,400
|
50,000
|
|
Gain on sale of
fixed assets
|
-
|
(300)
|
|
Change in fair
value of contingent consideration
|
(118,500)
|
60,000
|
|
Changes in
operating assets and liabilities:
|
|
|
|
Trade accounts
receivable
|
(758,500)
|
(210,000)
|
|
Inventories
|
(697,700)
|
(452,500)
|
|
Right - of- use
assets
|
87,700
|
(867,400)
|
|
Income tax
receivable
|
(1,500)
|
-
|
|
Prepaid and other
current assets
|
57,400
|
9,500
|
|
Lease
liabilities
|
(51,000)
|
933,300
|
|
Accounts
payable
|
142,600
|
(117,100)
|
|
Contract
liabilities
|
(20,000)
|
116,100
|
|
Bank
overdraft
|
7,500
|
-
|
|
Accrued
expenses
|
(222,600)
|
(38,100)
|
|
|
|
|
|
Total
adjustments
|
(281,100)
|
(436,600)
|
|
|
|
|
|
Net cash used in
operating activities
|
(2,592,500)
|
(803,800)
|
|
|
|
|
|
Investing
activities:
|
|
|
|
Redemption of
investment securities
|
1,631,000
|
53,600
|
|
Purchase of
investment securities
|
(6,609,200)
|
(62,800)
|
|
Proceeds from sale
of discontinued operations
|
440,000
|
-
|
|
Proceeds from sale
of fixed assets
|
-
|
1,000
|
|
Capital
expenditures
|
(183,700)
|
(38,100)
|
|
Purchase of other
intangible assets
|
(41,200)
|
(20,000)
|
|
|
|
|
|
Net cash used in
investing activities
|
(4,763,100)
|
(66,300)
|
|
|
|
|
|
Financing
activities:
|
|
|
|
Payments of
contingent consideration
|
(13,400)
|
-
|
|
Proceeds from
Payroll Protection Program
|
433.800
|
-
|
|
Proceeds from stock
options exercised
|
3,000
|
7,000
|
|
|
|
|
|
Net cash provided
by financing activities
|
423,400
|
7,000
|
|
|
|
|
|
Net decrease in
cash and cash equivalents
|
(6,932,200)
|
(863,100)
|
|
|
|
|
|
Cash and cash
equivalents, beginning of year
|
7,559,700
|
1,602,500
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
$627,500
|
$739,400
|
|
|
|
|
|
Supplemental
disclosures:
|
|
|
|
|
|
|
|
Cash paid during
the period for:
|
|
|
|
Income
taxes
|
$2,500
|
$40,900
|
|
|
|
|
See
notes to unaudited condensed consolidated financial
statements.
F-29
SCIENTIFIC
INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
|
General:
|
The
accompanying 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 footnotes 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 financial statements and notes
thereto, included in its Annual Report on Form 10-K, for the fiscal
year ended June 30, 2020. The results for the three and nine months
ended March 31, 2021 are not necessarily an indication of the
results for the full fiscal year ending June 30, 2021.
|
1. Summary of Significant
Accounting Policies
Principles of Consolidation
The
accompanying consolidated financial statements include the accounts
of Scientific Industries, Inc., Scientific Bioprocessing, Inc.
(“SBI”) a Delaware corporation and wholly-owned
subsidiary, and Altamira Instruments, Inc.
(“Altamira”), a Delaware corporation and wholly-owned
subsidiary (discontinued as of November 2020), 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.
COVID-19 Pandemic
The
challenges posed by the COVID-19 pandemic on the global economy
began to impact the Company’s operations at the end of the
third quarter of the year ended June 30, 2020. At that time, the
Company took appropriate action and put plans in place to diminish
the effects of COVID-19 on its operations, enabling the Company to
continue to operate with minor or temporary disruptions to its
operations. The Company took immediate action as it pertains to
COVID-19 preparedness by implementing the Center for Disease
Control’s guidelines for employers in order to protect the
Company’s employees’ health and safety, with actions
such as implementing work from home, social distancing in the
workplace, requiring self -quarantine for any employee showing
symptoms, wearing face coverings, and training employees on
maintaining a healthy work environment. However, if an employee
becomes infected in the future, and the Company is forced to shut
down for a period of time, it could have a short-term negative
impact on operations. At the beginning of the pandemic, the
Catalyst Research Instruments (“discontinued
operation”) and Bioprocessing Systems Operations were shut
down due to state mandates, however, the impact on operations was
immaterial, and the Company was able to retain its employees
without furloughs or layoffs, in part, due to the Company’s
receipt of certain loan amounts under the Federal
Government’s Paycheck Protection Program. The Company did not
experience and does not anticipate any material impact on its
ability to collect its accounts receivable due to the nature of its
customers, which are primarily distributors of laboratory equipment
and supplies that have the ability to pay. However, there were some
delays in receiving some accounts receivable due for the
discontinued operation due to customer shutdowns, and there was a
material negative impact on the revenues of the discontinued
operation. The Company has not experienced and does not anticipate
any material impairment to its tangible and intangible assets,
system of internal controls, supply chain, or delivery and
distribution of its products as a result of COVID-19, however the
ultimate impact of COVID-19 on the Company’s business,
results of operations, financial condition and cash flows is
dependent on future developments, including the duration or
worsening of the pandemic and the related length of its impact on
the global economy, which are uncertain and cannot be predicted at
this time.
Adopted Accounting Pronouncements
In
August 2018, the Financial Standards Board (“FASB”)
issued Accounting Standards Update ("ASU") 2018-13, "Fair Value
Measurement (Topic 820): Disclosure Framework Changes to the
Disclosure Requirements for Fair Value Measurement", which is part
of the FASB disclosure framework project to improve the
effectiveness of disclosures in the notes to the financial
statements. The amendments in the new guidance remove, modify, and
add certain disclosure requirements related to fair value
measurements covered in Topic 820, "Fair Value Measurement." The
new standard was effective for fiscal years beginning after
December 15, 2019. Early adoption was permitted for either the entire standard or only the
requirements that modify or eliminate the disclosure requirements,
with certain requirements applied prospectively, and
all other requirements applied retrospectively to all periods
presented. The adoption of this standard on July 1, 2020 did not
have a material impact on the Company’s financial
statements.
