Scientific Industries Inc

Good morning and welcome to the Scientific Industries Third Quarter Fiscal Year 2023 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, press star then one on your telephone keypad. To withdraw from the question queue, 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. Please go ahead.

Thank you. Good morning, and thank you for joining us today to review the financial results of scientific industries for the third quarter of 2023, ending September 30th, 2023. With us today on the call are Helena Santos, Chief Executive Officer, Daniel Grunes, CEO of Scientific Bioprocessing, and John Moore, Chairman. After the conclusion of today's prepared remarks, we will open the call for questions. 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 end of December 31, 2022. 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 except as required by law. Now I'd like to turn the call over to Helena Santos, CEO of Scientific Industries. Helena?

Thank you, Joe, and good morning to all. So today I'd like to take this opportunity to speak to you from the heart about our company. In 1928, just one mile from our factory here in Long Island, Amelia Earhart delivered the opening dedication for the Islip Airport around the corner. In her remarks, she said, the most difficult thing is the decision to act. The rest is mere tenacity. In 2019, I received a mandate from our new board of directors at the time and our shareholders to invest and transform scientific industries, from a private-like company that had access cash and was paying a dividend into a fast-growing, public-like, high-margin life sciences company. We knew, I knew, the process of transforming a business whose revenues were largely from the popular but aging and mature products like the Vortex Genie 2 and the Torbell pharmaceutical scales would not be an easy or quick task. We did believe the view would be worth the climb, and we could find the right patient investors that we could create exciting new business franchises and shareholder value. So where are we today? Today we have two fast-growing businesses that address large market opportunities and the promise of the high-margin recurring revenues that our genie equipment business lacks. Anyone who's heard me before knows that I always say selling equipment is hard. The 2014 acquisition of Torbell was the first step into diversifying away from our mature lab equipment industry. When we met the sellers back then, what struck me was their vision for an automated pill counter. They showed me a crude prototype utilizing a tablet, but the concept of vision-based pill counting was intriguing and a major reason for our acquisition. So now fast forward to 2023, and our Torbell division sales are 36% of the benchtop lab equipment sales, with Vivid automated pill counter sales representing more than half of that, and more importantly, a 75% increase year over year for the nine months ended September 30th, 2023. And what about the other business platform, our bioprocessing segment operating under our SBI division? In 2019, when I received that mandate, we did embark on a strategy to develop that business, spearheaded by John Moore, with our first capital raise in 2020, followed by the acquisition in April of 2021 of our German affiliate, Aquila Biolabs. We've spent the last two years building an organization that would deliver a product roadmap that would be ready to market at this time, and here we are. We are now ready to launch and market the first set of products that came out of that two-year effort. Mr. Daniel Grunus, who is the leader of our bioprocessing business, will speak to you directly in detail about that right after me. Currently, we have embarked on a fundraising campaign to raise the necessary capital to to fund our next two years of growth and an ambitious business plan for the entire company, which we expect will result in the company returning to profitability and positive cash flow. We expect to add new shareholders and garner support from our existing shareholders, whose support we could not do without. We believe this financing will be another stepping stone to position ourselves for an eventual NASDAQ uplisting but only at the point where our growing business can afford the extra expenses of an uplisting. As I said before, I'll let Mr. Grunus dive deeper into our bioprocessing business, but the big and relevant news for our tour bell business in the past quarter was a walkout from October 30th to November 1st by over 2,000 pharmacists at CVS and Walgreens that they referred to as Pharmageddon. The strikes are unusual in that the strikers aren't taking their employers for better pay. They're not asking their employers for better pay. They're asking them to hire more staff so their workloads are less overwhelming. Pharmacy owners are learning automation is a better investment than hard to hire and retain employees. There are times a lot of pharmacists aren't happy with the state of the business. In a non-randomized survey in 2021, the American Pharmacists Association and National Alliance of State Pharmacy Associations reported that 74% of 4,482 pharmacy workers polled said that they did not have enough time to safely perform non-clinical work. And 75% said there were not enough other staff like techs and nurses to safely perform the clinical work. The pressure on pharmacists is about to get worse. On November 23rd of this year, an FDA mandate called Track and Trace is set to go into effect, and this requires pharmacists to visually inspect and approve all of their technicians' pill counts and scan barcodes that enable the easy recall of drugs and to electronically store all prescriptions for six years. So the status quo of more work and longer hours for pharmacists is really untenable. Many retail pharmacies have begun curtailing their hours, as I'm sure most of us have heard in the news, and this is due to the shortage of pharmacists. Torbell is finding an eager market for our vivid automated pill counters. Pharmacy directors of chain stores are facing pressure to make life easier for their pharmacists. We're gaining traction in the 50% of pharmacies that traditionally counted pills by hand. Here I'm referring to independent pharmacies in the U.S. The estimated ROI of a Vivid automated pill counter is less than two months versus the labor cost of manual counting. We're also gaining market share from our competitor who offers mechanical pill counters and our one competitor in vision-based counting. The Vivid is the only cloud-enabled system on the market which is a big advantage for data storage and adding new drugs to the system. And in today's world, data is vital. Vivid could be seen as the Netflix of pill counters versus our competition, which are more like the old blockbuster video. We are very optimistic about the future of Torbell. We feel that we have just scratched the surface with over 1,000 devices sold in the first two years versus a market opportunity of more than 88,000 units just in the retail pharmacy segment alone. And then there are other segments that we sell into, such as police departments, pill return processors, rehab centers, veterinary clinics, hospitals, and community health clinics. Torval is our first business to offer software subscriptions. We are seeing 90% plus of our retail pharmacy clients select the software license auto-renew feature. And as we sell more Vivids, the number of potential subscriptions obviously will increase. We have the most complete product line in the industry with prices ranging from $3,500 for our Vivid Lite to $6,500 for our Vivid One and we continue to invest in new products. We will be introducing the Vivid Workstation in the first quarter of calendar year 2024, which will add a $13,000 to $15,000 price point pill counter, and we will offer the fastest, most performant automated pill counter in the industry. Once the Vivid Workstation is complete, we plan to aggressively market to the pharmacy chains, that represent 65% of the number of locations in the market. We will be releasing a new version of our entry-level product, the Vivid Light, in 2024, which will be three times faster than the current model that we have in the marketplace. And with that, I'm going to turn the call over to Daniel Grunos so he can speak to us about our scientific bioprocessing business.