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Item 9A. Controls and Procedures

2020-10-09 compared with 2019-10-04 · 1367 added, 1196 removed, 1486 unchanged (63% of the section changed)

Evaluation of Disclosure

Controls and Procedures .

the end of the period covered by this Annual Report on Form 10-K,

based on an evaluation of the Company's disclosure controls and

procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the

Securities Exchange Act of 1934), the Chief Executive Officer and

Chief Financial Officer of the Company has concluded that the

Company's disclosure controls and procedures were not effective as

of June 30, 2019 because of the identification of a material

weakness in internal control over financial reporting which related

to the accounting of the Company’s tax provision calculation.

Notwithstanding the material weakness that existed at June 30,

2019, the Chief Executive and Chief Financial Officer of the

Company has concluded that the financial statements included in

this Annual Report on Form 10-K present fairly, in all material

respects, the financial position, results of operations, and cash

flows of the Company and its subsidiaries in conformity with

accounting principles generally accepted in the United States of

America (“GAAP”).

Management and the

Board of Directors are committed to the continued improvement of

the Company's overall system of internal controls over financial

reporting. 

The Company's remediation plan is to implement

additional processes, controls and procedures relating to the

preparation and review process of its quarterly and annual income

tax provision calculation. 

The Company is continuing to

implement remedial measures to improve and develop internal

controls, processses and procedures in the income tax provision

process in order to address the material

Evaluation of Disclosure Controls and

As of the end of the period covered by this

Annual Report on Form 10-K, based on an evaluation of the Company's

disclosure controls and procedures (as defined in Rules 13a-15(e)

and 15d-15(e) under the Securities Exchange Act of 1934), the Chief

Executive Officer and Chief Financial Officer of the Company has

concluded that the Company's disclosure controls and procedures are

effective to ensure that information required to be disclosed by

the Company in its Exchange Act reports is recorded, processed,

summarized and reported within the applicable time periods

specified by the SEC’s rules and forms.

The Company also

concluded that information required to be disclosed in such reports

is accumulated and communicated to the Company's management,

including its principal executive and principal financial officer,

as appropriate to allow timely decisions regarding required

Management’s Annual

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Integrated Framework.

annual report does not include an attestation report of the

Company's registered public accounting firm regarding internal

control over financial reporting.

Management's report was not

subject to attestation by the Company's registered public

accounting firm pursuant to the rules of the Securities and

Exchange Commission that permit the Company to provide only

management's report in this annual report.

This annual report does not include an

attestation report of the Company's registered public accounting

firm regarding internal control over financial reporting.

Management's report was not subject to attestation by the Company's

registered public accounting firm pursuant to the rules of the

Securities and Exchange Commission that permit the Company to

provide only management's report in this annual

Changes in Internal Control

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and Corporate

Company has the following seven Directors:

Company has the following six Directors:

(age 85), a Director since November

2002 and Chairman of the Board since February 2006, has been,

through his affiliate, a marketing consultant to the Company since

2002 and Chairman of the Board from February 2006 to January 2020,

has been, through his affiliate, a consultant to the Company since

Cremonese has been since 1991, President of his

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Permanent Fund Corporation and serves on the Board of Directors of

Twin Creeks Timber, LLC and Nyrada, Inc., a drug development

Managed Funds Association and Nyrada, Inc., a drug development

He served as Director of Investments, Real Assets and

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Fund from 2012 to 2016 for the Alaska Permanent Fund

Corporation. 

Moore (age 55), a Director

since January 2019 has been providing consulting services to the

Company’s subsidiary, Scientific Bioprocessing, Inc.

Moore serves as Executive Chairman of Nyrada, Inc.,

a drug development company since July 2019 and prior to that served

as a director with Noxopharm Limited, a drug development company,

and is also the Chairman of Trialogics, a clinical trial software

Moore was President, Chief Executive Officer and

director of Acorn Energy, Inc.

from 2006 to 2016.

(age 71), a Director since December 4,

2006, had been President, Director and principal stockholder of

Altamira Instruments, Inc.

from December 2003 until its acquisition

in November 2006 by the Company.

Morin had been employed by

Altamira to supervise its administrative functions at the

Pittsburgh, Pennsylvania facility as a full-time employee through

March 31, 2009 and since that date as a part-time

since January 2019 and Chairman of the Board since January 2020, is

also the President of SBI since January 2020 and had been providing

consulting services to SBI since March 2019.

Moore serves as

Chairman of Nyrada, Inc., a drug development company since July

2019 and prior to that served as a director with Noxopharm Limited,

a drug development company, and is also the Chairman of Trialogics,

a clinical trial software provider.

Moore was President, Chief

Executive Officer and director of Acorn Energy, Inc.

(age 56), a Director since 2009, has

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Controller from 1997 and as Secretary from May

(age 83), a Director since 1991, has

been retired for the last five years.

(age 52), is a corporate and

securities attorney and has been a member of Reitler Kailas &

Rosenblatt LLC since 2002.

Watkins was first elected to the

Board of Directors of the Company in January

Reinhard Vogt

(age 64), a Director since August

2020, served as Executive Vice President and on the Executive Board

of Sartorius Stedim Biotech GmbH for the 10 years prior to his

retirement in July 2019.

(age 53), a Director since January

2017, is a corporate and securities attorney and has been a member

of Reitler Kailas & Rosenblatt LLC since

Directors are elected to three-year staggered terms.

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the fiscal year ended June 30, 2020 -

three directors (Mr.

Frampton, Mr.

Moore, and Ms.

Morin, Class B),

the fiscal year ending June 30, 2020 –

two directors (Mr.

Cremonese and Mr.

Watkins, Class C), and the fiscal year ending

June 30, 2021 - two directors (Ms.

Watkins, Class C), the fiscal

year ending June 30, 2021 - two directors (Ms.

Santos and Mr.

Segasture, Class

Class A), and the fiscal year ending June 30, 2022 –

directors (Mr.

Frampton and Mr.

Moore, Class B).

Board Committees

Company has three committees –

The Stock Option Committee,

the Compensation Committee, and the Audit Committee, each of which

is comprised of the entire Board of Directors.

Company has two committees –

The Compensation Committee and

the Audit Committee.

The Compensation Committee is comprised of Mr.

Frampton and Mr.

The Audit Committee is comprised of the

entire Board of Directors.

Executive Officers

See above for the employment history of

above for the employment history of Ms.

Santos and Mr.

(age 59), is the President of the

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2001, the Company’s Vice President of

(age 74), has been since July 1, 2017

Vice President of Corporate Development and Strategy and Vice

President of Sales of Altamira.

Previously he had been President

and Director of Sales and Marketing of Altamira.

He had been Vice

President and a Director of Altamira from December 2003 until it

was acquired by the Company in 2006.

March is the husband of

Morin, a Director of the Company.

(age 42), is the President of the

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with the Company in 2004.

Section 16(a) Beneficial Ownership Reporting

16(a) Beneficial Ownership Reporting Compliance

Company believes that, for fiscal 2020, its officers, directors and

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and financial results of the segments under their

following table summarizes all compensation paid by the Company to

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SUMMARY COMPENSATION TABLE

Principal Position

Option Awards

Incentive Plan Compensation ($)

Non- Qualified

Deferred Compensation

Pension Value and Non-Qualified Deferred Compensation

Compensation ($)

and Principal Position

Equity Incentive Plan Compensation ($)

Qualified Deferred Compensation

in Pension Value and Non-Qualified Deferred

Compensation  

Earnings  

Other Compensation ($)

President, CFO

Vice President

Corporate Strategy, VP, Sales of Altamira

Genie Division

Torbal Division and Director of Marketing

The amounts represent compensation expense for the stock options

185,700  

50,000  

258,200  

President, CFO

180,300  

198,300  

145,000  

50,000  

259,900  

40,000  

61,800  

130,000  

141,700  

120,000  

131,300  

of Genie Division

162,300  

177,900  

of Genie Division

157,600  

168,300  

of Torbal Division and Director of Marketing

169,800  

10,000  

193,300  

of Torbal Division and Director of Marketing

163,300  

10,000  

187,100  

amounts represent compensation expense for the stock options

granted on July 1, 2017 valued utilizing the Black-Scholes-Merton

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of fiscal 2020 and fiscal 2019.

The amounts represent compensation expense for the July 1, 2017

stock options granted valued utilizing the Black-Scholes-Merton

options pricing model, disregarding estimates of forfeitures

related to service-based vesting considerations.

The option was

valued at a total of $11,800 for each individual, of which $3,900

was expensed in each of fiscal 2019 and fiscal 2018.

The amounts represent compensation expense for the stock options

On June 23, 2020, the Company

Santos options to purchase 215,366 shares of Common

Stock, subject to amendment of the Company’s 2012 Stock

represent consulting expense for the stock options granted from

March 2019 through June 2020 valued at $3,000 per month utilizing

the Black-Scholes-Merton options pricing model, of which $36,000

was expensed in fiscal 2020 and $12,000 in fiscal

amounts represent compensation expense for the stock options

granted on June 30, 2018 and December 31, 2017 valued utilizing the

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at a total of $10,000 and $9,500, respectively, utilizing the

Black-Scholes options pricing model, of which a total of $6,500 and

$1,600 was expensed in fiscal 2019 and fiscal 2018,

respectively.

The amounts represent compensation expense for the stock options

Black-Scholes-Merton options pricing model, of which a total of

$6,500 was expensed in each of fiscal 2020 and fiscal

represent compensation expense for the July 1, 2017 stock options

granted valued utilizing the Black-Scholes-Merton options pricing

model, disregarding estimates of forfeitures related to

service-based vesting considerations.

The option was valued at a

total of $11,800, of which $3,900 was expensed in each of fiscal

2020 and 2019.

amounts represent compensation expense for the stock options

granted on July 1, 2017, and February 26, 2017, valued utilizing

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The options were valued at a total of

$11,800, and $10,500, respectively, of which $7,400 was expensed in

each of fiscal 2019 and 2018.

The amounts represent the Company’s matching contribution

under the Company’s 401(k).

$11,800, and $10,500, respectively, of which $6,300 and $7,400 was

expensed in fiscal 2020 and 2019, respectively.

amounts represent the Company’s matching contribution under

the Company’s 401(k).

represent director and chairman fees paid to Mr.

Moore through June

On July 1, 2020 Mr.

Moore became an employee of the

Company and thereafter will not be paid any director

OF PLAN-BASED AWARDS IN FISCAL YEAR ENDED JUNE 30,

There were no options granted to named executives

during fiscal 2019 .

Estimate Future

5.35-11.30  

36,000  

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

Option Awards

Underlying  

Unexercised  

(#) Exercisable

Underlying Unexercised

Unexercisable

Incentive Plan Awards

Number of Securities Underlying Unexercised

Unearned Options (#)

of Securities Underlying Unexercised Unearned Options

Option  

Exercise  

07/2027  

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10,684  

4.50-11.30  

03/2029-06/2030

4 unchanged sentences

Employment Agreements

July 1, 2017, the Company entered into a new employment agreement

Santos through June 30, 2020 with the option to

extend for two additional one-year periods.

