Scientific Industries, Inc. (SCND) Earnings Call Transcript & Summary

Welcome. I think we'll get started. This is the Annual Meeting of the Stockholders of Scientific Industries, Inc. I'm John A. Moore, Chairman of the Board of Directors. Before the meeting begins, I want to welcome you and express my thanks for all of you attending. The current directors and executive officers of the company are Helena R. Santos, Director and President, Chief Executive Officer, Treasurer and Secretary; John A. Moore, Director, Chairman of the Board; Zach Rovinsky, Chief Financial Officer; Michael Blechman, Director; John Nichols, Director; Dr. Jurgen Schumacher, Director; Daniel Donadille, President and CEO of Scientific Bioprocessing; and Karl Nowosielski, President of the Torbal division. I'd also like to introduce Brent Leslie and Matthew Weintraub principles of Carr, Riggs & Ingram the corporation's public registered accounting firm. John Watkins of Reitler Kailas & Rosenblatt LLP will act as Secretary of this meeting. Erika Young of the Continental Stock Transfer and Trust Company has been appointed Inspector of the Elections, to act at this meeting and has executed and delivered her written oath as inspector. The inspector has reported to stockholders who voted by proxy, representing more than 50% of the outstanding shares of the common stock are present. The meeting is declared lawfully and properly convened. We should now proceed to transact the business for which the meeting has been called. The meeting will now please come to order. Ms. Santos will present proof of due calling of the meeting.

I attest to the following: copies of the printed notice of meeting dated December 16, 2025 and accompanying proxy statement stating the time, place and purposes of the meeting have been provided and are available at the company's headquarters. Unless specifically requested, I will dispense with reading of the notice. Also available at the company, which can be supplied at a stockholders' request is a complete list certified by a representative of Continental Stock Transfer and Trust company, the transfer agent for the corporation of the stockholders of the corporation as of the close of business on December 16, 2025, the record date fixed for stockholders entitled to vote at this meeting. Upon a stockholders' request, the list will also be available electronically during the whole time of this meeting. Please indicate if you would like to examine the list and Ms. Young will give you instructions on how to do that at this meeting. The list shows that as of the close of business on December 16, 2025, there were 11,928,599 shares of common stock issued and outstanding and entitled to vote. The affidavit of [indiscernible] of Continental Stock Transfer and Trust Company showing that they were mailed on December 24, 2025 to each of the stockholders of record as of December 16, 2025; a copy of the combined notice of meeting, the proxy statement and the annual report to stockholders.

Copies of the notice of meeting, proxy statement and the annual report to stockholders, together with the affidavit of mailing of the notice will be inserted in the minute book of the corporation as part of the minutes of the meeting. Let's now move to the business of the meeting. As of the first order of business, we will consider the election of two Class A directors to serve until the Annual Meeting of Stockholders following the year ending December 31, 2027, and until a successor is elected and qualified. Nominations are now in order.

The Board of Directors favors the election of, and I move to nominate each of Ms. Helena Santos and Dr. Jurgen Schumacher, to be elected directors of the company to serve until the Annual Meeting of Stockholders following the year ending December 31, 2027, and until the due election and qualification of each of their successors.

Are there any other nominations? If none, the Chair will entertain a motion to close nominations.

So moved.

Will all those in favor of the motion, please signify by say, Aye. Aye.

Aye.

Those opposed? The motion is carried. Is there any discussion? There being no further discussion, I hereby call for a vote, please indicate if you need a ballot to vote and Ms. Young will give you instructions on how to do that at this meeting. If you have not voted by proxy or desire to change your vote by proxy please deliver your executed proxy or ballot to the Inspector of Elections as is constructed. The Inspector of Elections has reported that each of Ms. Santos and Dr. Schumacher has received the highest member votes of the shares -- number of votes of the shares voting in such a position. And accordingly, each is elected to serve until the Annual Meeting of Stockholders the following the year ending December 31, 2027, and the due election and qualification of each of their successors. As the next order of business, we will consider a proposal to amend the company's 2022 stock equity plan to increase the number of shares subject to options to 3.750,000 shares. I'll entertain a motion with respect to this proposal.

