UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarterly period ended September 30, 2008
TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-6658
SCIENTIFIC INDUSTRIES, INC.
___________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 04-2217279
____________________________ __________________________________
(State or other jurisdiction (IRS Employer Identification No.)
Of incorporation or
organization)
70 Orville Drive, Bohemia, New York 11716
___________________________________________________________________
(Address of principal executive offices) (Zip Code)
(631)567-4700
___________________________________________________________________
(Registrant's telephone number, including area code)
Not Applicable
_____________________________________________________________________
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act during the preceding 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
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a small
reporting company. See the definitions of "large accelerated filer,"
"accelerated filer" and "small reporting company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer Accelerated Filer
Non-accelerated filer Smaller reporting company X
(Do not check if a smaller reporting company) ______
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes X No
_____ _____
The number of shares outstanding of the issuer's common stock par value,
$0.05 per share, as of November 7, 2008 was 1,181,352 shares.
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, June 30,
2008 2008
------------- ------------
Current Assets: (Unaudited)
Cash and cash equivalents $ 395,800 $1,065,500
Investment securities 662,900 682,400
Trade accounts receivable, less allowance
for doubtful accounts of $11,600 as of
September 30, and June 30, 2008 448,200 454,800
Inventories 1,861,300 1,521,400
Prepaid expenses and other current assets 62,400 84,700
Deferred taxes 31,600 31,400
------------ ------------
Total current assets 3,462,200 3,840,200
Property and equipment at cost, less
accumulated depreciation of $604,800
as of September 30, 2008 and $586,900
as of June 30, 2008 235,200 247,400
Intangible assets, less accumulated
amortization of $334,800 as of
September 30, 2008, and $299,900 as
of June 30, 2008 423,000 454,600
Goodwill 162,600 158,400
Other 46,000 46,000
Deferred taxes 40,300 30,200
------------ ------------
Total assets $4,369,300 $4,776,800
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 187,500 $ 241,800
Customer advances 357,600 379,300
Accrued expenses and taxes 211,900 442,900
Dividends payable 94,500 -
----------- ------------
Total current liabilities 851,500 1,064,000
----------- ------------
Shareholders' equity:
Common stock, $.05 par value; authorized
7,000,000 shares; 1,201,154 issued and
outstanding at September 30, 2008 and
June 30, 2008 60,000 60,000
Additional paid-in capital 1,507,700 1,507,000
Accumulated other comprehensive loss,
unrealized holding loss on investment
securities ( 67,500) ( 44,400)
Retained earnings 2,070,000 2,242,600
----------- ------------
3,570,200 3,765,200
Less common stock held in treasury,
at cost, 19,802 shares 52,400 52,400
----------- ------------
Total shareholders' equity 3,517,800 3,712,800
----------- ------------
Total liabilities and
shareholders' equity $4,369,300 $4,776,800
=========== ============
See notes to unaudited condensed consolidated financial statements
1
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Month
Periods Ended
September 30,
--------------------------
2008 2007
------------ ------------
Net sales $ 972,300 $ 1,500,400
Cost of goods sold 637,200 876,000
------------ ------------
Gross profit 335,100 624,400
------------ ------------
Operating Expenses:
General & administrative 245,600 228,000
Selling 114,200 123,800
Research & development 96,600 60,400
------------ ------------
456,400 412,200
------------ ------------
Income (loss) from operations ( 121,300) 212,200
Interest & other income, net 11,200 13,000
------------ ------------
Income (loss) before income taxes ( 110,100) 225,200
------------ ------------
Income tax expense (benefit):
Current ( 21,700) 94,000
Deferred ( 10,300) ( 15,500)
------------ ------------
( 32,000) 78,500
------------ ------------
Net income (loss) ($ 78,100) $ 146,700
============ ============
Basic earnings (loss) per common share ($ .07) $ .13
Diluted earnings (loss) per common share ($ .07) $ .12
Cash dividends declared per common share $ .08 $ .07
See notes to unaudited condensed consolidated financial statements
2
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Month Periods Ended
Sept. 30, 2008 Sept. 30, 2007
-------------- --------------
Operating activities:
Net income (loss) ($ 78,100) $ 146,700
Adjustments to reconcile net income ------------ -----------
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 52,800 55,800
Deferred income taxes (10,300) ( 15,500)
Stock-based compensation 700 700
Changes in assets and liabilities:
Accounts receivable 6,700 69,300
Inventories ( 339,900) ( 117,500)
Prepaid expenses and other
current assets 22,300 17,400
Accounts payable ( 54,300) 144,700
Customer advances ( 21,800) 117,600
Accrued expenses and taxes ( 90,200) ( 114,400)
------------ ------------
Total adjustments ( 434,000) 158,100
------------ ------------
Net cash provided by (used in)
operating activities ( 512,100) 304,800
------------ ------------
Investing activities:
Acquisition of Altamira Instruments, Inc.,
net of cash acquired ( 144,900) -
Purchase of investment securities,
available-for-sale ( 3,600) ( 6,200)
Capital expenditures ( 5,700) ( 19,200)
Purchases of intangible assets ( 3,400) ( 3,600)
------------ ------------
Net cash used in
investing activities ( 157,600) ( 29,000)
------------ ------------
Net increase (decrease) in cash and
cash equivalents ( 669,700) 275,800
Cash and cash equivalents,
beginning of period 1,065,500 388,700
------------ -------------
Cash and cash equivalents, end of period $ 395,800 $ 664,500
============ =============
Supplemental disclosures:
Cash paid during the period for:
Income Taxes $ 75,000 $ 50,400
See notes to unaudited condensed consolidated financial statements
3
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
General: The accompanying unaudited interim condensed consolidated
financial statements are prepared pursuant to the Securities
and Exchange Commission's rules and regulations for
reporting on Form 10-Q. Accordingly, certain information and
footnotes required by accounting principles generally
accepted in the United States for complete financial
statements are not included herein. The Company believes all
adjustments necessary for a fair presentation of these
interim statements have been included and that they are of a
normal and recurring nature. These interim statements
should be read in conjunction with the Company's financial
statements and notes thereto, included in its Annual Report
on Form 10-KSB, for the fiscal year ended June 30, 2008.
The results for the three months ended September 30, 2008,
are not necessarily an indication of the results of the full
fiscal year ending June 30, 2009.
1. 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 Packaging Industries, Inc., an inactive wholly-owned
subsidiary (all collectively referred to as the "Company"). All
material intercompany balances and transactions have been
eliminated.
Stock-based compensation:
Stock-based compensation is accounted for using Statement of
Financial Accounting Standards No. 123(R) "Share-Based Payment",
which requires compensation costs related to stock-based payment
transactions to be recognized commencing with the first reporting
period in our fiscal year ended June 30, 2007. 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 will be measured each reporting period.
Compensation costs are recognized over the period that an employee
provides service in exchange for the award.
2. Recent Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 157,
"Fair Value Measurements," which defines fair value, establishes a
framework for measuring fair value and expands disclosures about
fair value measurements. SFAS No. 157 applies under other accounting
pronouncements that require or permit fair value measurement.
SFAS No. 157 does not require any new fair value measurements. The
provisions of SFAS No. 157 are effective for financial statements
issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. In January 2008, the FASB
deferred the effective date for one year for certain non-financial
assets and non-financial liabilities, except those that are
4
recognized or disclosed at fair value in the financial statements on
a recurring basis (at least annually). The adoption of this standard
and such application had no impact on the Company's financial
condition, results of operations, or cash flows.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities Including an
Amendment of FASB Statement No. 115" ("SFAS No. 159"). SFAS No. 159
allows entities to choose to measure eligible financial instruments
at fair value with changes in fair value recognized in earnings of
each subsequent reporting date. The fair value election is
available for most financial assets and liabilities on an
instrument-by-instrument basis and is to be elected on the date the
financial instrument is initially recognized. SFAS 159 is effective
for all entities as of the beginning of a reporting entity's first
fiscal year that begins after November 15, 2007 (with earlier
application permitted under certain circumstances). The adoption of
SFAS No. 159 had no impact on the Company's financial position or
statement of operations.
In April 2008, the FASB issued FSP 142-3, "Determination of the
Useful Life of Intangible Assets" ("FSP 142-3"). FSP 142-3 amends
the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a
recognized intangible asset under SFAS No. 142, "Goodwill and Other
Intangible Assets." FSP 142-3 is effective for fiscal years
beginning after December 15, 2008. The Company is currently
assessing the impact of FSP 142-3 on its financial position and
results of operations.
3. Acquisition of Altamira Instruments, Inc.:
On November 30, 2006, the Company acquired all of the outstanding
capital stock of Altamira. The acquisition was pursuant to a Stock
Purchase Agreement (the "Agreement") whereby the Company paid to the
sellers $400,000, and issued to them 125,000 shares of the Company's
Common Stock and agreed to make additional cash payments equal to 5%,
subject to adjustment, of the net sales of Altamira for each of five
periods December 1, 2006 to June 30, 2007, each of the fiscal years
ending June 30, 2008, 2009, and 2010, and July 1, 2010 to November 30,
2010.
Altamira's principal customers are universities, government
laboratories, and chemical and petrochemical companies. The
instruments are customizable to the customer's specifications, and are
sold on a direct basis.
In conjunction with the acquisition of Altamira, management of the
Company valued the tangible and intangible assets acquired, including
goodwill, customer relationships, non-compete agreements, and certain
technology, trade names and trademarks. The carrying amounts of
goodwill and other intangible assets are presented in Note 8,
"Goodwill and Other Intangible Assets" which represent the valuations
determined in conjunction with the acquisition. In addition, other
fair market value adjustments were made in conjunction with the
acquisition, primarily adjustments to property and equipment, and
inventory.
5
As of September 30, 2008, the adjusted aggregate purchase price of
$1,139,100 was allocated to assets acquired and liabilities assumed as
follows:
Current assets $ 734,000
Property and equipment 140,300
Non-current assets 25,100
Goodwill 162,600
Other intangible assets 639,000*
Current liabilities ( 561,900)
-----------
Net purchase price $1,139,100
===========
*Of the $639,000 of other intangible assets, $237,000 was allocated
to customer relationships with a weighted-average estimated useful
life of 10 years, $300,000 was allocated to technology including
trade names and trademarks with a useful life of 5 years, and
$102,000 was allocated to a non-compete agreement with a useful life
of 5 years. The other intangible assets are being amortized on a
straight-line basis except that the amount allocated to the customer
relationships is being amortized on an accelerated (declining
balance) method.
4. Segment Information and Concentrations:
The Company views its operations as two segments: the manufacture
and marketing of standard benchtop laboratory equipment for research
in university, hospital and industrial laboratories sold primarily
through laboratory equipment distributors ("Benchtop Laboratory
Equipment Operations"), and 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").
Segment information is reported as follows:
Benchtop Catalyst Corporate
Laboratory Research and
Equipment Instruments Other Consolidated
--------- ----------- -------- ------------
Three months ended September 30, 2008:
Net Sales $ 886,600 $ 85,700 $ - $ 972,300
Foreign Sales 480,500 69,200 - 549,700
Segment Profit (Loss) 100,900 ( 211,000) - ( 110,100)
Segment Assets 2,351,100 1,120,800 897,400 4,369,300
Long-Lived Asset
Expenditures 3,100 2,600 - 5,700
Depreciation and
Amortization 14,800 38,000 - 52,800
6
Benchtop Catalyst Corporate
Laboratory Research and
Equipment Instruments Other Consolidated
--------- ----------- -------- ------------
Three months ended September 30, 2007:
Net Sales $ 947,500 $ 552,900 $ - $1,500,400
Foreign Sales 407,400 347,800 - 755,200
Segment Profit 173,500 51,700 - 225,200
Segment Assets 2,170,300 1,483,300 796,000 4,449,600
Long-Lived Asset
Expenditures 13,900 5,300 - 19,200
Depreciation and
Amortization 13,800 42,000 - 55,800
Approximately 69% of net sales of benchtop laboratory equipment for
each of the three month periods ended September 30, 2008 and 2007,
were derived from the Company's main product, the Vortex-Genie 2
mixer, excluding accessories.
Two customers accounted in the aggregate for approximately 33% (30%
of total sales) and 37% (23% of total sales) of the benchtop
laboratory equipment operations' net sales for the three month
periods ended September 30, 2008 and 2007, respectively. Sales of
catalyst research instruments generally comprise a few very large
orders averaging $100,000 per order to a limited numbers of
customers, who differ from order to order. Sales pursuant to an
order from one customer represented approximately 60% of the
segment's sales (5% of total sales) for the three months ended
September 30, 2008, and sales pursuant to an order from another
customer represented 53% of the segment's sales (20% of total sales)
for the three months ended September 30, 2007.
The Company's export sales are principally to customers in Europe
and Asia.
5. Inventories:
Inventories for interim financial statement purposes are based on
perpetual inventory records at the end of the applicable period.
Components of inventory are as follows:
September 30, June 30,
2008 2008
------------- ------------
Raw Materials $1,188,900 $ 1,037,900
Work in process 511,300 288,600
Finished Goods 161,100 194,900
----------- -----------
$1,861,300 $ 1,521,400
=========== ============
6. Earnings (loss) per common share:
Basic earnings (loss) per common share are computed by dividing net
income (loss) by the weighted-average number of shares outstanding.
Diluted earnings (loss) per common share include the dilutive effect
of stock options, if any.
7
Earnings (loss) per common share was computed as follows:
For the Three Month
Periods Ended
September 30,
2008 2007
------------------------
Net income (loss) ($ 78,100) $ 146,700
=========== ===========
Weighted average common
shares outstanding 1,181,352 1,145,352
Dilutive securities - 53,285
----------- -----------
Weighted average dilutive
common shares outstanding 1,181,352 1,198,637
=========== ===========
Basic earnings (loss) per
common share ($ .07) $ .13
======== =======
Diluted earnings (loss) per
common share ($ .07) $ .12
======== =======
Approximately 66,000 shares of the Company's common stock issuable
upon the exercise of outstanding options were excluded from the
calculation of diluted loss per common share for the three months
ended September 30, 2008, because the effect would be anti-dilutive.
7. Comprehensive Income (Loss):
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" establishes standards for disclosure of
comprehensive income or loss, which includes net income and any
changes in equity from non-owner sources that are not recorded in
the income statement (such as changes in the net unrealized gains
or losses on securities.) The Company's only source of other
comprehensive income or loss is the net unrealized gain or loss on
securities. The components of comprehensive income (loss) were as
follows:
For the Three Month
Periods Ended
September 30,
2008 2007
----------- ----------
Net income (loss) ($ 78,100) $ 146,700
Other comprehensive loss,
Unrealized holding loss
arising during period ( 23,100) ( 2,200)
----------- ----------
Comprehensive income (loss) ($ 101,200) $ 144,500
=========== ==========
8. Goodwill and Other Intangible Assets:
In conjunction with the acquisition of Altamira, management of the
Company evaluated the tangible and intangible assets acquired,
including customer relationships, non-compete agreements and
technology which encompasses trade names, trademarks and licenses.
The acquisition agreement provides contingent payments to the former
8
shareholders based on net sales of the catalyst research instrument
operations subject to certain limits, which are expected to be earned
and paid. Additional consideration accrued for the thee months ended
September 30, 2008 amounted to $4,200. Goodwill amounted to $162,600
and $158,400 at September 30, 2008 and June 30, 2008, respectively.
The components of other intangible assets are as follows:
Useful Accumulated
Lives Cost Amortization Net
------- -------- ------------ ---------
At September 30, 2008:
Technology 5 yrs. $300,000 $110,000 $190,000
Customer relationships 10 yrs. 237,000 102,100 134,900
Non-compete agreement 5 yrs. 102,000 37,400 64,600
Other intangible assets 5 yrs. 118,800 85,300 33,500
-------- ----------- ---------
$757,800 $334,800 $423,000
-------- ----------- ---------
Useful Accumulated
Lives Cost Amortization Net
------ -------- ------------ ---------
At June 30, 2008:
Technology 5 yrs. $300,000 $ 95,000 $205,000
Customer relationships 10 yrs. 237,000 90,600 146,400
Non-compete agreement 5 yrs. 102,000 32,300 69,700
Other intangible assets 5 yrs. 115,500 82,000 33,500
-------- -------- --------
$754,500 $299,900 $454,600
-------- -------- --------
Total amortization expense was $34,900 and $39,800 for the three months
ended September 30, 2008 and 2007, respectively. As of September 30,
2008, estimated future amortization expense related to intangible assets
is $96,400 for the remainder of fiscal year ending June 30, 2009,
$119,600 for fiscal 2010, $107,900 for fiscal 2011, $51,000 for fiscal
2012, $11,500 for fiscal 2013, and $36,600 thereafter.
9. Subsequent Events:
On October 30, 2008 the Company entered into a one-year $500,000 line
of credit agreement with its bank. The loans extended thereunder are
to be secured by a pledge of all of the Company's assets. The loans
are to bear interest at the bank's prime rate. The line of credit,
replaces an unused $200,000 line of credit.
9
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis or Plan of Operations
Certain statements contained in this report are not based on historical
facts, but are forward-looking statements that are based upon various
assumptions about future conditions. Actual events in the future could
differ materially from those described in the forward-looking
information. Numerous unknown factors and future events could cause such
differences, including but not limited to, product demand, market
acceptance, impact of competition, the ability to reach final agreements,
the ability to finance and produce catalyst research instruments to
customers' satisfaction, adverse economic conditions, and other factors
affecting the Company's business that are beyond the Company's control.
Consequently, no forward-looking statement can be guaranteed.
We undertake no obligation to publicly update forward-looking
statements, whether as a result of new information, future events or
otherwise.
Liquidity and Capital Resources
Cash and cash equivalents decreased by $669,700 to $395,800 as of
September 30, 2008 from $1,065,500 as of June 30, 2008.
Net cash used in operating activities was $512,100 for the three months
ended September 30, 2008 as compared to net cash provided by operating
activities of $304,800 for the comparable three month period in 2007, due
mainly to the loss incurred, higher inventory balances, reduction
in accounts payable, accrued expenses, and lower customer advances. Cash
used in investing activities was $157,600 for the three months ended
September 30, 2008, $128,600 higher than $29,000 cash used for the three
months ended September 30, 2007. The increase primarily was the result
of additional consideration based on Altamira sales for the relevant
period required to be paid pursuant to the Altamira Instruments, Inc.
purchase agreement.
On September 26, 2008, the Board of Directors of the Company declared a
cash dividend of $.08 per share of Common Stock payable on January 15,
2009 to holders of record as of the close of business on October 27,
2008.
The Company's working capital decreased by $165,500 to $2,610,700 as of
September 30, 2008 from the working capital of $2,776,200 at June 30,
2008 mostly due to the loss incurred. The Company has available for its
working capital needs, a new one-year line of credit of $500,000 with
Capital One Bank replacing an unused $200,000 line of credit originally
extended in November 2003. Advances will be secured by the Company's
assets. The loans will bear interest at the bank's prime rate.
Management believes that the Company will be able to meet its cash flow
needs during the 12 months ending September 30, 2009 from its available
financial resources including the line of credit and its cash and
investment securities.
10
Results of Operations
Financial Overview
The Company incurred a net loss of $78,100 for the three months ended
September 30, 2008 primarily the result of the reduced catalyst research
instruments operations sales due in part to vendor-caused delays
preventing fulfillment during the period of a major order (only one order
was completed during the period); a decrease in the gross profits of the
benchtop laboratory instruments operations due to a $60,900 reduction in
sales and higher material costs; and an increase of research and
development expenses for both segments. The catalyst research instrument
operations relies on a small number of large orders, and as a
result, experiences significant swings in its revenues and results,
particularly when comparing results of interim periods. As of September
30, 2008 backlog for this segment was $893,000, substantially all of
which is expected to be shipped and recognized in the current fiscal
year. For the three months ended September 30, 2007, the Company had net
income of $146,700.
The Three Months Ended September 30, 2008 Compared With the Three Months
Ended September 30, 2007
Net sales for the three months ended September 30, 2008 decreased by
$528,100 (35.2%) to $972,300 as compared with $1,500,400 for the three
months ended September 30, 2007, mainly because of: (i) inability to
fulfill during the 2008 period a major order for catalyst research
instruments due to vendor-caused delays, and (ii) a $60,900 (6.4%)
decrease in sales of benchtop laboratory equipment. Sales of the
catalyst research instruments are comprised of a small number of large
orders, typically averaging over $100,000 each, while benchtop laboratory
equipment sales consist of a large number of small orders usually from
stock. As of September 30, 2008, the catalyst research instrument order
backlog was $893,000.
The gross profit percentage for the three months ended September 30, 2008
decreased to 34.5% compared to 41.6% for the three months ended September
30, 2007, the result of: (i) the lower sales of the catalyst research
instruments operations, and (ii) an increase in raw material costs of
the benchtop laboratory equipment operations.
General and administrative expenses for the three months ended September
30, 2008 increased by $17,600 (7.7%) to $245,600 from $228,000 for the
comparable period of the prior year, mainly due to an increase in such
expenses for the catalyst research instruments operations.
Selling expenses for the three months ended September 30, 2008 decreased
by $9,600 (7.8%) to $114,200 from $123,800 for the three months ended
September 30, 2007, due to lower trade show related expenses for all
operations.
Research and development expenses for the three months ended September
30, 2008 were $96,600, an increase of $36,200 (59.9%) from $60,400 for
the three months ended September 30, 2007, due to increased research and
development for catalyst research instruments and development of an
additional benchtop laboratory equipment product.
11
Interest and other income decreased by $1,800 (13.8%) to $11,200 for the
three months ended September 30, 2008 from $13,000 for the three months
ended September 30, 2007 mainly as a result of smaller cash balances.
Due to the loss, the Company had an income tax benefit for the three
months ended September 30, 2008 of $32,000 compared to income tax expense
of $78,500 for the three months ended September 30, 2007.
As a result of the foregoing, the net loss for the three months ended
September 30, 2008 was $78,100 compared to net income of $146,700 for the
three months ended September 30, 2007.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. As of the end of the
period covered by this report, based on an evaluation of the Company's
disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934), the Chief Executive
and Chief Financial Officer of the Company has concluded that the
Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in its Exchange Act
reports is recorded, processed, summarized and reported within the
applicable time periods specified by the SEC's rules and forms. The
Company also concluded that information required to be disclosed in such
reports is accumulated and communicated to the Company's management,
including its principal executive and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting. There was no change
in the Company's internal controls over financial reporting that occurred
during the most recent fiscal quarter that materially affected or is
reasonably likely to materially affect the Company's internal controls
over financial reporting.
12
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Number: Description
31.1 Certification of Chief Executive
Officer and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.1 Certification of Chief Executive Officer and
Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
On September 30, 2008 Registrant filed a
Report on Form 8-K, reporting under Item 8.01.
13
SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
SIGNATURE
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
/s/ Helena R. Santos
__________________________
Helena R. Santos
President, Chief Executive Officer
and Treasurer
Principal Executive, Financial and
Accounting Officer
Date: November 14, 2008
14