The agreement provides

for an annual base salary for the fiscal year ended June 30, 2018

of $175,000 with annual increases thereafter of 3% per annum or the

percentage increase, if any, in the Consumer Price Index, whichever

The agreement also provides for a bonus of $25,000 for

the fiscal year ended June 30, 2018 and on a discretionary basis

No bonuses were granted during fiscal 2019.

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.

The agreement does not provide for the

grant of stock options in 2019.

On July 1, 2017, the Company entered into a new

employment agreement with Ms.

Santos through June 30,

2020 with the option to extend for two additional one-year

periods, with the first

one-year option exercised through June 30, 2021.

The agreement

provides for an annual base salary for the fiscal year ended June

30, 2018 of $175,000 with annual increases thereafter of 3% per

annum or the percentage increase, if any, in the Consumer Price

Index, whichever is higher.

The agreement also provided for a bonus

of $25,000 for the fiscal year ended June 30, 2018 and on a

discretionary basis thereafter.

A bonus of $50,000 was granted for fiscal 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.

The agreement does not

provide for the grant of stock options in 2019.

On June 23, 2020

the Board of Directors authorized to be granted to Ms.

options to purchase 215,366

shares of the Company’s stock, subject to amendment of the

Company’s 2012 Stock Option Plan.

July 1, 2017, the Company entered into a new employment agreement

Nichols through June 30, 2020 with the option to

extend for two additional one-year periods.

The agreement provides

for an annual base salary for the fiscal year ended June 30, 2018

of $153,000 with annual increases thereafter of 3% per annum or the

extend for two additional one-year periods, with the first one-year

option exercised through June 30, 2021.

The agreement provided for

an annual base salary for the fiscal year ended June 30, 2018 of

$153,000 with annual increases thereafter of 3% per annum or the

percentage increase, if any, in the Consumer Price Index, whichever

The agreement also provides for a bonus of $10,000 for

The agreement also provided for a bonus of $10,000 for

the fiscal year ended June 30, 2018 and on a discretionary basis

No bonuses were granted during fiscal 2019.

agreement also provided 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.

The agreement does not provide for the

grant of stock options in 2019.

On July 1, 2017, the Company entered into a new

employment agreement with Mr.

March through June 30,

2020 with the option to extend for two additional one-year periods.

The agreement provides for an annual base salary for the fiscal

year ended June 30, 2018 of $155,000 with annual increases

thereafter of 3% per annum or the percentage increase, if any, in

the Consumer Price Index, whichever is higher.

The agreement also

provides for a bonus of $10,000 for the fiscal year ended June 30,

2018 and on a discretionary basis thereafter.

No bonuses were

granted during fiscal 2019.

The agreement also provided 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.

agreement does not provide for the grant of stock options in

March is the husband of

Morin, a Director of the Company and of Altamira and a

former principal stockholder of Altamira.

A bonus of $5,000 was granted for fiscal 2020 and none

The agreement also provided 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.

The agreement does not

provide for the grant of stock options in 2019 or

July 1, 2017, the Company entered into a new employment agreement

Karl Nowosielski through June 30, 2020 with the option to

extend for two additional one-year periods, with the first one-year

option exercised through June 30, 2021.

The agreement provided for

an annual base salary for the fiscal year ended June 30, 2018 of

$157,000 with annual increases thereafter of 4% per annum.

agreement also provided for a bonus of $10,000 for the fiscal year

ending June 30, 2018 and $10,000 for each subsequent year, provided

a minimum 5% increase in the EBITDA of the Torbal Products Division

A bonus of $10,000 was awarded during fiscal 2020 and

The agreement also provided 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.

The agreement does not

provide for the grant of stock options in 2019 or

July 1, 2020, the Company entered into a new employment agreement

Moore through June 30, 2023 with the option to

extend for two additional one-year periods.

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for an annual base salary for the fiscal year ended June 30, 2021

of $157,000 with annual increases thereafter of 4% per annum.

agreement also provides for a bonus of $10,000 for the fiscal year

ending June 30, 2018 and $10,000 for each subsequent year, provided

a minimum 5% increase in the EBITDA of the Torbal Products Division

A bonus of $10,000 was awarded during fiscal 2019.

agreement also provided 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.

The agreement does not provide for the

grant of stock options in 2019.

of $175,000 with annual increases thereafter of 3% per annum or the

percentage increase, if any, in the Consumer Price Index, whichever

The agreement also provides for discretionary bonuses as

determined by the Board of Directors or Compensation Committee.

bonus of $50,000 was granted for fiscal 2020 and none in 2019.

The agreement also provides for

a grant of options to purchase 215,366 shares of the

Company’s stock, subject to amendment of the Company’s

2012 Stock Option Plan.

Moore had been providing consulting

services to the Company’s wholly owned subsidiary, Scientific

Bioprocessing, Inc., since March 2019 pursuant to a consulting

agreement through June 30, 2020, at which time he became an

employee of the Company.

The agreement provided for a monthly cash

fee of $10,000 through August 2019 and $12,500 from September 2019

through June 2020 plus the monthly issuance of stock options valued

at $3,000 per month.

The agreement contained confidentiality and

non-competition covenants.

The Company paid fees of $40,000 and

granted options with a value of $12,000 for fiscal

May 16, 2017, the Company entered into a new employment agreement

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extend for one additional year period, which was exercised by

mutual agreement.

The agreement provides for an annual base salary

for the fiscal year ended June 30, 2019 of $120,000 and $110,000

for the fiscal year ending June 30, 2018 plus incentive pay based

on achievement of certain sales and income levels of Altamira

mutual agreement through June 30, 2020 at an annual salary of

The agreement provided for an annual base salary for the

fiscal year ended June 30, 2019 of $120,000 and $110,000 for the

fiscal year ending June 30, 2018 plus incentive pay based on

achievement of certain sales and income levels of Altamira

Instruments, Inc.

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shares, all of which were granted during the fiscal year ended June

No shares were granted during the year ended June 30,

employment agreements for Ms.

No shares were granted during the years ended June 30,

2019 or June 30, 2020.

The employment agreements for Ms.

Nowosielski, and Mr.

Mitri contain confidentiality and

non-competition covenants.

The employment agreements for all the

named executives above, except Mr.

Mitri, contain 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 the relevant employee resigns for

Mitri contain

confidentiality and non-competition covenants.

The employment

agreements for Ms.

Nichols and Mr.

Nowosielski, contain

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 the relevant employee resigns for

“good reason”

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for a period of one year from termination.

The employment agreement

Moore 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 Mr.

Moore resigns for “good reason”

(as such term is

defined therein), the Company shall pay severance payments equal to

either one year’s salary at the rate of the compensation at

the time of termination if Mr.

Moore is terminated within 12 months

of the date of his agreement or six months’

salary if Mr.

Moore is terminated after 12 months of the date of his agreement,

continue to pay the regular benefits provided by the Company for

the period equal to the length of the severance payments and pay a

pro rata portion of any bonus achieved prior to such termination of

Santos’

employment agreement also contains a provision that within one year

of a change of control, if either the Company terminates her

employment for any reason other than for “cause”

terminates her employment for “good reason”, she 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 immediately preceding such termination, minus

employment agreement also contains a

provision that within one year of a change of control, if either

the Company terminates her employment for any reason other than for

“cause”

or she terminates her employment for

“good reason”, she 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 immediately

preceding such termination, minus $1.00.

Directors’

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For the Year Ended June 30, 2020

Earned or Paid in Cash ($)

Incentive Plan Compensation ($)

in Pension Value and Non-qualified Deferred Compensation

Non-qualified

Deferred Comp-sensation Earnings ($)

41,200  

84,400  

Option Awards

Non-Equity Incentive Plan

Pension Value and Non-qualified Deferred Compensation

Non-qualified Deferred Comp-sensation

Comp- ensation

36,700  

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24,800  

Represents amount paid to his affiliate pursuant to a marketing

Represents amount paid to him and his affiliate pursuant to a

consulting agreement (see Items 12 and 13).

Represents compensation received for his administrative services as

consultant for SBI (see items 12 and 13). 

(2) Director is

also a named officer.

Refer to Compensation Table in Item

Represents compensation received for her administrative services as

a consultant for Altamira (see Items 12 and 13).

a consultant for Altamira through March 2020, upon termination of

her consulting agreement.

Morin’s directorship terminated

in January 2020.

Company paid each Director who is not an employee of the Company or

a subsidiary a quarterly retainer fee of $2,200 and a meeting fee

of $2,000 for each meeting attended for fiscal 2019 and fiscal

2018, respectively.

In addition, the Company reimburses each

Director for out-of-pocket expenses incurred in connection with

attendance at board meetings.

Cremonese, as Chairman of the

Board receives an additional fee of $1,700 per month.

During fiscal

2019, total director compensation to non-employee Directors

aggregated $213,600, including the consulting fees paid to Mr.

of $2,000 for each meeting attended for each of fiscal 2020 and

In addition, the Company reimburses each Director for

out-of-pocket expenses incurred in connection with attendance at

board meetings.

From July 2019 through January 2020, Mr.

and from February 2020 through June 2020, Mr.

Moore, as Chairman of

the Board, each received an additional fee of $1,700 per month.

During fiscal 2020, total director compensation to non-employee

Directors aggregated $418,000, including the consulting fees paid

Cremonese’s affiliate, Mr.

Moore, and Ms.

              Mr.

Moore was awarded on a monthly basis options valued at $3,000

utilizing the Black-Scholes option pricing model (a total of 6,705

options) for each of March, April, May, and June 2019 as part of

his consulting agreement with the Company.

Since December 1, 2003,

Cremonese, has been awarded a total of 45,000 stock

options under the Company's 2002 and 2012 Stock Option Plans of

which 5,000 remain unexercised.

None of the other directors have

options outstanding.

June 23, 2020, Mr.

Cremonese was awarded 20,000 options in

connection with his consulting agreement.

Prior to that, Mr.

Cremonese, had been awarded a total of 45,000 stock options under

the Company's 2002 and 2012 Stock Option Plans of which 5,000

remain unexercised.

None of the other directors have options

Security Ownership of Certain

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Orville Drive, Bohemia, New York 11716.

and Nature of Beneficial Ownership

F Street Unit #P2

Delawanna Avenue

Amount and Nature of

Ownership  

Eddleman, Trustee, Roy T.

Eddleman Trust UAD

Century Park East Suite 1600

Angeles, CA 900067

1,495,686 (1)

World Financial Center

York, NY 10281

1585 Broadway 22 nd

York, NY 10036

directors and executive officers as a group (8

upon form Schedule 13G filed with the Securities and Exchange

Commission on January 23, 2019.

Frampton, a director of the

Company, has voting power over these shares.

ownership in conjunction with the acquisition of the Torbal

division assets from Fulcrum, Inc.

on February 26,

shares are owned jointly with his wife, 7,000 shares are owned by

his wife, and 5,000 shares are issuable upon exercise of

shares owned by Mr.

shares issuable upon exercise of options.

14,500 shares issuable upon exercise of options held by her

25,000 shares issuable upon exercise of options.

owned jointly with his wife.

9,683 stock issued in connection with the acquisition of the Torbal

Division in February 2014.

Includes 24,500 shares issuable upon

exercise of options.

82,950 shares owned by Ms.

Morin, his wife and includes 14,500

shares issuable upon exercise of options.

9,500 shares issuable upon exercise of options.

95,205 shares issuable upon exercise of options.