I hereby move the following: Resolve, that the proposal to amend the company's 2022 stock equity plan to increase the number of shares available for issuance thereunder to 3,750,000 shares and it hereby is approved.

I hereby second the motion.

Are there any questions or discussions? If there are none, I hereby call for a vote, please indicate if you need a ballot to vote. Ms. Young will give you instructions on how to do this at the meeting. If you have not voted or desire to change your proxy, please deliver your executed proxy or ballot to the inspector as instructed. The inspector has reported that the proposal received a favorable vote of a majority of the shares present in person or by proxy and accordingly, the amendment of the company's 2022 stock equity plan is approved. As a next order of business, we originally to have considered a proposal to ratify the appointment of the Board of Directors of the company of Berkowitz Pollack Brant as the company's registered public accounting firm with respect to the company's financial statements for the period ended December 31, 2025. However, it was recently announced that Berkowitz Pollack Brant was acquired by Baker Tilly and subsequent to the distribution of the notice of meeting, proxy statement and the annual report to shareholders of this meeting. The Board rescinded the appointment of Berkowitz Pollack Brant as the company's accounting firm with respect to its financial statements for the period ended December 31, 2025, and reporting Carr, Riggs & Ingram. As such, the originally contemplated ratification of such appointment is no longer applicable and we'll move to the next order of business. I would now like to ask Ms. Santos to make some remarks, and then I'd like to ask Mr. Donadille to make some closing remarks.

Thank you, John, and welcome to the Scientific Industries Annual Meeting, and thank you for joining us today. Our goal over the last 10 years has been to transform Scientific Industries from a sleepy lab equipment cash flow business into a focused life sciences tool company. Built around to AI-enabled platforms designed to drive sustainable growth and to increase shareholder value for us. We began this journey with the acquisition of Fluorometrix and the associated royalty license with Sartorius, which led to the creation of Scientific Bioprocessing and provided the company with nearly $10 million in royalties. We then acquired the Torbal business, which became the foundation for our current VIVID automated pill counter line. And then in 2021, we further strengthened our bioprocessing segment with the acquisition of aquila biolabs in Germany, bringing in a talented team of entrepreneurs and engineers. To fund this transformation, we have raised over $30 million in equity capital and generated an additional $10 million through the sale of the Genie legacy business back in August of this year or last year. Closing a significant 7-year chapter in our history and enabling us to fully focus on our growth platforms. Today, our attention is firmly on these two AI-powered life science platforms. In our VIVID pill counter portfolio, we recently introduced an AI-driven enhancement to the VIVID workstation that provides customers with actionable insights, strengthens the regulatory compliance, and delivers meaningful cost savings, an important step in positioning to VIVID as the premier pill counting solution in the market. And we're further developing the workstation with the machine learning or AI enabling machine that will be ready to launch this year. On the bioprocessing side, our team is laser-focused on completing the DOTS platform and refining its core components so that we can deliver a robust, scalable solution to our customers, as Mr. Donadille will indicate in a bit with further details. As we enter this new year, we recognize that there is still considerable work ahead of us, particularly in bioprocessing. But we remain confident in our strategy, our people and the markets we serve. The decisive actions we have taken and our relentless focus on innovation and execution have in our view, place Scientific Industries on the right path to becoming a durable growth company. On behalf of the entire leadership team, we thank you for your continued trust. Thank you for your support and your confidence in the company and in us. And now I turn it over to Daniel.

