Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Sep. 06, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | SCIENTIFIC INDUSTRIES INC | |
Entity Central Index Key | 0000087802 | |
Document Type | 10-K | |
Document Period End Date | Jun. 30, 2019 | |
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 | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 1,494,112 | |
Public Float | $ 8,035,000 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2019 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 1,602,500 | $ 1,053,100 |
Investment securities | 330,900 | 314,700 |
Trade accounts receivable, less allowance for doubtful accounts of $15,000 and $11,600 respectively | 1,974,200 | 1,722,300 |
Inventories | 2,592,300 | 2,267,900 |
Prepaid expenses and other current assets | 91,200 | 33,500 |
Total current assets | 6,591,100 | 5,391,500 |
Property and equipment, net | 318,800 | 199,500 |
Intangible assets, net | 175,000 | 338,700 |
Goodwill | 705,300 | 705,300 |
Trade accounts receivable, less current portion | 0 | 245,400 |
Other assets | 54,700 | 52,500 |
Deferred taxes | 431,100 | 392,600 |
Total assets | 8,276,000 | 7,325,500 |
Current Liabilities: | ||
Accounts payable | 569,000 | 428,000 |
Accrued expenses and taxes, current portion | 608,300 | 657,700 |
Contract liabilities | 0 | 63,800 |
Bank overdraft | 140,000 | 0 |
Contingent consideration, current portion | 268,000 | 118,000 |
Notes payable | 0 | 5,800 |
Total current liabilities | 1,585,300 | 1,273,300 |
Accrued expenses, less current portion | 0 | 60,000 |
Contingent consideration payable, less current portion | 350,000 | 290,000 |
Total liabilities | 1,935,300 | 1,623,300 |
Stockholders' equity: | ||
Common stock, $.05 par value; 7,000,000 shares authorized; 1,513,914 shares issued; 1,494,112 shares outstanding, respectively | 75,700 | 75,700 |
Additional paid-in capital | 2,592,700 | 2,545,900 |
Accumulated other comprehensive income | 0 | 1,200 |
Retained earnings | 3,724,700 | 3,131,800 |
Total | 6,393,100 | 5,754,600 |
Less common stock held in treasury at cost, 19,802 shares | 52,400 | 52,400 |
Total stockholders' equity | 6,340,700 | 5,702,200 |
Total liabilities and stockholders' equity | $ 8,276,000 | $ 7,325,500 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance doubtful accounts | $ 15,000 | $ 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 | 1,494,112 | 1,513,914 |
Stock held in treasury, shares | 19,802 | 19,802 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||
Revenues | $ 10,199,800 | $ 8,481,400 |
Cost of revenues | 5,832,700 | 5,259,700 |
Gross profit | 4,367,100 | 3,221,700 |
Operating expenses: | ||
General and administrative | 1,924,400 | 1,748,800 |
Selling | 1,136,100 | 957,500 |
Research and development | 530,500 | 520,900 |
Total operating expenses | 3,591,000 | 3,227,200 |
Income (loss) from operations | 776,100 | (5,500) |
Other income (expense): | ||
Interest income | 3,400 | 6,100 |
Other income (loss), net | (7,800) | 2,500 |
Interest expense | (1,500) | (1,700) |
Total other income (expense) | (5,900) | 6,900 |
Income before income tax expense | 770,200 | 1,400 |
Income tax expense: Current | 166,600 | 50,400 |
Income tax expense (benefit): Deferred | (42,000) | 111,500 |
Total income tax expense | 124,600 | 161,900 |
Net income (loss) | $ 645,600 | $ (160,500) |
Basic earnings (loss) per common share | $ 0.43 | $ (0.11) |
Diluted earnings (loss) per common share | $ 0.43 | $ (0.11) |
Weighted average common shares outstanding, basic | 1,494,112 | 1,494,112 |
Weighted average common shares outstanding, assuming dilution (in 2019) | 1,512,178 | 1,494,112 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 645,600 | $ (160,500) |
Other comprehensive income (loss): | ||
Unrealized holding gain arising during period, net of tax | 0 | 4,700 |
Comprehensive income (loss) | $ 645,600 | $ (155,800) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income / Loss | Retained Earnings | Treasury Stock | Total |
Balance beginning, Shares at Jun. 30, 2017 | 1,513,914 | 19,802 | ||||
Balance beginning, Amount at Jun. 30, 2017 | $ 75,700 | $ 2,515,900 | $ (3,500) | $ 3,292,300 | $ 52,400 | $ 5,828,000 |
Net income (loss) | (160,500) | (160,500) | ||||
Holding gain (loss) on investment securities, net of tax | 4,700 | 4,700 | ||||
Stock-based compensation | 30,000 | 30,000 | ||||
Balance ending, Shares at Jun. 30, 2018 | 1,513,914 | 19,802 | ||||
Balance ending, Amount at Jun. 30, 2018 | $ 75,700 | 2,545,900 | 1,200 | 3,131,800 | $ 52,400 | 5,702,200 |
Cumulative effect of the adoption of ASU 2016-01 - Financial Instruments | (22,000) | 22,000 | 0 | |||
Net income (loss) | 645,600 | 645,600 | ||||
Cash dividend declared and paid, $.05 | (74,700) | (74,700) | ||||
Holding gain (loss) on investment securities, net of tax | $ 20,800 | 20,800 | ||||
Stock-based compensation | 46,800 | 46,800 | ||||
Balance ending, Shares at Jun. 30, 2019 | 1,513,914 | 19,802 | ||||
Balance ending, Amount at Jun. 30, 2019 | $ 75,700 | $ 2,592,700 | $ 3,724,700 | $ 52,400 | $ 6,340,700 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities: | ||
Net income (loss) | $ 645,600 | $ (160,500) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Loss on sale of investment securities | 13,200 | 0 |
Depreciation and amortization | 257,300 | 305,100 |
Deferred income tax (benefit) expense | (38,500) | 112,500 |
Unrealized holding gain on investment securities | (3,000) | 0 |
Stock-based compensation | 46,800 | 30,000 |
Change in fair value of contingent consideration | 521,200 | 253,700 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | (6,500) | (543,300) |
Inventories | (324,400) | (306,700) |
Prepaid expenses and other assets | (60,100) | 46,800 |
Accounts payable | 141,000 | 288,800 |
Contract liabilities | (63,800) | 63,800 |
Accrued expenses and taxes | (109,300) | 166,700 |
Bank overdraft | 140,000 | 0 |
Total adjustments | 513,900 | 417,400 |
Net cash provided by operating activities | 1,159,500 | 256,900 |
Investing activities: | ||
Purchase of investment securities | (157,900) | (14,500) |
Redemption of investment securities | 151,900 | 0 |
Capital expenditures | (187,800) | (61,400) |
Purchase of other intangible assets | (24,600) | (3,600) |
Net cash used in investing activities | (218,400) | (79,500) |
Financing activities: | ||
Principal payments on note payable | (5,800) | (6,700) |
Cash dividend declared and paid | (74,700) | 0 |
Line of credit proceeds | 50,000 | 40,000 |
Line of credit repayments | (50,000) | (40,000) |
Payments for contingent consideration | (311,200) | (142,700) |
Net cash used in financing activities | (391,700) | (149,400) |
Net increase in cash and cash equivalents | 549,400 | 28,000 |
Cash and cash equivalents, beginning of year | 1,053,100 | 1,025,100 |
Cash and cash equivalents, end of year | 1,602,500 | 1,053,100 |
Cash paid during the period for: | ||
Income Taxes | 56,700 | 16,000 |
Interest | $ 1,500 | $ 1,700 |
1. Summary of Significant Accou
1. Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Nature of Operations Scientific Industries, Inc. and its subsidiaries (the “Company”) design, manufacture, and market a variety of benchtop laboratory equipment, bioprocessing products and catalyst research instruments. The Company is headquartered in Bohemia, New York where it produces benchtop laboratory equipment. Additionally, the Company has two other locations in Pittsburgh, Pennsylvania, where it produces a variety of custom-made catalyst research instruments and designs bioprocessing products, and an administrative facility in Oradell, New Jersey related to sales and marketing. The products sold by the Company includes mixers, shakers, stirrers, refrigerated incubators, pharmacy balances and scales, force gauges, catalyst characterization instruments, reactor systems and high throughput systems. The Company also sublicenses certain patents and technology under a license with the University of Maryland, Baltimore County, and receives royalty fees from the sublicenses. 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, and Scientific Bioprocessing, Inc. (“SBI”), a Delaware corporation and wholly-owned subsidiary, (all collectively referred to as the “Company”). All material intercompany balances and transactions have been eliminated. Revenue Recognition On July 1, 2018 the Company adopted Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers, as amended” (“ASC Topic 606”), using the modified retrospective method applied to those contracts which were not completed as of the adoption date. The adoption of the standard did not have a material impact on how the Company recognizes its revenues. 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 revenues from the following sources: (1) Benchtop Laboratory Equipment, (2) Catalyst Research Instruments, and (3) Royalties. The following table summarizes the Company’s disaggregation of revenues for the years ended June 30, 2019 and 2018. Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Consolidated June 30, 2019: Revenues $ 7,078,800 $ 1,814,900 $ 1,306,100 $ 10,199,800 Foreign Sales 2,680,300 1,102,300 1,301,200 5,083,800 June 30, 2018: Revenues $ 6,403,400 $ 1,408,900 $ 669,100 $ 8,481,400 Foreign Sales 2,669,000 707,200 669,100 4,045,300 Benchtop laboratory equipment sales comprise primarily of standard benchtop laboratory equipment from its stock 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 from a day to a few weeks. Customers either pay by credit card (online sales) or Net 30-90, 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. Warranty usually comprises of one to two year parts and labor and is deemed immaterial. Catalyst research instrument sales comprise primarily 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 received 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 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 which normally consists of replacement of small components or software support. Catalyst research instruments are never returned for repairs. Royalty revenues pertain to royalties earned by the Company, which are paid on a calendar year basis, under a licensing agreement from a single licensee and its sublicensees. The Company is then obligated to pay 50% of all royalties received 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 ● Identification of the performance obligations in the contract ● Determination of the transaction price ● 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 Financial Accounting Standards Board ("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. Cash and Cash Equivalents The Company considers all highly liquid debt instruments purchased with a maturity of 90 days or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit. As of June 30, 2019, and 2018, $1,328,600 and $593,700, respectively of cash balances were in excess of such limit. Accounts Receivable In order to record the Company’s accounts receivable at their net realizable value, the Company must assess their collectability. A considerable amount of judgment is required in order to make this assessment, including an analysis of historical bad debts and other adjustments, a review of the aging of the Company’s receivables, and the current creditworthiness of the Company’s customers. The Company has recorded allowances for receivables which it considered uncollectible, including amounts for the resolution of potential credit and other collection issues such as disputed invoices, customer satisfaction claims and pricing discrepancies. However, depending on how such potential issues are resolved, or if the financial condition of any of the Company’s customers was to deteriorate and its ability to make required payments became impaired, increases in these allowances may be required. The Company actively manages its accounts receivable to minimize credit risk. The Company does not obtain collateral for its accounts receivable. Contract Liabilities Contract liabilities consists of billings or payments received in advance of revenue recognition and is recognized as the revenue recognition criteria are met. Amounts that have been invoiced are initially recorded in accounts receivable and contract liabilities. The Company invoices its customers in accordance with the terms of the underlying contract. Accordingly, the contract liabilities balance does not represent the total contract value of outstanding arrangements. Contract liabilities that are expected to be recognized during the subsequent 12-month period are recorded as current and the remaining portion as noncurrent. Customer advances of $63,800 for the year ended June 30, 2018 were reclassified to contract liabilities on the balance sheet, which was all recognized as revenue during the year ended June 30, 2019. Investment Securities Investment securities consist of equity securities and mutual funds with realized gains and losses recorded using the specific identification method. Changes in fair value are recorded as unrealized holding gains or losses on the income statement. We determine the cost of the investment sold based on an average cost basis at the individual security level, and record the interest income and realized gains or losses on the sale of these investments in other income (loss), net. Prior to the year ended June 30, 2019, the Company’s investment securities were classified as available-for-sale securities and measured and recorded at fair value with unrealized changes in fair value recorded through other comprehensive income. 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 management’s 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. Property and Equipment Property and equipment are stated at cost. Depreciation of property and equipment is provided for primarily by the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized by the straight-line method over the remaining term of the related lease or the estimated useful lives of the assets, whichever is shorter. Intangible Assets Intangible assets consist primarily of acquired technology, customer relationships, non-compete agreements, patents, licenses, websites, intellectual property and research and development (“IPR&D”), trademarks and trade names. All intangible assets are amortized on a straight-line basis over the estimated useful lives of the respective assets, generally 3 to 10 years. The Company continually evaluates the remaining estimated useful lives of intangible assets that are being amortized to determine whether events or circumstances warrant a revision to the remaining period of amortization. Goodwill and Long-Lived Assets Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill and long-lived intangible assets are tested for impairment at least annually in accordance with the provisions of ASC No. 350, “Intangibles-Goodwill and Other” (“ASC No. 350”). ASC No. 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The Company tests goodwill and long-lived assets annually as of June 30, the last day of its fiscal year, unless an event occurs that would cause the Company to believe the value is impaired at an interim date. The Company concluded as of June 30, 2019 and 2018, there was no impairment of goodwill. Impairment of Long-Lived Assets The Company follows the provisions of ASC No. 360-10, “Property, Plant and Equipment - Impairment or Disposal of Long-Lived Assets (“ASC No. 360-10”). ASC No. 360-10 which requires evaluation of the need for an impairment charge relating to long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation for impairment is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write down to a new depreciable basis is required. If required, an impairment charge is recorded based on an estimate of future discounted cash flows. The Company concluded as of June 30, 2019 and 2018, there was no impairment of long-lived assets. Income Taxes The Company and its subsidiaries file a consolidated U.S. federal income tax return. Income taxes are accounted for under the asset and liability method. The Company provides for federal, and state income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributed to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Advertising Advertising costs are expensed as incurred. Advertising expense amounted to $207,500 and $174,700 for the years ended June 30, 2019 and 2018, respectively. Research and Development Research and development costs consisting of expenses for activities that are useful in developing and testing new products, as well as expenses that may significantly improve existing products, are expensed as incurred. Stock Compensation Plan The Company has a ten-year stock option plan (the “2012 Plan”) which provides for the grant of options to purchase up to 100,000 shares of the Company’s Common Stock, par value $.05 per share (“Common Stock”), plus 57,000 shares under options previously granted under the 2002 Stock Option Plan of the Company (the “Prior Plan”). The 2012 Plan provides for the granting of incentive or non-incentive stock options as defined in the 2012 Plan and options under the 2012 Plan may be granted until 2022. Incentive stock options may be granted to employees at an exercise price equal to 100% (or 110% if the optionee owns directly or indirectly more than 10% of the outstanding voting stock) of the fair market value of the shares of Common Stock on the date of the grant. Non-incentive stock options shall be granted at the fair market value of the shares of Common Stock on the date of grant. At June 30, 2019 and 2018, 20,795 and 26,000 shares respectively, of Common Stock were available for grant of options under the 2012 Plan. Stock-based compensation is accounted for in accordance with ASC No. 718 “Compensation-Stock Compensation” (“ASC No. 718”) which requires compensation costs related to stock-based payment transactions to be recognized. With limited exceptions, the amount of compensation cost is measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards are measured at each reporting period. Compensation costs are recognized over the period that an employee provides service in exchange for the award. During the years ended June 30, 2019 and 2018, the Company granted 6,705 and 57,500 options, respectively, to employees that had a fair value of $12,000 and $51,000, respectively. The fair value of the options granted during the years ended June 30, 2019 and 2018 were determined using the Black-Scholes-Merton option-pricing model. The weighted average assumptions used for the years ended June 30, 2019 and 2018 was an expected life of 10 years; risk free interest rate of 2.44% and 2.43%; volatility of 35% and 47%, and dividend yield of 1.29% and .85%, respectively. The Company declared a dividend of $0.05 per share during the year ended June 30, 2019. The Company did not declare dividends during the year ended June 30, 2018. The weighted-average value per share of the options granted during the years ended June 30, 2019 and 2018 was $1.79 and $1.64, respectively, and total stock-based compensation costs were $46,800 and $30,000 for the years ended June 30, 2019 and 2018, respectively. Stock-based compensation costs related to nonvested awards expected to be recognized in the future are $38,600 and $73,500 as of June 30, 2019 and 2018, respectively. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Estimates are used for, but not limited to, the allowance for doubtful accounts, slow-moving inventory reserves, depreciation and amortization, assumptions made in valuing equity instruments issued for services, and the fair values of intangibles and goodwill. The actual results experienced by the Company may differ materially from management’s estimates. Earnings Per Common Share Basic earnings per common share is computed by dividing net income (loss) by the weighted-average number of shares outstanding. Diluted earnings per common share includes the dilutive effect of stock options, if any. Recent Accounting Pronouncements In February 2016, the FASB issued authoritative guidance that requires lessees to account for most leases on their balance sheets with the liability being equal to the present value of the lease payments. The right-of-use asset will be based on the lease liability adjusted for certain cost such as direct costs. Lease expense will be recognized similar to current accounting guidance with operating leases resulting in a straight-line expense and financing leases resulting in a front-loaded expense similar to the current accounting for capital leases. This guidance becomes effective for the Company’s fiscal 2020 first quarter, with early adoption permitted. This guidance must be adopted using a modified retrospective transition approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and provides for certain practical expedients. We anticipate the adoption of this standard will result in an increase in our right of use assets and lease liabilities recorded on our consolidated balance sheets on July 1, 2019. The Company does not believe the adoption of this guidance will have a material impact on its consolidated results of operations or cash flows. In July 2017, the FASB issued ASU 2017-11, “ Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” Adopted Accounting Pronouncements In January 2016, the 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 adopted this pronouncement during the interim period September 30, 2018, which resulted in a $22,000 cumulative effect adjustment to retained earnings in the condensed consolidated balance sheet as of the beginning of the year ended June 30, 2019. The adoption of this pronouncement also resulted in the recognition of holding loss of $8,500 in the Company's consolidated statement of operations for the year ended June 30, 2019. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing (Topic 606)”. In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross verses Net) (Topic 606)”. These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, “Revenue from Contracts with Customers”. The amendments in ASU 2016-10 provide clarifying guidance on materiality of performance obligations; evaluating distinct performance obligations; treatment of shipping and handling costs; and determining whether an entity’s promise to grant a license provides a customer with either a right to use an entity’s intellectual property or a right to access an entity’s intellectual property. The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The adoption of ASU 2016-10 and ASU 2016-08 is to coincide with an entity’s adoption of ASU 2014-09. The Company has performed a review of the requirements of the new guidance and has identified which of its revenue streams will be within the scope of ASC 606. The Company has applied the five-step model of the new standard to a selection of contracts within each of its revenue streams and has compared the results to its prior accounting practices. The Company adopted the provisions of these pronouncements on July 1, 2018, using the modified retrospective approach. Revenue from the Company’s sales continue to generally be recognized when products are shipped (i.e. point in time). As such, the adoption of ASU 2016-10 did not have a material impact to the Company’s financial position or results of operations. Reclassification Customer advances of $63,800 for the year ended June 30, 2018 were reclassified to contract liabilities. |
2. Segment Information and Conc
2. Segment Information and Concentrations | 12 Months Ended |
Jun. 30, 2019 | |
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 June 30, 2019: Revenues $ 7,078,800 $ 1,814,900 $ 1,306,100 $ - $ 10,199,800 Foreign Sales 2,680,300 1,102,300 1,301,200 - 5,083,800 Income (Loss) From Operations 541,700 (130,600 ) 365,000 - 776,100 Assets 5,280,700 1,443,200 790,100 762,000 8,276,000 Long-Lived Asset Expenditures 194,500 2,200 15,700 - 212,400 Depreciation and Amortization 217,800 1,000 38,500 - 257,300 Segment information is reported as follows: Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate and Other Consolidated June 30, 2018: Revenues $ 6,403,400 $ 1,408,900 $ 669,100 $ - $ 8,481,400 Foreign Sales 2,669,000 707,200 669,100 - 4,045,300 Income (Loss) From Operations 297,000 (248,000 ) (54,500 ) - (5,500 ) Assets 4,141,200 1,482,200 1,002,800 699,300 7,325,500 Long-Lived Asset Expenditures 60,500 1,900 2,600 - 65,000 Depreciation and Amortization 265,100 2,800 37,200 - 305,100 |
3. Fair Value of Financial Inst
3. Fair Value of Financial Instruments | 12 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 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 table. 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 June 30, 2019 and 2018 according to the valuation techniques the Company used to determine their fair values: Fair Value Measurements Using Inputs Considered as Fair Value at June 30, 2019 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 1,602,500 $ 1,602,500 $ - $ - Investment securities 330,900 330,900 - - Total $ 1,933,400 $ 1,933,400 $ - $ - Liabilities: Contingent consideration $ 618,000 $ - $ - $ 618,000 Fair Value Measurements Using Inputs Considered as Fair Value at June 30, 2018 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 1,053,100 $ 1,053,100 $ - $ - Investment securities 314,700 314,700 - - Total $ 1,367,800 $ 1,367,800 $ - $ - Liabilities: Contingent consideration $ 408,000 $ - $ - $ 408,000 The following table sets forth an analysis of changes during the years ended June 30, 2019 and 2018 in Level 3 financial liabilities of the Company: 2019 2018 Beginning balance $ 408,000 $ 297,000 Increase in contingent consideration liability 521,200 408,900 Payments and accruals (311,200 ) (297,900 ) Ending balance $ 618,000 $ 408,000 The Company’s contingent obligations require cash payments to the sellers of certain acquired operations based on royalty payments received or operating results achieved. These contingent considerations are classified as liabilities and the liabilities are remeasured to an estimated fair value at each reporting date. During the years ended June 30, 2019 and 2018, the Company recorded an increase in the estimated fair value of contingent liabilities of approximately $521,200 and $408,900, respectively related to its Bioprocessing Systems Operations segment. Investments in marketable securities classified by security type at June 30, 2019 and 2018 consisted of the following: Cost Fair Value Unreealized Holding Gain (Loss) At June 30, 2019: Equity securities $ 47,100 $ 72,000 $ 24,900 Mutual funds 292,300 258,900 (33,400 ) $ 339,400 $ 330,900 $ (8,500 ) Cost Fair Value Unrealized Holding Gain (Loss) At June 30, 2018: Equity securities $ 45,700 $ 67,800 $ 22,100 Mutual funds 267,800 246,900 (20,900 ) $ 313,500 $ 314,700 $ 1,200 In conformity with ASC 205-10 “Presentation of Financial Statements”, as it relates to the comparability of financial statements, because ASU 2016-01 was not implemented retroactively, in order for the amounts presented in the 2019 financial statements to be comparable to the same period in 2018, the following table illustrates the impact the implementation of the standard would have had on the year ended June 30, 2018: As Reported Adjustments Balance with ASU 2016-01 Adoption Unrealized gain on marketable securities $ - $ 1,200 $ 1,200 Income before income tax expense 1,400 1,200 2,600 Income tax expense 161,900 - 161,900 Net loss (160,500 ) 1,200 (159,300 ) Earnings per common share (basic and diluted) $ (.11 ) $ - $ (.11 ) |
4. Inventories
4. Inventories | 12 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | 2019 2018 Raw materials $ 1,738,300 $ 1,488,000 Work-in-process 106,400 352,700 Finished goods 747,600 427,200 $ 2,592,300 $ 2,267,900 |
5. Property and Equipment
5. Property and Equipment | 12 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Useful Lives (years) 2019 2018 Automobiles 5 $ 22,000 22,000 Computer equipment 3-5 233,900 173,400 Machinery and equipment 3-7 986,500 870,400 Furniture and fixtures 4-10 205,900 205,900 Leasehold improvements 3-10 45,300 34,200 1,493,600 1,305,900 Less accumulated depreciation and amortization 1,174,800 1,106,400 318,800 199,500 |
6. Goodwill and Other Intangibl
6. Goodwill and Other Intangible Assets | 12 Months Ended |
Jun. 30, 2019 | |
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 June 30, 2019 and 2018, 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 (Years) At June 30, 2019: Technology, trademarks 5/10 yrs. $ 663,800 $ 661,700 $ 2,100 Trade names 6 yrs. 140,000 124,400 15,600 Websites 5 yrs. 210,000 210,000 - Customer relationships 9/10 yrs. 357,000 308,100 48,900 Sublicense agreements 10 yrs. 294,000 224,100 69,900 Non-compete agreements 5 yrs. 384,000 384,000 - IPR&D 3 yrs. 110,000 110,000 - Other intangible assets 5 yrs. 221,700 183,200 38,500 $ 2,380,500 $ 2,205,500 $ 175,000 Useful Lives Cost Accumulated Amortization Net At June 30, 2018: Technology, trademarks 5/10 yrs. $ 662,800 $ 613,400 $ 49,400 Trade names 6 yrs. 140,000 101,100 38,900 Websites 5 yrs. 210,000 182,000 28,000 Customer relationships 9/10 yrs. 357,000 294,800 62,200 Sublicense agreements 10 yrs. 294,000 194,800 99,200 Non-compete agreements 5 yrs. 384,000 348,000 36,000 IPR&D 3 yrs. 110,000 110,000 - Other intangible assets 5 yrs. 198,100 173,100 25,000 $ 2,355,900 $ 2,017,200 $ 338,700 Total amortization expense was $190,000 and $243,900 in 2019 and 2018, respectively. Estimated future amortization expense of intangible assets as of June 30, 2019 is as follows: Year Ended June 30, 2020 $ 70,500 2021 54,300 2022 31,700 2023 15,000 2024 3,500 Total $ 175,000 |
7. Lines of Credit
7. Lines of Credit | 12 Months Ended |
Jun. 30, 2019 | |
Line of Credit Facility [Abstract] | |
Lines of credit | The Company has a Demand Line of Credit through December 2019 with First National Bank of Pennsylvania which provides for borrowings of up to $300,000 for regular working capital needs, bearing interest at prime, currently 5.25%. The agreement contains a financial covenant requiring the Company to maintain a minimum net worth and borrowings are also secured by a pledge of the Company’s assets including inventory, accounts receivable, chattel paper, equipment and general intangibles of the Company. As of June 30, 2019 and 2018, there were no borrowings outstanding under the line. |
8. Notes Payable
8. Notes Payable | 12 Months Ended |
Jun. 30, 2019 | |
Notes Payable [Abstract] | |
Notes Payable | The Company had a $20,000 36-month auto loan through April 2019, with its bank, with monthly payments of $600 bearing interest at 4% for a vehicle used by the Company’s sales manager. The note had an outstanding balance of $5,800 as of June 30, 2018 which was paid in full as of June 30, 2019. |
9. Employee Benefit Plans
9. Employee Benefit Plans | 12 Months Ended |
Jun. 30, 2019 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | The Company has a 401(k) profit sharing plan covering all its employees, which provides for voluntary employee salary contributions not to exceed the statutory limitations provided by the Internal Revenue Code. The plan provides for Company matching contribution equal to 100% of employee’s deferral up to 3% of pay, plus 50% of employee’s deferral over 3% of pay up to 5%. Total matching contributions amounted to $69,600 and $74,500 for the years ended June 30, 2019 and 2018, respectively. |
10. Commitments and Contingenci
10. Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | The Company entered into a lease in August 2014 for its Bohemia, New York premises through February 2025 which requires minimum annual rental payments plus other expenses, including real estate taxes and insurance. The future minimum annual rental expense, computed on a straight-line basis, is approximately $170,000 under the terms of the lease. Rental expense for the Bohemia facility amounted to approximately $187,200 and $183,300 for the years ended June 30, 2019 and 2018, respectively. Accrued rent, payable in future years, amounted to $66,600 and $65,600 at June 30, 2019 and 2018, respectively. The Company has an operating lease for its facility in Pittsburgh, Pennsylvania, which requires monthly minimum rental payments through November 2020, plus common area expenses. Total rent expense for the Pittsburgh facility was $91,500 and $106,000 for the years ended June 30, 2019 and 2018, respectively. The Company also entered into another operating lease in Pittsburgh for product development and engineering space for its Bioprocessing Systems Operations from June 2019 through November 2020. Rental expense was $2,300 for the year ended June 30, 2019. In addition, the Company maintains an office in Oradell, New Jersey from which it performs its sales and marketing functions. The Company is obligated under an operating lease for its facility in Oradell, New Jersey, which required monthly minimum rental payments through June 2018, plus common area expenses. The Company is operating under a second one year renewal option through June 30, 2020. However, the Company is currently under negotiations for lease termination at the request of the landlord due to sale of the property, and entering into a new lease of similar terms in the same geographic area. Total rent expense for the New Jersey facility, was $24,300 and $23,000 for the years ended June 30, 2019 and 2018, respectively. The Company’s approximate future minimum rental payments under all operating leases as of June 30, 2019 are as follows: Year Ended June 30, 2020 $ 284,100 2021 222,500 2022 184,600 2023 190,200 2024 195,900 Thereafter 91,600 $ 1,168,900 The Company has a three-year employment contract with its President, effective July 1, 2017. The agreement provides for an annual base salary of $175,000 for the year ended June 30, 2018, with subsequent annual increases of 3% or percentage increase in Consumer Price Index (“CPI”), whichever is higher, plus $25,000 cash bonus for the year ended June 30, 2018, and a discretionary bonus for subsequent years. The agreement also provides for a grant of options to purchase 25,000 shares of the Company’s stock, which were granted during the year ended June 30, 2018. No shares were granted during the year ended June 30, 2019. The Company has a three-year employment contract with its President of the Genie Products Division of the Benchtop Laboratory Equipment Operations and Corporate Secretary effective July 1, 2017. The agreement provides for an annual base salary of $153,000 for the year ended June 30, 2018, with subsequent annual increases of 3% or percentage increase in the CPI, whichever is higher, plus $10,000 cash bonus for the year ended June 30, 2018, and a discretionary bonus for subsequent years. The agreement also provides for a grant of options to purchase 7,500 shares of the Company’s stock, which were granted during the year ended June 30, 2018. No shares were granted during the year ended June 30, 2019. The Company has a three-year employment contract with its Vice President of Corporate Development and Strategy and Vice president of Sales and Marketing of Altamira Instruments, Inc. effective July 1, 2017. The agreement provides for an annual base salary of $155,000 for the year ended June 30, 2018, with subsequent annual increases of 3% or percentage increase in the CPI, whichever is higher, plus $10,000 cash bonus for the year ended June 30, 2018, and a discretionary bonus for subsequent years. The agreement also provides for a grant of options to purchase 7,500 shares of the Company’s stock, which were granted during the year ended June 30, 2018. No shares were granted during the year ended June 30, 2019. The Company has a three-year employment contract with its President of Torbal Products Division of the Benchtop Laboratory Equipment Operations and Director of Marketing effective July 1, 2017. The agreement provides for an annual base salary of $157,000 for the year ended June 30, 2018, with subsequent annual increases of 4% or percentage increase in the CPI, whichever is higher, plus $10,000 cash bonus for the year ended June 30, 2018 and subsequent years, subject to a minimum increase of 5% in the divisions’ EBITDA for the related year. The agreement also provides for a grant of options to purchase 7,500 shares of the Company’s stock, which were granted during the year ended June 30, 2018. No shares were granted during the year ended June 30, 2019. A performance-based bonus of $10,000 was awarded for the year ended June 30, 2019. The Company has a two-year agreement with its President of Altamira Instruments, Inc. effective July 1, 2017, which was extended by mutual agreement through June 30, 2020. The agreement provides for an annual base salary of $120,000 and $110,000 for the years ended June 30, 2019 and 2018, respectively, plus incentive pay based on achievement of certain revenue and income levels, which were not achieved in both fiscal years and therefore there was no incentive pay. The agreement also provides for a grant of options for an aggregate of 10,000 shares of the Company’s common stock, which were granted during the year ended June 30, 2018. No shares were granted during the year ended June 30, 2019. The Company has a consulting agreement, which expires on December 31, 2019, with an affiliate of the Chairman of the Board of Directors for marketing consulting services. The agreement provides that the consultant be paid a monthly fee of $3,600 for a certain number of consulting days as defined in the agreement. Consulting expense related to this agreement amounted to $43,200 for each of the years ended June 30, 2019 and 2018, respectively. The Company has a consulting agreement, which expires December 31, 2019, with another member of its Board of Directors for administrative services provided that the consultant be paid at the rate of $85 per hour. Consulting expense related to this agreement amounted to $18,200 and $7,000 for the years ended June 30, 2019 and 2018, respectively. The Company entered into a new consulting agreement during the year ended June 30, 2019, which expired in August 2019. This consulting agreement is expected to be renewed for another six months with a member of its Board of Directors as it relates to its Bioprocessing Systems Operations. Consulting expense related to this agreement amounted to $40,000 for the year ended June 30, 2019. The Company is required to make payments of 30% of the net royalties received from the license and sublicense acquired in the SBI acquisition in fiscal 2014. Total contingent consideration payments made for this acquisition amounted to $311,200 and $142,700 for the years ended June 30, 2019 and 2018, respectively. The fair value of contingent consideration estimated to be paid as of June 30, 2019 is as follows: Year ended June 30, Amount 2020 $ 268,000 2021 228,000 2022 54,000 2023 46,000 2024 22,000 $ 618,000 |
11. Income Taxes
11. Income Taxes | 12 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The reconciliation of the provision for income taxes at the federal statutory rate of 21% to the actual tax expense or benefit for the applicable fiscal year was as follows: 2019 2018 Computed “expected” income tax (benefit) $ 161,700 $ 300 Research and development credits (24,300 ) (32,700 ) Change in tax rate 224,300 Other, net (12,800 ) (30,000 ) Income tax expense $ 124,600 $ 161,900 Deferred tax assets and liabilities consist of the following: 2019 2018 Deferred tax assets: Amortization of intangible assets $ 303,900 $ 326,500 Various accruals 173,600 54,700 Other 13,300 48,200 490,800 429,400 Deferred tax liability: Depreciation of property and equipment (59,700 ) (36,800 ) Net deferred tax assets $ 431,100 $ 392,600 ASC No. 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC No. 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. As of June 30, 2019 and 2018, the Company did not have any unrecognized tax benefits related to various federal and state income tax matters. The Company’s policy is to recognize interest and penalties on any unrecognized tax benefits as a component of income tax expense. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits. The Company is subject to U.S. federal income tax, as well as various state jurisdictions. The Company is currently open to audit under the statute of limitations by the federal and state jurisdictions for the years ended June 30, 2016 and after. The Company does not anticipate any material amount of unrecognized tax benefits within the next 12 months. |
12. Stock Options
12. Stock Options | 12 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options | Option activity is summarized as follows: June 30, 2019 June 30, 2018 Weighted- Weighted- Average Average Exercise Exercise Shares Price Shares Price Shares under option: Outstanding, beginning of year 92,000 $ 3.15 34,500 $ 3.25 Granted 6,705 4.54 57,500 3.08 Exercised - - - - Forfeited 1,500 3.27 - - Outstanding, end of year 97,205 3.24 92,000 3.15 Options exercisable at year-end 50,167 $ 3.29 28,834 $ 3.46 Weighted average fair value per share of options granted during the fiscal year - $ 1.79 - $ 1.64 As of June 30, 2019 Options Outstanding As of June 30, 2019 Exercisable Weighted- Average Weighted- Weighted- Range Remaining Average Average Exercise Number Contractual Exercise Number Exercise Prices Outstanding Life (Years) Price Outstanding Price $ 2.91 - $3.08 70,500 7.81 $ 3.07 30,167 $ 2.80 $ 3.65 - $4.65 26,705 5.57 $ 4.02 20,000 $ 3.84 97,205 50,167 As of June 30, 2018 Options Outstanding As of June 30, 2018 Exercisable Weighted- Average Weighted- Weighted- Range Remaining Average Average Exercise Number Contractual Exercise Number Exercise Prices Outstanding Life (Years) Price Outstanding Price $ 3.50 - $4.05 20,000 5.13 $ 3.84 20,000 $ 3.84 $ 2.91 - $3.27 72,000 8.63 $ 3.07 8,834 $ 3.06 92,000 28,834 |
13. Earnings (Loss) Per Common
13. Earnings (Loss) Per Common Share | 12 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Common Share | Earnings (loss) per common share data was computed as follows: 2019 2018 Net income (loss) $ 645,600 $ (160,500 ) Weighted average common shares outstanding 1,494,112 1,494,112 Effect of dilutive securities 18,066 - Weighted average dilutive common shares outstanding 1,512,178 1,494,112 Basic and diluted earnings (loss) per common share $ .43 $ (.11 ) Approximately 1,600 and 92,000 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 years ended June 30, 2019 and 2018, respectively, because the effect would be anti-dilutive. |
1. Summary of Significant Acc_2
1. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Nature of Operations | Scientific Industries, Inc. and its subsidiaries (the “Company”) design, manufacture, and market a variety of benchtop laboratory equipment, bioprocessing products and catalyst research instruments. The Company is headquartered in Bohemia, New York where it produces benchtop laboratory equipment. Additionally, the Company has two other locations in Pittsburgh, Pennsylvania, where it produces a variety of custom-made catalyst research instruments and designs bioprocessing products, and an administrative facility in Oradell, New Jersey related to sales and marketing. The products sold by the Company includes mixers, shakers, stirrers, refrigerated incubators, pharmacy balances and scales, force gauges, catalyst characterization instruments, reactor systems and high throughput systems. The Company also sublicenses certain patents and technology under a license with the University of Maryland, Baltimore County, and receives royalty fees from the sublicenses. |
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, and Scientific Bioprocessing, Inc. (“SBI”), a Delaware corporation and wholly-owned subsidiary, (all collectively referred to as the “Company”). All material intercompany balances and transactions have been eliminated. |
Revenue Recognition | On July 1, 2018 the Company adopted Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers, as amended” (“ASC Topic 606”), using the modified retrospective method applied to those contracts which were not completed as of the adoption date. The adoption of the standard did not have a material impact on how the Company recognizes its revenues. 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 revenues from the following sources: (1) Benchtop Laboratory Equipment, (2) Catalyst Research Instruments, and (3) Royalties. The following table summarizes the Company’s disaggregation of revenues for the years ended June 30, 2019 and 2018. Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Consolidated June 30, 2019: Revenues $ 7,078,800 $ 1,814,900 $ 1,306,100 $ 10,199,800 Foreign Sales 2,680,300 1,102,300 1,301,200 5,083,800 June 30, 2018: Revenues $ 6,403,400 $ 1,408,900 $ 669,100 $ 8,481,400 Foreign Sales 2,669,000 707,200 669,100 4,045,300 Benchtop laboratory equipment sales comprise primarily of standard benchtop laboratory equipment from its stock 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 from a day to a few weeks. Customers either pay by credit card (online sales) or Net 30-90, 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. Warranty usually comprises of one to two year parts and labor and is deemed immaterial. Catalyst research instrument sales comprise primarily 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 received 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 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 which normally consists of replacement of small components or software support. Catalyst research instruments are never returned for repairs. Royalty revenues pertain to royalties earned by the Company, which are paid on a calendar year basis, under a licensing agreement from a single licensee and its sublicensees. The Company is then obligated to pay 50% of all royalties received 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 ● Identification of the performance obligations in the contract ● Determination of the transaction price ● 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 Financial Accounting Standards Board ("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. |
Cash and Cash Equivalents | The Company considers all highly liquid debt instruments purchased with a maturity of 90 days or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit. As of June 30, 2019, and 2018, $1,328,600 and $593,700, respectively of cash balances were in excess of such limit. |
Accounts Receivable | In order to record the Company’s accounts receivable at their net realizable value, the Company must assess their collectability. A considerable amount of judgment is required in order to make this assessment, including an analysis of historical bad debts and other adjustments, a review of the aging of the Company’s receivables, and the current creditworthiness of the Company’s customers. The Company has recorded allowances for receivables which it considered uncollectible, including amounts for the resolution of potential credit and other collection issues such as disputed invoices, customer satisfaction claims and pricing discrepancies. However, depending on how such potential issues are resolved, or if the financial condition of any of the Company’s customers was to deteriorate and its ability to make required payments became impaired, increases in these allowances may be required. The Company actively manages its accounts receivable to minimize credit risk. The Company does not obtain collateral for its accounts receivable. |
Contract Liabilities | Contract liabilities consists of billings or payments received in advance of revenue recognition and is recognized as the revenue recognition criteria are met. Amounts that have been invoiced are initially recorded in accounts receivable and contract liabilities. The Company invoices its customers in accordance with the terms of the underlying contract. Accordingly, the contract liabilities balance does not represent the total contract value of outstanding arrangements. Contract liabilities that are expected to be recognized during the subsequent 12-month period are recorded as current and the remaining portion as noncurrent. Customer advances of $63,800 for the year ended June 30, 2018 were reclassified to contract liabilities on the balance sheet, which was all recognized as revenue during the year ended June 30, 2019. |
Investment Securities | Investment securities consist of equity securities and mutual funds with realized gains and losses recorded using the specific identification method. Changes in fair value are recorded as unrealized holding gains or losses on the income statement. We determine the cost of the investment sold based on an average cost basis at the individual security level, and record the interest income and realized gains or losses on the sale of these investments in other income (loss), net. Prior to the year ended June 30, 2019, the Company’s investment securities were classified as available-for-sale securities and measured and recorded at fair value with unrealized changes in fair value recorded through other comprehensive income. |
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 management’s 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. |
Property and Equipment | Property and equipment are stated at cost. Depreciation of property and equipment is provided for primarily by the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized by the straight-line method over the remaining term of the related lease or the estimated useful lives of the assets, whichever is shorter. |
Intangible Assets | Intangible assets consist primarily of acquired technology, customer relationships, non-compete agreements, patents, licenses, websites, intellectual property and research and development (“IPR&D”), trademarks and trade names. All intangible assets are amortized on a straight-line basis over the estimated useful lives of the respective assets, generally 3 to 10 years. The Company continually evaluates the remaining estimated useful lives of intangible assets that are being amortized to determine whether events or circumstances warrant a revision to the remaining period of amortization. |
Goodwill and Long-Lived Assets | Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill and long-lived intangible assets are tested for impairment at least annually in accordance with the provisions of ASC No. 350, “Intangibles-Goodwill and Other” (“ASC No. 350”). ASC No. 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The Company tests goodwill and long-lived assets annually as of June 30, the last day of its fiscal year, unless an event occurs that would cause the Company to believe the value is impaired at an interim date. The Company concluded as of June 30, 2019 and 2018, there was no impairment of goodwill. |
Impairment of Long-Lived Assets | The Company follows the provisions of ASC No. 360-10, “Property, Plant and Equipment - Impairment or Disposal of Long-Lived Assets (“ASC No. 360-10”). ASC No. 360-10 which requires evaluation of the need for an impairment charge relating to long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation for impairment is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write down to a new depreciable basis is required. If required, an impairment charge is recorded based on an estimate of future discounted cash flows. The Company concluded as of June 30, 2019 and 2018, there was no impairment of long-lived assets. |
Income Taxes | The Company and its subsidiaries file a consolidated U.S. federal income tax return. Income taxes are accounted for under the asset and liability method. The Company provides for federal, and state income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributed to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. |
Advertising | Advertising costs are expensed as incurred. Advertising expense amounted to $207,500 and $174,700 for the years ended June 30, 2019 and 2018, respectively. |
Research and Development | Research and development costs consisting of expenses for activities that are useful in developing and testing new products, as well as expenses that may significantly improve existing products, are expensed as incurred. |
Stock Compensation Plan | The Company has a ten-year stock option plan (the “2012 Plan”) which provides for the grant of options to purchase up to 100,000 shares of the Company’s Common Stock, par value $.05 per share (“Common Stock”), plus 57,000 shares under options previously granted under the 2002 Stock Option Plan of the Company (the “Prior Plan”). The 2012 Plan provides for the granting of incentive or non-incentive stock options as defined in the 2012 Plan and options under the 2012 Plan may be granted until 2022. Incentive stock options may be granted to employees at an exercise price equal to 100% (or 110% if the optionee owns directly or indirectly more than 10% of the outstanding voting stock) of the fair market value of the shares of Common Stock on the date of the grant. Non-incentive stock options shall be granted at the fair market value of the shares of Common Stock on the date of grant. At June 30, 2019 and 2018, 20,795 and 26,000 shares respectively, of Common Stock were available for grant of options under the 2012 Plan. Stock-based compensation is accounted for in accordance with ASC No. 718 “Compensation-Stock Compensation” (“ASC No. 718”) which requires compensation costs related to stock-based payment transactions to be recognized. With limited exceptions, the amount of compensation cost is measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards are measured at each reporting period. Compensation costs are recognized over the period that an employee provides service in exchange for the award. During the years ended June 30, 2019 and 2018, the Company granted 6,705 and 57,500 options, respectively, to employees that had a fair value of $12,000 and $51,000, respectively. The fair value of the options granted during the years ended June 30, 2019 and 2018 were determined using the Black-Scholes-Merton option-pricing model. The weighted average assumptions used for the years ended June 30, 2019 and 2018 was an expected life of 10 years; risk free interest rate of 2.44% and 2.43%; volatility of 35% and 47%, and dividend yield of 1.29% and .85%, respectively. The Company declared a dividend of $0.05 per share during the year ended June 30, 2019. The Company did not declare dividends during the year ended June 30, 2018. The weighted-average value per share of the options granted during the years ended June 30, 2019 and 2018 was $1.79 and $1.64, respectively, and total stock-based compensation costs were $46,800 and $30,000 for the years ended June 30, 2019 and 2018, respectively. Stock-based compensation costs related to nonvested awards expected to be recognized in the future are $38,600 and $73,500 as of June 30, 2019 and 2018, respectively. |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Estimates are used for, but not limited to, the allowance for doubtful accounts, slow-moving inventory reserves, depreciation and amortization, assumptions made in valuing equity instruments issued for services, and the fair values of intangibles and goodwill. The actual results experienced by the Company may differ materially from management’s estimates. |
Earnings Per Common Share | Basic earnings per common share is computed by dividing net income (loss) by the weighted-average number of shares outstanding. Diluted earnings per common share includes the dilutive effect of stock options, if any |
Recent Accounting Pronouncements | In February 2016, the FASB issued authoritative guidance that requires lessees to account for most leases on their balance sheets with the liability being equal to the present value of the lease payments. The right-of-use asset will be based on the lease liability adjusted for certain cost such as direct costs. Lease expense will be recognized similar to current accounting guidance with operating leases resulting in a straight-line expense and financing leases resulting in a front-loaded expense similar to the current accounting for capital leases. This guidance becomes effective for the Company’s fiscal 2020 first quarter, with early adoption permitted. This guidance must be adopted using a modified retrospective transition approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and provides for certain practical expedients. We anticipate the adoption of this standard will result in an increase in our right of use assets and lease liabilities recorded on our consolidated balance sheets on July 1, 2019. The Company does not believe the adoption of this guidance will have a material impact on its consolidated results of operations or cash flows. In July 2017, the FASB issued ASU 2017-11, “ Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” |
Adopted Accounting Pronouncements | In January 2016, the 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 adopted this pronouncement during the interim period September 30, 2018, which resulted in a $22,000 cumulative effect adjustment to retained earnings in the condensed consolidated balance sheet as of the beginning of the year ended June 30, 2019. The adoption of this pronouncement also resulted in the recognition of holding loss of $8,500 in the Company's consolidated statement of operations for the year ended June 30, 2019. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing (Topic 606)”. In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross verses Net) (Topic 606)”. These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, “Revenue from Contracts with Customers”. The amendments in ASU 2016-10 provide clarifying guidance on materiality of performance obligations; evaluating distinct performance obligations; treatment of shipping and handling costs; and determining whether an entity’s promise to grant a license provides a customer with either a right to use an entity’s intellectual property or a right to access an entity’s intellectual property. The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The adoption of ASU 2016-10 and ASU 2016-08 is to coincide with an entity’s adoption of ASU 2014-09. The Company has performed a review of the requirements of the new guidance and has identified which of its revenue streams will be within the scope of ASC 606. The Company has applied the five-step model of the new standard to a selection of contracts within each of its revenue streams and has compared the results to its prior accounting practices. The Company adopted the provisions of these pronouncements on July 1, 2018, using the modified retrospective approach. Revenue from the Company’s sales continue to generally be recognized when products are shipped (i.e. point in time). As such, the adoption of ASU 2016-10 did not have a material impact to the Company’s financial position or results of operations. |
Reclassification | Customer advances of $63,800 for the year ended June 30, 2018 were reclassified to contract liabilities. |
2. Segment Information and Co_2
2. Segment Information and Concentrations (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment information | Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate and Other Consolidated June 30, 2019: Revenues $ 7,078,800 $ 1,814,900 $ 1,306,100 $ - $ 10,199,800 Foreign Sales 2,680,300 1,102,300 1,301,200 - 5,083,800 Income (Loss) From Operations 541,700 (130,600 ) 365,000 - 776,100 Assets 5,280,700 1,443,200 790,100 762,000 8,276,000 Long-Lived Asset Expenditures 194,500 2,200 15,700 - 212,400 Depreciation and Amortization 217,800 1,000 38,500 - 257,300 Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate and Other Consolidated June 30, 2018: Revenues $ 6,403,400 $ 1,408,900 $ 669,100 $ - $ 8,481,400 Foreign Sales 2,669,000 707,200 669,100 - 4,045,300 Income (Loss) From Operations 297,000 (248,000 ) (54,500 ) - (5,500 ) Assets 4,141,200 1,482,200 1,002,800 699,300 7,325,500 Long-Lived Asset Expenditures 60,500 1,900 2,600 - 65,000 Depreciation and Amortization 265,100 2,800 37,200 - 305,100 |
3. Fair Value of Financial In_2
3. Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair value inputs | Fair Value Measurements Using Inputs Considered as Fair Value at June 30, 2019 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 1,602,500 $ 1,602,500 $ - $ - Investment securities 330,900 330,900 - - Total $ 1,933,400 $ 1,933,400 $ - $ - Liabilities: Contingent consideration $ 618,000 $ - $ - $ 618,000 Fair Value Measurements Using Inputs Considered as Fair Value at June 30, 2018 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 1,053,100 $ 1,053,100 $ - $ - Investment securities 314,700 314,700 - - Total $ 1,367,800 $ 1,367,800 $ - $ - Liabilities: Contingent consideration $ 408,000 $ - $ - $ 408,000 |
Analysis of changes in Level 3 financial liabilities | 2019 2018 Beginning balance $ 408,000 $ 297,000 Increase in contingent consideration liability 521,200 408,900 Payments and accruals (311,200 ) (297,900 ) Ending balance $ 618,000 $ 408,000 |
Investments in marketable securitites | Cost Fair Value Unreealized Holding Gain (Loss) At June 30, 2019: Equity securities $ 47,100 $ 72,000 $ 24,900 Mutual funds 292,300 258,900 (33,400 ) $ 339,400 $ 330,900 $ (8,500 ) Cost Fair Value Unrealized Holding Gain (Loss) At June 30, 2018: Equity securities $ 45,700 $ 67,800 $ 22,100 Mutual funds 267,800 246,900 (20,900 ) $ 313,500 $ 314,700 $ 1,200 |
ASU 2016-01 change | As Reported Adjustments Balance with ASU 2016-01 Adoption Unrealized gain on marketable securities $ - $ 1,200 $ 1,200 Income before income tax expense 1,400 1,200 2,600 Income tax expense 161,900 - 161,900 Net loss (160,500 ) 1,200 (159,300 ) Earnings per common share (basic and diluted) $ (.11 ) $ - $ (.11 ) |
4. Inventories (Tables)
4. Inventories (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | 2019 2018 Raw materials $ 1,738,300 $ 1,488,000 Work-in-process 106,400 352,700 Finished goods 747,600 427,200 $ 2,592,300 $ 2,267,900 |
5. Property and Equipment (Tabl
5. Property and Equipment (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Useful Lives (years) 2019 2018 Automobiles 5 $ 22,000 22,000 Computer equipment 3-5 233,900 173,400 Machinery and equipment 3-7 986,500 870,400 Furniture and fixtures 4-10 205,900 205,900 Leasehold improvements 3-10 45,300 34,200 1,493,600 1,305,900 Less accumulated depreciation and amortization 1,174,800 1,106,400 318,800 199,500 |
6. Goodwill and Other Intangi_2
6. Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | Useful Lives Cost Accumulated Amortization Net (Years) At June 30, 2019: Technology, trademarks 5/10 yrs. $ 663,800 $ 661,700 $ 2,100 Trade names 6 yrs. 140,000 124,400 15,600 Websites 5 yrs. 210,000 210,000 - Customer relationships 9/10 yrs. 357,000 308,100 48,900 Sublicense agreements 10 yrs. 294,000 224,100 69,900 Non-compete agreements 5 yrs. 384,000 384,000 - IPR&D 3 yrs. 110,000 110,000 - Other intangible assets 5 yrs. 221,700 183,200 38,500 $ 2,380,500 $ 2,205,500 $ 175,000 Useful Lives Cost Accumulated Amortization Net At June 30, 2018: Technology, trademarks 5/10 yrs. $ 662,800 $ 613,400 $ 49,400 Trade names 6 yrs. 140,000 101,100 38,900 Websites 5 yrs. 210,000 182,000 28,000 Customer relationships 9/10 yrs. 357,000 294,800 62,200 Sublicense agreements 10 yrs. 294,000 194,800 99,200 Non-compete agreements 5 yrs. 384,000 348,000 36,000 IPR&D 3 yrs. 110,000 110,000 - Other intangible assets 5 yrs. 198,100 173,100 25,000 $ 2,355,900 $ 2,017,200 $ 338,700 |
Estimated future amortization expense of intangible assets | Year Ended June 30, 2020 $ 70,500 2021 54,300 2022 31,700 2023 15,000 2024 3,500 Total $ 175,000 |
10. Commitments and Contingen_2
10. Commitments and Contingencies (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum rental payments | Year Ended June 30, 2020 $ 284,100 2021 222,500 2022 184,600 2023 190,200 2024 195,900 Thereafter 91,600 $ 1,168,900 |
Fair value of contingent consideration | Year ended June 30, Amount 2020 $ 268,000 2021 228,000 2022 54,000 2023 46,000 2024 22,000 $ 618,000 |
11. Income Taxes (Tables)
11. Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income tax reconciliation | 2019 2018 Computed “expected” income tax (benefit) $ 161,700 $ 300 Research and development credits (24,300 ) (32,700 ) Change in tax rate 224,300 Other, net (12,800 ) (30,000 ) Income tax expense $ 124,600 $ 161,900 |
Deferred tax assets and liabilities | 2019 2018 Deferred tax assets: Amortization of intangible assets $ 303,900 $ 326,500 Various accruals 173,600 54,700 Other 13,300 48,200 490,800 429,400 Deferred tax liability: Depreciation of property and equipment (59,700 ) (36,800 ) Net deferred tax assets $ 431,100 $ 392,600 |
12. Stock Options (Tables)
12. Stock Options (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Option activity | June 30, 2019 June 30, 2018 Weighted- Weighted- Average Average Exercise Exercise Shares Price Shares Price Shares under option: Outstanding, beginning of year 92,000 $ 3.15 34,500 $ 3.25 Granted 6,705 4.54 57,500 3.08 Exercised - - - - Forfeited 1,500 3.27 - - Outstanding, end of year 97,205 3.24 92,000 3.15 Options exercisable at year-end 50,167 $ 3.29 28,834 $ 3.46 Weighted average fair value per share of options granted during the fiscal year - $ 1.79 - $ 1.64 |
Options outstanding | As of June 30, 2019 Options Outstanding As of June 30, 2019 Exercisable Weighted- Average Weighted- Weighted- Range Remaining Average Average Exercise Number Contractual Exercise Number Exercise Prices Outstanding Life (Years) Price Outstanding Price $ 2.91 - $3.08 70,500 7.81 $ 3.07 30,167 $ 2.80 $ 3.65 - $4.65 26,705 5.57 $ 4.02 20,000 $ 3.84 97,205 50,167 As of June 30, 2018 Options Outstanding As of June 30, 2018 Exercisable Weighted- Average Weighted- Weighted- Range Remaining Average Average Exercise Number Contractual Exercise Number Exercise Prices Outstanding Life (Years) Price Outstanding Price $ 3.50 - $4.05 20,000 5.13 $ 3.84 20,000 $ 3.84 $ 2.91 - $3.27 72,000 8.63 $ 3.07 8,834 $ 3.06 92,000 28,834 |
13. Earnings (Loss) Per Commo_2
13. Earnings (Loss) Per Common Share (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Loss per common share | 2019 2018 Net income (loss) $ 645,600 $ (160,500 ) Weighted average common shares outstanding 1,494,112 1,494,112 Effect of dilutive securities 18,066 - Weighted average dilutive common shares outstanding 1,512,178 1,494,112 Basic and diluted earnings (loss) per common share $ .43 $ (.11 ) |
2. Segment Information and Co_3
2. Segment Information and Concentrations (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | $ 10,199,800 | $ 8,481,400 |
Depreciation and Amortization and Impairment | 257,300 | 305,100 |
Benchtop Laboratory Equipment [Member] | ||
Revenues | 7,078,800 | 6,403,400 |
Foreign Sales | 2,680,300 | 2,669,000 |
Income (Loss) from Operations | 541,700 | 297,000 |
Assets | 5,280,700 | 4,141,200 |
Long-lived Asset Expenditures | 194,500 | 60,500 |
Depreciation and Amortization and Impairment | 217,800 | 265,100 |
Catalyst Research Instruments [Member] | ||
Revenues | 1,814,900 | 1,408,900 |
Foreign Sales | 1,102,300 | 707,200 |
Income (Loss) from Operations | (130,600) | (248,000) |
Assets | 1,443,200 | 1,482,200 |
Long-lived Asset Expenditures | 2,200 | 1,900 |
Depreciation and Amortization and Impairment | 1,000 | 2,800 |
Bioprocessing Systems [Member] | ||
Revenues | 1,306,100 | 669,100 |
Foreign Sales | 1,301,200 | 669,100 |
Income (Loss) from Operations | 365,000 | (54,500) |
Assets | 790,100 | 1,002,800 |
Long-lived Asset Expenditures | 15,700 | 2,600 |
Depreciation and Amortization and Impairment | 38,500 | 37,200 |
Corporate and Other [Member] | ||
Revenues | 0 | 0 |
Foreign Sales | 0 | 0 |
Income (Loss) from Operations | 0 | 0 |
Assets | 762,000 | 699,300 |
Long-lived Asset Expenditures | 0 | 0 |
Depreciation and Amortization and Impairment | 0 | 0 |
Consolidated [Member] | ||
Revenues | 10,199,800 | 8,481,400 |
Foreign Sales | 5,083,800 | 4,045,300 |
Income (Loss) from Operations | 776,100 | (5,500) |
Assets | 8,276,000 | 7,325,500 |
Long-lived Asset Expenditures | 212,400 | 65,000 |
Depreciation and Amortization and Impairment | $ 257,300 | $ 305,100 |
3. Fair Value of Financial In_3
3. Fair Value of Financial Instruments (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 |
Assets | |||
Cash and cash equivalents | $ 1,602,500 | $ 1,053,100 | $ 1,025,100 |
Available for sale securities | 330,900 | 314,700 | |
Total | 1,933,400 | 1,367,800 | |
Liabilities: | |||
Contingent consideration | 618,000 | 408,000 | $ 297,000 |
Level 1 | |||
Assets | |||
Cash and cash equivalents | 1,602,500 | 1,053,100 | |
Available for sale securities | 330,900 | 314,700 | |
Total | 1,933,400 | 1,367,800 | |
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 | $ 618,000 | $ 408,000 |
3. Fair Value of Financial In_4
3. Fair Value of Financial Instruments (Details 1) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | ||
Beginning balance | $ 408,000 | $ 297,000 |
Increase in contingent consideration liability | 521,200 | 408,900 |
Payments | (311,200) | (297,900) |
Ending balance | $ 618,000 | $ 408,000 |
3. Fair Value of Financial In_5
3. Fair Value of Financial Instruments (Details 2) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Cost | $ 339,400 | $ 313,500 |
Fair value | 330,900 | 314,700 |
Unrealized holding gain (loss) | (8,500) | 1,200 |
Equity Securities | ||
Cost | 47,100 | 45,700 |
Fair value | 72,000 | 67,800 |
Unrealized holding gain (loss) | 24,900 | 22,100 |
Mutual Funds | ||
Cost | 292,300 | 267,800 |
Fair value | 258,900 | 246,900 |
Unrealized holding gain (loss) | $ (33,400) | $ (20,900) |
3. Fair Value of Financial In_6
3. Fair Value of Financial Instruments (Details 3) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income before income tax expense | $ 770,200 | $ 1,400 |
Income tax expense | 124,600 | 161,900 |
Net income (loss) | $ 645,600 | $ (160,500) |
Earnings per common share (basic and diluted) | $ 0.43 | $ (0.11) |
As Reported [Member] | ||
Unrealized gain on marketable securities | $ 0 | |
Income before income tax expense | 1,400 | |
Income tax expense | 161,900 | |
Net income (loss) | $ (160,500) | |
Earnings per common share (basic and diluted) | $ (.11) | |
Adjustments [Member] | ||
Unrealized gain on marketable securities | $ 1,200 | |
Income before income tax expense | 1,200 | |
Income tax expense | 0 | |
Net income (loss) | $ 1,200 | |
Earnings per common share (basic and diluted) | $ 0 | |
Balance With Adoption [Member] | ||
Unrealized gain on marketable securities | $ 1,200 | |
Income before income tax expense | 2,600 | |
Income tax expense | 161,900 | |
Net income (loss) | $ (159,300) | |
Earnings per common share (basic and diluted) | $ (.11) |
4. Inventories (Details)
4. Inventories (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,738,300 | $ 1,488,000 |
Work-in-process | 106,400 | 352,700 |
Finished goods | 747,600 | 427,200 |
Inventory | $ 2,592,300 | $ 2,267,900 |
5. Property and Equipment (Deta
5. Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Property and equipment, gross | $ 1,493,600 | $ 1,305,900 |
Less accumulated depreciation and amortization | 1,174,800 | 1,106,400 |
Property and equipment, net | $ 318,800 | 199,500 |
Automobiles | ||
Useful lives | 5 years | |
Property and equipment, gross | $ 22,000 | 22,000 |
Computer equipment | ||
Property and equipment, gross | $ 233,900 | 173,400 |
Computer equipment | Minimum | ||
Useful lives | 3 years | |
Computer equipment | Maximum | ||
Useful lives | 5 years | |
Machinery and equipment | ||
Property and equipment, gross | $ 986,500 | 870,400 |
Machinery and equipment | Minimum | ||
Useful lives | 3 years | |
Machinery and equipment | Maximum | ||
Useful lives | 7 years | |
Furniture and fixtures | ||
Property and equipment, gross | $ 205,900 | 205,900 |
Furniture and fixtures | Minimum | ||
Useful lives | 4 years | |
Furniture and fixtures | Maximum | ||
Useful lives | 10 years | |
Leasehold improvements | ||
Property and equipment, gross | $ 45,300 | $ 34,200 |
Leasehold improvements | Minimum | ||
Useful lives | 3 years | |
Leasehold improvements | Maximum | ||
Useful lives | 10 years |
5. Property and Equipment (De_2
5. Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 67,300 | $ 61,200 |
6. Goodwill and Other Intangi_3
6. Goodwill and Other Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cost | $ 2,355,900 | |
Accumulated amortization | 2,017,200 | |
Net | $ 175,000 | 338,700 |
Technology, trademarks | ||
Cost | 663,800 | 662,800 |
Accumulated amortization | 661,700 | 613,400 |
Net | $ 2,100 | $ 49,400 |
Technology, trademarks | Minimum | ||
Useful life | 5 years | 5 years |
Technology, trademarks | Maximum | ||
Useful life | 10 years | 10 years |
Trade names [Member] | ||
Cost | $ 140,000 | $ 140,000 |
Accumulated amortization | 124,400 | 101,100 |
Net | $ 15,600 | $ 38,900 |
Useful life | 6 years | 6 years |
Websites [Member] | ||
Cost | $ 210,000 | $ 210,000 |
Accumulated amortization | 210,000 | 182,000 |
Net | $ 0 | $ 28,000 |
Useful life | 5 years | 5 years |
Customer relationships | ||
Cost | $ 357,000 | $ 357,000 |
Accumulated amortization | 308,100 | 294,800 |
Net | $ 48,900 | $ 62,200 |
Customer relationships | Minimum | ||
Useful life | 9 years | 9 years |
Customer relationships | Maximum | ||
Useful life | 10 years | 10 years |
Sublicense agreements | ||
Cost | $ 294,000 | $ 294,000 |
Accumulated amortization | 224,100 | 194,800 |
Net | $ 69,900 | $ 99,200 |
Useful life | 10 years | 10 years |
Non-compete agreements | ||
Cost | $ 384,000 | $ 384,000 |
Accumulated amortization | 384,000 | 348,000 |
Net | $ 0 | $ 36,000 |
Useful life | 5 years | 5 years |
IPR and D | ||
Cost | $ 110,000 | $ 110,000 |
Accumulated amortization | 110,000 | 110,000 |
Net | $ 0 | $ 0 |
Useful life | 3 years | 3 years |
Other intangible assets | ||
Cost | $ 221,700 | $ 198,100 |
Accumulated amortization | 183,200 | 173,100 |
Net | $ 38,500 | $ 25,000 |
Useful life | 5 years | 5 years |
6. Goodwill and Other Intangi_4
6. Goodwill and Other Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Estimated future amortization expense 2020 | $ 70,500 | |
Estimated future amortization expense 2021 | 54,300 | |
Estimated future amortization expense 2022 | 31,700 | |
Estimated future amortization expense 2023 | 15,000 | |
Estimated future amortization expense 2024 | 3,500 | |
Estimated future amortization expense thereafter | 0 | |
Total | 175,000 | $ 338,700 |
Total amortization expense | $ 190,000 | $ 243,900 |
10. Commitments and Contingen_3
10. Commitments and Contingencies (Details) | Jun. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2020 | $ 284,100 |
2021 | 222,500 |
2022 | 184,600 |
2023 | 190,200 |
2024 | 195,900 |
Thereafter | 91,600 |
Total | $ 1,168,900 |
10. Commitments and Contingen_4
10. Commitments and Contingencies (Details 1) | Jun. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2020 | $ 268,000 |
2021 | 228,000 |
2022 | 54,000 |
2023 | 46,000 |
2024 | 22,000 |
Thereafter | 0 |
Total | $ 618,000 |
11. Income Taxes (Details)
11. Income Taxes (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Computed "expected" income tax (benefit) | $ 161,700 | $ 300 |
Research and development credits | (24,300) | (32,700) |
Change in tax rate | 0 | 224,300 |
Other, net | (12,800) | (30,000) |
Income tax expense (benefit) | $ 124,600 | $ 161,900 |
11. Income Taxes (Details 1)
11. Income Taxes (Details 1) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Deferred tax assets: | ||
Amortization of intangibles | $ 303,900 | $ 326,500 |
Various accruals | 173,600 | 54,700 |
Other | 13,300 | 48,200 |
Gross | 490,800 | 429,400 |
Deferred tax liability: | ||
Depreciation of property and amortization of goodwill | (59,700) | (36,800) |
Net deferred tax assets | $ 431,100 | $ 392,600 |
12. Stock Options (Details)
12. Stock Options (Details) - $ / shares | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Number of Options Outstanding, Beginning | 92,000 | 34,500 |
Number of Options Granted | 6,705 | 57,500 |
Number of Options Exercised | 0 | 0 |
Number of Options Forfeited | 1,500 | 0 |
Number of Options Outstanding, Ending | 97,205 | 92,000 |
Number of Options Exercisable | 50,167 | 28,834 |
Weighted Average Exercise Price Outstanding, Beginning | $ 3.15 | $ 3.25 |
Weighted Average Exercise Price Granted | 4.54 | 3.08 |
Weighted Average Exercise Price Exercised | 0 | 0 |
Weighted Average Exercise Price Forfeited | 3.27 | 0 |
Weighted Average Exercise Price Outstanding, Ending | 3.24 | 3.15 |
Weighted Average Exercise Price Exercisable | 3.29 | 3.46 |
Weighted average fair value per share of options granted | $ 1.79 | $ 1.64 |
12. Stock Options (Details 1)
12. Stock Options (Details 1) - $ / shares | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Number of Options Outstanding, Ending | 97,205 | 92,000 | 34,500 |
Weighted Average Exercise Price Outstanding, Ending | $ 3.24 | $ 3.15 | $ 3.25 |
Number of Options Exercisable | 50,167 | 28,834 | |
Weighted Average Exercise Price Exercisable | $ 3.29 | $ 3.46 | |
Exercise Price Range 2.91 to 3.08 | |||
Number of Options Outstanding, Ending | 70,500 | 72,000 | |
Weighted Average Remaining Contractual Life | 7 years 9 months 22 days | 3 years 25 days | |
Weighted Average Exercise Price Outstanding, Ending | $ 3.07 | $ 3.07 | |
Number of Options Exercisable | 30,167 | 8,834 | |
Weighted Average Exercise Price Exercisable | $ 2.80 | $ 3.06 | |
Exercise Price Range 3.65 to 4.65 | |||
Number of Options Outstanding, Ending | 26,705 | 20,000 | |
Weighted Average Remaining Contractual Life | 5 years 6 months 25 days | 5 years 1 month 7 days | |
Weighted Average Exercise Price Outstanding, Ending | $ 4.02 | $ 3.84 | |
Number of Options Exercisable | 20,000 | 20,000 | |
Weighted Average Exercise Price Exercisable | $ 3.84 | $ 3.84 |
13. Earnings (Loss) Per Commo_3
13. Earnings (Loss) Per Common Share (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||
Net income (loss) | $ 645,600 | $ (160,500) |
Weighted average common shares outstanding | 1,494,112 | 1,494,112 |
Effect of dilutive securities | 18,066 | 0 |
Basic and diluted loss per common share | $ .43 | $ (0.11) |
13. Earnings (Loss) Per Commo_4
13. Earnings (Loss) Per Common Share (Details Narrative) - shares | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||
Common stock issuable upon the exercise of outstanding options | 1,600 | 92,000 |