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Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-15 · 47 added, 28 removed, 38 unchanged (66% of the section changed)

12 unchanged sentences

The Company’s products are used primarily for research purposes by universities, pharmaceutical companies, pharmacies, national laboratories, medical device manufacturers, and other industries performing laboratory-scale research.

Results of Operations .

The Company’s results reflect those of the Benchtop Laboratory Equipment Operations and the Bioprocessing Systems Operations and its corporate operation.

The Company realized a loss from continuing operations of $2,051,600 for the three months ended March 31, 2024 compared to a $2,371,900 loss from continuing operations for the three months ended March 31, 2023, primarily due to increased revenue in the Bioprocessing Systems Operations segment along with a decrease in noncash stock compensation expense, and decreased Corporate expenses compared to the prior year period,

Net revenues for the three months ended March 31, 2024 decreased $321,900 (11.5%) to $2,483,500 from $2,805,400 for the three months ended March 31, 2023, driven primarily by lower revenues of Benchtop Laboratory Equipment Operations of $414,800, due primarily to decreased orders for Torbal products in part due to unavailability of product due to extensive ocean shipping delays, partially offset by an increase of $92,900 (41%) in revenues of the Bioprocessing Systems Operations related to the Company’s Aquila legacy products.

The gross profit percentage for the three months ended March 31, 2024 and 2023, was 41.9% and 47.7%, respectively.

Results of Operations .

Three months ended June 30, 2024 and 2023

The Company was able to reduce the loss from continuing operations to $1,283,600 for the three months ended June 30, 2024 as compared to $2,185,100 loss from continuing operations for the three months ended June 30, 2023, primarily due to decreased expenses resulting from operating cost reductions mostly in the Bioprocessing Systems Operations segment and decreased Corporate expenses compared to the prior year periods.

Net revenues for the three months ended June 30, 2024 decreased $335,200 (11.2%) to $2,647,300 from $2,982,500 for the three months ended June 30, 2023, driven primarily by lower revenues of Benchtop Laboratory Equipment Operations.

Sales of Genie brand products reflected a decrease due to post-COVID destocking and overall market softness for laboratory equipment, particularly in Asia.

Sales of Torbal and VIVD brand products amounted to $789,100 for the current year period compared to $943,000 in the prior year, due to reduced VIVID pill counter sales resulting primarily from the new regulations related to pharmacy direct and indirect renumeration fees “DIR fees” charged by pharmacy benefit managers, which caused financial hardships and cash flow challenges for the independent pharmacy market in the beginning of 2024.

The gross profit percentage for the three months ended June 30, 2024 and 2023, was 48.8% and 45.3%, respectively.

The increase is due primarily to higher gross margin percentage in the Bioprocessing Systems Operations.

General and administrative

General and administrative expenses for the three months ended June 30, 2024 decreased $237,900 (18.3%) to $1,062,000 from $1,299,900 for the three months ended June 30, 2023, primarily due to decreased Corporate expenses related to external professional services and non-cash stock-based compensation expense compared to prior year period, partially offset by employee related costs associated with a reduction in force in the Bioprocessing Systems Operations.

Selling expenses for the three months ended June 30, 2024 decreased $691,200 (43.4%) to $900,600 from $1,591,800 for the three months ended June 30, 2023 due primarily to the reduction of sales and marketing employees in conjunction to the strategic operational and product development plan for the Bioprocessing Systems Operations.

Research and development

Research and development expenses for the three months ended June 30, 2024 and 2023, were $666,000 and $684,500, respectively.

The decrease of $18,500 (2.7%) is due primarily to the reduction of research and development expenditures related to the VIVID automated pill counter in the Benchtop Laboratory Equipment Operations due to the completion of a new product development in the current year as compared to prior year period.

Other income, net

Other income, net, for the three months ended June 30, 2024 and 2023, were $52,600 and $41,100, respectively.

The increase is due primarily to the increase in interest income on investment securities, and a decrease in realized loss on investment securities attributable to more investment securities held in mutual funds as compared to investment securities held in equity securities during the current year period as compared to prior year period.

