What changed in this filing

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Item 1. Financial Statements

2022-05-16 compared with 2022-02-16 · 179 added, 105 removed, 309 unchanged (48% of the section changed)

6 unchanged sentences

Investment securities

Trade accounts receivable, less allowance for doubtful accounts of $ 15,600 at December 31, 2021 and June 30, 2021

Trade accounts receivable, less allowance for doubtful accounts of $ 15,600 at March 31, 2022 and June 30, 2021

Income tax receivable

22 unchanged sentences

Common stock, $ 0.05 par value;

15,000,000 shares authorized;

6,477,945 shares issued;

6,458,143 shares outstanding at December 31, 2021 and June 30, 2021

20,000,000 and 15,000,000 shares authorized;

7,023,401 and 6,477,945 shares issued;

7,003,599 and 6,458,143 shares outstanding at March 31, 2022 and June 30, 2021

Additional paid-in capital

Accumulated comprehensive gain (loss)

Accumulated comprehensive loss

Accumulated deficit

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

For the Three Month Period Ended March 31,

For the Nine Month Period Ended March 31,

Cost of revenues

6 unchanged sentences

( 1,858,800 )

Other income:

Other income, net

( 5,111,500 )

( 2,298,900 )

Other income (expense):

Other income (expense), net

Interest income

Total other income, net

Loss from continuing operations before income tax benefit

Total other income (expense), net

Loss from continuing operations

before income tax benefit

( 1,844,600 )

( 1,830,200 )

( 4,698,200 )

( 2,205,200 )

Income tax benefit, current

Income tax benefit, deferred

Total income tax benefit

( 1,054,500 )

Loss from continuing operations

( 1,527,400 )

( 1,452,000 )

( 3,643,700 )

( 1,732,900 )

Discontinued operations (Note 9):

1 unchanged sentence

$ ( 1,535,000 )

Comprehensive gain (loss):

Unrealized holding loss on investment securities, net of tax

$ ( 1,435,600 )

$ ( 3,640,300 )

$ ( 2,311,400 )

Comprehensive loss:

Unrealized holding loss on investment

securities, net of tax

Foreign currency translation adjustment

Comprehensive gain

Comprehensive loss

Total comprehensive loss

11 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

Comprehensive

Retained Earnings (Accumulated

Accumulated Other Comprehensive

Treasury Stock

Shareholders’

Balances, July 1, 2021

Paid-in Capital

Accumulated Deficit

Stockholders'

Balance July 1, 2021

$ ( 651,100 )

4 unchanged sentences

Stock-based compensation

Balances, September 30, 2021

Balance, September 30, 2021

( 1,859,900 )

Foreign currency translation adjustment

Unrealized holding gain on investment securities, net of tax

Stock-based compensation

Balance, December 31, 2021

( 2,756,400 )

( 1,535,000 )

Issuance of Common Stock and Warrants, net of issuance costs

Foreign currency translation adjustment

Unrealized holding loss on investment securities, net of tax

Stock-based compensation

Balances, December 31, 2021

Balance, March 31, 2022

$ ( 104,800 )

$ ( 4,291,400 )

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED)

Additional Paid-in

Treasury Stock

Shareholders’

Total Stockholders'

Balance July 1, 2020

3 unchanged sentences

Balance, December 31, 2020

See notes to unaudited condensed consolidated financial statements.

( 1,435,600 )

Stock-based compensation

Stock options exercised

Balance, March 31, 2021

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Period Ended December 31,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Month Period March 31, 2022

For the Nine Month Period March 31, 2021

Operating activities:

2 unchanged sentences

Adjustments to reconcile net loss to net cash used in operating activities:

Gain on sale of investments

Loss/(Gain) on sale of investments

Unrealized holding loss on investments

7 unchanged sentences

Trade accounts receivable

( 1,383,900 )

Carrying value of right of use assets

3 unchanged sentences

Contract liabilities

Lease liabilities

Bank overdraft

Discontinued operations

Other long-term liabilities

Accrued expenses and taxes

Accrued expenses

Total adjustments

7 unchanged sentences

( 6,609,200 )

Proceeds from sale of discontinued operations

Proceeds from sale of assets of discontinued operations

Capital expenditures

4 unchanged sentences

Financing activities:

Proceeds from issuance of common stock

Issuance costs of common stock and warrants

Payments of contingent consideration

Net cash used in financing activities

Proceeds from Payroll Protection Program

Proceeds from stock options exercised

Net cash provided by financing activities

Effect of changes in foreign currency exchange rates

4 unchanged sentences

Cash and cash equivalents, end of period

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the Nine Month Period March 31, 2022

For the Nine Month Period March 31, 2021

SUPPLEMENTAL DISCLOSURES:

3 unchanged sentences

Record lease liabilities

See notes to unaudited condensed consolidated financial statements.

SCIENTIFIC INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited interim condensed consolidated financial statements are prepared pursuant to the Securities and Exchange Commission’s rules and regulations for reporting on Form 10-Q.

Accordingly, certain information and footnotes required by accounting principles generally accepted in the United States for complete financial statements are not included herein.

Accordingly, certain information and notes required by accounting principles generally accepted in the United States for complete financial statements are not included herein.

The Company believes all adjustments necessary for a fair presentation of these interim statements have been included and that they are of a normal and recurring nature.

These interim statements should be read in conjunction with the Company’s financial statements and notes thereto, included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

The results for the three and six months ended December 31, 2021 are not necessarily an indication of the results for the full fiscal year ending June 30, 2022.

These interim statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto, included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

The results for the three and nine months ended March 31, 2022 are not necessarily an indication of the results for the full fiscal year ending June 30, 2022.

Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Scientific Industries, Inc., Scientific Packaging Industries, Inc., an inactive wholly-owned subsidiary, Altamira Instruments, Inc.

(“Altamira”), a Delaware corporation and wholly-owned subsidiary (discontinued operation as of November 30, 2020), Scientific Bioprocessing Holdings, Inc.

(“SBHI”), a Delaware corporation, and SBHI’s wholly-owned subsidiaries, Scientific Bioprocessing, Inc.

(“SBI”), a Delaware corporation, and aquila biolabs GmbH (“Aquila”), a German corporation, which was acquired on April 29, 2021, (all collectively referred to as the “Company”).

The accompanying consolidated financial statements include the accounts of Scientific Industries, Inc., its wholly- owned subsidiary, Scientific Bioprocessing Holdings, Inc.

(“SBHI”), SBHI’s wholly-owned subsidiaries, Scientific Bioprocessing, Inc.

(“SBI”), and aquila biolabs GmbH (“Aquila”), a German corporation, which was acquired on April 29, 2021, Scientific Packaging Industries, Inc., an inactive wholly-owned subsidiary, and Altamira Instruments, Inc.

(“Altamira”), and wholly-owned subsidiary (accounted for as a discontinued operation as of November 30, 2020) (all collectively referred to as the “Company”).

All material intercompany balances and transactions have been eliminated in consolidation.

2 unchanged sentences

At that time, the Company took appropriate action and put plans in place to diminish the adverse 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 pertaining 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.

SBI’s facility was shut down temporarily due to state mandates, however, the impact on operations was minimal, and the Company has been able to retain its employees without furloughs or layoffs, in part, due to the Company’s receipt of two loans under the Federal Government’s Small Business Administration Paycheck Protection Program (“PPP”).

The Company took immediate action pertaining to COVID-19 preparedness by implementing the US 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.

The Company experienced supply chain disruptions which had an impact on its operations causing delayed delivery of some products to its customers, and production inefficiencies.

