UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒~~QUARTERLYREPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2020~~

☐~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to________

Commission file number 0-6658

~~SCIENTIFIC INDUSTRIES, INC.~~

~~(Exact Name of Registrant as specified in Its Charter)~~

~~Delaware~~	~~04-2217279~~ SCIENTIFIC INDUSTRIES, INC.
(Exact Name of Registrant as specified in Its Charter)

Delaware		04-2217279
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

80 Orville Drive, Suite 102, Bohemia, New York		11716
(Address of principal executive offices)		(Zip Code)

(631) 567-4700

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer☐	☐	Accelerated filer	☐
Non-accelerated filer☐	☐	Smaller reporting company	☒
		Emerging Growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

~~Indicate by check mark whether the registrant is a shell company~~ ~~(as defined in Rule 12b-2 of the Act)~~ ~~Yes~~☐ No ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, par value $.05 per share (“Common Stock”) as of November ~~6, 2020~~5, 2021 is ~~2,861,263~~6,458,143 shares.

SCIENTIFIC INDUSTRIES, INC.

Table of Contents

PART I - Financial Information

Item 11..	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)		#

	Condensed Consolidated Balance Sheets	2	3

	Condensed Consolidated Statements of Operations and Comprehensive Loss	3	4

	Condensed Consolidated Statements of Changes in Shareholders' Equity	4	5

	Condensed Consolidated Statements of Cash Flows	5	6

	Notes to Unaudited Condensed Consolidated Financial Statements	6	7

Item 22..	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13	15

Item 4.	CONTROLS AND PROCEDURES	14	16

PART II - Other Information

Item 6.	EXHIBITS AND REPORTS ON FORM 8-K	14	17

SIGNATURE			18


~~SIGNATURE~~		152

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

~~ASSETS~~

September 30, 2020

June 30, 2020

Current assets:

(Unaudited)

Cash and cash equivalents
$3,355,500
$7,559,700
Investment securities
  4,017,700
  331,800
Trade accounts receivable, less allowance for doubtful accounts of $11,600 at September 30, 2020
and June 30, 2020
  1,171,300
  1,064,000
Inventories
  2,941,200
  2,884,700
Income tax receivable
  331,500
  334,800
Prepaid expenses and other current assets
  134,700
  112,300
Total current assets
  11,951,900
  12,287,300



Property and equipment, net
  325,200
  279,700



Intangible assets, net
  129,000
  128,700



Goodwill
  705,300
  705,300



Other assets
  57,900
  56,000



Deferred taxes
  598,200
  537,100



Operating lease right-of-use assets
  826,600
  803,300



Total assets
$14,594,100
$14,797,400

~~LIABILITIES AND SHAREHOLDERS’ EQUITY~~

Current liabilities:

Accounts payable
$531,900
$354,700
Accrued expenses
  538,000
  799,700
Contract liabilities
  82,700
  89,000
Contingent consideration, current portion
  97,600
  111,000
Bank overdraft
  109,400
  43,100
Current portion of operating lease liabilities
  161,300
  226,900
Payroll Protection Program loan
  563,800
  563,800
Total current liabilities
  2,084,700
  2,188,200
Contingent consideration payable, less current portion
  247,000
  247,000
Operating lease liabilities, less current portion
  743,000
  640,800



Total liabilities
  3,074,700
  3,076,000
Shareholders’ equity:


Common stock, $.05 par value; 7,000,000 shares authorized; 2,881,065 shares issued; 2,861,263 shares outstanding at September 30, 2020 and June 30, 2020
  144,100
  144,100
Additional paid-in capital
  8,669,600
  8,608,300
Retained earnings
  2,758,100
  3,021,400

  11,571,800
  11,773,800
Less common stock held in treasury at cost, 19,802 shares
  52,400
  52,400



Total shareholders’ equity
  11,519,400
  11,721,400



Total liabilities and shareholders’ equity
$14,594,100
$14,797,400

	September 30, 2021			June 30, 2021
	(Unaudited)

ASSETS

Current assets:
Cash and cash equivalents	$	5,268,700		$	9,675,200
Investment securities		6,985,800			3,744,600
Trade accounts receivable, less allowance for doubtful accounts of $15,600 at September 30, 2021 and June 30, 2021		1,493,200			1,294,700
Inventories		3,094,700			2,977,100
Income tax receivable		66,000			333,300
Prepaid expenses and other current assets		502,100			350,900
Assets of discontinued operations		56,200			55,300
Total current assets		17,466,700			18,431,100

Property and equipment, net		435,300			412,600
Goodwill		4,395,400			4,395,400
Other intangible assets, net		2,418,900			2,557,800
Deferred taxes		2,812,500			2,489,900
Operating lease right-of-use assets		631,300			665,300
Other assets		54,200			54,300

Total assets	$	28,214,300		$	29,006,400

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	620,500		$	453,500
Accrued expenses		542,700			633,500
Contingent consideration, current portion		136,600			136,600
Bank overdraft		0			321,700
Lease liabilities, current portion		234,000			270,500
Payroll Protection Program loan		433,800			433,800
Liabilities of discontinued operations		26,400			37,200
Total current liabilities		1,994,000			2,286,800

Contingent consideration payable, less current portion		23,400			23,400
Lease liabilities, less current portion		469,200			460,500
Other long-term liabilities		0			10,900

Total liabilities		2,486,600			2,781,600

Shareholders’ equity:
Common stock, $.05 par value; 15,000,000 shares authorized; 6,477,945 shares issued; 6,458,143 shares outstanding at September 30, 2021 and June 30, 2021		324,000			324,000
Additional paid-in capital		27,288,900			26,613,500
Accumulated comprehensive gain (loss)		27,100			(9,200	)
Accumulated deficit		(1,859,900	)		(651,100	)
		25,780,100			26,277,200
Less common stock held in treasury at cost, 19,802 shares		52,400			52,400
Total shareholders’ equity		25,727,700			26,224,800

Total liabilities and shareholders’ equity	$	28,214,300		$	29,006,400

See notes to unaudited condensed consolidated financial statements.

Table of Contents

SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

For the Three Month Period Ended September 30, 2020

For the Three Month Period Ended September 30, 2019

Revenues
$2,156,300
$2,004,200



Cost of revenues
  1,146,600
  1,023,800



Gross profit
  1,009,700
  980,400



Operating expenses:


General and administrative
  579,600
  510,200
Selling
  521,700
  309,100
Research and development
  244,300
  236,600



Total operating expenses
  1,345,600
  1,055,900



Loss from operations
  (335,900)
  (75,500)



Other income (expense):


Other income (expense), net
  11,500
  (200)



Loss before income tax benefit
  (324,400)
  (75,700)



Income tax benefit:


Current
  -
  -
Deferred
  (61,100)
  (19,500)



Total income tax benefit
  (61,100)
  (19,500)



Net loss
$(263,300)
$(56,200)



Basic loss per common share
$(.09)
$(.04)



Diluted loss per common share
$(.09)
$(.04)

	For the Three Month Period Ended September 30, 2021			For the Three Month Period Ended September 30, 2020

Revenues	$	2,854,500		$	2,019,200

Cost of revenues		1,340,900			962,500

Gross profit		1,513,600			1,056,700

Operating expenses:
General and administrative		1,465,700			519,200
Selling		935,800			493,900
Research and development		636,500			244,300

Total operating expenses		3,038,000			1,257,400

Loss from operations		(1,524,400	)		(200,700	)

Other income (expense):
Other income (expense), net		(7,900	)		11,500

Loss from continuing operations before income tax benefit		(1,532,300	)		(189,200	)

Income tax benefit, deferred		(322,600	)		(35,600	)

Loss from continuing operations		(1,209,700	)		(153,600	)

Discontinued operations (Note 9):

Gain (loss) from discontinued operations, net of tax		900			(109,700	)

Net loss		(1,208,800	)		(263,300	)

Comprehensive gain:
Unrealized holding gain on investment securities, net of tax		2,200			0
Foreign currency translation adjustment		34,100			0
Comprehensive gain		36,300			0

Total comprehensive loss	$	(1,172,500	)	$	(263,300	)

Basic loss per common share:

Continuing operations	$	(.19	)	$	(.05	)
Discontinued operations	$	.00		$	(.04	)
Consolidated operations	$	(.19	)	$	(.09	)

See notes to unaudited condensed consolidated financial statements.

