SCIENTIFIC INDUSTRIES INC 10-K/A

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures. 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-15I and 15d-15(e) under the Securities Exchange Act of 1934), the Chief Executive Officer and Chief Financial Officer of the Company have concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2023. Management’s Annual Report on Internal Control Over Financial Reporting. Management is responsible for establishing and maintaining adequate internal controls over the Company’s financial reporting, as such term is defined in Securities Exchange Act Rule 13a-15(f) and 15d-15(f). The Company’s internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. 23 Table of Contents The Chief Executive Officer and the Chief Financial Officer of the Company conducted an evaluation of the effectiveness of the Company’s internal controls over financial reporting as of December 31, 2023 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework. 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 report. Inherent Limitations on Effectiveness of Controls. The Company’s management, including its Chief Executive Officer and its Chief Financial Officer, believes that its disclosure on controls and procedures and internal controls over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, management does not expect that its disclosure on controls and procedures or its internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected. Item 9B. Other Information. Not applicable. Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections. None. 24 Table of Contents PART III Item 10—Directors, Executive Officers and Corporate Governance The information required under this item is incorporated by reference to the Company's Proxy Statement for the 2023 Annual Meeting of Stockholders (the "2023 Proxy Statement") which is to be filed with the SEC and is hereby incorporated by reference. Item 11—Executive Compensation The information required under this item is incorporated by reference to the 2023 Proxy Statement. Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required under this item is incorporated by reference to the 2023 Proxy Statement. Item 13—Certain Relationships and Related Party Transactions, and Director Independence The information required under this item is incorporated by reference to the 2023 Proxy Statement. Item 14—Principal Accountant Fees and Services The information required under this item is incorporated by reference to the 2023 Proxy Statement. 25 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules. Financial Statements . The required financial statements of the Company are attached hereto on pages F1-F36. Exhibits . The following Exhibits are filed as part of this report on Form 10-K: Exhibit Number Exhibit 3 Certificate of Incorporation and By-Laws: 3(a) 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.) 3(b) 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 thereto.) 3(c) 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). 3(d) Second Amended and Restated By-Laws of Scientific Industries, Inc. (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on August 10, 2020 and incorporated by reference thereto). 3(e) Certificate of Amendment of Certificate of Incorporation of Scientific Industries, Inc. (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 1, 2021 and incorporated by reference thereto). 3(f) Certificate of Amendment of Certificate of Incorporation of Scientific Industries, Inc. (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 21, 2021 and incorporated by reference thereto). 3(g) Certificate of Amendment of Certificate of Incorporation of Scientific Industries, Inc. (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 25, 2022 and incorporated by reference thereto). 3(h) By-Laws of the Company, as restated and amended (filed as Exhibit 3(i) to the Company’s Current Report on Form 8-K filed on November 9, 2022 and incorporated by reference thereto). 3(g) Certificate of Amendment of Certificate of Incorporation of Scientific Industries, Inc. (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 11, 2023 and incorporated by reference thereto). 4 Instruments defining the rights of security holders: 26 Table of Contents 4(a) 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). 4(b) 2012 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). 4(c) 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 thereto). 4(d) 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 thereto). 4(e) Amendment No. 2 to Scientific Industries, Inc. 2012 Stock Option Plan (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 1, 2021 and incorporated by reference thereto). 4(f) 2022 Equity Incentive Plan to the Company’s Current Report on Form 8-K filed on February 25, 2022 and incorporated by reference thereto). 4(g) 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 December 13, 2023, and incorporated by reference thereto). 4(h) Amendment No.1 to 2022 Equity Incentive Plan filed as Exhibit 4 within this Form 10-K 10 Material Contracts: 10(a) 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). 10(a)-1 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 thereto). 10(a)-2 Second amendment to lease between Registrant and REP A10 LLC dated November 5, 2007 (filed as Exhibit 10A-1 to the Company’s Current Report on Form 8-K filed on November 8, 2007, and incorporated by reference thereto). 10(a)-3 Lease agreement dated August 8, 2014 by and between the Company and 80 Orville Drive Associates LLC. (filed as Exhibit 10 to the Company's Form 10-K filed on September 26, 2014, and incorporated by reference thereto). 10(a)-3(i) First amendment to lease dated September 20, 2021 by and between the Company and REP 2035 LLC. (filed as Exhibit 10(a)-3(i) to the Company's Form 10-K filed on October 14, 2021, and incorporated by reference thereto). 10(b) 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). 10(b)-1 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). 27 Table of Contents 10(b)-2 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). 10(b)-3 Employment 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). 10(b)-4 Employment 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). 10(b)-5 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 thereto). 10(b)-6 Amended Employment Agreement dated May 20, 2013 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). 10(b)-7 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 thereto) 10(b)-8 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 thereto). 10(b)-9 Employment 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). 10(b)-10 Amendment No.1 to Employment Agreement dated June 23, 2022, by and between the Company and Ms. Santos (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on June 27, 2022, and incorporated by reference thereto). 10(c) Employment Agreement dated January 1, 2003, by and between the Company and Mr. Robert P. 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). 10(c)-1 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, 2004, and incorporated by reference thereto). 10(c)-2 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, 2006, and incorporated by reference thereto). 28 Table of Contents 10(c)-3 Employment 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). 10(c)-4 Employment 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). 10(c)-5 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 thereto). 10(c)-6 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). 10(c)-7 Agreement 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). 10(c)-8 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, 2016, and incorporated by reference thereto). 10(c)-9 Employment 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). 10(c)-10 Amendment No.1 to Employment Agreement dated June 23, 2022, by and between the Company and Mr. Nichols (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on June 27, 2022, and incorporated by reference thereto). 10(d) 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). 10(d)-1 Amended and Restated Consulting Agreement dated March 22, 2005, 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 23, 2005, and incorporated by reference thereto). 10(d)-2 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). 10(d)-3 Third Amended and Restated Consulting Agreement dated September 23, 2009, by and between the Company and Mr. Cremonese and Laboratory Innovation Company, Ltd. (filed as Exhibit 10 to the Company’s Annual Report on Form 10-K field on September 24, 2009, and incorporated by reference thereto). 10(d)-4 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). 29 Table of Contents 10(d)-5 Fifth 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 thereto). 10(d)-6 Agreement extension dated November 29, 2012 to Amended and Restated Consulting Agreement (filed as Exhibit 10 to the Company’s Current Report on Form 8-K filed on December 4, 2012, and incorporated by reference thereto). 10(d)-7 Agreement extension dated December 12, 2013 to Amended and Restated Consulting Agreement (filed as Exhibit 10 to the Company’s Current Report on Form 8-K filed on December 12, 2013, and incorporated by reference thereto). 10(d)-8 Agreement 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). 10(d)-9 Agreement 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). 10(d)-10 Agreement extension dated February 16, 2018 to Amended and Restated Consulting Agreement by and between the Company and Mr. Cremonese and affiliates (filed as Exhibit 10-A1 to the Company’s Current Report on Form 8-K filed on March 9, 2018, and incorporated with reference thereto). 10(d)-11 Agreement extension dated January 23, 2019 to Amended and Restated Consulting Agreement by and between the Company and Mr. Cremonese and affiliates (filed as Exhibit 10-1 to the Company’s Current Report on Form 8-K filed on January 25, 2019, and incorporated with reference thereto). 10(d)-12 Monthly Retainer Agreement between Scientific Bioprocessing, Inc. and Mr. 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). 10(d)-13 Extension of Monthly Retainer Agreement between Scientific Bioprocessing, Inc. and Mr. Cremonese and affiliates (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 8, 2021, and incorporated with reference thereto). 10(e) Sublicense 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). 10(f) Stock 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). 10(g) Escrow 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 thereto). 10(h) Registration Rights 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(b) to the Company’s Current Report on Form 8-K filed on December 5, 2006, and incorporated by reference thereto). 30 Table of Contents 10(i) Employment 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 thereto). 10(i)-1 Employment 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 thereto). 10(i)-2 Employment Agreement, dated as of October 1, 2010, between Altamira Instruments, Inc., and Brookman P. March (filed as Exhibit 10A-1 to the Company’s Current Report on Form 8-K filed on October 13, 2010, and incorporated by reference thereto). 10(i)-3 Employment Agreement, dated as of May 18, 2012 between Altamira Instruments, Inc. 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 thereto). 10(i)-4 Agreement Extension, dated as of May 21, 2014 between Altamira Instruments, Inc. and Brookman P. March (filed as Exhibit 10 to the Company’s Current Report on Form 8-K filed on May 21, 2014, and incorporated by reference thereto). 10(i)-5 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). 10(i)-6 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). 10(i)-7 Employment 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 thereto). 10(i)-8 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). 10(j) Indemnity Agreement, dated as of April 13, 2007 by and among the Company and Grace Morin, Heather H. Haught and William D. 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 thereto). 10(k) 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). 10(k)-1 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). 10(l) Line of Credit Agreements dated October 30, 2008, by and among the Company and Capital One, N.A. (filed as Exhibits 10-A1(a) through (f) to the Company’s Current Report on Form 8-K filed on October 30, 2008, and incorporated by reference thereto. 31 Table of Contents 10(l)-1 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, 2010, and incorporated by reference thereto). 10(I)-2 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). 10(m)-1 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 thereto). 10(m)-2 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 thereto). 10(m)-3 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 thereto). 10(m)-4 Agreement 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 thereto). 10(n) 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 thereto). 10(n)-1 Promissory 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 Current Report on Form 8-K filed on June 7, 2013, and incorporated by reference thereto). 10(o) 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). 