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.
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(1)Title
of each class of securities to which transaction
applies:
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(2)Aggregate
number of securities to which transaction applies:
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(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):
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(4)Proposed
maximum aggregate value of transaction:
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(5)Total
fee paid:
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☐
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.
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(1)Amount
previously paid:
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(2)Form,
Schedule or Registration Statement No.:
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(3)Filing
Party:
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(4)Date
Filed:
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January 6, 2021
Dear Fellow Stockholders:
You
are cordially invited to attend the 2020 Annual Meeting of
Stockholders of Scientific Industries, Inc. which will be held at
11:00 a.m. (New York time) on Friday, February 26, 2021. The safety
of our stockholders is important to us, and given the current
guidance by public health officials surrounding COVID-19 and group
gatherings, this year’s annual meeting will be a virtual only
meeting held completely via telephone and Internet.
Information
concerning the matters to be considered and voted upon at the
Annual Meeting is set out in the attached Notice of 2020 Annual
Meeting of Stockholders and Proxy Statement.
It
is important that your shares be represented at the 2020 Annual
Meeting, regardless of the number of shares you hold and whether or
not you plan to attend the meeting. 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 at the meeting or to attend the
meeting.
Thank
you for your continued support.
|
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Sincerely,
John
A. Moore
Chairman
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SCIENTIFIC INDUSTRIES, INC.
80 Orville Drive, Suite 102
Bohemia, New York 11716
NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS
February 26, 2021
Notice is hereby given that the 2020 Annual Meeting of Stockholders
(the “Annual Meeting”) of Scientific Industries, Inc.,
a Delaware corporation (the "Company"), will be held on Friday,
February 26, 2021, at 11:00 a.m. (New York time). In light of the
COVID-19 Pandemic, for the safety of all our people, including
stockholders, directors, management and all that attend our
meeting, we have determined that the 2020 Annual Meeting will be
held in a virtual meeting format only, via the Internet and by
telephone, with no physical in-person meeting. Stockholders may
participate online by logging in at:
https://global.gotomeeting.com/join/967698701
Or by telephone by dialing
+1 (786)
535-3211
, with access code:
967-698-701.
At
the meeting, stockholders will consider and act upon the
following:
1.
To
elect two Class C 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, 2023 and until the election and
qualification of their respective successors.
2.
To
consider and act upon a proposal to approve an amendment to the
Certificate of Incorporation of the Company to increase the number
of authorized shares of Common Stock of the Company from 7,000,000
to 10,000,000 shares.
3.
To
consider and act upon a proposal to approve an amendment to the
2012 Stock Option Plan of the Company to increase the number of
shares of Common Stock available for issuance thereunder by 943,000
shares, from 307,000 to 1,250,000 shares.
4.
To
ratify the appointment of Nussbaum Berg Klein & Wolpow, CPAs
LLP as the Company’s independent registered public accounting
firm for the fiscal year ending June 30, 2021.
5.
To
transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.
The
foregoing items of business are more fully described in the
accompanying proxy statement.
The
Board of Directors has fixed the close of business on January 6,
2021, 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,
Robert
P. Nichols,
Secretary
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Bohemia,
New York
January
6, 2021
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, BY EMAIL
TO PROXY@SCIENTIFICINDUSTRIES.COM, OR FAX 631-567-5896. IF YOU ARE
A STOCKHOLDER OF RECORD AND YOU ATTEND THE ANNUAL MEETING, YOU MAY
VOTE AT THE MEETING IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
SCIENTIFIC INDUSTRIES, INC.
80 Orville Drive, Suite 102
Bohemia, New York 11716
PROXY STATEMENT
_________________
2020 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 26, 2021
_________________
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 2020 Annual
Meeting of Stockholders (the "Annual Meeting") to be held
virtually, on Friday, February 26, 2021, at 11:00 a.m. (New York
time), and at any adjournments or postponements thereof. In light
of the COVID-19 Pandemic, for the safety of all our people,
including stockholders, directors, management, and all that attend
our meeting, we have determined that the Annual Meeting will be
held in a virtual meeting format only, via the Internet and by
telephone, with no physical in-person meeting to be held.
Stockholders may participate online by logging in at:
https://global.gotomeeting.com/join/967698701
or by telephone by dialing
+1 (786)
535-3211
, with
access
code:
967-698-701.
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, 2023, and until the election and
qualification of their successors; (2) approve the amendment to the
Certificate of Incorporation of the Company; (3) approve the
amendment to the 2012 Stock Option Plan of the Company; (4) ratify
the appointment of Nussbaum Berg Klein & Wolpow, CPAs LLP, as
the Company’s independent registered public accounting firm
for the fiscal year ending June 30, 2021; and (5) 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 January 6, 2021 (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 2,861,263 shares of Common Stock issued and outstanding. Each
share of Common Stock is entitled to one vote.
The presence at the Annual Meeting, virtually, 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, Mr. Joseph G. Cremonese and Mr.
Christopher Cox as Class C Directors of the Company; (2) the
approval of the amendment to the Certificate of Incorporation of
the Company; (3) the approval of the amendment to the 2012 Stock
Option Plan of the Company; and (4) the ratification of the
appointment by the Board of Directors of Nussbaum Berg Klein &
Wolpow, CPAs LLP, as the Company’s independent registered
public accounting firm for the fiscal year ending June 30,
2021.
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 attending the Annual
Meeting and requesting the return of the proxy or by voting during
the meeting. 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 approve the amendment to
the Company’s Certificate of Incorporation, the proposal to
approve the amendment to the Company’s 2012 Stock Option Plan
and 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 (at the Annual Meeting 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. Instructions will be provided during the virtual
meeting on how to vote at the Annual Meeting.
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 January 20, 2021.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of January 6, 2021 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
|
Amount and
Nature of Beneficial Ownership**
|
% of Class
|
|
Roy T. Eddleman, Trustee, Roy T. Eddleman Trust UAD
8-7-2000
Troy Gould PC
1801 Century Park East Suite 1600
Los Angeles, CA 90067
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1,495,686 (1)
|
42.2%
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Christopher Cox
One World Financial Center
New York, NY 10281
|
444,000 (2)
|
14.4%
|
|
Lyon Polk
1585 Broadway 22
nd
Floor
New York, NY 10036
|
444,000 (3)
|
14.4%
|
** 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 or warrants 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 or warrants, but are not deemed outstanding
for the percentage ownership of any other person.
(1)
Based
upon form Schedule 13D filed with the Securities and Exchange
Commission (“SEC”) on June 24, 2020. Includes 683,850
shares issuable upon exercise of warrants.
(2)
Based
upon form Schedule 13D filed with the SEC on June 29, 2020.
Includes 222,000 shares issuable upon exercise of
warrants.
(3)
Based
upon form Schedule 13D filed with the Securities and Exchange
Commission SEC on June 29, 2020. Includes 222,000 shares issuable
upon exercise of warrants.
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, two are Class B Directors, and two are Class C
Directors. At the Annual Meeting, the two Class C Directors are to
be elected to serve until the annual meeting of stockholders with
respect to the fiscal year ending June 30, 2023, and until their
successors are duly elected and qualified. During the fiscal year
ended June 30, 2020 (“fiscal 2020”), the Board held
eight 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 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 Mr. Joseph G. Cremonese and
Mr. Christopher Cox, one of which is currently a Class C director,
as their nominees for election.
Joseph G. Cremonese (age 85)
, 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.
[
Christopher Cox
(age 56), has been a Senior Vice
President of Population Health Investment Co., Inc. since September
2020 and a Co-Founder and Managing Partner of Population Health
Partners LLC since May 2020. Mr. Cox has been a corporate attorney
for over 25 years, most recently at Cadwalader, Wickersham &
Taft LLP, which he joined as a partner in January 2012 and where he
served a co-chair of the global corporate group and a member of the
firm’s management committee until February 2016. From
February 2016 to March 2019, Mr. Cox was Executive Vice President
and Chief Corporation Development Officer of Medicines Company.
Prior to January 2012, Mr. Cox was a partner at Chill Gordon &
Reindel.
Other Directors
Marcus Frampton
(age 40), a
Director since March 2019 is the Chief Investment Officer of the
Alaska Permanent Fund Corporation and serves on the Board of
Directors of Managed Funds Association and Nyrada, Inc., a drug
development company. He served as Director of Investments, Real
Assets and Absolute Return of the Alaska Permanent Fund from 2016
to 2018 and Director of Investments, Private Markets of the Alaska
Permanent Fund from 2012 to 2016 for the Alaska Permanent Fund
Corporation.
John A. Moore
(age 55), a Director since January 2019 and
Chairman of the Board since January 2020, is also the President of
Scientific Bioprocessing, Inc. (“SBI”), a wholly owned
subsidiary of the Company, since January 2020 and had been
providing consulting services to SBI since March 2019. Mr. Moore
serves as Chairman of Nyrada, Inc., a drug development company
since July 2019 and prior to that served as a director with
Noxopharm Limited, a drug development company, and is also the
Chairman of Trialogics, a clinical trial software provider. Mr.
Moore was President, Chief Executive Officer and director of Acorn
Energy, Inc. from 2006 to 2016.
Helena R. Santos
(age 56), a
Director since 2009, has been employed by the Company since 1994,
and has served since August 2002 as its President, Chief Executive
Officer, Chief Financial Officer and Treasurer. She had served as
Vice President, Controller from 1997 and as Secretary from May
2001.
Reinhard
Vogt
(age 64),
a Director since August 2020, served as Executive Vice President
and on the Executive Board of Sartorius Stedim Biotech GmbH for the
10 years prior to his retirement in July 2019.
Stock Ownership
The following table sets forth, as of January 6, 2021, relevant
information as to the shares of Common Stock beneficially owned by
(I) each Director and Director nominee 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, director nominees and
executive officers as a group.
|
Beneficial Owner
|
Number
|
Percentage
|
|
Christopher
Cox
|
444,000
(1)
|
14.4
%
|
|
Joseph
G. Cremonese
|
134,412
(2)
|
4.7
%
|
|
Marcus
Frampton
|
76,360
(3)
|
2.7
%
|
|
John
A. Moore
|
34,786
(4)
|
1.2
%
|
|
Reinhard
Vogt
|
125,000
(5)
|
4.2
%
|
|
Helena
R. Santos
|
38,252
(6)
|
1.3
%
|
|
Robert
P. Nichols
|
27,085
(7)
|
1.0
%
|
|
Karl
D. Nowosielski
|
34,183
(8)
|
1.2
%
|
|
All
directors, director nominees and executive officers as a group (8
persons)
|
914,078
(9)
|
27.7
%
|
(1)
Based upon form Schedule 13D filed with the SEC on June 29, 2020.
Includes 222,000 shares issuable upon exercise of
warrants.
(2)
102,412 shares are owned jointly with his wife,
7,000 shares are owned by his wife, and 25,000 shares are issuable
upon exercise of
options.