SBI’s facility was shut down temporarily due to state mandates, however, the impact on operations was minimal, and the Company was able to retain its employees without furloughs or layoffs, in part, due to the Company’s receipt of two loans under the Federal Government’s Small Business Administration Paycheck Protection Program (“PPP”).

The Company received $ 563,800 and $ 433,800 in PPP loans in April 2020 and March 2021, respectively.

The first loan was forgiven in June 2021 except for $ 32,700 which was repaid by the Company and the second loan was forgiven in full in December 2021.

The Company elected to account for its PPP Loans in accordance with Accounting Standards Codification (“ASC”), 470 Debt, with interest, if any, accrued in accordance with the interest method under ASC 835-30, Imputation of Interest.

Initially, the Company recognized the entire loan amounts as liabilities on its balance sheets, and remain as liabilities until either the Company is legally released from its obligations or pays the lender.

Once the loan is forgiven, the amount forgiven is recorded in the Company’s statement of operations as “Other Income.”

The Company elected to account for its PPP Loans in accordance with Accounting Standards Codification (“ASC”), Topic 470 Debt , with interest, if any, accrued in accordance with the interest method under ASC 835-30, Imputation of Interest .

Initially, the Company recognized the entire loan amounts as liabilities on its balance sheets and remained as liabilities until either the Company was legally released from its obligations or paid the lender.

Once the loans were forgiven, the amounts forgiven were recorded in the Company’s statement of operations as “Other Income.”

Adopted Accounting Pronouncements

3 unchanged sentences

The adoption of this standard as of July 1, 2021 did not have a material impact on the Company’s financial statements.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and is evaluating any that may impact its financial statements.

The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

The Company generates revenues from the following sources:

(1) Benchtop Laboratory Equipment, and (2) Bioprocessing Systems.

The following table summarizes the Company’s disaggregation of revenues for the three and six months ended December 31, 2021 and 2020.

Bioprocessing

Three Months Ended December 31, 2021:

The following table summarizes the Company’s disaggregation of revenues for the three and nine months ended March 31, 2022 and 2021.

Benchtop Laboratory Equipment

Bioprocessing Systems

Three Months Ended March 31, 2022:

Foreign Sales

Bioprocessing

Three Months Ended December 31, 2020:

Benchtop Laboratory Equipment

Bioprocessing Systems

Three Months Ended March 31, 2021:

Foreign Sales

Bioprocessing

Six Months Ended December 31, 2021:

Benchtop Laboratory Equipment

Bioprocessing Systems

Nine Months Ended March 31, 2022:

Foreign Sales

Bioprocessing

Six Months Ended December 31, 2020:

Benchtop Laboratory Equipment

Bioprocessing Systems

Nine Months Ended March 31, 2021:

Foreign Sales

Benchtop Laboratory Equipment sales are comprised primarily of standard benchtop laboratory equipment sold to laboratory equipment distributors, or to end users primarily via e-commerce.

Benchtop Laboratory Equipment sales are comprised primarily of standard benchtop laboratory equipment sold to laboratory equipment distributors, or directly to end users primarily online via the Company’s website.

The sales cycle from time of receipt of order to shipment ranges from a day to a few weeks.

10 unchanged sentences

the manufacture and marketing of standard benchtop laboratory equipment for research in university, hospital and industrial laboratories sold primarily through laboratory equipment distributors and laboratory and pharmacy balances and scales (“Benchtop Laboratory Equipment Operations”);

and the design, manufacture, and marketing of bioprocessing systems and products and related royalty income (“Bioprocessing Systems”).

and the design, manufacture, and marketing of bioprocessing systems and products (“Bioprocessing Systems”) and related royalty income.

Segment information is reported as follows:

Bioprocessing

Three Months Ended December 31, 2021:

Benchtop Laboratory Equipment

Bioprocessing Systems

Corporate And Other

Three Months Ended March 31, 2022:

Foreign Sales

1 unchanged sentence

( 1,651,700 )

( 1,742,300 )

Long-Lived Asset Expenditures

Depreciation and Amortization

Bioprocessing

Three Months Ended December 31, 2020:

Benchtop Laboratory Equipment

Bioprocessing Systems

Corporate And Other

Three Months Ended March 31, 2021:

Foreign Sales

Income (Loss) From Operations

( 1,323,900 )

( 1,858,800 )

Long-Lived Asset Expenditures

Depreciation and Amortization

Approximately 44 % and 52 % of net sales of Benchtop Laboratory Equipment for the three months ended December 31, 2021 and 2020, respectively, were derived from the Company’s main product, the Vortex-Genie 2 mixer, excluding accessories.

Approximately 29 % and 23 % of total Benchtop Laboratory Equipment sales were derived from the Torbal Scales Division for the three months ended December 31, 2021 and 2020, respectively.

For the three months ended December 31, 2021 and 2020, respectively, three customers accounted for approximately 20 % for both periods of net sales of the Benchtop Laboratory Equipment Operations ( 17 % and 18 % of the Company’s total revenues), respectively.

Sales of products from Aquila of the Bioprocessing Systems Operations, amounted to $332,400 for the three months ended December 31, 2021 and none in the corresponding prior year period.

Segment Information and Concentrations (Continued)

Bioprocessing

Six Months Ended December 31, 2021:

Approximately 50 % and 55 % of net sales from Benchtop Laboratory Equipment Operations ( 42 % and 52 % of total revenues) for the three months ended March 31, 2022 and 2021, respectively, were derived from sales of the Company’s main product, the Vortex-Genie 2 mixer, excluding accessories.

Approximately 24 % and 20 % of total Benchtop Laboratory Equipment Operations sales ( 20 % and 19 % of total revenues) were derived from the Torbal Scales Division for the three months ended March 31, 2022 and 2021, respectively.

For the three months ended March 31, 2022 and 2021, respectively, three customers accounted for approximately 19 % and 26 % of net sales of the Benchtop Laboratory Equipment Operations ( 16 % and 25 % of the Company’s total revenues), respectively.

Benchtop Laboratory Equipment

Bioprocessing Systems

Corporate And Other

Nine Months Ended March 31, 2022:

Foreign Sales

1 unchanged sentence

( 5,091,300 )

( 1,127,200 )

( 5,111,500 )

Long-Lived Asset Expenditures

Depreciation and Amortization

Bioprocessing

Six Months Ended December 31, 2020:

Benchtop Laboratory Equipment

Bioprocessing Systems

Corporate And Other

Nine Months Ended March 31, 2021:

Foreign Sales

Income (Loss) From Operations

( 2,598,000 )

( 1,048,000 )

( 2,298,900 )

Long-Lived Asset Expenditures

Depreciation and Amortization

Approximately 48 % and 50 % of total benchtop laboratory equipment sales ( 42 % and 47 % of total revenues) for the six months ended December 31, 2021 and 2020, respectively, were derived from the Company’s main product, the Vortex-Genie 2 mixer, excluding accessories.

Approximately 25 % for both periods of total benchtop laboratory equipment sales ( 22 % and 23 % of total revenues) were derived from the Torbal Scales Division for the six months ended December 31, 2021 and 2020, respectively.

For the six months ended December 31, 2021 and 2020, three customers accounted for approximately 21 % for both periods of net sales of the Benchtop Laboratory Equipment Operations ( 18 % and 20 % of the Company’s total revenues), respectively.

Approximately 49 % and 51 % of total Benchtop Laboratory Equipment Operations sales ( 42 % and 47 % of total revenues) for the nine months ended March 31, 2022 and 2021, respectively, were derived from sales of the Company’s main product, the Vortex-Genie 2 mixer, excluding accessories.

Approximately 24 % and 23 % for both periods of total Benchtop Laboratory Equipment Operations sales ( 21 % and 21 % of total revenues) were derived from the Torbal Scales Division for the nine months ended March 31, 2022 and 2021, respectively.