(1) Based upon form Schedule

13D filed with the Securities and Exchange Commission

(“SEC”) on June 24, 2020.

Includes 683,850 shares

issuable upon exercise of warrants.

(2) Based upon from Schedule 13D filed with the SEC on June

Includes 222,000 shares issuable upon exercise of

(3) Based upon form Schedule 13G filed with the SEC on July

Includes 222,000 shares issuable upon exercise of

(4) 126,262 shares are owned

jointly with his wife, 7,000 shares are owned by his wife, and

5,000 shares are issuable upon exercise of

(5) 2,250 shares are owned by Mr.

voting power over 77,085 shares.

(6) Includes 12,586 shares

issuable upon exercise of options.

(7) Includes 17,000 shares

issuable upon exercise of options.

(8) Includes 9,683 stock issued

in connection with the acquisition of the Torbal Division in

February 2014.

(9) Represents shares issuable upon exercise of

(10) Includes 7,500 shares

issuable upon exercise of options.

(11) Includes 96,586 shares issuable upon exercise of

of Class is less than 1%.

EQUITY COMPENSATION PLAN INFORMATION

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options, warrants and rights as of June 30, 2020.

of Securities to be Issued Upon Exercise of Outstanding Options,

Warrants and Rights

be Issued Upon Exercise

Outstanding Options, Warrants and Rights

Weighted-Average

Exercise Price of Outstanding Options, Warrants and Rights

of Securities Remaining Available for Future Issuance Under Equity

Compensation Plans (Excluding Securities Reflected in

Compensation plans approved by security holders

 Exercise

Options, Warrants

Number of Securities Remaining Available for

Future Issuance Under Equity Compensation Plans (Excluding

Securities Reflected in

Compensation plans

by security holders

96,600  

147,400  

Compensation plans not approved by security holders

Compensation plans

approved by security holders

96,600  

3 unchanged sentences

Cremonese, a Director since November 2002, through his

affiliate, Laboratory Innovation Company, Ltd., has been providing

independent marketing consulting services to the Company since

January 1, 2003 pursuant to a consulting agreement expiring

December 31, 2019.

The agreement currently provides that Mr.

Cremonese and his affiliate shall render, at the request of the

Company, marketing consulting services for a monthly payment of

The agreement contains confidentiality and non-competition

The Company paid fees of $43,200 pursuant to the

agreement for each of fiscal 2019 and 2018.

Morin, was elected a Director in December 2007 following

the sale of her 90.36% ownership interest in Altamira to the

Company in November 2006.

Up until March 31, 2009, Ms.

been employed by Altamira as an administrative employee.

April 1, 2009, she has provided consulting services on a part-time

basis pursuant to an agreement expiring December 31, 2019 at the

rate of $85 per hour, resulting in payments of $18,200 and $7,000

for fiscal 2019 and fiscal 2018, respectively.

affiliate, Laboratory Innovation Company, Ltd., provides consulting

services to the Company under a consulting agreement expiring on

December 31, 2020 at a monthly retainer of $9,000.

The agreement

contains confidentiality and non-competition

Moore, a Director since January 2019, has been providing

consulting services to the Company since March 2019 pursuant to a

consulting agreement which expired on August 31, 2019 but which has

been renewed for an additional six months.

The agreement currently

provides that Mr.

Moore shall render, at the request of the

Company, consulting services as to the operations of Scientific

Bioprocessing, Inc., a wholly-owned subsidiary of the Company for a

monthly payment of $10,000 plus the issuance of stock options

valued at $3,000.

The agreement contains confidentiality and

non-competition covenants.

The Company paid fees of $40,000 and

granted options with a value of $12,000 pursuant to the agreement

for fiscal 2019.

contains confidentiality and non-competition covenants.

paid fees of $76,200 and $43,200 for fiscal 2020 and fiscal 2019,

respectively.

Principal Accountant Fees and Services.

5 unchanged sentences

in connection with the audit of the Company’s annual

financial statements and quarterly reviews;

and $7,500 and $6,000

for the preparation of the Company’s corporate tax returns

for fiscal 2019 and fiscal 2018, respectively.

consolidated financial statements and quarterly reviews;

and $7,500 for the preparation of the Company’s corporate tax

returns for fiscal 2020 and fiscal 2019, respectively.

approving the engagement of the independent registered public

8 unchanged sentences

The following Exhibits are filed as part of this report on Form

Exhibit Number

Articles of Incorporation and By-Laws:

Certificate of Incorporation of the Company as amended (filed as

Exhibit 1(a-1) to the Company's General Form for Registration of

Securities on Form 10 dated February 14, 1973 and incorporated by

reference thereto.)

Certificate of Amendment of the Company’s Certificate of

Incorporation, as filed on January 28, 1985 (filed as Exhibit 3(a)

to the Company’s Annual Report on Form 10-K for the fiscal

year ended June 30, 1985 and incorporated by reference

By-Laws of the Company, as restated and amended (filed as 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 and incorporated by

reference thereto).

Instruments defining the rights of security holders:

2002 Stock Option Plan (filed as Exhibit 99-1 to the

Company’s Current Report on Form 8-K filed on November 25,

2002 and incorporated by reference thereto).

of Incorporation and By-Laws:

of Incorporation of the Company as amended (filed as Exhibit 1(a-1)

to the Company's General Form for Registration of Securities on

Form 10 dated February 14, 1973 and incorporated by reference

of Amendment of the Company’s Certificate of Incorporation,

as filed on January 28, 1985 (filed as Exhibit 3(a) to the

Company’s Annual Report on Form 10-K for the fiscal year

ended June 30, 1985 and incorporated by reference

of the Company, as restated and amended (filed as 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 and incorporated by reference

Amended and Restated By-Laws of Scientific Industries, Inc.

as Exhibit 3.2 to the Company’s Current Report on Form 8-K

filed on August 10, 2020 and incorporated by reference

defining the rights of security holders:

Stock Option Plan (filed as Exhibit 99-1 to the Company’s

Current Report on Form 8-K filed on November 25, 2002 and

incorporated by reference thereto).

Stock Option Plan (filed as Exhibit 10 to the Company’s

Current Report on Form 8-K filed on January 23, 2012 and

incorporated by reference thereto).

Amendment to the Company’s 2012 Stock Option Plan (Filed as

Exhibit 4(c) to the Company’s Quarterly Report on Form 10-Q

filed on May 12, 2016 and incorporated by reference

Material Contracts:

Lease between Registrant and AIP Associates,

predecessor-in-interest of current lessor, dated October, 1989 with

respect to Company's offices and facilities in Bohemia, New York

(filed as Exhibit 10(a) to the Company’s Annual Report on

Form 10-KSB filed on September 28, 2005 and incorporated by

reference thereto).

Amendment to lease between Registrant and REP A10 LLC, successor in

interest of AIP Associates, dated September 1, 2004 (filed as

Exhibit 10A-1 to the Company’s Current Report on Form 8-K

filed on September 2, 2004, and incorporated by reference

Second amendment to lease between Registrant and REP A10 LLC dated

to the Company’s 2012 Stock Option Plan (Filed as Exhibit

4(c) to the Company’s Quarterly Report on Form 10-Q filed on

May 12, 2016 and incorporated by reference thereto).

Form of Warrant issued by the Company to Investors (Filed as

Exhibit 4.1 to the Company’s Current Report on Form 8-K filed

on June 19, 2020, and incorporated by reference

between Registrant and AIP Associates, predecessor-in-interest of

current lessor, dated October, 1989 with respect to Company's

offices and facilities in Bohemia, New York (filed as Exhibit 10(a)

to the Company’s Annual Report on Form 10-KSB filed on

September 28, 2005 and incorporated by reference

to lease between Registrant and REP A10 LLC, successor in interest

of AIP Associates, dated September 1, 2004 (filed as Exhibit 10A-1

to the Company’s Current Report on Form 8-K filed on

September 2, 2004, and incorporated by reference

amendment to lease between Registrant and REP A10 LLC dated

November 5, 2007 (filed as Exhibit 10A-1 to the Company’s

3 unchanged sentences

Orville Drive Associates LLC.

Employment Agreement dated January 1, 2003, by and between the

Company and Ms.

Santos (filed as Exhibit 10(a) to the

Company’s Current Report on Form 8-K filed on January 22,

2003, and incorporated by reference thereto).

Employment Agreement dated September 1, 2004, by and between the

Company and Ms.

Santos (filed as Exhibit 10A-1 to the

Company’s Current Report on Form 8-K filed on September 1,

2004, and incorporated by reference thereto).

Employment Agreement dated December 29, 2006, by and between the

Company and Ms.

Santos (filed as Exhibit 10A-1 to the

Company’s Current Report on Form 8-K filed on December 29,

2006, and incorporated by reference thereto).

Employment Agreement dated July 31, 2009 by and between the Company

Santos (filed as Exhibit 10A-1 to the Company’s

Current Report on Form 8-K filed on August 7, 2009, and

Agreement dated January 1, 2003, by and between the Company and Ms.

Santos (filed as Exhibit 10(a) to the Company’s Current

Report on Form 8-K filed on January 22, 2003, and incorporated by

reference thereto).

Agreement dated September 1, 2004, by and between the Company and

Santos (filed as Exhibit 10A-1 to the Company’s Current

Report on Form 8-K filed on September 1, 2004, and incorporated by

reference thereto).

Agreement dated December 29, 2006, by and between the Company and

Santos (filed as Exhibit 10A-1 to the Company’s Current

Report on Form 8-K filed on December 29, 2006, and incorporated by

reference thereto).

Agreement dated July 31, 2009 by and between the Company and Ms.

Santos (filed as Exhibit 10A-1 to the Company’s Current

Report on Form 8-K filed on August 7, 2009, and incorporated by

reference thereto).

Agreement dated May 14, 2010 by and between the Company and Ms.

Santos (filed as Exhibit 10A-1 to the Company’s Current

Report on Form 8-K filed on May 18, 2010, and incorporated by

reference thereto).

Agreement dated September 13, 2011 by and between the Company and

Santos (filed as exhibit 10(b)-5 to the Company’s Annual

Report on Form 10-K for the fiscal year ended June 30, 2011, and

incorporated by reference thereto).

3 unchanged sentences

by reference thereto).

Employment Agreement dated September 13, 2011 by and between the

Company and Ms.

Santos (filed as exhibit 10(b)-5 to the

Company’s Annual Report on Form 10-K for the fiscal year

ended June 30, 2011, and incorporated by reference

Amended Employment Agreement dated May 20, 2013 by and between the

Company and Ms.

extension dated June 9, 2015 to amend employment agreement by and

between the Company and Ms.

Santos (filed as Exhibit 10A-1 to the

Company’s Current Report on Form 8-K filed on May 20, 2013,

and incorporated by reference thereto).

Agreement extension dated June 9, 2015 to amend employment

agreement by and between the Company and Ms.

Santos (filed as

Exhibit 10A-1 to the Company’s Current Report on Form 8-K

filed on June 9, 2015, and incorporated by reference

Agreement extension dated May 25, 2016 to amend employment

agreement by and between the Company and Ms.