F-30
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Recent Accounting Pronouncements
In
December 2019, the FASB issued ASU No. 2019-12, Simplifying the
Accounting for Income Taxes, which is designed to simplify the
accounting for income taxes by removing certain exceptions to the
general principles in Topic 740. ASU No. 2019-12 is effective for
fiscal years beginning after December 15, 2020, including interim
periods within those fiscal years; this ASU allows for early
adoption in any interim period after issuance of the update. The
Company is currently evaluating the impact of adopting this
guidance.
2. Revenue
The Company records revenues in accordance with Accounting
Standards Codification (“ASC”) Topic 606 “Revenue
from Contracts with Customers, as amended” (“ASC Topic
606”). In accordance with ASC Topic 606, the Company accounts
for a customer contract when both parties have approved the
contract and are committed to perform their respective obligations,
each party’s rights can be identified, payment terms can be
identified, the contract has commercial substance, and it is
probable that the Company will collect substantially all of the
consideration to which it is entitled. Revenue is recognized when,
or as, performance obligations are satisfied by transferring
control of a promised product or service to a
customer.
Nature of Products and Services
We
generate revenues from the following sources: (1) Benchtop
Laboratory Equipment, and (2) Bioprocessing Systems.
The
following table summarizes the Company’s disaggregation of
revenues for the three and nine months ended March 31, 2021 and
2020.
|
|
Benchtop Laboratory
Equipment
|
Bioprocessing
Systems
|
Consolidated
|
|
Three Months Ended
March 31, 2021:
|
|
|
|
|
|
|
|
|
|
Revenues
|
$2,365,700
|
$142,900
|
$2,508,600
|
|
|
|
|
|
|
Foreign
Sales
|
942,200
|
102,600
|
1,044,800
|
|
|
Benchtop Laboratory
Equipment
|
Bioprocessing
Systems
|
Consolidated
|
|
Three Months Ended
March 31, 2020:
|
|
|
|
|
|
|
|
|
|
Revenues
|
$1,800,700
|
$335,500
|
$2,136,200
|
|
|
|
|
|
|
Foreign
Sales
|
743,000
|
335,000
|
1,078,000
|
|
|
Benchtop Laboratory
Equipment
|
Bioprocessing
Systems
|
Consolidated
|
|
Nine Months Ended
March 31, 2021:
|
|
|
|
|
|
|
|
|
|
Revenues
|
$6,803,300
|
$441,800
|
$7,245,100
|
|
|
|
|
|
|
Foreign
Sales
|
2,724,800
|
395,000
|
3,119,800
|
|
|
Benchtop Laboratory
Equipment
|
Bioprocessing
Systems
|
Consolidated
|
|
Nine Months Ended
March 31, 2020:
|
|
|
|
|
|
|
|
|
|
Revenues
|
$5,320,300
|
$914,200
|
$6,234,500
|
|
|
|
|
|
|
Foreign
Sales
|
1,996,400
|
913,700
|
2,910,100
|
Benchtop
Laboratory Equipment sales are comprised primarily of standard
benchtop laboratory equipment from its stock sold to laboratory
equipment distributors, or to end users primarily via e-commerce.
The sales cycle from time of receipt of order to shipment varies
from one day to up to a few weeks. Customers pay either by credit
card (online sales) or net 30-90, depending on the customer. Once
the item is shipped under the terms specified in the order, which
is typically “FOB Factory”, other than a standard
warranty, there are no obligations to the customer. The
Company’s standard warranty is typically comprised of one to
two years of parts and labor and is deemed immaterial.
Bioprocessing
Systems’ revenues are primarily comprised of royalties earned
by the Company, which are paid on a calendar year basis, under a
licensing agreement from a single licensee and its sublicensees.
The Company is obligated to pay 50% of all royalties it receives to
the entity that licenses the intellectual property to the Company.
During the year, the Company’s management uses its best
judgement to estimate the royalty revenues earned during each
fiscal period.
F-31
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The
Company determines revenue recognition through the following
steps:
|
|
●
|
Identification
of the contract, or contracts, with a customer
|
|
|
●
|
Identification
of the performance obligations in the contract
|
|
|
●
|
Determination
of the transaction price
|
|
|
●
|
Allocation
of the transaction price to the performance obligations in the
contract
|
|
|
●
|
Recognition
of revenue when, or as, a performance obligation is
satisfied
|
The Company has made the following accounting policy elections and
elected to use certain practical expedients, as permitted by the
FASB, in applying ASC Topic 606: 1) all revenues are recorded net
of returns, allowances, customer discounts, and incentives; 2)
although sales and other taxes are immaterial, the Company accounts
for amounts collected from customers for sales and other taxes, if
any, net of related amounts remitted to tax authorities; 3) the
Company expenses costs to obtain a contract as they are incurred if
the expected period of benefit, and therefore the amortization
period, is one year or less; 4) the Company accounts for shipping
and handling activities that occur after control transfers to the
customer as a fulfillment cost rather than an additional promised
service and these fulfillment costs fall within selling expenses;
5) the Company is always considered the principal and never an
agent, because it has full control and responsibility until title
is transferred to the customer; 6) the Company does not assess
whether promised goods or services are performance obligations if
they are immaterial in the context of the contract with the
customer such as is the case with catalyst
instruments.
3. Segment Information and
Concentrations
The
Company views its operations as two 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 design and marketing of bioprocessing
systems and products and related royalty income
(“Bioprocessing Systems Operations”).
