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Item 2. Management’s Discussion and Analysis

2026-05-15 compared with 2025-11-19 · 34 added, 53 removed, 27 unchanged (76% of the section changed)

9 unchanged sentences

and its subsidiaries on a consolidated basis, unless stated or the context implies otherwise.

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”).

Scientific Industries, Inc., a Delaware corporation (“SI” and along with its subsidiaries, the “Company”, “we”, “our”), is engaged in the design, manufacture, and marketing a variety of benchtop laboratory equipment, weight and measurement products (“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.

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.

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 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.

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 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

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

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.

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.

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.

On August 7, 2025, the Genie Division of the Benchtop Laboratory Equipment Operations became discontinued due to the sale of the GENIE product line to Troemner LLC.

However, the Company continued to produce and market its Torbal and VIVID products within the Benchtop Laboratory Equipment Operations, which operates primarily out of Bohemia, New York .

The Company realized a loss from continuing operations before income tax expense of $1,589,300 for the three months ended March 31, 2026, reflecting a $467,800 decrease in the current period, compared to a $2,057,100 loss from continuing operations before income tax expense for the three months ended March 31, 2025, primarily due to increased revenues across both Benchtop Laboratory Equipment and Bioprocessing Systems segments and cost cutting initiatives in the Bioprocessing Systems Operations and Corporate segments.

Net revenues for the three months ended March 31, 2026 increased $284,800 (30.2%) to $1,227,100 from $942,300 for the three months ended March 31, 2025, primarily due to a $227,700 increase in the Bioprocessing Systems Operations revenues as well as an increase of $57,100 in the Benchtop Laboratory Equipment Operations, which, since the August 2025 Genie division sale, is comprised entirely of Torbal and VIVID brand products.

The gross profit percentage for the three months ended March 31, 2026, and 2025, was 38.3% and 36.5%, respectively.

The increase is due primarily to a higher gross margin percentage in the Bioprocessing Systems Operations derived from higher margin new products.

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 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.

General and administrative expenses for the three months ended March 31, 2026, and 2025, were $746,900 and $1,028,100, respectively.

The decrease of $281,200 (27.4%) is due primarily to decreased employee-related costs associated with a reduction in force in the Bioprocessing Systems Operations.

Selling expenses for the three months ended March 31, 2026 and 2025, were $687,000 and $753,700, respectively.

The decrease of $66,700 (8.8%) is due primarily to cost savings initiatives including reduction in salesforce and marketing activities by the Bioprocessing Systems Operations.

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.

Research and development expenses for the three months ended March 31, 2026, and 2025, were $703,700 and $652,000, respectively.

The increase of $51,700 (7.9%) is due primarily to the increase of research and development expenditures for new products 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 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.

Other income, net, for the three months ended March 31, 2026 and 2025, were $78,400 and $32,400, respectively.

The increase is due primarily to the increase in interest income related to investment securities purchased with the proceeds related to sale of the Genie Division in August of 2025.

Income tax for the three months ended March 31, 2026, and 2025, was $0 and $0, respectively.

The Company maintains a full valuation allowance of $13,484,039 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.

Liquidity and Capital Resources .

Our primary source of liquidity are existing cash and cash equivalents, including investment securities, and cash generated from sales of equity investments, payments related to agreements associated with the sale of the Genie Division in August 2025, and our on-going business operations.

In order to continue as a going concern, the Company will need to continue to decrease expenses, materially increase revenues, and/or secure additional external capital resources.

Based on management’s current operating plan, the Company believes its cash on hand, including its investments, is sufficient to fund the Company's operations for a period of at least one year subsequent to the issuance of the accompanying condensed consolidated financial statements.

However, there is no assurance that management's current operating plan will be successful.

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

$ (1,522,200 )

Net cash provided by investing activities

Net cash provided by financing activities

Net cash provided by operating activity of discontinued operations

Effect of changes in foreign currency exchange rates

Increase / (decrease) in cash and cash equivalents

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.

Net cash provided by discontinued operations

Decrease in cash and cash equivalents

Net cash used in operating activities was $993,500 for the three months ended March 31, 2026, compared to net cash used of $1,522,200 for the three months ended March 31, 2025.

The net change of $528,700 is primarily due to cost reductions related to the Bioprocessing Systems operations and corporate expenses.

Net cash provided by investing activities was $813,900 for the three months ended March 31, 2026, compared to $1,204,000 provided in the three months ended March 31, 2025.

The net decrease of $390,100 is primarily due to the lower redemption of investment securities during the three months ended March 31, 2026.

Net cash provided by financing activities was zero for the three months ended March 31, 2026 and March 31, 2025.

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.

GAAP”) requires us to make judgments, assumptions, and estimates that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.

“Note 2-Summary of significant accounting policies” to the Condensed Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 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 2025 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