Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2018 | May 01, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | SCIENTIFIC INDUSTRIES INC | |
Entity Central Index Key | 87,802 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
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 | 1,494,112 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2018 | Jun. 30, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 678,600 | $ 1,025,100 |
Investment securities | 309,100 | 295,500 |
Trade accounts receivable, less allowance for doubtful accounts of $11,600 at March 31, 2018 and June 30, 2017 | 1,406,700 | 1,179,000 |
Inventories | 2,701,600 | 1,961,200 |
Prepaid expenses and other current assets | 92,300 | 80,300 |
Total current assets | 5,188,300 | 4,541,100 |
Property and equipment, net | 223,100 | 199,300 |
Intangible assets, net | 399,200 | 579,000 |
Goodwill | 705,300 | 705,300 |
Trade accounts receivable, less current portion | 245,400 | 245,400 |
Other assets | 52,500 | 52,500 |
Deferred taxes | 544,500 | 505,100 |
Total assets | 7,358,300 | 6,827,700 |
Current Liabilities: | ||
Accounts payable | 394,400 | 139,200 |
Accrued expenses, current portion | 398,200 | 491,000 |
Bank line of credit | 40,000 | 0 |
Customer advances | 356,000 | 0 |
Contingent consideration, current portion | 215,000 | 175,700 |
Notes payable, current portion | 6,900 | 6,700 |
Total current liabilities | 1,410,500 | 812,600 |
Accrued expenses, less current portion | 60,000 | 60,000 |
Notes payable, less current portion | 600 | 5,800 |
Contingent consideration payable, less current portion | 385,000 | 121,300 |
Total liabilities | 1,856,100 | 999,700 |
Shareholders' equity: | ||
Common stock, $.05 par value; authorized 7,000,000 shares; issued 1,513,914 shares outstanding at March 31, 2018 and June 30, 2017 | 75,700 | 75,700 |
Additional paid-in capital | 2,542,500 | 2,515,900 |
Accumulated other comprehensive loss | (4,400) | (3,500) |
Retained earnings | 2,940,800 | 3,292,300 |
Total | 5,554,600 | 5,880,400 |
Less common stock held in treasury at cost, 19,802 shares | 52,400 | 52,400 |
Total shareholders' equity | 5,502,200 | 5,828,000 |
Total liabilities and shareholders' equity | $ 7,358,300 | $ 6,827,700 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2018 | Jun. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, allowance for doubtful accounts | $ 11,600 | $ 11,600 |
Shareholders' equity: | ||
Common stock,par value | $ 0.05 | $ 0.05 |
Common stock, authorized shares | 7,000,000 | 7,000,000 |
Common stock, issued shares | 1,513,914 | 1,513,914 |
Common stock, outstanding shares | 1,513,914 | 1,513,914 |
Stock held in treasury, shares | 19,802 | 19,802 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||||
Revenues | $ 2,099,300 | $ 1,910,900 | $ 5,272,600 | $ 6,153,800 |
Cost of revenues | 1,331,500 | 1,054,800 | 3,287,300 | 3,833,200 |
Gross profit | 767,800 | 856,100 | 1,985,300 | 2,320,600 |
Operating Expenses: | ||||
General and administrative | 470,200 | 435,100 | 1,306,600 | 1,256,700 |
Selling | 263,800 | 223,900 | 679,500 | 664,800 |
Research & development | 117,700 | 114,100 | 379,700 | 334,500 |
Total operating expenses | 851,700 | 773,100 | 2,365,800 | 2,256,000 |
Income (loss) from operations | (83,900) | 83,000 | (380,500) | 64,600 |
Other income (expense): | ||||
Interest income | 0 | 1,100 | 5,600 | 10,100 |
Other income, net | 500 | 0 | 1,900 | 5,700 |
Interest expense | (500) | (1,200) | (1,100) | (2,200) |
Total other income (expense), net | 0 | (100) | 6,400 | 13,600 |
Income (loss) before income tax expense (benefit) | (83,900) | 82,900 | (374,100) | 78,200 |
Income tax expense (benefit): | ||||
Current | 9,700 | 38,900 | 17,800 | 23,400 |
Deferred | (55,900) | (21,600) | (40,400) | (7,400) |
Total income tax expense (benefit) | (46,200) | 17,300 | (22,600) | 16,000 |
Net income (loss) | $ (37,700) | $ 65,600 | $ (351,500) | $ 62,200 |
Basic earnings (loss) per common share | $ (0.03) | $ 0.04 | $ (0.24) | $ 0.04 |
Diluted earnings (loss) per common share | (0.03) | 0.04 | (0.24) | .04 |
Cash dividends declared per common share | $ .00 | $ 0.03 | $ .00 | $ 0.03 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Condensed Consolidated Statements Of Comprehensive Income Loss | ||||
Net income (loss) | $ (37,700) | $ 65,600 | $ (351,500) | $ 62,200 |
Other comprehensive income (loss): | ||||
Unrealized holding gain (loss) arising during period net of tax | (5,100) | 1,300 | (900) | (5,600) |
Comprehensive income (loss) | $ (42,800) | $ 66,900 | $ (352,400) | $ 56,600 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating activities: | ||
Net income (loss) | $ (351,500) | $ 62,200 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Gain on sale of investment | 0 | (3,200) |
Depreciation and amortization | 230,100 | 276,500 |
Deferred income tax expense | (39,400) | (7,400) |
Income tax benefit of stock options exercised | 8,000 | 0 |
Stock-based compensation | 18,600 | 1,300 |
Change in fair value of contingent consideration | 445,700 | 0 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | (227,700) | 149,600 |
Inventories | (740,400) | 206,200 |
Prepaid expenses and other current assets | (12,000) | (25,900) |
Accounts payable | 255,200 | 700 |
Long term accounts receivable | 0 | (245,400) |
Customer advances | 356,000 | 107,900 |
Accrued expenses | (92,800) | (317,700) |
Total adjustments | 201,300 | 142,600 |
Net cash provided by (used in) operating activities | (150,200) | 204,800 |
Investing activities: | ||
Redemption of investment securities, available-for-sale | 0 | 11,100 |
Purchase of investment securities, available-for-sale | (14,500) | (18,700) |
Capital expenditures | (70,500) | (18,200) |
Purchase of other intangible assets | (3,600) | (12,800) |
Net cash used in investing activities | (88,600) | (38,600) |
Financing activities: | ||
Line of credit proceeds | 40,000 | 250,000 |
Line of credit repayments | 0 | (250,000) |
Payments for contingent consideration | (142,700) | (166,100) |
Cash dividend declared and paid | 0 | (44,500) |
Proceeds from exercise of stock options | 0 | 15,500 |
Principal payments on note payable | (5,000) | (4,800) |
Net cash used in financing activities | (107,700) | (199,900) |
Net decrease in cash and cash equivalents | (346,500) | (33,700) |
Cash and cash equivalents, beginning of year | 1,025,100 | 1,245,000 |
Cash and cash equivalents, end of period | 678,600 | 1,211,300 |
Cash paid during the period for: | ||
Income taxes | 16,000 | 213,500 |
Interest | $ 1,100 | $ 2,200 |
1. Summary of Significant Accou
1. Summary of Significant Accounting Policies | 9 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Scientific Industries, Inc., Altamira Instruments, Inc. (“Altamira”), a Delaware corporation and wholly-owned subsidiary, Scientific Bioprocessing, Inc. (“SBI”), a Delaware corporation and wholly-owned subsidiary, and Scientific Packaging Industries, Inc., an inactive wholly-owned subsidiary (all collectively referred to as the “Company”). All material intercompany balances and transactions have been eliminated. Recent Accounting Pronouncements In January 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”. The update addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted only for certain portions of the ASU related to financial liabilities. The Company is currently evaluating the impact of the provisions of this new standard on the consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842). The FASB issued this update to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the effect of the new standard. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing (Topic 606)”. In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”, In August 2016, the FASB issued ASU 2016-15, “ Classification of Certain Cash Receipts and Cash Payments” In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230)” Adopted Accounting Pronouncements In November 2015, the FASB issued ASU No. 2015-17, " Income Taxes: Balance Sheet Classification of Deferred Taxes On December 22, 2017, the Staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118, “ Income Tax Accounting Implications of the Tax Cuts and Jobs Act, or ” Income Taxes, Under ASC 740, entities are required to adjust current and deferred tax assets and liabilities for the effects of changes in tax laws or rates at their date of enactment. However, pursuant to SAB 118, if an entity does not have the necessary information available, prepared, or analyzed for certain income tax effects of the 2017 Tax Act at the time an entity’s financial statements are issued, an entity shall apply ASC 740 based on the provisions of the tax laws that were in effect immediately prior to the enactment of the 2017 Tax Act. If the accounting for certain income tax effects of the 2017 Tax Act is incomplete, but an entity can determine a reasonable estimate for those effects, an entity can record provisional amounts during a measurement period, which ends on the earlier of when an entity has obtained, prepared, and analyzed the information necessary to complete the accounting requirements of ASC 740 and December 22, 2017. The 2017 Tax Act includes significant changes to the U.S. income tax system. The 2017 Tax Act contains numerous provisions impacting the Company, the most significant of which reduces the Federal corporate statutory rate from 35% to 21%. The Company is a fiscal-year end taxpayer and is required to use a blended statutory federal tax rate, inclusive of the Federal rate change enacted on December 22, 2017 to compute its effective rate for the three and six months ended December 31, 2017. The various provisions under the 2017 Tax Act most relevant to the Company have been considered in the preparation of the financial statements as of March 31, 2018. However, the Company had not completed its accounting for the tax effects of the enactment of 2017 Tax act. The Company’s provision for income taxes for the three and nine months ended March 31, 2018 is based on reasonable estimates of the effects of its implementation and existing deferred tax balances. The Company estimates it will record a one-time non-cash charge of approximately $30,000 for the fiscal year ended June 30, 2018 due to an estimated reduction in deferred tax assets as a result of the reduction in the Federal tax rate. We expect to complete our accounting during the one year measurement period from the enactment date. Reclassification Accounts receivable of $245,400 was reclassified from current to long-term assets on the balance sheet as of June 30, 2017 to conform to the current period's presentation. |
2. Segment Information and Conc
2. Segment Information and Concentrations | 9 Months Ended |
Mar. 31, 2018 | |
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 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 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 March 31, 2018: Revenues $1,550,700 $110,700 $437,900 $- $2,099,300 Foreign Sales 620,200 105,400 - - 725,600 Income (Loss) From Operations 78,200 (74,400) (87,700) - (83,900) Assets 3,930,600 1,680,800 893,300 853,600 7,358,300 Long-Lived Asset Expenditures 4,500 - - - 4,500 Depreciation and Amortization 67,400 (800) 9,400 - 76,000 Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate And Other Consolidated Three Months Ended March 31, 2017: Revenues $1,410,800 $359,800 $140,300 $- $1,910,900 Foreign Sales 611,400 37,100 - - 648,500 Income (Loss) From Operations 88,900 (82,400) 76,500 - 83,000 Assets 4,170,900 1,822,200 485,700 719,200 7,198,000 Long-Lived Asset Expenditures 4,600 - 7,000 - 11,600 Depreciation and Amortization 73,500 1,600 12,000 - 87,100 Approximately 53% and 54% of net benchtop laboratory equipment sales (39% and 40% of total revenues) for the three month periods ended March 31, 2018 and 2017, respectively, were derived from the Company’s main product, the Vortex-Genie 2 mixer, excluding accessories. Approximately 21% of total benchtop laboratory equipment sales (16% of total revenues) were derived from the Torbal Scales Division for both the three months ended March 31, 2018 and 2017 respectively. For the three months ended March 31, 2018 and 2017, respectively, two customers accounted in the aggregate for approximately 17% and 15% of net sales of the Benchtop Laboratory Equipment Operations (13% and 11% of the Company’s total revenues). Sales of catalyst research instruments generally comprise a few very large orders averaging approximately $50,000 per order to a limited number of customers, who differ from order to order. Sales to two and two different customers during the three months ended March 31, 2018 and 2017, accounted for approximately 89% and 76% of the Catalyst Research Instrument Operations’ revenues and 5% and 14% of the Company’s total revenues, respectively. Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate And Other Consolidated Nine Months Ended March 31, 2018: Revenues $4,436,300 $293,000 $543,300 $- $5,272,600 Foreign Sales 1,937,800 114,400 - - 2,052,200 Income (Loss) From Operations 106,300 (361,900) (124,900) - (380,500) Assets 3,930,600 1,680,800 893,300 853,600 7,358,300 Long-Lived Asset Expenditures 69,700 1,900 2,500 - 74,100 Depreciation and Amortization 199,300 2,700 28,100 - 230,100 Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate And Other Consolidated Nine Months Ended March 31, 2017: Revenues $4,334,400 $1,629,400 $190,000 $- $6,153,800 Foreign Sales 1,924,400 52,200 - - 1,976,600 Income (Loss) From Operations 252,900 (197,400) 9,100 - 64,600 Assets 4,170,900 1,822,200 485,700 719,200 7,198,000 Long-Lived Asset Expenditures 18,200 - 12,800 - 31,000 Depreciation and Amortization 226,900 12,600 37,000 - 276,500 Approximately 51% and 53% of net benchtop laboratory equipment sales (43% and 37% of total revenues) for the nine month periods ended March 31, 2018 and 2017, respectively, were derived from the Company’s main product, the Vortex-Genie 2 mixer, excluding accessories. Approximately 22% and 23% of total benchtop laboratory equipment sales (19% and 16% of total revenues) were derived from the Torbal Scales Division for the nine months ended March 31, 2018 and 2017, respectively. For the nine months ended March 31, 2018 and 2017, respectively, two customers accounted in the aggregate for approximately 16% of net sales of the Benchtop Laboratory Equipment Operations (14% and 11% of the Company’s total revenues). Sales of catalyst research instruments generally comprise a few very large orders averaging approximately $50,000 per order to a limited number of customers, who differ from order to order. Sales to three and four customers during the nine months ended March 31, 2018 and 2017, accounted for approximately 79% and 92% of the Catalyst Research Instrument Operations’ revenues and 4% and 24% of the Company’s total revenues, respectively. |
3. Fair Value of Financial Inst
3. Fair Value of Financial Instruments | 9 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [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 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. The following tables set forth by level within the fair value hierarchy the Company’s financial assets that were accounted for at fair value on a recurring basis at March 31, 2018 and June 30, 2017 according to the valuation techniques the Company used to determine their fair values: Fair Value Measurements Using Inputs Considered as Fair Value at March 31, 2018 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $678,600 $678,600 $- $- Available-for- sale securities 309,100 309,100 - - Total $987,700 $987,700 $- $- Liabilities: Contingent consideration $600,000 $- $- $600,000 Fair Value Measurements Using Inputs Considered as Fair Value at June 30, 2017 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $1,025,100 $1,025,100 $- $- Available for sale securities 295,500 295,500 - - Total $1,320,600 $1,320,600 $- $- Liabilities: Contingent consideration $297,000 $- $- $297,000 The following table sets forth an analysis of changes during the nine months ended March 31, 2018 and 2017 in Level 3 financial liabilities of the Company: 2018 2017 Beginning balance $297,000 $346,300 Increase in contingent consideration liability 445,700 - Payments (142,700) (166,100) Ending balance $600,000 $180,200 Investments in marketable securities classified as available-for-sale by security type at March 31, 2018 and June 30, 2017 consisted of the following: Cost Fair Value Unrealized Holding Gain (Loss) At March 31, 2018: Available for sale: Equity securities $45,700 $63,300 $17,600 Mutual funds 267,800 245,800 (22,000) $313,500 $309,100 $(4,400) Cost Fair Value Unrealized Holding Gain (Loss) At June 30, 2017: Available for sale: Equity securities $37,000 $50,800 $13,800 Mutual funds 262,000 244,700 (17,300) $299,000 $295,500 $(3,500) |
4. Inventories
4. Inventories | 9 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories are valued at the lower of cost (determined on a first-in, first-out basis) or net realizable value, and have been reduced by an allowance for excess and obsolete inventories. The estimate is based on managements review of inventories on hand compared to estimated future usage and sales. Cost of work-in-process and finished goods inventories include material, labor, and manufacturing overhead. March 31, 2018 June 30, 2017 Raw materials $1,525,400 $1,373,800 Work-in-process 831,000 166,500 Finished goods 345,200 420,900 $2,701,600 $1,961,200 |
5. Goodwill and Other Intangibl
5. Goodwill and Other Intangible Assets | 9 Months Ended |
Mar. 31, 2018 | |
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 acquisitions. Goodwill amounted to $705,300 at March 31, 2018 and June 30, 2017, all of which is expected to be deductible for tax purposes. The components of other intangible assets are as follows: Useful Lives Cost Accumulated Amortization Net At March 31, 2018: Technology, trademarks 5/10 yrs. $662,800 $595,300 $67,500 Trade names 6 yrs. 140,000 95,300 44,700 Websites 5 yrs. 210,000 171,500 38,500 Customer relationships 9/10 yrs. 357,000 291,400 65,600 Sublicense agreements 10 yrs. 294,000 187,400 106,600 Non-compete agreements 5 yrs. 384,000 334,500 49,500 IPR&D 3 yrs. 110,000 110,000 - Other intangible assets 5 yrs. 198,000 171,200 26,800 $2,355,800 $1,956,600 $399,200 Useful Lives Cost Accumulated Amortization Net At June 30, 2017: Technology, trademarks 5/10 yrs. $662,800 $541,100 $121,700 Trade names 6 yrs. 140,000 77,800 62,200 Websites 5 yrs. 210,000 140,000 70,000 Customer relationships 9/10 yrs. 357,000 281,400 75,600 Sublicense agreements 10 yrs. 294,000 165,400 128,600 Non-compete agreements 5 yrs. 384,000 294,000 90,000 IPR&D 3 yrs. 110,000 110,000 - Other intangible assets 5 yrs. 194,500 163,600 30,900 $2,352,300 $1,773,300 $579,000 Total amortization expense was $61,200 and $69,900 for the three months ended March 31, 2018 and 2017, respectively and $183,400 and $224,000 for the nine months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, estimated future amortization expense related to intangible assets is $60,200 for the remainder of the fiscal year ending June 30, 2018, $185,800 for fiscal 2019, $65,400 for fiscal 2020, $48,000 for fiscal 2021, $27,000 for fiscal 2022, and $12,800 thereafter. |
6. Earnings (Loss) Per Common S
6. Earnings (Loss) Per Common Share | 9 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Common Share | Earnings (loss) per common share data was computed as follows: For the Three Month Period Ended March 31, 2018 For the Three Month Period Ended March 31, 2017 For the Nine Month Period Ended March 31, 2018 For the Nine Month Period Ended March 31, 2017 Net income (loss) $(37,700) $65,600 $(351,500) $62,200 Weighted average common shares outstanding 1,494,112 1,492,334 1,494,112 1,490,189 Effect of dilutive securities - 38 - 1,309 Weighted average dilutive common shares outstanding 1,494,112 1,492,372 1,494,112 1,491,498 Basic earnings (loss) per common share $(.03) $.04 $(.24) $.04 Diluted earnings (loss) per common share $(.03) $.04 $(.24) $.04 Approximately 82,000 and 33,500 shares of the Company's common stock issuable upon the exercise of outstanding options were excluded from the calculation of diluted earnings per common share for the three and nine month periods ended March 31, 2018 and 2017, respectively, because the effect would be anti-dilutive. |
1. Summary of Significant Acc13
1. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | The accompanying condensed consolidated financial statements include the accounts of Scientific Industries, Inc., Altamira Instruments, Inc. (“Altamira”), a Delaware corporation and wholly-owned subsidiary, Scientific Bioprocessing, Inc. (“SBI”), a Delaware corporation and wholly-owned subsidiary, and Scientific Packaging Industries, Inc., an inactive wholly-owned subsidiary (all collectively referred to as the “Company”). All material intercompany balances and transactions have been eliminated. |
Recent Accounting Pronouncements | In January 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”. The update addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted only for certain portions of the ASU related to financial liabilities. The Company is currently evaluating the impact of the provisions of this new standard on the consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842). The FASB issued this update to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the effect of the new standard. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing (Topic 606)”. In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”, In August 2016, the FASB issued ASU 2016-15, “ Classification of Certain Cash Receipts and Cash Payments” In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230)” |
Adopted Accounting Pronouncements | In November 2015, the FASB issued ASU No. 2015-17, " Income Taxes: Balance Sheet Classification of Deferred Taxes On December 22, 2017, the Staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118, “ Income Tax Accounting Implications of the Tax Cuts and Jobs Act, or ” Income Taxes, Under ASC 740, entities are required to adjust current and deferred tax assets and liabilities for the effects of changes in tax laws or rates at their date of enactment. However, pursuant to SAB 118, if an entity does not have the necessary information available, prepared, or analyzed for certain income tax effects of the 2017 Tax Act at the time an entity’s financial statements are issued, an entity shall apply ASC 740 based on the provisions of the tax laws that were in effect immediately prior to the enactment of the 2017 Tax Act. If the accounting for certain income tax effects of the 2017 Tax Act is incomplete, but an entity can determine a reasonable estimate for those effects, an entity can record provisional amounts during a measurement period, which ends on the earlier of when an entity has obtained, prepared, and analyzed the information necessary to complete the accounting requirements of ASC 740 and December 22, 2017. The 2017 Tax Act includes significant changes to the U.S. income tax system. The 2017 Tax Act contains numerous provisions impacting the Company, the most significant of which reduces the Federal corporate statutory rate from 35% to 21%. The Company is a fiscal-year end taxpayer and is required to use a blended statutory federal tax rate, inclusive of the Federal rate change enacted on December 22, 2017 to compute its effective rate for the three and six months ended December 31, 2017. The various provisions under the 2017 Tax Act most relevant to the Company have been considered in the preparation of the financial statements as of March 31, 2018. However, the Company had not completed its accounting for the tax effects of the enactment of 2017 Tax act. The Company’s provision for income taxes for the three and nine months ended March 31, 2018 is based on reasonable estimates of the effects of its implementation and existing deferred tax balances. The Company estimates it will record a one-time non-cash charge of approximately $30,000 for the fiscal year ended June 30, 2018 due to an estimated reduction in deferred tax assets as a result of the reduction in the Federal tax rate. We expect to complete our accounting during the one year measurement period from the enactment date. |
Reclassification | Accounts receivable of $245,400 was reclassified from current to long-term assets on the balance sheet as of June 30, 2017 to conform to the current period's presentation. |
2. Segment Information and Co14
2. Segment Information and Concentrations (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate And Other Consolidated Three Months Ended March 31, 2018: Revenues $1,550,700 $110,700 $437,900 $- $2,099,300 Foreign Sales 620,200 105,400 - - 725,600 Income (Loss) From Operations 78,200 (74,400) (87,700) - (83,900) Assets 3,930,600 1,680,800 893,300 853,600 7,358,300 Long-Lived Asset Expenditures 4,500 - - - 4,500 Depreciation and Amortization 67,400 (800) 9,400 - 76,000 Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate And Other Consolidated Three Months Ended March 31, 2017: Revenues $1,410,800 $359,800 $140,300 $- $1,910,900 Foreign Sales 611,400 37,100 - - 648,500 Income (Loss) From Operations 88,900 (82,400) 76,500 - 83,000 Assets 4,170,900 1,822,200 485,700 719,200 7,198,000 Long-Lived Asset Expenditures 4,600 - 7,000 - 11,600 Depreciation and Amortization 73,500 1,600 12,000 - 87,100 Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate And Other Consolidated Nine Months Ended March 31, 2018: Revenues $4,436,300 $293,000 $543,300 $- $5,272,600 Foreign Sales 1,937,800 114,400 - - 2,052,200 Income (Loss) From Operations 106,300 (361,900) (124,900) - (380,500) Assets 3,930,600 1,680,800 893,300 853,600 7,358,300 Long-Lived Asset Expenditures 69,700 1,900 2,500 - 74,100 Depreciation and Amortization 199,300 2,700 28,100 - 230,100 Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate And Other Consolidated Nine Months Ended March 31, 2017: Revenues $4,334,400 $1,629,400 $190,000 $- $6,153,800 Foreign Sales 1,924,400 52,200 - - 1,976,600 Income (Loss) From Operations 252,900 (197,400) 9,100 - 64,600 Assets 4,170,900 1,822,200 485,700 719,200 7,198,000 Long-Lived Asset Expenditures 18,200 - 12,800 - 31,000 Depreciation and Amortization 226,900 12,600 37,000 - 276,500 |
3. Fair Value of Financial In15
3. Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Inputs | Fair Value Measurements Using Inputs Considered as Fair Value at March 31, 2018 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 678,600 $ 678,600 $ — $ — Available-for- sale securities 309,100 309,100 — — Total $ 987,700 $ 987,700 $ — $ — Liabilities: Contingent consideration $ 600,000 $ — $ — $ 600,000 Fair Value Measurements Using Inputs Considered as Fair Value at June 30, 2017 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 1,025,100 $ 1,025,100 $ — $ — Available for sale securities 295,500 295,500 — — Total $ 1,320,600 $ 1,320,600 $ — $ — Liabilities: Contingent consideration $ 297,000 $ — $ — $ 297,000 |
Changes to Level 3 Financial Liabilities | 2018 2017 Beginning balance $297,000 $346,300 Increase in contingent consideration liability 445,700 - Payments (142,700) (166,100) Ending balance $600,000 $180,200 |
Investments in Marketable Securitites | Cost Fair Value Unrealized Holding Gain (Loss) At March 31, 2018: Available for sale: Equity securities $45,700 $63,300 $17,600 Mutual funds 267,800 245,800 (22,000) $313,500 $309,100 $(4,400) Cost Fair Value Unrealized Holding Gain (Loss) At June 30, 2017: Available for sale: Equity securities $37,000 $50,800 $13,800 Mutual funds 262,000 244,700 (17,300) $299,000 $295,500 $(3,500) |
4. Inventories (Tables)
4. Inventories (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | March 31, 2018 June 30, 2017 Raw materials $ 1,525,400 $ 1,373,800 Work-in-process 831,000 166,500 Finished goods 345,200 420,900 $ 2,701,600 $ 1,961,200 |
5. Goodwill and Other Intangi17
5. Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Useful Cost Accumulated Amortization Net At March 31, 2018: Technology, trademarks 5/10 yrs. $ 662,800 $ 595,300 $ 67,500 Trade names 6 yrs. 140,000 95,300 44,700 Websites 5 yrs. 210,000 171,500 38,500 Customer relationships 9/10 yrs. 357,000 291,400 65,600 Sublicense agreements 10 yrs. 294,000 187,400 106,600 Non-compete agreements 5 yrs. 384,000 334,500 49,500 IPR&D 3 yrs. 110,000 110,000 — Other intangible assets 5 yrs. 198,000 171,200 26,800 $ 2,355,800 $ 1,956,600 $ 399,200 Useful Cost Accumulated Amortization Net At June 30, 2017: Technology, trademarks 5/10 yrs. $ 662,800 $ 541,100 $ 121,700 Trade names 6 yrs. 140,000 77,800 62,200 Websites 5 yrs. 210,000 140,000 70,000 Customer relationships 9/10 yrs. 357,000 281,400 75,600 Sublicense agreements 10 yrs. 294,000 165,400 128,600 Non-compete agreements 5 yrs. 384,000 294,000 90,000 IPR&D 3 yrs. 110,000 110,000 — Other intangible assets 5 yrs. 194,500 163,600 30,900 $ 2,352,300 $ 1,773,300 $ 579,000 |
6. Earnings (Loss) per common18
6. Earnings (Loss) per common share (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings (loss) per common share | For the Three Month Period Ended March 31, 2018 For the Three Month Period Ended March 31, 2017 For the Nine Month Period Ended March 31, 2018 For the Nine Month Period Ended March 31, 2017 Net income (loss) $(37,700) $65,600 $(351,500) $62,200 Weighted average common shares outstanding 1,494,112 1,492,334 1,494,112 1,490,189 Effect of dilutive securities - 38 - 1,309 Weighted average dilutive common shares outstanding 1,494,112 1,492,372 1,494,112 1,491,498 Basic earnings (loss) per common share $(.03) $.04 $(.24) $.04 Diluted earnings (loss) per common share $(.03) $.04 $(.24) $.04 |
2. Segment Information and Co19
2. Segment Information and Concentrations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Depreciation and Amortization | $ 230,100 | $ 276,500 | ||
Benchtop Laboratory Equipment [Member] | ||||
Revenues | $ 1,550,700 | $ 1,410,800 | 4,436,300 | 4,334,400 |
Foreign Sales | 620,200 | 611,400 | 1,937,800 | 1,924,400 |
Income (Loss) from Operations | 78,200 | 88,900 | 106,300 | 252,900 |
Assets | 3,930,600 | 4,170,900 | 3,930,600 | 4,170,900 |
Long-lived Asset Expenditures | 4,500 | 4,600 | 69,700 | 18,200 |
Depreciation and Amortization | 67,400 | 73,500 | 199,300 | 226,900 |
Catalyst Research Instruments [Member] | ||||
Revenues | 110,700 | 359,800 | 293,000 | 1,629,400 |
Foreign Sales | 105,400 | 37,100 | 114,400 | 52,200 |
Income (Loss) from Operations | (74,400) | (82,400) | (361,900) | (197,400) |
Assets | 1,680,800 | 1,822,200 | 1,680,800 | 1,822,200 |
Long-lived Asset Expenditures | 0 | 0 | 1,900 | 0 |
Depreciation and Amortization | (800) | 1,600 | 2,700 | 12,600 |
Bioprocessing Systems [Member] | ||||
Revenues | 437,900 | 140,300 | 543,300 | 190,000 |
Foreign Sales | 0 | 0 | 0 | 0 |
Income (Loss) from Operations | (87,700) | 76,500 | (124,900) | 9,100 |
Assets | 893,300 | 485,700 | 893,300 | 485,700 |
Long-lived Asset Expenditures | 0 | 7,000 | 2,500 | 12,800 |
Depreciation and Amortization | 9,400 | 12,000 | 28,100 | 37,000 |
Corporate and Other [Member] | ||||
Revenues | 0 | 0 | 0 | 0 |
Foreign Sales | 0 | 0 | 0 | 0 |
Income (Loss) from Operations | 0 | 0 | 0 | 0 |
Assets | 853,600 | 719,200 | 853,600 | 719,200 |
Long-lived Asset Expenditures | 0 | 0 | 0 | 0 |
Depreciation and Amortization | 0 | 0 | 0 | 0 |
Consolidated [Member] | ||||
Revenues | 2,099,300 | 1,910,900 | 5,272,600 | 6,153,800 |
Foreign Sales | 725,600 | 648,500 | 2,052,200 | 1,976,600 |
Income (Loss) from Operations | (83,900) | 83,000 | (380,500) | 64,600 |
Assets | 7,358,300 | 7,198,000 | 7,358,300 | 7,198,000 |
Long-lived Asset Expenditures | 4,500 | 11,600 | 74,100 | 31,000 |
Depreciation and Amortization | $ 76,000 | $ 87,100 | $ 230,100 | $ 276,500 |
2. Segment Information and Co20
2. Segment Information and Concentrations (Details Narrative) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Benchtop Laboratory Equipment [Member] | ||||
Net sales | 53.00% | 54.00% | 51.00% | 53.00% |
Total revenues | 39.00% | 40.00% | 43.00% | 37.00% |
Benchtop Laboratory Equipment [Member] | TwoCustomers [Member] | ||||
Net sales | 17.00% | 15.00% | 16.00% | 16.00% |
Total revenues | 13.00% | 11.00% | 14.00% | 11.00% |
Benchtop Laboratory Equipment [Member] | Torbal Brand Products | ||||
Net sales | 21.00% | 21.00% | 22.00% | 23.00% |
Total revenues | 16.00% | 16.00% | 19.00% | 16.00% |
Catalyst Research Instruments [Member] | ||||
Net sales | 89.00% | 76.00% | 79.00% | 92.00% |
Total revenues | 5.00% | 14.00% | 4.00% | 24.00% |
3. Fair Value of Financial In21
3. Fair Value of Financial Instruments (Details) - USD ($) | Mar. 31, 2018 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2016 |
Assets: | ||||
Cash and cash equivalents | $ 678,600 | $ 1,025,100 | $ 1,211,300 | $ 1,245,000 |
Available for sale securities | 309,100 | 295,500 | ||
Total | 987,700 | 1,320,600 | ||
Liabilities: | ||||
Contingent consideration | 600,000 | 297,000 | ||
Level 1 | ||||
Assets: | ||||
Cash and cash equivalents | 678,600 | 1,025,100 | ||
Available for sale securities | 309,100 | 295,500 | ||
Total | 987,700 | 1,320,600 | ||
Liabilities: | ||||
Contingent consideration | 0 | 0 | ||
Level 2 | ||||
Assets: | ||||
Cash and cash equivalents | 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 | ||
Available for sale securities | 0 | 0 | ||
Total | 0 | 0 | ||
Liabilities: | ||||
Contingent consideration | $ 600,000 | $ 297,000 |
3. Fair Value of Financial In22
3. Fair Value of Financial Instruments (Details 1) - USD ($) | Mar. 31, 2018 | Mar. 31, 2017 |
Fair Value Of Financial Instruments Details 1 | ||
Beginning balance | $ 297,000 | $ 346,300 |
Increase in contingent consideration liability | 445,700 | 0 |
Payments | (142,700) | (166,100) |
Ending balance | $ 600,000 | $ 180,200 |
3. Fair Value of Financial In23
3. Fair Value of Financial Instruments (Details 2) - USD ($) | Mar. 31, 2018 | Jun. 30, 2017 |
Cost | $ 313,500 | $ 299,000 |
Fair Value | 309,100 | 295,500 |
Unrealized Holding Gain (Loss) | (4,400) | (3,500) |
Equity Securities | ||
Cost | 45,700 | 37,000 |
Fair Value | 63,300 | 50,800 |
Unrealized Holding Gain (Loss) | 17,600 | 13,800 |
Mutual Funds | ||
Cost | 267,800 | 262,000 |
Fair Value | 245,800 | 244,700 |
Unrealized Holding Gain (Loss) | $ (22,000) | $ (17,300) |
4. Inventories (Details)
4. Inventories (Details) - USD ($) | Mar. 31, 2018 | Jun. 30, 2017 |
Inventory Disclosure [Abstract] | ||
Raw Materials | $ 1,525,400 | $ 1,373,800 |
Work in process | 831,000 | 166,500 |
Finished Goods | 345,200 | 420,900 |
Inventory | $ 2,701,600 | $ 1,961,200 |
5. Goodwill and Other Intangi25
5. Goodwill and Other Intangible Assets (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Jun. 30, 2017 | |
Cost | $ 2,355,800 | $ 2,352,300 |
Accumulated Amortization | 1,956,600 | 1,773,300 |
Net | $ 399,200 | $ 579,000 |
Technology, trademarks [Member] | ||
Useful Lives Minimum | 5 years | 5 years |
Useful Lives Maximum | 10 years | 10 years |
Cost | $ 662,800 | $ 662,800 |
Accumulated Amortization | 595,300 | 541,100 |
Net | $ 67,500 | $ 121,700 |
Trade names [Member] | ||
Useful Lives | 6 years | 6 years |
Cost | $ 140,000 | $ 140,000 |
Accumulated Amortization | 95,300 | 77,800 |
Net | $ 44,700 | $ 62,200 |
Websites [Member] | ||
Useful Lives | 5 years | 5 years |
Cost | $ 210,000 | $ 210,000 |
Accumulated Amortization | 171,500 | 140,000 |
Net | $ 38,500 | $ 70,000 |
Customer relationships [Member] | ||
Useful Lives Minimum | 9 years | 9 years |
Useful Lives Maximum | 10 years | 10 years |
Cost | $ 357,000 | $ 357,000 |
Accumulated Amortization | 291,400 | 281,400 |
Net | $ 65,600 | $ 75,600 |
Sublicense agreements [Member] | ||
Useful Lives | 10 years | 10 years |
Cost | $ 294,000 | $ 294,000 |
Accumulated Amortization | 187,400 | 165,400 |
Net | $ 106,600 | $ 128,600 |
Non-compete agreements [Member] | ||
Useful Lives | 5 years | 5 years |
Cost | $ 384,000 | $ 384,000 |
Accumulated Amortization | 334,500 | 294,000 |
Net | $ 49,500 | $ 90,000 |
Intellectual property, research & development (IPR&D) [Member] | ||
Useful Lives | 3 years | 3 years |
Cost | $ 110,000 | $ 110,000 |
Accumulated Amortization | 110,000 | 110,000 |
Net | $ 0 | $ 0 |
Other intangible assets [Member] | ||
Useful Lives | 5 years | 5 years |
Cost | $ 198,000 | $ 194,500 |
Accumulated Amortization | 171,200 | 163,600 |
Net | $ 26,800 | $ 30,900 |
5. Goodwill and Other Intangi26
5. Goodwill and Other Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Goodwill | $ 705,300 | $ 705,300 | $ 705,300 | ||
Total amortization expense | 61,200 | $ 69,900 | 183,400 | $ 224,000 | |
Estimated future amortization expense 2018 | 60,200 | 60,200 | |||
Estimated future amortization expense 2019 | 185,800 | 185,800 | |||
Estimated future amortization expense 2020 | 65,400 | 65,400 | |||
Estimated future amortization expense 2021 | 48,000 | 48,000 | |||
Estimated future amortization expense 2022 | 27,000 | 27,000 | |||
Estimated future amortization expense thereafter | $ 12,800 | $ 12,800 |
6. Earnings (Loss) Per Common27
6. Earnings (Loss) Per Common Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ (37,700) | $ 65,600 | $ (351,500) | $ 62,200 |
Weighted average common shares outstanding | 1,494,112 | 1,492,334 | 1,494,112 | 1,490,189 |
Effect of dilutive securities | 0 | 38 | 0 | 1,309 |
Weighted average dilutive common shares outstanding | 1,494,112 | 1,492,372 | 1,494,112 | 1,491,498 |
Basic earnings (loss) per common share | $ (0.03) | $ 0.04 | $ (0.24) | $ 0.04 |
Diluted earnings (loss) per common share | $ (0.03) | $ 0.04 | $ (0.24) | $ .04 |
6. Earnings (Loss) Per Common28
6. Earnings (Loss) Per Common Share (Details Narrative) - shares | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||||
Common stock issuable upon the exercise of outstanding stock options | 82,000 | 33,500 | 82,000 | 33,500 |