Forward-Looking statements.

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, 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 to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's financial statements and the related notes included elsewhere in this report.





Overview.

The Company's results reflect the results from the Benchtop Laboratory Equipment operations and the Bioprocessing Systems operations. The Company realized a loss from continuing operations before income tax benefit of $7,001,600 for fiscal 2022 compared to a loss of $4,055,000 for fiscal 2021, primarily due to increased operating expenses of its Bioprocessing Systems operations. These expenses include significant amounts for product development, sales and marketing costs, and non-cash compensation expense related to stock options, partially offset by the profits generated by the Benchtop Laboratory Equipment operations. The results also reflected a gain before income tax benefit for discontinued operations of $8,400 compared to a loss of $769,900 in fiscal 2021. On November 30, 2020, the Company sold substantially all of the assets of its Catalyst Research Instruments Operations which was operated through its wholly-owned subsidiary, Altamira Instruments, Inc.

The challenges posed by the COVID-19 pandemic on the global economy affected the Company with minor or temporary disruptions to its operations. The Company took appropriate action and put plans in place to diminish the effects of COVID-19 on its operations, by implementing the Center for Disease Control's guidelines for employers in order to protect the Company's employees' health and safety, with actions such as implementing work from home, social distancing in the workplace, requiring self-quarantine for any employee showing symptoms, wearing face coverings, and training employees on maintaining a healthy work environment. In fiscal years ended June 30, 2020 and June 30, 2021, the Company received loans from the Paycheck Protection Program (the "PPP") administered by the U.S. Small Business Administration, all of which were repaid or forgiven through the fiscal year ended June 30, 2022. The Company has not experienced and does not anticipate any material impact on its ability to collect its accounts receivable due to the nature of its customers. The Company experienced some delays from its supply chain which caused delayed delivery of some products, however this is deemed temporary and does not affect the Company's major product, the Vortex-Genie 2. The extent to which the COVID-19 outbreak ultimately impacts the Company's business, future revenues, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and actions to curtail the virus, and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 outbreak has subsided, the Company may experience a significant impact to its business as a result of the global economic impact of COVID-19, including any economic downturn or recession that has occurred or may occur in the future. As a result of the impact of COVID-19 on capital markets, the availability, amount, and type of financing available to the Company in the near future is uncertain and cannot be assured and is largely dependent upon evolving market conditions and other factors. The Company intends to continue to monitor the situation and may adjust its current business plans as more information and guidance become available.





Results of Operations.

Net revenues for fiscal 2022 increased $1,625,300 (16.6%) to $11,400,500 from $9,775,200 for fiscal 2021, reflecting an increase of approximately $937,500 in net sales of Benchtop Laboratory Equipment operations. The Benchtop Laboratory Equipment sales of Genie brand products increased year-over-year to $7,517,200 from $6,931,900 for fiscal 2022 and fiscal 2021, respectively. Torbal® brand product sales totaled $2,463,900 and $2,111,700 for fiscal 2022 and fiscal 2021, respectively, primarily due to increased sales of its automated VIVID pill counter. Approximately $687,800 of the increase in net revenues for fiscal 2022 is primarily attributable to inclusion of a full fiscal year of Aquila sales as compared to two months of Aquila sales contribution in fiscal 2021, which sales were attributable to Aquila's bioprocessing products including the CGQ for Biomass monitoring in shake flasks, the LIS for automated feeding in shake flasks, and a line of coaster systems and flow-through cells for pH and DO monitoring.

The gross profit percentage for fiscal 2022 of 50.3% approximated fiscal 2021's gross profit percentage of 50.9%.

General and administrative expenses for fiscal 2022 increased by approximately $1,788,100 (44.4%) to $5,816,600 compared to $4,028,500 for fiscal 2021 due primarily to compensation-related costs resulting from stock option grants and increased administrative costs from the Bioprocessing Systems operations.

Selling expenses for fiscal 2022 increased approximately $278,900 (6.9%) to $4,310,800 from $4,031,900 for fiscal 2021, primarily due to increased sales and marketing expenses incurred by the Bioprocessing Systems operations for sales and marketing personnel, sales and marketing activities.






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Research and development expenses increased $1,249,500 (76.9%) to $2,873,300 for fiscal 2022 compared to $1,623,800 for fiscal 2021, due to increased product development expenditures by the Bioprocessing Systems operations.

