UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended December 31, 1995
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-6658
SCIENTIFIC INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 04-2217279
(State of incorporation) (IRS Employer Identification No.)
70 Orville Drive, Bohemia, New York 11716
(Address of principal executive offices)
(516)567-4700
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X No
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 826,239 shares, common
stock, $.05 par value per share.
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARY
FORM 10-QSB
The following information of the registrant and its subsidiary are submitted
herewith:
PART I - - Financial Information:
Condensed Consolidated Balance Sheet -
December 31, 1995 1
Condensed Consolidated Statements of Income -
Three and Six Months Ended December 31, 1995 and 1994 2
Condensed Consolidated Statements of Cash Flows -
Six Months Ended December 31, 1995 and 1994 3
Notes to Condensed Consolidated Financial
Statements 4
Management's Discussion and Analysis 5-6
PART II -- Other Information:
Items 1 through 6 7
Signatures 8
SCIENTIFIC INDUSTRIES INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
ASSETS
December 31, 1995
Current assets:
Cash and cash equivalents $ 37,300
Investment securities 798,100
Trade accounts receivable, less allowance
for doubtful accounts of $7,400 309,000
Inventories (Note 2) 357,400
Prepaid expenses and other current assets 51,900
Deferred income taxes 67,900
Total current assets 1,621,600
Property and equipment at cost, less
accumulated depreciation of $60,700 108,700
Intangible assets at cost, less
accumulated amortization of $6,600 59,500
Deferred income taxes 7,100
Other assets 90,200
Total assets $1,887,100
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 65,100
Accrued expenses and taxes 216,700
Customer advances 6,000
Total current liabilities 287,800
Deferred compensation 50,300
Stockholders' equity:
Common stock,0 $.05 par value 42,300
Additional paid-in capital 842,300
Unrealized holding loss on investment
securities (3,000)
Retained earnings 719,800
---------
1,601,400
---------
Less common stock held in treasury, at cost 52,400
---------
1,549,000
Total stockholders' equity and liabilities $1,887,100
See notes to condensed unaudited consolidated financial statements
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
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For the Three Month For the Six Month
Periods Ended Periods Ended
December 31, December 31,
1995 1994 1995 1994
Net sales $638,200 $663,400 $1,267,700 $1,321,700
Cost of goods sold 381,300 358,700 781,000 756,900
Gross profit 256,900 304,700 486,700 564,800
Operating Expenses:
Selling, general
and administrative expenses 191,200 181,200 371,200 363,100
Research and development 8,000 - 8,000
199,200 181,200 379,200 363,100
Income from operations 57,700 123,500 107,500 201,700
Interest and other income 8,200 5,900 17,100 13,500
Income before income taxes 65,900 129,400 124,600 215,200
Income taxes 17,100 49,000 38,100 81,500
Net income $48,800 $ 80,400 $ 86,500 $ 133,700
Net income per common
share (Note 3): $.05 $.09 $.09 $.14
Weighted average number of
outstanding shares 826,239 826,239 826,239 826,239
See notes to condensed unaudited consolidated financial statements
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Month Periods
Ended December 31,
1995 1994
Operating activities:
Net income $ 86,500 $133,700
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 26,600 14,600
Changes in assets and liabilities:
Accounts receivable (38,200) (17,600)
Inventories (85,300) (12,100)
Prepaid expenses and other current
assets (14,100) (16,300)
Other assets 4,100 (14,700)
Accounts payable (21,700) 39,700
Accrued expenses and taxes 53,700 (104,900)
Customer advances ( 9,900) 500
Total adjustments (84,800) (110,800)
Net cash used in
operating activities 1,700 22,900
Investing activities:
Purchase of investments, held to
maturity (577,100) (551,200)
Redemption of investments, principally
held to maturity 378,100 359,000
Capital expenditures (14,900) (7,800)
Purchase of intangible assets (66,100)
Net cash used in investing
activities (280,000) (200,000)
Net decrease in cash and cash equivalents (278,300) (177,100)
Cash and cash equivalents, beginning
of year 315,600 318,300
Cash and cash equivalents, end of period $ 37,300 $ 141,200
Supplemental disclosures:
Cash paid during the period for:
Income taxes $ 36,300 $ 151,800
See notes to condensed unaudited consolidated financial statements
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SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
General: As contemplated by the Securities and Exchange Commission, the
accompanying financial statements and footnotes have been condensed and
therefore do not contain all financial statements and disclosures required
by generally accepted accounting principles. Reference should be made to
the Annual Report to Stockholders for the year ended June 30, 1995 of
Scientific Industries, Inc., the "Company."
The statements as of and for the six months ended December 31, 1995 and 1994
are unaudited. In the opinion of management, all adjustments have been
made to present fairly the results of such unaudited interim periods.
1. Significant accounting policies:
Principles of consolidation:
The accompanying condensed consolidated financial statements include the
accounts of Scientific Industries, Inc. and Scientific Packaging Industries,
Inc. (a 100% owned subsidiary). All intercompany items and transactions
have been eliminated in consolidation.
2. Inventories:
Inventories for interim financial statement purposes are computed by costing
sales made during the applicable periods. Management has estimated the
components of inventory to be as follows:
December 31,
1995
Raw materials $312,700
Work in process 37,100
Finished goods 7,600
$357,400
3. Net income per share:
Net income per share of Common Stock is computed on the basis of the
weighted average number of shares outstanding plus the dilutive effect of
stock options.
SCIENTIFIC INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis
Liquidity and Capital Resources
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The Company's working capital increased slightly to $1,333,800 at
December 31, 1995 from $1,304,700 at June 30, 1995. Management believes
that the Company's working capital will be sufficient to meet the
Company's operational requirements through the current fiscal year.
Results of Operations
The Three Months Ended December 31, 1995 Compared With Three Months Ended
December 31, 1994.
Net sales for the three month period ended December 31, 1995 ($638,200) were
slightly lower compared with the three month period ended December 31, 1994
($663,400). At this time, we do not consider this as a trend for the future.
The gross profit margin for the three month period ended December 31, 1995 of
40.2% decreased from the gross profit margin for the comparable period last
year (45.9%). The decrease is primarily due to increased material costs and
slightly lower sales volume. Management believ
osts cannot all be totally absorbed within our pricing structure. This is a
result of the demand for medical cost containment within the industry.
Selling, general and administrative expenses for the three month period
ended December 31, 1995 were slightly higher compared to the three month
period ended December 31, 1994.
Research and development expenses for the three month period ended December
31, 1995 increased $8,000 compared to the same period last year as a result
of the research and development activities conducted relating to the new
product line. Significant research and development expenses are expected
to be incurred during the balance of this fiscal year. As a result, we
expect profits to be lower because the earliest possible date for shipment
of the new product line is at the end of the current fiscal year.
Income before income taxes for the three month period ended December 31,
1995 ($65,900) compared with the three month period ended December 31, 1994
($129,400) decreased $63,500 mainly due to lower profit margins as discussed
above.
The Six Months Ended December 31, 1995 Compared With Six Months Ended
December 31, 1994.
Net sales decreased $54,000 (4.1%) for the six month period ended December
31, 1995 compared with the six month period ended December 31, 1994.
At this time, we do not consider this as a trend for the future. The gross
profit margin for the six month period ended December 31, 1995 of 38.4%
decreased from the gross profit margin for the comparable period last year
(42.7%). The decrease is primarily due to increased material costs and
slightly lower sales volume.
SCIENTIFIC INDUSTRIES, INC.
Management believes that decreased lower profit margins will continue in the
future due to the fact that higher material costs cannot all be totally
absorbed within our pricing structure. This is a result of the demand for
medical cost containment within the industry.
Selling, general and administrative expenses for the six month period ended
December 31, 1995 compared with the six month period ended December 31, 1994
remained essentially the same.
Research and development expenses for the six month period ended
December 31, 1995 increased $8,000 compared to the same period last year as
a result of the research and development activities conducted relating to
the new product line, as discussed in the previous page.
Income before income taxes for the six month period ended December 31, 1995
($124,600) compared with the six month period ended December 31, 1994
($215,200) decreased $90,600 mainly due to lower profit margins as discussed
above.
SCIENTIFIC INDUSTRIES, INC.
FORM 10-QSB
For the Quarter Ended December 31, 1995
PART II--OTHER INFORMATION
Items 1,2, and 3 Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
During the quarter ended December 31, 1995, the Company's 1995 Annual
Meeting was held on November 14, 1995. At this meeting one Class B
Director, Joseph I. Kesselman was elected to the Company's Board of
Directors to serve until the 1998 Annual Meeting. There was a total
of 655,871 "FOR" votes, 10,424 "AGAINST" votes. The other directors
whose terms of office as directors continued after the meeting are
Lowell A. Kleiman (Class C), Roger B. Knowles (Class C), Arthur M. Borden
(Class A), and James S. Segasture (Class A).
There were no other matters submitted to a vote of security holders
during this quarter.
Item 5 and 6 Not Applicable
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Scientific Industries, Inc.
Registrant
________________________________
Lowell A. Kleiman
President and Treasurer
______________________________________
Helena R. Santos
Controller and Assistant Treasurer
Date: February 14, 1996
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-KSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 315600
<SECURITIES> 606200
<RECEIVABLES> 278200
<ALLOWANCES> 7400
<INVENTORY> 272100
<CURRENT-ASSETS> 1570400
<PP&E> 154400
<DEPRECIATION> 46900
<TOTAL-ASSETS> 1779300
<CURRENT-LIABILITIES> 265700
<BONDS> 0
0
0
<COMMON> 42300
<OTHER-SE> 1421000
<TOTAL-LIABILITY-AND-EQUITY> 1779300
<SALES> 2673200
<TOTAL-REVENUES> 2673200
<CGS> 1716600
<TOTAL-COSTS> 1716600
<OTHER-EXPENSES> 657300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 299300
<INCOME-TAX> 93000
<INCOME-CONTINUING> 206300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 206300
<EPS-PRIMARY> .22
<EPS-DILUTED> 0
</TABLE>