Income tax for the three months ended June 30, 2024 and 2023, was $0 and $108,800, respectively.

The Company maintains a full valuation allowance of $10,542,700 against the consolidated net deferred tax asset as the Company determined the net deferred tax assets which includes net operating loss carry-forwards and other tax credits, are not more likely than not to be realized in the future.

Six months ended June 30, 2024 and 2023

The Company realized a loss from continuing operations of $3,335,200 for the six months ended June 30, 2024 compared to a $4,557,000 loss from continuing operations for the six months ended June 30, 2023, primarily due to decreased expenses resulting from operating cost reductions mostly in the Bioprocessing Systems Operations segment and decreased Corporate expenses compared to the prior year periods

Net revenues for the six months ended June 30, 2024 decreased $657,100 (12.8%) to $5,130,800 from $5,787,900 for the six months ended June 30, 2023, driven primarily by lower revenues of Benchtop Laboratory Equipment Operations of $747,200, resulting primarily from decreased Genie brand sales due to post-COVID destocking and overall market softness for laboratory equipment, particularly in Asia.

Sales of Torbal and VIVD brand products amounted to $1,541,100 in the current year period, compared to $1,808,500 in the prior year period, due to reduced VIVID pill counter sales resulting primarily from the new regulations related to pharmacy direct and indirect renumeration fees “DIR fees” charged by pharmacy benefit managers, which caused financial hardships and cash flow challenges for the independent pharmacy market in the beginning of 2024.

Bioprocessing Systems Operations revenues increased $90,100 to $681,500 for the current year period compared to $591,400 in the prior year period, despite a record one-time order in the prior year period reflecting a trend in growth of steady orders for bioprocessing products.

The gross profit percentage for the six months ended June 30, 2024 and 2023, was 45.5% and 46.4%, respectively.

The 0.9% decrease is due primarily to lower gross margin percentage in the Benchtop Laboratory Equipment Operations, resulting from increases in material, labor and overhead costs.

General and administrative

General and administrative expenses for the three months ended March 31, 2024 and 2023, were $1,521,800 and $1,569,300, respectively.

The decrease of $47,500 (3.0%) is due primarily to decreased Corporate expenses related to stock-based compensation costs compared to prior year period, partially offset by employee related costs associated with a reduction in force in the Bioprocessing Systems Operations.

Selling expenses for the three months ended March 31, 2024 and 2023, were $897,800 and $1,444,800 , respectively.

The decrease of $547,000 (37.9%) is due primarily to the reduction of sales and marketing employees and decreased non-cash stock-based compensation expenses in the Bioprocessing Systems Operations, and to a lower extent reductions in marketing activities by the Benchtop Laboratory Equipment Operations compared to prior year period.

General and administrative expenses for the six months ended June 30, 2024 decreased $285,400 (11.0%) to $2,583,800 compared to$2,869,200 for the six months ended June 30, 2023 due primarily to decreased Corporate expenses related to external professional services costs compared to prior year period, partially offset by employee related costs associated with a reduction in force in the Bioprocessing Systems Operations.

Selling expenses for the six months ended June 30, 2024 and 2023 decreased by $1,238,200 (68.9%) to $1,798,400, compared to $3,036,600 for the six months ended June 30, 2023 due primarily to the decreased non-cash stock-based compensation expenses and reduction of sales and marketing employees in conjunction to the strategic operational and product development plan for the Bioprocessing Systems Operations.

Research and development

Research and development expenses for the three months ended March 31, 2024, and 2023, were $710,700 and $791,500, respectively.

Research and development expenses for the six months ended June 30, 2024 and 2023, were $1,376,700 and $1,476,000, respectively.

The decrease of $99,300 (7.2%) is due primarily to the reduction of research and development expenditures related to the VIVID automated pill counter in the Benchtop Laboratory Equipment Operations as compared to prior year period.

Other income, net

Other income, net, for the three months ended March 31, 2024 and 2023, were $37,900 and $95,700, respectively.

The decrease is due primarily to the decrease in unrealized gain and interest income on investment securities, and a decrease in realized loss on investment securities during the current year period as compared to prior year period.