(3) 725 shares are owned by Mr. Frampton. Mr. Frampton has voting
power over 77,085 shares of Common Stock.
(4) Includes 12,586 shares issuable upon exercise of
options.
(5) Represents 125,000 shares issuable upon exercise of
options.
(6) Includes 17,000 shares issuable upon exercise of
options.
(7)
Includes 7,500 shares issuable upon exercise of
options.
(8)
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.
(9) Includes 433,586 shares issuable upon exercise of
options.
Board Committees
The Company has two committees – The Compensation Committee
and the Audit Committee. The Compensation Committee is comprised of
Mr. Frampton. The Audit Committee is comprised of the entire Board
of Directors.
Directors’ Compensation and Options
DIRECTORS’ COMPENSATION
For the Year Ended June 30, 2020
|
Name
(a)
|
Fees
Earned or Paid in Cash
($)
(b)
|
Stock
Awards ($)
(c)
|
Option
Awards($)
(d)
|
Non-Equity
Incentive Plan Comp-ensation
($)
(e)
|
Changes
in Pension Value and Non-qualified Deferred Compens-ation
Earnings
($)
(f)
|
Non-qualified
Deferred Comp-ensation Earnings
($)
(g)
|
All
Other
Comp-
ensation
($)
(h)
|
Total
($)
(i
)
|
|
Joseph
G.Cremonese
|
36,700
|
0
|
0
|
0
|
0
|
0
|
76,200
(1)
|
112,900
|
|
Marcus
Frampton
|
24,800
|
0
|
0
|
0
|
0
|
0
|
0
|
24,800
|
|
Grace
S. Morin
|
6,400
|
0
|
0
|
0
|
0
|
0
|
8,400
(2)
|
14,800
|
|
James
S. Segasture
|
16,800
|
0
|
0
|
0
|
0
|
0
|
00
|
16,800
|
|
John
F.F. Watkins
|
24,800
|
0
|
0
|
0
|
0
|
0
|
0
|
24,800
|
(1)
Represents amount paid to him and his affiliate pursuant to a
consulting agreement (see Related Transactions below).
(2)
Represents compensation received for her administrative services as
a consultant for Altamira through March 2020, upon termination of
her consulting agreement. Ms. Morin’s directorship terminated
in January 2020.
The Company paid each Director who is not an employee of the
Company or a subsidiary a quarterly retainer fee of $2,200 and a
meeting fee of $2,000 for each meeting attended for each of fiscal
2020 and fiscal 2019. In addition, the Company reimburses each
Director for out-of-pocket expenses incurred in connection with
attendance at board meetings. From July 2019 through January 2020,
Mr. Cremonese, and from February 2020 through June 2020, Mr. Moore,
as Chairman of the Board, each received an additional fee of $1,700
per month. During fiscal 2020, total director compensation to
non-employee Directors aggregated $418,000, including the
consulting fees paid to Mr. Cremonese’s affiliate, Mr. Moore,
and Ms. Morin. On June 23, 2020, Mr. Cremonese was awarded 20,000
options in connection with his consulting agreement. Prior to that,
Mr. Cremonese, had 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 below for the employment history of Ms. Santos and Mr.
Moore.
Robert P. Nichols
(age 59), 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.
Karl D. Nowosielski
(age 42),
is the President of the Torbal Products Division of the Benchtop
Laboratory Equipment operations and Director of Marketing for the
Company. He was Vice President of Fulcrum, Inc. (the seller of the
Torbal Products Division assets to the Company) from 2004 until
February 2014.
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% of which is based on the
achievement by the Company of its financial and personnel goals
taking into account the amount of the income or loss of the Company
during the relevant 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, 2020 and 2019.
SUMMARY COMPENSATION TABLE
|
Name and
Principal Position
(a)
|
Fiscal Year
(b)
|
Salary
($)
(c)
|
Bonus
($)
(d)
|
Stock Awards
($)
(e)
|
Option Awards
($)
(f)
|
Non- Equity
Incentive Plan Comp- ensation
($)
(g)
|
Non- Qualified
Deferred Compen-sation Earnings ($)
(h)
|
Changes in Pension
Value and Non-Qualified Deferred Compensation Earnings
|
All Other Comp-
ensation
($)
(i)
|
Total
($)
(j)
|
|
Helena R.
Santos,
|
2020
|
185,700
|
50,000
|
0
|
13,100
(1)
|
0
|
0
|
0
|
9,400
(5)
|
258,200
|
|
CEO, President,
CFO
|
2019
|
180,300
|
0
|
0
|
13,100
(1)
|
0
|
0
|
0
|
4,900
(5)
|
198,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Moore,
|
2020
|
145,000
|
50,000
|
0
|
36,000
(2)
|
0
|
0
|
0
|
28,900
(6)
|
259,900
|
|
Chairman, President
of SBI
|
2019
|
40,000
|
0
|
0
|
12,000
(2)
|
0
|
0
|
0
|
9,800
(6)
|
61,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert P.
Nichols,
|
2020
|
162,300
|
10,000
|
0
|
3,900
(3)
|
0
|
0
|
0
|
6,700
(5)
|
177,900
|
|
President of Genie
Division and Corporate Secretary
|
2019
|
157,600
|
0
|
0
|
3,900
(3)
|
0
|
0
|
0
|
6,800
(5)
|
168,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karl D.
