SCIENTIFIC INDUSTRIES INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking statements. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024. Certain statements contained in this report are not based on historical facts, but are forward-looking statements that are based upon various assumptions about future conditions. Actual events in the future could differ materially from those described in the forward-looking statements. Numerous unknown factors and future events could cause such differences, including but not limited to, product demand, market acceptance, success of marketing strategy, success of expansion efforts, impact of competition, adverse economic conditions, and other factors affecting the Company’s business that are beyond the Company’s control, which are discussed elsewhere in this report. Consequently, no forward-looking statement can be guaranteed. The Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. Throughout this Quarterly Report on Form 10-Q, the terms the “Company,” “Scientific,” “we,” “our” or “us,” refer to Scientific Industries, Inc. and its subsidiaries on a consolidated basis, unless stated or the context implies otherwise. Overview . Scientific Industries, Inc., a Delaware corporation (“SI” and along with its subsidiaries, the “Company”, “we”, “our”), is engaged in the manufacture of standard benchtop laboratory equipment (“Benchtop Laboratory Equipment”), and through its wholly-owned subsidiary, Scientific Bioprocessing Holdings, Inc., a Delaware corporation (“SBHI”), the design, manufacture, and marketing of bioprocessing systems and products (“Bioprocessing Systems”). SBHI has two wholly-owned subsidiaries – Scientific Bioprocessing, Inc., a Delaware corporation (“SBI”), and aquila biolabs GmbH, a German corporation (“Aquila”). 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. The Company’s results reflect those of the Benchtop Laboratory Equipment Operations consisting of the Genie Division through August 7, 2025 and the Torbal Division, the Bioprocessing Systems Operations, and its corporate operation. On August 7, 2025, the Company sold its Genie Division which is reported as discontinued operations in the accompanying unaudited condensed consolidated financial statements. Unless otherwise noted, all amounts, percentages and discussions below reflect only the results of operations and financial condition of our continuing operations. Results of Operations . Three months ended September 30, 2025 and 2024 The Company realized a loss from continuing operations before income tax expense of $1,522,300 for the three months ended September 30, 2025 compared to a $1,565,800 loss from operations before income tax expense for the three months ended September 30, 2024, primarily due to reduced operating expenses related to the Company’s continuing operations. Revenue Net revenues for the three months ended September 30, 2025 increased $69,600 (5.2%) to $1,404,000 from $1,334,400 for the three months ended September 30, 2024, primarily due to the increase in sales of the Torbal division which increased by $186,400 from $881,900 in the prior year period to $1,068,300 in the current year period, which was driven by increased sales of its VIVID automated pill counters. Bioprocessing Systems Operations revenues reflected a $141,700 decrease due to overall softness in the market, customer delays in finalizing orders and requirements for products not yet available. Gross profit The gross profit percentage for the three months ended September 30, 2025, and 2024, was 45.5% and 51.0%, respectively. This is primarily due to primarily due to the lack of Genie Division sales resulting from the sale on August 7, 2025, and to a lower extent the Company experienced some increases in material costs due to tariffs, principally for Torbal OEM products, and lower gross margins for Bioprocessing products due to fixed costs on lower sales. General and administrative General and administrative expenses for the three months ended September 30, 2025, and 2024, were $803,600 and $780,800, respectively. The increase of $22,800 (2.9%) is due primarily to increased administrative costs by the Bioprocessing Systems Operations. Selling Selling expenses for the three months ended September 30, 2025 and 2024, were $735,900 and $820,900, respectively. The decrease of $85,000 (10.4%) is due primarily to decreased sales and marketing personnel in the Bioprocessing Systems Operations. 17 Table of Contents Research and development Research and development expenses for the three months ended September 30, 2025, and 2024, were $621,400 and $644,000, respectively. The decrease of $22,600 (3.5%) is due primarily to lower research and development expenditures in the Bioprocessing Systems Operations related to DOTS new products. Other income, net Total other income (expense), net, for the three months ended September 30, 2025 and 2024, was $5,526,900 and $78,500, respectively. The increase is due primarily to the gain on disposition of the Genie product line of the Benchtop Laboratory Equipment Operations which occurred in August 2025 as discussed in Note 11 of Item 1. Financial Statements, and to a lesser extent due to a refund for the Bioprocessing Systems Operations related