Segment
information is reported as follows:
|
|
Benchtop Laboratory
Equipment
|
Bioprocessing
Systems
|
Corporate And
Other
|
Consolidated
|
|
Three Months Ended
March 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$2,365,700
|
$142,900
|
$-
|
$2,508,600
|
|
|
|
|
|
|
|
Foreign
Sales
|
942,200
|
102,600
|
-
|
1,044,800
|
|
|
|
|
|
|
|
Income (Loss) From
Operations
|
774,600
|
(1,722,200)
|
(911,200)
|
(1,858,800)
|
|
|
|
|
|
|
|
Assets
|
5,979,400
|
1,281,200
|
6,639,700
|
13,900,300
|
|
|
|
|
|
|
|
Long-Lived Asset
Expenditures
|
18,600
|
92,100
|
-
|
110,700
|
|
|
|
|
|
|
|
Depreciation and
Amortization
|
30,000
|
16,700
|
-
|
43,700
|
Approximately
$124,600 included in Assets relates to discontinued
operations.
|
|
Benchtop Laboratory
Equipment
|
Bioprocessing
Systems
|
Corporate And
Other
|
Consolidated
|
|
Three Months Ended
March 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$1,800,700
|
$335,500
|
$-
|
$2,136,200
|
|
|
|
|
|
|
|
Foreign
Sales
|
743,000
|
335,000
|
-
|
1,078,000
|
|
|
|
|
|
|
|
Income (Loss) From
Operations
|
138,800
|
(193,100)
|
(180,700)
|
(235,000)
|
|
|
|
|
|
|
|
Assets
|
5,229,700
|
1,647,800
|
2,042,400
|
8,919,900
|
|
|
|
|
|
|
|
Long-Lived Asset
Expenditures
|
4,900
|
11,700
|
-
|
16,600
|
|
|
|
|
|
|
|
Depreciation and
Amortization
|
29,600
|
11,000
|
300
|
40,900
|
F-32
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Approximately
$1,227,900 included in Assets relates to discontinued operations,
and $300 in depreciation and amortization relates to discontinued
operations.
Approximately
55% and 49% of total benchtop laboratory equipment sales (52% and
37% of total revenues) for the three months ended March 31, 2021
and 2020, respectively, were derived from the Company’s main
product, the Vortex-Genie 2 mixer, excluding
accessories.
Approximately
20% and 24% of total benchtop laboratory equipment sales (19% and
18% of total revenues) were derived from the Torbal Scales Division
for the three months ended March 31, 2021 and 2020,
respectively.
For the
three months ended March 31, 2021 and 2020, respectively, three
customers accounted for approximately 26% and 16% of net sales of
the Benchtop Laboratory Equipment Operations (25% and 12% of the
Company’s total revenues).
|
|
Benchtop Laboratory
Equipment
|
Bioprocessing
Systems
|
Corporate And
Other
|
Consolidated
|
|
Nine Months Ended
March 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$6,803,300
|
$441,800
|
$-
|
$7,245,100
|
|
|
|
|
|
|
|
Foreign
Sales
|
2,724,800
|
395,000
|
-
|
3,119,800
|
|
|
|
|
|
|
|
Income (Loss) From
Operations
|
1,727,000
|
(2,996,300)
|
(1,029,600)
|
(2,298,900)
|
|
|
|
|
|
|
|
Assets
|
5,979,400
|
1,281,200
|
6,639,700
|
13,900,300
|
|
|
|
|
|
|
|
Long-Lived Asset
Expenditures
|
54,100
|
170,800
|
-
|
224,900
|
|
|
|
|
|
|
|
Depreciation and
Amortization
|
79,700
|
46,500
|
500
|
126,700
|
Approximately
$124,600 included in Assets relates to discontinued operations, and
$500 in depreciation and amortization relates to discontinued
operations.
|
|
Benchtop Laboratory
Equipment
|
Bioprocessing
Systems
|
Corporate And
Other
|
Consolidated
|
|
Nine Months Ended
March 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$5,320,300
|
$914,200
|
$-
|
$6,234,500
|
|
|
|
|
|
|
|
Foreign
Sales
|
1,996,400
|
913,700
|
-
|
2,910,100
|
|
|
|
|
|
|
|
Income (Loss) From
Operations
|
331,300
|
(209,400)
|
(180,700)
|
(58,800)
|
|
|
|
|
|
|
|
Assets
|
5,229,700
|
1,647,800
|
2,042,400
|
8,919,900
|
|
|
|
|
|
|
|
Long-Lived Asset
Expenditures
|
26,800
|
31,300
|
-
|
58,100
|
|
|
|
|
|
|
|
Depreciation and
Amortization
|
90,900
|
31,500
|
900
|
123,300
|
Approximately
$1,227,900 included in Assets relates to discontinued operations,
and $900 in depreciation and amortization relates to discontinued
operations.
Approximately
51% and 45% of total benchtop laboratory equipment sales (47% and
36% of total revenues) for the nine months ended March 31, 2021 and
2020, respectively, were derived from the Company’s main
product, the Vortex-Genie 2 mixer, excluding
accessories.
Approximately
23% and 27% of total benchtop laboratory equipment sales (21% and
21% of total revenues) were derived from the Torbal Scales Division
for the nine months ended March 31, 2021 and 2020,
respectively.
For the
nine months ended March 31, 2021 and 2020, three customers
accounted for approximately 23% and 17% of net sales of the
Benchtop Laboratory Equipment Operations (21% and 13% of the
Company’s total revenues), respectively.
F-33
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
4. Fair Value of Financial
Instruments
The
FASB defines 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.
The
fair values of the contingent consideration obligations are based
on a probability weighted approach derived from the estimates of
earn-out criteria and the probability assessment with respect to
the likelihood of achieving those criteria. The measurement is
based on significant inputs that are not observable in the market,
therefore, the Company classifies this liability as Level 3 in the
following tables.
