UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
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))
[X]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Section 240.14a-12
SCIENTIFIC INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)
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SCIENTIFIC INDUSTRIES, INC.
(letterhead)
November 30, 2010
Dear Fellow Stockholders:
You are cordially invited to attend the 2010 Annual Meeting of
Stockholders of Scientific Industries, Inc. which will be held at 11:00
a.m. (New York time) on Friday, January 7, 2011 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 2010 Annual
Meeting of Stockholders and Proxy Statement.
It is important that your shares be represented at the 2010 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.
Sincerely,
/s/ Joseph G. Cremonese
_______________________
Joseph G. Cremonese
Chairman
_______________________________________________________________________
SCIENTIFIC INDUSTRIES, INC.
70 Orville Drive
Bohemia, New York 11716
_____________
NOTICE OF 2010 ANNUAL MEETING OF STOCKHOLDERS
JANUARY 7, 2011
Notice is hereby given that the 2010 Annual Meeting of Stockholders
(the "Annual Meeting") of Scientific Industries, Inc., a Delaware
corporation (the "Company"), will be held on Friday, January 7, 2011,
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 the Class B 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, 2013 and
until 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, 2011.
3. 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 November 30,
2010, 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.
By Order of your Board of
Directors,
/s/ Robert P. Nichols
_____________________
Robert P. Nichols
Secretary
Bohemia, New York
November 30, 2010
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.
70 Orville Drive
Bohemia, New York 11716
PROXY STATEMENT
_________________
2010 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 7, 2011
_________________
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 2010 Annual Meeting of Stockholders (the "Annual Meeting") to
be held at La Quinta Inn & Suites, 10 Aero Road, Bohemia, New York, 11716,
on Friday, January 7, 2011, 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,
2013, and the election and qualification of their respective 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, 2011; 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 30, 2010 (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 1,196,577 shares of Common Stock issued
and 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, Grace S. Morin and
Joseph I.
Kesselman as 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, 2011.
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 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 6, 2010.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of November 30, 2010 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 and Address of Shares Beneficially Percent of
Beneficial Owner Owned** Class***
___________________ ___________________ __________
James S. Segasture* 177,250 (1) 14.8
Lowell A. Kleiman 139,581 (2) 11.7
16 Walnut Street
Glen Head, NY 11545
Spectrum Laboratories, Inc. 124,736 (3) 10.4
18617 Broadwick Street
Rancho Dominquez, CA 90220
Grace S. Morin* 87,783(4) 7.3
Joseph I. Kesselman* 64,120 (5) 5.3
Brookman P. March* 87,783 (6) 7.3
______________
* His or her address is c/o Scientific Industries, Inc., 70 Orville
Drive, Bohemia, New York 11716.
** Beneficial ownership, as such term is used herein, is determined
in accordance with Rule 13d-3(d)(1) promulgated under the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") and includes
voting and/or investment power with respect to shares of
Common Stock of the Company. Unless otherwise indicated, the named
person possesses sole voting and investment power with respect to the
shares. The shares shown include shares issuable pursuant to options
held by the named person that may be exercised within 60 days of the
date indicated above.
*** 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) Includes 4,000 shares issuable upon exercise of options and 493
shares owned by his wife.
(2) Based on information reported on Schedule 13D filed with the
Securities and Exchange Commission on October 30, 2002.
(3) Based on information reported on Schedule 13G filed with the
Securities and Exchange Commission on June 15, 2009.
(4) Includes 4,833 shares issuable upon exercise of options held
by her husband.
(5) Includes 4,000 shares issuable upon exercise of options, 735
shares of Common Stock owned jointly with his wife, and 16,000 shares
owned by his wife.
(6) Represents 82,950 shares owned by his wife, Grace S. Morin and
4,833 shares issuable upon exercise of options.
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. The number of Directors
constituting the Board was reduced from seven to six upon the resignation
in February 2010 as Director of Mr. Arthur M. Borden. Two are Class A
Directors, two are Class B Directors and two are Class C Directors. At
the Annual Meeting, the two Class B Directors are to be elected to serve
until the annual meeting of stockholders with respect to the fiscal year
ending June 30, 2013, and until their successors are duly elected and
qualified. 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 nominees 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. Grace S. Morin and Mr.
Joseph I. Kesselman, both currently Class B Directors, as their
nominees for election.
Grace S. Morin (age 62), 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 its Pittsburgh, Pennsylvania
facility as a full-time employee from its acquisition through March 31,
2009 and since that date as a part-time consultant to Altamira. Prior
to December 2003, she was a general business consultant for two years,
and prior to that a member of senior management of a designer of gas
flow environmental engineered products for approximately four years.
Ms. Morin's husband, Mr. Brookman P. March is President of Altamira.
Joseph I. Kesselman (age 85), a Director since 1961 and Chairman of
the Board from August 2002 until his resignation in February 2006, has
been for more than five years a consultant to various corporations,
including Nuclear and Environmental Protection Inc., of which he had
been a director, and Perrot Duval Management, S.H., a Swiss management
company, and its subsidiary.
Other Directors
_______________
Class A Directors:
Helena R. Santos (age 46), a Director since 2009, has been employed
by the Company since 1994, and has served since August 2002 as its
President, Chief Executive Officer,
Treasurer and Chief Financial Officer. Prior thereto, she had served
from 1997 as Vice President, Controller and from May 2001 as Secretary.
Ms. Santos was an internal auditor with a major defense contractor
from March 1991 to April 1994. She had been previously employed in
public accounting.
James S. Segasture (age 74), a Director since 1991, has been a
private investor since February 1990.
Class C Directors:
Joseph G. Cremonese (age 74), a Director since November 2002 and
Chairman of the Board since February 2006, has been a marketing
consultant to the Company since 1996. He has been since 1991, President
of Laboratory Innovation Company, Ltd., which is a vehicle for
technology transfer and consulting services for companies, including
the Company, engaged in the production and sale of products for science
and biotechnology. Since March 2003, Mr. Cremonese has been a director
of and consultant to Proteomics, Inc., a producer of recombinant
proteins for medical research. Prior to 1991, he had been employed by
Fisher Scientific, the largest U.S. distributor of laboratory equipment.
Roger B. Knowles (age 85), a Director since 1965, is retired. During
the past five years he had been, although not currently, involved in
liquidating various real estate and manufacturing concerns.
Stock Ownership
_______________
The following table sets forth, as of November 30, 2010, 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 Number Percentage*
________________ ______ ___________
Joseph G. Cremonese 56,597(1) 4.6%
Joseph I. Kesselman 64,120(2) 5.3%
Roger B. Knowles 4,000(3) .3%
Grace S. Morin 87,783(4) 7.3%
James S. Segasture 177,250(5) 14.7%
Helena R. Santos 15,779 1.3%
Robert P. Nichols 21,446(6) 1.8%
Brookman P. March 87,783(7) 7.3%
All current directors and executive 426,975(8) 34.5%
officers as a group (8 persons)
(1) 36,597 shares are owned jointly with his wife and 20,000
shares are issuable upon exercise of options.
(2) Includes 4,000 shares issuable upon exercise of options, 735
shares of Common Stock owned jointly with his wife, and 16,000 shares
owned by his wife.
(3) Represents shares issuable upon exercise of options.
(4) Includes 4,833 shares issuable within 60 days of the Record
Date upon exercise of
options held by her husband, Mr. March.
(5) Includes 4,000 shares issuable upon exercise of options and
493 shares owned by his
wife.
(6) Includes 5,000 shares issuable upon exercise of options.
(7) Represents 82,950 shares owned by his wife, Ms. Morin, and
833 shares issuable within 60 days of the Record date upon exercise
of stock options.
(8) Includes 41,833 shares issuable upon exercise of options.
Board Committees
________________
Joseph I. Kesselman and James S. Segasture have been the sole members
of the Company's Stock Option Committee, the members of which serve at
the discretion of the Board. The Committee administers the Company's
2002 Stock Option Plan ("2002 Plan").
Grace S. Morin, Joseph I. Kesselman, and James S. Segasture have been
the members of the Company's Compensation Committee serving at the
discretion of the Board. The Committee administers the Company's
compensation policies.
The Board of Directors acts as the Company's Audit Committee.
The Company does not have a financial expert on the Audit
Committee as defined by the Securities and Exchange Commissions;
however, the Company believes that the members of the Audit Committee
have sufficient knowledge to properly evaluate and analyze the
Company's financial statements.
Meetings
________
During the fiscal year ended June 30, 2010 ("fiscal 2010"), the
Board of Directors held five meetings, at each of which all persons
who were Directors at the time were present.
Directors' Compensation and Options
___________________________________
DIRECTORS' COMPENSATION
For the Year Ended June 30, 2010
Non-
Equity
Fees Incentive
Earned Plan
or Paid Stock Option Comp-
in Cash Awards Awards ensation
Name ($) ($) ($) ($)
(a) (b) (c) (d) (e)
_____________________________________________________________________
Arthur M.
Borden(1) 8,500 0 0 0
Joseph G.
Cremonese 23,000 0 8,300(2) 0
Joseph I.
Kesselman 11,000 0 0 0
Roger B.
Knowles 11,000 0 0 0
Grace S.
Morin 11,000 0 0 0
James S.
Segasture 11,000 0 0 0
____________________________________________________________________
DIRECTORS' COMPENSATION (CONTINUED)
Changes
in
Pension
Value and
Non- Non-
qualified qualified
Deferred Deferred All
Compens- Comp- Other
ation ensation Comp-
Earnings Earnings ensation Total
Name ($) ($) ($) ($)
(a) (f) (g) (h) (i)
____________________________________________________________________
Arthur M. 0 0 8,500
Borden(1)
Joseph G.
Cremonese 0 36,000(3) 67,300
Joseph I.
Kesselman 0 0 11,000
Roger B.
Knowles 0 0 11,000
Grace S.
Morin 0 32,700(4) 43,700
James S.
Segasture 0 0 11,000
____________________________________________________________________
(1) The late Mr. Borden resigned from the Board of Directors in
February 2010.
(2) Represents consulting expense recorded in fiscal 2010 for stock
options granted in fiscal 2010 computed in accordance with ASC No. 718
utilizing the Black-Scholes options pricing model (see "Related
Transactions").
(3) Represents amount paid to his affiliate pursuant to a marketing
consulting agreement (see "Related Transactions").
(4) Represents compensation as a consultant received for her
administrative services for Altamira (See "Related Transactions").
The Company pays each Director who is not an employee of the Company
or a subsidiary a quarterly retainer fee of $1,500 and $1,000 for each
meeting of the Company's Board of Directors attended. In addition, the
Company reimburses each Director for out-of-pocket expenses incurred in
connection with attendance at board meetings in the amount of $50 or
the Director's itemized expenses, whichever is greater. Mr. Cremonese,
in his capacity as Chairman of the Board since February 2006, receives
an additional fee of $1,000 per month. During fiscal 2010, the fees to
non-employee Directors aggregated $152,500, including the consulting
fees paid to Mr. Cremonese's affiliate, and to Ms. Morin.
Pursuant to the Company's 1992 Stock Option Plan ("1992 Plan")
options to purchase 3,000 shares of Common Stock at the then fair
market value were granted to each non-employee director who was on the
Board of Directors on the first business day of each March, in 1993,
1994, 1995, and 1996, namely Messrs. Borden, Kesselman, Knowles and
Segasture. In addition, in December 1997 and through December 2001 the
Board of Directors granted under the 1992 Plan annually options to
purchase 4,000 shares of Common Stock to each of them exercisable at
the fair market value on the date of grant. Accordingly, as of June 30,
2010, the Company had granted under the 1992 Plan to the foregoing four
individuals options to purchase an aggregate of 128,000 shares of Common
Stock, or options to purchase 32,000 shares of Common Stock to each.
The fair market value per share of Common Stock on the dates of grant
ranged from $0.50 for options granted in 1993 to $2.40 in 2001. As of
June 30, 2010, options under the 1992 Plan with respect to 94,000 shares
had been exercised by them and with respect to 22,000 shares had expired.
In addition, they had exercised options with respect to 48,000 shares
granted to them prior to the adoption of the 1992 Plan.
Under the Company's 2002 Plan, none of the Directors at the time of
the adoption by the Board of Directors of the 2002 Plan (subsequently
approved by stockholders) have been eligible to receive option grants
thereunder. Mr. Joseph G. Cremonese who was elected a Director at the
2002 Annual Meeting of Stockholders, was granted on December 1, 2003 a
ten-year option to purchase 5,000 shares of Common Stock at the fair
market value of $1.35 per share, on February 20, 2007 a ten-year option
to purchase 5,000 shares of Common Stock at the fair market value of
$3.10 per share, and on September 17, 2009 a five-year option to purchase
10,000 shares at the fair market value of $1.88 per share. The $1.88
option had a total fair value (as determined using the Black-Scholes
option-pricing model) of $9,300 of which $8,300 was recognized as
consulting expense in fiscal 2010. None of the options have been
exercised to date.