Nowosielski,
|
2020
|
169,800
|
10,000
|
0
|
6,300
(4)
|
0
|
0
|
0
|
7,200
(5)
|
193,300
|
|
President of Torbal
Division and Director of Marketing
|
2019
|
163,300
|
10,000
|
0
|
7,400
(4)
|
0
|
0
|
0
|
6,400
(5)
|
187,100
|
(1)
The
amounts represent compensation expense for the stock options
granted on July 1, 2017 valued utilizing the Black-Scholes-Merton
options pricing model, disregarding estimates of forfeitures
related to service-based vesting considerations. The option was
valued at a total of $39,200 of which $13,100 was expensed in each
of fiscal 2020 and fiscal 2019. On June 23, 2020, the Company
awarded Ms. Santos options to purchase 215,366 shares of Common
Stock, subject to amendment of the Company’s 2012 Stock
Option Plan.
(2)
The
amounts represent consulting expense for the stock options granted
from March 2019 through June 2020 valued at $3,000 per month
utilizing the Black-Scholes-Merton options pricing model, of which
$36,000 was expensed in fiscal 2020 and $12,000 in fiscal
2019.
(3)
The
amounts represent compensation expense for the July 1, 2017 stock
options granted valued utilizing the Black-Scholes-Merton options
pricing model, disregarding estimates of forfeitures related to
service-based vesting considerations. The option was valued at a
total of $11,800, of which $3,900 was expensed in each of fiscal
2020 and 2019.
(4) T
he
amounts represent compensation expense for the stock options
granted on July 1, 2017, and February 26, 2017, valued utilizing
the Black-Scholes-Merton options pricing model, disregarding
estimates of forfeitures related to service-based vesting
considerations. The stock options were granted as part of his
employment agreement. The options were valued at a total of
$11,800, and $10,500, respectively, of which $6,300 and $7,400 was
expensed in fiscal 2020 and 2019, respectively.
(5)
The
amounts represent the Company’s matching contribution under
the Company’s 401(k).
(6) The amounts represent director and chairman fees paid to Mr.
Moore through June 30, 2020. On July 1, 2020 Mr. Moore became an
employee of the Company and thereafter has not been and will not be
paid any director fees.
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR ENDED JUNE 30,
2020
|
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
($/Sh)
(g)
|
Grant
Date
Fair
Value
of
Stock
And
Option
Awards
(h)
|
|
John
A. Moore
|
07/01/19-06/30/20
|
0
|
0
|
0
|
5,881
|
5.35-11.30
|
36,000
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
Option
Awards
|
|||||
|
Name
(a)
|
Number
of
Securities
Under-
lying
Unexercised
Options
(#)
Exercisable
(b)
|
Number
of
Securities
Under-
lying
Unexercised
Options
(#)
Unexerci-
sable
(c)
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
(d)
|
Option
Exercise
Price
($)
(e)
|
Option
Expiration
Date
(f)
|
|
Helena
Santos
|
8,666
|
8,334
|
0
|
3.08
|
07/2022-12/2027
|
|
John
Moore
|
1,902
|
10,684
|
0
|
4.50-11.30
|
07/2029-06/2030
|
|
Robert
Nichols
|
5,000
|
2,500
|
0
|
3.08
|
12/2023-07/2027
|
|
Karl
Nowosielski
|
22,000
|
2,500
|
0
|
3.05-4.05
|
02/2024-07/2027
|
OPTION EXERCISES AT FISCAL YEAR-END
|
Name
(a)
|
Number
of
Shares
Acquired on Exercise
(#)
|
Value
Realized on Exercise
($)
|
|
Helena
Santos
|
8,000
|
26,560
|
|
Robert
Nichols
|
2,000
|
4,880
|
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, with the
first one-year option exercised through June 30, 2021. 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 provided for a
bonus of $25,000 for the fiscal year ended June 30, 2018 and on a
discretionary basis thereafter. A bonus of $50,000 was granted for
fiscal 2020 and none in fiscal 2019. The agreement also provided
for a grant of options to purchase 25,000 shares of the
Company’s stock which were granted during the year ended June
30, 2018. No options were granted in fiscal 2019. On June 23, 2020
the Board of Directors authorized to be granted to Ms. Santos
options to purchase 215,366 shares of the Company’s stock,
subject to amendment of the Company’s 2012 Stock Option
Plan.
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, with the
first one-year option exercised through June 30, 2021. The
agreement provided 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 provided for a
bonus of $10,000 for the fiscal year ended June 30, 2018 and on a
discretionary basis thereafter. A bonus of $5,000 was granted for
fiscal 2020 and none in fiscal 2019. The agreement also provided
for a grant of options to purchase 7,500 shares of the
Company’s stock which were granted during the year ended June
30, 2018. No options were granted in fiscal 2019 or fiscal
2020.
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, with the
first one-year option exercised through June 30, 2021. The
agreement provided 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 provided 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 during fiscal 2020 and fiscal 2019. The agreement also
provided for a grant of options to purchase 7,500 shares of the
Company’s stock which were granted during the year ended June
30, 2018. No options were granted in fiscal 2019 or fiscal
2020.
On July 1, 2020, the Company entered into a new employment
agreement with Mr. John A. Moore through June 30, 2023 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, 2021 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
discretionary bonuses as determined by the Board of Directors or
Compensation Committee. A bonus of $50,000 was granted for fiscal
2020 and none in fiscal 2019. The
agreement also provides for a grant of options to
purchase 215,366 shares of the Company’s stock, subject to
amendment of the Company’s 2012 Stock Option Plan. Mr. Moore
had been providing consulting services to the Company’s
wholly owned subsidiary, Scientific Bioprocessing, Inc., since
March 2019 pursuant to a consulting agreement through June 30,
2020, at which time he became an employee of the Company. The
agreement provided for a monthly cash fee of $10,000 through August
2019 and $12,500 from September 2019 through June 2020 plus the
monthly issuance of stock options valued at $3,000 for each month
that services were provided. The agreement contained
confidentiality and non-competition covenants. The Company paid
fees of $40,000 and granted options with a value of $12,000 for
fiscal 2019.
The employment agreements for Ms. Santos, Mr. Nichols, Mr. Moore,
and Mr. Nowosielski contain confidentiality and non-competition
covenants. The employment agreements for Ms. Santos, Mr. Nichols
and Mr. Nowosielski 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.
The employment agreement for Mr. Moore contains 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 Mr. Moore resigns for “good
reason” (as such term is defined therein), the Company shall
pay severance payments equal to either one year’s salary at
the rate of the compensation at the time of termination if Mr.
Moore is terminated within 12 months of the date of his agreement
or six months’ salary if Mr. Moore is terminated after 12
months of the date of his agreement, continue to pay the regular
benefits provided by the Company for the period equal to the length
of the severance payments and pay a pro rata portion of any bonus
achieved prior to such termination of employment. 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., provides
consulting services to the Company under a consulting agreement
expiring on December 31, 2021 at a monthly retainer of $9,000. The
agreement contains confidentiality and non-competition covenants.
The Company paid fees of $76,200 and $43,200 for fiscal 2020 and
fiscal 2019, respectively.
Effective July 20, 2020, the Company entered into a consulting
agreement with Societät Reinhard and Noah Vogt AG GmbH and Mr.
Vogt (collectively, the “Consultant”) for a two
(2)-year period, unless terminated by either party with 90
days’ prior written notice. Mr. Vogt is a member of the Board
of Directors. The consulting agreement provides for the Consultant
to furnish consulting services as to the strategic operations of
SBI. The Consultant is paid a monthly fee of 5,000 euros, an annual
bonus of up to 2% of net sales of SBI over mutually agreed upon
sales targets plus the issuance of 125,000 stock options of the
Company, which were issued in July 2020. The agreement shall
automatically renew at the end of the term for additional one (1)
year periods, subject to earlier termination by either party upon
90 days’ prior written notice, and incorporates
non-competition and confidentiality clauses.
Section 16(a) Reporting
The Company believes that, for the year ended June 30, 2020, 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
PROPOSAL TO APPROVE AMENDMENT TO THE CERTIFICATE OF
INCORPORATION
The Board of Directors, subject to stockholders’ approval,
approved an amendment to the Company’s Certificate of
Incorporation to increase the number of authorized shares of Common
Stock from 7,000,000 to 10,000,000 shares and directed that the
amendment be submitted to the stockholders for approval at the
Annual Meeting. The proposed amendment is attached as Exhibit A to
this Proxy Statement.
Our Board of Directors believes that the amendment of the
Company’s Certificate of Incorporation is in the best
interest of the Company and its stockholders as it will provide the
Company with available shares that can be issued for various
corporate purposes, including acquisitions, stock dividends, stock
splits, stock options, convertible debt and equity financings,
which will enable the Company to promptly take advantage of market
conditions and the availability of favorable opportunities without
the delay and expense associated with holding a special meeting of
stockholders.
Increase in Authorized Shares
The amendment to Article FOUR of the Company’s Certificate of
Incorporation is intended to increase the number of authorized
shares of Common Stock from 7,000,000 to 10,000,000 shares. The
additional shares of Common Stock to be authorized under the
Certificate of Incorporation will have rights identical to the
currently outstanding Common Stock of the Company.
The increase in authorized shares will allow for an increase in the
number of shares made available under the Company’s 2012
Stock Option Plan. Additionally, the Company may issue shares of
Common Stock in connection with a future financing. The increase
will provide the Company’s Board of Directors with the
ability to issue additional authorized shares of stock without
further vote of the stockholders of the Company, except as provided
under Delaware corporate law or under the rules of any national
securities exchange on which shares of stock of the Company may be
listed. Under the Company’s Certificate of Incorporation, the
Company’s stockholders do not have preemptive rights to
subscribe to additional securities which may be issued by the
Company, which means that current stockholders do not have a prior
right to purchase any new issuance of capital stock of the Company
in order to maintain their proportionate ownership of the
Company’s stock.
The issuance of any additional shares of the Company’s Common
Stock would both dilute the equity interest and the earnings per
share of existing holders of the Company’s Common Stock. Such
dilution may be substantial depending upon the number of shares
issued. The newly authorized shares will have voting and other
rights identical to those of the currently issued Common Stock.
However, the increase could have a dilutive effect on the voting
power of existing stockholders.
The authorization of additional Common Stock, under certain
circumstances, may also have an anti-takeover effect. For example,
it may be possible for the Company’s Board of Directors to
delay or impede a takeover or transfer of control of the Company by
causing such additional authorized shares to be issued to holders
who might side with the Company’s Board of Directors in
opposing a takeover bid that the Board of Directors determines is
not in the best interests of the Company and its stockholders. The
increased authorized capital therefore may have the effect of
discouraging unsolicited takeover attempts and thereby limit the
opportunity for stockholders to dispose of their shares at the
higher price generally available in takeover attempts or that may
be available under a merger proposal. However, our Board of
Directors is not aware of any attempt to take control of the
Company and the Company’s Board of Directors did not propose
the increase in the Company’s authorized capital with the
intent that it be utilized as a type of anti-takeover
device.