Table of Contents

SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)

Additional

Total

Common Stock

Paid-in

Retained

Treasury Stock

Shareholders’

Fiscal Year 2021

Shares

Amount

Capital

Earnings

Shares

Amount

Equity

Balance, July 1, 2020
  2,881,065
$144,100
$8,608,300
$3,021,400
  19,802
$52,400
$11,721,400








Net loss
  -
  -
  -
  (263,300)
  -
  -
  (263,300)








Stock-based compensation
  -
  -
  61,300
  -
  -
  -
  61,300
Balance, September 30, 2020
  2,881,065
$144,100
$8,669,600
$2,758,100
  19,802
$52,400
$14,594,100

Additional

Total

Common Stock

Paid-in

Retained

Treasury Stock

Shareholders’

Fiscal Year 2019

Shares

Amount

Capital

Earnings

Shares

Amount

Equity

Balance, July 1, 2019
  1,513,914
$75,700
$2,592,700
$3,724,700
  19,802
$52,400
$6,340,700








Net loss
  -
  -
  -
  (56,200)
  -
  -
  (56,200)








Stock options exercised
  2,000
  100
  6,900



  7,000








Stock-based compensation
  -
  -
  17,700
  -
  -
  -
  17,700
Balance, September 30, 2019
  1,515,914
$75,800
$2,617,300
$3,668,500
  19,802
$52,400
$6,309,200

~~SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)~~

For the Three Month Period Ended
September 30, 2020

For the Three Month Period Ended
September 30, 2019

Operating activities:

Net loss
$(263,300)
$(56,200)
Adjustments to reconcile net loss to net
cash used in operating activities:


Depreciation and amortization
  40,600
  41,000
Deferred income taxes
  (61,100)
  (19,500)
Stock-based compensation
  61,300
  17,700
(Gain) loss on sale of investments
  (16,800)
  800
Unrealized holding (gain) loss of investments
  20,900
  (2,300)
Changes in operating assets and liabilities:


Trade accounts receivable
  (107,300)
  106,400
Income tax receivable
  3,300
  -
Right -of- use assets
  (23,300)
  (902,500)
Lease liability
  36,600
  969,100
Inventories
  (56,500)
  (120,800)
Prepaid and other assets
  (24,300)
  (6,800)
Accounts payable
  177,200
  (111,800)
Contract liabilities
  (6,300)
  62,000
Bank overdraft
  66,300
  -
Accrued expenses
  (261,700)
  (301,200)



Total adjustments
  (151,100)
  (267,900)



Net cash used in operating activities
  (414,400)
  (324,100)



Investing activities:


Purchase of investment securities
  (3,723,500)
  (25,000)
Redemption of investment securities
  33,800
  23,800
Capital expenditures
  (70,500)
  (17,000)
Purchase of other intangible assets
  (16,200)
  (7,500)



Net cash used in investing activities
  (3,776,400)
  (25,700)



Financing activities:


Proceeds from stock options exercised
  -
  7,000
Payments of contingent consideration
  (13,400)
  -



Net cash provided by (used in) financing activities
  (13,400)
  7,000



Net decrease in cash and cash equivalents
  (4,204,200)
  (342,800)



Cash and cash equivalents, beginning of year
  7,559,700
  1,602,500



Cash and cash equivalents, end of period
$3,355,500
$1,259,700



Supplemental disclosures:





Cash paid during the period for:


Income taxes
$500
$40,900
Interest
  -
  -

							Accumulated
	Common Stock				Additional Paid-in		other Comprehensive Income			Retained Earnings (Accumulated			Treasury Stock				Total Shareholders’
Fiscal Year 2022	Shares		Amount		Capital		(Loss)			Deficit)			Shares		Amount		Equity

Balances, July 1, 2021		6,477,945	$	324,000	$	26,613,500	$	(9,200	)	$	(651,100	)		19,802	$	52,400	$	26,224,800

Net loss		-		0		0		0			(1,208,800	)		-		0		(1,208,800	)

Foreign currency translation adjustment		-		0		0		34,100			0			-		0		34,100

Unrealized holding gain on investment securities, net of tax		-		0		0		2,200			0			-		0		2,200

Stock-based compensation		-		0		675,400		0			0			-		0		675,400

Balances, September 30, 2021		6,477,945	$	324,000	$	27,288,900	$	27,100		$	(1,859,900	)		19,802	$	52,400	$	25,727,700

							Accumulated
	Common Stock				Additional Paid-in		other Comprehensive Income		Retained			Treasury Stock				Total Shareholders’
Fiscal Year 2021	Shares		Amount		Capital		(Loss)		Earnings			Shares		Amount		Equity

Balances, July 1, 2020		2,881,065	$	144,100	$	8,608,300	$	0	$	3,021,400			19,802	$	52,400	$	11,721,400

Net loss		-		0		0		0		(263,300	)		-		0		(263,300	)

Stock-based compensation		-		0		61,300		0		0			-		0		61,300

Balances, September 30, 2020		2,881,065	$	144,100	$	8,669,600	$	0	$	2,758,100			19,802	$	52,400	$	14,594,100

See notes to unaudited condensed consolidated financial statements.

Table of Contents

SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Three Month Period Ended September 30, 2021			For the Three Month Period Ended September 30, 2020
Operating activities:
Net loss	$	(1,208,800	)	$	(263,300	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		165,100			40,600
Deferred income tax benefit		(322,600	)		(61,100	)
Stock-based compensation		675,400			61,300
(Gain) loss on sale of investments		200			(16,800	)
Unrealized holding loss of investments		32,800			20,900
Changes in operating assets and liabilities:
Trade accounts receivable		(198,500	)		(107,300	)
Income tax receivable		267,300			3,300
Right -of- use assets		34,000			(23,300	)
Lease liabilities		(27,800	)		36,600
Inventories		(117,600	)		(56,500	)
Prepaid and other current assets		(151,200	)		(24,300	)
Accounts payable		167,000			177,200
Contract liabilities		0			(6,300	)
Bank overdraft		(321,700	)		66,300
Other long-term liabilities		(10,800	)		0
Accrued expenses		(90,700	)		(261,700	)

Total adjustments		100,900			(151,100	)

Net cash used in operating activities		(1,107,900	)		(414,400	)

Investing activities:
Purchase of investment securities		(3,982,400	)		(3,723,500	)
Redemption of investment securities		708,200			33,800
Capital expenditures		(48,900	)		(70,500	)
Purchase of other intangible assets		0			(16,200	)

Net cash used in investing activities		(3,323,100	)		(3,776,400	)

Financing activities:
Payments of contingent consideration		0			(13,400	)

Net cash used in financing activities		0			(13,400	)

Effect of changes in foreign currency exchange rates and gain on investment securities		24,500			0

Net decrease in cash and cash equivalents		(4,406,500	)		(4,204,200	)

Cash and cash equivalents, beginning of year		9,675,200			7,559,700

Cash and cash equivalents, end of period	$	5,268,700		$	3,355,500

Supplemental disclosures:
Cash paid during the period for:
Income taxes	$	0		$	500

See notes to unaudited condensed consolidated financial statements.

Table of Contents

SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

General:

The accompanying unaudited interim condensed consolidated financial statements are prepared pursuant to the Securities and Exchange Commission’s rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnotes required by accounting principles generally accepted in the United States for complete financial statements are not included herein. The Company believes all adjustments necessary for a fair presentation of these interim statements have been included and that they are of a normal and recurring nature. These interim statements should be read in conjunction with the Company’s financial statements and notes thereto, included in its Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020.~~2021. The results for the three months ended September 30, ~~2020,~~2021 are not necessarily an indication of the results for the full fiscal year ending June 30, ~~2021.~~

2022.

