SCIENTIFIC INDUSTRIES INC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment
No.___)
Filed
by the Registrant
☒
Filed
by a Party other than the Registrant
☐
Check
the appropriate box:
☐
Preliminary Proxy Statement
☐
Confidential, for Use of the Commission Only
(As Permitted by Rule 14a-6(e) (2))
☒
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material Pursuant to Section
240.14a-12
SCIENTIFIC INDUSTRIES, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
☒
No fee required.
☐
Fee computed on table below per Exchange
Act Rules 14a-6(i)(4) and 0-11.
(1)
Title
of each class of securities to which transaction
applies:
(2)
Aggregate
number of securities to which transaction applies:
(3)
Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule
0-11 (set forth the
amount on which the filing fee is calculated and state ho it was
determined):
(4)
Proposed
maximum aggregate value of transaction:
(5)
Total
fee paid:
☐
Fee paid previously with preliminary
materials.
☐
Check box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
(1)
Amount
previously paid:
(2)
Form,
Schedule or Registration Statement No.:
(3)
Filing
Party:
(4)
Date
Filed:
November
28, 2018
Dear
Fellow Stockholders:
You are
cordially invited to attend the 2018 Annual Meeting of Stockholders
of Scientific Industries, Inc. which will be held at 11:00 a.m.
(New York time) on Wednesday, January 23, 2019 at La Quinta Inn
& Suites, 10 Aero Road, Bohemia, New York, 11716.
Information
concerning the matters to be considered and voted upon at the
Annual Meeting is set out in the attached Notice of 2018 Annual
Meeting of Stockholders and Proxy Statement.
It is
important that your shares be represented at the 2018 Annual
Meeting, regardless of the number of shares you hold and whether or
not you plan to attend the meeting in person. Accordingly, please
complete, sign and date the enclosed proxy card and return it as
soon as possible in the accompanying business reply envelope so
that your shares will be represented at the Annual Meeting. This
will not limit your right to vote in person or to attend the
meeting.
Thank
you for your continued support.
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Sincerely,
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/s/
Joseph G. Cremonese
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Joseph
G. Cremonese
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Chairman
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SCIENTIFIC INDUSTRIES, INC.
80 Orville Drive, Suite 102
Bohemia, New York 11716
_____________
NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS
January 23, 2019
Notice
is hereby given that the 2018 Annual Meeting of Stockholders (the
“Annual Meeting”) of Scientific Industries, Inc., a
Delaware corporation (the "Company"), will be held on Wednesday,
January 23, 2019, at 11:00 a.m. (New York time) at La Quinta Inn
& Suites, 10 Aero Road, Bohemia, New York, 11716, for the
following purposes:
1.
To elect two Class
A Directors to the Company's Board of Directors to serve until the
Company’s annual meeting of stockholders with respect to the
year ending June 30, 2021 and the election and qualification of
their respective successors.
2.
To ratify the
appointment of Nussbaum Yates Berg Klein & Wolpow, LLP as the
Company’s independent registered public accounting firm for
the fiscal year ending June 30, 2019.
3.
To transact such
other business as may properly come before the Annual Meeting and
any adjournments or postponements thereof.
T
he
foregoing items of business are more fully described in the
accompanying proxy statement.
The
Board of Directors has fixed the close of business on November 28,
2018, as the record date for determination of stockholders entitled
to notice of and to vote at, the Annual Meeting and at any
adjournments or postponements thereof.
A
complete list of the stockholders entitled to vote at the Annual
Meeting will be available for inspection by any stockholder of the
Company at the Annual Meeting. In addition, the list will be open
for examination by any stockholder of the Company for any purpose
germane to the Annual Meeting during ordinary business hours for a
period of ten days prior to the Annual Meeting at the offices of
the Company.
You are requested to fill in and sign the
enclosed form of proxy, which is being solicited by the Board of
Directors of the Company, and mail it promptly in the enclosed
postage paid envelope. Any proxy may be revoked by delivery of a
later dated proxy
.
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By
Order of your Board of Directors,
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/s/
Robert P. Nichols
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Robert
P. Nichols
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Secretary
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Bohemia,
New York
November
28, 2018
WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, WE KINDLY REQUEST
THAT YOU PLEASE COMPLETE, SIGN, DATE, AND PROMPTLY RETURN THE
ENCLOSED PROXY CARD IN THE POSTAGE PAID ENVELOPE PROVIDED. IF YOU
ARE A STOCKHOLDER OF RECORD AND YOU ATTEND THE ANNUAL MEETING, YOU
MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
YOUR VOTE IS IMPORTANT
SCIENTIFIC INDUSTRIES, INC.
80 Orville Drive, Suite 102
Bohemia, New York 11716
PROXY STATEMENT
_________________
2018 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 23, 2019
_________________
Solicitation of Proxies
This
proxy statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors (the
“Board”) of Scientific Industries, Inc., a Delaware
corporation (the "Company"), for use at the 2018 Annual Meeting of
Stockholders (the "Annual Meeting") to be held at La Quinta Inn
& Suites, 10 Aero Road, Bohemia, New York, 11716, on Wednesday,
January 23, 2019, at 11:00 a.m. (New York time), and at any
adjournments or postponements thereof.
At the
Annual Meeting, stockholders of the Company will be asked to: (1)
elect two Directors of the Company to serve until the
Company’s annual meeting of stockholders with respect to the
fiscal year ending June 30, 2021, and the election and
qualification of their successors; (2) ratify the appointment of
Nussbaum Yates Berg Klein & Wolpow, LLP, as the Company’s
independent registered public accounting firm for the fiscal year
ending June 30, 2019; and (3) transact such other business as may
properly come before the Annual Meeting and any adjournments or
postponements thereof.
Record Date, Voting Rights
Only
stockholders of record of the Company’s Common Stock, par
value $0.05 per share (the “Common Stock”), as of the
close of business on November 28, 2018 (the "Record Date"), are
entitled to notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof. On the Record Date, there
were 1,513,914 shares of Common Stock issued and 1,494,112
outstanding. Each share of Common Stock is entitled to one
vote.
The
presence at the Annual Meeting, in person or by a properly executed
proxy, of the holders of a majority of the outstanding shares of
the Company’s Common Stock as of the Record Date is necessary
to constitute a quorum. In the determination of the number of
shares of Common Stock present at the Annual Meeting for quorum
purposes abstentions and broker “non-votes” are
included. A broker "non-vote" occurs when a nominee holding shares
of Common Stock for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary
voting power with respect to that item and has not received
instructions from the beneficial owner.
Voting of Proxies, Revocation, Solicitation
All
stockholders who deliver properly executed and dated proxies to the
Company prior to the Annual Meeting will be deemed present at the
Annual Meeting regardless of whether such proxies direct the proxy
holders to vote for or against, or to withhold or abstain from
voting. The proxies, when properly executed and returned to the
Company, will be voted in accordance with the instructions given
therein by the person executing the proxy. In the absence of
instructions, properly executed proxies other than with respect to
broker “non-votes” will be voted FOR (1) the election
of the Board’s nominees, Ms. Helena R. Santos and Mr. James
S. Segasture as Class A Directors of the Company; and (2) the
ratification of the appointment by the Board of Directors of
Nussbaum Yates Berg Klein & Wolpow, LLP, as the Company’s
independent registered public accounting firm for the fiscal year
ending June 30, 2019.
Any
stockholder who executes and delivers a proxy may revoke it at any
time before it is voted by delivering a written notice of such
revocation to the Secretary of the Company at the address of the
Company set forth in this proxy statement, by submitting a properly
executed proxy bearing a later date, or by appearing at the Annual
Meeting and requesting the return of the proxy or by voting in
person. In accordance with applicable rules, boxes and designated
spaces are provided on the proxy card for stockholders to mark if
they wish either to vote for or withhold authority to vote for the
nominees for Directors, or to vote for, against or to abstain from
voting for the proposal to ratify the appointment by the Board of
Directors of the Company’s independent registered public
accounting firm.
A
stockholder’s attendance at the Annual Meeting will not, by
itself, revoke a proxy given by that stockholder. Stockholders vote
at the Annual Meeting by casting ballots (in person or by proxy),
which are tabulated by a person who is appointed by the Board of
Directors before the Annual Meeting to serve as inspector of
election at the Annual Meeting and who has executed and verified an
oath of office.
It is
anticipated that this proxy statement, the enclosed proxy card, and
the Company’s Annual Report will be mailed to the Company's
stockholders on or about December 10, 2018.
PRINCIPAL STOCKHOLDERS
The
following table sets forth as of November 28, 2018 certain
information as to each person who to the Company’s knowledge,
based upon such person’s representations or publicly
available filings, beneficially owned more than 5% of the
outstanding shares of the Company’s Common Stock as of that
date:
|
Name
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Amount and
Nature of Beneficial Ownership**
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% of
Class
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James S.
Segasture*
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162,500(1)
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10.9%
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Joseph G.
Cremonese*
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138,262(2)
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9.2%
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Fulcrum,
Inc.
100 Delawanna
Avenue
Clifton, NJ
07014
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117,370(3)
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7.9%
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Grace S.
Morin*
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97,450(4)
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6.5%
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Brookman P.
March*
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97,450(5)
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6.5%
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Falcon Juneau,
LLC
800 F
Street
Juneau, AK
99801
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74,825(6)
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5.0%
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* His
or her address is c/o Scientific Industries, Inc., 80 Orville
Drive, Suite 102, Bohemia, New York 11716.
**
Percentages of ownership are based upon the number of shares of
Common Stock issued and outstanding. Shares of Common Stock that
may be acquired pursuant to options that are exercisable within 60
days of the date indicated above are deemed outstanding for
computing the percentage ownership of the person holding such
options, but are not deemed outstanding for the percentage
ownership of any other person.
(1)
Shares
owned jointly with his wife.
(2)
126,262
shares are owned jointly with his wife, 7,000 shares are owned by
his wife, and 5,000 shares are issuable upon exercise of
options.
(3)
Stock
issued in connection with the acquisition of the Torbal division
assets from Fulcrum, Inc. on February 26, 2014.
(4)
Includes
14,500 shares issuable upon exercise of options held by her
husband, Mr. March.
(5)
Represents
82,950 shares owned by Ms. Morin, his wife and 14,500 shares
issuable upon exercise of options.
(6)
Based
on report on schedule 13G filed with the Securities and Exchange
Commission on August 31, 2018.
PROPOSAL 1
ELECTION OF DIRECTORS
General
The
Company's Certificate of Incorporation provides for a classified
Board of Directors, consisting of three classes, each class serving
a three-year term on a staggered basis. Two are Class A Directors,
one is a Class B Director, and two are Class C Directors. At the
Annual Meeting, the two Class A Directors are to be elected to
serve until the annual meeting of stockholders with respect to the
fiscal year ending June 30, 2021, and until their successors are
duly elected and qualified. During the fiscal year ended June 30,
2018 (“fiscal 2018”), the Board held three meetings, at
each of which all Directors were present. Shares of Common Stock
represented by executed and returned proxies solicited by the Board
of Directors will be voted for the nominees hereinafter named if
authority to do so is not specifically withheld. If for any reason
said nominee shall become unavailable for election, which is not
now anticipated, the proxies will be voted for a substitute nominee
designated by the Board of Directors.
The
Directors of the Company are elected by the affirmative vote of the
holders of a plurality of the shares of Common Stock present in
person or represented by proxy at the Annual Meeting and entitled
to vote. A plurality means that the nominee with the largest number
of votes is elected as Director. In tabulating the vote,
abstentions and broker “non-votes” will be disregarded
and will have no effect on the outcome of the vote.
The Board of Directors recommends that stockholders vote FOR the
election of the nominees identified below to the Board of
Directors
.
Nominees
The
Board of Directors has designated Ms. Helena R. Santos and Mr.
James S. Segasture, currently Class A directors, as their nominees
for election.
Helena
R. Santos
(age 54), a Director since 2009, has been employed
by the Company since 1994, and has served since August 2002 as its
President, Chief Executive Officer and Treasurer. She had served as
Vice President, Controller from 1997 and as Secretary from May
2001
.
James
S. Segasture
(age 82), a Director since 1991, has been retired
for the last five years.
Other Directors
Joseph G. Cremonese
(age 82), a Director since November 2002 and
Chairman of the Board since February 2006, has been, through his
affiliate, a marketing consultant to the Company since 1996. Mr.
Cremonese has been since 1991, President of his affiliate,
Laboratory Innovation Company, Ltd, which is a vehicle for the
consulting services for the Company.
John
F.F. Watkins (age 51), is a corporate and securities attorney and
has been a member of Reitler Kailas & Rosenblatt LLC since
2002. Mr. Watkins was first elected to the Board of Directors of
the Company in January 2017.
Grace S. Morin
(age 70), a Director since December 4, 2006, had
been President, Director and principal stockholder of Altamira
Instruments, Inc. from December 2003 until its acquisition in
November 2006 by the Company. Ms. Morin had been employed by
Altamira to supervise its administrative functions at the
Pittsburgh, Pennsylvania facility as a full-time employee through
March 31, 2009 and since that date as a part-time
consultant.
Stock Ownership
The
following table sets forth, as of November 28, 2018, relevant
information as to the shares of Common Stock beneficially owned by
(I) each Director of the Company, (ii) each executive officer of
the Company identified in the Summary Compensation Table under
“Executive Officers and Key Personnel,” and (iii) all
directors and executive officers as a group.
|
Beneficial
Owner
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Number
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Percentage
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Joseph G.
Cremonese
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138,262
(1)
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9.2
%
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Grace S.
Morin
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97,450
(2)
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6.5
%
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James S.
Segasture
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162,500
(3)
|
10.9
%
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|
Helena R.
Santos
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40,779
(4)
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2.7
%
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Robert P.
Nichols
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27,897
(5)
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1.9
%
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Brookman P.
March
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97,450
(6)
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6.5
%
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Karl D.
Nowosielski
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34,183
(7)
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2.2
%
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All current
directors and executive officers as a group (7
persons)
|
501,071
(8)
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31.9
%
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(1)
126,262 shares are
owned jointly with his wife, 7,000 shares are owned by his wife,
and 5,000 shares are issuable upon exercise of
options.
(2)
Includes 14,500
shares issuable upon exercise of options held by her husband, Mr.
March.
(3)
Shares owned
jointly with his wife.
(4)
Includes 25,000
shares issuable upon exercise of options.
(5)
Includes 9,500
shares issuable upon exercise of options.
(6)
Represents 82,950
shares owned by Ms. Morin, his wife and 14,500 shares issuable upon
exercise of options.
(7)
Includes 9,683
stock issued in connection with the acquisition of the Torbal
Division in February 2014. Includes 24,500 shares issuable upon
exercise of options.