10(p) 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). 10(q) Research and Development Agreement dated as of November 14, 2011, by and between Scientific Bioprocessing, Inc. and Biodox R&D Corporation (filed as Exhibit 10(B) to the Company’s Current Report on Form 8-K filed on November 17, 2011, and incorporated by reference thereto). 10(q)-1 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) 10(r) 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). 10(s) 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 filed on November 17, 2011, and incorporated by reference thereto). 32 Table of Contents 10(t) 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). 10(u) 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 thereto). 10(v) 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). 10(v)-1 Escrow 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). 10(v)-2 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 thereto). 10(v)-3 Registration Rights Agreement, dated as of February 26, 2014, by and among the Company, and Fulcrum, Inc. (filed as Exhibit 10(d) to the Company’s Current Report on Form 8-K filed on February 28, 2014, and incorporated by reference thereto). 10(v)-4 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). 10(w) Line 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 thereto). 10(w)-1 Commercial Security Agreement dated July 5, 2016 by and among the Company, and First National Bank of Pennsylvania. 10(y) 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 filed on June 30, 2015, and incorporated by reference thereto). 10(z) 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 filed on June 30, 2015, and incorporated by reference thereto). 10(aa) Consulting Agreement dated March 1, 2019 between the Company and Mr. John A. Moore (filed as Exhibit 10A-1 to the Company’s Current Report on Form 8-K filed on March 6, 2019, and incorporated by reference thereto). 10(aa)-1 Amendment to Consulting Agreement dated November 7, 2019 between the Company and Mr. John A. 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). 33 Table of Contents 10(aa)-2 Employment Agreement dated July 1, 2020 between Scientific Bioprocessing, Inc. and John A. 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). 10(bb) Consulting Agreement dated July 20, 2020 between the Company and Mr. Reinhard 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 thereto.) 10(bb)-1 Amendment to Consulting Agreement between the Company and Societät Reinhard and Noah Vogt AG GmbH and Reinhard Vogt (filed as Exhibit 10A-1 to the Company’s Current Report on Form 8-K filed on March 8, 2021, and incorporated by reference thereto. 10(cc) Employment 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). 10(dd) Securities 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(dd)-1 Form of Amendment of Securities Purchase Agreement, by and between the Company and Investors (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 13, 2021, and incorporated by reference thereto). 10(ee) Loan 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). 10(ff) Asset Purchase Agreement dated November 30, 2020 between Altamira Instruments, Inc. and Beijing JWGB Sci. & Tech. Co., Ltd (filed as Exhibit 2 to the Company’s Current Report on Form 8-K filed on December 1, 2020, and incorporated by reference thereto). 10(gg) Asset Purchase Agreement dated April 28, 2021 between the Company and the sellers of aquila biolabs GmbH (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 30, 2021, and incorporate by reference thereto). 10(gg)-1 Directors’ Service Contract dated April 29, 2021 between the Company and the sellers of aquila biolabs GmbH (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 30, 2021, and incorporate by reference thereto). 10(gg)-2 Directors’ Service Contract dated May 24, 2022 between the Company and a seller of aquila biolabs GmbH (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 27, 2022, and incorporate by reference thereto). 10(hh) Securities Purchase Agreement dated April 29, 2021 between the Company and Investors (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 30, 2021, and incorporated by reference thereto). 10(hh)-1 Registration Rights Agreement dated April 29, 2021 between the Company and Investors (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on April 30, 2021, and incorporated by reference thereto). 34 Table of Contents 10(hh)-2 Amendment No. 1 to Registration Rights Agreement dated April 29, 2021 between the Company and Investors (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on June 21, 2021, and incorporated by reference thereto). 10(ii) Securities Purchase Agreement dated June 18, 2021 between the Company and Investors (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 21, 2021, and incorporated by reference thereto). 10(jj) Securities Purchase Agreement dated March 2, 2022 between the Company and Investors (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 2, 2022, and incorporated by reference thereto). 10(kk) Securities Purchase Agreement dated March 2, 2022 between the Company and Investors (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 2, 2022, and incorporated by reference thereto). 10(ll) Employment Agreement dated June 30, 2023, by and between the Company and Mr. Averilla (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 07,2023, and incorporated by reference thereto). 10(mm) Securities Purchase Agreement dated December 13, 2023 between the Company and Investors (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 15, 2023, and incorporated by reference thereto). 35 Table of Contents SIGNATURES Pursuant to the requirements of Section13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: July 18, 2024 SCIENTIFIC INDUSTRIES, INC. (Registrant) /s/Helena R. Santos Helena R. Santos President, Chief Executive Officer, and Treasurer Date: July 18, 2024 SCIENTIFIC INDUSTRIES, INC. (Registrant) /s/Reginald Averilla Reginald Averilla Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Title Date Helena R. Santos President, Chief Executive Officer, and Treasurer July 18, 2024 Reginald Averilla Chief Financial Officer July 18, 2024 John A. Moore Chairman of the Board July 18, 2024 Christopher Cox Director July 18, 2024 Michael Blechman Director July 18, 2024 Jurgen Schumacher Director July 18, 2024 John Nicols Director July 18, 2024 36 Table of Contents SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES CONTENTS Page Report of Independent Registered Public Accounting Firm (PCAOB firm ID 339 ) F-2 Report of independent registered public accounting firm (PCAOB firm ID 324) F-3 Report of independent registered public accounting firm (PCAOB firm ID 103) F-4 Consolidated financial statements: Consolidated Balance Sheets as of December 31, 2023 and 2022, and June 30, 2022 F-6 Consolidated Statements of Operations and Comprehensive Loss for the Year Ended December 31, 2023, for the Six Months Ended December 31, 2022 and for the Year Ended June 30, 2022 F-7 Consolidated Statements of Changes in Stockholders’ Equity for the Year Ended December 31, 2023, for the Six Months Ended December 31, 2022 and for the Year Ended June 30, 2022 F-8 Consolidated Statements of Cash Flows for the Year Ended December 31, 2023, for the Six Months Ended December 31, 2022 and for the Year Ended June 30, 2022 F-9 Notes to financial statements F-10 – F-36 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Scientific Industries, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Scientific Industries, Inc. (the “Company”) as of December 31, 2023 and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows, for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, 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 These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a 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 the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit 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 audit, 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. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Going Concern Assessment We identified management’s assessment of the Company’s ability to continue as a going concern as a critical audit matter due to inherent complexities and uncertainties related to the Company’s projections of operations. Auditing management’s going concern assessment involved especially challenging auditor judgment and audit effort due to the nature and extent of effort required to address these matters, including cost projections and revenue growth. Our audit procedures related to the Company’s assessment of its ability to continue as a going concern included the following among others: · We evaluated the reasonableness of key assumptions used in the cash flow projections underlying management’s conclusion that there was not substantial doubt about the Company’s ability to continue as a going concern. · We assessed management’s cash flow projections in the context of other audit evidence obtained during the audit and historical performance to determine whether it was contradictory to the conclusion reached by management. · We assessed whether the Company’s determination that there was not substantial doubt about its ability to continue as a going concern was adequately disclosed in Note 1 to the financial statements. /s/ Mazars USA LLP We have served as the Company’s auditor since 2023. New York, NY March 29, 2024 F-2 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Scientific Industries Inc., and Subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Scientific Industries Inc., and its subsidiaries (the “Company”) as of December 31, 2022, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the six-month period July 1, 2022 to December 31, 2022, and the related notes (collectively referred to as the “Financial Statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the six-month period July 1, 2022 to December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. The financial statements of the Company as of June 30, 2022, before restatement, were audited by other auditors whose report dated September 28, 2022, expressed an unqualified opinion on those statements. We also audited the adjustments described in Note 19 in the Form 10-KT filed on April 17, 2023, that were applied to the June 30, 2022, financial statements. In our opinion, such adjustments are appropriate and have been properly applied. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a 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 the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit 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 audit, 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 entity’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Macias Gini & O’Connell LLP We have served as the Company’s auditor since 1991 (such date takes into account the acquisition of certain assets including the majority of the Partners of Nussbaum Berg Klein & Wolpow, CPAs LLP by Macias Gini & O'Connell LLP during 2022). Melville, New York April 17, 2023 PCAOB ID: 324 F-3 Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders’ Scientific Industries, Inc. Bohemia, New York Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Scientific Industries, Inc. and its subsidiaries (the “Company”) as of June 30, 2022 and 2021, the related consolidated statements of operations and comprehensive 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, except for the effects of the adjustments, if any, as might have been determined to be necessary had we been engaged to audit the Company’s restatement adjustments, as described below, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and 2021, 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. Restatement of the June 30, 2022 Financial Statements We were not engaged to audit the restatement of the Company’s change in it’s deferred tax asset valuation or the Company’s impairment of goodwill and intangible assets for the year ended June 30, 2022, and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by Macias Gini & O’Connell LLP. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a 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 U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. Except as discussed above, we conducted our audits in accordance with the auditing 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. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the audit of the June 30, 2022 consolidated financial statements that were communicated or required to be communicated to those charged with governance and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F-4 Table of Contents Impairment Assessment of Goodwill and Long-Lived Intangible Assets As described in the financial statements, the Company completed its acquisition of Aquila biolabs GmbH (“Aquila”) during fiscal 2021 on April 29, 2021. The Company’s goodwill and intangible assets associated with this acquisition amounted to $4,138,100 and $1,947,500, respectively, as of June 30, 2022. Goodwill and long-lived intangible assets are tested for impairment at least annually in accordance with the provisions of ASC No. 350, “Intangibles Goodwill and Other” (“ASC No. 350”). We identified the impairment assessment of the Company’s goodwill and long-lived assets acquired in the acquisition as a critical audit matter as of June 30, 2022. Auditing the Company’s impairment test was complex and highly judgmental because (i) there was significant judgment used by management to develop the fair value measurement, which led to a high degree of audit judgment and subjectivity in performing procedures relating to fair value measurement; (ii) there was significant effort in performing procedures to evaluate the reasonableness of the fair value measurement and significant assumptions and projections used by management, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. To test the potential impairment of the Company’s goodwill and long-lived intangible assets, our audit procedures included, among others, testing management’s application of the relevant accounting guidance, involving a specialist to assist us in the evaluation of the Company’s valuation methodology and testing of the significant assumptions used by the Company to develop forecasted results for the reporting unit, including projected revenue growth and operating margins. We also assessed the historical accuracy of management’s estimates, as well as requested the performance of a sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions. We compared the significant assumptions to current and past industry, market and economic trends. Additionally, we tested the completeness and accuracy of the underlying data supporting the significant assumptions and estimates and ensured that the assumptions were consistent with other evidence obtained in other areas of our audit. Nussbaum Berg Klein & Wolpow, CPAs LLP We served as the Company’s auditor from 1991 to November 2022. Melville, New York September 28, 2022 F-5 Table of Contents SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of December 31, 2023 As of December 31, 2022 As of June 30, 2022 ASSETS Current assets: Cash and cash equivalents $ 796,100 $ 1,927,100 $ 2,971,100 Investment securities 4,928,700 4,272,100 6,391,600 Trade accounts receivable, less allowance for doubtful accounts of $ 15,600 , $ 33,600 and $ 15,600 at December 31, 2023 and 2022 and June 30, 2022 1,157,100 1,312,900 1,501,400 Inventories 4,883,900 4,859,600 4,696,300 Income tax receivable 161,400 161,400 161,100 Prepaid expenses and other current assets 413,500 456,800 547,600 Assets of discontinued operations - - 200 Total current assets 12,340,700 12,989,900 16,269,300 Property and equipment, net 1,082,300 1,163,200 1,005,600 Goodwill 115,300 115,300 115,300 Other intangible assets, net 1,249,900 1,763,000 2,079,800 Inventories 609,000 606,000 - Operating lease right-of-use assets 1,273,900 1,373,600 1,475,500 Other assets 59,400 58,200 62,400 Total assets $ 16,730,500 $ 18,069,200 $ 21,007,900 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 711,700 $ 887,300 $ 1,105,900 Accrued expenses 777,900 821,800 796,000 Contract liabilities 23,600 134,400 29,000 Lease liabilities, current portion 324,100 276,900 299,300 Total current liabilities 1,837,300 2,120,400 2,230,200 Lease liabilities, less current portion 1,007,800 1,156,200 1,239,600 Total liabilities 2,845,100 3,276,600 3,469,800 Shareholders’ equity: Common stock, $ 0.05 par value; 30,000,000 , 20,000,000 and 20,000,000 shares authorized; 10,145,211 , 7,023,401 and 7,023,401 shares issued; 10,145,211 , 7,003,599 and 7,003,599 shares outstanding at December 31, 2023 and 2022 and June 30, 2022 507,300 351,200 351,200 Additional paid-in capital 40,844,600 32,900,800 31,664,100 Accumulated comprehensive income (loss) 18,600 ( 8,400 ) ( 105,600 ) Accumulated deficit ( 27,485,100 ) ( 18,398,600 ) ( 14,319,200 ) 13,885,400 14,845,000 17,590,500 Less common stock held in treasury at cost, 0 , 19,802 and 19,802 shares at December 31, 2023 and 2022 and June 30, 2022 - 52,400 52,400 Total shareholders’ equity 13,885,400 14,792,600 17,538,100 Total liabilities and shareholders’ equity $ 16,730,500 $ 18,069,200 $ 21,007,900 See notes to consolidated financial statements F-6 Table of Contents SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Year Ended December 31, Six Months Ended December 31, Year Ended June 30, 2023 2022 2022 Revenues $ 11,111,500 $ 5,237,800 $ 11,400,500 Cost of revenues 6,009,500 2,919,700 5,663,800 Gross profit 5,102,000 2,318,100 5,736,700 Operating expenses: General and administrative 5,417,900 2,658,800 5,816,600 Selling 5,377,800 2,349,000 4,310,800 Research and development 3,566,200 1,395,800 2,873,300 Impairment of goodwill and intangible asset - 51,500 4,280,100 Total operating expenses 14,361,900 6,455,100 17,280,800 Loss from operations ( 9,259,900 ) ( 4,137,000 ) ( 11,544,100 ) Other income (expense): Other income (expense), net 62,900 63,900 185,100 Interest income 107,200 - 77,300 Total other income (expense), net 170,100 63,900 262,400 Loss from continuing operations before income tax expense (benefit) ( 9,089,800 ) ( 4,073,100 ) ( 11,281,700 ) Income tax (benefit), current - - ( 99,200 ) Income tax expense - - 2,490,000 Total Income tax expense - - 2,390,800 Loss from continuing operations ( 9,089,800 ) ( 4,073,100 ) ( 13,672,500 ) Discontinued operations: Gain (loss) from discontinued operations, net of tax 3,300 ( 6,300 ) 4,400 Net loss ( 9,086,500 ) ( 4,079,400 ) ( 13,668,100 ) Comprehensive gain (loss): Unrealized holding gain (loss) on investment securities, net of tax 1,600 8,600 ( 10,200 ) Foreign currency translation gain (loss) 25,400 88,600 ( 86,200 ) Comprehensive gain (loss) 27,000 97,200 ( 96,400 ) Total comprehensive loss $ ( 9,059,500 ) $ ( 3,982,200 ) $ ( 13,764,500 ) Basic and Diluted loss per common share Continuing operations $ ( 1.27 ) $ ( 0.58 ) $ ( 2.06 ) Discontinued operations $ - $ - $ - Consolidated operations $ ( 1.27 ) $ ( 0.58 ) $ ( 2.06 ) See notes to consolidated financial statements F-7 Table of Contents SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY Additional Accumulated Other Total Common Stock Paid-in Comprehensive Accumulated Treasury Stock Stockholders’ Shares Amount Capital Income (Loss) Deficit Shares Amount Equity Balance June 30, 2021 6,477,945 324,000 26,613,500 ( 9,200 ) ( 651,100 ) 19,802 52,400 26,224,800 Net loss - - - - ( 13,668,100 ) - - ( 13,668,100 ) Issuance of Common Stock and Warrants, net of issuance costs (Note 12) 545,456 27,200 2,700,000 - - - - 2,727,200 Foreign currency translation adjustment - - - ( 86,200 ) - - - ( 86,200 ) Unrealized holding loss on investment securities, net of tax - - - ( 10,200 ) - - - ( 10,200 ) Stock-based compensation - - 2,350,600 - - - - 2,350,600 Balance June 30, 2022 7,023,401 $ 351,200 $ 31,664,100 $ ( 105,600 ) $ ( 14,319,200 ) 19,802 $ 52,400 $ 17,538,100 Net loss - - - - ( 4,079,400 ) - - ( 4,079,400 ) Foreign currency translation adjustment - - - 88,600 - - - 88,600 Unrealized holding gain on investment securities, net of tax - - - 8,600 - - - 8,600 Stock-based compensation - - 1,236,700 - - - - 1,236,700 Balance December 31, 2022 7,023,401 $ 351,200 $ 32,900,800 $ ( 8,400 ) $ ( 18,398,600 ) 19,802 $ 52,400 $ 14,792,600 Net loss - - - - ( 9,086,500 ) - - ( 9,086,500 ) Issuance of Common Stock and Warrants, net of issuance costs (Note 12) 3,141,612 157,100 3,481,300 - - - - 3,638,400 Fair value modification of warrants recorded as stock issuance costs - - 2,112,800 - - - - 2,112,800 Issuance of warrants - - 161,000 - - - - 161,000 Foreign currency translation adjustment - - - 25,400 - - - 25,400 Unrealized holding gain on investment securities, net of tax - - - 1,600 - - - 1,600 Retirement of treasury stock ( 19,802 ) ( 1,000 ) ( 51,400 ) - - ( 19,802 ) ( 52,400 ) - Stock-based compensation - - 2,240,100 - - - - 2,240,100 Balance December 31, 2023 10,145,211 $ 507,300 $ 40,844,600 $ 18,600 $ ( 27,485,100 ) 0 $ - $ 13,885,400 See notes to consolidated financial statements F-8 Table of Contents SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31, Six months ended December 31, Year ended June 30, 2023 2022 2022 Operating activities: Net loss $ ( 9,086,500 ) $ ( 4,079,400 ) $ ( 13,668,100 ) Adjustments to reconcile net loss to net cash used in operating activities: Provision for bad debt - 17,300 - Extinguishment of debt - - ( 433,800 ) Impairment of goodwill and intangible asset - 51,500 4,280,100 Depreciation and amortization 754,000 380,800 688,200 Stock-based compensation 2,240,100 1,236,700 2,350,600 Fair value on issuance of warrants 161,000 - - Loss/(Gain) on sale of investment securities 92,300 89,200 32,700 Unrealized holding (gain)/loss on investment securities ( 143,400 ) ( 18,900 ) 233,700 Change in fair value of contingent consideration - - ( 42,500 ) Deferred income taxes - - 2,490,000 Carrying value of right of use assets 105,200 103,800 ( 810,200 ) Changes in operating assets and liabilities: Trade accounts receivable 119,100 175,600 ( 206,700 ) Inventories ( 13,100 ) ( 733,600 ) ( 1,719,200 ) Prepaid and other current assets 47,400 89,400 ( 207,800 ) Income tax receivable - ( 300 ) 172,200 Other assets ( 1,200 ) 4,200 ( 8,100 ) Accounts payable ( 222,400 ) ( 191,500 ) 652,400 Accrued expenses and taxes 10,100 27,300 180,300 Contract liabilities ( 110,800 ) 106,500 29,000 Lease Liabilities ( 106,800 ) - 807,900 Other long term liabilities - ( 107,600 ) ( 10,900 ) Net cash used in operating activities ( 6,155,000 ) ( 2,849,000 ) ( 5,190,200 ) Investing activities: Redemption of investment securities 5,314,000 2,404,200 2,709,800 Purchase of investment securities ( 5,917,400 ) ( 346,200 ) ( 5,634,500 ) Capital expenditures ( 131,700 ) ( 253,000 ) ( 757,600 ) Purchase of other intangible assets - ( 1,500 ) ( 67,000 ) Net cash provided by (used) in investing activities ( 735,100 ) 1,803,500 ( 3,749,300 ) Financing activities: Proceeds from issuance of common stock 6,283,200 - 3,000,000 Issuance cost of common stock and warrants ( 532,000 ) - ( 272,800 ) Payments of contingent consideration - - ( 98,800 ) Bank overdraft - - ( 321,700 ) Net cash received in financing activities 5,751,200 - 2,306,700 Effect of changes in foreign currency exchange rates on cash and cash equivalents 7,900 1,500 ( 71,300 ) Net (decrease) increase in cash and cash equivalents ( 1,131,000 ) ( 1,044,000 ) ( 6,704,100 ) Cash and cash equivalents, beginning of period 1,927,100 2,971,100 9,675,200 Cash and cash equivalents, end of period $ 796,100 $ 1,927,100 $ 2,971,100 SUPPLEMENTAL DISCLOSURES: Cash paid during the period for: Income taxes $ - $ - $ - Interest - - - Noncash financing activities: Record right-of-use assets $ 166,400 $ 104,326 $ 1,010,900 Record lease liabilities $ 166,400 $ 104,642 $ 1,010,400 See notes to consolidated financial statements F-9 Table of Contents SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO SOLIDATED FINANCIAL STATEMENTS 1. Nature of the Business and Basis of Presentation Scientific Industries, Inc. and its subsidiaries (the “Company”) design, manufacture, and market a variety of benchtop laboratory equipment, weight and measurement, and bioprocessing products. The Company is headquartered in Bohemia, New York where it produces benchtop laboratory and pharmacy equipment. Additionally, the Company has two other locations in Pittsburgh, Pennsylvania and Baesweiller, Germany, where it designs and produces a variety of bioprocessing products, and an administrative facility in Orangeburg, New York related to sales and marketing. The products, which are sold to customers worldwide, include mixers, shakers, stirrers, refrigerated incubators, pharmacy balances and scales, force gauges, bioprocessing sensors and analytical tools. The Company also sublicensed certain patents and technology under a license agreement which expired in August 2021 and received royalty fees from the sublicenses. Change in Fiscal Year The Company’s Board of Directors approved the change in the Company’s fiscal year end to December 31 from June 30, effective November 9, 2022. In connection with this change, the Company previously filed a Transition Report on Form 10-KT to report the results of the six month transition period from July, 2022 to December 31, 2022. In this Annual Report, the periods presented are the year ended December 31, 2023, the six-month transition period from July 1, 2022 to December 31, 2022 (which the Company sometimes refer to “the six months ended December 31, 2022”) and the fiscal year ended June 30, 2022 (which the Company sometimes refer to “fiscal 2022”). 