Income tax for the three months ended March 31, 2024, and 2023, was $0 and $0, respectively.

Other income, net, for the six months ended June 30, 2024 and 2023, were $90,500 and $136,800, respectively.

The decrease is due primarily to the decrease in unrealized gain and on investment securities offset with a decrease in realized loss on investment securities attributable to more investment securities held in mutual funds as compared to investment securities held in equity securities during the current year period as compared to prior year period.

Income tax for the six months ended June 30, 2024, and 2023, was $0 and $108,800, respectively.

Liquidity and Capital Resources .

Our primary sources of liquidity are existing cash and cash equivalents, and cash generated from operating activities of the Benchtop Laboratory Equipment Operations.

Our primary sources of liquidity are existing cash and investment securities, and cash generated from operating activities of the Benchtop Laboratory Equipment Operations.

We assess our liquidity in terms of our ability to generate cash to fund our short and long-term cash requirements.

For the three months ended March 31, 2024, the Company generated negative cash flows from operations of $2,051,600 and has an accumulated deficit of $29,536,700 as of March 31, 2024.

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 the three months ended March 31, 2024, the Company continued 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 be recurring in the Company’s operational plans for the foreseeable future, primarily in the form of reduced number of employees and related employment expenses.

An additional $716,776 of equity financing was raised in January 2024 as disclosed in Note 7.

Management is in plans to obtain such resources for the Company by obtaining capital through third party equity.

However, management cannot provide any assurances that the Company will be successful in accomplishing its plans.

As a result of the above actions, 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.

For the six months ended June 30, 2024, the Company reflected negative cash flows from operations of $2,436,800 and has an accumulated deficit of $30,820,300 as of June 30, 2024.

We believe that our operating cash flows derived primarily from the Benchtop Laboratory Equipment Operations, our cash and investment securities on hand, and the availability of our line of credit, are not sufficient to fund our cash requirements for the next 12 months.

The accompanying unaudited condensed financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

In order to continue as a going concern, the Company will need, among other things, additional capital resources.

Management is making plans to obtain such resources for the Company which may include capital from management and significant shareholders sufficient to meet its operating expenses and seeking third party equity and/or debt financing.

However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The following table discloses our cash flows for the periods presented:

For the three months ended March 31,

For the six months ended June 30,

Net cash used in operating activities

5 unchanged sentences

Decrease in cash and cash equivalents

Net cash used in operating activities was $1,565,100 for the three months ended March 31, 2024 compared to $1,744,700 for the three months ended March 31, 2023.

The net decrease of $179,600 is primarily due to the decreased operational costs from the Bioprocessing Systems operations in the current period.

Net cash provided by investing activities was $480,600 for the three months ended March 31, 2024 compared to $893,700 provided in the three months ended March 31, 2023.

The net decrease of $413,10 is primarily due to the net decrease in net redemption of purchase of investment securities, in the current year period compared to prior year period.

Net cash provided by financing activities was $645,700 for the three months ended March 31, 2024 compared to $0 for the three months ended March 31, 2023.

The net increase of $645,700, is primarily due to issuance of common stock in the current year period.

$ (1,282,600 )

Net cash used in operating activities was $2,436,800 for the six months ended June 30, 2024 compared to $3,659,700 for the six months ended June 30, 2023.

The net decrease of $1,222,900 is primarily due to the decreased operating expenses associated with a reduction in force in the Bioprocessing Systems operations and decreased corporate expenses in the current period compared to prior year period.

Net cash provided by investing activities was $1,570,700 for the six months ended June 30, 2024 compared to $2,372,600 provided in the six months ended June 30, 2023.

The net decrease of $801,900 is primarily due to the net decrease in net redemption of investment securities, in the current year period compared to prior year period.

Net cash provided by financing activities was $645,700 for the six months ended June 30, 2024 compared to $0 for the six months ended June 30, 2023.

The net increase of $645,700, is primarily due to issuance of the Units pursuant to the Purchase Agreement in the current year period.

Critical Accounting Estimates

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis