What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-13 compared with 2024-11-14 · 26 added, 49 removed, 35 unchanged (68% of the section changed)

14 unchanged sentences

Results of Operations .

Three months ended September 30, 2024 and 2023

The Company reported a decrease of $1,021,000 (46.4%) in its loss from continuing operations to $1,180,100 for the three months ended September 30, 2024 as compared to a $2,201,100 loss from continuing operations for the three months ended September 30, 2023, primarily due to decreased expenses resulting from operating cost reductions mostly in the Bioprocessing Systems Operations segment and increased net revenue in both of the Company’s operating segments compared to the prior year period.

Net revenues for the three months ended September 30, 2024 increased $183,600 (7.1%) to $2,769,100 from $2,585,500 for the three months ended September 30, 2023, driven by increased revenues of $155,300 from the Benchtop Laboratory Equipment Operations and $28,300 from the Bioprocessing Systems Operations.

The increase in revenue from the Benchtop Laboratory Equipment Operations was driven by increased sales of Genie brand products in the U.S., and to a lesser extent increased sales of the Torbal division’s VIVID pill counter.

Sales of Torbal and VIVID brand products amounted to $881,900 for the current year period compared to $850,700 in the prior year.

The pharmacy industry is recovering from cash flow constraints caused by 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 September 30, 2024 and 2023, were 49.2% and 45.7%, respectively.

The increase is due primarily to higher gross margin percentage in the Bioprocessing Systems Operations, in part attributable to increased sales of the recently launched Multiparameter Sensor.

The Company realized a loss from continuing operations before income tax expense of $1,778,500 for the three months ended March 31, 2025 compared to a $2,051,600 loss from continuing operations before income tax expense for the three months ended March 31, 2024, primarily due to cost cutting initiatives in the Bioprocessing Systems Operations segment which were initiated at the beginning of the second quarter of the fiscal year ended December 31, 2024 (“fiscal 2024”).

Net revenues for the three months ended March 31, 2025 decreased $77,000 (3.1%) to $2,406,500 from $2,483,500 for the three months ended March 31, 2024, primarily due to a $182,600 decrease in the Bioprocessing Systems Operations revenues, which was offset by an increase of $105,600 in the Benchtop Laboratory Equipment Operations in both sales of Genie and Torbal divisions’ products.

The gross profit percentage for the three months ended March 31, 2025, and 2024, was 42.2% and 41.9%, 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 September 30, 2024 increased $122,700 (13.7%) to $1,019,000 from $896,300 for the three months ended September 30, 2023, primarily due to increases in Corporate expenses related to external professional services and non-cash stock-based compensation expense compared to prior year period.

Selling expenses for the three months ended September 30, 2024 decreased $694,600 (43.0%) to $919,600 from $1,614,200 for the three months ended September 30, 2023, primarily due to the reduction of sales and marketing employees in conjunction to the strategic operational plan for the Bioprocessing Systems Operations, implemented in the first and second quarters of the current year.

General and administrative expenses for the three months ended March 31, 2025, and 2024, were $1,251,300 and $1,521,800, respectively.

The decrease of $270,500 (17.8%) is due primarily to decreased employee-related costs associated with a reduction in force in the Bioprocessing Systems Operations during the second quarter of fiscal 2024.

Selling expenses for the three months ended March 31, 2025 and 2024, were $924,200 and $897,800, respectively.

The increase of $26,400 (2.9%) is due primarily to commissions incurred by the Laboratory Equipment Operations.

Research and development

Research and development expenses for the three months ended September 30, 2024 decreased $212,700 (23.7%) to $683,200 from $895,900 for the three months ended September 30, 2023, primarily due to the completion of new product developments in the current year and reduction of research and development expenditures in both operating segments as compared to prior year period.

Research and development expenses for the three months ended March 31, 2025, and 2024, were $652,000 and $710,700, respectively.

The decrease of $58,700 (8.3%) is due primarily to the reduction of research and development expenditures in the Bioprocessing Systems Operations.

Other income, net

Other income, net, for the three months ended September 30, 2024 and 2023, were $78,500 and $24,300, respectively.

The increase is due primarily to increased interest income on investment securities and increased unrealized gain in investment securities during the current year period as compared to prior year period.

Income tax for the three months ended September 30, 2024 and 2023, were $0 and $0, respectively.

Other income, net, for the three months ended March 31, 2025 and 2024, were $32,400 and $37,900, respectively.

The decrease is due primarily to the decrease in interest income.

Income tax for the three months ended March 31, 2025, and 2024, was $0 and $0, respectively.

The Company maintains a full valuation allowance of $10,512,500 against its 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.

Nine months ended September 30, 2024 and 2023

The Company reported a loss from continuing operations of $4,515,300 for the nine months ended September 30, 2024 compared to a $6,758,100 loss from continuing operations for the nine months ended September 30, 2023, primarily due to an increase in productivity from the Bioprocessing Systems Operations that saw a slight year-over-year pick up in revenue at significantly decreased expenses resulting from operating cost reductions as well as decreased Corporate expenses related to external professional services and non-cash stock-based compensation expense compared to the prior year periods.

