Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 30, 2019 | Oct. 31, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | SCIENTIFIC INDUSTRIES INC | |
Entity Central Index Key | 0000087802 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
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 | 1,496,112 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2019 | Jun. 30, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 1,259,700 | $ 1,602,500 |
Investment securities | 333,600 | 330,900 |
Trade accounts receivable, less allowance for doubtful accounts of $11,600 at September 30, and $15,000 at June 30, 2019 | 1,867,800 | 1,974,200 |
Inventories | 2,713,100 | 2,592,300 |
Prepaid expenses and other current assets | 93,500 | 91,200 |
Total current assets | 6,267,700 | 6,591,100 |
Property and equipment, net | 314,400 | 318,800 |
Intangible assets, net | 162,900 | 175,000 |
Goodwill | 705,300 | 705,300 |
Other assets | 59,200 | 54,700 |
Deferred taxes | 450,600 | 431,100 |
Operating lease right-of-use assets | 902,500 | 0 |
Total assets | 8,862,600 | 8,276,000 |
Current Liabilities: | ||
Accounts payable | 457,200 | 569,000 |
Accrued expenses and taxes | 437,700 | 608,300 |
Contract liabilities | 62,000 | 0 |
Contingent consideration, current portion | 268,000 | 268,000 |
Bank overdraft | 9,400 | 140,000 |
Current portion of operating lease liabilities | 231,100 | 0 |
Total current liabilities | 1,465,400 | 1,585,300 |
Contingent consideration payable, less current portion | 350,000 | 350,000 |
Operating lease liabilities, less current portion | 738,000 | 0 |
Total liabilities | 2,553,400 | 1,935,300 |
Shareholders' equity: | ||
Common stock, $.05 par value; authorized 7,000,000 shares; issued 1,515,914 shares and 1,513,914, outstanding 1,496,112 and 1,494,112 shares at September 30 and June 30, 2019 | 75,800 | 75,700 |
Additional paid-in capital | 2,617,300 | 2,592,700 |
Retained earnings | 3,668,500 | 3,724,700 |
Total | 6,361,600 | 6,393,100 |
Less common stock held in treasury at cost, 19,802 shares | 52,400 | 52,400 |
Total shareholders' equity | 6,309,200 | 6,340,700 |
Total liabilities and shareholders' equity | $ 8,862,600 | $ 8,276,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2019 | Jun. 30, 2019 |
Shareholders' equity: | ||
Common stock,par value | $ 0.05 | $ 0.05 |
Common stock, authorized shares | 7,000,000 | 7,000,000 |
Common stock, issued shares | 1,515,914 | 1,513,914 |
Common stock, outstanding shares | 1,515,914 | 1,513,914 |
Stock held in treasury, shares | 19,802 | 19,802 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||
Revenues | $ 2,004,200 | $ 2,038,600 |
Cost of revenues | 1,023,800 | 1,092,900 |
Gross profit | 980,400 | 945,700 |
Operating Expenses: | ||
General and administrative | 510,200 | 416,500 |
Selling | 309,100 | 236,100 |
Research and development | 236,600 | 117,400 |
Total operating expenses | 1,055,900 | 770,000 |
Income (loss) from operations | (75,500) | 175,700 |
Other income (expense): | ||
Other income (expense), net | (200) | 2,200 |
Interest expense | 0 | (400) |
Total other income (expense), net | (200) | 1,800 |
Income (loss) before income tax expense (benefit) | (75,700) | 177,500 |
Income tax expense (benefit): | ||
Current | 0 | 29,500 |
Deferred | (19,500) | 6,000 |
Total income tax expense (benefit) | (19,500) | 35,500 |
Net income (loss) | $ (56,200) | $ 142,000 |
Basic earnings (loss) per common share | $ (.04) | $ .10 |
Diluted earnings (loss) per common share | $ (.04) | $ 0.09 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Other Comprehensive Income [Abstract] | ||
Net income (loss) | $ (56,200) | $ 142,000 |
Other comprehensive loss: | ||
Unrealized holding loss arising during period, net of tax | 0 | (18,100) |
Comprehensive income (loss) | $ (56,200) | $ 123,900 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Gain (Loss) | Retained Earnings | Treasury Stock | Total |
Balance beginning, shares at Jun. 30, 2018 | 1,513,914 | 19,802 | ||||
Balance beginning, 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 | ||||
Net income (loss) | 142,000 | 142,000 | ||||
Cash dividend declared, $.05 | (74,700) | (74,700) | ||||
Unrealized holding loss on investment securities,net of tax | (18,100) | (18,100) | ||||
Stock-based compensation | 8,700 | 8,700 | ||||
Balance ending, shares at Sep. 30, 2018 | 1,513,914 | 19,802 | ||||
Balance ending, amount at Sep. 30, 2018 | $ 75,700 | 2,554,600 | (16,900) | 3,221,100 | $ 52,400 | 5,782,100 |
Balance beginning, shares at Jun. 30, 2019 | 1,513,914 | 19,802 | ||||
