UNITES 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))
[ ]Definitive Proxy Statement
[X]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Section 240.14a-11(c)or
Section 240.14a-12
SCIENTIFIC INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
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[ ] Fee paid previously with preliminary materials.
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SCIENTIFIC INDUSTRIES, INC.
70 ORVILLE DRIVE
BOHEMIA, NEW YORK 11716
TEL. (631)567-4700
SUPPLEMENT TO PROXY STATEMENT
FOR THE
2002 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 18, 2002
The Proxy Statement, dated October 9, 2002, previously furnished to
stockholders of Scientific Industries, Inc. (the "Company") for the
solicitation by the Board of Directors of proxies to be voted at the
Annual Meeting of Stockholders of the Company to be held at the
Princeton Club, 15 West 43rd Street, New York, New York 10036 on
Monday, November 18, 2002 at 10:30 A.M. (New York Time) is hereby
supplemented as follows:
Nominees for Directors
The Board of Directors of the Company has nominated Messrs. Joseph G.
Cremonese and Roger B. Knowles, a current Class C Director, for
election as Class C Directors of the Company at the Annual Meeting
to serve until the Annual Meeting of Stockholders with respect to
the fiscal year ending June 30, 2005 and the due election and
qualification of their respective successors. Each nominee has
consented to being named in the Proxy Statement and to serve as
Director if elected. Mr. Lowell A. Kleiman, the other current
Class C Director, has advised the Board of Directors that he
intends to oppose the election of one of the nominees of the Board
and to seek election of himself as a Class C Director.
Joseph G. Cremonese (age 67), has been a marketing consultant
to the Company since 1996. Mr. Cremonese had been from 1974 to
1984 employed by Fisher Scientific (the Company's principal
distributor) where he was Vice President, Director of Corporate
Planning, and Chairman of the New Products Committee. He has been
since 1985 President of Laboratory Innovation Company, Ltd., a
Pennsylvania corporation, which is a vehicle for technology transfer
and consulting services for companies engaged in the production and
sale of products for science and biotechnology.
Roger B. Knowles (age 77), a Director since 1965, is semi-retired.
During the past five years, he was President of various corporations,
including Conductive Systems, Inc., a manufacturer of EMI and RFI
shielding material, and G.H. Realty Company, a real-estate company,
and a director of Ionic, Inc., an investment company. In June, 1994,
Mr. Knowles, as President of a privately-held company, was fined
$10,000 by the Superior Court, Bristol County, Massachusetts, for
violations of Massachusetts laws and regulations with respect to
storing hazardous waste without a valid license; storage of hazardous
waste in a manner that could endanger health or the environment;
and transferring hazardous waste to a person without a valid license.
Within the past two years, Mr. Cremonese and his wife jointly
acquired 500, 1,000 and 1,000 shares of Common Stock of the Company
on November 2, 2000, December 20, 2000 and July 9, 2002, respectively.
None of the Directors acquired or sold any shares of Common Stock
within the past two years, other than upon exercise of options by:
Mr. Knowles on February 7, 2002 with respect to 12,000 shares, Mr.
Segasture on October 3, 2001 with respect to 28,000 shares,
Mr. Borden on October 19, 2001 with respect to 7,000 shares and
September 20, 2002 with respect to 3,000 shares and Mr. Kesselman
on January 8, 2002 with respect to 4,000 shares.
Unless otherwise specified by the stockholder the enclosed proxy
dated and executed will be voted for the election of each of
Mr. Cremonese and Mr. Knowles as a Director unless such nominee
or nominees is no longer available for election. In the latter
event, which is not now anticipated, the proxies will be voted for
a substitute nominee designated by the Board of Directors.
The Board of Directors recommends that stockholders vote FOR the
election of Messrs. Joseph G. Cremonese and Roger B. Knowles to
the Board of Directors.
Proposal to Approve The 2002 Stock Option Plan.
The Proxy Statement previously distributed by the Board of
Directors stated that the Board of Directors unanimously
recommends that stockholders vote their shares FOR the proposal
to approve the 2002 Stock Option Plan (the "2002 Plan").
Mr. Lowell A. Kleiman, who the Board of Directors has not
proposed for reelection as a Class C Director, maintains he
abstained from approving the Board resolution adopting the
Plan. The other four Directors have confirmed their vote in
favor. Mr. Kleiman has stated that he intends to solicit
stockholders to vote against approval of the 2002 Plan.
The 1992 Plan authorized options with respect to 300,000 shares,
of which options to purchase 113,333 shares were exercised and
options to purchase 161,000 shares are subject to options
outstanding as of October 30, 2002. Under the 1992 Plan,
options to purchase 70,000 shares were granted to and exercised
by Mr. Kleiman (options granted to him to purchase an additional
10,000 shares expired unexercised) and options to purchase an
aggregate of 32,000 shares were granted in annual installments
over a period of almost nine years to each of the four current
nonemployee directors (an aggregate of 128,000 shares, of which
options to purchase 34,000 shares have been exercised). Each
of the four nonemployee directors received in February 1992,
prior to the adoption of the 1992 Plan, options to purchase
12,000 shares, all of which have been exercised.
