What changed in this filing

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Item 1A. Risk Factors

2020-10-09 compared with 2019-10-04 · 181 added, 72 removed, 154 unchanged (62% of the section changed)

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to the top three Benchtop Laboratory Equipment operations customers

accounted for a combined aggregate of 21% and 20% of the

segment’s total sales for fiscal 2019 and 2018, respectively

(15% of its total net revenues for both fiscal 2019 and

accounted for a combined aggregate of 21% of the segment’s

total sales for each of fiscal 2020 and 2019 (17% and 15% of its

total net revenues for fiscal 2020 and 2019,

respectively).

representation can be made that the Company will be successful in

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larger bioprocessing products industry, which is dominated by

several large companies with much greater resources than the

several companies that are many times larger than SBI, which is

still in its start-up phase of operations.

The Company’s Ability to Grow and Compete Effectively Depends

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success of the Company’s Bioprocessing Systems operation will

be heavily dependent on its ability to successfully develop and

produce new products.

Commencing approximately in the last quarter

of fiscal 2019, the Company began to commit substantial resources

in the form of consulting, employees, materials, supplies, and

facilities to accelerate its new product development efforts.

be heavily dependent on its ability to successfully develop,

produce, and market new products.

Commencing in the last quarter of

fiscal 2019, the Company began to commit substantial resources to

its Bioprocessing Systems operations in the form of employees,

materials, supplies, marketing, and facilities to accelerate its

new product development efforts and marketing activities.

products are of a complex nature in an industry that the Company

does not operate in and are taking longer to develop than

previously anticipated.

In addition, they will be subject to beta

testing by end users, which could result in design and/or

production changes which could further delay development time.

Company expects the sale and marketing of these new products, at

least initially, to be through the Company’s attendance at

trade shows, website, online marketing, and a few select

has not traditionally operated in and have taken much longer to

develop than previously anticipated.

In addition, they will be

subject to beta testing by end users, which could result in design

and/or production changes which could further delay development

The Company expects the sale and marketing of these new

products, at least initially, to be through the Company’s

website, online marketing, direct selling efforts, and some

distributors.

The Company plans to incur significant marketing

expenditures on initial marketing of the Bioprocessing Systems

The Company is incurring substantial product

development and marketing expenditures for its bioprocessing

assurance can be given that the Company will be successful with its

new product development and that its sales and marketing programs

new product development or that its sales and marketing programs

will be sufficient to develop additional commercially feasible

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Factors including a general

economic recession, the European crisis, slowdown in Asian

economies, or a major terrorist attack may have a negative impact

on the availability of funding including government or academic

grants to potential customers.

economic recession, a European crisis, slowdown in Asian economies,

or a major terrorist attack may have a negative impact on the

availability of funding including government or academic grants to

potential customers.

Please also see the separate COVID-19 pandemic

related discussion in this “Risk Factors”

discussed in Item 1, sales to overseas customers, including sales

in China, account for approximately 49% of the Company’s net

The high value of the dollar relative to foreign

The high value of the U.S.

dollar relative to foreign

currencies has a negative impact on sales because the

Company’s products, which are paid in dollars, become more

expensive to overseas customers.

current political situation as it pertains to tariffs and a trade

war could have a negative effect on the Company’s level of

future exports.

In addition, any tariffs will have a negative

effect on the Company’s gross margins since various

components used in the Company’s products are produced

overseas, even if purchased from a US supplier, and the Company is

unable to pass such cost increases to its customers.

Company’s products, which are paid in U.S.

dollars, become

more expensive to overseas customers.

current political situation as it pertains to tariffs has not had a

material impact on the Company, other than higher component costs

which affects gross margins and somewhat lower sales to China due

to tariffs on the Company’s products.

Continuation of tariffs

and/or increased trade tensions could have a negative effect on the

Company’s gross margins and level of future exports, because

the Company is unable to pass such cost increases to its customers,

and may not be able to replace lost revenues to customers in

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and the environment, which could affect funding of potential

The Company is Heavily Dependent on Outside Suppliers for the

The Company Has Been Adversely Affected and Could Be Materially

Adversely Impacted in the Future by the COVID-19

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

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

further discussed in Item 7 below, in April 2020, the Company

received loan proceeds of $563,800 under the Paycheck Protection

Program (“PPP”).

The application for these funds

required the Company to, in good faith, certify that the current

economic uncertainty made the loan request necessary to support its

ongoing operations at the time without need to furlough its

employees, especially for the Catalyst Research Instruments, which

was negatively impacted by customer shutdowns and its own temporary

This certification further required the Company to take

into account its current business activity and its ability to

access other sources of liquidity sufficient to support ongoing

operations in a manner that is not significantly detrimental to the

The receipt of these loan proceeds, and the forgiveness

of the related note payable, is dependent on the Company having

initially qualified for the loan and qualifying for the forgiveness

of such loan based on our future adherence to the forgiveness

             Under

the terms of the CARES Act, the use of the proceeds of the loan is

restricted to payroll costs (as defined in the CARES Act), covered

rent, covered utility payments and certain other expenditures that,

while permitted, would not result in forgiveness of a corresponding

portion of the loan.