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 at March 31, 2021 and June 30, 2020
according to the valuation techniques the Company used to determine
their fair values:
|
|
|
Fair
Value Measurements Using Inputs Considered as
|
||
|
|
Fair
Value at March 31, 2021
|
Level 1
|
Level 2
|
Level 3
|
|
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$627,500
|
$627,500
|
$-
|
$-
|
|
Investment
securities
|
5,325,700
|
5,325,700
|
-
|
-
|
|
|
|
|
|
|
|
Total
|
$5,953,200
|
$5,953,200
|
-
|
$-
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Contingent
consideration
|
$226,100
|
$-
|
$-
|
$226,100
|
|
|
|
Fair
Value Measurements Using Inputs Considered as
|
||
|
|
Fair
Value at June 30, 2020
|
Level 1
|
Level 2
|
Level 3
|
|
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$7,559,700
|
$7,559,700
|
$-
|
$-
|
|
Investment
securities
|
331,800
|
331,800
|
-
|
-
|
|
|
|
|
|
|
|
Total
|
$7,891,500
|
$7,891,500
|
$-
|
$-
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Contingent
consideration
|
$358,000
|
$-
|
$-
|
$358,000
|
F-34
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Investments
in marketable securities at March 31, 2021 and June 30, 2020
consisted of the following:
|
|
Cost
|
Fair
Value
|
Unrealized Holding
Gain (Loss)
|
|
At March 31,
2021:
|
|
|
|
|
Equity
securities
|
$102,200
|
$148,100
|
$45,900
|
|
Mutual and bond
funds
|
5,169,700
|
5,177,600
|
7,900
|
|
|
|
|
|
|
|
$5,271,900
|
$5,325,700
|
$53,800
|
|
|
Cost
|
Fair
Value
|
Unrealized Holding
Gain (Loss)
|
|
At June 30,
2020:
|
|
|
|
|
Equity
securities
|
$77,600
|
$101,900
|
$24,300
|
|
Mutual and bond
funds
|
250,300
|
229,900
|
(20,400)
|
|
|
|
|
|
|
|
$327,900
|
$331,800
|
$3,900
|
5. Inventories
Inventories
are valued at the lower of cost (determined on a first-in,
first-out basis) or net realizable value, and have been reduced by
an allowance for excess and obsolete inventories. The estimate is
based on managements review of inventories on hand compared to
estimated future usage and sales. Cost of work-in-process and
finished goods inventories include material, labor, and
manufacturing overhead.
|
|
March 31,
2021
|
June
30, 2020
|
|
Raw
materials
|
$2,191,200
|
$1,726,400
|
|
Work-in-process
|
74,100
|
35,700
|
|
Finished
goods
|
619,900
|
778,900
|
|
|
|
|
|
|
$2,885,200
|
$2,541,000
|
6. Goodwill and Other
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 $257,300 at March 31, 2021 and
June 30, 2020, all of which is expected to be deductible for tax
purposes.
The
components of other intangible assets are as follows:
|
|
Useful
Lives
|
Cost
|
Accumulated
Amortization
|
Net
|
|
At March 31,
2021:
|
|
|
|
|
|
Technology,
trademarks
|
5/10
yrs.
|
$364,700
|
$362,200
|
$2,500
|
|
Trade
names
|
6 yrs.
|
140,000
|
140,000
|
-
|
|
Websites
|
5 yrs.
|
210,000
|
210,000
|
-
|
|
Customer
relationships
|
9/10
yrs.
|
120,000
|
94,400
|
25,600
|
|
Sublicense
agreements
|
10
yrs.
|
294,000
|
275,600
|
18,400
|
|
Non-compete
agreements
|
5 yrs.
|
282,000
|
282,000
|
-
|
|
IPR&D
|
3 yrs.
|
110,000
|
110,000
|
-
|
|
Other intangible
assets
|
5 yrs.
|
287,800
|
212,800
|
75,000
|
|
|
|
|
|
|
|
|
$1,808,500
|
$1,687,000
|
$121,500
|
|
F-35
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
|
|
Useful
Lives
|
Cost
|
Accumulated
Amortization
|
Net
|
|
At June 30,
2020:
|
|
|
|
|
|
Technology,
trademarks
|
5/10
yrs.
|
$364,700
|
$362,000
|
$2,700
|
|
Trade
names
|
6 yrs.
|
140,000
|
140,000
|
-
|
|
Websites
|
5 yrs.
|
210,000
|
210,000
|
-
|
|
Customer
relationships
|
9/10
yrs.
|
120,000
|
84,400
|
35,600
|
|
Sublicense
agreements
|
10
yrs.
|
294,000
|
253,600
|
40,400
|
|
Non-compete
agreements
|
5 yrs.
|
282,000
|
282,000
|
-
|
|
IPR&D
|
3 yrs.
|
110,000
|
110,000
|
-
|
|
Other intangible
assets
|
5 yrs.
|
246,600
|
196,600
|
50,000
|
|
|
|
|
|
|
|
|
$1,767,300
|
$1,638,600
|
$128,700
|
|
Total
amortization expense was $16,000 and $18,300 for the three months
ended March 31, 2021 and 2020, respectively, and $48,500 and
$57,600 for the nine months ended March 31, 2021 and 2020,
respectively. As of March 31, 2021, estimated future amortization
expense related to intangible assets is $42,800 for the remainder
of the fiscal year ending June 30, 2021, $32,100 for fiscal 2022,
$20,400 for fiscal 2023, $18,000 for fiscal 2024 and $8,200
thereafter.