1. ~~Summary of~~ Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Scientific Industries, Inc., Scientific Packaging Industries, Inc., an inactive wholly-owned subsidiary, Altamira Instruments, Inc. (“Altamira”), a Delaware corporation and wholly-owned subsidiary (discontinued operation as of November 30, 2020), and Scientific Bioprocessing Holdings, Inc. (“SBHI”), a Delaware corporation, and its wholly-owned subsidiaries, Scientific Bioprocessing, Inc. (“SBI”), a Delaware corporation, and ~~wholly-owned subsidiary, and Scientific Packaging Industries, Inc.~~aquila biolabs GmbH (“Aquila”), ~~an inactive wholly-owned subsidiary~~a German corporation, which was acquired on April 29, 2021, (all collectively referred to as the “Company”). On April 30, 2021 Scientific Industries, Inc. contributed 100% of the stock of SBI to SBHI. All material intercompany balances and transactions have been ~~eliminated.~~

eliminated in consolidation.

COVID-19 Pandemic

The challenges posed by the COVID-19 pandemic on the global economy began to ~~impact~~take effect and adversely effected the Company’s operations at the end of the third quarter of the fiscal year ended June 30, 2020. At that time, the Company took appropriate action and put plans in place to diminish the adverse effects of COVID-19 on its operations, enabling the Company to continue to operate with minor or temporary disruptions to its operations. The Company took immediate action ~~as it pertains~~pertaining to COVID-19 preparedness by implementing the Center for Disease Control’s guidelines for employers in order to protect the Company’s employees’ health and safety, with actions such as implementing work from home, social distancing in the workplace, requiring ~~self -quarantine~~self-quarantine for any employee showing symptoms, wearing face coverings, and training employees on maintaining a healthy work environment. ~~However, if an employee becomes infected in the future, and the Company is forced to~~The Bioprocessing Systems Operations’ SBI facility was shut down ~~for a period of time, it could have a short-term negative impact on operations. At the beginning of the pandemic, the Catalyst Research Instruments and Bioprocessing Systems Operations were shut down~~temporarily due to state mandates, however, the impact on operations was immaterial, and the Company has been able to retain its employees without furloughs or layoffs, in part, due to the ~~Company’s~~Company’ receipt of ~~a $563,800 loan~~two loans under the Federal Government’s Small Business Administration Paycheck Protection Program. The Company ~~has not experienced~~received $563,800 and ~~does not anticipate~~$433,800 in Payroll Protection Program loans in April 2020 and March 2021, respectively. The first loan was forgiven in June 2021 except for $32,700 which was repaid by the Company. The Company expects to apply and receive forgiveness for the second loan. The Company elected to account for its PPP Loans in accordance with Accounting Standards Codification (“ASC”), 470 Debt, with interest, if any, ~~material impact~~accrued in accordance with the interest method under ASC 835-30, Imputation of Interest. Initially, the Company recognized the entire loan amounts as liabilities on its ~~ability to collect~~balance sheets, and remain as liabilities until either the Company is legally released from its ~~accounts receivable due to~~obligations or pays the ~~nature of its customers, which are primarily distributors of laboratory equipment and supplies that have~~lender. Once the ~~ability to pay. However, there were some delays~~loan is forgiven, the amount forgiven is recorded in receiving some accounts receivable due for catalyst research instruments due to customer shutdowns, and there was a material negative impact on the revenues of the Catalyst Research Instruments operations. The Company has not experienced and does not anticipate any material impairment to its tangible and intangible assets, system of internal controls, supply chain, or delivery and distribution of its products as a result of COVID-19, however the ultimate impact of COVID-19 on the Company’s ~~business, results~~statement of operations financial condition and cash flows is dependent on future developments, including the duration or worsening of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time.

as “Other Income.”

Adopted Accounting Pronouncements

In ~~August 2018,~~December 2019, the ~~The~~ Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ~~("ASU"~~(“ASU”) 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement", which is part of the FASB disclosure framework project to improve the effectiveness of disclosures in the notes to the financial statements. The amendments in the new guidance remove, modify, and add certain disclosure requirements related to fair value measurements covered in Topic 820, "Fair Value Measurement." The new standard was effective for fiscal years beginning after December 15, 2019. Early adoption was permitted for ~~either the entire standard or~~ only the requirements that modify or eliminate the disclosure requirements, with certain requirements applied prospectively, and all other requirements applied retrospectively to all periods presented. The adoption of this standard on July 1, 2020 did not have a material impact on the Company’s financial statements.

R~~Recent Accounting Pronouncements~~

~~In December 2019, the FASB issued ASU~~ No. 2019-12, ~~Simplifying~~“Simplifying the Accounting for Income ~~Taxes,~~Taxes”, which is designed to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. ASU No. 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years; this ASU allows for early adoption in any interim period after issuance of the update. The ~~Company is currently evaluating~~adoption of this standard as of July 1, 2021 did not have a material impact on the ~~impact of adopting this guidance~~.

Company’s financial statements.

Table of Contents

2. Revenue

The Company records revenues in accordance with Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers, as amended” (“ASC Topic 606”). In accordance with Topic 606, the Company accounts for a customer contract when both parties have approved the contract and are committed to perform their respective obligations, each party’s rights can be identified, payment terms can be identified, the contract has commercial substance, and it is probable that the Company will collect substantially all of the consideration to which it is entitled. Revenue is recognized when, or as, performance obligations are satisfied by transferring control of a promised product or service to a customer.

~~Nature of Products and Services~~

~~We generate~~generates revenues from the following sources: (1) Benchtop Laboratory Equipment, and (2) ~~Catalyst Research Instruments, and (3) Royalties.~~

~~The following table summarizes the Company’s disaggregation of revenues for the three months ended September 30, 2020 and 2019.~~

Bioprocessing Systems.

	Benchtop Laboratory Equipment		Bioprocessing Systems		Consolidated
Three Months Ended September 30, 2021:

Revenues	$	2,529,900	$	324,600	$	2,854,500

Foreign Sales		1,071,800		91,500		1,163,300

	Benchtop Laboratory Equipment		Bioprocessing Systems		Consolidated
Three Months Ended September 30, 2020:

Revenues	$	1,930,300	$	88,900	$	2,019,200

Foreign Sales		631,900		86,300		718,200

Benchtop Laboratory Equipment sales are comprised primarily of standard benchtop laboratory equipment ~~from its stock~~sold to laboratory equipment distributors, or to end users primarily via e-commerce. The sales cycle from time of receipt of order to shipment is ~~very~~ short ~~varying~~ranging from a day to a few weeks. Customers either pay by credit card (online sales) or ~~net~~Net 30-90 days, depending on the customer. Once the item is shipped under the ~~FOB~~ terms specified in the order, which is primarily “FOB Factory”, other than a standard warranty, there are no other obligations to the customer. The standard warranty is typically ~~for a period of,~~ one toor two years, ~~for~~covering parts and labor, and is deemed immaterial.

~~Catalyst Research Instrument sales are comprised primarily~~ Revenue is recognized at the point in time when the risks and rewards of large instruments which begin with a standard model and then are customized to a customer’s specifications. The sales cycle can be quite long, typically ranging from one to three months, from the time an order is receivedownership have transferred to the ~~time the instrument is shipped to the customer. Payment terms vary from~~ customer, ~~to customer and can include advance payments which are recorded as contract liabilities. Some contracts call for training and installation,~~ which is ~~considered ancillary~~generally upon shipment.