(8)
Includes 78,500
shares issuable upon exercise of options.
Board Committees
The
Company’s Stock Option Committee administers the
Company’s 2012 Stock Option Plan. The members of the
committee are non-management Directors of the Company – James
S. Segasture and Joseph G. Cremonese. The members of the Committee
serve at the discretion of the Board. During fiscal 2018 the Stock
Option Committee held one meeting.
Grace
S. Morin and James S. Segasture are the current members of the
Company’s Compensation Committee serving at the discretion of
the Board. The Committee administers the Company’s
compensation policies. During fiscal 2018, the Compensation
Committee held one meeting.
The
Board of Directors acts as the Company’s Audit Committee,
which in its function as the Committee, held three meetings during
fiscal 2018. Ms. Santos, who is not “independent” and
Ms. Morin are “financial experts” as defined by the
Securities and Exchange Commission.
Directors’ Compensation and Options
DIRECTORS’ COMPENSATION
For the Year Ended June 30, 2018
|
Name
(a)
|
Fees Earned or Paid in Cash ($)
(b)
|
Stock Awards ($)
(c)
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Option Awards($)
(d)
|
Non-Equity Incentive Plan Compensation ($)
(e)
|
Changes in Pension Value and Non-qualified Deferred Compensation
Earnings($)
(f)
|
Non-qualified Deferred Compensation Earnings
($)
(g)
|
All Other
Comp-
ensation ($)
(h)
|
Total
($)
(i)
|
|
Joseph G.
Cremonese
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34,300
|
0
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0
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0
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0
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0
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43,200(1)
|
77,500
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Grace S.
Morin
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14,600
|
0
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0
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0
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0
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0
|
7,000(2)
|
21,600
|
|
James
S.Segasture
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14,600
|
0
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0
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0
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0
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0
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0
|
14,600
|
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John F.F.
Watkins
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14,600
|
0
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0
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0
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0
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0
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0
|
14,600
|
(1)
Represents
amount paid to his affiliate pursuant to a marketing consulting
agreement (see "Related Transactions").
(2)
Represents
compensation received for her administrative services as a
consultant for Altamira (see "Related Transactions").
The
Company paid each Director who is not an employee of the Company or
a subsidiary a quarterly retainer fee of $2,200 and $2,000
(increased from 1,800 as of January 2018) for each meeting attended
for fiscal 2018. In addition, the Company reimburses each
Director for out-of-pocket expenses incurred in connection with
attendance at board meetings. Mr. Cremonese, as Chairman of the
Board receives an additional fee of $1,700 per month. During fiscal
2018, total director compensation to non-employee Directors
aggregated $128,300, including the consulting fees paid to Mr.
Cremonese’s affiliate, and to Ms. Morin.
Since
December 1, 2003, Mr. Joseph G. Cremonese, has been awarded a total
of 45,000 stock options under the Company's 2002 and 2012 Stock
Option Plans of which 5,000 remain unexercised. None of the other
directors have options outstanding.
Executive Officers and Key Personnel
See "Nominees" for the employment history
of
Ms.
Santos
.
Robert P. Nichols
(age 57), is the President of the
Genie Products Division of the Benchtop Laboratory Equipment
Operations and Corporate Secretary and has been employed by the
Company since February 1998. Previously, he had been since May
2001, the Company’s Vice President of
Engineering.
Brookman P. March
( age 73), has been since July 1, 2017
Vice President of Corporate Development and Strategy and Vice
President of Sales of Altamira. Previously he had been President
and Director of Sales and Marketing of Altamira. He had been Vice
President and a Director of Altamira from December 2003 until it
was acquired by the Company in 2006. Mr. March is the husband of
Ms. Morin, a Director of the Company.
Karl D. Nowosielski
(age 38), is the President of the
Torbal Products Division of the Benchtop Laboratory Equipment
Operations and Director of Marketing for the Company. He had been
until February 2014 Vice President of Fulcrum, Inc. (the seller of
the Torbal Products Division assets) since
2004.
Anthony J. Mitri
(age 36), has been the
President of Altamira since May 2017. Prior to that he had been
Director of Operations and Engineer since he began his employment
with the Company in 2004.
The
Compensation Committee reviews and recommends to the Board of
Directors the compensation to be paid to each executive officer.
Executive compensation, in all instances except for the
compensation for the Chief Executive Officer (“CEO”),
is based on recommendations from the CEO. The CEO makes a
determination by comparing the performance of each executive being
reviewed with objectives established at the beginning of each
fiscal year and with objectives established during the business
year with regard to the success of the achievement of such
objectives and the successful execution of management targets and
goals.
With
respect to the compensation of the CEO, the Committee considers
performance criteria, 50% of which is related to the direction, by
the CEO, of the reporting executives, the establishment of
executive objectives as components for the successful achievement
of Company goals and the successful completion of programs leading
to the successful completion of the business plan for the Company
and 50% is based on the achievement by the Company of its financial
and personnel goals tempered by the amount of the income or loss of
the Company during the fiscal year.
The
compensation at times includes grants of options under its stock
option plan to the named executives. Each officer is employed
pursuant to a long-term employment agreement, containing terms
proposed by the Committee and approved as reasonable by the Board
of Directors. The Board is cognizant that as a relatively small
company, the Company has limited resources and opportunities
with respect to recruiting and retaining key executives.
Accordingly, the Company has relied upon long-term employment
agreements and grants of stock options to retain qualified
personnel.
Compensation
for each of its executive officers provided by their employment
agreements were based on the foregoing factors and the operating
and financial results of the segments under their
management.
The
following table summarizes all compensation paid by the Company to
each of its executive officers for the fiscal years ended June 30,
2018 and 2017.
SUMMARY COMPENSATION TABLE
|
Name and Principal Position
(a)
|
Fiscal Year
(b)
|
Salary ($)
(c)
|
Bonus ($)
(d)
|
Stock Awards ($)
(e)
|
Option Awards ($)
(f)
|
Non- Equity Incentive Plan Compensation ($) (g)
|
Non- Qualified Deferred Compensation Earnings ($)
(h)
|
Changes in Pension Value and Non-Qualified Deferred Compensation
Earnings
|
All Other Compensation ($)
(i)
|
Total ($)
(j)
|
|
Helena R.
Santos,
|
2018
|
175,000
|
25,000
|
0
|
13,100(1)
|
0
|
0
|
0
|
6,700(4)
|
219,800
|
|
CEO,
President, CFO
|
2017
|
162,000
|
20,000
|
0
|
0
|
0
|
0
|
0
|
6,500(4)
|
188,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brookman P.
March,
|
2018
|
155,000
|
10,000
|
0
|
3,900(5)
|
0
|
0
|
0
|
6,200(4)
|
175,100
|
|
Vice President
Corporate Strategy, VP, Sales of Altamira
|
2017
|
147,000
|
10,000
|
0
|
500(2)
|
0
|
0
|
0
|
5,900(4)
|
163,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony
Mitri
|
2018
|
110,000
|
0
|
0
|
1,600(6)
|
0
|
0
|
0
|
4,400(4)
|
116,000
|
|
President of
Altamira
|
2017
|
100,000
|
0
|
0
|
0
|
0
|
0
|
0
|
4,000(4)
|
104,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert P.
Nichols,
|
2018
|
153,000
|
10,000
|
0
|
3,900(5)
|
0
|
0
|
0
|
6,300(4)
|
173,200
|
|
President of
Genie Division
|
2017
|
146,000
|
10,000
|
0
|
500(2)
|
0
|
0
|
0
|
5,800(4)
|
162,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karl D.
Nowosielski
|
2018
|
161,700
|
10,000
|
0
|
7,400(3)
|
0
|
0
|
0
|
6,400(4)
|
185,500
|
|
President of
Torbal Division and Director of Marketing
|
2017
|
143,000
|
10,000
|
0
|
1,200(3)
|
0
|
0
|
0
|
5,700(4)
|
159,900
|
(1)
The
amounts represent compensation expense for the stock options
granted on July 1, 2017 valued utilizing the Black-Scholes-Merton
options pricing model. The option was valued at a total of $39,200
of which $13,100 was expensed in fiscal 2018.
(2)
The
amounts represent compensation expense for the 2014 stock options
granted valued utilizing the Black-Scholes-Merton options pricing
model, disregarding estimates of forfeitures related to
service-based vesting considerations. The 2014 option was valued at
a total of $3,500 of which $500 was expensed in fiscal
2017.
(3)
The
amounts represent compensation expense for various options granted
which included, the July 1, 2017, and the February 26, 2017, stock
options granted as part of his employment agreement, valued
utilizing the Black-Scholes-Merton options pricing model,
disregarding estimates of forfeitures related to service-based
vesting considerations. The options were valued at a total of
$11,800, and $10,500, respectively, of which $7,400 and $1,200 were
expensed in fiscal 2018 and 2017, respectively.
(4)
The
amounts represent the Company’s matching contribution under
the Company’s 401(k) Plans.
(5)
The
amounts represent compensation expense for the stock options
granted on July 1, 2017 valued utilizing the Black-Scholes-Merton
options pricing model. The option was valued at a total of $11,800
of which $3,900 was expensed in fiscal 2018.
(6
The
amounts represent compensation expense for the stock options
granted on December 31, 2017 valued utilizing the
Black-Scholes-Merton options pricing model. The option was valued
at a total of $9,500 based off the black scholes calculation of
which $1,600 was expensed in fiscal 2018.
