Scientific Industries Inc

Good afternoon and welcome to the Scientific Industries first quarter of fiscal year 2022 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Joe Dorme, Managing Partner with LISM Partners. Please go ahead.

Thank you, Gary. Good afternoon, and thank you for joining us today to review the financial results of scientific industries for the first quarter of fiscal year 2022, ended September 30, 2021. With us today on the call are John Moore, Chairman, and Helena Santos, Chief Executive Officer. After the conclusion of today's prepared remarks, we'll open the call for questions. If anyone participating on today's call does not have a full text copy of the press release, you can retrieve it from the company's website at scientificindustries.com or numerous other financial websites. Before we begin with prepared remarks, I would like to remind everyone certain statements made by the management team of Scientific Industries during this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Except for the statements of historical fact, this conference call may contain forward-looking statements that involve risks and uncertainties, some of which are detailed under risk factors and documents filed by the company with the Securities and Exchange Commission, including the annual report on Form 10-K for the year ended June 30, 2021. Forward-looking statements speak only as of the date the statements were made. The company can give no assurance that such forward-looking statements will prove to be correct. Scientific industry does not undertake and specifically disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. Now I'd like to turn the call over to Helena Santos, CEO of Scientific Industries. Helena?

Good afternoon. Thank you, Joe. And thank you for attending our company's fiscal 2022 first quarter earnings call. The first quarter of fiscal 2022 experienced formidable results from the company's core business, the benchtop laboratory equipment operation, and began to record full quarterly revenues from the product sales of the bioprocessing systems operation. And that was due to the sales generated by Aquila Biolab products. Akilah was acquired by the company in the fourth quarter of fiscal 2021. I would like to take the opportunity to thank our valuable employees whose hard work and dedication helped us achieve our results during this quarter. As I am sure you all read in our 10Q, we experienced a 41% increase in revenues compared to last year's same quarter. And as you can also see, That increase was generated primarily from the benchtop lab equipment operation. So, what were the drivers of that increase, and what can we expect in the near and long-term future? The increased sales were a result of the continued demand for the flagship product, the Vortex Genie 2. We also came into the first quarter with a significant backlog from the fourth quarter of our fiscal 2021, and that was due to some labor challenges, which were resolved in the first quarter of this fiscal year. We had a couple key employees out during the summer on sick leave. We hired a few more direct labor employees, and we created a new position of operations manager and hired someone to fill that position, which also contributed to the positive results in this first quarter. We now have a total of 31 employees at the Benchtop Lab Equipment and we augmented our current facility in Bohemia with an additional 5,000 square feet of space, which is primarily being used for the Torbell Division's Vivid product line, as well as for additional warehousing space in general. Shortly after the start of the pandemic, we began to experience a sharp demand worldwide for the Vortex Genie 2, fueled by COVID testing labs' demands and then followed by SARS-related research. At the same time, we did experience a sharp decline in orders for other products that were not related to COVID. This is because many labs shut down and took a while to come back online. Also, most of our other products are not considered a commodity in the same way that the Vortex Genie 2 is considered. They are more of a discretionary purchase, which, based on our knowledge, were being put on hold. The demand for the Vortex Genie 2 is still healthy, and the demand for our other products has seen steady growth since the start of the pandemic. However, we have been impacted with part shortages for the non-Vortex Genie products. Most of these products are digital and therefore incorporate digital boards, which, as we all know, is a worldwide problem, no matter what industry, not just auto. Luckily, it has not affected our flagship product because that is an analog product. Looking forward, the 2021 industry outlook for the benchtop lab equipment market is at a growth rate of 10.6%, which combines COVID and non-COVID-related products. The 2022 industry outlook, and by that I mean calendar 2022, is a growth rate of 5.1%. which is in line with pre-COVID growth rates in our industry. As we disclosed in our 10Q, Torbell products account for about 20% to 25% of the total benchtop lab equipment product sales. Total Torbell product sales have remained at approximately the same levels as prior year quarters, and that's because the core Torbell products, which are basically the digital scale, did take a hit during COVID and have only recently began to recover. What has closed the gap on that decrease is the growth rate in the new Vivid pill counter. And we foresee continued growth from the Vivid pill counter in the near term and for the long term also from other Vivid projects in the pipeline. We are investing to launch the Vivid Light in fiscal Q4. and also the Vivid Workstation in Q2 of our fiscal 2023, barring any unforeseen circumstances or delays of any kind. Sales of the core Torvald scales are also making a recovery, and that's due in part to a new website that Mr. Nowaczewski has recently launched. I'm going to let John Moore give you some insight into the bioprocessing systems operations, but as you can see from the 10Q, the new AQUILA subsidiary generated $168,000 in product sales, and there was another $68,000 generated by the U.S. subsidiary of AQUILA product sold. We are still working on the integration of AQUILA after an initial period of studying and evaluating both businesses in depth, analyzing the synergies and what made more sense from all angles, administration, product development, sales, marketing, manufacturing, and even accounting and finance. There's still work to do, but I believe we have a good plan with an amazing team to implement it. The challenges that we face and the factors that could negatively impact us in the future are possible shortage of key components, which thus far has only had limited effect on our results, and that's been primarily in the form of shipping delays, possible labor issues, although that is not anticipated. We also expect that there may be some pressure on future gross margins due to increased raw material costs, which may not be fully passed on to customers due to competitive pressures. We minimize these risks by working very closely with our suppliers and providing a work-friendly environment to retain and attract our employees. Although in terms of cost increases, we are limited in what we can do. Example, all the Vortex Genies use a zinc die casting. That zinc, which is called Xamax 3, fluctuates in price, and the cost of our casting is dependent on the market price of Xamax 3, no matter where we source it. The bioprocessing system operations will continue to concentrate on immediate revenue generation from existing products and invest heavily in new product development, as John Moore will further discuss. And so with that, I'm going to turn it over to John.