Bioprocessing Systems revenues consist of royalty revenues generated through SBI and not a material part of the contract. Due to the size and nature of the instruments, the Company subjects the instruments to an extensive factory acceptance testing process prior to shipment to ensure that they are fully operational once they reach the customer’s site. Normally, the Company warrantees its instruments for a period of twelve months for parts and labor the fulfillment of which normally consists of replacement of small components or software support.

product revenues generated primarily through Aquila. Royalty revenues ~~pertain to royalties~~are earned by the Company ~~which are paid on a calendar year basis,~~ under a licensing agreement from a single licensee and its sublicenses. The license agreement includes two United States patents, one which expired in August 2021 and another which will expire in December 2023. The Company is ~~then~~ obligated to pay 50% of all royalties ~~received~~earned to the entity that licenses the intellectual property to the Company. ~~During the year, the Company’s management uses its best judgement to estimate the royalty revenues earned during the period.~~

~~The Company determines revenue recognition through the following steps:~~


●	~~Identification of the contract, or contracts, with a customer~~8
	●	~~Identification of the performance obligations in the contract~~
	●	~~Determination~~Table of ~~the transaction price~~Contents
	●	~~Allocation of the transaction price to the performance obligations in the contract~~
	●	~~Recognition of revenue when, or as, a performance obligation is satisfied~~

The Company has made the following accounting policy elections and elected to use certain practical expedients, as permitted by the FASB, in applying ASC Topic 606: 1) all revenues are recorded net of returns, allowances, customer discounts, and incentives; 2) although sales and other taxes are immaterial, the Company accounts for amounts collected from customers for sales and other taxes, if any, net of related amounts remitted to tax authorities; 3) the Company expenses costs to obtain a contract as they are incurred if the expected period of benefit, and therefore the amortization period, is one year or less; 4) the Company accounts for shipping and handling activities that occur after control transfers to the customer as a fulfillment cost rather than an additional promised service and these fulfillment costs fall within selling expenses; 5) the Company is always considered the principal and never an agent, because it has full control and responsibility until title is transferred to the customer; 6) the Company does not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer such as is the case with catalyst instruments.

3. Segment Information and Concentrations

The Company views its operations as ~~three~~two segments: the manufacture and marketing of standard benchtop laboratory equipment for research in university, hospital and industrial laboratories sold primarily through laboratory equipment distributors and laboratory and pharmacy balances and scales (“Benchtop Laboratory Equipment Operations”), the manufacture and marketing of custom-made catalyst research instruments for universities, government laboratories, and chemical and petrochemical companies sold on a direct basis (“Catalyst Research Instruments Operations”); and the design, manufacture, and marketing of bioprocessing systems and products and related royalty income (“Bioprocessing Systems”).

Segment information is reported as follows:

Benchtop Laboratory Equipment

Catalyst Research Instruments

Bioprocessing
Systems

Corporate
And
Other

Consolidated

Three Months Ended
September 30, 2020:

Revenues
$1,930,300
$137,100
$88,900
$-
$2,156,300






Foreign Sales
  631,900
  57,200
  86,300
  -
  775,400






Income (Loss) From Operations
  383,800
  (135,200)
  (532,300)
  (52,200)
  (335,900)






Assets
  5,871,900
  996,000
  775,700
  6,950,500
  14,594,100






Long-Lived Asset Expenditures
  21,800
  -
  64,900
  -
  86,700






Depreciation and Amortization
  26,300
  300
  14,000
  -
  40,600

Benchtop Laboratory Equipment

Catalyst Research Instruments

Bioprocessing Systems

Corporate
And
Other

Consolidated

Three Months Ended
September 30, 2019:

Revenues
$1,576,200
$138,700
$289,300
$-
$2,004,200






Foreign Sales
  397,600
  71,700
  -
  -
  469,300






Income (Loss) From Operations
  12,900
  (90,200)
  1,800
  -
  (75,500)






Assets
  5,589,400
  1,400,900
  1,088,100
  784,200
  8,862,600






Long-Lived Asset Expenditures
  7,800
  -
  16,700
  -
  24,500






Depreciation and Amortization
  30,500
  400
  10,100
  -
  41,000

	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate And Other			Consolidated
Three Months Ended September 30, 2021:

Revenues	$	2,529,900	$	324,600		$	-		$	2,854,500

Foreign Sales		1,071,800		91,500			-			1,163,300

Income (Loss) From Operations		561,600		(1,685,500	)		(400,500	)		(1,524,400	)

Assets		9,689,700		8,670,100			9,854,500			28,214,300

Long-Lived Asset Expenditures		33,800		15,100			0			48,900

Depreciation and Amortization		22,800		142,300			0			165,100

	Benchtop Laboratory Equipment		Bioprocessing Systems			Corporate And Other			Consolidated
Three Months Ended September 30, 2020:

Revenues	$	1,930,300	$	88,900		$	-		$	2,019,200

Foreign Sales		631,900		86,300			-			718,200

Income (Loss) From Operations		383,800		(532,300	)		(52,200	)		(200,700	)

Assets		5,871,900		775,700			7,946,500			14,594,100

Long-Lived Asset Expenditures		21,800		64,900			0			86,700

Depreciation and Amortization		26,300		14,000			0			40,300

Approximately ~~47%~~52% and ~~36%~~47% of net sales of Benchtop Laboratory Equipment for the three ~~month periods~~months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, were derived from the Company’s main product, the Vortex-Genie 2 mixer, excluding accessories.

Approximately ~~27%~~20% and ~~33%~~27% of total Benchtop Laboratory Equipment sales were derived from the Torbal Scales Division for the three months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively.

For the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, three customers accounted for approximately 22% and 23% ~~(both periods)~~ of net sales of the Benchtop Laboratory Equipment Operations ~~(21%~~(19% and ~~18%~~22% of the Company’s total revenues). , respectively.

Sales of ~~Catalyst Research Instruments are generally comprised~~products from Aquila of ~~a few very large orders averaging approximately $50,000 per order~~the Bioprocessing Systems Operations, amounted to ~~a limited number of customers, who differ from order to order. Sales to two customers during~~$168,200 for the three months ended September 30, ~~2020 accounted for approximately 88% of~~2021 and none in the Catalyst Research Instruments Operations revenues and 6% of the Company’s total revenues. Sales to two other customers during the three months ended September 30, 2019 accounted for approximately 90% of the Catalyst Research Instrument Operations’ revenues and 6% of the Company’s total revenues.

corresponding prior year period.

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4. Fair Value of Financial Instruments

The FASB defines the fair value of financial instruments as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements do not include transaction costs.

The accounting guidance also expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are described below:

~~Level 1 - Inputs that are based upon unadjusted quoted prices for identical instruments traded in active markets.~~

~~Level 2 - Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.~~

~~Level 3 - Prices or valuation that require inputs that are both significant to the fair value measurement and unobservable.~~

In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculated the fair value of its Level 1 and 2 instruments based on the exchange traded price of similar or identical instruments where available or based on other observable instruments. These calculations take into consideration the credit risk of both the Company and its counterparties. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period.

The fair value of the contingent consideration obligations are based on a probability weighted approach derived from the estimates of earn-out criteria and the probability assessment with respect to the likelihood of achieving those criteria. The measurement is based on significant inputs that are not observable in the market, therefore, the Company classifies this liability as Level 3 in the following ~~tables.~~

table.