For each of the nine-month periods ended March 31, 2022 and 2021, three customers accounted for approximately 20 % and 23 % of net sales of the Benchtop Laboratory Equipment Operations ( 17 % and 21 % of the Company’s total revenues), respectively.

Fair Value of Financial Instruments

2 unchanged sentences

These calculations take into consideration the credit risk of both the Company and its counterparties.

The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period.

The Company has not changed its valuation techniques in measuring the fair value of any financial assets or liabilities during the period.

The fair value of the contingent consideration obligations are based on a probability-weighted approach derived from the estimates of earn-out criteria and the probability assessment with respect to the likelihood of achieving those criteria.

The measurement is based on significant inputs that are not observable in the market, therefore, the Company classifies this liability as Level 3 in the following table.

The following tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis at December 31, 2021 and June 30, 2021 according to the valuation techniques the Company used to determine their fair values:

The following tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis at March 31, 2022 and June 30, 2021 according to the valuation techniques the Company used to estimate their fair values:

Fair Value at

8 unchanged sentences

Contingent consideration

Investments in marketable securities by security type at December 31, 2021 and June 30, 2021 consisted of the following:

At December 31, 2021:

Investments in marketable securities by security type at March 31, 2022 and June 30, 2021 consisted of the following:

At March 31, 2022:

Equity securities

Debt securities

At June 30, 2021:

5 unchanged sentences

Goodwill and Finite Lived Intangible Assets

Goodwill amounted to $ 4,395,400 at December 31, 2021 and June 30, 2021, all of which is expected to be deductible for tax purposes.

Goodwill amounted to $ 4,395,400 at March 31, 2022 and June 30, 2021, all of which is expected to be deductible for tax purposes.

The components of finite-lived intangible assets are as follows:

Accumulated Amortization

At December 31, 2021:

At March 31, 2022:

Technology, trademarks

10 unchanged sentences

In-process research and development

Total amortization expense was $ 135,000 and $ 16,200 for the three months ended December 31, 2021 and 2020, respectively, and $ 273,900 and $ 32,000 for the six months ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, estimated future amortization expense related to intangible assets is $263,200 for the remainder of the fiscal year ending June 30, 2022, $ 520,300 for fiscal 2023, $ 508,800 for fiscal 2024, $ 474,100 for fiscal 2025, $ 272,400 for fiscal 2026 and $ 311,600 thereafter.

Total amortization expense was $ 134,600 and $ 16,000 for the three months ended March 31, 2022 and 2021, respectively, and $ 408,500 and $ 48,500 for the nine months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, estimated future amortization expense related to intangible assets is $ 134,300 for the remainder of the fiscal year ending June 30, 2022, $ 520,900 for fiscal 2023, $ 518,900 for fiscal 2024, $ 485,100 for fiscal 2025, $ 284,600 for fiscal 2026 and $ 137,500 thereafter.

Loss Per Common Share

5 unchanged sentences

The following table sets forth the weighted average number of common shares outstanding for each period presented.

For the Three

Period Ended December 31,

For the Three Month

Period Ended December 31,

For the Three Month Period Ended March 31, 2022

For the Three Month Period Ended March 31, 2021

For the Nine Month Period Ended March 31, 2022

For the Nine Month Period Ended March 31, 2021

Weighted average number of common shares outstanding

1 unchanged sentence

Weighted average number of dilutive common shares outstanding

Basic loss per common share:

Basic and diluted loss per common share:

Continuing operations

1 unchanged sentence

Consolidated operations

Approximately 3,288,927 and 3,367,555 shares of the Company’s common stock issuable upon the exercise of options and warrants, respectively, were excluded from the calculation because the effect would be anti-dilutive due to the loss for the three and six months ended December 31, 2021.