Following recent amendments to the PPP, after

an eight- or twenty-four-week period starting with the disbursement

of the respective loan proceeds, the Company may, and intends to,

apply for forgiveness of some or all of the loan, with the amount

which may be forgiven equal to the sum of eligible payroll costs,

covered rent, and covered utility payments, in each case incurred

during the eight- or twenty-four-week period following the date of

first disbursement.

Certain reductions in the Company’s

payroll costs or full-time equivalent employees (when compared

against the applicable measurement period) could reduce the amount

of the loan eligible for forgiveness, although it is not

Further, any future amendment to the CARES Act or

rules by The U.S.

Department of the Treasury or the Small Business

Administration (“SBA”) as it pertains to the PPP could

have an impact on the loan’s forgiveness with no guarantee

that the Company will receive forgiveness for any amount, and

forgiveness will be subject to the Company’s submission to

its lender of information and documentation as required by SBA and

Company is Heavily Dependent on Outside Suppliers for the

Components of Its Products

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lead times and potential other risks related to production in a

foreign country, such as current and potential future tariffs.

minimize the risk of supply shortages, the Company keeps more than

normal quantities on hand of the critical components that cannot

easily be procured or, where feasible and cost effective, purchases

are made from more than one supplier.

The Company seeks to mitigate

the effect of the tariffs on its component costs through supplier

negotiations, however, alternate suppliers are not always feasible

for various reasons including complexity and cost of toolings.

shortage of such components could halt production and have a

material negative effect on the Company’s

foreign country, such as current and potential future tariffs, and

the COVID-19 pandemic.

To minimize the risk of supply shortages,

the Company keeps more than normal quantities on hand of the

critical components that cannot easily be procured or, where

feasible and cost effective, purchases are made from more than one

The Company seeks to mitigate the effect of the tariffs

on its component costs through supplier negotiations, however,

alternate suppliers are not always feasible for various reasons

including complexity and cost of toolings.

A shortage of such

components could halt production and have a material negative

effect on the Company’s operations.

The Company’s Ability to Compete Depends in Part on Its

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Laboratory Equipment product, the Vortex-Genie 2 Mixer, the Torbal

balances, or for its Catalyst Research Instruments products and

limited patent protection on a few other Benchtop Laboratory

Equipment products.

There are several competitive products

available in the marketplace possessing similar technical

specifications and design.

part of the asset purchase by SBI during fiscal 2012, the Company

acquired the rights to various patents for bioprocessing products

which it licenses from UMBC, however such patents expire in

calendar year 2023.

balances other than the VIVID pill counter, or for its Catalyst

Research Instruments products, and limited patent protection on a

few other Benchtop Laboratory Equipment products.

There are several

competitive products available in the marketplace possessing

similar technical specifications and design.

As part of the asset purchase by SBI during fiscal 2012, the

Company acquired the rights to various patents for bioprocessing

products which it licenses from UMBC, however these United States

patents expire in December 2023, and it lost European patent

protection as of end of December 2019, which was originally due to

expire in August 2021. 

Hence, the Company will not

receive any further license fees on the European Union patent for

calendar year 2020 or thereafter and will receive license fees on

the United States patent through December 2023

There can be no assurance that any patent issued,

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Karl Nowosielski, the President of the Torbal Products Division of

the Benchtop Laboratory operations, or Mr.

the Benchtop Laboratory operations, Mr.

Anthony Mitri, the

President of Altamira or any material expansion of the

Company’s operations could place a significant additional

strain on the Company’s limited management resources and

could be materially adverse to the Company’s operating

results and financial condition.

President of Altamira, or Mr.

Moore, President of SBI, or

any material expansion of the Company’s operations could

place a significant additional strain on the Company’s

limited management resources and could be materially adverse to the

Company’s operating results and financial

Common Stock of the Company is Thinly Traded and is Subject to

of September 6, 2019, there were 1,494,112 shares of Common Stock

of the Company outstanding, of which 424,821 (28%) were held by the

directors and officers of the Company.

The Common Stock of the

Company is traded on the Over-the-Counter Bulletin Board and,

historically, has been thinly traded.

There have been a number of

trading days during fiscal 2019 on which no trades of the

of October 2, 2020, there were 2,861,263 shares of Common Stock of

the Company outstanding, of which 1,856,378 (65%) were held by

affiliates or Directors and Officers of the Company.

Stock of the Company is traded on the Over-the-Counter Bulletin

Board and, historically, has been thinly traded.

There have been a

number of trading days during fiscal 2020 on which no trades of the

Company’s Common Stock were reported.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors