Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2015 | Feb. 02, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | SCIENTIFIC INDUSTRIES INC | |
Entity Central Index Key | 87,802 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,489,112 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,016 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Jun. 30, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 666,900 | $ 482,000 |
Restricted cash | 300,000 | 300,000 |
Investment securities | 278,200 | 281,800 |
Trade accounts receivable, net | 870,100 | 1,081,700 |
Inventories | 3,262,500 | 2,213,700 |
Prepaid expenses and other current assets | 55,600 | 68,600 |
Deferred taxes | 109,700 | 114,200 |
Total current assets | 5,543,000 | 4,542,000 |
Property and equipment at cost, net | 206,500 | 235,200 |
Intangible assets, net | 1,281,200 | 1,451,900 |
Goodwill | 705,300 | 705,300 |
Other assets | 52,500 | 52,500 |
Deferred taxes | 190,400 | 154,500 |
Total assets | 7,978,900 | 7,141,400 |
Current Liabilities: | ||
Accounts payable | 372,100 | 227,600 |
Customer advances | 110,100 | 76,400 |
Bank line of credit | 470,000 | 0 |
Notes payable | 200,000 | 200,000 |
Accrued expenses and taxes | 779,500 | 519,900 |
Contingent consideration, current portion | 128,900 | 106,800 |
Total current liabilities | 2,060,600 | 1,130,700 |
Contingent consideration, less current portion | 137,300 | 260,300 |
Total liabilities | 2,197,900 | 1,391,000 |
Shareholders' equity: | ||
Common stock, $.05 par value; authorized 7,000,000 shares; 1,508,914 outstanding at December 31, 2015 and at June 30, 2015 | 75,400 | 75,400 |
Additional paid-in capital | 2,487,900 | 2,486,700 |
Accumulated other comprehensive loss | (8,200) | (3,300) |
Retained earnings | 3,278,300 | 3,244,000 |
Total | 5,833,400 | 5,802,800 |
Less common stock held in treasury, at cost, 19,802 shares | 52,400 | 52,400 |
Total shareholders' equity | 5,781,000 | 5,750,400 |
Total liabilities and shareholders' equity | $ 7,978,900 | $ 7,141,400 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2015 | Jun. 30, 2015 |
Shareholders' equity: | ||
Common stock,par value | $ 0.05 | $ 0.05 |
Common stock, authorized shares | 7,000,000 | 7,000,000 |
Common stock, issued shares | 1,508,914 | 1,508,914 |
Common stock, outstanding shares | 1,508,914 | 1,508,914 |
Stock held in treasury, shares | 19,802 | 19,802 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||||
Revenues | $ 2,028,200 | $ 1,691,100 | $ 3,472,600 | $ 3,353,200 |
Cost of sales | 1,190,500 | 1,081,700 | 2,039,800 | 2,163,900 |
Gross profit | 837,700 | 609,400 | 1,432,800 | 1,189,300 |
Operating expenses: | ||||
General & administrative | 395,700 | 446,400 | 803,900 | 852,600 |
Selling | 227,200 | 229,400 | 394,200 | 524,700 |
Research & development | 84,100 | 116,100 | 169,500 | 223,200 |
Total operating expenses | 707,000 | 791,900 | 1,367,600 | 1,600,500 |
Income (loss) from operations | 130,700 | (182,500) | 65,200 | (411,200) |
Other income (expense): | ||||
Investment income | 5,000 | 7,400 | 5,400 | 9,600 |
Other | 1,400 | (5,900) | (3,300) | (1,100) |
Interest expense | (14,000) | (1,400) | (22,100) | (2,700) |
Total other income, (expense) net | (7,600) | 100 | (20,000) | 5,800 |
Income (loss) before income tax expense (benefit) | 123,100 | (182,400) | 45,200 | (405,400) |
Income tax expense (benefit): Current | 40,900 | (33,800) | 40,900 | (91,000) |
Income tax expense (benefit): Deferred | (12,200) | (10,600) | (30,000) | (15,100) |
Total income tax expense (benefit) | 28,700 | (44,400) | 10,900 | (106,100) |
Net income (loss) | $ 94,400 | $ (138,000) | $ 34,300 | $ (299,300) |
Basic and diluted earnings (loss) per common share | $ .06 | $ (.09) | $ .02 | $ (.20) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Condensed Consolidated Statements Of Comprehensive Income Loss | ||||
Net loss | $ 94,400 | $ (138,000) | $ 34,300 | $ (299,300) |
Other comprehensive loss: | ||||
Unrealized holding loss on investments arising during period, net of tax | (1,100) | (3,800) | (4,900) | (4,500) |
Comprehensive loss | $ 93,300 | $ (141,800) | $ 29,400 | $ (303,800) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities: | ||
Net income (loss) | $ 34,300 | $ (299,300) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Loss on sale of investments | 0 | 1,300 |
Loss on asset disposal | 2,700 | 0 |
Depreciation and amortization | 210,800 | 220,100 |
Deferred income tax benefit | (30,000) | (15,100) |
Stock-based compensation | 1,200 | 2,100 |
Income tax benefit of stock options exercised | 0 | 4,900 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 211,600 | 25,700 |
Inventories | (1,048,800) | (106,900) |
Prepaid expenses and other current assets | 13,000 | (37,200) |
Other assets | 0 | (25,400) |
Accounts payable | 144,500 | 48,700 |
Customer advances | 33,700 | (77,500) |
Accrued expenses and taxes | 259,600 | (149,200) |
Total adjustments | (201,700) | (108,500) |
Net cash used in operating activities | (167,400) | (407,800) |
Investing activities: | ||
Purchase of investment securities, available for sale | (2,700) | (3,800) |
Capital expenditures | (8,400) | (52,900) |
Purchase of other intangible assets | (5,700) | (3,400) |
Redemption of investment securities, available for sale | 0 | 75,000 |
Net cash provided by (used in) investing activities | (16,800) | 14,900 |
Financing activities: | ||
Line of credit proceeds | 470,000 | 250,000 |
Payments of contingent consideration | (100,900) | (98,900) |
Proceeds from exercise of stock options | 0 | 18,800 |
Principal payments on note payable | 0 | (26,700) |
Net cash provided by financing activities | 369,100 | 143,200 |
Net increase (decrease) in cash and cash equivalents | 184,900 | (249,700) |
Cash and cash equivalents, beginning of year | 482,000 | 493,700 |
Cash and cash equivalents, end of period | 666,900 | 244,000 |
Cash paid during the period for: | ||
Income Taxes | 18,500 | 3,500 |
Interest | $ 4,400 | $ 2,700 |
1. Summary of significant accou
1. Summary of significant accounting policies | 6 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Summary of significant accounting policies | Principles of consolidation: The accompanying consolidated financial statements include the accounts of Scientific Industries, Inc. (Scientific, a Delaware corporation), Altamira Instruments, Inc.(Altamira, a wholly-owned subsidiary and Delaware corporation), Scientific Packaging Industries, Inc. (an inactive wholly-owned subsidiary and New York corporation) and Scientific Bioprocessing, Inc. (SBI, a wholly-owned subsidiary and Delaware corporation). All are collectively referred to as the Company. All material intercompany balances and transactions have been eliminated. |
2. New Accounting Pronouncement
2. New Accounting Pronouncements | 6 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
New Accounting Pronouncements | In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers amending revenue recognition requirements for multiple-deliverable revenue arrangements. This update provides guidance on how revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. This determination is made in five steps: (i) identify the contract with the customer: (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. In July 2015, the FASB deferred the effective date to fiscal years beginning after December 15, 2018, or the Company's fiscal year ending June 30, 2020, and early adoption of the standard is permitted, but not before the original effective date of December 15, 2017. The Company is evaluating the effect this guidance will have on the consolidated financial statements and related disclosures. In June 2014, the FASB issued ASU 2014-12, Compensation Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved After the Requisite Service Period. This update affects reporting entities that grant their employees targets that affects vesting could be achieved after the requisite service period. The new standard requires that a performance target that affects vesting and that could be achieved after the requisite services period be treated as a performance condition. The new standard will be effective for the Company beginning July 1, 2016, and early adoption is permitted. The Company expects the adoption will not have a material impact on its financial condition, results of operations or cash flows. In July 2015, the FASB issued ASU No. 2015-11, "Inventory: Simplifying the Measurement of Inventory", that requires inventory not measured using either the last in, first out (LIFO) or the retail inventory method to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. The new standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and will be applied prospectively. Early adoption is permitted. The Company is evaluating the impact that this standard will have on its consolidated financial statements. In November 2015, the FASB issued new guidance simplifying the balance sheet classification of deferred taxes. The new guidance requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the new guidance. The guidance is effective for public companies for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted as of the beginning of an interim or annual reporting period. The new guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company is evaluating the impact that the new guidance will have on its consolidated financial statements and related disclosures. |
3. Acquisition
3. Acquisition | 6 Months Ended |
Dec. 31, 2015 | |
Text Block [Abstract] | |
Acquisition | On February 26, 2014, the Company acquired substantially all the assets of a privately owned company consisting principally of inventory, fixed assets, and intangible assets related to the production and sale of a variety of laboratory and pharmacy balances and scales. The acquisition was pursuant to an asset purchase agreement whereby the Company paid the sellers $700,000 in cash, 126,449 shares of Common Stock valued at $427,500 and agreed to make The products, which are similar to the Companys other Benchtop Laboratory equipment, and in many cases used by the same customers, are marketed under the Torbal® brand. The principal customers are pharmacies, pharmacy schools, universities, government laboratories, and industries utilizing precision s The Company allocated the purchase price based on its valuation of the assets acquired, as follows: Curent assets $ 144,000 Property and equipment 118,100 Goodwill * 115,400 Other intangible assets 1,210,000 Total Purchase Price $ 1,587,500 *See Note 8, Goodwill and Other Intangible Assets. Of the $1,210,000 of the acquired other intangible assets, $570,000 was assigned to technology and websites with a useful life of 5 years, $120,000 was assigned to customer relationships with an estimated useful life of 9 years, $140,000 was assigned to the trade name with an estimated useful life of 6 years, $110,000 was assigned to the IPR&D with an estimated useful life of 3 years, and $270,000 was assigned to non-compete agreements with an estimated useful life of 5 years. In connection with the acquisition, the Company entered into a three-year employment agreement with the previous Chief Operating Officer of the acquired business as President of the Companys new Torbal Division and Director of Marketing for the Company. The agreement may be extended by mutual consent for an additional two years. |
4. Segment Information and Conc
4. Segment Information and Concentrations | 6 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Information and Concentrations | The Company views its operations as three segments: the manufacture and marketing of standard benchtop laboratory equipment for research in university, hospital and industrial laboratories sold primarily through laboratory equipment distributors (Benchtop Laboratory Equipment), 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) and the marketing and production of bioprocessing systems for laboratory research in the biotechnology industry sold directly to customers and through distributors (Bioprocessing Systems). Segment information is reported as follows (foreign sales are principally to customers in Europe and Asia): Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate and Other Consolidated Three months ended December 31, 2015: Revenues $ 1,583,500 $ 414,500 $ 30,200 $ $ 2,028,200 Foreign Sales 764,400 105,500 869,900 Income (Loss) from Operations 187,700 (10,100 ) (32,900 ) (14,000 ) 130,700 Assets 4,352,600 2,319,200 728,800 578,300 7,978,900 Long-Lived Asset Expenditures 1,900 5,700 7,600 Depreciation and Amortization 74,200 7,000 24,400 105,600 Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate and Other Consolidated Three months ended December 31, 2014: Revenues $ 1,247,000 $ 419,600 $ 24,500 $ $ 1,691,100 Foreign Sales 722,400 315,700 1,038,100 Loss from Operations (67,200 ) (70,600 ) (44,700 ) (182,500 ) Assets 4,032,700 1,387,900 774,100 585,800 6,780,500 Long-Lived Asset Expenditures 33,200 2,300 35,500 Depreciation and Amortization 76,300 9,200 24,500 110,000 Approximately 53% and 50% of net sales of benchtop laboratory equipment (41% and 37% of total revenues) for the three month periods ended December 31, 2015 and 2014, respectively, were derived from the Companys main product, the Vortex-Genie 2® mixer, excluding accessories. Approximately 19% and 21% of net sales of benchtop laboratory equipment (15% of total revenues for both periods) were derived from Torbal brand products for the three months ended December 31, 2015 and 2014, respectively. Two customers accounted in the aggregate for approximately 14% and 18% of the net sales of the Benchtop Laboratory Equipment Operations and 11% and 13% of total revenues for the three months ended December 31, 2015, and 2014, respectively. Sales of catalyst research instruments generally comprise a few very large orders averaging at least $100,000 per order to a limited number of customers, who differ from order to order. Sales to three different customers represented approximately 92% and 84% of the Catalyst Research Instrument Operations net sales, respectively, and 19% and 21% of total revenues for the three months ended December 31, 2015 and 2014, respectively. Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate and Other Consolidated Six months ended Revenues $ 2,846,500 $ 567,500 $ 58,600 $ $ 3,472,600 Foreign Sales 1,363,400 113,300 1,476,700 Income (Loss) from Operations 242,400 (92,200 ) (62,900 ) (22,100 ) 65,200 Assets 4,352,600 2,319,200 728,800 578,300 7,978,900 Long-Lived Asset Expenditures 8,400 5,700 14,100 Depreciation and Amortization 148,000 13,900 48,900 210,800 Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate and Other Consolidated Six months ended Revenues $ 2,333,400 $ 970,700 $ 49,100 $ $ 3,353,200 Foreign Sales 1,133,500 759,200 1,892,700 Loss from Operations (185,300 ) (140,800 ) (85,100 ) (411,200 ) Assets 4,032,700 1,387,900 774,100 585,800 6,780,500 Long-Lived Asset Expenditures 51,500 900 3,900 56,300 Depreciation and Amortization 152,300 19,000 48,800 220,100 Approximately 50% and 48% of net sales of benchtop laboratory equipment (41% and 33% of total revenues) for the six month periods ended December 31, 2015 and 2014, respectively, were derived from the segments main product, the Vortex-Genie 2® mixer, excluding accessories. Two benchtop laboratory equipment customers, accounted in the aggregate for approximately 13% and 16% of the segments net sales for the six month periods ended December 31, 2015 and 2014, and 11% of total revenues for each of the six month periods ended December 31, 2015 and 2014. Approximately 20% of net sales of benchtop laboratory equipment were derived from Torbal brand products for each of the six months ended December 31, 2015 and 2014, and 16% and 14% of total revenues, respectively. For the six month periods ended December 31, 2015 and 2014, catalyst research Instruments sales to three and six different customers in each of the six month periods, accounted for approximately 88% and 97% of the segments net sales and 14% and 28% of total revenues, respectively. |
5. Fair Value of Financial Inst
5. Fair Value of Financial Instruments | 6 Months Ended |
Dec. 31, 2015 | |
Investments, All Other Investments [Abstract] | |
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 of 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. The following tables set forth by level within the fair value hierarchy the Companys financial assets that were accounted for at fair value on a recurring basis at December 31, 2015 and June 30, 2015 according to the valuation techniques the Company used to determine their fair values: Fair Value Measurements Using Inputs Considered as Assets: Fair Value at December 31, 2015 Level 1 Level 2 Level 3 Cash and cash equivalents $ 666,900 $ 666,900 $ $ Restricted Cash 300,000 300,000 Available for sale securities 278,200 278,200 Total $ 1,245,100 $ 1,245,100 $ $ Liabilities: Contingent consideration $ 266,200 $ $ $ 266,200 Fair Value Measurements Using Inputs Considered as Assets: Fair Value at June 30, 2015 Level 1 Level 2 Level 3 Cash and cash equivalents $ 482,000 $ 482,000 $ $ Restricted Cash 300,000 300,000 Available for sale securities 281,800 281,800 Total $ 1,063,800 $ 1,063,800 $ $ Liabilities: Contingent consideration $ 367,100 $ $ $ 367,100 Investments in marketable securities classified as available-for-sale by security type at December 31, 2015 and June 30, 2015 consisted of the following: Cost Fair Value Unrealized Holding Gain (Loss) At December 31, 2015: Available for sale: Equity securities $ 29,300 $ 38,200 $ 8,900 Mutual funds 257,100 240,000 (17,100 ) $ 286,400 $ 278,200 $ (8,200 ) Cost Fair Value Unrealized Holding Gain (Loss) At June 30, 2015: Available for sale: Equity securities $ 29,300 $ 35,800 $ 6,500 Mutual funds 255,800 246,000 (9,800 ) $ 285,100 $ 281,800 $ (3,300 ) |
6. Inventories
6. Inventories | 6 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories for financial statement purposes are based on perpetual inventory records at December 31, 2015 and based on a physical count as of June 30, 2015. Components of inventory are as follows: December 31, 2015 June 30, 2015 Raw materials $ 1,439,000 $ 1,420,800 Work in process 1,510,400 442,900 Finished goods 313,100 350,000 $ 3,262,500 $ 2,213,700 |
7. Earnings (Loss) per common s
7. Earnings (Loss) per common share | 6 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Earnings (Loss) per common share | Basic earnings (loss) per common share are computed by dividing net income (loss) by the weighted-average number of shares outstanding. Diluted earnings per common share include the dilutive effect of stock options, if any. Earnings (loss) per common share was computed as follows: For the Three Month For the Six Month Periods Ended Periods Ended December 31, December 31, 2015 2014 2015 2014 Net income (loss) $ 94,400 $ (138,000 ) $ 34,300 $ (299,300 ) Weighted average common shares outstanding 1,489,112 1,479,112 1,489,112 1,475,960 Dilutive securities Weighted average dilutive common shares outstanding 1,489,112 1,479,112 1,489,112 1,475,960 Basic earningsand diluted earnings (loss) per common share $ 0.06 $ (0.09 ) $ 0.02 $ (0.20 ) Approximately 38,500 and 51,000 shares of the Companys Common Stock issuable upon the exercise of outstanding stock options were excluded from the calculation of diluted earnings per common share for the three and six month periods ended December 31, 2015 and 2014, respectively, because the effect would be anti-dilutive. |