The following tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis at September 30, ~~2020~~2021 and June 30, ~~2020~~2021 according to the valuation techniques the Company used to determine their fair values:

Fair Value Measurements Using Inputs Considered as

Fair Value at September 30, 2020

Level 1

Level 2

Level 3

Assets:

Cash and cash equivalents
$3,355,500
$3,355,500
$-
$-
Investment securities
  4,017,700
  4,017,700
  -
  -





Total
$7,373,200
$7,373,200
$-
$-





Liabilities:




Contingent consideration
$344,600
$-
$-
$344,600

~~Payments amounting to $13,400 for contingent consideration were made during the three months ended September 30, 2020.~~

  Fair Value Measurements Using Inputs Considered as

Fair Value at June 30, 2020

Level 1

Level 2

Level 3

Assets:

Cash and cash equivalents
$7,559,700
$7,559,700
$-
$-
Investment securities
  331,800
  331,800
  -
  -





Total
$7,891,500
$7,891,500
$-
$-





Liabilities:




Contingent consideration
$358,000
$-
$-
$358,000

	Fair Value at		Fair Value Measurements Using Inputs Considered as
	September 30, 2021		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	5,268,700	$	5,268,700	$	0	$	0
Investment securities		6,985,800		6,878,200		107,600		0

Total	$	12,254,500	$	12,146,900	$	107,600	$	0

Liabilities:
Contingent consideration	$	160,000	$	0	$	0	$	160,000

	Fair Value at		Fair Value Measurements Using Inputs Considered as
	June 30, 2021		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	9,675,200	$	9,675,200	$	0	$	0
Investment securities		3,744,600		2,920,600		824,000		0

Total	$	13,419,800	$	12,595,800	$	824,000	$	0

Liabilities:
Contingent consideration	$	160,000	$	0	$	0	$	160,000

Investments in marketable securities ~~classified as available-for-sale~~ by security type at September 30, ~~2020~~2021 and June 30, ~~2020~~2021 consisted of the following:

Cost

Fair Value

Unrealized Holding Gain (Loss)

At September 30, 2020:

Equity securities
$110,800
$118,400
$7,600
Mutual and bond funds
  3,876,200
  3,899,300
  23,100





$3,987,000
$4,017,700
$30,700

Cost

Fair Value

Unrealized Holding Gain (Loss)

At June 30, 2020:

Equity securities
$77,600
$101,900
$24,300
Mutual funds
  250,300
  229,900
  (20,400)





$327,900
$331,800
$3,900

	Cost		Fair Value		Unrealized Holding Gain
At September 30, 2021:
Equity securities	$	112,100	$	159,200	$	47,100
Mutual funds		6,714,600		6,719,000		4,400
Debt securities		105,400		107,600		2,200

	$	6,932,100	$	6,985,800	$	53,700

	Cost		Fair Value		Unrealized Holding Gain (Loss)
At June 30, 2021:
Equity securities	$	102,200	$	154,100	$	51,900
Mutual funds		2,752,400		2,766,500		14,100
Debt securities		832,700		824,000		(8,700	)

	$	3,687,300	$	3,744,600	$	57,300

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5. Inventories

September 30,2020

June 30,2020

Raw materials
$1,883,500
$1,838,500
Work-in-process
  323,500
  228,600
Finished goods
  734,200
  817,600

$2,941,200
$2,884,700

	September 30, 2021		June 30, 2021
Raw materials	$	2,139,200	$	2,170,400
Work-in-process		91,900		39,600
Finished goods		863,600		767,100
	$	3,094,700	$	2,977,100

6. Goodwill and ~~Other~~Finite Lived Intangible Assets

~~Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in connection with the Company’s acquisitions.~~

Goodwill amounted to ~~$705,300~~$4,395,400 at September 30, ~~2020~~2021 and June 30, ~~2020,~~2021, all of which is expected to be deductible for tax purposes.

The components of ~~other~~finite lived intangible assets are as follows:

Useful Lives

Cost

Accumulated Amortization

Net

At September 30, 2020:

Technology, trademarks 5/10 yrs.
$664,700
$662,000
$2,700
Trade names 6 yrs.
  140,000
  140,000
  -
Websites 5 yrs.
  210,000
  210,000
  -
Customer relationships 9/10 yrs.
  357,000
  324,800
  32,200
Sublicense agreements 10 yrs.
  294,000
  260,900
  33,100
Non-compete agreements 5 yrs.
  384,000
  384,000
  -
IPR&D 3 yrs.
  110,000
  110,000
  -
Other intangible assets 5 yrs.
  262,700
  201,700
  61,000





$2,422,400
$2,293,400
$129,000

Useful Lives

Cost

Accumulated Amortization

Net

At June 30, 2020:

Technology, trademarks 5/10 yrs.
$664,700
$662,000
$2,700
Trade names 6 yrs.
  140,000
  140,000
  -
Websites 5 yrs.
  210,000
  210,000
  -
Customer relationships 9/10 yrs.
  357,000
  321,400
  35,600
Sublicense agreements 10 yrs.
  294,000
  253,600
  40,400
Non-compete agreements 5 yrs.
  384,000
  384,000
  -
IPR&D 3 yrs.
  110,000
  110,000
  -
Other intangible assets 5 yrs.
  246,600
  196,600
  50,000





$2,406,300
$2,277,600
$128,700

	Useful Lives	Cost		Accumulated Amortization		Net
At September 30, 2021:
Technology, trademarks	5-10 yrs.	$	364,700	$	363,000	$	1,700
Trade names	3-6 yrs.		592,300		171,500		420,800
Websites	3-7 yrs.		210,000		210,000		0
Customer relationships	4-10 yrs.		372,200		112,600		259,600
Sublicense agreements	10 yrs.		294,000		290,300		3,700
Non-compete agreements	4-5 yrs.		1,060,500		357,500		703,000
IPR&D	3-5 yrs.		852,100		172,000		680,100
Patents	5-7 yrs.		591,500		241,500		350,000

		$	4,337,300	$	1,918,400	$	2,418,900

	Useful Lives	Cost		Accumulated Amortization		Net
At June 30, 2021:
Technology, trademarks	5-10 yrs.	$	364,700	$	362,200	$	2,500
Trade names	3-6 yrs.		592,300		152,600		439,700
Websites	3-7 yrs.		210,000		210,000		0
Customer relationships	4-10 yrs.		372,200		102,400		269,800
Sublicense agreements	10 yrs.		294,000		283,000		11,000
Non-compete agreements	4-5 yrs.		1,060,500		308,600		751,900
IPR&D	3-5 yrs.		852,100		134,800		717,300
Patents	5-7 yrs.		591,500		225,900		365,600

		$	4,337,300	$	1,779,500	$	2,557,800

Total amortization expense was ~~$15,800~~$138,900 and ~~$19,500~~$15,800 for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. As of September 30, ~~2020,~~2021, estimated future amortization expense related to intangible assets is ~~$44,000~~$386,800 for the remainder of the fiscal year ending June 30, ~~2021, $36,800 for fiscal~~ 2022, ~~$20,200~~$520,300 for fiscal 2023, ~~$16,400~~$508,800 for fiscal 2024, ~~and $11,600~~$474,100 for fiscal ~~2025.~~

2025, $272,400 for fiscal 2026 and $256,500 thereafter.

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7.Loss Per Common Share

~~Loss~~

The Company presents the computation of earnings per share (“EPS”) on a basic basis. Basic EPS is computed by dividing net income, if any, by the weighted average number of shares outstanding during the reported period. Diluted EPS is computed similarly to basic EPS, except that the denominator is increased to include the number of additional common ~~share data was computed as follows:~~

For the Three Months Ended September 30, 2020

For the Three Months Ended September 30, 2019

Loss
$(263,300)
$(56,200)



Weighted average common shares outstanding
  2,861,263
  1,494,212



Basic loss per common share
  (.09)
  (.04)
Diluted loss per common share
  (.09)
  (.04)

shares that would have been outstanding if the potential additional common shares that were dilutive had been issued. Common shares are excluded from the calculation if they are determined to be anti-dilutive; accordingly, no dilution is shown for loss periods. The following table sets forth the weighted average number of common shares outstanding for each period presented.

	September 30, 2021			September 30, 2020

Weighted average number of common shares outstanding		6,458,143			2,861,263
Effect of dilutive securities:		-			-
Weighted average number of dilutive common shares outstanding		6,458,143			2,861,263

Basic loss per common share:

Continuing operations	$	(.19	)	$	(.05	)
Discontinued operations	$	(.00	)	$	(.04	)
Consolidated operations	$	(.19	)	$	(.09	)

Approximately ~~126,700~~539,357 and ~~1,349,850~~3,246,984 shares of the Company's common stock issuable upon the exercise of options and warrants, respectively, were excluded from the calculation because the effect would be anti-dilutive due to the loss for the three months ended September 30, ~~2020.~~2021. Approximately, ~~44,200~~126,700 and 1,349,850 shares of the Company’s common stock issuable upon the exercise of outstanding options and warrants, respectively, were excluded from the calculation because the effect would be anti-dilutive due to the loss for the three months ended September 30, ~~2019 because they were anti-dilutive.~~

2020.