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), and Scientific Bioprocessing Holdings, Inc. (“SBHI”), a Delaware corporation and wholly-owned subsidiary, which holds 100 % of the outstanding stock of Scientific Bioprocessing, Inc. (“SBI”), a Delaware corporation, and aquila biolabs GmbH (“Aquila”), a German corporation, since its acquisition on April 29, 2021, (all collectively referred to as the “Company”). All material intercompany balances and transactions have been eliminated in consolidation. Management’s Plans The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) which contemplate continuation of the Company as a going concern. For the year ended December 31, 2023, the Company generated negative cash flows from operations of $ 6,155,000 and has an accumulated deficit of $ 27,485,100 as of December 31, 2023. In order to address these conditions, the Company has undertaken a number of strategic initiatives that management believes will provide sufficient funding to enable the Company to continue to operate as a going concern. During 2023, the Company incurred certain expenses related to a pursued public offering and uplisting to the Nasdaq Capital Market, which was subsequently withdrawn by the Company. These were one-time costs that are non-recurring. During the second half of the year ended December 31, 2023, the Company commenced to eliminate certain operating expenses in conjunction with its review of the strategic operational and product development plan for the Bioprocessing Systems Operations segment. The Company identified expenses which the Company does not anticipate replacing or to recurring in the Company’s operational plans for the foreseeable future, primarily in the form of reduced number of employees and related employment expenses. The Company is continuing to evaluate additional cost measures, that includes reductions in operation headcounts to continue to operate as a going concern. F-10 Table of Contents As disclosed in Note 12, during the fourth quarter of 2023, the Company raised $ 6,283,224 of equity financing . An additional $ 716,776 of equity financing was raised in January 2024 as disclosed in Note 17. As a result of the above actions, as of March 29, 2024, the Company believes that it will be able to meet its cash flow needs during the next 12 months from cash and investment securities on-hand, cash derived from its Benchtop Laboratory Equipment Operations, and availability of the Company’s line of credit. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Estimates are used for, but not limited to, the valuation allowance of net, deferred taxes. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers”. The Company accounts for a customer contract when both parties have approved the contract and are committed to perform their respective obligations, each party’s rights can be identified, payment terms can be identified, the contract has commercial substance, and it is probable that the Company will collect substantially all of the consideration to which it is entitled. Revenue is recognized when, or as, performance obligations are satisfied by transferring control of a promised product or service to a customer. The Company determines revenue recognition through the following steps: · 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 contract · Recognition of revenue when, or as, a performance obligation is satisfied The 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 Topic 606: 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 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. F-11 Table of Contents Nature of Products and Services The Company generates revenues from the following sources: (1) Benchtop Laboratory Equipment and (2) Bioprocessing Systems. Benchtop laboratory equipment sales comprise primarily of standard benchtop laboratory equipment from its stock to laboratory equipment distributors, or to end users primarily via e- commerce. The sales cycle from time of receipt of order to shipment is very short varying from a day to a few weeks. Customers either pay by credit card (online sales) or Net 30-90, depending on the customer. Revenue is recognized at the point in time when the item is shipped. Once the item is shipped under the FOB terms specified in the order, which is primarily “FOB Factory”, other than a standard warranty, there are no other obligations to the customer. Warranty usually comprises of one to two year parts and labor and is deemed immaterial. Bioprocessing Systems sales comprise primarily of bioprocessing products, principally products incorporating smart sensors and state of the art software analytics. Products offered for sale include the Cell Growth Quantifier (“CGQ”) for Biomass monitoring in shake flasks, the Liquid Injection System (“LIS”) for automated feeding in shake flasks, and a line of coaster systems and flow-through cells for pH and DO monitoring. Revenue is recognized at the point in time when the item is shipped. The Company, through SBI, sublicensed certain patents and technology it held relating to bioprocessing products exclusively under a license which expired in August 2021, with the University of Maryland, Baltimore County (“UMBC”), for which it received royalties for such patents and technology. The Company was obligated to pay 50 % of all royalties received to the entity that licensed the intellectual property to UMBC. Segment Reporting The Company views its operations as two operating segments, that are also the two reporting segments: 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 manufacture, design, and marketing of bioprocessing systems and products and related royalty income (“Bioprocessing Systems”). The Company’s chief operating decision maker (“CODM”) regularly reviews revenue and operating income/loss for each segment in determination of allocating resources and assessing financial performance results. The Company eliminates inter-segment activity in the Company’s reporting segment results to be consistent with the information that is presented to the CODM. The Company also included a Non-operating Corporate segment in the Company’s reporting segment results. Cash and Cash Equivalents The Company considers all highly liquid debt instruments purchased with original maturities of 90 days or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit. As of December 31, 2023 and 2022, and June 30, 2022, $ 166,000 , $ 1,082,100 and $ 1,984,300 , respectively, of cash balances were in excess of such limit. Allowance for Credit Losses - Accounts Receivable 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. The Company’s 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. This analytical model incorporates historical loss activity, geographic location, customer-specific information, collection terms and customer amounts. 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 December 31, 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. The allowance for doubtful accounts as of December 31, 2023 and 2022 and June 30, 2022, was $ 15,600 , $ 33,600 and $ 15,600 , respectively. F-12 Table of Contents Investment Securities The Company’s investment securities are classified as equity securities, mutual funds, and bonds, and are held as available-for-sale and recorded at fair value. Changes in fair value of equity securities and mutual funds are recorded as net unrealized gains or losses in other income (loss), net on the statement of operations and comprehensive loss. Changes in fair value of bonds are recorded as net unrealized gains or losses as a component of other comprehensive income. The Company determines 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, net on the statement of operations and comprehensive loss. Inventories Current and noncurrent inventories recorded other than those of Aquila, are valued at the lower of cost (determined on a first-in, first-out basis) or net realizable value, and have been reduced by an allowance for excess and obsolete inventories. Inventories of Aquila are valued at the lower of cost (determined on a average cost method) or net realizable value, and have been reduced by an allowance for excess and obsolete inventories. The Company’s inventory allowance is based on management’s estimates and reviews of inventories on hand is based on management’s review of inventories on hand compared to estimated future usage and sales. Cost of work-in-process and finished goods inventories include material, labor and manufacturing overhead. As needed, the Company may purchase critical raw materials that are used in the core production process in quantities that exceed anticipated consumption within the normal operating cycle, which is 12 months. The Company classifies such raw materials that the Company does not expect to consume within the normal operating cycle as noncurrent. Property and Equipment Property and equipment are stated at cost. Depreciation of property and equipment is provided for primarily by the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized by the straight-line method over the remaining term of the related lease or the estimated useful lives of the assets, whichever is shorter. Goodwill and Finite Lived Intangible Assets and Long-Lived Assets, Net Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill and long-lived intangible assets are tested for impairment at least annually in accordance with the provisions of Accounting Standards Codification (“ASC”) No. 350, “Intangibles- Goodwill and Other” (“ASC No. 350”). ASC No. 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. As of December 31, 2023, the Company had two reporting units, the Benchtop Laboratory Equipment Operations and the Bioprocessing Systems. Goodwill is tested for impairment by reporting unit on an annual basis as of December 31, the last day of its fiscal year, and in the interim if events and circumstances indicate that goodwill may be impaired. Prior to the change in the Company’s fiscal year from the last day of June to a calendar fiscal year end, goodwill was tested for impairment on an annual basis as of June 30, the last day of its then fiscal year, and in the interim if events and circumstances indicated that goodwill may be impaired. The voluntary change is preferable under the circumstances as a better alignment with the Company’s strategic planning and forecasting process given the Company’s change in fiscal year end. The events and circumstances that are considered in the Company’s goodwill impairment testing include business climate and market conditions, legal factors, operating performance indicators and competition. Impairment of goodwill is first assessed using a qualitative approach. If the qualitative assessment suggests that impairment is more likely than not, a quantitative analysis is performed. The quantitative analysis involves a comparison of the fair value of the reporting unit with its carrying amount. The fair value is determined using the income approach, which utilizes the present value of expected future cash flows for each reporting unit based on estimate future cash flows, the timing of these cash flows, and a discount rate based on a weighted average cost of capital. The assumptions used to estimate future cash flows and the development of forecasts used in the fair value determination were based on assumptions made using the best information available at the time, subject to inherent risk and judgement. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. To the extent additional information arises, market conditions change, or our strategies change, it is possible that the conclusion regarding whether our remaining goodwill is impaired could change and result in future goodwill impairment charges that will have a material effect on our consolidated financial position or results of operations. F-13 Table of Contents During the year ended December 31, 2023, the Company performed the annual goodwill impairment analysis. The Company elected to perform the qualitative analysis for the Benchtop Laboratory Equipment Operation reporting unit. These qualitative analyses evaluated factors, including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting unit. In completing these assessments, the Company noted no changes in events or circumstances that indicated that it was more likely than not that the fair value of the reporting unit was less than its carrying amount. As of December 31, 2023 and 2022 there was no remaining goodwill to the Bioprocessing System reporting unit. For the fiscal year ended June 30, 2022, the Company recorded a goodwill impairment charge of $ 4,280,100 to the goodwill of the Bioprocessing Systems reporting unit as the excess of carrying value over fair value was higher than the recorded amount of goodwill for the reporting unit. Intangible assets consist primarily of acquired technology, customer relationships, non-compete agreements, patents, licenses, websites, intellectual property in-process research and development (“IPR&D”), trademarks and trade names. All intangible assets are amortized on a straight-line basis over the estimated useful lives of the respective assets, generally 3 to 10 years. The Company continually evaluates the remaining estimated useful lives of intangible assets that are being amortized to determine whether events or circumstances warrant a revision to the remaining period of amortization. The Company reviews the recoverability of our finite-lived intangible assets and long-lived assets, when events or conditions occur that indicate a possible impairment exists. Determining whether impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset’s residual value, if any. The assessment for recoverability is based primarily on our ability to recover the carrying value of its long-lived and finite-lived intangible assets from expected future undiscounted net cash flows. If the total of expected future undiscounted net cash flows is less than the total carrying value of the assets the asset is deemed not to be recoverable and possibly impaired. We then estimate the fair value of the asset to determine whether an impairment loss should be recognized. An impairment loss will be recognized if the asset’s fair value is determined to be less than its carrying value. Fair value is determined by computing the expected future discounted cash flows. The Company recognized a impairment of intangible assets of $ 0 , $ 51,500 and $ 0 , for the year ended December 31, 2023, the six month transition period ended December 31, 2022 and for the fiscal year ended June 30, 2022, respectively. The impairment charge is attributable to a technology intangible asset in the Bioprocessing segment, written down by $ 51,500 , net of accumulated amortization, to its estimated fair value of $ 0 . Impairment of Long-Lived Assets The Company follows the provisions of ASC No. 360-10, “Property, Plant and Equipment - Impairment or Disposal of Long-Lived Assets (“ASC No. 360-10”). ASC No. 360-10 which requires evaluation of the need for an impairment charge relating to long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation for impairment is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write down to a new depreciable basis is required. If required, an impairment charge is recorded based on an estimate of future discounted cash flows. The Company concluded as of December 31, 2023 and 2022 and June 30, 2022, respectively, there was no impairment of long-lived assets. F-14 Table of Contents Leases The Company accounts for its leases under ASC 842, Leases. The 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 asset. 