Thank you, Helena, and good morning, everyone, from Germany. Thank you for joining us today. And obviously, thank you all for your continued support. I'd like to share an update on how the bioprocessing business is evolving and how we are positioning it for long-term value creation. Over the past year, the bioprocessing business has operated in one of the most challenging market environments. The sector has seen in recent years. Constrained capital spending, extended procurement cycles and highly selective investment decisions materially impacted short-term revenue across the industry, including our own. But rather than dwelling on this environment or using it as an excuse, we take ownership, focus on what we can control and execute with discipline to advance our technology platform and strengthen our long-term position. A core element of our strategy is the continued evolution of the business. When I founded the company, we began with targeted insights in shake flask and over the past several years with increasing intensity in 2025, we have deliberately expanded beyond that foundation. In a year of lower sales, we doubled down on what matters most: completing our technology platform to enable the transition into bioreactor workflows and larger, more strategic customer accounts. We are clear that some essential bioreactor scale capabilities are still being built and lacking today. But that is a matter of when, not if, as we focus our resources with discipline on platform completion. What gives us confidence is the consistency of our progress. Each month, each quarter, we are adding capabilities strengthening integration and increasing the value of the platform as a whole. New sensing technologies, expanded software functionality and OEM partnerships are not isolated developments, together they move us steadily closer to being a relevant player across a much larger portion of the bioprocessing value chain. One important example of this progress is pH sensing. Over the past year, we've achieved stable lab-validated pH sensing that covers the full microbial range for a single sensor format, simplifying workflows and reducing barriers to adoption. At the same time, we remain focused on what ultimately matters for commercial success: reliability, robustness and real-world usability. In 2026, pH sensing will move into customer pilots, making a critical milestone towards completing the core sensing stack of the DOTS platform. From a financial perspective, 2025 was clearly a year of 2 halves. After a strong fourth quarter in 2024, the first half of '25 saw a sharp market-driven sales slowdown primarily through hesitant U.S. academic market, pressure across industrial biotech and delayed investment decisions. Importantly, customer engagement outside pure conversion remains strong, indicating deferred rather than lost demand. In the second half of the year, we saw a meaningful improvement in Europe, culminating in a record quarter for the bioprocessing business in Q4 with quarterly sales exceeding $600,000 for the first time. While full year revenue remained below prior year levels, and internal targets. This late year performance confirms that demand for our solution remains intact with significant upside for the existing portfolio as market conditions continue to stabilize. At the same time, we continue to build demand under difficult conditions. We grew our pipeline to $8 million, within 1 year, we entered the cell culture segment and progressed from initial launches to technology trials with leading biopharma companies generating valuable insights into the requirements for future adoption. Our OEM strategy also reached an important milestone with our partnership with IKA resulting in close to $100,000 in bundled sensor purchases. We view this as the first proof of concept for OEM interest in our sensors and the scalability of this commercial channel that knows so many different system builders. As we look ahead, our priorities are clear. We will continue to evolve DOTS from a collection of individual sensing solutions into an integrated bioprocessing development platform, complete the remaining core components, particularly in pH and further expand into higher value biorector workflows. At the same time, we remain disciplined in managing costs and aligning investments with clear technical and commercial milestones. Let me close by tying this back to why this trajectory matters, particularly in this day and age. Every DOTS sensor -- every single DOTS sensor generates millions of high-quality data points in every experiment, capturing real biological behavior in real time. As we expand from shake flask into bioreactors, the value of that data increases exponentially. Applying AI to bioprocessing without this kind of sensor infrastructure is like building Chat GPT without the Internet. It simply does not work. DOTS provides the deep tech hardware-based data foundation that makes advanced analytics and AI possible in the first place. This is the crucial difference. Our approach to bioprocessing eye is not built on software alone. It is grounded in proprietary sensors, real physical measurements and highly contextualized data. For us, AI is not the product. It is the force multiplier that allows us to extract significantly more value from the technology we already place in our customers' labs and on our path to building a relevant future technology platform for bioreactor users. That is why completing the sensing stack expanding into bioreactor workflows and building the dots data backbone go hand in hand. Together, they changed the trajectory of the company into a platform with real and growing relevance in biorector-based bioprocessing. That is the strategy. That is our vision, and that is how we create long-term value for our shareholders. Thank you.

Thank you, Daniel. I'd like to ask the shareholders do you have any questions for me, Daniel, Ms. Santos, Mr. Nowosielski our auditors. There being no further questions and no other business before the meeting, I entertain a motion to adjourn the meeting.

I so move.

Are there any objections? If there are none, I hereby declare the meeting adjourned. Thank you very much.

Thank you. To our directors, we will have our Board meeting within 5 minutes. Thank you.