8. Leases

~~The Company~~ recognizes all long-term leases on its balance sheet as a liability for its lease obligation, measured at the present value of lease payments not yet paid, and a corresponding asset representing its right to use the underlying asset over the lease term.

The Company leases certain properties consisting principally of a facility in Bohemia, New York (headquarters) through January 2025 ~~a facility in Pittsburgh, Pennsylvania for its Catalyst Research Instrument Operations~~which was amended effective October 2021, toincrease the space by approximately 25% and lease term through ~~November 2020 and on~~approximately October 2028, a ~~month to month basis thereafter, and another~~ facility in Pittsburgh, Pennsylvania for its Bioprocessing Systems Operations through May 2023, and a facility for sales and administration ~~office~~ in Orangeburg, New York ~~for its Torbal Division of the Benchtop Laboratory Equipment Operations~~ through October 2022. The Company had a lease for its discontinued operations through November 2020. There are no renewal options with any of the leases, no residual values or significant restrictions or covenants other than those customary in such arrangements, and no non-cash activities, and any rent escalations incorporated within the leases are included in the calculation of the future minimum lease payments, as further described below. ~~All of the Company’s leases are deemed operating leases.~~

The Company determines whether an agreement contains a lease at inception based on the Company’s right to obtain substantially all of the economic benefits from the use of the identified asset and its right to direct the use of the identified asset. Lease liabilities represent the present value of future lease payments and the Right-Of-Use (“ROU”) assets represent the Company’s right to use the underlying assets for the respective lease terms. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. The ROU asset is further adjusted to account for previously recorded lease expenses such as deferred rent and other lease liabilities. As the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate of 5.0% as the discount rate to calculate the present value of future lease payments, which was the interest rate that its bank would charge for a similar loan.

The Company elected not to recognize a ROU asset and a lease liability for leases with an initial term of twelve months or less. In addition to minimum lease payments, certain leases require payment of a proportionate share of real estate taxes and certain building operating expenses or payments based on an excess of a specified base. These variable lease costs are not included in the measurement of the ROU asset or lease liability due to unpredictability of the payment amount and are recorded as lease expenses in the period incurred. The Company’s lease agreements do not contain residual value ~~guarantees.~~

guarantees

The Company elected available practical expedients for existing or expired contracts of lessees ~~wherein~~whereby the Company is not required to reassess whether such contracts contain leases, the lease classification or the initial direct costs. The Company is not utilizing the practical expedient which allows the use of hindsight by lessees and lessors in determining the lease term and in assessing impairment of its ROU assets. The Company utilized the transition method allowing entities to only apply the new lease standard in the year of adoption.

Table of Contents

8. Leases (continued)

As of September 30, ~~2020,~~2021, the weighted-average remaining lease term for operating lease liabilities was approximately ~~3.5~~2.5 years and the weighted-average discount rate was 5.0%. Total cash payments under these leases were ~~$78,600,~~approximately $68,300, for the three months ended September 30, 2021 of which ~~$78,800~~$62,600 was recorded as leases expense.

The Company’s approximate future minimum rental payments under all leases existing at September 30, ~~2020~~2021 through ~~February~~January 2025 are as follows:

Fiscal year ending June 30,

Amount

Remainder of 2021
$204,200
2022
  260,300
2023
  245,300
2024
  195,900
2025
  91,600


Total future minimum payments
  997,300
Less: Imputed interest
  93,000


Total Present Value of Operating Lease Liabilities
  904,300

I~~tem~~

Fiscal year ending June 30,	Amount
Remainder of 2022	$	209,000
2023		261,100
2024		195,900
2025		91,600

Total future minimum payments	$	757,600
Less imputed interest		(54,400	)

Total Present Value of Operating Lease Liabilities	$	703,200

9.Discontinued Operations

Effective November 30, 2020, as part of its strategic shift to becoming a life sciences tool provider, the Company sold its operations relating to the manufacture and marketing of custom-made catalyst research instruments for universities, government laboratories, and chemical petrochemical companies sold on direct basis (the “ Catalyst Research Instruments Operations” through the sale by Altamira of substantially all of its assets, and inventory to Beijing JWGB Sci. & Tech. Co. Ltd., a corporation formed under the laws of the People’s Republic of China (“JWGB”) for $440,000 which was fully paid in cash by January 2021, resulting in a $405,400 pre-tax loss. To preserve business continuity for the buyer, Altamira agreed to purchase certain components on behalf of JWGB for which JWGB agreed to reimburse Altamira. The Company retained all its receivables and payables related to sales made prior to November 30, 2020, certain inventory related to two work-in-process orders that will be shipped by the end of the fiscal year ending June 30, 2022, product warranty and other miscellaneous liabilities related to certain employee benefits, and expenses related to the closure of the Altamira facility, which was completed at the end of December 2020.

As a result of the disposal described above, the operating results of the former Catalyst Research Instruments Operations segment have been presented as discontinued operations in the balance sheets, the statements of operations, and the statements of cash flows, as detailed below.

Assets:	September 30, 2021		June 30, 2021
Cash	$	900	$	0
Accounts receivable		52,000		52,000
Inventories		3,300		3,300

Discontinued operations	$	56,200	$	55,300

Liabilities:	September 30, 2021		June 30, 2021
Accrued expenses and taxes	$	9,900	$	20,700
Contract liabilities		16,500		16,500

	$	26,400	$	37,200

Table of Contents

9.Discontinued Operations (continued)

	September 30, 2021		September 30, 2020
Revenues	$	1,200	$	137,100
Cost of goods sold		0		184,200
Gross profit		1,200		(47,100	)
Selling, general and administrative expenses		300		88,100
Loss from operations before income tax benefit		900		(135,200	)
Income tax benefit, deferred		-		(25,500	)
Net income (loss) attributable to discontinued operations	$	900	$	(109,700	)

In our Consolidated Statements of Cash Flows, the cash flows from discontinued operations are not separately classified. Cash provided by operating activities from discontinued operations for three months ended September 30, 2021 and September 30, 2020 was $900 and $245,700, respectively. There was no cash provided by or used in investing or financing activities for both periods.

10. Acquisition of Aquila Biolabs GmbH

Effective April 29, 2021, pursuant to a Stock Purchase Agreement ("SPA") the Company acquired all the outstanding capital stock of Aquila, a German start-up company engaged from its facility in Baesweiler, Germany in the design, production, and sale of bioprocessing systems and products which focus on the control and analysis of bioprocesses in bioreactors and incubation shakers for an aggregate purchase price of $7,880,100 in cash upon closing. Aquila’s principal customers are universities, pharmaceutical companies, and industrial companies. The products are sold primarily on a direct basis and to a lesser extent, through distributors.

The acquisition was accounted for in accordance with ASC 805, Business Combinations (“ASC 805”) in which the Company is treated as the accounting acquirer. Accordingly, the assets acquired and liabilities assumed have been measured at estimated fair value.

For purposes of measuring the estimated fair value, where applicable, of the assets acquired and liabilities assumed, as reflected in the unaudited pro forma condensed consolidated financial information, the guidance in ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) has been applied, which establishes a framework for measuring fair value. In accordance with ASC 820, fair value is an exit price and is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Under ASC 805, acquisition-related transaction costs and acquisition-related restructuring charges are not included as components of consideration transferred but are accounted for as expenses in the period in which the costs are incurred.

Management of the Company allocated the purchase price based on its estimated valuation of the assets acquired and liabilities assumed as follows:

	Amount			Useful life
Fair value of assets acquired:
Current assets:
Cash and cash equivalents	$	201,100
Accounts receivable		159,200
Inventory		187,500
Prepaid expenses and other current assets		25,400
Property, plant and equipment		40,200
Deferred tax asset		800,300
Tradename		452,300		6 years
Non-compete agreements		784,500		4 years
IPR&D		742,100		5 years
Customer relationships		252,200		9 years
Patents and other intangibles		286,200		7 years
Total assets acquired	$	3,931,000

Fair value of liabilities assumed:
Accounts payable	$	(39,300	)
Accrued expenses		(90,300	)
Other current liabilities		(59,400	)
Total liabilities assumed	$	(189,000	)

Total identifiable net assets	$	3,742,000
Fair value of consideration transferred		7,880,100
Goodwill	$	4,138,100

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking statements.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 information. 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. This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s financial statements and the related notes included elsewhere in this report.

