What changed in this filing

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Item 1. Financial Statements

2023-11-14 compared with 2023-08-14 · 108 added, 82 removed, 398 unchanged (32% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current assets:

1 unchanged sentence

Investment securities

Trade accounts receivable, less allowance for doubtful accounts of $ 33,600 at June 30, 2023 and December 31, 2022

Trade accounts receivable, less allowance for doubtful accounts of $ 33,600 at September 30, 2023 and December 31, 2022

Income tax receivable

10 unchanged sentences

Lease liabilities, current portion

Bank overdraft

Total current liabilities

4 unchanged sentences

20,000,000 shares authorized;

7,003,599 ,shares issued and outstanding at June 30, 2023 and 7,023,401 shares issued and 7,003,599 shares outstanding at December 31, 2022

7,003,599 shares issued and outstanding at September 30, 2023 and 7,023,401 shares issued and 7,003,599 shares outstanding at December 31, 2022

Additional paid-in capital

Accumulated comprehensive income (loss)

Accumulated comprehensive loss

Accumulated deficit

1 unchanged sentence

( 18,398,600 )

Less common stock held in treasury at cost, 0 shares at June 30, 2023 and 19,802 shares at December 31, 2022

Less common stock held in treasury at cost, 0 shares at September 30, 2023 and 19,802 shares at December 31, 2022

Total shareholders’ equity

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended, June 30

Six Months Ended, June 30

Three Months Ended, September 30

Nine Months Ended, September 30

2022 (as Restated)

Cost of revenues

31 unchanged sentences

( 13,272,000 )

Comprehensive gain (loss):

Unrealized holding (loss) gain on investment securities, net of tax

Comprehensive loss:

Unrealized holding gain (loss) on investment securities, net of tax

Foreign currency translation adjustment

Comprehensive (loss) gain

Comprehensive loss

Total comprehensive loss

10 unchanged sentences

AND SUBSIDIARIES

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

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Accumulated Other

8 unchanged sentences

Foreign currency translation adjustment

Unrealized holding gain on investment securities, net of tax

Unrealized gain on investment securities, net of tax

Stock-based compensation

4 unchanged sentences

Foreign currency translation adjustment

Unrealized holding loss on investment securities, net of tax

Unrealized loss on investment securities, net of tax

Retirement of treasury stock

2 unchanged sentences

( 23,061,100 )

( 2,201,100 )

Foreign currency translation adjustment

Stock-based compensation

Balance September 30, 2023

( 25,262,200 )

Accumulated Other

9 unchanged sentences

Foreign currency translation adjustment

Unrealized holding loss on investment securities, net of tax

Unrealized loss on investment securities, net of tax

Stock-based compensation

1 unchanged sentence

$ ( 104,800 )

Net loss (as restated)

$ ( 4,291,400 )

( 10,027,800 )

Foreign currency translation adjustment

Unrealized holding loss on investment securities, net of tax

Unrealized loss on investment securities, net of tax

Stock-based compensation

1 unchanged sentence

$ ( 105,600 )

See notes to unaudited condensed consolidated financial statements

$ ( 14,319,200 )

( 1,709,200 )

Foreign currency translation adjustment

Unrealized gain on investment securities, net of tax

Stock-based compensation

Balance, September 30, 2022 (as restated)

$ ( 219,800 )

$ ( 16,028,400 )

See notes to consolidated financial statements

SCIENTIFIC INDUSTRIES, INC.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Six Months Ended June 30,

For the Nine Months Ended

September 30,

Operating activities:

18 unchanged sentences

Contract liabilities

Other long term liabilities

Lease liabilities

Total adjustments

( 1,533,300 )

Net cash used in operating activities

7 unchanged sentences

Purchase of other intangible assets

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Financing activities:

29 unchanged sentences

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-KT for the six months transition period of July 1, 2022 through December 31, 2022.

The results for the three and six months ended June 30, 2023 are not necessarily an indication of the results for the full fiscal year ending December 31, 2023.

The results for the three and nine months ended September 30, 2023 are not necessarily an indication of the results for the full fiscal year ending December 31, 2023.

Significant Accounting Policies

20 unchanged sentences

Upon further analysis of the errors, the Company determined that it should have allocated a full valuation allowance to the consolidated net deferred tax asset and applied a goodwill impairment charge to the Bioprocessing Systems reporting unit in the fiscal year ended June 30, 2022, as restated in the Company’s Transition Report for the six-month transition period from July 1, 2022 to December 31, 2022, filed on Form 10-KT with the SEC.

The Company has restated certain information within this Quarterly Report on Form 10-Q, relevant to the unaudited interim financial information as of June 30, 2022.

The Company has restated certain information within this Quarterly Report on Form 10-Q, relevant to the unaudited interim financial information as of September 30, 2022.

Derivative Instruments

1 unchanged sentence

On January 9, 2023, the Company entered into a 90-day foreign currency forward contract with a settled date on April 11, 2023, for a notional amount of $ 1,082,500 .

On April 4, 2023, the Company entered into a 90 day foreign currency forward contract for a notional amount of $ 1,097,300 .

On April 4, 2023, the Company entered into a 90 day foreign currency forward contract with a settled date on July 11, 2023, for a notional amount of $ 1,097,300 .

The foreign currency forward contracts are used to manage the foreign exchange risk associated with a portion of the Company’s Euro foreign currency denominated assets and liabilities and other Euro foreign currency transactions.

12 unchanged sentences

The allowance for credit losses required under ASC 326 is a valuation account that is deducted from the accounts receivables’ amortized cost basis on the Company’s condensed consolidated balance sheets.

Our accounts receivables are generated from the sales revenue derived from the Company’s Benchtop Laboratory Equipment and Bioprocessing segments.

Our accounts receivables are generated from the sales revenue derived from the Company’s Benchtop Laboratory Equipment and Bioprocessing Systems segments.

The Company elected to estimate expected losses using an analytical model based on methods that utilize the accounts receivable aging schedule.

1 unchanged sentence

The Company evaluates the estimated allowance on an aggregate basis as each individual account receivable shares similar risk characteristics.

Upon adoption of ASC 326 using the modified retrospective transition method and as of June 30, 2023, the Company determined that the allowance for credit losses, if any, is immaterial as of adoption date and the Company will continue to evaluate the accounts receivable portfolio on an on-going basis.

Upon adoption of ASC 326 using the modified retrospective transition method and as of September 30, 2023, the Company determined that the allowance for credit losses, if any, is immaterial as of adoption date and the Company will continue to evaluate the accounts receivable portfolio on an on-going basis.

Allowance for Credit Losses – Available-for-Sale Debt Securities

3 unchanged sentences

If either criterion is met, the security’s amortized cost basis is written down to fair value.

For AFS debt securities where neither of the criteria are met, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors.

For AFS debt securities where neither of the criteria is met, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors.

In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the credit rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.

5 unchanged sentences

Losses are charged against the allowance when management believes the collectability of an AFS security is considered below the amortized cost basis of the security.

As of June 30, 2023, the Company determined that the unrealized loss positions in AFS securities were not the result of credit losses, and therefore, an allowance for credit losses was not recorded.

As of September 30, 2023, the Company determined that the unrealized loss positions in AFS securities were not the result of credit losses, and therefore, an allowance for credit losses was not recorded.

Fair Value of Financial Instruments

14 unchanged sentences

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

The following tables set forth by level within the fair value hierarchy the Company’s financial assets that were accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 according to the valuation techniques the Company used to determine their fair values:

Fair Value Measurements as of June 30, 2023

The following tables set forth by level within the fair value hierarchy the Company’s financial assets that were accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 according to the valuation techniques the Company used to determine their fair values:

Fair Value Measurements as of September 30, 2023

Cash and cash equivalents

5 unchanged sentences

Any decline in fair value related to a credit loss is recognized in the condensed consolidated statements of operations, with the amount of the loss limited to the difference between fair value and amortized cost.

As of June 30, 2023 and December 31, 2022, the allowance for credit losses related to available-for sale debt securities was zero.

Investments in marketable securities by security type as of June 30, 2023 and December 31, 2022 consisted of the following:

As of June 30, 2023:

Unrealized Holding Gain (Loss)

As of September 30, 2023 and December 31, 2022, the allowance for credit losses related to available-for sale debt securities was zero.

Investments in marketable securities by security type as of September 30, 2023 and December 31, 2022 consisted of the following:

As of September 30, 2023:

Unrealized Holding

Equity securities

Derivative asset - Foreign currency forward

As of December 31, 2022:

Unrealized Holding Gain (Loss)

Unrealized Holding

Equity securities

2 unchanged sentences

Foreign currency forward contract

On January 9, 2023, the Company entered into a 90 day foreign currency forward contract which settled on April 11, 2023, for a notional amount of $ 1,082,500 .

