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Item 2. Management’s Discussion and Analysis

2026-08-14 compared with 2026-05-15 · 40 added, 24 removed, 37 unchanged (63% of the section changed)

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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.

The Company undertakes no obligation except as required by law, 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.

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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 products are used primarily in pharmacies, pharmaceutical companies, university and industrial laboratories, and other industries that utilize weighing and pill counting systems and bioprocessing analytical tools.

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

Results of 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.

Three months ended June 30, 2026 and 2025

Net revenues for the three months ended June 30, 2026 increased $389,400 (36.0%) to $1,470,400 from $1,081,000 for the three months ended June 30, 2025, primarily due to a $338,900 increase in Benchtop Laboratory Equipment sales which, since the August 2025 Genie division sale, is comprised entirely of Torbal and VIVID brand products as well as a $50,500 increase in sales from our Bioprocessing Systems Operations.

The gross profit percentage for the three months ended June 30, 2026, and 2025, was 42.3% and 34.8%, respectively.

The increase is due primarily to a higher gross margin percentage in the Bioprocessing Systems Operations derived from increased sales of its DOTS product line which have higher margins than legacy products.

General and administrative

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

General and administrative expenses for the three months ended June 30, 2026, and 2025, were $553,900 and $744,800, respectively.

The decrease of $190,900 (25.6%) 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.

Selling expenses for the three months ended June 30, 2026 and 2025, were $647,100 and $774,300, respectively.

The decrease of $127,200 (16.4%) 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 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.

Research and development expenses for the three months ended June 30, 2026, and 2025, were $694,500 and $677,100, respectively.

The increase of $17,400 (2.6%) is due primarily to the increase of research and development expenditures for new products associated with the Benchtop Laboratory Equipment's VIVID pill counters.

Other income, net

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

Other income, net, for the three months ended June 30, 2026 and 2025, were $39,000 and $22,700, 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.

Income tax for the three months ended June 30, 2026, and 2025, was $0 and $0, respectively.

The Company maintains a full valuation allowance of $13,484,039 as of June 30, 2026 against its consolidated net deferred taxasset as the Company determined the net deferred taxassets, which includes net operating loss carry-forwards and other taxcredits, are not more likely than not to be realized in the future.

Six months ended June 30, 2026 and 2025

Net revenues for the six months ended June 30, 2026 increased $674,200 (33.3%) to $2,697,500 from $2,023,300 for the six months ended June 30, 2025, primarily due to a $395,900 increase in Benchtop Laboratory Equipment sales which, since the August 2025 Genie division sale, is comprised entirely of Torbal and VIVID brand products, as well as a $278,300 increase in sales from our Bioprocessing Systems Operations.

The gross profit percentage for the six months ended June 30, 2026, and 2025, was 40.5% and 35.6%, respectively.

General and administrative

General and administrative expenses for the six months ended June 30, 2026, and 2025, were $1 , 300 , 900 and $1,774,000, respectively.

The decrease of $473,100 (26.7%) is due primarily to decreased employee-related costs associated with a reduction in force in Bioprocessing Systems Operations.

Selling expenses for the six months ended June 30, 2026 and 2025, were $1,334,200 and $1,528,100, respectively.

The decrease of $193,900 (12.7%) 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 six months ended June 30, 2026, and 2025, were $1,398,100 and $1,329,100, respectively.

The increase of $69,000 (5.2%) is due primarily to the increase of research and development expenditures for new products associated with the Benchtop Laboratory Equipment's VIVID pill counters.

Other income, net

Other income, net, for the six months ended June 30, 2026 and 2025, were $117,500 and $55,300, 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 six months ended June 30, 2026, and 2025, was $0 and $0, respectively.

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.

Our primary sources 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.

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

For the three months ended

For the six months ended

Net cash used in operating activities

$ (1,897,600 )

$ (3,204,500 )

Net cash provided by investing activities

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Effect of changes in foreign currency exchange rates

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.

Net cash (used in) provided by discontinued operations

(Decrease) increase in cash and cash equivalents

Net cash used in operating activities decreased by $1,306,900 for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.

The net change is primarily due to cost reductions related to both the Benchtop and Bioprocessing Systems operations as well as corporate expenses.

Net cash provided by investing activities increased by $159,900 for the six months ended June 30, 2026, as compared the to six months ended June 30, 2025.

The net increase is primarily due to the higher redemption of investment securities during the six months ended June 30, 2026.

The decrease in net cash provided by financing activities for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 is related to there being no stock issuance for the six months ended June 30, 2026.

Critical Accounting Estimates

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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