UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
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Section 240.14a-12
SCIENTIFIC INDUSTRIES, INC.
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SCIENTIFIC INDUSTRIES, INC.
70 Orville Drive
Bohemia, New York 11716
November 12, 2002
Dear Fellow Stockholder:
By now, you should have received proxy materials from Lowell
Kleiman seeking your vote at the upcoming annual meeting scheduled
for November 18, 2002. Your Board believes the solicitation by
Mr. Kleiman is contrary to the best interests of Scientific Industries
and its stockholders. We encourage you to vote the WHITE card and
discard his Blue proxy card thereby supporting management's two
Class C nominees - Joseph G. Cremonese and Roger B. Knowles.
The Board believed that after 27 years of Mr. Kleiman's
leadership - it was time for a change. We believe that our strategy
for the company has a greater chance of substantially growing our
Company with a united Board of Directors. In our opinion, Mr. Kleiman's
reelection would create a division in the Board that would impede the
achievement of our strategic goals. At this crucial time for our
Company, we believe that we must have a Board of Directors that is
"all on the same page".
Our Vision for the Future
Your Board and new management team are committed to implementing,
in a controlled and responsible manner, a growth plan which includes:
* a material expansion of our product line through internal and external
research and development as well as purchase of products to be marketed
under the Scientific Industries label;
* an aggressive and improved marketing program; and
* the pursuit of merger and acquisition opportunities.
Your management realizes that the Company has reached a point where it
can no longer rely solely on its principal product for meaningful growth
and profitability. Indeed, it was the inability of Mr. Kleiman to
implement the goals of growth for the Company that led to his termination
by your Board. Contrary to Mr. Kleiman's beliefs, the Board is prepared
to allocate the necessary resources to accomplish our goals of
significant growth (although there is no assurance that the election of
the Board's two nominees will produce such result).
Your Board, which combined are the owners of approximately 31% of
the outstanding shares (excluding Mr. Kleiman), took these bold steps in
replacing Mr. Kleiman as CEO, as well as not nominating him to the Board,
to give the new management team a chance to implement their strategy
without any interference.
We believe stockholders have an opportunity at this year's annual
meeting to take a big step forward. We strongly urge you to vote for the
company's two nominees at the annual meeting and to vote on the other
proposals in the manner recommended by the Board of Directors. We ask
you to sign, date and return the WHITE proxy card recently mailed to you,
using the provided postage-paid envelope. If you have any questions or
need assistance in completing the proxy card, please call our proxy
solicitor: Greg Tartaglia, D.F. King & Co., Inc., toll free at
(800) 758-5378 or collect at (212) 269-5550.
On Behalf of the Board of Directors
/s/Helena R. Santos
___________________
Helena R. Santos
President and Chief Executive Officer
You are encouraged to read on the reverse side of this letter a comparison
of statements contained in Mr. Kleiman's latest letter and the facts.
Comparison of Kleiman's Statements with the Facts
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In furtherance of our belief set forth in our previous letter that
Mr. Kleiman is employing "distortions", "untruths" and "half-truths" in
pursuit of your vote, we refer you to the following comparison of
statements in his latest letter and the facts:
Mr. Kleiman's statements: Facts:
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1. I was "summarily fired 1. Termination occurred after (i)
by the Company on August first, Kleiman's request on
29, 2002 . . . "; June 11, 2002 for a three-year
extension of the June 30, 2002
expiration date of his contract
at a $15,000 increase to
$175,000 per annum, plus bonus for
performance; (ii) then, his
agreeing to a 30-day extension of
the current contract; (iii) then,
his submission and withdrawal in
June 2002 of his resignation;
(iv) then, his agreement on July 1
to continue employment for a 30-day
period at will; (v) then, his
rejection of the Company's July 31
offer for an incentive motivated
one-year term at $120,000 plus
bonus up to $50,000 based on
profitability; and (vi) then,
the Company's rejection of his
counteroffer of $160,000 per
annum plus bonus.
2. ". . . I had proposed to the Board 2. Kleiman did not submit a
a strategic business plan designed to written business plan during
establish a foundation for the growth his entire tenure as President
of the Company . . ." and Chief Executive Officer
until days prior to the
expiration of his employment
agreement which submission
required substantial revision
and was produced largely through
the efforts of Mr. Cremonese,
who then became one of the
Board's nominees.
3. "...I grew increasingly critical 3. His dismissal was solely due
[during the last 6 years] of my fellow to longstanding disappointment
Board members . . . convinced that with his performance and
this criticism led to my ultimate failure to fulfill prior
dismissal..." plans (all verbal) presented
to the Board.
4. ". . . we were able to achieve 4. Our current ratio as of the
financial stability . . . [the Company] end of each fiscal year
is no longer undercapitalized." during the past 10 years,
hardly indicating "undercapitalized",
ranged from 4.3 to 1 to 7.2 to 1.
He said, however, the available
funds were to be used for an
acquisition program which has
been unsuccessful and resulted
since 1998 in expenditures of
$225,000 (not the $385,000 which
we mistakenly set forth in our
prior letter) but no meaningful
expansion of our product base
and marketing efforts.
5. "direct response to my actions, 5. In consideration of the Plan,
the Company modified the Stock Option each Director stated that
Plan to non-directors." none of the current Directors
will be eligible for option grants
thereunder, but he voted against
such modification when it was
formally adopted.
Please also note in response to his reference to his material financial
interest that the four other Directors, as a group, hold a materially
greater stock and financial interest in the Company.