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 quarterly period ended September 30, 1996
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 as specified in its charter)
Delaware 04-2217279
(State of incorporation) (I.R.S. 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
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 - September 30, 1996 1
Condensed Consolidated Statements of Income - Three Months
Ended September 30, 1996 and 1995 2
Condensed Consolidated Statements of Cash Flows - Three
Months Ended September 30, 1996 and 1995 3
Notes to Condensed Consolidated Financial Statements 4
Management's Discussion and Analysis 5
PART II -- Other Information:
Items 1 through 6 6
Signatures 7
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
ASSETS
September 30, 1996
Current Assets:
Cash and cash equivalents $ 132,600
Investment securities 734,100
Trade accounts receivable, less allowance for
doubtful accounts of $7,400 320,900
Inventories (Note 2) 294,500
Prepaid expenses, taxes and other current assets 83,700
Deferred income taxes 28,000
Total current assets 1,593,800
Property and equipment at cost, less accumulated
depreciation of $85,800 121,000
Other assets and deferred charges:
Intangible assets, less accumulated amortization
of $10,600 59,800
Deferred income taxes 8,600
Other 108,400
171,200
$1,891,600
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 37,800
Accrued expenses 169,900
Customer advances 23,000
Total current liabilities 230,700
Deferred compensation 64,700
Shareholders' equity:
Common stock $.05 par value 42,300
Additional paid-in capital 842,300
Unrealized holding loss on investment securities (1,800)
Retained earnings 765,800
1,648,600
Less common stock held in treasury, at cost (52,400)
1,596,200
$1,891,600
See notes to condensed unaudited consolidated financial statements
1
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Month Periods Ended
September 30, 1996 September 30, 1995
Net sales $ 786,900 $ 629,500
Cost of sales 469,100 399,700
Gross profit 317,800 229,800
Operating expenses:
General and administrative 180,800 169,300
Selling 27,300 10,700
Research and development 36,700 -
244,800 180,000
Income from operations 73,000 49,800
Interest and other income 8,400 8,900
Income before income taxes 81,400 58,700
Income taxes 30,400 21,000
Net income $ 51,000 $ 37,700
Net income per common share (Note 3) $ .05 $ .04
Weighted average number of outstanding
shares 826,239 826,239
See notes to condensed unaudited consolidated financial statements
2
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Month Periods Ended
September 30, 1996 September 30, 1995
Operating activities:
Net Income $ 51,000 $ 37,700
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 17,000 12,600
Change in assets and liabilities:
Accounts receivable (136,500) (26,900)
Inventories 100 (33,900)
Prepaid expenses, taxes and other
current assets 32,600 (12,100)
Other assets (5,500) 4,400
Accounts payable (6,700) (57,300)
Accrued expenses (10,400) 55,600
Customer advances 18,700 (14,800)
Total adjustments (90,700) (72,400)
Net cash used in
operating activities (39,700) (34,700)
Investing activities:
Purchase of investment securities,
principally held to maturity (434,600) (381,700)
Redemptions of investment securities,
principally held to maturity 451,200 197,300
Capital expenditures (14,200) (6,700)
Purchase of intangible assets - (64,000)
Net cash used in (provided by)
investing activities 2,400 (255,100)
Net decrease in cash and cash equivalents (37,300) (289,800)
Cash and cash equivalents, beginning
of year 169,900 315,600
Cash and cash equivalents, end of period $ 132,600 $ 25,800
Supplemental disclosures:
Cash paid during the period for:
Income Taxes $ 400 $ 6,300
See notes to condensed unaudited consolidated financial statements
3
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,
1996 of Scientific Industries, Inc., the "Company."
The statements as of and for the three months ended September 30, 1996
and 1995 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:
September 30,
1996
Raw Materials $ 251,300
Work in process 31,900
Finished Goods 11,300
$ 294,500
3. Net income per share:
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.
4
SCIENTIFIC INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Liquidity and Capital Resources
The Company's working capital increased to $1,363,100 at September 30, 1996
from $1,304,400 at June 30, 1996 attributable primarily to an increase in
net income. 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 September 30, 1996 Compared With Three Months Ended
September 30, 1995.
Net sales increased $157,400 (25.0%) for the three month period ended
September 30, 1996 compared with the three month period ended September 30,
1995 as a result of increased demand for our existing laboratory products
during this quarter. The gross profit percentage for the three month period
ended September 30, 1996 of 40.4% compared to the gross profit percentage of
36.5% for the three month period ended September 30, 1995 increased 10.7% as
a result of higher sales combined with unchanged fixed overhead costs.
General and administrative expenses for the three month period ended
September 30, 1996 of $180,800 increased slightly compared with $169,300 for
the three month period ended September 30, 1995 due to regular increases in
salaries, insurance, and depreciation.
Selling expenses for the three month period ended September 30, 1996 of
$27,300 compared with $10,700 for the same period last year increased $16,600
(155.1%) as a result of market research expenses pertaining to the new line
of centrifuge products and a promotional rebate program for our existing
laboratory products.
Research and development expenses for the three month period ended September
30, 1996 were $36,700 compared to none in the comparable period last year as
a result of the research and development activities conducted relating to
the new product line and accessories for existing products. The Company
expects to market and have available for delivery the centrifuge products at
the end of this fiscal year.
Income before income taxes for the three month period ended September
30, 1996 of $81,400 compared with $58,700 for the three month period ended
September 30, 1995 increased $22,700 (38.7%) mainly due to the increased
sales and gross profit margins.
5
SCIENTIFIC INDUSTRIES, INC.
FORM 10-QSB
For the Quarter Ended September 30, 1996
Part II -- OTHER INFORMATION
Not Applicable
6
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 November 14, 1996
7
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This schedule contains summary financial information extracted from SEC Form
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