8. Goodwill and Other Intangibl
8. Goodwill and Other Intangible Assets | 6 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other 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 acquisition of Altamira and SBIs acquisition of assets. Goodwill amounted to $705,300 as of December 31, 2015 and June 30, 2015, all of which is deductible for tax purposes. The components of other intangible assets are as follows: Useful Lives Cost Accumulated Amortization Net At December 31, 2015: Technology, trademarks 5/10 yrs. $ 1,215,800 $ 682,600 $ 533,200 Trade names 6 yrs. 140,000 42,800 97,200 Websites 5 yrs. 210,000 77,000 133,000 Customer relationships 9/10 yrs. 357,000 246,500 110,500 Sublicense agreements 10 yrs. 294,000 121,300 172,700 Non-compete agreements 5 yrs. 384,000 210,900 173,100 Intellectual Property, Research and Development (IPR&D) 3 yrs. 110,000 67,200 42,800 Other intangible assets 5 yrs. 169,800 151,100 18,700 $ 2,880,600 $ 1,599,400 $ 1,281,200 Useful Lives Cost Accumulated Amortization Net At June 30, 2015: Technology, trademarks 5/10 yrs. $ 1,226,800 $ 624,200 $ 602,600 Trade names 6 yrs. 140,000 31,100 108,900 Websites 5 yrs. 210,000 56,000 154,000 Customer relationships 10 yrs. 357,000 236,200 120,800 Sublicense agreements 10 yrs. 294,000 106,600 187,400 Non-compete agreements 5 yrs. 384,000 182,700 201,300 Intellectual Property, Research and Development (IPR&D) 3 yrs. 110,000 48,900 61,100 Other intangible assets 5 yrs. 164,000 148,200 15,800 $ 2,885,800 $ 1,433,900 $ 1,451,900 Total amortization expense was $87,500 and $88,200 for the three months ended December 31, 2015 and 2014, respectively and $173,800 and $176,300 for the six months ended December 31, 2015 and 2014, respectively. As of December 31, 2015, estimated future amortization expense related to intangible assets is $160,600 for the remainder of the fiscal year ending June 30, 2016, $337,000 for fiscal 2017, $324,000 for fiscal 2018, $246,600 for fiscal 2019, $80,400 for fiscal 2020 and $132,600 thereafter. |
1. Summary of significant acc15
1. Summary of significant accounting policies (Policies) | 6 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Principles of consolidation | The accompanying consolidated financial statements include the accounts of Scientific Industries, Inc. (Scientific, a Delaware corporation), Altamira Instruments, Inc.(Altamira, a wholly-owned subsidiary and Delaware corporation), Scientific Packaging Industries, Inc. (an inactive wholly-owned subsidiary and New York corporation) and Scientific Bioprocessing, Inc. (SBI, a wholly-owned subsidiary and Delaware corporation). All are collectively referred to as the Company. All material intercompany balances and transactions have been eliminated. |
New Accounting Pronouncements | In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers amending revenue recognition requirements for multiple-deliverable revenue arrangements. This update provides guidance on how revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. This determination is made in five steps: (i) identify the contract with the customer: (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. In July 2015, the FASB deferred the effective date to fiscal years beginning after December 15, 2018, or the Company's fiscal year ending June 30, 2020, and early adoption of the standard is permitted, but not before the original effective date of December 15, 2017. The Company is evaluating the effect this guidance will have on the consolidated financial statements and related disclosures. In June 2014, the FASB issued ASU 2014-12, Compensation Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved After the Requisite Service Period. This update affects reporting entities that grant their employees targets that affects vesting could be achieved after the requisite service period. The new standard requires that a performance target that affects vesting and that could be achieved after the requisite services period be treated as a performance condition. The new standard will be effective for the Company beginning July 1, 2016, and early adoption is permitted. The Company expects the adoption will not have a material impact on its financial condition, results of operations or cash flows. In July 2015, the FASB issued ASU No. 2015-11, "Inventory: Simplifying the Measurement of Inventory", that requires inventory not measured using either the last in, first out (LIFO) or the retail inventory method to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. The new standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and will be applied prospectively. Early adoption is permitted. The Company is evaluating the impact that this standard will have on its consolidated financial statements. In November 2015, the FASB issued new guidance simplifying the balance sheet classification of deferred taxes. The new guidance requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the new guidance. The guidance is effective for public companies for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted as of the beginning of an interim or annual reporting period. The new guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company is evaluating the impact that the new guidance will have on its consolidated financial statements and related disclosures. |