The Board of Directors unanimously recommends that the stockholders
vote FOR the proposal to amend the Certificate of
Incorporation.
PROPOSAL 3
PROPOSAL TO APPROVE AMENDMENT TO THE 2012 STOCK OPTION
PLAN
General
The Board of Directors, subject to stockholders’ approval,
approved an amendment to the Company’s 2012 Stock Option Plan
(the “2012 Plan”) to increase the number of shares
available for issuance thereunder by 943,000 shares, from 307,000
to 1,250,000 shares, and directed that the amendment be submitted
to the stockholders for approval at the Annual Meeting. The
proposed amendment is attached as Exhibit B to this Proxy
Statement.
The amendment to the 2012 Plan is intended to ensure that the
Company
can continue to provide an incentive
to our key employees, directors, and consultants by enabling them
to share in our future growth. If approved by the stockholders, all
of the additional shares will be available for grant as incentive
stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”), or as
nonqualified stock options as defined in the 2012 Plan. If the
stockholders do not approve the amendment, no shares will be added
and the 2012 Plan will only have 22,414 available for grant as of
the record date.
The 2012 Plan was adopted on February 12, 2012, and approved by the
stockholders at the 2011 Annual Meeting of Stockholders. 157,000
shares of the Company’s Common Stock were initially approved
and available for awards under the 2012 Plan. The 2012 Plan was
subsequently amended to increase the number of shares available for
issuance thereunder to 307,000. The purpose of the 2012 Plan was to
create incentives which are designed to motivate eligible
employees, directors, and consultants to put forth maximum effort
toward the success and growth of the Company, and to enable the
Company to attract and retain experienced individuals who by their
position, ability and diligence are able to make important
contributions to the Company’s success.
As of January 6, 2021 the number of shares currently available for
grant is 22,414. Our Board does not believe that the number of
shares available for issuance under the 2012 Plan is sufficient in
light of our current strategy for growth. The increase represents
approximately 32% of the outstanding total number of shares of the
Company’s Common Stock as of January 6, 2021. After giving
effect to such increase, the number of shares of Common Stock
currently subject to outstanding awards (including those in Note 9
of Stock Ownership section), and shares currently available for
issuance (22,414) pursuant to future awards will represent
approximately 41.5% of our total outstanding shares of Common
Stock.
Summary of the 2012 Plan
The following summary of the provisions of the 2012 Plan is
qualified in its entirety by reference to the text of the 2012
Plan.
Options Authorized:
The 2012 Plan permits, as did the 2002 Plan, the Company to grant
both incentive stock options (“Incentive Stock
Options”) within the meaning of Section 422 of the Code, and
other options which do not qualify as Incentive Stock Options
(“Non-Qualified Options”).
The aggregate number of shares of Common Stock reserved for
issuance under the 2012 Plan is 307,000, which includes 57,000
shares which, as of November 18, 2011, were reserved for issuance
upon the exercise of outstanding stock options granted pursuant to
the 2002 Plan. To the extent that any of the stock options
previously granted under the 2002 Plan expire or terminate for any
reason without having been exercised, then stock options
exercisable for that same number of shares of Common Stock may be
granted under the 2012 Plan. Accordingly, to the extent any of the
outstanding options granted under the 2002 Plan are exercised, the
number of shares for which options may be granted under the 2012
Plan will be reduced.
Unless earlier terminated by the Board of Directors, the 2012 Plan
(but not outstanding options) will terminate on February 10, 2022,
after which no further awards may be granted under the 2012 Plan.
The 2012 Plan is administered by the full Board of Directors or, at
the Board’s discretion, by a committee of the Board (the
“Committee”) consisting of at least two
persons.
Recipients of options under the 2012 Plan (“optionees”)
are to be selected by the Board or the Committee. Unless otherwise
provided by the Board or the Committee, options shall be
exercisable in three equal, cumulative installments commencing
respectively on the first, second, and third anniversary of the
date of grant. The purchase price will be based on the fair market
value of a share of Common Stock on the date of grant as determined
pursuant to Section 422 (c)(7) of the Internal Revenue Code (the
“Code”). The Board or the Committee determines the
terms of each option grant including (1) the purchase price of
shares subject to options, (2) the dates on which options become
exercisable; (3) the expiration date of each option (which may not
exceed ten years from the date of grant except for an incentive
stock option granted to an employee who is also at least a 10%
stockholder five years from the date of grant) and (4) any
restriction to which the options are subject. The minimum per share
purchase price for Incentive Stock Options and options granted to
any director of the Company or a subsidiary who is not an employee
of the Company or subsidiary (“Director”) is the fair
market value or 110% of the fair market value for an Incentive
Stock Option granted to an employee who owns at least 10% of the
outstanding shares of Common Stock.
Optionees will have no voting, dividend or other rights as
stockholders with respect to shares of Common Stock covered by
options prior to becoming the holders of record of such shares. The
purchase price upon the exercise of options may be paid in cash, by
certified bank or cashier’s check or by tendering stock held
by the optionee or by cashless exercise through a broker. The total
number of shares of Common Stock available under the 2012 Plan, and
the number of shares and per share exercise price under outstanding
options will be appropriately adjusted in the event of any
reorganization, merger or recapitalization of the Company or
similar corporate event.
The Board of Directors may at any time terminate the 2012 Plan or
from time to time make such modifications or amendments to the 2012
Plan as it may deem advisable and the Board or Committee (other
than with respect to options held by a Director) may adjust,
reduce, cancel and regrant an unexercised option if the fair market
value declines below the exercise price subject to Section 409A of
the Code. In no event may the Board, without the approval of
stockholders, amend the 2012 Plan to increase the maximum number of
shares of Common Stock for which options may be granted under the
2012 Plan or change the class of persons eligible to receive
options under the 2012 Plan, or change the manner of determining
the option prices, or extend the period during which an option may
be granted or exercised.
Subject to limitations set forth in the 2012 Plan, the terms of
option agreements will be determined by the Board or Committee, and
need not be uniform among optionees.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief discussion of the Federal income tax
consequences of transactions under the 2012 Plan. This discussion
is not intended to be exhaustive and does not describe state or
local tax consequences.
Incentive Stock Options:
No taxable income is realized by the optionee upon the grant or
exercise of an Incentive Stock Option. If Common Stock is issued to
an optionee pursuant to the exercise of an Incentive Stock Option,
and if no disqualifying disposition of such shares is made by such
optionee within two years after the date of grant or within one
year after the transfer of such shares to such optionee, then (1)
upon sale of such shares, any amount realized in excess of the
option price will be taxed to such optionee as a long-term capital
gain and any loss sustained will be a long-term capital loss, and
(2) no deduction will be allowed to the optionee’s employer
for Federal income tax purposes.
Except as noted below for corporate “insiders,” if the
Common Stock acquired upon the exercise of an Incentive Stock
Option is disposed of prior to the expiration of the holding period
described above, generally (1) the optionee will realize ordinary
income in the year of disposition in an amount equal to the excess
(if any) of the fair market value of such shares at exercise (or,
if less, the amount realized on the disposition of such shares)
over the option price paid for such shares and (2) the Company will
be entitled to deduct such amount for Federal income tax purposes
if the amount represents an ordinary and necessary business
expense. Any further gain (or loss) realized by the optionee will
be taxed as short-term or long-term capital gain (or loss), as the
case may be, and will not result in any deduction by the
Company.
Subject to certain exceptions for disability or death, if an
Incentive Stock Option is exercised more than three months
following termination of employment, the exercise of the option
will generally be taxed as the exercise for a Non-Qualified
Option.
For purposes of determining whether an optionee is subject to any
alternative minimum tax liability, an optionee who exercises an
Incentive Stock Option generally would be required to increase his
or her alternative minimum taxable income, and compute the tax
basis in the stock so acquired, in the same manner as if the
optionee had exercised a Non-Qualified Option. Each optionee is
potentially subject to the alternative minimum tax. In substance, a
taxpayer is required to pay the higher of his/her alternative
minimum tax liability or his/her “regular” income tax
liability. As a result, a taxpayer has to determine his potential
liability under the alternative minimum tax.
Non-Qualified Options:
Except as noted below for corporate “insiders,” with
respect to Non-Qualified Options: (1) no income is realized by the
optionee at the time the option is granted; (2) generally, at
exercise, ordinary income is realized by the optionee in an amount
equal to the difference between the option price paid for the
shares and the fair market value of the shares, if unrestricted, on
the date of exercise, (and the Company is generally entitled to a
tax deduction in the same amount), subject to applicable tax
withholding requirements; and (3) at sale, appreciation (or
depreciation) after the date of exercise is treated as either
short-term or long-term capital gain (or loss) depending on how
long the shares have been held.
Special Rules Applicable To Corporate Insiders:
As a result of the rules under Section 16(b) of the Exchange Act,
“insiders” (as defined in the Exchange Act), depending
upon the particular exemption from the provisions of Section 16(b)
utilized, may not receive the same tax treatment as set forth above
with respect to the grant and/or exercise of options. Generally,
insiders will not be subject to taxation until the expiration of
any period during which they are subject to the liability
provisions of Section 16(b) with respect to any particular option.
Insiders should check with their own tax advisers to ascertain the
appropriate tax treatment for any particular option.
The Board of Directors unanimously recommends that the stockholders
vote FOR the proposal to amend the 2012 Stock Option
Plan.
PROPOSAL 4
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Board of Directors, subject to stockholders’ approval,
appointed Nussbaum Berg Klein & Wolpow, CPAs LLP (the
“Firm”) as the Company’s independent registered
public accounting firm for the fiscal year ending June 30, 2021.
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 during fiscal 2020 and fiscal
2019:
The Company incurred for the services of the Firm fees of
approximately $77,500 and $73,000 for fiscal 2020 and fiscal 2019,
respectively, in connection with the audit of the Company’s
annual consolidated financial statements and quarterly reviews; and
$7,500 and $7,500 for the preparation of the Company’s
corporate tax returns for fiscal 2020 and fiscal 2019,
respectively.
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 Berg Klein
& Wolpow, CPAs LLP as the independent registered public
accounting firm of the Company for the fiscal year ending June 30,
2021
.
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, 2020, 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, 2020. 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, 2021 must be received by the Secretary of the
Company for inclusion in the appropriate proxy materials no later
than September 20, 2021.
EXPENSES AND SOLICITATION
The entire cost of soliciting proxies will be borne by the Company.
In addition to the use of the mail, 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.
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By
Order of your Board of Directors,
Robert
P. Nichols
Secretary
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Bohemia, New York
January 6, 2021
Exhibit A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION OF SCIENTIFIC INDUSTRIES,
INC.