Balance beginning, amount at Jun. 30, 2019 | $ 75,700 | 2,592,700 | 0 | 3,724,700 | $ 52,400 | 6,340,700 |
Net income (loss) | (56,200) | (56,200) | ||||
Stock options exercised, shares | 2,000 | |||||
Stock options exercised, amount | $ 100 | 6,900 | 7,000 | |||
Stock-based compensation | 17,700 | 17,700 | ||||
Balance ending, shares at Sep. 30, 2019 | 1,515,914 | 19,802 | ||||
Balance ending, amount at Sep. 30, 2019 | $ 75,800 | $ 2,617,300 | $ 0 | $ 3,668,500 | $ 52,400 | $ 6,309,200 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Operating activities: | ||
Net income (loss) | $ (56,200) | $ 142,000 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 41,000 | 75,900 |
Deferred income taxes | (19,500) | 6,000 |
Stock-based compensation | 17,700 | 8,700 |
Loss on sale of investments | 800 | 5,000 |
Unrealized holding gain of investments | (2,300) | (6,400) |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | 106,400 | 254,100 |
Contract assets | 0 | 211,100 |
Right -of- use assets | (902,500) | 0 |
Lease liability | 969,100 | 0 |
Inventories | (120,800) | (33,100) |
Prepaid and other assets | (6,800) | (33,500) |
Accounts payable | (111,800) | (65,400) |
Contract liabilities | 62,000 | 12,100 |
Accrued expenses and taxes | (301,200) | (115,800) |
Total adjustments | (267,900) | 318,700 |
Net cash provided by (used in) operating activities | (324,100) | 460,700 |
Investing activities: | ||
Purchase of investment securities | (25,000) | (75,200) |
Redemption of investment securities | 23,800 | 72,500 |
Capital expenditures | (17,000) | (900) |
Purchase of other intangible assets | (7,500) | (1,300) |
Net cash used in investing activities | (25,700) | (4,900) |
Financing activities: | ||
Proceeds from stock options exercised | 7,000 | 0 |
Principal payments on note payable | 0 | (1,600) |
Net cash provided by (used in) financing activities | 7,000 | (1,600) |
Net increase (decrease) in cash and cash equivalents | (342,800) | 454,200 |
Cash and cash equivalents, beginning of year | 1,602,500 | 1,053,100 |
Cash and cash equivalents, end of period | 1,259,700 | 1,507,300 |
Cash paid during the period for: | ||
Income taxes | 40,900 | 500 |
Interest | $ 0 | $ 400 |
1. Summary of Significant Accou
1. Summary of Significant Accounting Policies | 3 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Scientific Industries, Inc., Altamira Instruments, Inc. (“Altamira”), a Delaware corporation and wholly-owned subsidiary, and Scientific Bioprocessing, Inc. (“SBI”), a Delaware corporation and wholly-owned subsidiary, and Scientific Packaging Industries, Inc., an inactive wholly-owned subsidiary (all collectively referred to as the “Company”). All material intercompany balances and transactions have been eliminated. Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement", which is part of the FASB disclosure framework project to improve the effectiveness of disclosures in the notes to the financial statements. The amendments in the new guidance remove, modify, and add certain disclosure requirements related to fair value measurements covered in Topic 820, "Fair Value Measurement". The new standard is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for either the entire standard or only the requirements that modify or eliminate the disclosure requirements, with certain requirements applied prospectively, and all other requirements applied retrospectively to all periods presented. We are currently evaluating the impact of adopting this guidance. |
2. Revenue
2. Revenue | 3 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | The Company records revenues in accordance with Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers, as amended” (“ASC Topic 606”). In accordance with Topic 606, the Company accounts for a customer contract when both parties have approved the contract and are committed to perform their respective obligations, each party’s rights can be identified, payment terms can be identified, the contract has commercial substance, and it is probable that the Company will collect substantially all of the consideration to which it is entitled. Revenue is recognized when, or as, performance obligations are satisfied by transferring control of a promised product or service to a customer. Nature of Products and Services We generate 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 three months ended September 30, 2019 and 2018. Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Consolidated September 30, 2019: Revenues $ 1,576,200 $ 138,700 $ 289,300 $ 2,004,200 Foreign Sales 397,600 71,700 - 469,300 September 30, 2018: Revenues $ 1,691,900 $ 217,500 $ 129,200 $ 2,038,600 Foreign Sales 635,700 142,300 - 778,000 Benchtop Laboratory Equipment sales are comprised 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. The standard warranty is typically comprised of one to two years of parts and labor and is deemed immaterial. Catalyst Research Instrument sales are comprised 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 sublicenses. 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 FASB, in applying ASC Topic 606: 1) all revenues are recorded net of returns, allowances, customer discounts, and incentives; 2) although sales and other taxes are immaterial, the Company accounts for amounts collected from customers for sales and other taxes, if any, net of related amounts remitted to tax authorities; 3) the Company expenses costs to obtain a contract as they are incurred if the expected period of benefit, and therefore the amortization period, is one year or less; 4) the Company accounts for shipping and handling activities that occur after control transfers to the customer as a fulfillment cost rather than an additional promised service and these fulfillment costs fall within selling expenses; 5) the Company is always considered the principal and never an agent, because it has full control and responsibility until title is transferred to the customer; 6) the Company does not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer such as is the case with catalyst instruments. |
3. Segment Information and Conc
3. Segment Information and Concentrations | 3 Months Ended |
Sep. 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 Three Months Ended September 30, 2019: Revenues $ 1,576,200 $ 138,700 $ 289,300 $ - $ 2,004,200 Foreign Sales 397,600 71,700 - - 469,300 Income (Loss) From Operations 12,900 (90,200 ) 1,800 - (75,500 ) Assets 5,589,400 1,400,900 1,088,100 784,200 8,862,600 Long-Lived Asset Expenditures 7,800 - 16,700 - 24,500 Depreciation and Amortization 30,500 400 10,100 - 41,000 Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate And Other Consolidated Three Months Ended September 30, 2018: Revenues $ 1,691,900 $ 217,500 $ 129,200 $ - $ 2,038,600 Foreign Sales 635,700 142,300 - - 778,000 Income (Loss) From Operations 175,400 (62,900 ) 63,200 - 175,700 Assets 4,633,500 1,343,100 623,500 709,300 7,309,400 Long-Lived Asset Expenditures 2,200 - - - 2,200 Depreciation and Amortization 66,300 200 9,400 - 75,900 Approximately 36% and 49% of net sales of Benchtop Laboratory Equipment for the three month periods ended September 30, 2019 and 2018, respectively, were derived from the Company’s main product, the Vortex-Genie 2 mixer, excluding accessories. Approximately 33% and 25% of total Benchtop Laboratory Equipment sales were derived from the Torbal Scales Division for the three months ended September 30, 2019 and 2018, respectively. For the three months ended September 30, 2019 and 2018, respectively, three customers accounted for approximately 23% (both periods) of net sales of the Benchtop Laboratory Equipment Operations (18% and 19% of the Company’s total revenues). Sales of Catalyst Research Instruments generally comprise a few very large orders averaging approximately $50,000 per order to a limited number of customers, who differ from order to order. Sales to two customers during the three months ended September 30, 2019 accounted for approximately 90% of the Catalyst Research Instruments Operations revenues and 6% of the Company’s total revenues. Sales to three customers during the three months ended September 30, 2018 accounted for approximately 83% of the Catalyst Research Instrument Operations’ revenues and 9% of the Company’s total revenues . |
4. Fair Value of Financial Inst
4. Fair Value of Financial Instruments | 3 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | The FASB defines the fair value of financial instruments as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements do not include transaction costs. The accounting guidance also expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are described below: Level 1 - Inputs that are based upon unadjusted quoted prices for identical instruments traded in active markets. Level 2 - Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly. Level 3 - Prices or valuation that require inputs that are both significant to the fair value measurement and unobservable. In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculated the fair value of its Level 1 and 2 instruments based on the exchange traded price of similar or identical instruments where available or based on other observable instruments. These calculations take into consideration the credit risk of both the Company and its counterparties. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period. The fair value of the contingent consideration obligations are based on a probability weighted approach derived from the estimates of earn-out criteria and the probability assessment with respect to the likelihood of achieving those criteria. The measurement is based on significant inputs that are not observable in the market, therefore, the Company classifies this liability as Level 3 in the following tables. The following tables set forth by level within the fair value hierarchy the Company’s financial assets that were accounted for at fair value on a recurring basis at September 30, 2019 and June 30, 2019 according to the valuation techniques the Company used to determine their fair values: Fair Value Measurements Using Inputs Fair Value at Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 1,259,700 $ 1,259,700 $ - $ - Investment securities 333,600 333,600 - - Total $ 1,593,300 $ 1,593,300 $ - $ - Liabilities: Contingent consideration $ 618,000 $ - $ - $ 618,000 Fair Value Measurements Using Inputs Fair Value at 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 Investments in marketable securities classified as available-for-sale by security type at September 30, 2019 and June 30, 2019 consisted of the following: Cost Fair Value Unrealized Holding Gain (Loss) At September 30, 2019: Equity securities $ 71,300 $ 96,500 $ 25,200 Mutual funds 246,600 237,100 (9,500 ) $ 317,900 $ 333,600 $ 15,700 Cost Fair Value Unrealized 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 ) |
5. Inventories
5. Inventories | 3 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | September 30, 2019 June 30, 2019 Raw materials $ 1,737,500 $ 1,738,300 Work-in-process 229,900 106,400 Finished goods 745,700 747,600 $ 2,713,100 $ 2,592,300 |
6. Goodwill and Other Intangibl
6. Goodwill and Other Intangible Assets | 3 Months Ended |
Sep. 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 September 30, 2019 and June 30, 2019, all of which is expected to be deductible for tax purposes. The components of other intangible assets are as follows: Useful Lives Cost Accumulated Amortization Net At September 30, 2019: Technology, trademarks 5/10 yrs. $ 663,800 $ 661,800 $ 2,000 Trade names 6 yrs. 140,000 130,300 9,700 Websites 5 yrs. 210,000 210,000 - Customer relationships 9/10 yrs. 357,000 311,400 45,600 Sublicense agreements 10 yrs. 294,000 231,500 62,500 Non-compete agreements 5 yrs. 384,000 384,000 - IPR&D 3 yrs. 110,000 110,000 - Other intangible assets 5 yrs. 229,200 186,100 43,100 $ 2,388,000 $ 2,225,100 $ 162,900 Useful Lives Cost Accumulated Amortization Net 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 Total amortization expense was $19,500 and $61,000 for the three months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, estimated future amortization expense related to intangible assets is $51,000 for the remainder of the fiscal year ending, June 30, 2020, $54,300 for fiscal 2021, $31,700 for fiscal 2022, $15,000 for fiscal 2023 and $10,900 for fiscal 2024. |
7. Income (Loss) Per Common Sha
7. Income (Loss) Per Common Share | 3 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Income (Loss) Per Common Share | Income (Loss) per common share data was computed as follows: For the Three Months Ended September 30, 2019 For the Three Months Ended September 30, 2018 Net income (loss) $ (56,200 ) $ 142,000 Weighted average common shares outstanding 1,494,212 1,494,112 Effect of dilutive securities - 3,897 Weighted average dilutive common shares outstanding 1,494,212 1,498,009 Basic earnings (loss) per common share (.04 ) $ .10 Diluted earnings (loss) per common share (.04) $ .09 Approximately 44,200 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 three months ended September 30, 2019 and 2018, respectively, because the effect would be anti-dilutive. |
8. Leases