3. Acquisition (Tables)
3. Acquisition (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Text Block [Abstract] | |
Purchase Price Allocation | Curent assets $ 144,000 Property and equipment 118,100 Goodwill * 115,400 Other intangible assets 1,210,000 Total Purchase Price $ 1,587,500 *See Note 8, Goodwill and Other Intangible Assets. |
4. Segment Information and Co17
4. Segment Information and Concentrations (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate and Other Consolidated Three months ended December 31, 2015: Revenues $ 1,583,500 $ 414,500 $ 30,200 $ $ 2,028,200 Foreign Sales 764,400 105,500 869,900 Income (Loss) from Operations 187,700 (10,100 ) (32,900 ) (14,000 ) 130,700 Assets 4,352,600 2,319,200 728,800 578,300 7,978,900 Long-Lived Asset Expenditures 1,900 5,700 7,600 Depreciation and Amortization 74,200 7,000 24,400 105,600 Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate and Other Consolidated Three months ended December 31, 2014: Revenues $ 1,247,000 $ 419,600 $ 24,500 $ $ 1,691,100 Foreign Sales 722,400 315,700 1,038,100 Loss from Operations (67,200 ) (70,600 ) (44,700 ) (182,500 ) Assets 4,032,700 1,387,900 774,100 585,800 6,780,500 Long-Lived Asset Expenditures 33,200 2,300 35,500 Depreciation and Amortization 76,300 9,200 24,500 110,000 Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate and Other Consolidated Six months ended Revenues $ 2,846,500 $ 567,500 $ 58,600 $ $ 3,472,600 Foreign Sales 1,363,400 113,300 1,476,700 Income (Loss) from Operations 242,400 (92,200 ) (62,900 ) (22,100 ) 65,200 Assets 4,352,600 2,319,200 728,800 578,300 7,978,900 Long-Lived Asset Expenditures 8,400 5,700 14,100 Depreciation and Amortization 148,000 13,900 48,900 210,800 Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate and Other Consolidated Six months ended Revenues $ 2,333,400 $ 970,700 $ 49,100 $ $ 3,353,200 Foreign Sales 1,133,500 759,200 1,892,700 Loss from Operations (185,300 ) (140,800 ) (85,100 ) (411,200 ) Assets 4,032,700 1,387,900 774,100 585,800 6,780,500 Long-Lived Asset Expenditures 51,500 900 3,900 56,300 Depreciation and Amortization 152,300 19,000 48,800 220,100 |
5. Fair Value of Financial In18
5. Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Investments, All Other Investments [Abstract] | |
Fair Value Inputs | Fair Value Measurements Using Inputs Considered as Assets: Fair Value at December 31, 2015 Level 1 Level 2 Level 3 Cash and cash equivalents $ 666,900 $ 666,900 $ $ Restricted Cash 300,000 300,000 Available for sale securities 278,200 278,200 Total $ 1,245,100 $ 1,245,100 $ $ Liabilities: Contingent consideration $ 266,200 $ $ $ 266,200 Fair Value Measurements Using Inputs Considered as Assets: Fair Value at June 30, 2015 Level 1 Level 2 Level 3 Cash and cash equivalents $ 482,000 $ 482,000 $ $ Restricted Cash 300,000 300,000 Available for sale securities 281,800 281,800 Total $ 1,063,800 $ 1,063,800 $ $ Liabilities: Contingent consideration $ 367,100 $ $ $ 367,100 |
Investments in Marketable Securitites | Cost Fair Value Unrealized Holding Gain (Loss) At December 31, 2015: Available for sale: Equity securities $ 29,300 $ 38,200 $ 8,900 Mutual funds 257,100 240,000 (17,100 ) $ 286,400 $ 278,200 $ (8,200 ) Cost Fair Value Unrealized Holding Gain (Loss) At June 30, 2015: Available for sale: Equity securities $ 29,300 $ 35,800 $ 6,500 Mutual funds 255,800 246,000 (9,800 ) $ 285,100 $ 281,800 $ (3,300 ) |
6. Inventories (Tables)
6. Inventories (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | December 31, 2015 June 30, 2015 Raw materials $ 1,439,000 $ 1,420,800 Work in process 1,510,400 442,900 Finished goods 313,100 350,000 $ 3,262,500 $ 2,213,700 |
7. Earnings (Loss) per common20
7. Earnings (Loss) per common share (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Earnings per common share | For the Three Month For the Six Month Periods Ended Periods Ended December 31, December 31, 2015 2014 2015 2014 Net income (loss) $ 94,400 $ (138,000 ) $ 34,300 $ (299,300 ) Weighted average common shares outstanding 1,489,112 1,479,112 1,489,112 1,475,960 Dilutive securities Weighted average dilutive common shares outstanding 1,489,112 1,479,112 1,489,112 1,475,960 Basic earningsand diluted earnings (loss) per common share $ 0.06 $ (0.09 ) $ 0.02 $ (0.20 ) |