Overview. The Company’s results reflect the results from the Benchtop Laboratory Equipment Operations and the Bioprocessing Systems Operations, which includes three months of results for Aquila, following its acquisition on April 29, 2021. The Company ~~reflected~~realized a loss from continuing operations before income tax benefit of ~~$324,400~~$1,532,700 for the three months ended September 30, 2021 compared to a loss from continuing operations before income tax benefit of $189,200 for the three months ended September 30, 2020, ~~compared to a loss before income tax benefit of $75,500 for the three months ended September 30, 2019,~~ primarily due to increased operating expenses ~~incurred by the Company’s~~of its Bioprocessing Systems Operations, which included significant amounts for product development, sales and marketing, and non-cash compensation expense related to stock options, partially offset by the profits generated by increased ~~income from~~sales of the Benchtop Laboratory Equipment ~~Operations resulting~~Operations.

COVID-19 Pandemic. The Company has not experienced and does not expect to experience any material impact on its ability to collect its accounts receivable due to the nature of its customers, which are primarily distributors of laboratory equipment and supplies, and pharmaceutical companies, which have benefitted from ~~increased~~the Pandemic due to the nature of the products and have the ability to pay. The Company also has not experienced and does not expect to experience any material impairment to its tangible and intangible assets, system of internal controls, or delivery and distribution of its products as a result of COVID-19, however the ultimate impact of COVID-19 on the Company’s business, results of operations, financial condition and cash flows is dependent on future developments, including the duration or worsening of the pandemic, which are uncertain and cannot be predicted at this time. The Company has experienced some delays from its supply chain which has had an immaterial impact on its business with delayed delivery of some products to its customers, however this is deemed temporary and does not affect the Company’s major product – the Vortex-Genie 2. In addition, due to the travel restrictions imposed by the United States and other governments worldwide, Company personnel has been and may be restricted in the future from traveling to conduct its operations including site visits, customer visits and installations, vendor facility visits, and other sales and marketing related travel that can negatively impact the Company. The operations of Aquila were negatively affected in their ability to secure new orders because Aquila had historically relied on face-to-face meetings at trade shows for its ~~Genie™ brand products. The Bioprocessing Systems Operations continues to expand its operations with additional personnel and infrastructure and investing~~sales opportunities. While it has participated in virtual trade shows, management believes that certain sales ~~and marketing.~~

opportunities were lost as a result.

Results of Operations. Net revenues for the three months ended September 30, ~~2020~~2021 increased ~~$152,100 (7.6%~~$835,400 (41.4%) to ~~$2,156,300~~$2,854,500 from ~~$2,004,200~~$2,019,100 for the three months ended September 30, ~~2019,~~2020, reflecting an increase of ~~$354,100 (22.5%~~$599,500 (31.1%) in net sales of Benchtop Laboratory Equipment primarily due to sales of its Genie brand products, which are used in COVID related research and testing. The Benchtop Laboratory Equipment sales reflected ~~$517,700~~$509,800 of Torbal® brand product sales for the three months ended September 30, ~~2020,~~2021, compared to ~~$522,400 in~~$517,700 for the three months ended September 30, ~~2019~~2020 primarily due to decreased sales of pharmacy scales, partially offset by increased sales of its new automated VIVID pill counter. ~~Sales of Catalyst Research Instruments decreased slightly~~Revenues derived from the Bioprocessing Systems Operations increased by ~~$1,600~~$235,900 (265.7%) to ~~$137,100~~$324,600 for the three months ended September 30, 2020 compared to $138,700 for the three months ended September 30, 2019 with an order backlog for Catalyst Research Instruments of $263,500, all of which is expected to be shipped during the fiscal year ending June 30, 2021 compared ~~to $173,500 as of September 30, 2019. Revenues derived from the Bioprocessing Systems Operations which are comprised primarily of net royalties accrued from sublicenses decreased by $200,400 (69.3%)~~ to $88,900 for the three months ended September 30, 2020 ~~compared to $289,300 for the three months ended September 30, 2019~~ due to ~~decreased royalties resulting~~product revenues of $168,200 derived from ~~the termination of the Company’s previously held European patent.~~

Aquila.

The gross profit percentage on a combined basis was ~~46.8%~~53.0% for the three months ended September 30, 2021 compared to 52.3% for the three months ended September 30, 2020 ~~compared to 48.9% for the three months ended September 30, 2019~~ due primarily to ~~lower margins on the Catalyst Research Instruments. However, gross~~increased margins for the Benchtop Laboratory Equipment Operations ~~were higher~~ due to increased sales ~~particularly~~ of higher profit margin products.

General and administrative expenses for the three months ended September 30, ~~2020~~2021 increased by ~~$69,400 (13.6%~~$946,500 (182.3%) to ~~$579,600 compared to $510,200~~$1,465,700 from $519,200 for the three months ended September 30, ~~2019 mainly~~2020 due primarily to ~~the expansion~~stock option compensation-related costs, newly incurred costs by Aquila of the ~~Scientific~~ Bioprocessing Systems Operations, ~~with increased personnel and related expenses,~~ and corporate ~~expenses~~

expenses.

Selling expenses for the three months ended September 30, ~~2020~~2021 increased ~~$212,600 (68.8%~~$441,900 (89.5%) to ~~$521,700~~$935,800 from ~~$309,100~~$493,900 for the three months ended September 30, ~~2019~~2020 which were incurred primarily ~~due to increased sales and marketing costs related to new personnel, websites, market research, and advertising expenditures~~by the by the Bioprocessing Systems ~~Operations.~~

operations for sales and marketing personnel, sales and marketing activities, and stock option compensation-related costs.

Research and development expenses increased by ~~$7,700 (3.3%~~$392,200 (160.5%) to $636,500 for the three months ended September 30, 2021 compared to $244,300 for the three months ended September 30, 2020, ~~compared~~mainly due to ~~$236,600~~product development costs incurred by the Bioprocessing Systems Operations’ Aquila operation which was acquired in the fourth quarter of fiscal 2021.

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Total other income (expense), net was ($7,900) for the three months ended September 30, ~~2019, mainly due~~2021 compared to ~~product development activities by the Bioprocessing Systems Operations.~~

~~The Company reflected an income tax benefit~~ ~~of $61,100~~$11,500 for the three months ended September 30, 2020 ~~compared~~due to ~~$19,500~~holding losses on investment securities.

The Company reflected income tax benefit for continuing operations of $322,600 for the three months ended September 30, ~~2019,~~2021 compared to income tax benefit of $35,600 for the three months ended September 30, 2020, primarily due to the increased ~~loss generated during the current period.~~

loss.

As a result of the foregoing, the Company recorded a ~~net~~ loss from continuing operations of ~~$263,300~~$1,209,700 for the three months ended September 30, 2021 compared to a loss from continuing operations of $153,600 for the three months ended September 30, 2020.

The Company reflected a gain from discontinued operations of $900 for the three months ended September 30, 2021, compared to a $109,700 loss for the three months ended September 30 2020, ~~compared~~due to ~~a net~~insignificant activity during the current year period.

Liquidity and Capital Resources. Cash and cash equivalents decreased by $4,406,500 to $5,268,700 as of September 30, 2021 from $9,675,200 as of June 30, 2021, due primarily the Company’s purchases of investment securities and the loss ~~of $56,200~~during the period.