(Pursuant to Sections 228 and 242 of the
General Corporation Law of the State of Delaware)
Scientific Industries, Inc. (the
“
Corporation
”), a corporation organized and existing
under and by virtue of the provisions of the General Corporation
Law of the State of Delaware (the “
DGCL
”),
DOES
HEREBY CERTIFY:
FIRST
: The Board of Directors of the Corporation (the
“
Board
”) duly adopted at a meeting proposing and
declaring advisable the amendment to the Certificate of
Incorporation of the Corporation filed on July 2, 1954, as amended
by that certain Certificate of Amendment filed on May 18,
1955,
as further amended by
that certain Certificate of Amendment filed on October 8, 1957, as
further amended by that certain Certificate of Amendment filed on
November 1, 1968, as further amended by that certain Certificate of
Amendment filed on October 19, 1970, as further amended by that
certain Certificate of Amendment filed on March 1, 1984, as further
amended by that certain Certificate of Amendment filed on January
28, 1985, and as further amended by that certain Certificate of
Amendment filed on December 19, 1986 (collectively, the
“
Certificate
”), and directing that such amendments be
submitted to the stockholders of the Corporation for
consideration:
RESOLVED
, that Article FOUR of the Certificate shall be
amended and restated in its entirety as
follows:
“FOUR:
The number of shares which the Corporation is authorized to issue
is Ten Million (10,000,000) shares, and the par value of each of
such shares is five cents ($0.05).”
SECOND
: That the foregoing amendment was
duly adopted in accordance with Sections 228 and 242 of the
DGCL.
IN WITNESS
WHEREOF
, the Corporation has
caused this Certificate of Amendment to be executed by a duly
authorized officer of the Corporation, on __________,
2020.
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SCIENTIFIC INDUSTRIES, INC.
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By:
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Name:
Helena R. Santos
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Title:
President, Chief Executive
Officer,
Chief
Financial Officer and Treasurer
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Exhibit B
AMENDMENT NO. 2
TO
SCIENTIFIC INDUSTRIES, INC.
2012 STOCK OPTION PLAN
(Effective as of [●], 2020)
The Scientific Industries, Inc. 2012 Stock Option
Plan (as may be amended from time to time, the
“
Plan
”) is hereby amended as
follows:
1.
Section 2 of the Plan is hereby amended and
restated in its entirety to read as follows:
“2.
Shares Subject to Plan. Options may be granted to
purchase up to One Million One Hundred Ninety Three Thousand
(1,193,000) shares of the common stock, par value $0.05 per share
(the “
Common Stock
”), of the Company. In addition, to the
extent that options previously granted under the 2002 Stock Option
Plan of the Company (the “
Prior Plan
”) expire or terminate for any reason
without having been exercised, then options exercisable for that
same number of shares of Common Stock, up to a maximum of
Fifty-Seven Thousand (57,000) shares, may be granted pursuant to
the Plan. For the purpose of this Section 2, the number of shares
purchased upon the exercise of an Option shall be determined
without giving effect to the use by a Participant of the right set
forth in Section 7(C) hereof to deliver shares of Common Stock in
payment of all or a portion of the option price or the use by a
Participant of the right set forth in Section 11(C) hereof to cause
the Company to withhold from the shares of the Common Stock
otherwise deliverable to him or her upon the exercise of an Option,
shares of Common Stock in payment of all or a portion of his or her
withholding obligation arising from such exercise. If any Options
expire or terminate for any reason without having been exercised in
full, new Options may thereafter be granted to purchase the
unpurchased shares subject to such expired or terminated Options.
Subject to the provisions of Section 10, the maximum number of
shares of Common Stock which may be issued in accordance with the
provisions of this Section 2 shall be One Million Two Hundred Fifty
Thousand (1,250,000) shares.”
2.
All
capitalized terms used but not otherwise defined herein shall have
the meanings assigned to them in the Plan. Except as expressly
amended hereby, the terms and conditions of the Plan shall remain
in full force and effect. This amendment shall be governed by the
laws of the State of New York without giving effect to the
conflicts of law principles thereof. This amendment shall be
effective as of the date first set forth above.
[END OF DOCUMENT]
SCIENTIFIC INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
February 26, 2021
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The
undersigned hereby appoints John A. Moore and Helena R. Santos, 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 2020 Annual Meeting of
Stockholders of the Company (the “Annual Meeting”), to
be held virtually, on Friday, February 26, 2021 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.
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1.
Election of Class C Directors:
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JOSEPH
CREMONESE
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CHRISTOPHER
COX
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FOR
both nominees
☐
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WITHHOLD
for both nominees
☐
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If you
wish your shares voted AGAINST one of the nominees, draw a line
through that person's name above.
2.
Approve the amendment to the Certificate of Incorporation of the
Company to increase the number of authorized shares of Common Stock
of the Company from 7,000,000 to 10,000,000 shares.
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FOR
☐
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AGAINST
☐
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ABSTAIN
☐
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3.
Approve an amendment to the 2012 Stock Option Plan of the Company
to increase the number of shares of Common Stock available for
issuance thereunder by 943,000 shares, from 307,000 to 1,250,000
shares.
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FOR
☐
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AGAINST
☐
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ABSTAIN
☐
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4.
Ratify the appointment of Nussbaum Berg Klein & Wolpow,
CPA’s LLP, as the Company’s independent registered
public accounting firm for the fiscal year ending June 30,
2021.
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FOR
☐
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AGAINST
☐
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ABSTAIN
☐
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5. 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 C Directors and proposals 2, 3, and
4.
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THIS PROXY IS CONTINUED ON THE REVERSE SIDE, PLEASE VOTE, SIGN AND
DATE ON REVERSE SIDE AND RETURN PROMPTLY.
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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, 3, and
4.
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.)
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Dated:
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Signature
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Signature,
if held by joint owners
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PLEASE COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
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