Approximately, 126,700 and 1,349,850 shares of the Company’s common stock issuable upon the exercise of outstanding options and warrants, respectively, were excluded from the calculation because the effect would be anti-dilutive due to the loss for the three and six months ended December 31, 2020.

The Company leases certain properties consisting principally of a facility in Bohemia, New York (headquarters) through October 2028, a facility in Pittsburgh, Pennsylvania for SBI’s Bioprocessing Systems Operations through May 2023, and a facility for sales and administration in Orangeburg, New York through October 2022.

Approximately 3,452,542 and 3,451,461 shares of the Company’s common stock issuable upon the exercise of options and warrants, respectively, were excluded from the calculation because the effect would be anti-dilutive due to the loss for the three and nine months ended March 31, 2022.

Approximately 259,357 and 1,349,850 shares of the Company’s common stock issuable upon the exercise of options and warrants, respectively, were excluded from the calculation because the effect would be anti-dilutive due to the loss for the three and nine months ended March 31, 2021.

The Company leases certain properties consisting principally of (i) a facility in Bohemia, New York (headquarters) through October 2028, (ii) a facility in Pittsburgh, Pennsylvania for SBI’s Bioprocessing Systems Operations through May 2023, and (iii) a facility for sales and administration in Orangeburg, New York through October 2022.

There are no renewal options with any of the leases, no residual values or significant restrictions or covenants other than those customary in such arrangements, and no non-cash activities;

3 unchanged sentences

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.

Each ROU asset is further adjusted to account for previously recorded lease expenses such as deferred rent and other lease liabilities.

As the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate of 5.0 % as the discount rate to calculate the present value of future lease payments, which was the interest rate that its bank would charge for a similar loan.

The Company elected not to recognize a ROU asset and a lease liability for leases with an initial term of twelve months or less.

The Company elected not to recognize a ROU asset or a lease liability for leases with an initial term of twelve months or less.

In addition to minimum lease payments, certain leases require payment of a proportionate share of real estate taxes and certain building operating expenses or payments based on an excess of a specified base.

4 unchanged sentences

The Company utilized the transition method allowing entities to only apply the new lease standard in the year of adoption.

As of December 31, 2021, the weighted-average remaining lease term for operating lease liabilities was approximately 6.83 years and the weighted-average discount rate was 5.0 %.

Total cash payments under these leases were approximately $ 89,800 and $ 158,100 , for the three and six months ended December 31, 2021 of which $ 81,800 and $ 144,400 was recorded as leases expense, respectively.

The Company’s approximate future minimum rental payments under all leases existing at December 31, 2021 through October 2028 are as follows:

As of March 31, 2022, the weighted-average remaining lease term for operating lease liabilities was approximately 5.32 years and the weighted-average discount rate was 5.0 %.

Total cash payments under these leases were approximately $ 82,000 and $ 240,200 , for the three and nine months ended March 31, 2022 of which $ 81,800 and $ 226,300 was recorded as leases expense, respectively.

The Company’s approximate future minimum rental payments under all leases existing at March 31, 2022 through October 2028 are as follows:

Fiscal year ending June 30,

10 unchanged sentences

Accounts receivable

Discontinued operations

Accrued expenses and taxes

Contract liabilities

Discontinued Operations (continued)

Three Months Ended

Six Months Ended

Nine Months Ended

March 31,2022

March 31,2021

March 31,2022

March 31,2021

Cost of goods sold

Gross profit (loss)

Selling, general and administrative expenses

Gain (loss) from operations

Income (loss) from operations

Loss on disposal

Income (loss) from operations before income tax benefit

Income tax expense, all deferred

Income (loss) before income tax benefit

Income tax expense (benefit)

Net income (loss) attributable to discontinued operations

1 unchanged sentence

In our Consolidated Statements of Cash Flows, the cash flows from discontinued operations are not separately classified.

Cash provided by (used in) operating activities from discontinued operations for six months ended December 31, 2021 and December 30, 2020 was $ 1,100 and $( 335,000 ), respectively.

There was no cash provided by or used in investing or financing activities for both periods.

Cash provided by (used in) operating activities from discontinued operations for nine months ended March 31, 2022 and March 31, 2021 was $ 25,400 and $( 502,900 ), respectively.

Cash provided by investing activities from discontinued operations for the nine months ended March 31, 2022 was none and $ 440,000 for the nine months ended March 31, 2021.

There was no cash provided by or used in financing activities for either period.

Acquisition of Aquila Biolabs GmbH

Effective April 29, 2021, pursuant to a Stock Purchase Agreement (“SPA”) the Company acquired all the outstanding capital stock of Aquila, a German start-up company engaged from its facility in Baesweiler, Germany in the design, production, and sale of bioprocessing systems and products which focus on the control and analysis of bioprocesses in bioreactors and incubation shakers for an aggregate purchase price of $ 7,880,100 in cash upon closing.

Effective April 29, 2021, the Company acquired all the outstanding capital stock of Aquila, a German start-up company engaged from its facility in Baesweiler, Germany in the design, production, and sale of bioprocessing systems and products which focus on the control and analysis of bioprocesses in bioreactors and incubation shakers for an aggregate purchase price of $ 7,880,100 in cash upon closing.

Aquila’s principal customers are universities, pharmaceutical companies, and industrial companies.

1 unchanged sentence

The acquisition was accounted for in accordance with ASC 805, Business Combinations (“ASC 805”) in which the Company is treated as the accounting acquirer.

Accordingly, the assets acquired and liabilities assumed have been measured at estimated fair value.

Accordingly, the assets acquired and liabilities assumed were measured at estimated fair value.

For purposes of measuring the estimated fair value, where applicable, of the assets acquired and liabilities assumed, as reflected in the unaudited pro forma condensed consolidated financial information, the guidance in ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) has been applied, which establishes a framework for measuring fair value.

In accordance with ASC 820, fair value is an exit price and is defined as “the price 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.” Under ASC 805, acquisition-related transaction costs and acquisition-related restructuring charges are not included as components of consideration transferred but are accounted for as expenses in the period in which the costs are incurred.

Acquisition of Aquila Biolabs GmbH (continued)

Management of the Company allocated the purchase price based on its estimated valuation of the assets acquired and liabilities assumed as follows:

23 unchanged sentences

The full amount of this loan was forgiven in December 2021, and is reflected as other income (extinguishment of debt) in the accompanying statements of operations and comprehensive loss.

Authorized Shares

On February 25, 2022, at the Company’s Annual Stockholders Meeting, the stockholders of the Company approved an amendment to its Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock by 5,000,000 shares from 15,000,000 to 20,000,000 shares.

In addition, the stockholders also approved the adoption of the Company’s 2022 Equity Incentive Plan (“Plan”) providing for the issuance of up to 1,750,000 shares plus outstanding options granted under the Company’s 2012 Stock Option Plan that expire or are forfeited.

The Plan provides various stock awards including incentive and nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other stock awards, which can be awarded to employees and directors of the Company and its subsidiaries.

Issuance and Sale of Common Stock

On March 2, 2022, the Company entered into a Securities Purchase Agreement with certain private investors pursuant to which the Company issued and sold an aggregate of 545,456 shares of common stock and warrants to purchase up to an additional 274,727 shares of common stock, at an offering price of $ 5.50 per share, for a gross consideration of $ 3,000,000 .

The issuance cost related to this private placement stock issuance amounted to approximately $ 272,800 .

Under the terms of Securities Purchase Agreement between the Company and the investors, the Company must use commercially reasonable efforts to file a registration statement with the SEC within 90 days of the closing date to register for resale the shares of common stock sold in the private offering, including the shares of common stock issuable upon the exercise of the warrants.

As of March 31, 2022, the Company had not yet filed a registration statement with respect to the offering.

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-Q

Item 1. Financial Statements