8. Leases | 3 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | On July 1, 2019 the Company adopted the new accounting pronouncement as it relates to its leases which requires a lessee to recognize all long-term leases on its balance sheet as a liability for its lease obligation, measured at the present value of lease payments not yet paid, and a corresponding asset representing its right to use the underlying asset over the lease term and expands disclosure of key information about leasing arrangements. The Company leases certain properties consisting principally of a facility in Bohemia, New York (headquarters) through February 2025, a facility in Pittsburgh, Pennsylvania for its Catalyst Research Instrument Operations through November 2020 and another facility in Pittsburgh, Pennsylvania for its Bioprocessing Systems Operations through November 2020. In addition, the Company had a lease for its Torbal Division of the Benchtop Laboratory Equipment Operations which was mutually terminated early effective as of October 31, 2019 and a new lease for a similar sales and administration office was entered into as of November 1, 2019 through October 2022. There are no renewal options with any of the leases, no residual values or significant restrictions or covenants other than those customary in such arrangements, and no non-cash activities, and any rent escalations incorporated within the leases are included in the calculation of the future minimum lease payments, as further described below. All of the Company’s leases are deemed operating leases. The Company determines whether an agreement contains a lease at inception based on the Company’s right to obtain substantially all of the economic benefits from the use of the identified asset and its right to direct the use of the identified asset. Lease liabilities represent the present value of future lease payments and the Right-Of-Use (“ROU”) assets represent the Company’s right to use the underlying assets for the respective lease terms. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. The ROU asset is further adjusted to account for previously recorded lease expenses such as deferred rent and other lease liabilities. As the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate of 5.0% as the discount rate to calculate the present value of future lease payments, which was the interest rate that its bank would charge for a similar loan. The Company elected not to recognize a ROU asset and a lease liability for leases with an initial term of twelve months or less. In addition to minimum lease payments, certain leases require payment of a proportionate share of real estate taxes and certain building operating expenses or payments based on an excess of a specified base. These variable lease costs are not included in the measurement of the ROU asset or lease liability due to unpredictability of the payment amount and are recorded as lease expenses in the period incurred. The Company’s lease agreements do not contain residual value guarantees. The Company elected available practical expedients for existing or expired contracts of lessees wherein the Company is not required to reassess whether such contracts contain leases, the lease classification or the initial direct costs. The Company is not utilizing the practical expedient which allows the use of hindsight by lessees and lessors in determining the lease term and in assessing impairment of its ROU assets. The Company utilized the transition method allowing entities to only apply the new lease standard in the year of adoption. As of September 30, 2019, the weighted-average remaining lease term for operating lease liabilities was approximately 4 years and the weighted-average discount rate was 5.0%. Total cash payments under these leases were $68,400, of which $68,300 was recorded as leases expense. The Company’s approximate future minimum rental payments under all leases existing at September 30, 2019 through February 2025 are as follows: Fiscal year ending June 30, Amount (1) Remainder of 2020 $ 208,800 2021 222,500 2022 184,600 2023 190,200 2024 195,900 2025 91,600 Total future minimum payments 1,093,600 Less: Imputed interest 124,500 Total Present Value of Operating Lease Liabilities 969,100 (1) Operating lease payments exclude $76,400 of legally binding lease payments for real estate leases signed but not yet commenced. Operating leases that have been signed but not yet commenced are expected to commence in the second quarter of fiscal 2020, with a lease term of 3 years. |
1. Summary of Significant Acc_2
1. Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of Scientific Industries, Inc., Altamira Instruments, Inc. (“Altamira”), a Delaware corporation and wholly-owned subsidiary, and Scientific Bioprocessing, Inc. (“SBI”), a Delaware corporation and wholly-owned subsidiary, and Scientific Packaging Industries, Inc., an inactive wholly-owned subsidiary (all collectively referred to as the “Company”). All material intercompany balances and transactions have been eliminated. |
Accounting Pronouncements | Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement", which is part of the FASB disclosure framework project to improve the effectiveness of disclosures in the notes to the financial statements. The amendments in the new guidance remove, modify, and add certain disclosure requirements related to fair value measurements covered in Topic 820, "Fair Value Measurement". The new standard is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for either the entire standard or only the requirements that modify or eliminate the disclosure requirements, with certain requirements applied prospectively, and all other requirements applied retrospectively to all periods presented. We are currently evaluating the impact of adopting this guidance. |
2. Revenue (Tables)
2. Revenue (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenues | Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Consolidated September 30, 2019: Revenues $ 1,576,200 $ 138,700 $ 289,300 $ 2,004,200 Foreign Sales 397,600 71,700 - 469,300 September 30, 2018: Revenues $ 1,691,900 $ 217,500 $ 129,200 $ 2,038,600 Foreign Sales 635,700 142,300 - 778,000 |
3. Segment Information and Co_2
3. Segment Information and Concentrations (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment information | Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate And Other Consolidated Three Months Ended September 30, 2019: Revenues $ 1,576,200 $ 138,700 $ 289,300 $ - $ 2,004,200 Foreign Sales 397,600 71,700 - - 469,300 Income (Loss) From Operations 12,900 (90,200 ) 1,800 - (75,500 ) Assets 5,589,400 1,400,900 1,088,100 784,200 8,862,600 Long-Lived Asset Expenditures 7,800 - 16,700 - 24,500 Depreciation and Amortization 30,500 400 10,100 - 41,000 Benchtop Laboratory Equipment Catalyst Research Instruments Bioprocessing Systems Corporate And Other Consolidated Three Months Ended September 30, 2018: Revenues $ 1,691,900 $ 217,500 $ 129,200 $ - $ 2,038,600 Foreign Sales 635,700 142,300 - - 778,000 Income (Loss) From Operations 175,400 (62,900 ) 63,200 - 175,700 Assets 4,633,500 1,343,100 623,500 709,300 7,309,400 Long-Lived Asset Expenditures 2,200 - - - 2,200 Depreciation and Amortization 66,300 200 9,400 - 75,900 |
4. Fair Value of Financial In_2
4. Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair value inputs | Fair Value Measurements Using Inputs Considered as Fair Value at September 30, 2019 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 1,259,700 $ 1,259,700 $ - $ - Investment securities 333,600 333,600 - - Total $ 1,593,300 $ 1,593,300 $ - $ - Liabilities: Contingent consideration $ 618,000 $ - $ - $ 618,000 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 |
Investments in marketable securitites | Cost Fair Value Unrealized Holding Gain (Loss) At September 30, 2019: Equity securities $ 71,300 $ 96,500 $ 25,200 Mutual funds 246,600 237,100 (9,500 ) $ 317,900 $ 333,600 $ 15,700 Cost Fair Value Unrealized 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 ) |
5. Inventories (Tables)
5. Inventories (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | September 30, 2019 June 30, 2019 Raw materials $ 1,737,500 $ 1,738,300 Work-in-process 229,900 106,400 Finished goods 745,700 747,600 $ 2,713,100 $ 2,592,300 |
6. Goodwill and Other Intangi_2
6. Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | Useful Lives Cost Accumulated Amortization Net At September 30, 2019: Technology, trademarks 5/10 yrs. $ 663,800 $ 661,800 $ 2,000 Trade names 6 yrs. 140,000 130,300 9,700 Websites 5 yrs. 210,000 210,000 - Customer relationships 9/10 yrs. 357,000 311,400 45,600 Sublicense agreements 10 yrs. 294,000 231,500 62,500 Non-compete agreements 5 yrs. 384,000 384,000 - IPR&D 3 yrs. 110,000 110,000 - Other intangible assets 5 yrs. 229,200 186,100 43,100 $ 2,388,000 $ 2,225,100 $ 162,900 Useful Lives Cost Accumulated Amortization Net 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 |
7. Income (Loss) Per Common S_2
7. Income (Loss) Per Common Share (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Income (loss) per common share | For the Three Months Ended September 30, 2019 For the Three Months Ended September 30, 2018 Net income (loss) $ (56,200 ) $ 142,000 Weighted average common shares outstanding 1,494,212 1,494,112 Effect of dilutive securities - 3,897 Weighted average dilutive common shares outstanding 1,494,212 1,498,009 Basic earnings (loss) per common share (.04 ) $ .10 Diluted earnings (loss) per common share (.04) $ .09 |
8. Leases (Tables)
8. Leases (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Future minimum rental payments | Fiscal year ending June 30, Amount (1) Remainder of 2020 $ 208,800 2021 222,500 2022 184,600 2023 190,200 2024 195,900 2025 91,600 Total future minimum payments 1,093,600 Less: Imputed interest 124,500 Total Present Value of Operating Lease Liabilities 969,100 (1) Operating lease payments exclude $76,400 of legally binding lease payments for real estate leases signed but not yet commenced. Operating leases that have been signed but not yet commenced are expected to commence in the second quarter of fiscal 2020, with a lease term of 3 years. |
2. Revenue (Details)
2. Revenue (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues | $ 2,004,200 | $ 2,038,600 |
Benchtop Laboratory Equipment | ||
Revenues | 1,576,200 | 1,691,900 |
Foreign sales | 397,600 | 635,700 |
Catalyst Research Instruments | ||
Revenues | 138,700 | 217,500 |
Foreign sales | 71,700 | 142,300 |
Bioprocessing Systems | ||
Revenues | 289,300 | 129,200 |
Foreign sales | 0 | 0 |
Consolidated | ||
Revenues | 2,004,200 | 2,038,600 |
Foreign sales | $ 469,300 | $ 778,000 |
3. Segment Information and Co_3
3. Segment Information and Concentrations (Details) - USD ($) | 3 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | |
Revenues | $ 2,004,200 | $ 2,038,600 | |
Income (loss) from operations | (75,500) | 175,700 | |
Assets | 8,862,600 | 7,309,400 | $ 8,276,000 |
Depreciation and amortization | 41,000 | 75,900 | |
Benchtop Laboratory Equipment | |||
Revenues | 1,576,200 | 1,691,900 | |
Foreign sales | 397,600 | 635,700 | |
Income (loss) from operations | 12,900 | 175,400 | |
Assets | 5,589,400 | 4,633,500 | |
Long-lived asset expenditures | 7,800 | 2,200 | |
Depreciation and amortization | 30,500 | 66,300 | |
Catalyst Research Instruments | |||
Revenues | 138,700 | 217,500 | |
Foreign sales | 71,700 | 142,300 | |
Income (loss) from operations | (90,200) | (62,900) | |
Assets | 1,400,900 | 1,343,100 | |
Long-lived asset expenditures | 0 | 0 | |
Depreciation and amortization | 400 | 200 | |
Bioprocessing Systems | |||
Revenues | 289,300 | 129,200 | |
Foreign sales | 0 | 0 | |
Income (loss) from operations | 1,800 | 63,200 | |
Assets | 1,088,100 | 623,500 | |
Long-lived asset expenditures | 16,700 | 0 | |
Depreciation and amortization | 10,100 | 9,400 | |
Corporate and Other | |||
Revenues | 0 | 0 | |
Foreign sales | 0 | 0 | |
Income (loss) from operations | 0 | 0 | |
Assets | 784,200 | 709,300 | |
Long-lived asset expenditures | 0 | 0 | |
Depreciation and amortization | 0 | 0 | |
Consolidated | |||
Revenues | 2,004,200 | 2,038,600 | |
Foreign sales | 469,300 | 778,000 | |
Income (loss) from operations | (75,500) | 175,700 | |
Assets | 8,862,600 | 7,309,400 | |
Long-lived asset expenditures | 24,500 | 2,200 | |
Depreciation and amortization | $ 41,000 | $ 75,900 |
3. Segment Information and Co_4
3. Segment Information and Concentrations (Details Narrative) | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Benchtop Laboratory Equipment | Three Customers | ||
Net sales | 23.00% | 23.00% |
Total revenues | 18.00% | 19.00% |
Benchtop Laboratory Equipment | Vortex-Genie 2 Mixer | ||
Net sales | 36.00% | 49.00% |
Benchtop Laboratory Equipment | Torbal Scales Division | ||
Net sales | 33.00% | 25.00% |
Catalyst Research Instruments | Three Customers | ||
Net sales | 83.00% | |
Total revenues | 9.00% | |
Catalyst Research Instruments | Two Customers | ||
Net sales | 90.00% | |
Total revenues | 6.00% |
4. Fair Value of Financial In_3
4. Fair Value of Financial Instruments (Details) - USD ($) | Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2018 |
Assets: | ||||
Cash and cash equivalents | $ 1,259,700 | $ 1,602,500 | $ 1,507,300 | $ 1,053,100 |
Investment securities | 333,600 | 330,900 | ||
Total | 1,593,300 | 1,933,400 | ||
Liabilities: | ||||
Contingent consideration | 618,000 | 618,000 | ||
Level 1 | ||||
Assets: | ||||
Cash and cash equivalents | 1,259,700 | 1,602,500 | ||
Investment securities | 333,600 | 330,900 | ||
Total | 1,593,300 | 1,933,400 | ||
Liabilities: | ||||
Contingent consideration | 0 | 0 | ||
Level 2 | ||||
Assets: | ||||
Cash and cash equivalents | 0 | 0 | ||
Investment securities | 0 | 0 | ||
Total | 0 | 0 | ||
Liabilities: | ||||
Contingent consideration | 0 | 0 | ||
Level 3 | ||||
Assets: | ||||
Cash and cash equivalents | 0 | 0 | ||
Investment securities | 0 | 0 | ||
Total | 0 | 0 | ||
Liabilities: | ||||
Contingent consideration | $ 618,000 | $ 618,000 |
4. Fair Value of Financial In_4
4. Fair Value of Financial Instruments (Details 1) - USD ($) | Sep. 30, 2019 | Jun. 30, 2019 |
Cost | $ 317,900 | $ 339,400 |
Fair value | 333,600 | 330,900 |
Unrealized holding gain (loss) | 15,700 | (8,500) |
Equity Securities | ||
Cost | 71,300 | 47,100 |
Fair value | 96,500 | 72,000 |
Unrealized holding gain (loss) | 25,200 | 24,900 |
Mutual Funds | ||
Cost | 246,600 | 292,300 |
Fair value | 237,100 | 258,900 |
Unrealized holding gain (loss) | $ (9,500) | $ (33,400) |
5. Inventories (Details)
5. Inventories (Details) - USD ($) | Sep. 30, 2019 | Jun. 30, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,737,500 | $ 1,738,300 |
Work-in-process | 229,900 | 106,400 |
Finished goods | 745,700 | 747,600 |
Inventory | $ 2,713,100 | $ 2,592,300 |
6. Goodwill and Other Intangi_3
6. Goodwill and Other Intangible Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Jun. 30, 2019 | |
Cost | $ 2,388,000 | $ 2,380,500 |
Accumulated amortization | 2,225,100 | 2,205,500 |
Net | $ 162,900 | $ 175,000 |
Technology, trademarks | ||
Useful lives minimum | 5 years | 5 years |
Useful lives maximum | 10 years | 10 years |
Cost | $ 663,800 | $ 663,800 |
Accumulated amortization | 661,800 | 661,700 |
Net | $ 2,000 | $ 2,100 |
Trade names | ||
Useful lives | 6 years | 6 years |
Cost | $ 140,000 | $ 140,000 |
Accumulated amortization | 130,300 | 124,400 |
Net | $ 9,700 | $ 15,600 |
Websites | ||
Useful lives | 5 years | 5 years |
Cost | $ 210,000 | $ 210,000 |
Accumulated amortization | 210,000 | 210,000 |
Net | $ 0 | $ 0 |
Customer relationships | ||
Useful lives minimum | 9 years | 9 years |
Useful lives maximum | 10 years | 10 years |
Cost | $ 357,000 | $ 357,000 |
Accumulated amortization | 311,400 | 308,100 |
Net | $ 45,600 | $ 48,900 |
Sublicense agreements | ||
Useful lives | 10 years | 10 years |
Cost | $ 294,000 | $ 294,000 |
Accumulated amortization | 231,500 | 224,100 |
Net | $ 62,500 | $ 69,900 |
Non-compete agreements | ||
Useful lives | 5 years | 5 years |
Cost | $ 384,000 | $ 384,000 |
Accumulated amortization | 384,000 | 384,000 |
Net | $ 0 | $ 0 |
Intellectual property, research & development (IPR&D) | ||
Useful lives | 3 years | 3 years |
Cost | $ 110,000 | $ 110,000 |
Accumulated amortization | 110,000 | 110,000 |
Net | $ 0 | $ 0 |
Other intangible assets | ||
Useful lives | 5 years | 5 years |
Cost | $ 229,200 | $ 221,700 |
Accumulated amortization | 186,100 | 183,200 |
Net | $ 43,100 | $ 38,500 |
6. Goodwill and Other Intangi_4
6. Goodwill and Other Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 705,300 | $ 705,300 | |
Total amortization expense | 19,500 | $ 61,000 | |
Estimated future amortization expense 2020 | 51,000 | ||
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 | $ 10,900 |
7. Income (Loss) Per Common S_3
7. Income (Loss) Per Common Share (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||
Net income (loss) | $ (56,200) | $ 142,000 |
Weighted average common shares outstanding | 1,494,212 | 1,494,112 |
Effect of dilutive securities | 0 | 3,897 |
Weighted average dilutive common shares outstanding | 1,494,212 | 1,498,009 |
Basic earnings (loss) per common share | $ (.04) | $ .10 |
Diluted earnings (loss) per common share | $ (.04) | $ 0.09 |
7. Income (Loss) Per Common S_4
7. Income (Loss) Per Common Share (Details Narrative) - shares | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||
Common stock issuable upon the exercise of outstanding stock options | 44,200 | 92,000 |
8. Leases (Details)
8. Leases (Details) | Sep. 30, 2019USD ($) | [1] |
Leases [Abstract] | ||
Remainder of 2020 | $ 208,800 | |
2021 | 222,500 | |
2022 | 184,600 | |
2023 | 190,200 | |
2024 | 195,900 | |
2025 | 91,600 | |
Total future minimum payments | 1,093,600 | |
Less: imputed interest | 124,500 | |
Total present value of operating lease liabilities | $ 969,100 | |
[1] | Operating lease payments exclude $76,400 of legally binding lease payments for real estate leases signed but not yet commenced. Operating leases that have been signed but not yet commenced are expected to commence in the second quarter of fiscal 2020, with a lease term of 3 years. |
8. Leases (Details Narrative)
8. Leases (Details Narrative) | 3 Months Ended |
Sep. 30, 2019USD ($) | |
Leases [Abstract] | |
Weighted-average remaining lease term | 4 years |
Weighted-average discount rate | 5.00% |
Lease expense | $ 68,300 |