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. As the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate 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. 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. 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. The 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. Advertising Advertising costs are expensed as incurred. Advertising expense amounted to $ 474,200 , $ 433,500 and $ 628,700 for the year ended December 31, 2023, for the six months ended December 31, 2022 and for the fiscal year ended June 30, 2022, respectively. Research and Development Research and development costs consisting of expenses for activities that are useful in developing and testing new products, as well as expenses that may significantly improve existing products, are expensed as incurred. Stock Compensation Plan Stock-based compensation is accounted for in accordance with ASC No. 718 “Compensation-Stock Compensation” (“ASC No. 718”) which requires compensation costs related to stock-based payment transactions to be recognized. With limited exceptions, the amount of compensation cost is measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards are measured at each reporting period. Compensation costs are recognized over the period that an employee provides service in exchange for the award. The Company estimates the fair value of each stock-based grant using the Black-Scholes option pricing model. This model derives the fair value of stock options based on certain assumptions related to expected stock price volatility, expected option life, risk-free interest rate and dividend yield. The expected volatility is based on the historical volatility of the Company's stock price over the most recent period commensurate with the expected term of the stock option award. The estimate expected term is based on management’s analysis of historical exercise activity. The risk-free interest rate is based on published U.S. Treasury rates for a term commensurate with the expected term. The dividend yield is estimated as zero as the Company has not paid dividends in the past and does not have any plans to pay any dividends in the foreseeable future. The Company has elected to account for forfeitures only when they occur. Foreign currency translation and transactions The Company has determined that the functional currency and reporting currency for its Aquila operations in Germany is the Euro and the U.S. Dollar, respectively. All assets and liabilities of Aquila are translated at the current exchange rate as of the end of the reporting period, and revenue and expenses are translated at average exchange rates in effect during the period with the resulting gain or loss reflected as a foreign currency cumulative translation adjustment and reported as a component of accumulated other comprehensive income (loss). Gains and losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in other income. F-15 Table of Contents Income taxes The Company and its subsidiaries file a consolidated U.S. federal income tax return, and a tax return in Germany for Aquila. Income taxes are accounted for under the asset and liability method. The Company provides for federal, and state income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributed to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date. ASC No. 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC No. 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. As of December 31, 2023 and 2022 and June 30, 2022, the Company did not have any unrecognized tax benefits related to various federal and state income tax matters. The Company recognizes interest and penalties on any unrecognized tax benefits as a component of income tax expense. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits. The Company is subject to U.S. federal income tax, as well as various state jurisdictions. The Company is currently open to audit under the statute of limitations by the federal and state jurisdictions for the fiscal years ended June 30, 2020 and after. The Company is currently open to audit under the statute of limitations by German tax authorities for the years ended December 31, 2018. The Company does not anticipate any material amount of unrecognized tax benefits within the next 12 months. Earnings (Loss) Per Common Share Basic earnings or loss per common share is computed by dividing net income (loss) by the weighted-average number of shares outstanding. Diluted earnings or loss per common share includes the dilutive effect of stock options and warrants, if any. The Company was in a net loss position during the year ended December 31, 2023, for the six months ended December 31, 2022 and for the year ended June 30, 2022, respectively, therefore the basic loss per share is the same as dilutive loss per share as the inclusion of the weighted-average number of all potential dilutive common shares which consists of stock options and warrants are anti-dilutive. Reclassifications Certain balances from the six months ended December 31, 2022 and for the year ended June 30, 2022 have been reclassified to conform to the current year presentation. Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Credit Losses-Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables. The Company adopted ASU 2016-13 beginning January 1, 2023, with no material impact to its consolidated financial position or results of operations. F-16 Table of Contents 3. Fair Value of Financial Instruments The Company follows ASC 820, “Fair Value Measurement”, which has defined 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. 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. 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 below: Level 1 Inputs that are based upon unadjusted quoted prices for identical instruments traded in active markets Level 2 Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly Level 3 Prices or valuation that require inputs that are both significant to the fair value measurement and unobservable. In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculated the fair value of its Level 1 and 2 instruments based on the exchange traded price of similar or identical instruments where available or based on other observable instruments. 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 fair value of the contingent consideration obligations was 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 was based on significant inputs that were not observable in the market, therefore, the Company classified this liability as Level 3 in the following tables. F-17 Table of Contents 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 December 31, 2023 and 2022 and June 30, 2022, respectively, according to the valuation techniques the Company used to determine their fair values: Fair Value Measurements as of December 31, 2023 Level 1 Level 2 Level 3 Total Assets: Investment securities $ 4,928,700 $ - $ - $ 4,928,700 Total $ 4,928,700 $ - $ - $ 4,928,700 Fair Value Measurements as of December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 1,927,100 $ - $ - $ 1,927,100 Investment securities 4,035,500 236,600 - 4,272,100 Total $ 5,962,600 $ 236,600 $ - $ 6,199,200 Fair Value Measurements as of June 30, 2022 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 2,971,100 $ - $ - $ 2,971,100 Investment securities 5,276,600 1,115,000 - 6,391,600 Total $ 8,247,700 $ 1,115,000 $ - $ 9,362,700 Investments in marketable securities by security type as of December 31, 2023 and 2022 and June 30, 2022, respectively, consisted of the following: As of December 31, 2023: Cost Fair Value Unrealized Holding Gain (Loss) Mutual funds $ 4,929,300 $ 4,928,700 $ ( 600 ) Total $ 4,929,300 $ 4,928,700 $ ( 600 ) As of December 31, 2022: Cost Fair Value Unrealized Holding Gain (Loss) Equity securities $ 118,900 $ 154,600 $ 35,700 Mutual funds 4,063,100 3,880,900 ( 182,200 ) Debt Securities 235,400 236,600 1,200 Total $ 4,417,400 $ 4,272,100 $ ( 145,300 ) F-18 Table of Contents As of June 30, 2022: Cost Fair Value Unrealized Holding Gain (Loss) Equity securities $ 118,800 $ 151,000 $ 32,200 Mutual funds 5,299,500 5,125,600 ( 173,900 ) Debt Securities 1,114,100 1,115,000 900 Total $ 6,532,400 $ 6,391,600 $ ( 140,800 ) 4. Inventories As of December 31, As of June 30, 2023 2022 2022 Raw materials $ 3,436,300 $ 3,703,900 $ 3,298,300 Work-in-process 23,200 66,700 55,300 Finished goods 2,033,400 1,695,000 1,342,700 Total Inventories $ 5,492,900 $ 5,465,600 $ 4,696,300 Inventories - Current Asset $ 4,883,900 $ 4,859,600 $ 4,696,300 Inventories - Noncurrent Asset 609,000 606,000 - 5. Property and Equipment, Net Useful Lives As of December 31, As of June 30, (Years) 2023 2022 2022 Automobiles 5 $ 22,000 $ 22,000 $ 22,000 Computer equipment 3 - 5 497,300 432,700 327,700 Machinery and equipment 3 - 7 1,624,300 1,533,000 1,364,900 Furniture and fixtures 4 - 10 108,500 105,200 105,200 Leasehold improvements 3 - 10 279,600 272,400 268,900 2,531,700 2,365,300 2,088,700 Less accumulated depreciation $ 1,449,400 $ 1,202,100 $ 1,083,100 Property and Equipment, Net $ 1,082,300 $ 1,163,200 $ 1,005,600 F-19 Table of Contents Depreciation expense was $ 240,900 , $ 115,200 and $ 145,300 for the year ended December 31, 2023, for the six months ended December 31, 2022 and for the fiscal year ended June 30, 2022, respectively. During the year ended December 31, 2023, the six months ended December 31, 2022 and the fiscal year ended June 30, 2022, respectively, the Company wrote off fully depreciated property and equipment assets for the cost amount of $ 38,600 , $ 0 , and $ 0 , respectively, and for the accumulated depreciated amount of $ 38,600 , $ 0 and $ 0 , respectively. 6. Goodwill and Finite Lived Intangible Asset Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in connection with the Company’s acquisitions. Goodwill amounted to $ 115,300 as of December 31, 2023 and 2022 and June 30, 2022, respectively, all of which is expected to be deductible for tax purposes. The components of finite lived intangible assets are as follows: Useful Lives Cost Accumulated Amortization Net As of December 31, 2023 Technology, trademarks 3 - 10 yrs. $ 1,216,800 $ 870,900 $ 345,900 Trade names 3 - 6 yrs. 592,300 341,600 250,700 Websites 3 - 7 yrs. 210,000 210,000 - Customer relationships 4 - 10 yrs. 372,200 193,600 178,600 Sublicense agreements 10 yrs. 294,000 294,000 - Non-compete agreements 4 - 5 yrs. 1,060,500 797,600 262,900 Patents 5 - 7 yrs. 595,800 384,000 211,800 $ 4,341,600 $ 3,091,700 $ 1,249,900 Useful Lives Cost Accumulated Amortization Net As of December 31, 2022 Technology, trademarks 3 - 10 yrs. $ 1,216,800 $ 721,700 $ 495,100 Trade names 3 - 6 yrs. 592,300 266,000 326,300 Websites 3 - 7 yrs. 210,000 210,000 - Customer relationships 4 - 10 yrs. 372,200 163,800 208,400 Sublicense agreements 10 yrs. 294,000 294,000 - Non-compete agreements 4 - 5 yrs. 1,060,500 602,000 458,500 Patents 5 - 7 yrs. 595,800 321,100 274,700 $ 4,341,600 $ 2,578,600 $ 1,763,000 Useful Lives Cost Accumulated Amortization Net As of June 30, 2022 Technology, trademarks 3 - 10 yrs. $ 1,278,900 $ 653,400 $ 625,500 Trade names 3 - 6 yrs. 592,300 228,200 364,100 Websites 3 - 7 yrs. 210,000 210,000 - Customer relationships 4 - 10 yrs. 372,200 143,300 228,900 Sublicense agreements 10 yrs. 294,000 294,000 - Non-compete agreements 4 - 5 yrs. 1,060,500 504,200 556,300 Patents 5 - 7 yrs. 594,300 289,300 305,000 $ 4,402,200 $ 2,322,400 $ 2,079,800 F-20 Table of Contents Total amortization expense was $ 513,100 , $ 265,600 and $ 542,900 for the year ended December 31, 2023, for the six months ended December 31, 2022 and for the fiscal year ended June 30, 2022, respectively. Estimated future amortization expense of intangible assets as of December 31, 2023 is as follows: As of December 31, 2024 $ 509,600 2025 371,500 2026 193,800 2027 92,600 2028 41,800 2029 40,600 Total $ 1,249,900 Impairment Loss As of December 31, 2023 and 2022, respectively, there was no remaining goodwill to the Bioprocessing System reporting unit. For the fiscal year ended June 30, 2022, the Company recorded a goodwill impairment charge of $ 4,280,100 to the goodwill of the Bioprocessing Systems reporting unit as the excess of carrying value over fair value was higher than the recorded amount of goodwill for the reporting unit. The Company recognized a impairment of intangible assets of $ 0 , $ 51,500 and $ 0 , for the year ended December 31, 2023, for the six month transition period ended December 31, 2022 and for the fiscal year ended June 30, 2022, respectively. The impairment charge is attributable to a technology intangible asset in the Bioprocessing segment, written down by $ 51,500 , net of accumulated amortization, to its estimated fair value of $0. 