Santos (filed as

Exhibit 10A-1 to the Company’s Current Report on Form 8-K

filed on May 31, 2016, and incorporated by reference

Employment agreement dated July 1, 2017 by and between the Company

Santos (filed as an exhibit to the Company's Annual Report

on Form 10-K for the fiscal year ended June 30, 2017, and

incorporated by reference thereto).

Employment Agreement dated January 1, 2003, by and between the

Company and Mr.

Nichols (filed as Exhibit 10A-1 to the

Company’s Current Report on Form 8-K filed on January 22,

2003, and incorporated by reference thereto).

Employment Agreement dated September 1, 2004, by and between the

Company and Mr.

Nichols (filed as Exhibit 10A-1 to the

Company’s Current Report on Form 8-K filed on September 1,

Company’s Current Report on Form 8-K filed on June 9, 2015,

and incorporated by reference thereto)

Employment Agreement dated December 29, 2006, by and between the

Company and Mr.

Nichols (filed as Exhibit 10A-1 to the

Company’s Current Report on Form 8-K filed on December 29,

extension dated May 25, 2016 to amend employment agreement by and

between the Company and Ms.

Santos (filed as Exhibit 10A-1 to the

Company’s Current Report on Form 8-K filed on May 31, 2016,

and incorporated by reference thereto).

Employment Agreement dated July 31, 2009 by and between the Company

agreement dated July 1, 2017 by and between the Company and Ms.

Santos (filed as an exhibit to the Company's Annual Report on Form

10-K for the fiscal year ended June 30, 2017, and incorporated by

reference thereto).

Agreement dated January 1, 2003, by and between the Company and Mr.

Nichols (filed as Exhibit 10A-1 to the Company’s

Current Report on Form 8-K filed on August 7, 2009, and

Current Report on Form 8-K filed on January 22, 2003, and

incorporated by reference thereto).

Agreement dated September 1, 2004, by and between the Company and

Nichols (filed as Exhibit 10A-1 to the Company’s Current

Report on Form 8-K filed on September 1, 2004, and incorporated by

reference thereto).

Agreement dated December 29, 2006, by and between the Company and

Nichols (filed as Exhibit 10A-1 to the Company’s Current

Report on Form 8-K filed on December 29, 2006, and incorporated by

reference thereto).

Agreement dated July 31, 2009 by and between the Company and Mr.

Nichols (filed as Exhibit 10A-2 to the Company’s Current

Report on Form 8-K filed on August 7, 2009, and incorporated by

reference thereto).

Agreement dated May 14, 2010 by and between the Company and Mr.

Nichols (filed as Exhibit 10A-2 to the Company’s Current

Report on Form 8-K filed on May 18, 2010, and incorporated by

reference thereto).

Agreement dated September 13, 2011 by and between the Company and

Nichols (filed as Exhibit 10(c)-5 to the Company’s Annual

Report on Form 10-K for the fiscal year ended June 30, 2011, and

incorporated by reference thereto).

Employment Agreement dated May 20, 2013 by and between the Company

2 unchanged sentences

by reference thereto).

Employment Agreement dated September 13, 2011 by and between the

Company and Mr.

Nichols (filed as Exhibit 10(c)-5 to the

Company’s Annual Report on Form 10-K for the fiscal year

ended June 30, 2011, and incorporated by reference

Amended Employment Agreement dated May 20, 2013 by and between the

Company and Mr.

Nichols (filed as Exhibit 10A-2 to the

Company’s current Report on Form 8-K filed on May 20, 2013,

and incorporated by reference thereto).

Agreement extension dated June 9, 2015 to amend employment

extension dated June 9, 2015 to amend employment agreement with Mr.

Nichols (filed as Exhibit 10A-1 to the Company’s Current

Report on Form 8-K filed on June 9, 2015, and incorporated by

reference thereto).

e Agreement extension dated May 25, 2016 to amend employment

agreement with Mr.

Nichols (filed as Exhibit 10A-1 to the

Company’s Current Report on Form 8-K filed on June 9, 2015,

and incorporated by reference thereto).

Agreement e Agreement extension dated May 25, 2016 to amend

employment agreement with Mr.

Nichols (filed as Exhibit 10A-1 to

the Company’s Current Report on Form 8-K filed on May 31,

Company’s Current Report on Form 8-K filed on May 31, 2016,

and incorporated by reference thereto).

Employment agreement dated July 1, 2017 by and between the Company

Nichols (filed as an exhibit to the Company's Annual Report

on Form 10-K for the fiscal year ended June 30, 2017, and

incorporated by reference thereto).

Consulting Agreement dated January 1, 2003 by and between the

Company and Mr.

Cremonese and his affiliate, Laboratory Innovation

Company, Ltd.

(filed as Exhibit 10(b) to the Company’s

Current Report on Form 8-K filed on January 6, 2003, and

incorporated by reference thereto).

Amended and Restated Consulting Agreement dated March 22, 2005, by

and between the Company and Mr.

agreement dated July 1, 2017 by and between the Company and Mr.

Nichols (filed as an exhibit to the Company's Annual Report on Form

10-K for the fiscal year ended June 30, 2017, and incorporated by

reference thereto).

Agreement dated January 1, 2003 by and between the Company and Mr.

Cremonese and his affiliate, Laboratory Innovation Company, Ltd.

(filed as Exhibit 10(b) to the Company’s Current Report on

Form 8-K filed on January 6, 2003, and incorporated by reference

and Restated Consulting Agreement dated March 22, 2005, by and

between the Company and Mr.

Cremonese and Laboratory Innovation

3 unchanged sentences

incorporated by reference thereto).

Second Amended and Restated Consulting Agreement dated March 15,

2007, by and between the Company and Mr.

Cremonese and Laboratory

Innovation Company Ltd.

(filed as Exhibit 10A-1 to the

Company’s Current Report on Form 8-K filed on March 16, 2007,

and incorporated by reference thereto).

Third Amended and Restated Consulting Agreement dated September 23,

Amended and Restated Consulting Agreement dated March 15, 2007, by

and between the Company and Mr.

Cremonese and Laboratory Innovation

(filed as Exhibit 10A-1 to the Company’s Current

Report on Form 8-K filed on March 16, 2007, and incorporated by

reference thereto).

Amended and Restated Consulting Agreement dated September 23, 2009,

by and between the Company and Mr.

4 unchanged sentences

2009, and incorporated by reference thereto).

Fourth Amended and Restated Consulting Agreement dated January 7,

2011 (filed as Exhibit 10A-1 to the Company’s Current Report

on Form 8-K (filed on January 18, 2011, and incorporated by

reference thereto).

Fifth Amendment and Restated Consulting Agreement dated January 20,

2012 (filed as Exhibit 10 to the Company’s Current Report on

Amended and Restated Consulting Agreement dated January 7, 2011

(filed as Exhibit 10A-1 to the Company’s Current Report on

Form 8-K (filed on January 18, 2011, and incorporated by reference

Agreement extension dated November 29, 2012 to Amended and Restated

Amendment and Restated Consulting Agreement dated January 20, 2012

(filed as Exhibit 10 to the Company’s Current Report on Form

8-K (filed on January 23, 2012, and incorporated by reference

extension dated November 29, 2012 to Amended and Restated

Consulting Agreement (filed as Exhibit 10 to the Company’s

1 unchanged sentence

incorporated by reference thereto).

Agreement extension dated December 12, 2013 to Amended and Restated

extension dated December 12, 2013 to Amended and Restated

Consulting Agreement (filed as Exhibit 10 to the Company’s

2 unchanged sentences

10(d)-8  

Agreement extension dated January 14, 2015 to Amended and Restated

Consulting Agreement by and between the Company and Mr.

and affiliates (filed as Exhibit 10A-1 to the Company’s

Current Report on Form 8-K filed on January 15, 2015, and

incorporated with reference thereto).

Agreement extension dated January 7, 2016 to Amended and Restated

Consulting Agreement by and between the Company and Mr.

and affiliates (filed as Exhibit 10A-1 to the Company’s

Current Report on Form 8-K filed on January 26, 2016, and

incorporated with reference thereto).

Agreement extension dated February 16, 2018 to Amended and Restated

extension dated January 14, 2015 to Amended and Restated Consulting

Agreement by and between the Company and Mr.

Cremonese and

affiliates (filed as Exhibit 10A-1 to the Company’s Current

Report on Form 8-K filed on January 15, 2015, and incorporated with

reference thereto).

extension dated January 7, 2016 to Amended and Restated Consulting

Agreement by and between the Company and Mr.

Cremonese and

affiliates (filed as Exhibit 10A-1 to the Company’s Current

Report on Form 8-K filed on January 26, 2016, and incorporated with

reference thereto).

extension dated February 16, 2018 to Amended and Restated

Consulting Agreement by and between the Company and Mr.

8 unchanged sentences

reference thereto).

Sublicense from Fluorometrix Corporation (filed as Exhibit 10(a)1

to the Company’s Current Report on Form 8-K filed on June 14,

Retainer Agreement between Scientific Bioprocessing, Inc.

Cremonese and affiliates (filed as Exhibit 10(d)-12 to the

Company’s Quarterly Report on Form 10-Q on February 13, 2020,

and incorporated by reference thereto).

Stock Purchase Agreement, dated as of November 30, 2006, by and

among the Company and Grace Morin, Heather H.

from Fluorometrix Corporation (filed as Exhibit 10(a)1 to the

Company’s Current Report on Form 8-K filed on June 14, 2006,

and incorporated by reference thereto).

Purchase Agreement, dated as of November 30, 2006, by and among the

Company and Grace Morin, Heather H.

Haught and William D.

Chandler (filed as Exhibit 2.1 to the Company’s Current

Report on Form 8-K filed on December 5, 2006, and incorporated by

reference thereto).

Escrow Agreement, dated as of November 30, 2006, by and among the

(filed as Exhibit 2.1 to the Company’s Current Report on Form

8-K filed on December 5, 2006, and incorporated by reference

Agreement, dated as of November 30, 2006, by and among the Company

and Grace Morin, Heather H.

Haught and William D.

Chandler (filed

as Exhibit 10(a) to the Company’s Current Report on Form 8-K

filed on December 5, 2006, and incorporated by reference

Rights Agreement, dated as of November 30, 2006, by and among the

Company and Grace Morin, Heather H.

Haught and William D.

(filed as Exhibit 10(a) to the Company’s Current Report on

(filed as Exhibit 10(b) to the Company’s Current Report on

Form 8-K filed on December 5, 2006, and incorporated by reference

Registration Rights Agreement, dated as of November 30, 2006, by

and among the Company and Grace Morin, Heather H.

Chandler (filed as Exhibit 10(b) to the Company’s

Current Report on Form 8-K filed on December 5, 2006, and

incorporated by reference thereto).

Employment Agreement, dated as of November 30, 2006, between

Altamira Instruments, Inc.

Agreement, dated as of November 30, 2006, between Altamira

Instruments, Inc.

and Brookman P.

March (filed as Exhibit

10(c) to the Company’s Current Report on Form 8-K filed on

December 5, 2006, and incorporated by reference

Employment Agreement, dated as of October 30, 2008, between

Altamira Instruments, Inc.

March (filed as Exhibit 10(c) to

the Company’s Current Report on Form 8-K filed on December 5,

2006, and incorporated by reference thereto).

Agreement, dated as of October 30, 2008, between Altamira

Instruments, Inc.

and Brookman P.