8. Goodwill and Other Intangi21
8. Goodwill and Other Intangible Assets (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Useful Lives Cost Accumulated Amortization Net At December 31, 2015: Technology, trademarks 5/10 yrs. $ 1,215,800 $ 682,600 $ 533,200 Trade names 6 yrs. 140,000 42,800 97,200 Websites 5 yrs. 210,000 77,000 133,000 Customer relationships 9/10 yrs. 357,000 246,500 110,500 Sublicense agreements 10 yrs. 294,000 121,300 172,700 Non-compete agreements 5 yrs. 384,000 210,900 173,100 Intellectual Property, Research and Development (IPR&D) 3 yrs. 110,000 67,200 42,800 Other intangible assets 5 yrs. 169,800 151,100 18,700 $ 2,880,600 $ 1,599,400 $ 1,281,200 Useful Lives Cost Accumulated Amortization Net At June 30, 2015: Technology, trademarks 5/10 yrs. $ 1,226,800 $ 624,200 $ 602,600 Trade names 6 yrs. 140,000 31,100 108,900 Websites 5 yrs. 210,000 56,000 154,000 Customer relationships 10 yrs. 357,000 236,200 120,800 Sublicense agreements 10 yrs. 294,000 106,600 187,400 Non-compete agreements 5 yrs. 384,000 182,700 201,300 Intellectual Property, Research and Development (IPR&D) 3 yrs. 110,000 48,900 61,100 Other intangible assets 5 yrs. 164,000 148,200 15,800 $ 2,885,800 $ 1,433,900 $ 1,451,900 |
3. Acquisition (Details)
3. Acquisition (Details) | Dec. 31, 2015USD ($) | |
Acquisition Details | ||
Current assets | $ 144,000 | |
Property and equipment | 118,100 | |
Goodwill | 115,400 | [1] |
Other intangible assets | 1,210,000 | |
Total Purchase Price | $ 1,587,500 | |
[1] | See Note 8, "Goodwill and Other Intangible Assets". |
4. Segment Information and Co23
4. Segment Information and Concentrations (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Depreciation and Amortization | $ 210,800 | $ 220,100 | ||
Benchtop Laboratory Equipment [Member] | ||||
Revenues | $ 1,583,500 | $ 1,247,000 | 2,846,500 | 2,333,400 |
Foreign Sales | 764,400 | 722,400 | 1,363,400 | 1,133,500 |
Income(Loss) from Operations | 187,700 | (67,200) | 242,400 | (185,300) |
Assets | 4,352,600 | 4,032,700 | 4,352,600 | 4,032,700 |
Long-lived Asset Expenditures | 1,900 | 33,200 | 8,400 | 51,500 |
Depreciation and Amortization | 74,200 | 76,300 | 148,000 | 152,300 |
Catalyst Research Instruments [Member] | ||||
Revenues | 414,500 | 419,600 | 567,500 | 970,700 |
Foreign Sales | 105,500 | 315,700 | 113,300 | 759,200 |
Income(Loss) from Operations | (10,100) | (70,600) | (92,200) | (140,800) |
Assets | 2,319,200 | 1,387,900 | 2,319,200 | 1,387,900 |
Long-lived Asset Expenditures | 0 | 0 | 0 | 900 |
Depreciation and Amortization | 7,000 | 9,200 | 13,900 | 19,000 |
Bioprocessing Systems [Member] | ||||
Revenues | 30,200 | 24,500 | 58,600 | 49,100 |
Foreign Sales | 0 | 0 | 0 | 0 |
Income(Loss) from Operations | (32,900) | (44,700) | (62,900) | (85,100) |
Assets | 728,800 | 774,100 | 728,800 | 774,100 |
Long-lived Asset Expenditures | 5,700 | 2,300 | 5,700 | 3,900 |
Depreciation and Amortization | 24,400 | 24,500 | 48,900 | 48,800 |
Corporate and Other [Member] | ||||
Revenues | 0 | 0 | 0 | 0 |
Foreign Sales | 0 | 0 | 0 | 0 |
Income(Loss) from Operations | (14,000) | 0 | (22,100) | 0 |
Assets | 578,300 | 585,800 | 578,300 | 585,800 |
Long-lived Asset Expenditures | 0 | 0 | 0 | 0 |
Depreciation and Amortization | 0 | 0 | 0 | 0 |
Consolidated [Member] | ||||
Revenues | 2,028,200 | 1,691,100 | 3,472,600 | 3,353,200 |
Foreign Sales | 869,900 | 1,038,100 | 1,476,700 | 1,892,700 |
Income(Loss) from Operations | 130,700 | (182,500) | 65,200 | (411,200) |
Assets | 7,978,900 | 6,780,500 | 7,978,900 | 6,780,500 |
Long-lived Asset Expenditures | 7,600 | 35,500 | 14,100 | 56,300 |
Depreciation and Amortization | $ 105,600 | $ 110,000 | $ 210,800 | $ 220,100 |
4. Segment Information and Co24
4. Segment Information and Concentrations (Details Narrative) | 6 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Benchtop Laboratory Equipment [Member] | ||
Net sales | 50.00% | 48.00% |
Consolidated sales | 41.00% | 33.00% |
Torbal [Member] | ||
Net sales | 20.00% | 20.00% |
Consolidated sales | 16.00% | 14.00% |
TwoCustomers [Member] | Benchtop Laboratory Equipment [Member] | ||
Net sales | 13.00% | 16.00% |
Three Customers [Member] | Catalyst Research Instruments [Member] | ||
Net sales | 88.00% | |
Consolidated sales | 14.00% | |
Six Customers [Member] | Catalyst Research Instruments [Member] | ||
Net sales | 97.00% | |
Consolidated sales | 28.00% |
5. Fair Value of Financial In25
5. Fair Value of Financial Instruments (Details) - USD ($) | Dec. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 |
Assets | ||||
Cash and cash equivalents | $ 666,900 | $ 482,000 | $ 244,000 | $ 493,700 |
Restricted cash | 300,000 | 300,000 | ||