7. Line of Credit The Company has a Demand Line of Credit through December 2024 with First National Bank of Pennsylvania which provides for borrowings of up to $ 300,000 for regular working capital needs, bearing interest at 8.50 %. The agreement does not contain any financial covenants and borrowings are secured by a pledge of the Company’s assets including inventory, accounts receivable, chattel paper, equipment and general intangibles of the Company. The borrowings outstanding under the line of credit as of December 31, 2023 and 2022 and June 30, 2022, are $ 50,000 , $ 0 and $ 0 , respectively. 8. Commitments and Contingencies Legal Matters During the normal course of business, the Company may be named from time to time as a party to claims and litigations arising in the ordinary course of business. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with ASC 450, Contingencies. Litigation and contingency accruals are based on our assessment, including advice of legal counsel, regarding the expected outcome of litigation or other dispute resolution proceedings. If the Company determines that an unfavorable outcome is probable and can be reasonably assessed, it establishes the necessary accruals. As of December 31, 2023, the Company is not aware of any contingent legal liabilities that should be reflected in the consolidated financial statements. F-21 Table of Contents Employment Agreements The Company has an employment agreement with its Chief Executive Officer and President, which expires on June 30, 2025 . The agreement 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 President terminates the employment for “good reason”, the President will have the right to receive a lump sum payment equal to three times the average of their total annual compensation paid for the last five years preceding such termination. The employment agreement also contains a 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” (as such term is defined therein), the Company shall pay severance payments equal to one year’s salary at the rate of the compensation at the time of termination, and continue to pay the regular benefits provided by the Company for a period of one year from termination. The Company has an employment agreement with its Chief Financial Officer, which expires on June 30, 2025 . The agreement 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 employee terminates the employment for “good reason”, the employee will have the right to receive a lump sum payment equal to one times the average of their total annual compensation paid for the last five years preceding such termination. The employment agreement also contains a 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” (as such term is defined therein), the Company shall pay severance payments equal to one year’s salary at the rate of the compensation at the time of termination, and continue to pay the regular benefits provided by the Company for a period of one year from termination. The Company has an employment agreement with its Chairman, which expires on June 30, 2024 . The employment 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 the employee resigns for “good reason”(as such term is defined in the agreement) , 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. The Company will 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 employment. The Company has employment agreements with the Chief Executive Officer of Aquila and three managing directors of Aquila for an indefinite term, which can be terminated by either party upon a twelve month written notice for the Chief Executive Officer and a six month written notice for the three managing directors, in accordance with German law. The agreements include a retention bonus of 25,000 euros if the employees do not terminate their employment with the Company within two years after the agreement date or the Company does not terminate their employment for good cause. 9. Related Parties Consulting Agreement The Company’s consulting agreement with Mr. Joseph G. Cremonese, a Director of the Company, and his affiliate which provided consulting services on product development, expired on December 31, 2021. The agreement provided that the consultant be paid a monthly retainer fee of $ 9,000 , plus a grant of 20,000 options which were awarded during the year ended June 30, 2020. Consulting expense related to this agreement amounted to $ 0 , $ 0 and $ 55,200 , for the year ended December 31, 2023, for the six months ended December 31, 2022 and for the fiscal year ended June 30, 2022, respectively. The Company’s consulting agreement with Mr. Reinhard Vogt, a former Director of the Company, and his affiliate which provided consulting services was terminated on April 1, 2022. The agreement provided that the consultant be paid a monthly retainer fee of 12,500 euros. The Company paid fees of $ 0 , $ 0 and $ 215,700 for the year ended December 31, 2023, for the six months ended December 31, 2022 and for the fiscal year ended June 30, 2022, respectively. F-22 Table of Contents 10. Leases The Company leases certain properties consisting principally of a facility in Bohemia, New York (headquarters) which was amended in September 2021 to increase the space by approximately 25 % and extend the lease term through October 2028. The Company’s Bioprocessing Systems operations are conducted in co-sharing office space in Pittsburgh, Pennsylvania, and a 5,252 square foot facility in Baesweiller, Germany, which was renewed in December 2023 to extend the lease term to December 31, 2025, comprised of manufacturing, engineering, and administrative space. In August and September 2022, the Company entered into two lease agreements to lease motor vehicles for certain employees. The contractual period of each lease is 36 months and the lease was determined to qualify for operating lease treatment upon the lease commencement date. 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, 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. As of December 31, 2023 December 31, 2022 June 30, 2022 Weighted Average Years 4.35 5.42 5.92 Weighted Average Discount 5.43 % 5.00 % 5.00 % Year ended December 31, 2023 Six Months Ended December 31, 2023 Year ended June 30, 2022 Total Cash Payment $ 334,600 $ 186,000 $ 344,500 The Company’s approximate future minimum rental payments under all operating leases as of December 31, 2023 are as follows: Year ended December 31, Amount 2024 $ 387,900 2025 360,500 2026 266,600 2027 274,600 2028 201,000 Total future minimum payments $ 1,490,600 Less: Imputed interest ( 158,700 ) Total Present Value of Operating Lease Liabilities $ 1,331,900 11. Loss Per Common Share The Company presents the computation of earnings per share (“EPS”) on a basic basis. Basic EPS is computed by dividing net income or loss by the weighted average number of shares outstanding during the reported period. Diluted EPS is computed similarly to basic EPS, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential additional common shares that were dilutive had been issued. Common shares are excluded from the calculation if they are determined to be anti-dilutive. The following table sets forth the weighted average number of common shares outstanding for each period presented. F-23 Table of Contents Year ended December 31, Six months ended December 31, Year ended June 30, 2023 2022 2022 Weighted average number of common shares outstanding 10,145,211 7,003,599 6,637,471 Effect of dilutive securities: - - Weighted average number of dilutive common shares outstanding 10,145,211 7,003,599 6,637,471 Basic and diluted loss per common share: Continuing operations $ ( 1.27 ) $ ( 0.58 ) $ ( 2.06 ) Discontinued operations $ 0 $ 0 $ 0 Consolidated operations $ ( 1.27 ) $ ( 0.58 ) $ ( 2.06 ) Approximately 1,120,097 and 7,856,203 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 December 31, 2023. Approximately 28,645 and 18,481 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 December 31, 2022. Approximately 39,086 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 fiscal year ended June 30, 2022. 12. Common Stock and Warrants 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. The stockholders also approved an amendment to the Company’s 2012 Stock Option Plan (the “2012 Plan”) to increase the number of shares available under the Plan by 943,000 shares, from 307,000 to 1,250,000 shares, which, together with 150,000 shares that were added to the 2012 Plan in 2020, were registered by the Company on a Form S-8 Registration Statement with the Securities and Exchange Commission on March 15, 2021. In addition, the stockholders also approved the adoption of the Company’s 2022 Equity Incentive Plan (the “2022 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 2022 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. On November 29, 2023, the board of directors of the Company adopted a resolution approving a certificate of amendment to the Company’s Certificate of Incorporation, as amended, to increase in the number of authorized shares of common stock of the Company from 20,000,000 shares of common stock, par value $0.05 per share, to 30,000,000 shares of common stock, par value $ 0.05 per share (the “Authorized Capital Increase”). On December 7, 2023, the Company obtained the written consent of stockholders of the Company holding greater than 50% of the voting securities of the Company approving the Authorized Capital Increase. F-24 Table of Contents Issuance and Sale of Common Stock 2021 Securities Purchase Agreement On April 29 2021, the Company received proceeds of approximately $ 7,580,400 from the sale of its securities to private investors upon the issuance of 1,595,880 shares of the Company’s Common Stock at an offering price of $ 4.75 per share which included warrants to purchase up to 797,940 shares of the Company’s Common Stock exercisable at $ 9.50 per share, and in June 2021 the Company received an additional $ 9.5 million through the sale of an additional 2,000,000 shares of the Company’s Common Stock at $ 4.75 per share which also included warrants to purchase up to 999,993 of the Company’s Common Stock exercisable at $ 9.50 per shares. These warrants are exercisable immediately and expire five years from date of issuance. The Company utilized the services of brokers for both transactions and incurred a total of approximately $ 1.3 million in issuance related costs for broker and legal fees. The Company was required under a registration rights agreement to register the shares, which it did through an S-1 Registration Statement filed with the Securities and Exchange Commission, which became effective on August 13, 2021. The proceeds were used for the Aquila acquisition with the remainder earmarked for the Bioprocessing Systems Operations. 2022 Securities Purchase Agreement 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 warrant. The Company filed a S-1 Registration Statement with the Securities and Exchange Commission, which became effective on June 13, 2022. 