Net revenues for the nine months ended September 30, 2024 decreased $473,500 (5.7%) to $7,899,900 from $8,373,400 for the nine months ended September 30, 2023, primarily due to a decrease of $591,900 in net revenues from the Benchtop Laboratory Equipment Operations, offset by an increase of $118,400 in net revenues from the Bioprocessing Systems Operations.

The reduced net revenue from the Benchtop Laboratory Equipment Operations resulted primarily from decreased Genie brand sales due to overall market softness in demand for laboratory equipment in China.

In addition, net revenue of Torbal and VIVID brand products decreased to $2,380,600 in the current year period, compared to $2,597,400 in the prior year period, due to principally 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 $118,400 to $1,134,000 for the current year period compared to $1,015,600 in the prior year period primarily due to increased market penetration of its new DOTS Multiparameter sensor products.

The gross profit percentage for the nine months ended September 30, 2024 and 2023, were 46.8% and 46.2%, respectively, due primarily to increased sales of the recently launched Multiparameter Sensor with higher gross margin percentage in the Bioprocessing Systems Operations offset by lower gross margin percentage in the Benchtop Laboratory Equipment Operations, resulting from increases in production overhead costs.

General and administrative

Selling expenses for the nine months ended September 30, 2024 decreased $1,932,800 (41.6%) to $2,718,000, compared to $4,650,800 for the nine months ended September 30, 2023 primarily due to the decreased non-cash stock-based compensation expenses and reduction of sales and marketing employees in conjunction to the strategic operational plan for the Bioprocessing Systems Operations implemented in the first and second quarter of the current year period.

Selling expenses for the nine months ended September 30, 2024 and 2023 decreased $1,932,800 (41.6%) to $2,718,000, compared to $4,650,800 for the nine months ended September 30, 2023 primarily due to the decreased non-cash stock-based compensation expenses and reduction of sales and marketing employees in conjunction to the strategic operational plan for the Bioprocessing Systems Operations implemented in the first and second quarter of the current year period.

Research and development

Research and development expenses for the nine months ended September 30, 2024 decreased $312,000 (13.2%) to $2,059,900 compared to $2,371,900 for the nine months ended September 30, 2023 primarily due to the reduction of research and development expenditures related to the completion of a new VIVID automated pill counter in the Benchtop Laboratory Equipment Operations as compared to prior year period.

Other income, net

Other income, net, for the nine months ended September 30, 2024 and 2023, were $169,000 and $161,000, respectively.

Income tax for the nine months ended September 30, 2024, and 2023, were $0 and $108,800, respectively.

The Company maintains a full valuation allowance of $11,032,000 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.

Liquidity and Capital Resources .

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

Our primary sources of liquidity are existing cash and cash equivalents, 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 nine months ended September 30, 2024, the Company reflected negative cash flows from operations of $3,304,600 and had an accumulated deficit of $32,000,400 as of September 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.

For the three months ending March 31, 2025, the Company generated negative cash flows from operations of $1,331,300 and has an accumulated deficit of $35,709,900 as of March 31, 2025.

We believe that our operating cash flow derived primarily from the Benchtop Laboratory Operations, our cash and investment securities on hand, the availability of our line of credit and latest financing efforts are not sufficient to fund our cash requirements over the next twelve 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 nine months ended September 30,

For the three months ended

Net cash used in operating activities

1 unchanged sentence

$ (1,565,100 )

Net cash provided by investing activities

Net cash provided by financing activities

Net cash provided in investing activities

Net cash provided in financing activities

Effect of changes in foreign currency exchange rates

Decrease in cash and cash equivalents

$ (1,411,700 )

Net cash used in operating activities was $3,304,600 for the nine months ended September 30, 2024 compared to $4,821,600 for the nine months ended September 30, 2023.

The net decrease of $1,517,000 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 $2,429,900 for the nine months ended September 30, 2024 compared to $3,400,500 provided in the nine months ended September 30, 2023.

The net decrease of $970,600 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 nine months ended September 30, 2024 compared to $13,300 for the nine months ended September 30, 2023.

The net increase of $632,400, is primarily due to issuance of the Units pursuant to the Purchase Agreement in the current year period.

Net cash used in operating activities was $1,331,100 for the three months ended March 31, 2025 compared to $1,565,100 for the three months ended March 31, 2024.

The net change of $234,000 is primarily due to a lower net loss in March 31, 2025.

Net cash provided by investing activities was $1,204,000 for the three months ended March 31, 2025 compared to $480,600 provided in the three months ended March 31, 2024.

The net increase of $723,400 is primarily due to the net redemption of investment securities in the three months ended March 31, 2025.

Net cash provided by financing activities was zero for the three months ended March 31, 2025 compared to $645,700 for the three months ended March 31, 2024.

The net change of $645,700, is primarily due to the issuance of common stock in the three months ended March 31, 2024.

Critical Accounting Estimates

2 unchanged sentences

“Note 2-Summary of significant accounting policies” to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 Form 10-K”) describes the significant accounting policies and methods used in the preparation of the consolidated financial statements.

Our critical accounting estimates are identified in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2023 Form 10-K.

Our critical accounting estimates are identified in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our fiscal 2024 Form 10-K.

Such accounting policies and estimates require significant judgments and assumptions to be used in the preparation of the consolidated financial statements, and actual results could differ from our assumptions and estimates, and such differences could be material.

2 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