March (filed as Exhibit

10A-2 to the Company’s Current Report on Form 8-K filed on

October 30, 2008, and incorporated by reference

Employment Agreement, dated as of October 1, 2010, between Altamira

March (filed as Exhibit 10A-2 to

the Company’s Current Report on Form 8-K filed on October 30,

2008, and incorporated by reference thereto).

Agreement, dated as of October 1, 2010, between Altamira

Instruments, Inc., and Brookman P.

2 unchanged sentences

2010, and incorporated by reference thereto).

Employment Agreement, dated as of May 18, 2012 between Altamira

Instruments, Inc.

Agreement, dated as of May 18, 2012 between Altamira Instruments,

and Brookman P.

March (filed as Exhibit 10(i)-3

to the Company’s Annual Report on Form 10-K filed on

September 27, 2012, and incorporated by reference

Agreement Extension, dated as of May 21, 2014 between Altamira

Instruments, Inc.

March (filed as Exhibit 10(i)-3 to the

Company’s Annual Report on Form 10-K filed on September 27,

2012, and incorporated by reference thereto).

Extension, dated as of May 21, 2014 between Altamira Instruments,

and Brookman P.

2 unchanged sentences

and incorporated by reference thereto).

Agreement extension dated June 9, 2015 to amend employment

agreement (filed as Exhibit 10A-1 to the Company’s Current

Report on Form 8-K filed on June 9, 2015, and incorporated by

reference thereto).

Agreement extension dated May 25, 2016 to amend employment

agreement (filed as Exhibit 10A-1 to the Company’s Current

Report on Form 8-K filed on May 31, 2016, and incorporated by

reference thereto).

Employment agreement dated July 1, 2017 by and between the Company

March (filed as an exhibit to the Company's Annual Report

on Form 10-K filed on June 30, 2017, and incorporated by reference

Indemnity Agreement, dated as of April 13, 2007 by and among the

Company and Grace Morin, Heather H.

extension dated June 9, 2015 to amend employment agreement (filed

as Exhibit 10A-1 to the Company’s Current Report on Form 8-K

filed on June 9, 2015, and incorporated by reference

extension dated May 25, 2016 to amend employment agreement (filed

as Exhibit 10A-1 to the Company’s Current Report on Form 8-K

filed on May 31, 2016, and incorporated by reference

agreement dated July 1, 2017 by and between the Company and Mr.

March (filed as an exhibit to the Company's Annual Report on Form

10-K filed on June 30, 2017, and incorporated by reference

Termination notice

dated February 14, 2020 to Mr.

March (filed as Exhibit 10(I-8) to

the Company’s Current Report on Form 8-K filed on February

18, 2020, and incorporated by reference thereto).

Agreement, dated as of April 13, 2007 by and among the Company and

Grace Morin, Heather H.

Haught and William D.

(filed as Exhibit 10(j) to the Company’s Annual Report on

Chandler (filed as

Exhibit 10(j) to the Company’s Annual Report on Form 10-KSB

filed on September 28, 2007 and incorporated by reference

between Altamira Instruments, Inc.

and Allegheny Homes, LLC, with

respect to the Company’s Pittsburgh, Pennsylvania facilities

(filed as Exhibit 10(k) to the Company’s Annual Report on

Form 10-KSB filed on September 28, 2007 and incorporated by

reference thereto).

Lease between Altamira Instruments, Inc.

and Allegheny Homes, LLC,

with respect to the Company’s Pittsburgh, Pennsylvania

facilities (filed as Exhibit 10(k) to the Company’s Annual

Report on Form 10-KSB filed on September 28, 2007 and incorporated

by reference thereto).

Lease between Altamira Instruments, Inc.

and Allegheny Homes, LLC,

with respect to the Company’s Pittsburgh, Pennsylvania

facilities (filed as Exhibit 10(k)-1 to the Company’s

Quarterly Report on Form 10-Q filed on February 14, 2013, and

incorporated by reference thereto).

Line of Credit Agreements dated October 30, 2008, by and among the

between Altamira Instruments, Inc.

and Allegheny Homes, LLC, with

respect to the Company’s Pittsburgh, Pennsylvania facilities

(filed as Exhibit 10(k)-1 to the Company’s Quarterly Report

on Form 10-Q filed on February 14, 2013, and incorporated by

reference thereto).

of Credit Agreements dated October 30, 2008, by and among the

Company and Capital One, N.A.

2 unchanged sentences

October 30, 2008, and incorporated by reference

Restated Promissory Note Agreement dated January 20, 2010 by and

among the Company and Capital One N.A.

(filed as Exhibit 99.1 to

the Company’s Current Report on Form 8-K filed on January 20,

Promissory Note Agreement dated January 20, 2010 by and among the

Company and Capital One N.A.

(filed as Exhibit 99.1 to the

Company’s Current Report on Form 8-K filed on January 20,

2010, and incorporated by reference thereto).

Consulting Agreement dated April 1, 2009 by and between the Company

and Grace Morin (filed as Exhibit 10A-1 to the Company’s

Current Report on Form 8-K filed on April 1, 2009, and incorporated

by reference thereto).

Agreement dated January 12, 2015 to extend Consulting Agreement

(filed as Exhibit 10A-2 to the Company’s Current Report on

Form 8-K filed on January 15, 2015, and incorporated by reference

Agreement dated January 7, 2016 to extend Consulting Agreement

(filed as Exhibit 10A-2 to the Company’s Current Report on

Form 8-K filed on January 26, 2016, and incorporated by reference

Agreement dated February 16, 2018 to extend Consulting Agreement

(filed as Exhibit 10A-2 to the Company’s Current Report on

Form 8-K filed on March 9, 2018, and incorporated by reference

Agreement dated April 1, 2009 by and between the Company and Grace

Morin (filed as Exhibit 10A-1 to the Company’s Current Report

on Form 8-K filed on April 1, 2009, and incorporated by reference

dated January 12, 2015 to extend Consulting Agreement (filed as

Exhibit 10A-2 to the Company’s Current Report on Form 8-K

filed on January 15, 2015, and incorporated by reference

dated January 7, 2016 to extend Consulting Agreement (filed as

Exhibit 10A-2 to the Company’s Current Report on Form 8-K

filed on January 26, 2016, and incorporated by reference

dated February 16, 2018 to extend Consulting Agreement (filed as

Exhibit 10A-2 to the Company’s Current Report on Form 8-K

filed on March 9, 2018, and incorporated by reference

dated January 23, 2019 to extend Consulting Agreement (filed as

Exhibit 10-2 to the Company’s Current Report on Form 8-K

filed on January 25, 2019, and incorporated by reference

Line of Credit Agreements dated June 14, 2011, by and among the

Company and JPMorgan Chase Bank, N.A.

(filed as Exhibits 99.1

through 99.3 to the Company’s Current Report on Form 8-K

filed on June 16, 2011, and incorporated by reference

Promissory Note dated June 5, 2013 by and among the Company and JP

Morgan Chase Bank, N.A.

of Credit Agreements dated June 14, 2011, by and among the Company

and JPMorgan Chase Bank, N.A.

(filed as Exhibits 99.1 through 99.3

to the Company’s Current Report on Form 8-K filed on June 16,

2011, and incorporated by reference thereto).

Note dated June 5, 2013 by and among the Company and JP Morgan

Chase Bank, N.A.

(filed as Exhibit 99 to the Company’s

1 unchanged sentence

by reference thereto).

Purchase Agreement, dated as of November 14, 2011, by and among the

Company, Scientific Bioprocessing, Inc., and Fluorometrix

Corporation (filed as Exhibit 2.1 to the Company’s Current

Report on Form 8-K filed on November 17, 2011, and incorporated by

reference thereto).

Escrow Agreement, dated as of November 14, 2011, by and among the

Company, Scientific Bioprocessing, Inc., and Fluorometrix

Corporation (filed as Exhibit 10(A) to the Company’s Current

Report on Form 8-K filed on November 17, 2011, and incorporated by

reference thereto).

Research and Development Agreement dated as of November 14, 2011,

by and between Scientific Bioprocessing, Inc.

Agreement, dated as of November 14, 2011, by and among the Company,

Scientific Bioprocessing, Inc., and Fluorometrix Corporation (filed

as Exhibit 2.1 to the Company’s Current Report on Form 8-K

filed on November 17, 2011, and incorporated by reference

Agreement, dated as of November 14, 2011, by and among the Company,

Scientific Bioprocessing, Inc., and Fluorometrix Corporation (filed

as Exhibit 10(A) to the Company’s Current Report on Form 8-K

filed on November 17, 2011, and incorporated by reference

and Development Agreement dated as of November 14, 2011, by and

between Scientific Bioprocessing, Inc.

and Biodox R&D

2 unchanged sentences

reference thereto).

Notice of termination of Research and Development Agreement dated

June 12, 2013 (filed as Exhibit 99 to the Company’s Current

Report on Form 8-K filed on June 27, 2013, and incorporated by

reference thereto)

Non-Competition Agreement, dated as of November 14, 2011, by and

among the Company, Scientific Bioprocessing, Inc., and Joseph E.

Qualitz (filed as Exhibit 10(D) to the Company’s Current

Report on Form 8-K filed on November 17, 2011, and incorporated by

reference thereto).

Promissory Note, dated as of November 14, 2011, by and between the

Company and the University of Maryland, Baltimore County (filed as

Exhibit 10(c) to the Company’s Current Report on Form 8-K

of termination of Research and Development Agreement dated June 12,

2013 (filed as Exhibit 99 to the Company’s Current Report on

Form 8-K filed on June 27, 2013, and incorporated by reference

Non-Competition

Agreement, dated as of November 14, 2011, by and among the Company,

Scientific Bioprocessing, Inc., and Joseph E.

Qualitz (filed as

Exhibit 10(D) to the Company’s Current Report on Form 8-K

filed on November 17, 2011, and incorporated by reference

License Agreement, dated as of January 31, 2001 by and between

University of Maryland, Baltimore County and Fluorometrix

Corporation (filed as Exhibit 10(E) to the Company’s Current

Report on Form 8-K filed on November 21, 2011, and incorporated by

reference thereto).

Line of Credit Agreements dated June 25, 2014, by and among the

Company and Bank of America Merrill Lynch (filed as Exhibits 99.1

through 99.2 (to the Company’s Current Report on Form 8-K

filed on July 2, 2014, and incorporated by reference

Asset Purchase Agreement, dated as of February 26, 2014, by and

among the Company and Fulcrum, Inc.

(filed as Exhibit 2.1 to the

Company’s Current Report on Form 8-K filed on February 28,

2014, and incorporated by reference thereto).

Escrow Agreement, dated as of February 26, 2014, by and among the

Note, dated as of November 14, 2011, by and between the Company and

the University of Maryland, Baltimore County (filed as Exhibit

10(c) to the Company’s Current Report on Form 8-K filed on

November 17, 2011, and incorporated by reference

Agreement, dated as of January 31, 2001 by and between University

of Maryland, Baltimore County and Fluorometrix Corporation (filed

as Exhibit 10(E) to the Company’s Current Report on Form 8-K

filed on November 21, 2011, and incorporated by reference

of Credit Agreements dated June 25, 2014, by and among the Company

and Bank of America Merrill Lynch (filed as Exhibits 99.1 through

99.2 (to the Company’s Current Report on Form 8-K filed on

July 2, 2014, and incorporated by reference thereto).

Purchase Agreement, dated as of February 26, 2014, by and among the

Company and Fulcrum, Inc.

(filed as Exhibit 10(e) to the

(filed as Exhibit 2.1 to the

Company’s Current Report on Form 8-K filed on February 28,

2014, and incorporated by reference thereto).

Non-Competition Agreements, dated as of February 26, 2014, by and

among the Company, and James Maloy and Karl Nowosielski (filed as

Exhibits 10(b) and 10(c) to the Company’s Current Report on

Form 8-K filed on February 28, 2014, and incorporated by reference

Agreement, dated as of February 26, 2014, by and among the Company,

and Fulcrum, Inc.

(filed as Exhibit 10(e) to the Company’s

Current Report on Form 8-K filed on February 28, 2014, and

incorporated by reference thereto).

Non-Competition

Agreements, dated as of February 26, 2014, by and among the

Company, and James Maloy and Karl Nowosielski (filed as Exhibits

10(b) and 10(c) to the Company’s Current Report on Form 8-K

filed on February 28, 2014, and incorporated by reference

Registration Rights Ag r eement,

4 unchanged sentences

incorporated by reference thereto).

Supply Agreement, dated as of February 20, 2014, by and among the

Company, and Axis Sp 3.O.O.

(filed as Exhibit 10(g) to the

Company’s Current Report on Form 8-K filed on February 28,

2014, and incorporated by reference thereto).

Line of Credit Agreements dated June 26, 2015, by and among the

Company and First National Bank of Pennsylvania (filed as Exhibit

Agreement, dated as of February 20, 2014, by and among the Company,

and Axis Sp 3.O.O.

(filed as Exhibit 10(g) to the Company’s

Current Report on Form 8-K filed on February 28, 2014, and

incorporated by reference thereto).

of Credit Agreements dated June 26, 2015, by and among the Company

and First National Bank of Pennsylvania (filed as Exhibit 10.1

through 10.4 to the Company’s Current Report on Form 8-K

filed on June 30, 2015, and incorporated by reference

Commercial Security Agreement dated July 5, 2016 by and among the

Company, and First National Bank of Pennsylvania.

Note Purchase Agreements with James Maloy dated May 7, 2015 (filed

as Exhibit 10.6 to the Company’s Current Report on Form 8-K

Security Agreement dated July 5, 2016 by and among the Company, and

First National Bank of Pennsylvania.

Purchase Agreements with James Maloy dated May 7, 2015 (filed as

Exhibit 10.6 to the Company’s Current Report on Form 8-K

filed on June 30, 2015, and incorporated by reference

Note Purchase Agreements with Grace March dated May 19, 2015 (filed

as Exhibit 10.6 to the Company’s Current Report on Form 8-K

Purchase Agreements with Grace March dated May 19, 2015 (filed as

Exhibit 10.6 to the Company’s Current Report on Form 8-K

filed on June 30, 2015, and incorporated by reference

1 unchanged sentence

Moore (filed as Exhibit 10A-1 to the Company’s Current Report

on Form 8-K filed on March 6, 2019.

Code of Ethics (filed as Exhibit 14 to the Company’s Annual

10KSB filed on September 28, 2007 and incorporated by reference

Subsidiaries of the Registrant

Altamira Instruments, Inc., a Delaware Corporation, is a

wholly-owned subsidiary of the Company.

Scientific Bioprocessing, Inc., a Delaware Corporation, is a

wholly-owned subsidiary of the Company since November

Scientific Packaging Industries, Inc., a New York corporation, is a

on Form 8-K filed on March 6, 2019, and incorporated by reference

Consulting Agreement dated November 7, 2019 between the Company and

Moore (filed as Exhibit 10.1 to the Company’s

Current Report on Form 8-K filed on December 11, 2019, and

incorporated by reference thereto).

Agreement dated July 1, 2020 between Scientific Bioprocessing, Inc.

Moore (filed as Exhibit 10.1 to the Company’s

Current Report on Form 8-K filed on June 25, 2020, and incorporated

by reference thereto).

Agreement dated July 20, 2020 between the Company and Mr.

Vogt and his affiliate Societat Reinhard and Noah Vogt AG (filed as

Exhibit 10A-1 to the Company’s Current Report on Form 8-K

filed on July 22, 2020, and incorporated by reference

Agreement dated July 1, 2020 between Scientific Bioprocessing, Inc.

and James Polk (filed as Exhibit 10.2 to the Company’s

Current Report on Form 8-K filed on June 25, 2020, and incorporated

by reference thereto).

Purchase Agreement dated June 18, 2020 between the Company and

Investors (filed as Exhibit 10.1 to the Company’s Current

Report on Form 8-K filed on June 19, 2020, and incorporated by

reference thereto).

10(ee)  

Agreement under the U.S.

Small Business Administration Paycheck

Protection Program dated April 14, 2020 between the Company and

First National Bank (filed as Exhibit 10.1 to the Company’s

Current Report on Form 8-K filed on April 21, 2020, and

incorporated by reference thereto).

of Ethics (filed as Exhibit 14 to the Company’s Annual 10KSB

filed on September 28, 2007 and incorporated by reference

of the Registrant

Instruments, Inc., a Delaware Corporation, is a wholly-owned

subsidiary of the Company.

Bioprocessing, Inc., a Delaware Corporation, is a wholly-owned

subsidiary of the Company since November 2011.

Packaging Industries, Inc., a New York corporation, is a

wholly-owned inactive subsidiary of the Company.

Certification of Chief Executive Officer and Chief Financial

Officer pursuant to Section 302 of Sarbanes-Oxley Act of

Certification of Chief Executive Officer and Chief Financial

Officer pursuant to Section 906 of Sarbanes-Oxley Act of

Certification

of Chief Executive Officer and Chief Financial Officer pursuant to

Section 302 of Sarbanes-Oxley Act of 2002.

Certification

of Chief Executive Officer and Chief Financial Officer pursuant to

Section 906 of Sarbanes-Oxley Act of 2002.

to the requirements of Section13 or 15(d) of the Securities

10 unchanged sentences

October 09, 2020

Chairman of the Board

October 09, 2020

1 unchanged sentence

October 09, 2020

October 04, 2019

Chairman of the Board

October 09, 2020

Reinhard Vogt

October 09, 2020

8 unchanged sentences

AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

     Page                   

of independent registered public accounting firm

2 unchanged sentences

Statements of

comprehensive income (loss)

Statements of

changes in stockholders’

2 unchanged sentences

Report of Independent Registered Public Accounting

Stockholders’

and the Board of Directors of Scientific

of Directors and Stockholders’

Industries, Inc.

4 unchanged sentences

“Company”) as of June 30, 2020 and 2019, the related

consolidated statements of operations, comprehensive income (loss),

changes in stockholders' equity and cash flows for the years then

ended, and the related notes to the consolidated financial

statements (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, 2019 and 2018, 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

consolidated statements of operations, changes in stockholders'

equity and cash flows for the years then ended, and the related

notes to the consolidated financial statements and schedules

(collectively, the “financial statements”).

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.

Basis for Opinion

3 unchanged sentences

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

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit 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.

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

conducted our audits in accordance with the auditing standards of

Those standards require that we plan and perform the

audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial

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.

audits included performing procedures to assess the risks of

9 unchanged sentences

served as the Company’s auditor since 1991.

Nussbaum Berg Klein

& Wolpow, CPAs LLP

Berg Klein & Wolpow, CPAs LLP

Melville, New York

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

BALANCE SHEETS

AS OF JUNE 30, 2020 AND 2019

13 unchanged sentences

2,592,300  

334,800  

Prepaid expenses

13 unchanged sentences

705,300  

Trade accounts

receivable, less current portion

Operating lease

right-of-use assets

803,300  

9 unchanged sentences

Accrued expenses

and taxes, current portion

799,700  

1 unchanged sentence

89,000  

140,000  

consideration, current portion

1 unchanged sentence

268,000  

43,100  

140,000  

Lease liabilities,

current portion

226,900  

Payroll Protection

563,800  

Total current

1 unchanged sentence

1,585,300  

Accrued expenses,

Lease liabilities,

less current portion

6 unchanged sentences

Stockholders’

Common stock, $.05

Common stock, $.05 par value;

7,000,000 shares authorized;

1,513,914 shares issued;

1,494,112 shares outstanding, respectively

2,881,065 and 1,513,914 shares issued;

and 1,494,112 shares outstanding in 2020 and 2019,

144,100  

3 unchanged sentences

2,592,700  

Accumulated other

comprehensive income

3,021,400  

38 unchanged sentences

776,100  

Total other income

Income before

income tax expense

12,600  

166,600  

(expense), net

Total other income

(expense), net

Income (loss)

before income tax expense (benefit)

770,200  

Income tax expense

166,600  

Total income tax

124,600  

expense (benefit)

124,600  

15 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

 2018 

Other comprehensive

Unrealized holding

arising during

Comprehensive

income (loss)

$ 645,600 

notes to consolidated financial statements.

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'

21 unchanged sentences

$ 52,400  

Unrealized holding gain on

$ 5,702,200  

Cumulative effect

of the adoption of Accounting Standards Update

(“ASU”) 2016-01 - Financial

22,000  

645,600  

Cash dividend

declared and paid, $.05

Holding loss on

investment securities, net of tax

1 unchanged sentence

20,800  

46,800  

Balance, June 30,

6 unchanged sentences

6,340,700  

Cumulative effect of the adoption

Issuance of Common

Stock and Warrants, net of issuance costs (Note 15)

1,349,850  

ASU 2016-01 –

67,500  

5,936,900  

Cash dividend declared and paid,

Holding loss on investment

securities, net of tax

6,004,400  

Stock options

17,301  

1 unchanged sentence

13,800  

65,800  

Balance, June 30,

15 unchanged sentences

Adjustments to

reconcile net income (loss) to net

   cash

provided by operating activities:

Loss on sale of investment

reconcile net income (loss) to net cash provided by

(used in) operating

(Gain) loss on sale

of investment securities

13,200  

4 unchanged sentences

(benefit) expense

112,500  

Unrealized holding

gain on investment securities

(gain) loss on investment securities

12,400  

Gain on sale of

65,800  

46,800  

Change in fair

4 unchanged sentences

Trade accounts

906,800  

Prepaid expenses

2 unchanged sentences

867,700  

288,800  

63,800  

expenses and taxes

Accrued expenses

191,500  

Bank overdraft

89,000  

1 unchanged sentence

535,200  

Net cash provided

by operating activities

513,900  

Net cash (used in)

provided by operating activities

1,159,500  

3 unchanged sentences

55,000  

151,900  

Proceeds from sale

of fixed assets

intangible assets

5 unchanged sentences

declared and paid

Proceeds from

Payroll Protection Program loan

563,800  

Line of credit

50,000  

Issuance of common

stock and warrants, net of issuance costs

6,004,400  

Line of credit

Proceeds from

exercise of stock options

13,800  

contingent consideration

Net cash used in

financing activities

Net cash provided

by (used in) financing activities

6,209,400  

Net increase in

15 unchanged sentences

$ 1,500  

$ 1,700  

notes to consolidated financial statements.

3 unchanged sentences

AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

Summary of Significant Accounting

Nature of Operations

Summary of Significant Accounting Policies

Industries, Inc.

8 unchanged sentences

and designs bioprocessing products, and an administrative facility

in Oradell, New Jersey related to sales and marketing.

sold by the Company includes 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

in Orangeburg, New York related to sales and marketing.

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

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

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

Summary of Significant Accounting Policies (Continued)

Principles of Consolidation

3 unchanged sentences

(“Altamira”), a Delaware corporation and

wholly-owned subsidiary, and Scientific

Bioprocessing, Inc.

(“SBI”), a Delaware corporation and

wholly-owned subsidiary, (all collectively referred to as the

wholly-owned subsidiary, and Scientific Bioprocessing, Inc.

(“SBI”), a Delaware corporation and wholly-owned

subsidiary, (all collectively referred to as the

“Company”).

24 unchanged sentences

Laboratory Equipment, (2) Catalyst Research Instruments, and (3)

following table summarizes the Company’s disaggregation of

revenues for the years ended June 30, 2019 and 2018.

 Benchtop

6 unchanged sentences

 Systems 

 Corporate

 Other 

 Consolidated 

7 unchanged sentences

4,176,700  

 Benchtop

 Laboratory

 Equipment 

 Catalyst

 Research

 Instruments 

Bioprocessing

 Systems 

 Corporate

 Other 

 Consolidated 

$ 7,078,800  

6 unchanged sentences

5,083,800  

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

Summary of Significant Accounting Policies (Continued)

Revenue Recognition (Continued)

Nature of Products and Services (Continued)

laboratory equipment sales comprise primarily of standard benchtop

9 unchanged sentences

usually comprises of one to two year parts and labor and is deemed

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

Summary of Significant Accounting Policies (Continued)

Revenue Recognition (Continued)

Nature of Products and Services (Continued)

research instrument sales comprise primarily of large instruments

18 unchanged sentences

revenues pertain to royalties earned by the Company, which are paid

on a calendar year basis, under a licensing agreement from a single

licensee and its sublicensees.

to the Company on a calendar year basis, under a licensing

agreement from a single licensee and its sublicensees.

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%

5 unchanged sentences

Company determines revenue recognition through the following

Identification

of the contract, or contracts, with a customer

Identification

of the performance obligations in the contract

Determination

of the transaction price

of the transaction price to the performance obligations in the

of revenue when, or as, a performance obligation is

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

Recognition of

revenue when, or as, a performance obligation is

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

Summary of Significant Accounting Policies (Continued)

Revenue Recognition (Continued)

Nature of Products and Services (Continued)

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

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

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

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.

Financial Accounting Standards Board (“FASB”), in

applying ASC Topic 606:

1) All revenues are recorded net of

returns, allowances, customer discounts, and incentives;

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;

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

Cash and Cash Equivalents

Company considers all highly liquid debt instruments purchased with

a maturity of 90 days or less to be cash equivalents.

cash balances may be in excess of the Federal Deposit Insurance

Corporation (“FDIC”) insurance limit.

As of June 30,

2019, and 2018, $1,328,600 and $593,700, respectively of cash

balances were in excess of such limit.

original maturities of 90 days or less to be cash equivalents.

times, cash balances may be in excess of the Federal Deposit

Insurance Corporation (“FDIC”) insurance limit.

June 30, 2020, and 2019, $6,729,300 and $1,328,600, respectively of

cash balances were in excess of such limit.

Accounts Receivable

20 unchanged sentences

obtain collateral for its accounts receivable.

assessment, the Company concluded that there are no collection

issues related to the COVID-19 Pandemic.

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

Summary of Significant Accounting Policies (Continued)

Contract Liabilities

12 unchanged sentences

current and the remaining portion as noncurrent.

Customer advances

of $63,800 for the year ended June 30, 2018 were reclassified to

contract liabilities on the balance sheet, which was all recognized

as revenue during the year ended June 30, 2019.

Contract liabilities amounted to $89,000 and $0 at June 30, 2020

and 2019, respectively.

Investment Securities

3 unchanged sentences

Changes in fair value are recorded as

unrealized holding gains or losses on the income statement.

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.

Prior to the year ended

June 30, 2019, the Company’s investment securities were

classified as available-for-sale securities and measured and

recorded at fair value with unrealized changes in fair value

recorded through other comprehensive income.

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)   

AS OF AND FOR THE YEARS ENDED JUNE 30, 2019 AND

Summary of Significant Accounting Policies (Continued)

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),

Inventories are

30 unchanged sentences

amortization.

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

Summary of Significant Accounting Policies (Continued)

Goodwill and Long-Lived Assets

67 unchanged sentences

judgment occurs.

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

Summary of Significant Accounting Policies (Continued)

Advertising costs

7 unchanged sentences

that may significantly improve existing products, are expensed as

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

Summary of Significant Accounting Policies (Continued)

Stock Compensation Plan

2 unchanged sentences

to 250,000 shares of the Company’s Common Stock, par value

$.05 per share (“Common Stock”), plus 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

$.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”).

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

6 unchanged sentences

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

compensation is accounted for in accordance with ASC No.

10 unchanged sentences

the years ended June 30, 2020 and 2019, the Company granted 25,881

and 57,500 options, respectively, to employees that had a fair

value of $12,000 and $51,000, respectively.

and 6,705 options, respectively, to employees that had a fair value

of $144,500 and $12,000, respectively.

The fair value of the

8 unchanged sentences

The Company declared a dividend of

$0.05 per share during the year ended June 30, 2019.

did not declare dividends during the year ended June 30, 2018.

weighted-average value per share of the options granted during the

years ended June 30, 2019 and 2018 was $1.79 and $1.64,

$0.05 per share during the year ended June 30, 2019 and none in

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

4 unchanged sentences

$38,600 as of June 30, 2020 and 2019, respectively.

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

Summary of Significant Accounting Policies (Continued)

Use of Estimates

13 unchanged sentences

by the Company may differ materially from management’s

Per Common Share

earnings per common share is computed by dividing net income (loss)

by the weighted-average number of shares outstanding.

earnings per common share includes the dilutive effect of stock

options, if any.

Recent Accounting Pronouncements

February 2016, the FASB issued authoritative guidance that requires

lessees to account for most leases on their balance sheets with the

liability being equal to the present value of the lease payments.

The right-of-use asset will be based on the lease liability

adjusted for certain cost such as direct costs.

Lease expense will

be recognized similar to current accounting guidance with operating

leases resulting in a straight-line expense and financing leases

resulting in a front-loaded expense similar to the current

accounting for capital leases.

This guidance becomes effective for

the Company’s fiscal 2020 first quarter, with early adoption

This guidance must be adopted using a modified

retrospective transition approach for leases that exist or are

entered into after the beginning of the earliest comparative period

in the financial statements, and provides for certain practical

We anticipate the adoption of this standard will result

in an increase in our right of use assets and lease liabilities

recorded on our consolidated balance sheets on July 1, 2019.

Company does not believe the adoption of this guidance will have a

material impact on its consolidated results of operations or cash

In July 2017, the FASB issued ASU 2017-11,

Earnings Per Share (Topic

260), Distinguishing Liabilities from Equity (Topic 480) and

Derivatives and Hedging (Topic 815):

Accounting for Certain

Financial Instruments with Down Round Features;

Replacement of

the Indefinite Deferral for Mandatorily Redeemable Financial

Instruments of Certain Nonpublic Entities and Certain Mandatorily

Redeemable Noncontrolling Interests with a Scope

Exception”

this update addresses the complexity of accounting for certain

financial instruments with down round features.

Down round features

are features of certain equity-linked instruments (or embedded

features) that result in the strike price being reduced on the

basis of the pricing of future equity offerings.

Current accounting

guidance creates cost and complexity for entities that issue

financial instruments (such as warrants and convertible

instruments) with down round features that require fair value

measurement of theentire instrument or conversion option.

of this update addresses the difficulty of navigating Topic 480,

Distinguishing Liabilities from Equity, because of the existence of

extensive pending content in the FASB Accounting Standards

Codification.

This pending content is the result of the indefinite

deferral of accounting requirements about mandatorily redeemable

financial instruments of certain nonpublic entities and certain

mandatorily redeemable noncontrolling interests.

The amendments in

Part II of this update do not have an accounting effect.

is effective for fiscal years, and interim periods within those

years, beginning after December 15, 2018.

The Company expects that

the adoption of this ASU will have no material impact to the

Company's financial statement.

Earnings (Loss) Per Common Share

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.

Accounting Pronouncements

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

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

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.

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.

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.

Company is currently evaluating the impact of adopting this

Adopted Accounting Pronouncement

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.

SCIENTIFIC INDUSTRIES, INC.

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AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

Summary of Significant Accounting Policies (Continued)

Adopted Accounting

Pronouncements

January 2016, the FASB issued ASU No.

2016-01, “Financial

Instruments - Overall (Subtopic 825-10):

Recognition and

Measurement of Financial Assets and Financial Liabilities”.

The update addresses certain aspects of recognition, measurement,

presentation and disclosure of financial instruments.

business entities, the amendments in this update are effective for

fiscal years beginning after December 15, 2017, including interim

periods within those fiscal years.

Early adoption is permitted only

for certain portions of the ASU related to financial liabilities.

The Company adopted this pronouncement during the interim period

September 30, 2018, which resulted in a $22,000 cumulative effect

adjustment to retained earnings in the condensed consolidated

balance sheet as of the beginning of the year ended June 30, 2019.

The adoption of this pronouncement also resulted in the recognition

of holding loss of $8,500 in the Company's consolidated statement

of operations for the year ended June 30, 2019.

April 2016, the FASB issued ASU No.

2016-10, “Revenue from

Contracts with Customers:

Identifying Performance Obligations and

Licensing (Topic 606)”.

In March 2016, the FASB issued ASU

2016-08, “Revenue from Contracts with Customers:

Principal versus Agent Considerations (Reporting Revenue Gross

verses Net) (Topic 606)”.

These amendments provide additional

clarification and implementation guidance on the previously issued

ASU 2014-09, “Revenue from Contracts with Customers”.

The amendments in ASU 2016-10 provide clarifying guidance on

materiality of performance obligations;

evaluating distinct

performance obligations;

treatment of shipping and handling costs;

and determining whether an entity’s promise to grant a

license provides a customer with either a right to use an

entity’s intellectual property or a right to access an

entity’s intellectual property.

The amendments in ASU 2016-08

clarify how an entity should identify the specified good or service

for the principal versus agent evaluation and how it should apply

the control principle to certain types of arrangements.

adoption of ASU 2016-10 and ASU 2016-08 is to coincide with an

entity’s adoption of ASU 2014-09.

The Company has performed a

review of the requirements of the new guidance and has identified

which of its revenue streams will be within the scope of ASC 606.

The Company has applied the five-step model of the new standard to

a selection of contracts within each of its revenue streams and has

compared the results to its prior accounting practices.

adopted the provisions of these pronouncements on July 1, 2018,

using the modified retrospective approach.

Revenue from the

Company’s sales continue to generally be recognized when

products are shipped (i.e.

point in time).

As such, the adoption of

ASU 2016-10 did not have a material impact to the Company’s

financial position or results of operations.

