SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Date of report (Date of earliest event reported): February 27, 2014
SCIENTIFIC INDUSTRIES, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 000-6658 04-2217279
_______________ ____________ __________________
(State or other (Commission (IRS Employer No.)
jurisdiction of File Number)
incorporation)
70 Orville Drive
Bohemia, New York 11716
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(Address of principal executive offices)
(631) 567-4700
______________________________________________________
Registrant's telephone number, including area code
Not Applicable
_____________________________________________________________
(Former name or former address, if changed since last report)
ITEM 1.01
See Item 2.01 for information as to an Asset Purchase Agreement,
dated February 26, 2014.
ITEM 2.01 Completion of Acquisition or Disposition of Assets
On February 26, 2014, the Company acquired the assets related to
the laboratory and pharmacy balance and digital scale business
(the "Digital Scale Business") of Fulcrum Inc., (the "Assignor")
pursuant to an Asset Purchase Agreement (?APA?) with the seller
and its principal stockholders, James Maloy and Karl Nowosielski.
Pursuant to the APA the consideration paid and payable by the
Company to Fulcrum Inc., consisted of $430,000 in cash, 126,449
shares of the Company's Common Stock valued at $427,500 (of which
31,612 shares are held in a one year escrow to secure the seller's
representations and warranties), based on the average of the per
share selling prices of the Common Stock in the last five
transactions prior to the Closing on the Over-the-Counter Market
Bulletin Board and the obligation to pay percentages of net sales
of the related products sold by the Company during the periods
ending June 30, 2014 (8%), June 30, 2015 (9%), June 30, 2016 (10%)
and June 30, 2017 (11%). The Company agreed to provide
Fulcrum "piggy-back" registration rights with respect to the
shares issued.
James Maloy, the Seller?s President, and Karl Nowosielski, the
Chief Operating Officer entered into long term non-competition
agreements with the Company pursuant to which each was paid
$135,000. Maloy and Nowosielski agreed to non-competition
covenants for five and four year periods, respectively. Mr.
Nowosielski also entered into an employment agreement providing
for his employment as President of the Company's new Torbal
Scales Division and the Director of Marketing of the Company
for a three-year term, which may be extended by mutual consent
for an additional two years. His annual salary is to be $140,000,
subject to increases commencing with the second year based on
percentage increases in the Consumer Price Index from the end
of the immediately preceding year's CPI plus such bonuses which
the Board of Directors in its sole and absolute discretion my
authorize. Pursuant to the employment agreement he was granted
at the Closing under the Company's 2012 Stock Option Plan qualified
stock options to purchase 2,000 shares of Common Stock at a price
of $3.66 per share and is to be granted subject to his continued
employment in February 26, 2015, 2016, and 2017 QSOs for 4,000
shares, 5,000 shares and 6,000 shares, respectively. The employment
agreement contains a non-competition covenant, subject to the Company
not being in default thereof for an 12 month period following his last
day of his employment in the United States, Canada, Central and South
America.
The Company also entered into an agreement with the principal
supplier to Fulcrum Inc., to be the Company's sole supplier for the
Digital Scale Products and for the Company to be the exclusive
distributor of the supplier of the products in the United States
and Canada. The termination date of the agreement is March 1,
2020, but may be terminated upon a breach by the other party or by
the supplier if the aggregate purchase price for the goods acquired
is less than $150,000 for 2014 or $180,000 for any subsequent year
during the term. Each party may terminate the agreement upon the
bankruptcy, moratorium, receivership, liquidation or any agreement
between the debtor and its creditors, or any circumstance likely to
affect the party's ability to fulfill its obligations under the
Supply Agreement.
As a result of the stock issuance, the Company's outstanding
shares of Common Stock increased to 1,469,112 as of
February 27, 2014.
Based on unaudited information the sales of the acquired business
for its fiscal years ended June 30, 2012 and June 30, 2013 and the
five months ended November 30, 2013 were $993,300, $1,140,000 and
$417,500, respectively.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
Fulcrum Inc., was unable to provide audited historical financial
statements for its fiscal years ended June 30, 2012 and June 30,
2013 to the Company or the information which would enable
the Company without material expense to have them prepared.
(b) Pro Forma Financial Information
The Company intends to file pro forma financial information under
cover of Form 8-K/A no later than 71 calendar days after the date
this Report was required to be filed.
(c) Exhibits
Exhibit No. Exhibit
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2.1 Copy of Asset Purchase Agreement dated February 26, 2014
among the Company, Fulcrum Inc., James Maloy and Karl
Nowosielski.*
10(b) Copy of Non-Competition Agreement with James Maloy.
10(c) Copy of Non-Competition Agreement with Karl Nowosielski.
10(d) Copy of Registration Rights Agreement.
10(e) Copy of Escrow Agreement.
10(f) Copy of Employment Agreement with Karl Nowosielski.
10(g) Copy of Supply Contract with Axis Sp 3.O.O
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*Disclosure Schedules to this Exhibit have been omitted pursuant
to Item 601(b)(2) of Regulation S-K. The Company agrees to
furnish supplemental copies of any of the omitted Disclosure
Schedules to the SEC upon request.
The lessor of the premises leased by the suppler has agreed to
the assignment to the Company of the lease as of June 30, 2014
for which agreement the Company contributed to the termination
fees.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
SCIENTIFIC INDUSTRIES, INC.
(Registrant)
Date: February 28, 2014
By: /s/ Helena R. Santos
________________________
Helena R. Santos,
President and Chief Executive
Officer