Total other income, net was $262,400 for fiscal 2022 compared to $653,800 in fiscal 2021. The decrease was due primarily to the increase in unrealized loss in investment securities of $233,700 offset to the $433,700 forgiveness of the second PPP loan received by the Company, compared to fiscal 2021 that was due primarily to the $531,100 forgiveness of the first PPP loan received by the Company and increased interest income resulting from increased investment securities balances.

The Company reflected income tax benefit for continuing operations of $1,352,800 for fiscal 2022 compared to income tax benefit of $945,000 for fiscal 2021, primarily due to the loss incurred.

As a result of the foregoing, the Company recorded a loss from continuing operations of $5,648,800 for fiscal 2022 compared to a loss from continuing operations of $3,110,000 for fiscal 2021.

The Company reflected net income from discontinued operations of $4,400 for fiscal 2022, compared to a net loss of $562,500 for fiscal 2021, which is primarily due to loss on the sale of the majority of Altarmira's assets during fiscal 2021.

As a result of the above, the Company recorded a net loss of $5,644,400 for fiscal 2022 compared to a net loss of $3,672,500 for fiscal 2021.

Liquidity and Capital Resources.

Cash and cash equivalents decreased by $6,704,100 to $2,971,100 as of June 30, 2022 from $9,675,200 as of June 30, 2021, primarily due to the increased sales, marketing and product development expenditures by the Bioprocessing Systems operations offset by the proceeds received from the issuance of common stock and warrants. The Company expects that it will be able to meet its cash flow needs during the next 12 months from cash derived from its operations and cash on-hand.

Net cash used in operating activities was $5,511,900 for fiscal 2022 compared to net cash used in operating activities of $3,301,500 for fiscal 2021, primarily due to the increased sales, marketing and product development expenditures by the Bioprocessing Systems operations in the current year.

Net cash used in investing activities was $3,749,300 for fiscal 2022 compared to $10,884,000 for fiscal 2021, primarily due to the purchase of investment securities in fiscal 2022 and primarily due to the acquisition of Aquila and the purchase of investment securities in fiscal 2021.

Net cash provided by financing activities was $2,628,400 for fiscal 2022 compared to $16,310,200 during fiscal 2021 due mainly to proceeds from the issuance of common stock and warrants in fiscal 2022 and 2021, respectively.

The Company's working capital decreased by $2,105,200 to $14,039,100 as of June 30, 2022 compared to $16,144,300, as of June 30, 2021, primarily due to the increased usage of cash in operating activities.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On an ongoing basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed in Note 2 - Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Management believes that the following accounting policies are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management's most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our board of directors.






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Fair Value Estimates

Goodwill, Intangible and Long-Lived Assets

Goodwill is the excess of the purchase price paid over the fair value of the net assets of an acquired business. Goodwill is tested for impairment on an annual basis or more often if warranted by events or changes in circumstances indicating that the carrying value may exceed fair value, also known as impairment indicators.

Inherent in the fair value determination for each reporting unit are certain judgments and estimates relating to future cash flows, including management's interpretation of current economic indicators and market conditions, and assumptions about our strategic plans with regard to its operations. To the extent additional information arises, market conditions change, or our strategies change, it is possible that the conclusion regarding whether our remaining goodwill is impaired could change and result in future goodwill impairment charges that will have a material effect on our consolidated financial position or results of operations.

The Company has the option to assess goodwill for possible impairment by performing a qualitative analysis to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount or to perform the quantitative impairment test.

We review the recoverability of our long-lived assets and finite-lived intangible assets, when events or conditions occur that indicate a possible impairment exists. Determining whether impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset's residual value, if any. The assessment for recoverability is based primarily on our ability to recover the carrying value of its long-lived and finite-lived assets from expected future undiscounted net cash flows. If the total of expected future undiscounted net cash flows is less than the total carrying value of the assets the asset is deemed not to be recoverable and possibly impaired. We then estimate the fair value of the asset to determine whether an impairment loss should be recognized. An impairment loss will be recognized if the asset's fair value is determined to be less than its carrying value. Fair value is determined by computing the expected future discounted cash flows.

During the years ended June 30, 2022 and 2021, no impairment of goodwill, intangible and long-lived assets was indicated.

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