On April 4, 2023, the Company entered into a 90 day foreign currency forward contract for a notional amount of $ 1,090,300 .

On January 9, 2023, the Company entered into a 90 day foreign currency forward contract for a notional amount of $ 1,082,500 , which settled on April 11, 2023.

On April 4, 2023, the Company entered into a 90 day foreign currency forward contract for a notional amount of $ 1,097,300 which settled on July 11, 2023.

The foreign currency forward contract are used to manage the foreign exchange risk associated with a portion of its Euro foreign currency denominated assets and liabilities and other Euro foreign currency transactions.

2 unchanged sentences

The immediate recognition of hedging gains and losses can cause net income/loss to be volatile from quarter to quarter due to the timing of the change in value of the derivative instruments.

September 30,

Raw materials

5 unchanged sentences

Goodwill and Finite Lived Intangible Assets

Goodwill amounted to $ 115,300 as of June 30, 2023 and December 31, 2022, all of which is expected to be deductible for tax purposes.

Goodwill amounted to $ 115,300 as of September 30, 2023 and December 31, 2022, all of which is expected to be deductible for tax purposes.

Finite lived intangible assets consist of the following:

As of June 30, 2023:

As of September 30, 2023:

Technology, trademarks

7 unchanged sentences

Non-compete agreements

Total amortization expense was $ 127,800 and $ 134,400 for the three months ended June 30, 2023 and 2022, respectively.

Total amortization expense was $ 257,800 and $ 269,000 for the six months ended June 30, 2023 and 2022, respectively.

Estimated future fiscal year amortization expense of intangible assets as of June 30, 2023 is as follows:

As of June 30, 2023

Total amortization expense was $ 127,800 and $ 134,200 for the three months ended September 30, 2023 and 2022, respectively.

Total amortization expense was $ 385,600 and $ 403,200 for the nine months ended September 30, 2023 and 2022, respectively.

Estimated future fiscal year amortization expense of intangible assets as of September 30, 2023 is as follows:

As of September 30, 2023

Remainder of fiscal year ending 2023

5 unchanged sentences

If the Company determines that an unfavorable outcome is probable and can be reasonably assessed, it establishes the necessary accruals.

As of June 30, 2023 and December 31, 2022, the Company is not aware of any contingent legal liabilities that should be reflected in the consolidated financial statements.

The Company’s approximate future minimum rental payments under all operating leases as of June 30, 2023 were as follows:

As of June 30, 2023:

As of September 30, 2023 and December 31, 2022, the Company is not aware of any contingent legal liabilities that should be reflected in the consolidated financial statements.

The Company’s approximate future minimum rental payments under all operating leases as of September 30, 2023 were as follows:

As of September 30, 2023:

Remainder of fiscal year ending 2023

2 unchanged sentences

Total Present Value of Operating Lease Liabilities

Employment Agreement

The Company entered into an employment agreement, effective as of July 1, 2023, with Reginald Averilla, its Chief Financial Officer.

The agreement provides continued employment through June 30, 2025 for a base annual salary of $ 195,000 , a 10 % bonus at the discretion of the Board of Directors of the Company and a 12-month post termination noncompete covenant.

Stockholders’ Equity

Stock-based compensation expense

On July 21, 2023, the Company’s Bioprocessing System segment entered into a separation agreement with their VP of Sales (“former employee”).

In connection with the separation agreement, the Company extended the exercisability of the former employee’s vested stock options up through the original expiration date of July, 13, 2030 , which the Company recorded a additional $ 684,900 of noncash stock base compensation expense related to the modification of the exercisability of the vested stock options

Loss Per Common Share

4 unchanged sentences

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

For the three months

ended June 30,

For the six months

ended June 30,

For the three months ended September 30,

For the nine months ended September 30,

2022 (as restated)

Weighted average number of common shares outstanding

5 unchanged sentences

Consolidated operations

Approximately 18,077 and 0 shares of the Company’s common stock issuable upon the exercise of stock options and warrants, and 26,740 and 0 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 three months ended June 30, 2023 and 2022, respectively.

Approximately 20,336 and 0 shares of the Company’s common stock issuable upon the exercise of stock options and warrants, and 27,682 and 0 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 six months ended June 30, 2023 and 2022, respectively.

Approximately 20,965 and 0 shares of the Company’s common stock issuable upon the exercise of stock options and warrants, and 36,423 and 0 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 three months ended September 30, 2023 and 2022, respectively.