Net cash used in operating activities was $1,107,900 for the three months ended September 30, ~~2019.~~

~~Liquidity and Capital Resources.~~ ~~Cash and cash equivalents decreased by $4,204,200~~2021 compared to ~~$3,355,500 as of September 30, 2020 from $7,559,700 as of June 30, 2020, due primarily to converting cash on-hand to short term liquid investments.~~

~~Net cash used in operating activities was~~ $414,400 ~~for~~during the three months ended September 30, 2020, ~~compared to $324,100 during the three months ended September 30, 2019,~~primarily as a result of the increased loss incurred for the current period.Net cash used in investing activities was ~~$3,776,400~~$3,323,100 for the three months ended September 30, ~~2020~~2021 compared to ~~$25,700~~$3,776,400 used during thethree months ended September 30, ~~2019~~2020 principally due to purchases and redemptions of investments, and to a lesser extent new capital ~~equipment purchases by the Bioprocessing Systems Operations~~.equipment. Net cash used in financing activities was $13,400 for the three months ended September 30, 2020 all due to contingent consideration payments made to sellers of the Bioprocessing Systems ~~Operations, compared to cash proceeds of $7,000~~Operations. There were no financing activities during the three months ended September 30, ~~2019 from exercises of stock options~~.

2021.

The Company's working capital decreased by ~~$231,900~~$671,600 to ~~$9,867,200~~$15,472,700 as of September 30, ~~2020~~2021 compared to ~~$10,099,100,~~$16,144,300, as of June 30, ~~2020~~2021 due to the loss generated during the period.

Item

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, based on an evaluation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), the Chief Executive and Chief Financial Officer of the Company has concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in its Exchange Act reports is recorded, processed, summarized and reported within the applicable time periods specified by the ~~SEC's~~Securities and Exchange Commission's rules and forms. The Company also concluded that information required to be disclosed in such reports is accumulated and communicated to the Company's management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

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PART II – OTHER INFORMATION

Item

Item 6. Exhibits and Reports on Form 8-K

Exhibit Number		Description

31.		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Reports on Form 8-K:

Current Report filed on Form ~~8-K~~8-K/A dated July ~~22, 2020 reporting under Items 1.01 and 5.2.~~

~~Current Report filed on Form 8-K dated August 13, 2020~~12, 2021 reporting under Item ~~5.03.~~

2.01.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~Date: November 23, 2020~~		SCIENTIFIC INDUSTRIES, INC. (Registrant)

Date: November 15, 2021		/s/ Helena R. Santos
		Helena R. Santos President, Chief Executive Officer, Chief Financial Officer and Treasurer

	September 30, 2020	June 30, 2020
Current assets:	(Unaudited)
Cash and cash equivalents	$3,355,500	$7,559,700
Investment securities	4,017,700	331,800
Trade accounts receivable, less allowance for doubtful accounts of $11,600 at September 30, 2020 and June 30, 2020	1,171,300	1,064,000
Inventories	2,941,200	2,884,700
Income tax receivable	331,500	334,800
Prepaid expenses and other current assets	134,700	112,300
Total current assets	11,951,900	12,287,300

Property and equipment, net	325,200	279,700

Intangible assets, net	129,000	128,700

Goodwill	705,300	705,300

Other assets	57,900	56,000

Deferred taxes	598,200	537,100

Operating lease right-of-use assets	826,600	803,300

Total assets	$14,594,100	$14,797,400

Current liabilities:
Accounts payable	$531,900	$354,700
Accrued expenses	538,000	799,700
Contract liabilities	82,700	89,000
Contingent consideration, current portion	97,600	111,000
Bank overdraft	109,400	43,100
Current portion of operating lease liabilities	161,300	226,900
Payroll Protection Program loan	563,800	563,800
Total current liabilities	2,084,700	2,188,200
Contingent consideration payable, less current portion	247,000	247,000
Operating lease liabilities, less current portion	743,000	640,800

Total liabilities	3,074,700	3,076,000
Shareholders’ equity:
Common stock, $.05 par value; 7,000,000 shares authorized; 2,881,065 shares issued; 2,861,263 shares outstanding at September 30, 2020 and June 30, 2020	144,100	144,100
Additional paid-in capital	8,669,600	8,608,300
Retained earnings	2,758,100	3,021,400
	11,571,800	11,773,800
Less common stock held in treasury at cost, 19,802 shares	52,400	52,400

Total shareholders’ equity	11,519,400	11,721,400

Total liabilities and shareholders’ equity	$14,594,100	$14,797,400

			Additional				Total
	Common Stock		Paid-in	Retained	Treasury Stock		Shareholders’
Fiscal Year 2021	Shares	Amount	Capital	Earnings	Shares	Amount	Equity

Balance, July 1, 2020	2,881,065	$144,100	$8,608,300	$3,021,400	19,802	$52,400	$11,721,400

Net loss	-	-	-	(263,300)	-	-	(263,300)

Stock-based compensation	-	-	61,300	-	-	-	61,300
Balance, September 30, 2020	2,881,065	$144,100	$8,669,600	$2,758,100	19,802	$52,400	$14,594,100

	Benchtop Laboratory Equipment	Catalyst Research Instruments	Bioprocessing Systems	Corporate And Other	Consolidated
Three Months Ended September 30, 2020:

Revenues	$1,930,300	$137,100	$88,900	$-	$2,156,300

Foreign Sales	631,900	57,200	86,300	-	775,400

	Benchtop Laboratory Equipment	Catalyst Research Instruments	Bioprocessing Systems	Corporate And Other	Consolidated
Three Months Ended September 30, 2019:

Revenues	$1,576,200	$138,700	$289,300	$-	$2,004,200

Foreign Sales	397,600	71,700	-	-	469,300

		Fair Value Measurements Using Inputs Considered as
	Fair Value at September 30, 2020	Level 1	Level 2	Level 3
Assets:
Cash and cash equivalents	$3,355,500	$3,355,500	$-	$-
Investment securities	4,017,700	4,017,700	-	-

Total	$7,373,200	$7,373,200	$-	$-

Liabilities:
Contingent consideration	$344,600	$-	$-	$344,600

		Fair Value Measurements Using Inputs Considered as
	Fair Value at June 30, 2020	Level 1	Level 2	Level 3
Assets:
Cash and cash equivalents	$7,559,700	$7,559,700	$-	$-
Investment securities	331,800	331,800	-	-

Total	$7,891,500	$7,891,500	$-	$-

Liabilities:
Contingent consideration	$358,000	$-	$-	$358,000

	Cost	Fair Value	Unrealized Holding Gain (Loss)
At September 30, 2020:
Equity securities	$110,800	$118,400	$7,600
Mutual and bond funds	3,876,200	3,899,300	23,100

	$3,987,000	$4,017,700	$30,700

	September 30,2020	June 30,2020
Raw materials	$1,883,500	$1,838,500
Work-in-process	323,500	228,600
Finished goods	734,200	817,600
	$2,941,200	$2,884,700

	Useful Lives	Cost	Accumulated Amortization	Net
At September 30, 2020:
Technology, trademarks	5/10 yrs.	$664,700	$662,000	$2,700
Trade names	6 yrs.	140,000	140,000	-
Websites	5 yrs.	210,000	210,000	-
Customer relationships	9/10 yrs.	357,000	324,800	32,200
Sublicense agreements	10 yrs.	294,000	260,900	33,100
Non-compete agreements	5 yrs.	384,000	384,000	-
IPR&D	3 yrs.	110,000	110,000	-
Other intangible assets	5 yrs.	262,700	201,700	61,000

		$2,422,400	$2,293,400	$129,000

	For the Three Months Ended September 30, 2020	For the Three Months Ended September 30, 2019
Loss	$(263,300)	$(56,200)

Weighted average common shares outstanding	2,861,263	1,494,212

Basic loss per common share	(.09)	(.04)
Diluted loss per common share	(.09)	(.04)

Fiscal year ending June 30,	Amount
Remainder of 2021	$204,200
2022	260,300
2023	245,300
2024	195,900
2025	91,600

Total future minimum payments	997,300
Less: Imputed interest	93,000

Total Present Value of Operating Lease Liabilities	904,300