Available for sale securities | 278,200 | 281,800 | ||
Total | 1,245,100 | 1,063,800 | ||
Liabilities: | ||||
Contingent consideration | 266,200 | 367,100 | ||
Level 1 | ||||
Assets | ||||
Cash and cash equivalents | 666,900 | 482,000 | ||
Restricted cash | 300,000 | 300,000 | ||
Available for sale securities | 278,200 | 281,800 | ||
Total | 1,245,100 | 1,063,800 | ||
Liabilities: | ||||
Contingent consideration | 0 | 0 | ||
Level 2 | ||||
Assets | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Available for sale securities | 0 | 0 | ||
Total | 0 | 0 | ||
Liabilities: | ||||
Contingent consideration | 0 | 0 | ||
Level 3 | ||||
Assets | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Available for sale securities | 0 | 0 | ||
Total | 0 | 0 | ||
Liabilities: | ||||
Contingent consideration | $ 266,200 | $ 367,100 |
5. Fair Value of Financial In26
5. Fair Value of Financial Instruments (Details 1) - USD ($) | Dec. 31, 2015 | Jun. 30, 2015 |
Cost | $ 286,400 | $ 285,100 |
Fair Value | 278,200 | 281,800 |
Unrealized Holding Gain (Loss) | (8,200) | (3,300) |
Equity Securities | ||
Cost | 29,300 | 29,300 |
Fair Value | 38,200 | 35,800 |
Unrealized Holding Gain (Loss) | 8,900 | 6,500 |
Mutual Funds | ||
Cost | 257,100 | 255,800 |
Fair Value | 240,000 | 246,000 |
Unrealized Holding Gain (Loss) | $ (17,100) | $ (9,800) |
6. Inventories (Details)
6. Inventories (Details) - USD ($) | Dec. 31, 2015 | Jun. 30, 2015 |
Inventories Details | ||
Raw Materials | $ 1,439,000 | $ 1,420,800 |
Work in process | 1,510,400 | 442,900 |
Finished Goods | 313,100 | 350,000 |
Inventory | $ 3,262,500 | $ 2,213,700 |
7. Earnings (Loss) per common28
7. Earnings (Loss) per common share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Loss Per Common Share Details | ||||
Net income (loss) | $ 94,400 | $ (138,000) | $ 34,300 | $ (299,300) |
Weighted average common shares outstanding | 1,489,112 | 1,479,112 | 1,489,112 | 1,475,960 |
Dilutive securities | 0 | 0 | 0 | 0 |
Weighted average dilutive common shares outstanding | 1,489,112 | 1,479,112 | 1,489,112 | 1,475,960 |
Basic earnings and diluted earnings (loss) per common share | $ .06 | $ (.09) | $ .02 | $ (.20) |
7. Earnings (Loss) per common29
7. Earnings (Loss) per common share (Details Narrative) - shares | 6 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Equity [Abstract] | ||
Common stock issuable upon the exercise of outstanding stock options | 38,500 | 51,000 |
8. Goodwill and Other Intangi30
8. Goodwill and Other Intangible Assets (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2015 | Jun. 30, 2015 | |
Cost | $ 2,880,600 | $ 2,885,800 |
Accumulated Amortization | 1,599,400 | 1,433,900 |
Net | $ 1,281,200 | $ 1,451,900 |
Technology, trademarks | ||
Useful Lives Minimum | 5 years | 5 years |
Useful Lives Maximum | 10 years | 10 years |
Cost | $ 1,215,800 | |
Accumulated Amortization | 682,600 | |
Net | $ 533,200 | |
Trade names [Member] | ||
Useful Lives | 6 years | 6 years |
Cost | $ 140,000 | $ 140,000 |
Accumulated Amortization | 42,800 | 31,100 |
Net | $ 97,200 | $ 108,900 |
Websites [Member] | ||
Useful Lives | 5 years | 5 years |
Cost | $ 210,000 | $ 210,000 |
Accumulated Amortization | 77,000 | 56,000 |
Net | $ 133,000 | $ 154,000 |
Customer relationships | ||
Useful Lives | 10 years | |
Useful Lives Minimum | 9 years | |
Useful Lives Maximum | 10 years | |
Cost | $ 357,000 | $ 357,000 |
Accumulated Amortization | 246,500 | 236,200 |
Net | $ 110,500 | $ 120,800 |
Sublicense agreements | ||
Useful Lives | 10 years | 10 years |
Cost | $ 294,000 | $ 294,000 |
Accumulated Amortization | 121,300 | 106,600 |
Net | $ 172,700 | $ 187,400 |
Non-compete agreements | ||
Useful Lives | 5 years | 5 years |
Cost | $ 384,000 | $ 384,000 |
Accumulated Amortization | 210,900 | 182,700 |
Net | $ 173,100 | $ 201,300 |
IPR and D [Member] | ||
Useful Lives | 3 years | 3 years |
Cost | $ 110,000 | $ 110,000 |
Accumulated Amortization | 67,200 | 48,900 |
Net | $ 42,800 | $ 61,100 |
Other intangible assets | ||
Useful Lives | 5 years | 5 years |
Cost | $ 169,800 | $ 164,000 |
Accumulated Amortization | 151,100 | 148,200 |
Net | $ 18,700 | $ 15,800 |
8. Goodwill and Other Intangi31
8. Goodwill and Other Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2015 | |
Goodwill And Other Intangible Assets Details Narrative | |||||
Estimated future amortization expense 2016 | $ 160,600 | $ 160,600 | |||
Estimated future amortization expense 2017 | 337,000 | 337,000 | |||
Estimated future amortization expense 2018 | 324,000 | 324,000 | |||
Estimated future amortization expense 2019 | 246,600 | 246,600 | |||
Estimated future amortization expense 2020 | 80,400 | 80,400 | |||
Estimated future amortization expense thereafter | 132,600 | 132,600 | |||
Total amortization expense | 87,500 | $ 88,200 | 173,800 | $ 176,300 | |
Goodwill | $ 705,300 | $ 705,300 | $ 705,300 |