2023 Securities Purchase Agreement On December 13, 2023, the Company entered into a Securities Purchase Agreement (“the 2023 Purchase Agreement”) with certain Investors pursuant to which the Investors agreed to subscribe and purchase up to 3,500,000 Units at a price per Unit of $ 2.00 , or an aggregate purchase price of $ 7,000,000 at one or more closings (the “Offering”), with each Unit comprised of (a) one newly-issued share of Common Stock, par value $ 0.05 per share (the “Shares”), and (b) a warrant (the “Warrants”) to purchase either 100% or 160%, depending on the number of Units purchased by an Investor, of the number of shares of Common Stock included in the Units purchased by an Investor (the “Warrant Shares”) at an exercise price of $2.50 per share. The Warrants are immediately exercisable and expire five years from their date of issuance. If at any time commencing 12 months from the date of the issuance of a Warrant, but before the expiration of the Warrant, the volume weighted average pricing of the Company’s common stock exceeds $5.00 (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like) for each of thirty consecutive trading days, then the Company may, at any time in its sole discretion, call for the exercise of the Warrants, in their entirety. On December 13, 2023, the Company issued and sold an aggregate of 2,638,076 Units, comprised of 2,638,076 shares of the Company’s common stock and Warrants to purchase 3,673,076 Warrant Shares for a total consideration of $5,276,152 pursuant to the Company’s 2023 Purchase Agreement. The Company recognized $970,200 of issuance cost, which includes $427,500 attributable to legal and placement agent fees and $542,700 attributable to the fair value of 131,904 warrants, issued to the private placement agent, to purchase up to 131,904 shares of Common Stock at an exercise price of $2.00 per share on substantially the same terms as the Warrants issued to the Investors . The Company intends to use the net proceeds from the sale of the Units for working capital needs of its Bioprocessing Systems Operations. On December 19, 2023, and December 20, 2023 the Company sold an aggregate of 432,935 and 70,601 Units, respectively, comprised of 432,935 and 70,601 shares of the Company’s Common Stock and Warrants to purchase 432,935 and 70,601 shares of Common Stock for a total consideration of $865,870 and $141,202, respectively, pursuant to the Company’s 2023 Purchase Agreement. The Company recognized $206,900 of issuance cost, which includes $104,500 attributable to legal and placement agent fees and $102,400 attributable to the fair value of 25,177 warrants, issued to the private placement agent, to purchase up to 25,177 shares of Common Stock at an exercise price of $2.00 per share on substantially the same terms as the Warrants issued to the Investors . The Company intends to use the net proceeds from the sale of the Units for working capital needs of its Bioprocessing Systems Operations. F-25 Table of Contents Warrants Replacements Warrants As an incentive to certain Investors of the Company who participated in previous private placements (“Existing Investors”) and received as part of those financings, warrants (“Outstanding Warrants”) to purchase shares of Common Stock, the Company agreed that, if any Existing Investor were to purchase Units at a certain level in the offering thereof under the 2023 Purchase Agreement (the “Offering”), the Company would reduce the exercise price of the Outstanding Warrants held by such Existing Investor to $2.50 per share and extend the period in which such Outstanding Warrants could be exercised to the period ending on the fifth anniversary of the date on which the Existing Investor purchased Units under the 2023 Purchase Agreement. Each such Existing Investor purchasing Units at the requisite level will receive a new warrant (the “Replacement Warrants”) to replace such Existing Investor’s Outstanding Warrants. As a result of their December 13, 2023, December 19, 2023, and December 20, 2023 purchase of Units, Existing Investors became entitled to receive Replacement Warrants to replace 1,257,331 , 559,905 and 17,631 , respectively, of their Outstanding Warrants. The Company measured and recognized a fair value change of $ 2,112,800 related to the modification and issuance of the Replacement Warrants, recorded as equity issuance cost in the statement of changes in stockholders’equity. Underwriter Warrants As part of its compensation as placement agent for the 2023 Purchase Agreement described above, the Company issued to the placement agent or its designees warrants to purchase up to 157,081 shares of Common Stock at an exercise price of $2.00 per share on substantially the same terms as the Warrants issued to the Investors . The Warrants were valued on each closing grant date, using the Black-Scholes-Merton option pricing model and the Company recognized $645,100 as equity issuance cost in the statement of changes in stockholders’equity. During the year ended December 31, 2023, in connection to underwriter/consulting services, the Company issued 100,000 warrants to purchase up to 100,000 shares of Common Stock at an exercise price of $ 2.50 per share. The Warrants are immediately exercisable and expire five years from their date of issuance. If at any time commencing 12 months from the date of the issuance of a Warrant, but before the expiration of the Warrant, the volume weighted average pricing of the Company’s common stock exceeds $5.00 (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like) for each of thirty consecutive trading days, then the Company may, at any time in its sole discretion, call for the exercise of the Warrants, in their entirety. The Warrants were valued on the grant date of December 13, 2023, using the Black-Scholes-Merton option pricing model and the Company recognized $ 161,000 as general and administration expense during the year ended December 31, 2023. The following table summarizes information about shares issuable under warrants outstanding during the year ended December 31, 2023, the six months ended December 31, 2022 and the fiscal year ended June 30, 2022, respectively. Warrant Shares Outstanding Weighted Average Exercise Price Weighted Average Remaining Life Outstanding and exercisable as of June 30, 2021 3,147,783 $ 9.29 4.51 Issued 274,727 5.50 4.67 Exercised - - - Expired or cancelled - - - Outstanding and exercisable as of June 30, 2022 3,422,510 $ 8.98 3.60 Issued - - - Exercised - - - Expired or cancelled - - - Outstanding and exercisable as of December 31, 2022 3,422,510 $ 8.98 3.10 Issued 6,268,560 2.49 4.96 Exercised - - - Expired or cancelled ( 1,834,867 ) 8.87 2.36 Outstanding and exercisable as of December 31, 2023 7,856,203 $ 3.82 4.32 F-26 Table of Contents Terms of the outstanding warrants as of December 31, 2023 are as follow: Warrant Issue Date Outstanding Warrants Exercise Price Expiration Date 6/19/2020 1,034,350 $ 9.00 6/18/2025 4/30/2021 443,469 $ 9.50 4/29/2026 6/21/2021 83,155 $ 9.50 6/18/2026 3/2/2022 26,669 $ 5.50 3/2/2027 12/13/2023 5,030,407 $ 2.50 12/13/2028 12/13/2023 131,904 $ 2.00 12/13/2028 12/19/2023 992,840 $ 2.50 12/19/2028 12/19/2023 21,647 $ 2.00 12/19/2028 12/20/2023 88,232 $ 2.50 12/20/2028 12/20/2023 3,530 $ 2.00 12/20/2028 7,856,203 13. Stock Options 2012 Plan The Company’s 2012 Plan expired in February 2022, which provided for the grant of options to purchase up to 1,193,000 shares of the Company’s Common Stock, par value $.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”). The 2012 Plan provided for the granting of incentive or non-incentive stock options. 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 Common Stock on the date of the grant and vested as to 1/3 on each of the first, second, and third anniversaries from the grant date. Non-incentive stock options shall be granted at the fair market value of the shares of Common Stock on the date of grant. During the year ended December 31, 2023, the six months ended December 31, 2022 and the fiscal year ended June 30, 2022, under the 2012 Plan the Company granted 0 , 0 and 60,000 to employees that had a fair value of $ 0 , $ 0 , and $ 268,848 , respectively. 2022 Plan The Company’s 2022 Plan provides for the issuance of up to 1,750,000 shares of the Company’s Common Stock, par value $ 0.05 per share, plus outstanding options granted under the Company’s 2012 Stock Option Plan that expire or are forfeited. 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 Common Stock on the date of the grant. Nonstatutory stock options shall be granted at the fair market value of the shares of Common Stock on the date of grant. Both Incentive and Nonstatutory stock options cliff-vest over five years. As of December 31, 2023, 1,879,660 shares of Common Stock were available for grant of options under the 2022 Plan, of which 224,660 shares of Common Stock are from either terminated or expired options from the 2012 Plan. F-27 Table of Contents During the year ended December 31, 2023, the six months ended December 31, 2022 and the fiscal year ended June 30, 2022, under the 2022 Plan the Company granted 0 , 0 and 60,000 to employees that had a fair value of $ 0 , $ 0 , and $ 262,372 , respectively. 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. On September 19, 2023, the Company’s Bioprocessing System segment entered into a one year consulting agreement with John Nicols. The agreement provided that the consultant be paid a monthly retainer fee of $ 8,000 . For the year ended December 31, 2023, the Company paid fees of $ 19,200 and issued 35,000 stock options which vest monthly over the one year period, valued at $ 114,700 on the grant date using the Black-Scholes-Merton option pricing model. The following table summarizes the weighted-average assumptions used for the Black-Scholes option pricing model to determine the fair value of our stock options for the year ended December 31, 2023, for the six months ended December 31, 2022 and for the fiscal year ended June 30, 2022, respectively: Year ended December 31, Six months ended December 31, Year ended June 30, 2023 2022 2022 Expected term (in years) 10 - 10 Risk-free interest rate 4.49 % - 1.91 % Expected volatility 72.5 % - 72 % Dividend rate 0 - 0 Total stock-based compensation costs were $ 2,240,100 , $ 1,236,700 and $ 2,350,600 for the year ended December 31, 2023, for the six months ended December 31, 2022 and for the fiscal year ended June 30, 2022, respectively. Stock-based compensation costs related to nonvested awards expected to be recognized in the future are $ 450,100 and $ 1,945,300 and $ 3,187,300 , as of December 31, 2023 and 2022 and June 30, 2022, respectively. The weighted-average period over which the nonvested awards is expected to be recognized are 0.87 years, 1.14 years and 1.51 years for the year ended December 31, 2023, for the six months ended December 31, 2022 and for the fiscal year ended June 30, 2022, respectively. F-28 Table of Contents The following table summarizes option activity under all plans for the year ended December 31, 2023, for the six months ended December 31, 2022 and for the fiscal year ended June 30, 2022: Year Ended December 31, Six months ended December 31, Year Ended June 30, 2023 2022 2022 Shares under option: Shares Weighted- Average Exercise Price Aggregate Intrinsic Value Shares Weighted- Average Exercise Price Shares Weighted- Average Exercise Price Outstanding, beginning 1,115,810 $ 8.4 $ 129,900 1,158,644 $ 8.40 1,180,757 $ 8.73 Granted 35,000 4.09 - - - 120,000 5.78 Exercised - - - - - - - Forfeited ( 30,713 ) 6.62 2,500 ( 42,834 ) 8.33 ( 142,113 ) 8.98 Outstanding, end 1,120,097 $ 8.32 - 1,115,810 $ 8.40 1,158,644 $ 8.40 Options exercisable end of the period 963,228 $ 8.45 632,175 $ 8.30 567,594 $ 8.13 Weighted average fair value per share of options granted during the period $ 3.28 $ 0 $ 4.43 Year ended December 31, Six months ended December 31, Year ended J une 30, 2023 2022 2022 NonVested Shares under option: Shares Weighted-Average Grant Date Fair Value Shares Weighted-Average Grant Date Fair Value Shares Weighted-Average Grant Date Fair Value Outstanding, beginning 483,635 $ 6.76 591,050 $ 6.75 970,082 $ 7.16 Granted 35,000 3.28 - - 120,000 4.43 Vested ( 351,453 ) 6.98 ( 106,248 ) 6.73 ( 356,919 ) 7.17 Forfeited ( 10,313 ) 5.09 ( 1,167 ) 4.48 ( 142,113 ) 6.53 Outstanding, end 156,869 $ 5.60 483,635 $ 6.76 591,050 $ 6.75 Year Ended December 31, 2023 Shares Weighted-Average Exercise price Weighted-Average Remaining Contractual term Vested Shares under option: 963,228 $ 8.45 6.47 Six months ended December 31, 2022 Shares Weighted-Average Exercise price Weighted-Average Remaining Contractual term Vested Shares under option: 632,175 $ 8.30 7.30 Year ended June 30, 2022 Shares Weighted-Average Exercise price Weighted-Average Remaining Contractual term Vested Shares under option: 567,594 $ 8.13 7.73 F-29 Table of Contents As of December 31, 2023 Options Outstanding As of December 31, 2023 Exercisable Range Exercise Price Number Outstanding Remaining Contractual Life (Years) Average Exercise Price Number Outstanding Average Exercise Price $5.35 - $ 11.30 1,029,392 6.84 $ 8.73 898,773 $ 8.18 $2.91 - $ 4.65 90,705 2.29 $ 3.61 64,455 $ 3.41 1,120,097 963,228 As of December 31, 2022 Options Outstanding As of December 31, 2022 Exercisable Range Exercise Price Number Outstanding Remaining Contractual Life (Years) Average Exercise Price Number Outstanding Average Exercise Price $5.35 - $ 11.30 1,055,105 7.85 $ 8.69 571,470 $ 8.82 $2.91 - $ 4.65 60,705 4 .00 $ 3.36 60,705 $ 3.36 1,115,810 632,175 As of June 30, 2022 Options Outstanding As of June 30, 2022 Exercisable Range Exercise Price Number Outstanding Remaining Contractual Life (Years) Average Exercise Price Number Outstanding Average