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR ENDED JUNE 30,
2018
|
Name
(a)
|
Grant
Date
(b)
|
Estimated
Future
Payouts
Under
Non-Equity
Incentive
Plan
$
(c)
|
Estimated
Future
Payouts
Under
Equity
Incentive
Plan
$
(d)
|
All Other
Stock
Awards:
Number
Of
Shares
Of Stock
Or Units
(#)
(e)
|
All Other
Option
Awards:
Number
Of
Securities
Underlying
Options
(#)
(f)
|
Exercise
Or Base
Price
Of Option
Awards
($/Sh)
(g)
|
Grant
Date
Fair
Value of
Stock
And
Option
Awards
($)
(h)
|
|
Helena
Santos
|
07/01/17
|
0
|
0
|
0
|
25,000
|
3.08
|
39,200
|
|
Anthony
Mitri
|
06/30/18
|
0
|
0
|
0
|
5,000
|
3.15
|
10,000
|
|
Anthony
Mitri
|
12/31/17
|
0
|
0
|
0
|
5,000
|
3.05
|
9,500
|
|
Brookman
March
|
07/01/17
|
0
|
0
|
0
|
7,500
|
3.08
|
11,800
|
|
Robert
Nichols
|
07/01/17
|
0
|
0
|
0
|
7,500
|
3.08
|
11,800
|
|
Karl
Nowosielski
|
07/01/17
|
0
|
0
|
0
|
7,500
|
3.08
|
11,800
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
Option Awards
|
|||||
|
Name
(a)
|
Number
of
Securities
Under-
lying
Unexercised
Options (#)
Exercisable
(b)
|
Number
of
Securities
Under-
lying
Unexercised
Options (#)
Unexerci-
sable
(c)
|
Equity Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options (#)
(d)
|
Option
Exercise
Price
($)
(e)
|
Option
Expiration
Date
(f)
|
|
Helena
Santos
|
0
|
25,000
|
0
|
3.08
|
07/2027
|
|
Anthony
Mitri
|
1,500
|
10,000
|
0
|
3.05-3.27
|
09/2018-06/2028
|
|
Brookman
March
|
7,000
|
7,500
|
0
|
3.71-3.96
|
05/2022-07/2027
|
|
Robert
Nichols
|
2,000
|
7,500
|
0
|
3.50
|
12/2023-07/2027
|
|
Karl
Nowosielski
|
11,333
|
13,167
|
0
|
3.05-4.05
|
02/2024-07/2027
|
There
were no options exercised by officers during fiscal
2018.
Employment Agreements
On
July 1, 2017, the Company entered into a new employment agreement
with Ms. Helena R. Santos through June 30, 2020 with the option to
extend for two additional one-year periods. The agreement provides
for an annual base salary for the fiscal year ended June 30, 2018
of $175,000 with annual increases thereafter of 3% per annum or the
percentage increase, if any, in the Consumer Price Index, whichever
is higher. The agreement also provides for a bonus of $25,000 for
the fiscal year ended June 30, 2018 and on a discretionary basis
thereafter. A bonus of $25,000 and $20,000 was awarded during
fiscal 2018 and fiscal 2017, respectively. The agreement also
provides for the grant of stock options to purchase 25,000 shares
during fiscal year ending June 30, 2018, subject to continued
employment.
On
July 1, 2017, the Company entered into a new employment agreement
with Mr. Robert P. Nichols through June 30, 2020 with the option to
extend for two additional one-year periods. The agreement provides
for an annual base salary for the fiscal year ended June 30, 2018
of $153,000 with annual increases thereafter of 3% per annum or the
percentage increase, if any, in the Consumer Price Index, whichever
is higher. The agreement also provides for a bonus of $10,000 for
the fiscal year ended June 30, 2018 and on a discretionary basis
thereafter. A bonus of $10,000 was awarded in each fiscal 2018 and
fiscal 2017. The agreement also provides for the grant of stock
options to purchase 7,500 shares during fiscal year ending June 30,
2018, subject to continued employment.
On
July 1, 2017, the Company entered into a new employment agreement
with Mr. Brookman P. March through June 30, 2020 with the option to
extend for two additional one-year periods. The agreement provides
for an annual base salary for the fiscal year ended June 30, 2018
of $155,000 with annual increases thereafter of 3% per annum or the
percentage increase, if any, in the Consumer Price Index, whichever
is higher. The agreement also provides for a bonus of $10,000 for
the fiscal year ended June 30, 2018 and on a discretionary basis
thereafter. A bonus of $10,000 was awarded in each fiscal 2018 and
fiscal 2017.
The
agreement also provides for the grant of stock options to purchase
7,500 shares during fiscal year ending June 30, 2018, subject to
continued employment. Mr. March is the husband of Grace S. Morin, a
Director of the Company and of Altamira and a former principal
stockholder of Altamira.
On
July 1, 2017, the Company entered into a new employment agreement
with Mr. Karl Nowosielski through June 30, 2020 with the option to
extend for two additional one-year periods. The agreement provides
for an annual base salary for the fiscal year ended June 30, 2018
of $157,000 with annual increases thereafter of 4% per annum. The
agreement also provides for a bonus of $10,000 for the fiscal year
ending June 30, 2018 and $10,000 for each subsequent year, provided
a minimum 5% increase in the EBITDA of the Torbal Products Division
is achieved. A bonus of $10,000 was awarded in each fiscal 2018 and
fiscal 2017. The agreement also provides for the grant of stock
options to purchase 7,500 shares during fiscal year ending June 30,
2018, subject to continued employment.