Approximately 24,417 and 0 shares of the Company’s common stock issuable upon the exercise of stock options and warrants, and 32,508 and 0 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 nine months ended September 30, 2023 and 2022, respectively.

Related Parties

Consulting Agreements

During the three months ended June 30, 2023 and 2022, respectively, the Company paid $ 0 and $ 61,500 , respectively, to Mr.

Reinhard Vogt, a former Director of the Company, and his affiliate which provided consulting services.

During the six months ended June 30, 2023 and 2022, respectively, the Company paid $ 0 and $ 120,700 , respectively, to Mr.

During the nine months ended September 30, 2023 and 2022, respectively, the Company paid $ 0 and $ 120,700 , respectively, to Mr.

Reinhard Vogt, a former Director of the Company, and his affiliate which provided consulting services.

1 unchanged sentence

Reinhard Vogt and his affiliate was terminated on April 1, 2022.

There were no payments to Mr.

Reinhard Vogt during the three months ended September 30, 2023 and 2022, respectively.

Segment Information and Concentration

4 unchanged sentences

Segment information is reported as follows.

Three Months Ended June 30, 2023:

Benchtop Laboratory Equipment

Bioprocessing Systems

Three Months Ended September 30, 2023:

Benchtop Laboratory

Bioprocessing

Corporate And Other

5 unchanged sentences

Depreciation and Amortization

Three Months Ended June 30, 2022:

Benchtop Laboratory Equipment

Bioprocessing Systems

Three Months Ended September 30, 2022 (as Restated):

Benchtop Laboratory

Bioprocessing

Corporate And Other

5 unchanged sentences

Depreciation and Amortization

Six Months Ended June 30, 2023:

Benchtop Laboratory Equipment

Bioprocessing Systems

Nine Months Ended September 30, 2023:

Benchtop Laboratory

Bioprocessing

Corporate And Other

6 unchanged sentences

Depreciation and Amortization

Six Months Ended June 30, 2022:

Benchtop Laboratory Equipment

Bioprocessing Systems

Nine Months Ended September 30, 2022:

Benchtop Laboratory

Bioprocessing

Corporate And Other

3 unchanged sentences

( 1,346,400 )

( 9,869,100 )

Long-Lived Asset Expenditures

Depreciation and Amortization

For the three months ended June 30, 2023 one customer accounted for approximately 10% or more of the Company’s total revenue.

For the three months ended June 30, 2022 no individual customer accounted for 10% or more of the Company’s total revenue.

For the six months ended June 30, 2023 and 2022, no individual customer accounted for approximately 10% or more of the Company’s total revenue.

A reconciliation of the Company’s consolidated segment income (loss) from operations to consolidated loss from operations before income taxes and net loss for the three and six months ended June 30, 2023 and 2022, respectively are as follows:

Three months ended June 30, 2023

Benchtop Laboratory Equipment

Bioprocessing Systems

For the three months ended September 30, 2023 and 2022, respectively, one customer accounted for approximately 10% or more of the Company’s total revenue.

For the nine months ended September 30, 2023 one customer accounted for approximately 10% or more of the Company’s total revenue.

For the nine months ended September 30, 2022 no individual customer accounted for 10% or more of the Company’s total revenue.

A reconciliation of the Company’s consolidated segment income (loss) from operations to consolidated loss from operations before income taxes and net loss for the three and nine months ended September 30, 2023 and 2022, respectively are as follows:

Three months ended September 30, 2023

Benchtop Laboratory

Bioprocessing

Income (Loss) from Operations

9 unchanged sentences

$ ( 2,201,100 )

Three months ended June 30, 2022

Benchtop Laboratory Equipment

Bioprocessing Systems

Three months ended September 30, 2022

Benchtop Laboratory

Bioprocessing

Income (Loss) from Operations

9 unchanged sentences

$ ( 1,709,200 )

Six months ended June 30, 2023

Benchtop Laboratory Equipment

Bioprocessing Systems

Nine months ended September 30, 2023

Benchtop Laboratory

Bioprocessing

Income (Loss) from Operations

9 unchanged sentences

$ ( 6,758,100 )

Six months ended June 30, 2022

Benchtop Laboratory Equipment

Bioprocessing Systems

Nine months ended September 30, 2022

Benchtop Laboratory

Bioprocessing

Income (Loss) from Operations

10 unchanged sentences

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