Exercise Price $5.35 - $ 11.30 1,097,939 8.34 $ 8.68 506,889 $ 8.70 $2.91 - $ 4.65 60,705 4.51 $ 3.37 60,705 $ 3.37 1,158,644 567,594 F-30 Table of Contents 14. Segment Information Segment and geographical information is reported as follows: Year Ended December 31, 2023 Benchtop Laboratory Equipment Bioprocessing Systems Corporate Consolidated Revenues $ 9,745,400 $ 1,366,100 $ - $ 11,111,500 Foreign Sales 2,865,900 894,600 - 3,760,500 Income (Loss) From Operations 720,200 ( 7,751,200 ) ( 2,228,900 ) ( 9,259,900 ) Assets 6,832,400 4,969,400 4,928,700 16,730,500 Long-Lived Asset Expenditures 29,700 102,000 - 131,700 Depreciation and Amortization 84,900 669,100 - 754,000 Six Months Ended December 31, 2022 Benchtop Laboratory Equipment Bioprocessing Systems Corporate Consolidated Revenues $ 4,608,900 628,900 $ - $ 5,237,800 Foreign Sales 1,322,500 478,200 - 1,800,700 Income (Loss) From Operations 203,500 ( 3,483,200 ) ( 902,300 ) ( 4,137,000 ) Assets 8,622,500 5,174,600 4,272,100 18,069,200 Long-Lived Asset Expenditures 34,300 220,200 - 254,500 Depreciation and Amortization 50,100 330,700 - 380,800 Year Ended June 30, 2022 Benchtop Laboratory Equipment Bioprocessing Systems Corporate Consolidated Revenues $ 9,981,100 $ 1,419,400 $ - $ 11,400,500 Foreign Sales 3,702,400 1,101,400 - 4,803,800 Income (Loss) From Operations 1,475,800 ( 11,369,500 ) ( 1,650,400 ) ( 11,544,100 ) Assets 9,538,600 5,077,500 6,391,800 21,007,900 Long-Lived Asset Expenditures 92,500 732,100 - 824,600 Depreciation and Amortization 96,300 591,900 - 688,200 F-31 Table of Contents Geographical Information Year Ended December 31, 2023 Revenue (a) Long-Lived Assets United States $ 7,351,000 $ 1,414,200 All Other Foreign Countries 3,027,500 - Germany 733,000 1,007,500 Total $ 11,111,500 $ 2,421,700 Six Months Ended December 31, 2022 Revenue (a) Long-Lived Assets United States $ 3,437,000 $ 1,710,000 All Other Foreign Countries 1,454,700 - Germany 346,100 885,000 Total $ 5,237,800 $ 2,595,000 (a) Revenues are attributed to countries based on location of customer For the year ended December 31, 2023, one customer accounted for approximately $ 1,301,400 revenue from the Benchtop Laboratory Equipment Segment, of which the revenue is 10 % or more of the Company’s total revenue. For the six months ended December 31, 2022, one customer accounted for approximately $ 545,300 revenue from the Benchtop Laboratory Equipment Segment, of which the revenue is 10 % or more of the Company’s total revenue. For the fiscal year ended June 30, 2022, there are no individual customer accounting for approximately 10 % or more of the Company’s total revenue. F-32 Table of Contents A reconciliation of the Company's consolidated segment income/loss from operations to consolidated income (loss) from operations before discontinued operations and income taxes for the year ended December 31, 2023, for the six months ended December 31, 2022 and for the fiscal year ended June 30, 2022, respectively are as follows: Year ended December 31, 2023 Benchtop Laboratory Equipment Bioprocessing Systems Corporate Consolidated Income (Loss) from Operations $ 720,200 $ ( 7,751,200 ) $ ( 2,228,900 ) $ ( 9,259,900 ) Other income (expense), net 10,500 14,300 145,300 170,100 Income (Loss) from operations before discontinued operations and income taxes $ 730,700 $ ( 7,736,900 ) $ ( 2,083,600 ) $ ( 9,089,800 ) Six Months ended December 31, 2022 Benchtop Laboratory Equipment Bioprocessing Systems Corporate Consolidated Income (Loss) from Operations $ 203,500 $ ( 3,438,200 ) $ ( 902,300 ) $ ( 4,137,000 ) Other (expense) income, net ( 28,200 ) 3,600 88,500 63,900 Income (Loss) from operations before discontinued operations and income taxes $ 175,300 $ ( 3,434,600 ) $ ( 813,800 ) $ ( 4,073,100 ) Year ended June 30, 2022 Benchtop Laboratory Equipment Bioprocessing Systems Corporate Consolidated Income (Loss) from Operations $ 1,475,800 $ ( 11,369,500 ) $ ( 1,650,400 ) $ ( 11,544,100 ) Other income, net 194,000 ( 3,100 ) 71,500 262,400 Income (Loss) from operations before discontinued operations and income taxes $ 1,669,800 $ ( 11,372,600 ) $ ( 1,578,900 ) $ ( 11,281,700 ) 15. Employee Benefit Plans The Company has a 401(k) profit sharing plan covering all its employees, which provides for voluntary employee salary contributions not to exceed the statutory limitations provided by the Internal Revenue Code. The plan provides for Company matching contribution equal to 100 % of employee’s deferral up to 3 % of pay, plus 50 % of employee’s deferral over 3 % of pay up to 5 %. Total matching contributions amounted to $ 122,400 , $ 58,600 and $ 112,400 for the year ended December 31, 2023, the six months ended December 31, 2022 and the fiscal year ended June 30, 2022, respectively. 16. Income Taxes The Domestic and foreign Components of loss before taxes are: Year Ended December 31, Six Months Ended December 31, Year Ended June 30, 2023 2022 2022 U.S. operations $ ( 5,352,700 ) $ ( 3,285,900 ) $ ( 8,985,600 ) Non-U.S. operations ( 3,737,100 ) ( 787,200 ) ( 2,296,100 ) Total loss before taxes $ ( 9,089,800 ) $ ( 4,073,100 ) $ ( 11,281,700 ) F-33 Table of Contents The provision for income taxes is comprised of: Year Ended December 31, Six Months Ended December 31, Year Ended June 30, 2023 2022 2022 U.S. federal taxes: Current $ - $ - $ ( 99,200 ) Deferred - - 1,693,700 Non-U.S. taxes: - - - Current - - - Deferred - - 800,300 Total provision for income taxes $ - $ - $ 2,394,800 Total provision for income taxes allocated to continuing operations for the year ended December, 31, 2023, for the six month ended December 31, 2022 and for the year ended June 30, 2022, respectively was $ 0 , $ 0 , and $ 2,390,800 , respectively. Total provision for income taxes allocated to discontinued operations for the year ended December, 31, 2023, for the six month ended December 31, 2022 and for the year ended June 30, 2022, respectively was $ 0 , $ 0 , and $ 4,000 , respectively. In accordance with ASC 740 “Accounting for Income Taxes” (“ASC 740”), the Company evaluated the deferred tax assets to determine if valuation allowances are required or should be adjusted. ASC 740 requires that companies assess whether valuation allowances should be established against their deferred tax assets based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard of whether the deferred tax assets will be realized. As of and for the year ended December 31, 2023, the Company maintains a full valuation allowance of $9,302,300 against the consolidated net deferred tax assets as the Company determined the net deferred tax assets which includes net operating loss carry-forwards and other tax credits, are more likely not to be realized and therefore the Company recorded a full valuation allowance. During the six months ended December 31, 2022, the Company recorded a full valuation allowance of $ 1,302,600 to the period change in the net deferred tax assets as the Company determined the net deferred tax assets which includes net operating loss carry-forwards and other tax credits, are more likely not to be realized and therefore the Company recorded a full valuation allowance. As of and for the fiscal year ended June 30, 2022, the Company recorded a full valuation allowance of $ 5,116,000 against the consolidated net deferred tax assets as the Company determined the net deferred tax assets which includes net operating loss carry-forwards and other tax credits, are more likely not to be realized. In the event that in the future the Company changes the determination as to the amount of deferred tax assets that can be realized, the Company will adjust the valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made. F-34 Table of Contents The reconciliation of the provision for income taxes at the federal statutory rate of 21 % to the actual income tax expense (benefit) for the applicable fiscal year is as follows: Year Ended December 31, Six Months Ended December 31, Year Ended June 30, 2023 2022 2022 Computed "expected" income tax benefit $ ( 1,908,900 ) $ ( 855,400 ) $ ( 2,369,200 ) Research and development credits ( 9,400 ) ( 49,600 ) ( 99,200 ) Incentive Stock Option Expense 73,300 36,600 64,300 PPP Loan Forgiveness - - ( 91,100 ) Valuation allowance 2,883,700 1,302,600 5,116,000 Aquila Biolabs GmbH operating loss ( 1,150,800 ) ( 245,700 ) ( 717,100 ) Return to provision and other true-ups 112,100 ( 187,800 ) - Other, net - ( 700 ) 491,100 Income tax expense $ - $ - $ 2,394,800 Income tax expense allocated to continuing operations for the year ended December 31, 2023, for the six month ended December 31, 2022, and for the year ended June 30, 2022, respectively was $ 0 , $ 0 , and $ 2,390,800 , respectively. Income tax expense allocated to discontinued operations for the year ended December 31, 2023, for the six month ended December 31, 2022, and for the year ended June 30, 2022, respectively was $ 0 , $ 0 , and $ 4,000 , respectively. The Company’s expected income tax expense differs from its provision for income tax expense primarily due to the Company’s evaluation of its net deferred tax assets and the Company’s related assessment to record a full valuation allowance against those net deferred tax assets in applying the more-likely than not standard that is required under the applicable guidance under Generally Accepted Accounting Principles in the US. Deferred tax assets and liabilities consist of the following: As of December 31, As of December 31, As of June 30, Deferred tax assets: 2023 2022 2022 Amortization of intangible assets, including goodwill $ 106,300 $ 377,800 $ 326,600 Research and development credits 426,400 416,900 367,400 Goodwill impairment 898,800 898,800 898,800 Capitalized research and development expenses 957,900 276,900 - Various accruals 103,300 92,200 50,400 Stock options expense 1,486,400 1,047,600 710,500 Net operating loss 5,383,200 3,353,100 2,769,400 Other 27,200 57,600 52,900 Subtotal $ 9,389,500 $ 6,520,900 $ 5,176,000 Deferred tax liability: Depreciation of property ( 87,200 ) ( 102,300 ) ( 60,000 ) Less valuation allowance ( 9,302,300 ) ( 6,418,600 ) ( 5,116,000 ) Net deferred tax assets $ - $ - $ - F-35 Table of Contents The Company has federal net operating loss (“NOL”) carryforwards of $ 20,154,400 , $ 7,571,300 and $ 5,961,700 as of December 31, 2023, and 2022 and June 30, 2022, respectively, with no expiration date, which are available to reduce future taxable income. The Company has foreign NOL carryforwards of $ 9,330,700 , $ 5,645,900 and $ 4,858,700 as of December 31, 2023, and 2022 and June 30, 2022, respectively, with no expiration date, which are available to reduce future taxable income. Under the 2017 Tax Cuts and Jobs Act (the “TCJA”), federal carryforwards may be carried forward indefinitely. All of the Company’s NOL carryforwards were generated on or after December 31, 2017, the effective date for TCJA NOL’s. 17. Subsequent Events On January 17, 2024, the Company completed the last closing of the sale of securities pursuant to the Company’s Securities Purchase Agreement (the “Purchase Agreement”) entered on December 13, 2023, as filed in the Company’s Form 8-K on December 15, 2023. At this closing, the Company sold an aggregate of 358,388 Units, comprising 358,388 shares of the Company’s common stock, par value $.05 per share (“Common Stock”) and warrants (“Warrants”) to purchase 358,388 shares of Common Stock for a total consideration of $716,776. The Company recognized $98,700 of issuance cost, which includes $71,100 attributable to legal and placement agent fees and $27,600 attributable to the fair value of 17,919 warrants, issued to the private placement agent, to purchase up to 17,919 shares of Common Stock at an exercise price of $2.00 per share on substantially the same terms as the Warrants issued to the Investors . As an incentive to certain Investors of the Company who participated in previous private placements (“Existing Investors”) and received as part of those financings, warrants (“Outstanding Warrants”) to purchase shares of Common Stock, the Company agreed that, if any Existing Investor were to purchase Units at a certain level in the offering thereof under the Purchase Agreement (the “Offering”), the Company would reduce the exercise price of the Outstanding Warrants held by such Existing Investor to $2.50 per share and extend the period in which such Outstanding Warrants could be exercised to the period ending on the fifth anniversary of the date on which the Existing Investor purchased Units under the Purchase Agreement. Each such Existing Investor purchasing Units at the requisite level will receive a new warrant (the “Replacement Warrants”) to replace such Existing Investor’s Outstanding Warrants. On January 17, 2024, as a result of their purchase of Units, Existing Investors became entitled to receive Replacement Warrants to replace 333,884 Outstanding Warrants, and therefore reducing the exercise price of such Outstanding Warrants to $ 2.50 per share and extending the period in which such Outstanding Warrants could be exercised to the period ending on the fifth anniversary of the closing under the Purchase Agreement on December 13, 2023. F-36