7. Earnings (Loss) Per
Common Share
The
Company presents the computation of earnings per share
(“EPS”) on a basic and diluted 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 Month Period Ended March 31, 2021
|
For
the Three Month Period Ended March 31, 2020
|
For
the Nine Month Period Ended March 31, 2021
|
For
the Nine Month Period Ended March 31, 2020
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
2,861,607
|
1,502,773
|
2,861,376
|
1,497,567
|
|
Effect of dilutive
securities
|
-
|
-
|
-
|
-
|
|
Weighted average
number of dilutive common shares outstanding
|
2,861,607
|
1,502,773
|
2,861,376
|
1,497,567
|
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$(.51)
|
$(.15)
|
$(.61)
|
$(.05)
|
|
Discontinued
operations
|
$.01
|
$(.06)
|
$(.20)
|
$(.20)
|
|
Consolidated
operations
|
$(.50)
|
$(.21)
|
$(.81)
|
$(.25)
|
Approximately
259,357 shares and 1,349,850 of the Company’s common stock
issuable upon the exercise of options and warrants, respectively,
were excluded from the calculation for the three and nine months
ended March 31, 2021, because the effect would be anti-dilutive due
to the loss for the periods. Approximately, 51,629 shares of the
Company’s common stock issuable upon the exercise of the
outstanding options were excluded from the calculation for three
and nine months ended March 31, 2020 because they were
anti-dilutive.
F-36
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
8. Leases
The
Company recognizes all long-term leases on its balance sheet as a
liability for its lease obligation, measured at the present value
of lease payments not yet paid, and a corresponding asset
representing its right to use the underlying asset over the lease
term.
The
Company leases certain properties consisting principally of a
facility in Bohemia, New York (headquarters) through January 2025,
a facility in Pittsburgh, Pennsylvania for its Bioprocessing
Systems Operations through May 2023, and a sales and administration
office in Orangeburg, New York for the Torbal Division of its
Benchtop Laboratory Equipment Operations through October 2022. The
Company had a lease for its Catalyst Research Instruments
Operations which terminated in November 2020 and the facility was
shut down at the end of December 2020 following the sale of that
business segment on November 30, 2020. There are no renewal options
with any of the leases, no residual values or significant
restrictions or covenants other than those customary in such
arrangements, and no non-cash activities. Any rent escalations
incorporated within the leases are included in the calculation of
the future minimum lease payments, as further described below. All
of the Company’s leases are deemed operating
leases.
The
Company determines whether an agreement contains a lease at
inception based on the Company’s right to obtain
substantially all of the economic benefits from the use of the
identified asset and its right to direct the use of the identified
asset. Lease liabilities represent the present value of future
lease payments and the Right-Of-Use (“ROU”) assets
represent the Company’s right to use the underlying assets
for the respective lease terms. ROU assets and lease liabilities
are recognized at the lease commencement date based on the present
value of the lease payments over the lease term. The ROU asset is
further adjusted to account for previously recorded lease expenses
such as deferred rent and other lease liabilities. As the
Company’s leases do not provide an implicit rate, the Company
used its incremental borrowing rate of 5.0% as the discount rate to
calculate the present value of future lease payments, which was the
interest rate that its bank would charge for a similar
loan.
The
Company elected not to recognize a ROU asset and a lease liability
for leases with an initial term of twelve months or less. In
addition to minimum lease payments, certain leases require payment
of a proportionate share of real estate taxes and certain building
operating expenses or payments based on an excess of a specified
base. These variable lease costs are not included in the
measurement of the ROU asset or lease liability due to
unpredictability of the payment amount and are recorded as lease
expenses in the period incurred. The Company’s lease
agreements do not contain residual value guarantees.
The
Company elected available practical expedients for existing or
expired contracts of lessees whereby the Company is not required to
reassess whether such contracts contain leases, the lease
classification or the initial direct costs. The Company is not
utilizing the practical expedient which allows the use of hindsight
by lessees and lessors in determining the lease term and in
assessing impairment of its ROU assets. The Company utilized the
transition method allowing entities to only apply the new lease
standard in the year of adoption.
As of
March 31, 2021, the weighted-average remaining lease term for
operating lease liabilities was approximately 2.7 years and the
weighted-average discount rate was 5.0%. Total cash payments under
these leases were $64,000 and $218,700 for the three- and nine-
month periods ended March 31, 2021 of which $59,900 and $211,100,
respectively, were recorded as lease expense.
The
Company’s approximate future minimum rental payments under
all leases existing at March 31, 2021 through February 2025 are as
follows:
|
Fiscal year ending
June 30,
|
Amount
|
|
Remainder of
2021
|
$64,000
|
|
2022
|
260,300
|
|
2023
|
245,300
|
|
2024
|
195,900
|
|
2025
|
91,600
|
|
Total future
minimum payments
|
$857,100
|
|
Less: Imputed
interest
|
71,500
|
|
|
|
|
Total Present
Value of Operating Lease Liabilities
|
$785,600
|
F-37
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
9. Discontinued
Operations
Effective November 30, 2020, the Company, as part of its strategic
shift to becoming a life sciences tool provider, sold its Catalyst
Research Instruments Operations reporting segment through the sale
by Altamira of substantially all of its assets, which comprised of
fixed assets, and inventory to Beijing JWGB Sci. & Tech. Co.
Ltd., a corporation formed under the laws of the People’s
Republic of China (“JWGB”) for $440,000 payable in cash
through January 2021, resulting in a $405,400 pre-tax loss. In
order to preserve business continuity for the buyer, Altamira
agreed to purchase certain components on behalf of JWGB for which
JWGB agreed to reimburse Altamira. At March 31, 2021, JWGB paid the
full $440,000 purchase price and $28,500 for component purchases
made on its behalf. The Company retained all its receivables and
payables related to sales made prior to November 30, 2020, certain
inventory related to two work-in-process orders which will be
shipped by the end of the fiscal year ending June 30, 2021, product
warranty and other miscellaneous liabilities related to certain
employee benefits, and expenses related to the closure of the
Altamira facility, which was substantially completed at the end of
December 2020.