to 2024 payroll taxes and social security contributions. Income tax Income tax expense for the three months ended September 30, 2025, and 2024, was $15,300 and $0, respectively, due to the current period income generated from the sale of the Genie product line. The Company maintains a full valuation allowance of $10,559,600 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, 2025 and 2024 Results of Operations . The Company realized a loss from continuing operations of $5,434,700 for the nine months ended September 30, 2025, as compared to a $5,685,800 loss from continuing operations for the nine months ended September 30, 2024. The decrease of $251,100 is due primarily to lower SG&A costs offset by lower revenues. Revenue Net revenues for the nine months ended September 30, 2025 decreased $87,500 (2.5%) to $3,427,100 from $3,514,600 for the nine months ended September 30, 2024, primarily due to a $441,200 decrease in the Bioprocessing Systems Operations revenues resulting mostly from overall softness in the market, inability to close on opportunities which are delayed to future periods for various reasons including customer funding or new product availability offset by increased sales of Torbal brand products, particularly with VIVID pill counters. Total net revenues of the Torbal division amounted to $2,734,300 for the nine months ended September 30, 2025 compared to $2,380,600 in the prior year period. Gross profit The gross profit percentage for the nine months ended September 30, 2025, and 2024, was 39.8% and 44.1%, respectively, primarily due to lower sales and related fixed overhead in the Bioprocessing Systems Operations. General and administrative General and administrative expenses for the nine months ended September 30, 2025, and 2024, were $2,571,400 and $2,878,200, respectively. The decrease of $306,800 (10.7%) is due primarily to decreased employee-related costs in the Bioprocessing Systems Operations, and to a lower extent reduced corporate expenses. Selling Selling expenses for the nine months ended September 30, 2025 and 2024, were $2,355,400 and $2,413,100, respectively. The decrease of $57,700 (2.4%) is due to reduced employee-related costs incurred by the Bioprocessing Systems Operations. 18 Table of Contents Research and development Research and development expenses for the nine months ended September 30, 2025, and 2024, were $1,870,900 and $1,946,000, respectively. The decrease of $75,100 (3.9%) is due primarily to the reduction of research and development expenditures in the Bioprocessing Systems Operations. Other income, net Other income/(loss), net, for the nine months ended September 30, 2025 and 2024, was $5,582,300 and $169,000, respectively. The increase is due primarily to the gain on disposition of the Genie product line of the Benchtop Laboratory Equipment Operations which occurred in August 2025 as discussed in Note 11 of Item 1. Financial Statements, and to a lesser extent due to a refund for the Bioprocessing Systems Operations related to 2024 payroll taxes and social security contributions. Income tax Income tax expense for the nine months ended September 30, 2025, and 2024, was $15,300 and $0, respectively, due to the current period income generated from the sale of the Genie product line. The Company maintains a full valuation allowance of $10,559,600 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. The following table discloses our cash flows for the periods presented: For the nine months ended September 30, 2025 2024 Net cash used in operating activities $ (4,390,700 ) $ (4,186,000 ) Net cash provided by investing activities 2,444,300 2,429,900 Net cash provided by financing activities 1,952,300 645,700 Net cash provided by operating activity of discontinued operations 529,700 881,400 Effect of changes in foreign currency exchange rates 39,100 (3,600 ) Increase / (decrease) in cash and cash equivalents 574,700 (232,600 ) Net cash used in operating activities was $4,390,700 for the nine months ended September 30, 2025 compared to cash used in operating activities of $4,186,000 for the nine months ended September 30, 2024. The change is primarily due to lack of Genie revenues as a result of the sale leading to lower margin sales of Torbal and Bioprocessing Systems Operations reduced revenues. Net cash provided by investing activities was $2,444,300 for the nine months ended September 30, 2025 compared to $2,429,900 for the nine months ended September 30, 2024 reflecting the proceeds received during the current period of the Genie division asset sale. Net cash provided by financing activities was $1,952,300 for the nine months ended September 30, 2025 compared to $645,700 for the nine months ended September 30, 2024. The net change of $1,306,600, is primarily due to the issuance of common stock and exercise of certain warrants in the nine months ended September 30, 2025. 19 Table of Contents Critical Accounting Estimates The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires us to make judgments, assumptions, and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. “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 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. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.