On
May 16, 2017, the Company entered into a new employment agreement
with Mr. Anthony Mitri through June 30, 2019 with the option to
extend for one additional year period. The agreement provides for
an annual base salary for the fiscal year ended June 30, 2018 of
$110,000 and $120,000 for the fiscal year ending June 30, 2019 plus
incentive pay based on achievement of certain sales and income
levels of Altamira Instruments, Inc. No incentive pay was earned
for fiscal 2018 or fiscal 2017. The agreement also provides
for the grant of stock options to purchase up to an aggregate of
10,000 shares, 5,000 shares which were granted on December 31,
2017, and 5,000 shares on June 30, 2018.
The
employment agreements for Ms. Santos, Mr. Nichols, Mr. March, Mr.
Nowosielski, and Mr. Mitri contain confidentiality and
non-competition covenants. The employment agreements for all the
named executives above, except Mr. Mitri, contain termination
provisions stipulating that if the Company terminates the
employment other than for death, disability, or cause (as such term
is defined therein), or if the relevant employee resigns for
“good reason” (as such term is defined therein), the
Company shall pay severance payments equal to one year’s
salary at the rate of the compensation at the time of termination,
and continue to pay the regular benefits provided by the Company
for a period of one year from termination. Ms. Santos’
employment agreement also contains a provision that within one year
of a change of control, if either the Company terminates her
employment for any reason other than for “cause” or she
terminates her employment for “good reason”, she will
have the right to receive a lump sum payment equal to three times
the average of her total annual compensation paid for the last five
years immediately preceding such termination, minus
$1.00.
Related Transactions
Mr.
Joseph G. Cremonese, a Director since November 2002, through his
affiliate, Laboratory Innovation Company, Ltd., has been providing
independent marketing consulting services to the Company since
January 1, 2003 pursuant to a consulting agreement expiring
December 31, 2018. The agreement currently provides that Mr.
Cremonese and his affiliate shall render, at the request of the
Company, marketing consulting services for a monthly payment of
$3,600. The agreement contains confidentiality and non-competition
covenants. The Company paid fees of $43,200 pursuant to the
agreement for each of fiscal 2018 and 2017.
Ms.
Grace S. Morin, was elected a Director in December 2007 following
the sale of her 90.36% ownership interest in Altamira to the
Company in November 2006. Up until March 31, 2009, Ms. Morin had
been employed by Altamira as an administrative employee. Since
April 1, 2009, she has provided consulting services on a part-time
basis pursuant to an agreement expiring December 31, 2018 at the
rate of $85 per hour, resulting in payments of $7,000 and $5,200
for fiscal 2018 and fiscal 2017, respectively. The agreement
contains confidentiality and non-competition
covenants.
Section 16(a) Reporting
The
Company believes that, for the year ended June 30, 2018, its
officers, directors and 10% stockholders timely complied with all
filing requirements of Section 16(a) of the Securities Exchange Act
of 1934, as amended.
PROPOSAL 2
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The
Board of Directors, subject to stockholders’ approval,
appointed Nussbaum Yates Berg Klein & Wolpow, LLP (the
“Firm”) as the Company’s independent registered
public accounting firm for the fiscal year ending June 30, 2019.
The Firm has audited the consolidated financial statements of the
Company since 1991. A representative of the Firm is expected to be
present at the Annual Meeting, and will have an opportunity to make
a statement to the stockholders and will be available to respond to
appropriate questions. The ratification of the appointment will
require the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock present in person or represented
by proxy at the Annual Meeting and entitled to vote. Abstentions
will be included in determining the number of shares of Common
Stock present or represented and entitled to vote for purposes of
approval and will have the effect of votes “against”
the proposal. Broker “non-votes” will not be counted in
determining the number of shares of Common Stock present or
represented and entitled to vote to approve the proposal and will
therefore not have the effect of votes either “for” or
“against”.
Stockholder
ratification of the appointment is not required by the
Company’s Certificate of
Incorporation
or By-laws or otherwise. If the stockholders fail to ratify the
appointment, the Board of Directors will reconsider whether to
retain that firm. Even if the appointment is ratified, the Board of
Directors in its discretion may direct the appointment of a
different independent registered public accounting firm at any time
during the year if the Audit Committee, currently the entire Board
of Directors, determines that such a change would be in the best
interest of the Company and its stockholders.
The
following is a description of the fees incurred by the Company for
services by the firm of Nussbaum Yates Berg Klein & Wolpow, LLP
(the “Firm”) during fiscal 2018 and fiscal
2017.
The
Company incurred for the services of the Firm fees of approximately
$70,000 and $69,000 for fiscal 2018 and fiscal 2017, respectively,
in connection with the audit of the Company’s annual
financial statements and quarterly reviews; and $6,000 for each
fiscal year for the preparation of the Company’s corporate
tax returns.