As a result of the disposal described above, the operating results
of the former Catalyst Research Instruments Operations segment have
been presented as discontinued operations in the balance sheets,
the statements of operations, and the statements of cash flows, as
detailed below.
|
Assets:
|
March 31, 2021
|
June
30, 2020
|
|
Cash
|
$12,100
|
$-
|
|
Accounts
receivable
|
109,300
|
-
|
|
Inventories
|
3,200
|
343,700
|
|
Property and
equipment, net
|
-
|
1,400
|
|
Goodwill
|
-
|
447,900
|
|
|
|
|
|
Discontinued
operations
|
$124,600
|
$793,000
|
|
Liabilities:
|
March 31, 2021
|
June
30, 2020
|
|
Accounts
payable
|
$2,900
|
$20,100
|
|
Accrued expenses
and taxes
|
45,000
|
120,700
|
|
Contract
liabilities
|
16,500
|
69,000
|
|
Operating lease
liabilities, current portion
|
-
|
31,100
|
|
|
|
|
|
|
$64,400
|
$240,900
|
|
|
Three
Months Ended
|
Nine
Months Ended
|
||
|
|
March
31,2021
|
March
31,2020
|
March
31,2021
|
March
31,2020
|
|
Revenues
|
$107,800
|
$241,800
|
$387,700
|
$420,000
|
|
Cost of goods
sold
|
78,800
|
237,700
|
458,500
|
500,300
|
|
Gross
profit
|
29,900
|
4,100
|
(70,800)
|
(80,300)
|
|
Selling, general
and administrative expenses
|
12,600
|
103,700
|
282,200
|
280,000
|
|
Income (loss from
operations)
|
16,400
|
(99,600)
|
(353,000)
|
(360,300)
|
|
Loss on
disposal
|
-
|
-
|
(405,400)
|
-
|
|
Income (loss)
before income tax benefit
|
16,400
|
(99,600)
|
(758,400)
|
(360,300)
|
|
Income tax benefit,
all deferred
|
-
|
(16,400)
|
(179,900)
|
(67,000)
|
|
Net income (loss)
attributable to discontinued operations
|
$16,400
|
$(83,200)
|
$(578,500)
|
$(293,300)
|
F-38
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
In our Consolidated Statements of Cash Flows, the cash flows from
discontinued operations are not separately classified. Cash (used)
and provided by operating activities from discontinued operations
for the nine months ended March 31, 2021 and March 31, 2020 was
($502,900) and $17,900, respectively. Cash provided by investing
activities from discontinued operations for the nine months ended
March 31, 2021 was $440,000 and none for the nine months ended
March 31, 2020. There was no cash provided or used by the
discontinued operations for financing activities for both the
current and prior year periods.
10. Payroll Protection
Program Loans
The Company has two Payroll Protection Program (“PPP”)
loans outstanding which are comprised of $563,800 received in April
2020 and $433,800 received
in March 2021 through its bank. The loans each bear interest at 1%
per annum and mature in April 2022 and March 2026, respectively,
and contain no collateral or guarantee requirements. The Company
expects to apply and receive forgiveness for both
loans.
11. Equity
At the 2020 Annual Meeting of Stockholders, the stockholders of the
Company approved an amendment to the Certificate of Incorporation
of the Company to increase the number of authorized shares of the
Company’s Common stock by 3,000,000 shares from 7,000,000
to 10,000,000 shares, which is reflected as of March 31,
2021.
In addition, the stockholders also approved an amendment to the
Company’s 2012 Stock Option Plan (“Plan”) to
increase the number of shares under the Plan by 943,000 shares,
from 307,000 to 1,250,000 shares, which, together with 150,000
shares that were added to the Plan in 2020, the Company registered
on a Form S-8 Registration Statement with the Securities and
Exchange Commission on March 15, 2021. The Company’s Board of
Directors authorized and
approved the grant of Stock Options in June
2020 and July 2020 to three key officers, subject to availability
of option shares. In February 2021, upon availability, the Company
issued these stock options to the Company’s Chairman of the
Board, its Chief Executive Officer and President, and the Chief
Commercial Officer of the Company’s Bioprocessing Systems
Operations, which resulted in total stock-based compensation of
$1,292,000 and $1,429,400 for the three and nine months ended March
31, 2021, which also included expense for other
optionees.
12. Subsequent
Events
On April 29 2021, the Company received proceeds of approximately
$7,580,500 from the sale of its securities to private investors
upon the issuance of 1,595,880 shares of the Company’s Common
Stock at an offering price of $4.75 per share which included
warrants to purchase up to 797,940 shares of the Company’s
Common Stock at $9.50 per share. These warrants are exercisable
immediately and expire five years from date of
issuance.
Using the proceeds received, the Company, through its newly
organized wholly owned subsidiary Scientific Bioprocessing
Holdings, Inc., purchased 100% of the capital stock in aquila
biolabs, GmbH (“Aquila”), a German bioprocessing
company, for approximately $7,880,000. This acquisition was
completed so both Aquila and SBI can create synergies in product
development and sales opportunities for all products in the United
States, Europe and other parts of the world. Concurrent with the
acquisition, the Company entered into employment agreements with
the four managing directors of Aquila. The Company has not
completed any other items required to be disclosed as more time is
needed in order to complete all of the necessary calculations. In
addition, certain disclosures of revenues and earnings of Aquila
since the acquisition are impracticable as they are minimal to the
Company as a whole.
f-39
8,093,513 Shares
Common Stock
PROSPECTUS
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
|
ITEM 13.
|
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
|
Our
estimated expenses in connection with the issuance and distribution
of the securities being registered are:
|
SEC Registration
Fee
|
$9,100
|
|
Accounting Fees and
Expenses
|
$8,000
|
|
Legal Fees and
Expenses
|
$25,000
|
|
Miscellaneous Fees
and Expenses
|
$1,000
|
|
|
|
|
Total
|
$43,100
|
ITEM
14.
INDEMNIFICATION
OF OFFICERS AND DIRECTORS
Section
102(b)(7) of the Delaware General Corporation Law, or DGCL,
provides that a corporation may, in its original certificate of
incorporation or an amendment thereto, eliminate or limit the
personal liability of a director for violations of the
director’s fiduciary duty, except (1) for any breach of the
director’s duty of loyalty to the corporation or its
stockholders, (2) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (3)
pursuant to Section 174 of the DGCL, which provides for liability
of directors for unlawful payments of dividends or unlawful stock
purchases or redemptions or (4) for any transaction from which a
director derived an improper personal benefit.
II-1
Section
145 of the DGCL provides that a corporation may indemnify any
person, including an officer or director, who is, or is threatened
to be made, party to any threatened, pending or completed legal
action, suit or proceeding, whether civil, criminal, administrative
or investigative, other than an action by or in the right of such
corporation, by reason of the fact that such person was an officer,
director, employee or agent of such corporation or is or was
serving at the request of such corporation as an officer, director,
employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action,
suit or proceeding, provided such officer, director, employee or
agent acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the corporation’s best interest
and, for criminal proceedings, had no reasonable cause to believe
that his conduct was unlawful. A Delaware corporation may indemnify
any officer or director in an action by or in the right of the
corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses that such
officer or director actually and reasonably incurred.
Our
amended certificate of incorporation as currently in effect
provides for the indemnification of directors to the fullest extent
permissible under Delaware law.
Our
amended and restated bylaws as currently in effect provide for the
indemnification of officers and directors acting on our behalf if
this person acted in good faith and in a manner reasonably believed
to be in and not opposed to our best interest, and, with respect to
any criminal action or proceeding, the indemnified party had no
reason to believe his or her conduct was unlawful.
In
addition, we have entered into separate indemnification agreements
with certain of our executive officers and directors. Such
agreements may require us, among other things, to advance expenses
and otherwise indemnify our executive officers and directors
against certain liabilities that may arise by reason of their
status or service as executive officers or directors, to the
fullest extent permitted by law. We intend to enter into
indemnification agreements with any new directors and executive
officers in the future.
We have
purchased and intend to maintain insurance on behalf of us and any
person who is or was a director or officer against any loss arising
from any claim asserted against him or her and incurred by him or
her in that capacity, subject to certain exclusions and limits of
the amount of coverage.
ITEM
15.
RECENT
SALES OF UNREGISTERED SECURITIES
The
information regarding the Securities Purchase Agreements in
“Description of Private Placements” is herein
incorporated by reference. The securities issued pursuant to the
Securities Purchase Agreements were issued pursuant to the
exemption from registration provide by Section 4(a)(2) of the
Securities Act.
Stock Options and Common Stock Issuances
Since
July 1, 2020, the Company granted stock options under our 2012
Stock Option Plan to purchase an aggregate of 663,439 shares of our
common stock, net of cancellations at a weighted-average exercise
price of $9.69 per share, to certain employees, consultants and
directors.
Since
July 1, 2020, an employee exercised 1,000 options under our 2012
Stock Option Plan.
Securities Act Exemptions
We
deemed the grants of stock options and issuances of common stock
upon exercise of such options described above under
“—Stock Options and Common Stock Issuances” to be
exempt from registration under the Securities Act in reliance on
Rule 701 of the Securities Act as offers and sales of securities
under compensatory benefit plans and contracts relating to
compensation in compliance with Rule 701. Each of the recipients of
securities in any transaction exempt from registration either
received or had adequate access, through employment, business or
other relationships, to information about us.
All
certificates representing the securities issued in the transactions
described in this Item 15 included appropriate legends setting
forth that the securities had not been offered or sold pursuant to
a registration statement and describing the applicable restrictions
on transfer of the securities. There were no underwriters employed
in connection with any of the transactions set forth in this Item
15.
ITEM
16.
EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
|
Exhibit No.
|
Description
|
|
3(a)
|
Certificate of
Incorporation of the Company as amended (incorporated by reference
to Exhibit 1(a-1) to the Company's General Form for Registration of
Securities on Form 10 filed with the SEC on February 14,
1973)
|
|
3(b)
|
Certificate of
Amendment of the Company’s Certificate of Incorporation, as
filed on January 28, 1985 (incorporated by reference to Exhibit
3(a) to the Company’s Annual Report on Form 10-K for the
fiscal year ended June 30, 1985)
|
|
3(c)
|
By-Laws
of the Company, as restated and amended (incorporated by reference
to Exhibit 3(ii) to the Company’s Current Report on Form 8-K
filed on January 6, 2003 and Exhibit 3(ii) to the Company’s
Current Report on Form 8-K filed on December 5, 2007).
|
|
3(d)
|
Second
Amended and Restated By-Laws of Scientific Industries, Inc. (filed
as Exhibit 3.2 to the Company’s Current Report on Form 8-K
filed on August 10, 2020 and incorporated by reference
thereto).
|
|
3(e)
|
Certificate of
Amendment of the Company’s Certificate of Incorporation, as
filed on June 21, 2021 (incorporated by reference to Exhibit 3.1 to
the Company’s Current Report on Form 8-K filed on June 21,
2021).
|
|
4.1
|
Specimen Common
Stock certificate of Scientific Industries, Inc. (incorporated by
reference to Exhibit 4.1 to the registrant’s Registration
Statement on Form S-1, as amended (File No.
