What changed in this filing

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Item 7. Management’s Discussion and Analysis

2020-10-09 compared with 2019-10-04 · 152 added, 97 removed, 65 unchanged (79% of the section changed)

23 unchanged sentences

and the related notes included elsewhere in this

Company reflected income before income tax expense of $776,100 for

fiscal 2019 compared to income before income tax expense of $1,400

for fiscal 2018, primarily due to the increased royalty income

derived by the Bioprocessing Operations and increased sales and

profits of the Benchtop Laboratory Equipment operations and

increased sales and a decreased loss by the Catalyst Research

Instruments operations.

The results reflected total non-cash

amounts for depreciation, amortization, and adjustments to

contingent consideration liabilities of approximately $778,500 for

fiscal 2019 and approximately $714,000 for fiscal

The Company reflected a loss before

income tax benefit of $1,139,900 for fiscal 2020 compared to income

before income tax expense of $770,200 for fiscal 2019, primarily

due to increased operating expenses as a result of the

Company’s investment in its Bioprocessing Systems operations,

decreased sales of catalyst research products, 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

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 Catalyst

Research Instruments due mostly to the COVID-19 pandemic, and to a

lesser extent, decreased sales of Benchtop Laboratory Equipment in

the last quarter of fiscal 2020, also due to the pandemic.

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.

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.

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

Net revenues for

fiscal 2019 increased $1,718,400 (20.3%) to $10,199,800 from

$8,481,400 for fiscal 2018, reflecting an increase of approximately

$637,000 (95.2%) in royalties earned by the Bioprocessing Systems

operations due to higher sales derived from its sublicense in

Europe, an increase of approximately $675,400 (10.5%) in sales of

Benchtop Laboratory Equipment derived from increased sales of new

Torbal brand products and increased sales for Genie brand products

in the United States, and an increase of approximately $406,000

(28.8%) in net sales of Catalyst Research Instruments, primarily to

overseas customers.

fiscal 2020 decreased $1,629,500 (15.9%) to $8,570,300 from

$10,199,800 for fiscal 2019, reflecting a decrease of $1,029,000 in

net sales of Catalyst Research Instruments, due mostly to COVID-19;

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.

1 unchanged sentence

Sales of Catalyst Research Instruments are

comprised of a small number of large orders, while the sales of

comprised of a small number of large orders, while sales of

Benchtop Laboratory Equipment are comprised of a large number of

2 unchanged sentences

Research Instruments was $176,500, all of which is expected to be

shipped during fiscal year ending June 30, 2020, compared to

shipped during the fiscal year ending June 30, 2021, compared to

$124,200 as of June 30, 2019.

4 unchanged sentences

The current year reflected

higher gross profit margins on sales of Catalyst Research

Instruments primarily due to increased sales of higher margin

custom products including more custom products at higher margins.

The Company’s gross margin on Benchtop Laboratory Equipment

also increased due to customer mix including more online sales that

have higher margins.

The Bioprocessing Systems Operations also

reflected higher gross margin due to higher revenues.

higher gross profit margin percentage for the Bioprocessing Systems

operations, a slightly lower gross margin percentage for the

Benchtop Laboratory Equipment Operations due in part to higher

material costs including tariffs and fixed overhead, and a negative

gross profit margin percentage for the Catalyst Research

Instruments due to materially lower sales.

2 unchanged sentences

2020 increased by approximately $489,500 (25.4%) to $2,413,900

compared to $1,748,800 for fiscal 2018 due primarily to an increase

in various items across all business segments including legal fees,

director meetings due to new directors, and consulting

compared to $1,924,400 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.

expenses for fiscal 2020 increased approximately $300,300 (26.4%)

to $1,436,400 from $1,136,100 for fiscal 2019, primarily due to

increased sales commissions and related salaries on higher sales

for both the Benchtop Laboratory Equipment operations and the

Catalyst Research Instruments operations, online marketing costs

for the Torbal brand products, and market research costs for the

increased sales and marketing expenses incurred by the

Bioprocessing Systems operations.

Research and development expenses amounted to

$530,500 for fiscal 2019 compared to $520,900 for fiscal 2018.

Company increased its new product development efforts in the last

quarter of fiscal 2019 for the Bioprocessing Systems operations.

During the last quarter of fiscal 2019, the Company's Bioprocessing

Systems operations began to expand and increased its product

development efforts with the hiring of an engineer. 

year end the Company hired two additional engineers and is

committing additional resources for materials and supplies for

development of Bioprocessing Systems .

and development expenses amounted to $1,140,000 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

other income (loss), net was $(3,600) for fiscal 2020 compared to

$6,900 income in fiscal 2018 due to holding losses on investment

Company reflected income tax expense of $124,600 for fiscal 2019

compared to $161,900 for fiscal 2018, primarily due to lower

effective tax rate.

a result of the foregoing, the Company recorded net income of

$645,600 for fiscal 2019 compared to a net loss of $160,500 for

$(5,900) in fiscal 2019.

Company reflected income tax benefit of $436,600 for fiscal 2020

compared to income tax expense of $124,600 for fiscal 2019,

primarily due to the loss incurred.

a result of the foregoing, the Company recorded a net loss of

$703,300 for fiscal 2020 compared to net income of $645,600 for

Liquidity and Capital

2 unchanged sentences

2020 from $1,602,500 as of June 30, 2019.

Net cash provided by operating activities was

$1,159,500 for fiscal 2019 compared to $256,900 for fiscal 2018.

The current fiscal year reflected significantly higher operating

income, higher accounts receivable balances, and a higher amount

for change in fair value adjustment of contingent

consideration.

Net cash used in investing activities was

$218,400 for fiscal 2019 compared to $79,500 for fiscal 2018 due

mainly to new capital expenditures related to new toolings and ERP

system, increased intangible asset purchases related to new patents

and trademarks, and purchases of investment securities.

used $391,700 in financing activities in fiscal 2019 compared to

$149,400 in fiscal 2018, mainly due to higher payments of

contingent consideration related to the SBI acquisition and payment

of a cash dividend.

Company's working capital increased by $887,600 to $5,005,800 as of

June 30, 2019 compared to $4,118,200, as of June 30, 2018,

primarily due to increased cash generated from higher operating

For fiscal 2019, the Company reclassified $245,400 of trade

accounts receivable from long term to short term

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

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.

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.

Company's working capital increased by $5,003,300 to $10,099,100 as

of June 30, 2020 compared to $5,005,800, as of June 30, 2019,

primarily due to the cash received from the equity

Company has a Demand Line of Credit through December 2020 with

1 unchanged sentence

of up to $300,000 for regular working capital needs, bearing

interest at prime, currently 5.25%.

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.

interest at prime, currently 3.25% at June 30, 2020.

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.

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.

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.

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 lines of credit, its cash and investment securities,

and operations. 

Commencing in the fourth quarter the Company

began committing significant resources for the Bioprocessing

Systems operations for new engineering personnel, market research,

and administration. 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 lines of credit,

its cash and investment securities, and operations. 

Commencing in the fourth quarter the Company began committing

significant resources for the Bioprocessing Systems operations for

new engineering personnel, market research, and

administration. 

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. 

Expenditures .

4 unchanged sentences

ending June 30, 2021.

Off-Balance Sheet

Arrangements .

Financial Statements and Supplementary

Financial Statements required by this item are attached hereto on

pages F1-F20.

Sheet Arrangements .

Financial Statements

and Supplementary Data.

consolidated Financial Statements required by this item are

attached hereto on pages F1-F25.

Changes In and Disagreements

1 unchanged sentence

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 7. Management’s Discussion and Analysis