In
approving the engagement of the independent registered public
accounting firm to perform the audit and non-audit services, the
Board of Directors as the Company’s audit committee evaluates
the scope and cost of each of the services to be performed
including a determination that the performance of the non-audit
services will not affect the independence of the firm in the
performance of the audit services.
The Board of Directors unanimously recommends that the stockholders
vote FOR the ratification of the appointment of Nussbaum Yates Berg
Klein & Wolpow, LLP as the independent registered public
accounting firm of the Company for the fiscal year ending June 30,
2019
.
OTHER MATTERS
The
Board of Directors are not aware of any matters other than those
set forth in this proxy statement that will be presented for action
at the Annual Meeting; however, if any other matters properly come
before the Annual Meeting, the persons named as proxies intend to
vote the shares of Common Stock they represent in accordance with
their judgment on such matters.
ADDITIONAL INFORMATION
The
Company's Annual Report to Stockholders for the fiscal year ended
June 30, 2018, includes its Annual Report on Form 10-K for the year
which was filed with the U.S. Securities and Exchange Commission on
September 28, 2018. The Annual Report to Stockholders on Form 10-K
is not part of this proxy material, but is being mailed to
stockholders with this proxy solicitation. Certain information
included herein is incorporated in the Report by
reference.
STOCKHOLDER PROPOSALS
Proposals of
stockholders of the Company intended to be presented at the
Company’s Annual Meeting of Stockholders following the year
ending June 30, 2019 must be received by the Secretary of the
Company for inclusion in the appropriate proxy materials no later
than Augusr 18, 2019.
EXPENSES AND SOLICITATION
The
entire cost of soliciting proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by
officers, directors and regular employees of the Company personally
or by telephone. No additional compensation will be paid to such
persons for any additional solicitations. The Company will also
request securities brokers, custodians, nominees and fiduciaries
who hold shares of Common Stock of record to forward solicitation
material to the beneficial owners of such shares, and will
reimburse them for their reasonable out-of-pocket expenses in
forwarding such soliciting materials.
|
|
By
Order of your Board of Directors,
|
|
|
|
|
|
|
|
/s/
Robert P. Nichols
|
|
|
|
Robert
P. Nichols
|
|
|
|
Secretary
|
|
Bohemia,
New York
November
28, 2018
SCIENTIFIC INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
January 23, 2019
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The
undersigned hereby appoints Joseph G. Cremonese and Grace S. Morin,
and each of them, with full power of substitution, to vote, as a
holder of the common stock, par value $0.05 per share
(“Common Stock”), of Scientific Industries, Inc., a
Delaware corporation (the “Company”), all the shares of
Common Stock which the undersigned is entitled to vote, through the
execution of a proxy with respect to the 2018 Annual Meeting of
Stockholders of the Company (the “Annual Meeting”), to
be held at La Quinta Inn & Suites, 10 Areo Road, Bohemia, New
York, on Wednesday, January 23, 2019 at 11:00 a.m. New York time,
and any and all adjournments or postponements thereof, and
authorizes and instructs said proxies to vote in the manner
directed below.
|
1.
Election of Class A Directors:
|
HELENA
R. SANTOS
|
JAMES
S. SEGASTURE
|
|
|
|
|
|
|
FOR
both nominees
☐
|
WITHHOLD
for both nominees
☐
|
If you
wish your shares voted FOR one of the nominees, draw a line through
that person's name above.
2.
Ratify the appointment of Nussbaum Yates Berg Klein & Wolpow,
LLP, as the Company’s independent registered public
accounting firm for the fiscal year ending June 30,
2019.
|
FOR
☐
|
AGAINST
☐
|
ABSTAIN
☐
|
3. In
their discretion, the proxies are authorized to vote upon such
other business as may properly come before such meeting or
adjournment or postponement thereof.
The
Board of Directors recommends the vote FOR the election of the
named nominees for Class A Directors and proposal 2.
|
THIS PROXY IS CONTINUED ON THE REVERSE SIDE, PLEASE VOTE, SIGN AND
DATE ON REVERSE SIDE AND RETURN PROMPTLY.
|
PROPERLY EXECUTED AND RETURNED PROXY CARDS WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
INSTRUCTIONS TO THE CONTRARY ARE MADE, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF THE NAMED
NOMINEES AND TO APPROVE PROPOSAL NO.
2.
You may
revoke this proxy at any time before it is voted by (i) filing a
revocation with the Secretary of the Company, (ii) submitting a
duly executed proxy bearing a later date or time than the date or
time of the proxy being revoked; or (iii) attending the Annual
Meeting and voting in person. A stockholder’s attendance at
the Annual Meeting will not by itself revoke a proxy given by the
stockholder. (Please sign exactly as the name appears hereon. Joint
owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If a corporation, please sign with full corporate name by the
president or other authorized
officer.
If a partnership, please sign in the partnership name by an
authorized person.)
|
|
Dated:
|
|
|
|
|
|
|
Signature
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature,
if held by joint owners
|
|
PLEASE COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
|
TABLE OF CONTENTS