Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025. 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 statements. Numerous unknown factors and future events could cause such differences, including but not limited to, product demand, market acceptance, success of marketing strategy, success of expansion efforts, impact of competition, adverse economic conditions, and other factors affecting the Company's business that are beyond the Company's control, which are discussed elsewhere in this report. Consequently, no forward-looking statement can be guaranteed. The Company undertakes no obligation except as required by law, to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. Throughout this Quarterly Report on Form 10-Q, the terms the "Company," "Scientific," "we," "our" or "us," refer to Scientific Industries, Inc. and its subsidiaries on a consolidated basis, unless stated or the context implies otherwise.

Overview;

Scientific Industries, Inc., a Delaware corporation ("SI" and along with its subsidiaries, the "Company", "we", "our"), is engaged in the design, manufacture, and marketing a variety of benchtop laboratory equipment, weight and measurement products ("Benchtop Laboratory Equipment"), and through its wholly-owned subsidiary, Scientific Bioprocessing Holdings, Inc., a Delaware corporation ("SBHI"), the design, manufacture, and marketing of bioprocessing systems and products ("Bioprocessing Systems"). SBHI has two wholly-owned subsidiaries - Scientific Bioprocessing, Inc., a Delaware corporation ("SBI"), and aquila biolabs GmbH, a German corporation ("Aquila"). The Company's products are used primarily in pharmacies, pharmaceutical companies, university and industrial laboratories, and other industries that utilize weighing and pill counting systems and bioprocessing analytical tools. The Company's results reflect those of the Benchtop Laboratory Equipment Operations and the Bioprocessing Systems Operations and its corporate operation.

Results of Operations.

Three months ended June 30, 2026 and 2025

Revenue

Net revenues for the three months ended June 30, 2026 increased $389,400 (36.0%) to $1,470,400 from $1,081,000 for the three months ended June 30, 2025, primarily due to a $338,900 increase in Benchtop Laboratory Equipment sales which, since the August 2025 Genie division sale, is comprised entirely of Torbal and VIVID brand products as well as a $50,500 increase in sales from our Bioprocessing Systems Operations.

Gross profit

The gross profit percentage for the three months ended June 30, 2026, and 2025, was 42.3% and 34.8%, respectively. The increase is due primarily to a higher gross margin percentage in the Bioprocessing Systems Operations derived from increased sales of its DOTS product line which have higher margins than legacy products.

General and administrative

General and administrative expenses for the three months ended June 30, 2026, and 2025, were $553,900 and $744,800, respectively. The decrease of $190,900 (25.6%) is due primarily to decreased employee-related costs associated with a reduction in force in the Bioprocessing Systems Operations.

Selling

Selling expenses for the three months ended June 30, 2026 and 2025, were $647,100 and $774,300, respectively. The decrease of $127,200 (16.4%) is due primarily to cost savings initiatives including reduction in salesforce and marketing activities by the Bioprocessing Systems Operations.

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Research and development

Research and development expenses for the three months ended June 30, 2026, and 2025, were $694,500 and $677,100, respectively. The increase of $17,400 (2.6%) is due primarily to the increase of research and development expenditures for new products associated with the Benchtop Laboratory Equipment's VIVID pill counters.

Other income, net

Other income, net, for the three months ended June 30, 2026 and 2025, were $39,000 and $22,700, respectively. The increase is due primarily to the increase in interest income related to investment securities purchased with the proceeds related to sale of the Genie Division in August of 2025.

Income tax

Income tax for the three months ended June 30, 2026, and 2025, was $0 and $0, respectively. The Company maintains a full valuation allowance of $13,484,039 as of June 30, 2026 against its consolidated net deferred taxasset as the Company determined the net deferred taxassets, which includes net operating loss carry-forwards and other taxcredits, are not more likely than not to be realized in the future.

Six months ended June 30, 2026 and 2025

Revenue

Net revenues for the six months ended June 30, 2026 increased $674,200 (33.3%) to $2,697,500 from $2,023,300 for the six months ended June 30, 2025, primarily due to a $395,900 increase in Benchtop Laboratory Equipment sales which, since the August 2025 Genie division sale, is comprised entirely of Torbal and VIVID brand products, as well as a $278,300 increase in sales from our Bioprocessing Systems Operations.

Gross profit

The gross profit percentage for the six months ended June 30, 2026, and 2025, was 40.5% and 35.6%, respectively. The increase is due primarily to a higher gross margin percentage in the Bioprocessing Systems Operations derived from increased sales of its DOTS product line which have higher margins than legacy products.

General and administrative

General and administrative expenses for the six months ended June 30, 2026, and 2025, were $1,300,900 and $1,774,000, respectively. The decrease of $473,100 (26.7%) is due primarily to decreased employee-related costs associated with a reduction in force in Bioprocessing Systems Operations.

Selling

Selling expenses for the six months ended June 30, 2026 and 2025, were $1,334,200 and $1,528,100, respectively. The decrease of $193,900 (12.7%) is due primarily to cost savings initiatives including reduction in salesforce and marketing activities by the Bioprocessing Systems Operations.

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Research and development

Research and development expenses for the six months ended June 30, 2026, and 2025, were $1,398,100 and $1,329,100, respectively. The increase of $69,000 (5.2%) is due primarily to the increase of research and development expenditures for new products associated with the Benchtop Laboratory Equipment's VIVID pill counters.

Other income, net

Other income, net, for the six months ended June 30, 2026 and 2025, were $117,500 and $55,300, respectively. The increase is due primarily to the increase in interest income related to investment securities purchased with the proceeds related to sale of the Genie Division in August of 2025.

Income tax

Income tax for the six months ended June 30, 2026, and 2025, was $0 and $0, respectively. The Company maintains a full valuation allowance of $13,484,039 as of June 30, 2026 against its consolidated net deferred taxasset as the Company determined the net deferred taxassets, which includes net operating loss carry-forwards and other taxcredits, are not more likely than not to be realized in the future.

Liquidity and Capital Resources.

Our primary sources of liquidity are existing cash and cash equivalents, including investment securities, and cash generated from sales of equity investments, payments related to agreements associated with the sale of the Genie Division in August 2025, and our on-going business operations. In order to continue as a going concern, the Company will need to continue to decrease expenses, materially increase revenues, and/or secure additional external capital resources. Based on management's current operating plan, the Company believes its cash on hand, including its investments, is sufficient to fund the Company's operations for a period of at least one year subsequent to the issuance of the accompanying condensed consolidated financial statements. However, there is no assurance that management's current operating plan will be successful.

The following table discloses our cash flows for the periods presented:

		For the six months ended June 30,
		2026				2025
Net cash used in operating activities		$	(1,897,600	)		$	(3,204,500	)
Net cash provided by investing activities			1,740,600				1,580,700
Net cash provided by financing activities			-				1,452,200
Effect of changes in foreign currency exchange rates			(27,200	)			33,500
Net cash (used in) provided by discontinued operations			(154,300	)			441,600
(Decrease) increase in cash and cash equivalents			(338,500	)			303,500

Net cash used in operating activities decreased by $1,306,900 for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The net change is primarily due to cost reductions related to both the Benchtop and Bioprocessing Systems operations as well as corporate expenses.

Net cash provided by investing activities increased by $159,900 for the six months ended June 30, 2026, as compared the to six months ended June 30, 2025. The net increase is primarily due to the higher redemption of investment securities during the six months ended June 30, 2026.

The decrease in net cash provided by financing activities for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 is related to there being no stock issuance for the six months ended June 30, 2026.

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Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires us to make judgments, assumptions, and estimates that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. "Note 2-Summary of significant accounting policies" to the Condensed Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Form 10-K") describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. Our critical accounting estimates are identified in Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2025 Form 10-K. Such accounting policies and estimates require significant judgments and assumptions to be used in the preparation of the consolidated financial statements, and actual results could differ from our assumptions and estimates, and such differences could be material.