Reclassification

Customer advances

of $63,800 for the year ended June 30, 2018 were reclassified to

contract liabilities.

Segment Information

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 Systems 

 Corporate

 Other 

 Consolidated 

14 unchanged sentences

14,797,400  

762,000  

8,276,000  

Long-Lived Asset

6 unchanged sentences

160,900  

INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)   

AS OF AND FOR THE YEARS ENDED JUNE 30, 2019 AND

Segment information

is reported as follows:

 Benchtop

24 unchanged sentences

1,443,200  

790,100  

762,000  

8,276,000  

Long-Lived Asset

1 unchanged sentence

15,700  

212,400  

Depreciation and

2 unchanged sentences

257,300  

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

Fair Value of Financial Instruments

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. 

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

These levels are described below:

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.

accounting guidance also expands the disclosure requirements around

fair value and establishes a fair value hierarchy for valuation

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

Inputs that are

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fair value of any financial assets and liabilities during the

fair value of the contingent consideration obligations are based on

fair value of the contingent consideration obligations is based on

a probability weighted approach derived from the estimates of

41 unchanged sentences

following table sets forth an analysis of changes during the years

ended June 30, 2019 and 2018 in Level 3 financial liabilities of

ended June 30, 2020 and 2019, respectively, in Level 3 financial

liabilities of the Company:

 2020 

 2019 

$ 618,000  

15 unchanged sentences

related to its Bioprocessing Systems Operations

in marketable securities classified by security type at June 30,

2019 and 2018 consisted of the following:

Investments in

marketable securities classified as available-for-sale by security

type at June 30, 2020 and 2019 consisted of the

 Cost 

 Unrealized

 Holding

$ 77,600  

5 unchanged sentences

$ 331,800  

 Cost 

$ 3,900  

 Cost 

 Unrealized

 Holding

$ 47,100  

5 unchanged sentences

$ 330,900  

INDUSTRIES, INC.

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

In conformity with

ASC 205-10 “Presentation of Financial Statements”, as

it relates to the comparability of financial statements, because

ASU 2016-01 was not implemented retroactively, in order for the

amounts presented in the 2019 financial statements to be comparable

to the same period in 2018, the following table illustrates the

impact the implementation of the standard would have had on the

year ended June 30, 2018:

 As Reported 

 Adjustments

 Balance with ASU 2016-01

 Unrealized gain on marketable

$ 1,200  

 Income before income tax

 Income tax expense

161,900  

 Net loss

 Earnings per common share (basic and

 2020 

 2019 

$ 1,838,500  

8 unchanged sentences

Property and Equipment

(Years)  

 2020 

 2019 

$ 22,000  

2 unchanged sentences

233,900  

Machinery and 

equipment 

Machinery and

equipment   

1,010,600  

5 unchanged sentences

45,300  

1,543,500  

6 unchanged sentences

$ 318,800  

expense was $88,900 and $67,300 for the years ended June 30, 2020

8 unchanged sentences

components of other intangible assets are as follows:

Lives              

Amortization 

$ 663,800  

  Useful

   Lives 

 Cost 

 Accumulated

 Amortization 

 Net 

$ 664,700  

28 unchanged sentences

Goodwill and Other Intangible Assets (Continued)

Lives              

Amortization 

$ 662,800  

  Useful

   Lives 

 Cost 

 Accumulated

 Amortization 

 Net 

$ 663,800  

17 unchanged sentences

110,000  

Other intangible

14 unchanged sentences

$ 128,700  

$ 175,000  

Line of Credit

3 unchanged sentences

interest at prime, currently 3.25%.

The agreement contains a

financial covenant requiring the Company to maintain a minimum net

worth 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.

of June 30, 2019 and 2018, there were no borrowings

outstanding under the line.

Notes Payable

Company had a $20,000 36-month auto loan through April 2019, with

its bank, with monthly payments of $600 bearing interest at 4% for

a vehicle used by the Company’s sales manager.

an outstanding balance of $5,800 as of June 30, 2018 which was paid

in full as of June 30, 2019.

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

As of June 30, 2020 and 2019, there were no

borrowings outstanding under the line.

Payroll Protection Program Loan

Company has 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.

Business Administration through its bank.

The loan bears interest

at 1% per annum and matures in April 2022 and contains no

collateral or guarantee requirements.

The Company expects to apply

and receive forgiveness for the majority of the

loan , for which it will

apply in the fiscal year ending June 30, 2021.

SCIENTIFIC INDUSTRIES, INC.

13 unchanged sentences

Commitments and Contingencies

Company entered into a lease in August 2014 for its Bohemia, New

York premises through February 2025 which requires minimum annual

rental payments plus other expenses, including real estate taxes

and insurance.

The future minimum annual rental expense, computed

on a straight-line basis, is approximately $170,000 under the terms

of the lease.

Rental expense for the Bohemia facility amounted to

approximately $187,200 and $183,300 for the years ended June 30,

2019 and 2018, respectively.

Accrued rent, payable in future years,

amounted to $66,600 and $65,600 at June 30, 2019 and 2018,

respectively.

Company has an operating lease for its facility in Pittsburgh,

Pennsylvania, which requires monthly minimum rental payments

through November 2020, plus common area expenses.

expense for the Pittsburgh facility was $91,500 and $106,000 for

the years ended June 30, 2019 and 2018, respectively.

also entered into another operating lease in Pittsburgh for product

development and engineering space for its Bioprocessing Systems

Operations from June 2019 through November 2020.

Rental expense was

$2,300 for the year ended June 30, 2019.

addition, the Company maintains an office in Oradell, New Jersey

from which it performs its sales and marketing functions.

Company is obligated under an operating lease for its facility in

Oradell, New Jersey, which required monthly minimum rental payments

through June 2018, plus common area expenses.

The Company is

operating under a second one year renewal option through June 30,

However, the Company is currently under negotiations for

lease termination at the request of the landlord due to sale of the

property, and entering into a new lease of similar terms in the

same geographic area.

Total rent expense for the New Jersey

facility, was $24,300 and $23,000 for the years ended June 30, 2019

and 2018, respectively.

Company’s approximate future minimum rental payments under

all operating leases as of June 30, 2019 are as

Year Ended June

$ 284,100  

222,500  

184,600  

190,200  

195,900  

91,600  

$ 1,168,900  

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

Commitments and Contingencies (Continued)

Company has a three-year employment contract with its President,

effective July 1, 2017.

The agreement provides 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.

The agreement also

provides for a grant of options to purchase 25,000 shares of the

Company’s stock, which were granted during the year ended

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.

No shares were granted during the year ended June

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.

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.

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.

agreement provides for an annual base salary of $153,000 for the

3 unchanged sentences

bonus for subsequent years.

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.

were granted during the year ended June 30, 2019.

Company has 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

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.

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

The agreement provides for an annual base salary of

2 unchanged sentences

higher, plus $10,000 cash bonus for the year ended June 30, 2018

and a discretionary bonus for subsequent years.

and subsequent years, subject to a minimum increase of 5% in the

divisions’

EBITDA for the related year.

The agreement also

2 unchanged sentences

June 30, 2018.

No shares were granted during the year ended June

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.

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’

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.

were granted during the year ended June 30, 2019.

performance-based bonus of $10,000 was awarded for the year ended

June 30, 2019.

Company has 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.

The agreement provides for

an annual base salary of $120,000 and $110,000 for the years ended

June 30, 2019 and 2018, 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

The agreement also provides 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.

were granted during the year ended June 30, 2019.

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

SCIENTIFIC INDUSTRIES, INC.

3 unchanged sentences

Commitments and Contingencies (Continued)

Company has a three-year employment contract with its President of

Scientific Bioprocessing, Inc., effective July 1, 2020.

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

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

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.

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

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

Company has a consulting agreement, which expires on December 31,

2019, with an affiliate of the Chairman of the Board of Directors

for marketing consulting services.

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 fee of $3,600 for a certain number of

consulting days as defined in the agreement.

Consulting expense

related to this agreement amounted to $43,200 for each of the years

ended June 30, 2019 and 2018, respectively.

Company has a consulting agreement, which expires December 31,

2019, with another member of its Board of Directors for

administrative services provided that the consultant be paid at the

rate of $85 per hour.

Consulting expense related to this agreement

amounted to $18,200 and $7,000 for the years ended June 30, 2019

and 2018, respectively.

Company entered into a new consulting agreement during the year

ended June 30, 2019, which expired in August 2019.

This consulting

agreement is expected to be renewed for another six months with a

member of its Board of Directors as it relates to its Bioprocessing

Systems Operations.

Consulting expense related to this agreement

amounted to $40,000 for the year ended June 30, 2019.

consultant be paid a monthly retainer fee of $9,000, plus a grant

of 20,000 options during the year ended June 30, 2020.

expense related to this agreement amounted to $76,200 and $43,200

for the years ended June 30, 2020 and 2019,

respectively.

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.

Company is required to make payments of 30% of the net royalties

4 unchanged sentences

years ended June 30, 2020 and 2019, respectively.

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

Commitments and Contingencies (Continued)

fair value of contingent consideration estimated to be paid as of

7 unchanged sentences

$ 358,000  

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.

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.

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.

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.

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

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.

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

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

Leases (Continued)

Company elected not to recognize a ROU asset and a lease liability

for leases with an initial term of twelve months or less.

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

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.

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.

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

Company’s approximate future minimum rental payments under

all leases existing at June 30, 2020 and 2019, respectively,

through January 2025 are as follows:

Year ended June

 Amount 

$ 265,800  

210,600  

198,900  

195,900  

91,600  

$ 962,800  

reconciliation of the provision for income taxes at the federal

1 unchanged sentence

applicable fiscal year was as follows:

 2020 

 2019 

“expected”

2 unchanged sentences

development credits

Change in tax

Rate changes and

NOL carrybacks

(122,600 ) 

14,800  

Income tax expense

$ 124,600  

6 unchanged sentences

and liabilities consist of the following:

 2020 

 2019 

Amortization of

2 unchanged sentences

$ 303,900  

development credits

89,400  

4 unchanged sentences

589,200  

490,800  

Depreciation of

property and equipment

property and amortization of goodwill

Net deferred tax

27 unchanged sentences

activity is summarized as follows:

30, 2019 

30, 2018 

 June 30,

 Average

15 unchanged sentences

$ 4.35  

97,205  

$ 3.24  

Options exercisable

13 unchanged sentences

of June 30, 2020

 Options

Outstanding 

of June 30, 2020

 Exercisable 

 Exercise

 Prices 

 Price 

4 unchanged sentences

$ 0.00  

$ 2.80  

$ 3.65 - $4.65  

$ 2.91 - $  

70,705  

4 unchanged sentences

49,236  

As of June 30,

of June 30, 2019

 Options

Outstanding 

of June 30, 2019

 Exercisable 

 Exercise

 Prices 

12 unchanged sentences

97,205  

50,167  

Earnings (Loss) Per Common Share

17 unchanged sentences

Approximately

and 92,000 shares of the Company's common stock issuable upon the

exercise of outstanding options were excluded from the calculation

of diluted earnings per common share for the years ended June 30,

2019 and 2018, respectively, because the effect would be

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,

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.

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE YEARS ENDED JUNE 30, 2020 AND 2019

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.

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 

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

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 9A. Controls and Procedures