Executive Officers and Key Personnel
____________________________________
Ms. Helena R. Santos and Mr. Robert P. Nichols are the executive
officers of the Company. Mr. Brookman P. March is President and
Director of Sales and Marketing of the Company's subsidiary, Altamira
Instruments, Inc.
See "Election of Directors" for the employment history of Ms. Santos.
Robert P. Nichols (age 49), employed by the Company since February
1998, has served since August 2002 as Executive Vice President.
Previously, he had been since May 2001 Vice President, Engineering.
Prior to joining the Company, Mr. Nichols was an Engineer Manager
with Bay Side Motion Group, a precision motion equipment manufacturer
from January 1996 to February 1998.
Brookman P. March (age 65) has been Director of Sales and Marketing
since November 30, 2006 and President since July 2008 of Altamira, which
conducts the Catalyst Research Instruments operation. He had been Vice
President and a Director of Altamira from December 2003 until it was
acquired by the Company. Mr. March is the husband of Ms. Morin, a
Director.
The executive officers of the Company are elected by the Board of
Directors of the corporation for which they serve and hold office
until their respective successors are elected and qualified or until
his or her earlier resignation or removal. None of the officers need
to be Directors, and more than one office may be held by the same
person. There is no arrangement or understanding between any executive
officer and any person other than the Company regarding election as
an officer.
The Compensation Committee reviews and recommends to the Board of
Directors the compensation to be paid to each executive officer. In
making a determination, the Committee and the Board give material
consideration to the Company's results of operations and financial
condition, competitive factors, and the Company's resources. 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 to
retain qualified personnel.
In May 2010, The Company entered into new employment agreements
with Ms. Santos and Mr. Nichols related to their employment in their
current positions. The agreements extended the terms of employment
to June 30, 2011 and increased their annual base salaries commencing
January 1, 2010 to $135,000 from $130,000 for Ms. Santos and to
$123,600 from $120,000 for Mr. Nichols. Bonuses may be awarded to
either or both at the discretion of the Board of Directors, as to
services for the six months ending June 30, 2010 and for the fiscal
year ending June 30, 2011. Under the previous agreements, a bonus
of $5,000 was paid during the fiscal year ended June 30, 2010 to
each of Ms. Santos and Mr. Nichols.
Mr. March is employed by Altamira pursuant to an employment agreement
dated as of October 1, 2010, which amended his employment agreement
dated November 30, 2006. The new agreement provides for his employment
through June 30, 2012 at a base salary of $121,900 per annum for the
12 months ending November 30, 2010 and $128,000 per annum thereafter
through June 30, 2012. Pursuant to the prior agreement, the Company,
with Mr. March's consent, granted him on December 2, 2009 options to
purchase 6,500 shares at $3.07 per share of which 4,000 options were
in payment of a salary increase of $6,900 and 2,500 options were in
payment of a bonus. The agreement also provides for a bonus at the
discretion of Altamira's Board of Directors for services for each of
the following periods: 12 months ending November 30, 2010, the seven
months ending June 30, 2011, and the 12 months ending June 30, 2012.
The 2,500 shares option was valued at $4,100 using the Black-Scholes
options pricing model in accordance with ASC No. 718.
Each of the foregoing employment agreements contains confidentiality
and non-competition covenants. Each contains termination provisions
stipulating that if the Company terminates during the term of the
agreement the employment of the employee other than for death,
disability, or cause (defined as (i) conviction of a felony or (ii)
gross neglect or gross misconduct (including conflict of interest) in
the carrying out of his or her duties under the agreement, the Company
shall pay severance payments equal to one year's salary at the rate
of the compensation at the time of termination, and continue to pay
his or her regular benefits provided by the Company for a period of
two years from termination.
Mr. March may terminate his agreement for any reason upon 90-day
prior notice, but will remain obligated under his non-competition
and confidentiality covenants.
Increases in the annual compensation provided by their employment
agreements were based on the factors set forth above and the increase
in sales and income under their management.
The following table summarizes all compensation paid by the Company
to each of its executive officers for the fiscal years ended June 30,
2010 and 2009.
SUMMARY COMPENSATION TABLE
Non- Non-
Equity Qualified
Incentive Deferred
Name Plan Comp-
and Stock Option Comp- ensation
Principal Fiscal Salary Bonus Awards Awards ensation Earnings
Position Year ($) ($) ($) ($) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h)
______________________________________________________________________
Helena R. 2010 131,500 5,000 0 0 0 0
Santos, 2009 125,000 0 0 0 0 0
CEO,
President,
CFO
______________________________________________________________________
Robert P. 2010 121,300 5,000 0 0 0 0
Nichols, 2009 117,500 0 0 0 0 0
Exec.
V.P.
______________________________________________________________________
Brookman 2010 116,900 0 0 8,100(2) 0 0
P. March, 2009 112,900 0 0 0 0 0
Director
of Sales
and
Marketing,
and
President of
Altamira
______________________________________________________________________
SUMMARY COMPENSATION TABLE (CONTINUED)
______________________________________________________________________
Changes
in
Pension
Value
and Non-
Qualified All
Name Deferred Other
and Comp- Comp-
Principal Fiscal ensation ensation Total
Position Year Earnings ($) ($)
(a) (b) (i) (j)
______________________________________________________________________
Helena R. 2010 0 2,600(1) 139,100
Santos, 2009 0 2,500(1) 127,500
CEO,
President,
CFO
______________________________________________________________________
Robert P. 2010 0 2,450(1) 128,700
Nichols, 2009 0 2,350(1) 119,850
Exec.
V.P.
______________________________________________________________________
Brookman 2010 0 4,700(1) 129,700
P. March, 2009 0 4,500(1) 117,400
Director
of Sales
and
Marketing,
and
President of
Altamira
______________________________________________________________________
(1) The amount represents the Company's matching contribution under the
Company's 401(k) Plans.
(2) The amount represents compensation expense recorded in fiscal 2010
for stock options granted in fiscal 2010 computed in accordance with ASC
No. 718 utilizing the Black-Scholes options pricing model, disregarding
estimates of forfeitures related to service-based vesting considerations.
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR ENDED JUNE 30, 2010
_______________________________________________________________________
Estimated All Other All Other
Future Stock Option
Payouts Estimated Awards: Awards:
under Future Number Number
Non- Payment of Shares of
Equity Under of Securities
Grant Incentive Equity Stock Underlying
Name Date Plan Plan Units(#) Options (#)
(a) (b) Awards Awards (c) (d)
_______________________________________________________________________
Brookman 12/02/09 0 0 0 2,500
P. March 12/02/09 0 0 0 4,000
_______________________________________________________________________
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR ENDED JUNE 30, 2010 (CONTINUED)
_______________________________________________________________________
Grant
Date
Exercise Fair
or Base Value of
Price of Stock
Option and
Grant Awards Option
Name Date ($/Sh) Awards
(a) (b) (e) (f)
_______________________________________________________________________
Brookman 12/02/09 3.07 $7,675
P. March 12/02/09 3.07 $12,280
_______________________________________________________________________
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
_______________________________________________________________________
Option Awards
_______________________________________________________________________
Number Equity
Number of Incerntive
of Securities Plan Awards:
Securities Under- Number of
Under- lying Securities
lying Un- Unexercised Underlying Option
exercised Options(#) Unexercised Exercise Option
Options(#) Unexerci- Unearned Price Expiration
Name Exercisable sable Options(#) ($) Date
(a) (b) (c) (d) (e) (f)
______________________________________________________________________
Robert P.
Nichols 5,000 0 0 1.25 10/2012
______________________________________________________________________
Brookman P. 2,331 4,169 4,169 3.07 11/2014
March
_____________________________________________________________________
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (CONTINUED)
______________________________________________________________________
Stock Awards
______________________________________________________________________
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Number of Value of
Market Unearned Unearned
Number Value Shares, Shares,
of Shares of Shares Units or Units or
or Units or Units Other Other
of Stock of Stock Rights Rights
That That That That
Have not Have not Have not Have not
Vested Vested Vested Vested
Name (#) ($) (#) ($)
(a) (g) (h) (i) (j)
______________________________________________________________________
Robert P.
Nichols 0 0 0 0
______________________________________________________________________
Brookman P. 0 0 0 0
March
______________________________________________________________________
No executive officer exercised any options during the fiscal year
ended June 30, 2010.
Related Transactions
____________________
Mr. Joseph G. Cremonese, who was elected a Director in November
2002, has been providing through his affiliate, Laboratory Innovation
Company, Ltd., independent marketing consulting services to the Company
for approximately ten years. The services have been rendered since
January 1, 2003 pursuant to a consulting agreement which was amended
and restated in March 2007 and extended in September 2009 through
December 31, 2010. The agreement as amended and restated currently
provides that Mr. Cremonese and his affiliate shall render, at the
request of the Company, marketing consulting services of at least 60,
but not more than 96, days per year at the rate of $600 per day with a
monthly payment of $3,000, with the Company's obligation reduced to the
extent the consulting services are less than 60 days for the 12 month
period. The agreement contains confidentiality and non-competition
covenants. The Company paid fees of $36,000 thereunder for each of
fiscal 2010 and fiscal 2009.
Ms. Grace S. Morin, was elected a Director in December 2006 upon
the sale of her 90.36% ownership interest in Altamira to the Company
in November 2006. Under the purchase agreement Ms. Morin is to receive
(in addition to $361,000 in cash paid and an aggregate of 112,950 shares
of the Company's Common Stock issued at the time of acquisition) an
amount equal to a 90.36% share of 5% of net sales of Altamira for each
of five designated periods, subject to possible adjustment. The first
period ran from December 1, 2006 through June 30, 2007, the second, third,
and fourth periods were the 12 months ended June 30, 2008, June 30, 2009,
and June 30, 2010 and the fifth period runs from July 1, 2010 to November
30, 2010. Accordingly, Ms. Morin received contingent consideration of
$59,700 for the first period, $131,000 for the second period, $97,000
for the third period, and $126,400 for the fourth period. She also
received in fiscal 2008 $36,400 as reimbursement for the Company's
treatment of the transaction as a purchase of assets for tax purposes.
Since the acquisition in November 2006, and until March 31, 2009,
Altamira employed Ms. Morin as an administrative employee. Since
April 1, 2009, she has provided Altamira consulting services on a
part-time basis pursuant to an agreement expiring March 31, 2011 at
the rate of $85 per hour. The agreement contains confidentiality
and non-competition covenants. Altamira paid her $32,700 and $10,400,
respectively, for the consulting services for fiscal 2010 and fiscal 2009.
Section 16(a) Reporting
_______________________
The Company believes that, for the year ended June 30, 2010, 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, 2011. 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 2010 and fiscal 2009:
Approximately $52,500 and $47,600, respectively, in connection with
the audit of the Company's annual financial statements and quarterly
reviews; and $5,000 and $4,000, respectively, for the preparation of
the Company's corporate tax returns. There were no other audit related
fees or other fees paid to the firm for the two fiscal years.
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, 2011.
OTHER MATTERS
The Board of Directors is 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, 2010, includes its Annual Report on Form 10-K for the year
which was filed with the U.S. Securities and Exchange Commission on
September 27, 2010. 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.
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, 2011 must be received by the Secretary of the Company for
inclusion in the appropriate proxy materials no later than August 7,
2011.
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 30, 2010
________________________________________________________________________
SCIENTIFIC INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
January 7, 2011
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Helena R. Santos and James S.
Segasture, 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 2010
Annual Meeting of Stockholders of the Company (the "Annual Meeting"), to be
held at La Quinta Inn & Suites, 10 Aero Road, Bohemia, New York, on
Friday, January 7, 2011 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.
The Board of Directors recommends the vote FOR the election of the
nominees for Class B Directors named below and proposal 2.
1. Election of Class B Directors:
GRACE S. MORIN JOSEPH I. KESSELMAN
FOR both nominees ( ) WITHHOLD for both nominees ( )
If you do not wish your shares voted FOR one of the nominees,
draw a line through that person's name above.
2. Proposal to ratify the appointment of the independent registered public
accounting firm, Nussbaum Yates Berg Klein & Wolpow, LLP, as the Company's
independent registered public accounting firm for the fiscal year ending
June 30, 2011.
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.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE, PLEASE VOTE, SIGN AND DATE ON
REVERSE SIDE AND RETURN PROMPTLY.
__________________________________________________________________________
(BACK OF CARD)
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 EACH OF THE
NAMED NOMINEES A DIRECTOR AND APPROVAL OF PROPOSAL NO. 2 LISTED ON THE
REVERSE SIDE OF THIS CARD.
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
PLEASE COMPLETE, SIGN, DATE __________________________________
AND RETURN THE PROXY CARD Signature, if held by joint owners
PROMPTLY USING THE
ENCLOSED ENVELOPE.