333-188209)).
|
|
4.2
|
Form of
Warrants issued by the Company on June 18, 2020 to the Purchasers
listed in that certain Securities Purchase Agreement dated as of
June 18, 2020 (incorporated by reference to Exhibit 4.1 to the
Company’s Current Report on Form 8-K filed with the SEC on
June 19, 2020)
|
|
4.3
|
Form of
Warrants issued by the Company on April 29, 2021 to the Purchasers
listed in that certain Securities Purchase Agreement dated as of
April 28, 2021 (incorporated by reference to Exhibit 4.1 to the
Company’s Current Report on Form 8-K filed with the SEC on
April 30, 2021)
|
|
4.4
|
Form of
Warrants issued by the Company on June 18 2021 to the Purchasers
listed in that certain Securities Purchase Agreement dated as of
June 18, 2021(incorporated by reference to Exhibit 4.1 to the
Company’s Current Report on Form 8-K filed with the SEC on
June 21, 2021)
|
|
4.5
|
Registration Rights
Agreement, dated as of April 29, 2021, by and among the Company and
the Investors named therein (incorporated by reference to Exhibit
4.2 to the Company’s Current Report on Form 8-K filed with
the SEC on April 30, 2021)
|
|
4.6
|
Amendment No. 1 to
Registration Rights Agreement, dated as of June 18, 2021, by and
among the Company and the Investors named therein (incorporated by
reference to Exhibit 4.1A to the Company’s Current Report on
Form 8-K filed with the SEC on June 19, 2020)
|
|
4.7
|
Form of
Joinder Agreement (incorporated by reference to Exhibit 4.1B to the
Company’s Current Report on Form 8-K filed with the SEC on
June 21, 2021)
|
|
5.1
|
Opinion
of Reitler Kailas & Rosenblatt LLP*
|
|
10.1
|
Securities Purchase
Agreement, dated as of June 18, 2020, by and among the Company and
the Purchasers named therein (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed with
the SEC on June 19, 2020)
|
|
10.2
|
Securities Purchase
Agreement, dated as of April 28, 20203 by and among the Company and
the Purchasers named therein (incorporated by reference to Exhibit
10.3 to the Company’s Current Report on Form 8-K filed with
the SEC on April 30, 2021)
|
|
10.3
|
Securities Purchase
Agreement, dated as of June 18, 2021 by and among the Company and
the Purchasers named therein (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed with
the SEC on June 21, 2021)
|
|
23.1
|
Consent
of Nussbaum Berg Klein & Wolpow,
CPAs LLP**
|
|
23.2
|
Consent
of Reitler Kailas & Rosenblatt LLP (included in Exhibit
5.1)*
|
|
24.1
|
Power
of Attorney (included on the signature page of this Registration
Statement)*
|
|
|
|
|
* To be
filed by amendment
**Filed
herewith
|
|
II-3
ITEM
17.
UNDERTAKINGS
The
undersigned registrant hereby undertakes:
(1) To file, during any
period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To include any
prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) To
reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form
of prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the “Calculation of
Registration Fee” table in the effective registration
statement; and
(iii) To
include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the
purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from
registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination
of the offering.
(4) That, for the
purpose of determining liability under the Securities Act of 1933
to any purchaser, each prospectus filed pursuant to Rule 424(b) as
part of a registration statement relating to an offering, other
than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A (§230.430A of this
chapter), shall be deemed to be part of and included in the
registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement
or made in any such document immediately prior to such date of
first use.
Insofar
as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the
requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-1 and has
duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of
Bohemia, State of New York, on this 4th day of August,
2021.
SCIENTIFIC
INDUSTRIES, INC.
|
By:
|
/s/
Helena R. Santos
|
|
|
Name:
|
Helena
R. Santos
|
|
|
Title:
|
President
and Chief Executive Officer
|
|
KNOW
ALL BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Helena R. Santos and John A.
Moore, and each of them, his true and lawful agent, proxy and
attorney-in-fact, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities, to (i) act on, sign and file with the
Securities and Exchange Commission any and all amendments
(including post-effective amendments) to this registration
statement together with all schedules and exhibits thereto and any
subsequent registration statement filed pursuant to Rule 462(b)
under the Securities Act of 1933, as amended, together with all
schedules and exhibits thereto, (ii) act on, sign and file such
certificates, instruments, agreements and other documents as may be
necessary or appropriate in connection therewith, (iii) act on and
file any supplement to any prospectus included in this registration
statement or any such amendment or any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended and (iv) take any and all actions which may be
necessary or appropriate to be done, as fully for all intents and
purposes as he might or could do in person, hereby approving,
ratifying and confirming all that such agent, proxy and
attorney-in-fact or any of his substitutes may lawfully do or cause
to be done by virtue thereof.
Pursuant to the
requirements of the Securities Act, this Registration Statement has
been signed by the following persons in the capacities and on the
dates indicated.
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
||
|
/s/ Helena
R.
Santos
|
|
President,
Chief Executive Officer, Chief Financial Officer and
Treasurer
|
|
|
|
Helena
R. Santos
|
|
|
|
August
04, 2021
|
|
|
|
|
||
|
/s/ John
A.
Moore
|
|
Chairman
of the Board
|
|
August
04, 2021
|
|
John A.
Moore
|
|
|
|
|
|
|
|
|
||
|
/s/ Joseph
G.
Cremonese
|
|
|
|
|
|
Joseph
G. Cremonese
|
|
Director
|
|
August
04, 2021
|
|
|
|
|
||
|
/s/ Marcus
Frampton
|
|
|
|
|
|
Marcus
Frampton
|
|
Director
|
|
August
04, 2021
|
|
|
|
|
||
|
/s/ Reinhard
Vogt
|
|
|
|
|
|
Reinhard
Vogt
|
|
Director
|
|
August
04, 2021
|
|
|
|
|
||
|
/s/ Christopher
Cox
|
|
|
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Christopher
Cox
|
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Director
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August
04, 2021
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/s/ Dr.
Juergen Schumacher
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| Dr. Juergen Schumacher |
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Director
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August
04, 2021
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II-5