In furtherance of the position expressed by all the Directors
with respect to a proposal by Mr. Joseph I. Kesselman, Chairman
of the Board at the meeting of the Board held on September 26, 2002
at which the 2002 Plan was adopted, the Board of Directors, with
Mr. Kleiman dissenting, at a subsequent meeting adopted a
resolution providing that no options may be granted under the
2002 Plan to any of the current Directors of the Company, none
of whom is an officer or employee of the Company. This would not
prohibit the grant of options under the 2002 Plan to other
nonemployee Directors. The 2002 Plan, as set forth on Schedule
A to the Proxy Statement, is modified accordingly.
The 2002 Plan provides authority for the grant of options with
respect to 100,000 shares, which authority increases only to the
extent that outstanding options under the 1992 Plan with respect
to an aggregate of 161,000 shares expire or terminate without
being exercised.
The 2002 Plan, as modified, was adopted by the Board with the
view of providing the Company with an effective means of inducing
and retaining persons to enter the employ or service of the Company,
including service as a Director of the Company. It is incumbent
for a publicly-held corporation with the limited cash resources
of the Company to have the ability to offer in lieu of cash
obligations, options for such purposes. In the event the 2002
Plan is not adopted options granted in June 2002 on Mr. Kleiman's
recommendation to purchase an aggregate of 7,000 shares to two
key employees (including Mr. Robert Nichols with respect to 5,000
shares) will be nullified.
The affirmative vote of holders of a majority of the votes cast is
required to approve the proposal to approve the 2002 Stock Option
Plan.
The Board of Directors recommends that stockholders vote their
shares FOR the proposal to approve the 2002 Stock Option Plan.
Independent Auditors
The affirmative vote of holders of shares of Common Stock
representing a majority of the votes cast is required to ratify
the appointment of Nussbaum Yates & Wolpow, P.C. as the independent
auditor of the Company for its financial statements for the fiscal
year ending June 30, 2003.
Stockholder Proposal
On October 30, 2002, the Company learned that Mr. Kleiman
intends to submit the following proposal at the Annual Meeting
(the "Kleiman Stockholder Proposal").
RESOLVED, that the stockholders of Scientific Industries, Inc.
demand that the Board of Directors adopt a policy (a) requiring
stockholder approval of all grants of stock options to nonemployee
directors of the Company and (b) prohibiting the aggregate number
of options granted under any stock option plan to nonemployee
directors as a group to be in excess of 20% of the total number
of options authorized under such plan.
To require that any option granted to an independent director be
subject to the approval of the stockholders will create a material
impediment to the ability of the Company to attract and maintain
qualified and experienced persons to accept appointment as
independent directors of the Company, particularly in view of the
substantial and increasing federal, state and NASD legal and
administrative requirements, burdens and risks to which an
independent director is and will be subject. In these
circumstances, it is reasonable to expect that a qualified
independent person will expect to receive a consideration
commensurate with his or her responsibilities as an inducement
to accept such appointment and well might not accept an offer
if part of the consideration is subject to stockholder approval.
The ability to reduce the Company's cash exposure in such event
by offering options as part of the consideration is expected to
be a meaningful cash saving measure for the Company. Furthermore,
the Kleiman Stockholder Proposal, if adopted, could be deemed by
potential optionees who are willing to be independent directors
of the Company as making illusory any grant in that there could
be a motivation for nonapproval of the grant by stockholders
should the purpose of the grant be realized - the increase in
the market value of the Company's stock over the exercise price
from the date of grant to the date of proposed ratification by
the stockholders.
The four current independent directors will not be eligible to
receive grants of options under the 2002 Plan and the Board of
Directors does not currently anticipate a need to grant options
to independent directors with respect to more than 20% of the
shares subject to the 2002 Plan. In view of the foregoing,
however, the Board of Directors does not believe it in the best
interests of stockholders to limit its authority to grant
options to independent directors.
Approval of the Kleiman Stockholder Proposal will require the
affirmative vote of the holders of shares of Common Stock
representing a majority of the votes cast.
The Board of Directors recommends that stockholders vote AGAINST
approval of the Kleiman Stockholder Proposal.
Expenses and Solicitation
The Company has engaged D.F. King & Co. Inc. to assist in
the solicitation of proxies for a fee of $10,000 plus
reimbursement of its expenses and has agreed to indemnify it
against certain liabilities and expenses, including certain
liabilities under the federal securities laws. The Company
will 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.
In addition to the use of the mails, proxies also may be
solicited by officers, directors and regular employees of the
Company, personally or by telephone. The Company estimates
that its cost of soliciting proxies will be approximately $40,000,
of which approximately $20,000 has been incurred to date. The
Company estimates that approximately 20 persons will be engaged
in its solicitation of proxies. The Company has engaged
Continental Stock Transfer & Trust Company for independent
tabulation of the votes for an approximate fee of $2,500.
Voting Information
"Broker non-votes" with respect to a particular matter are
shares held in street name that are not voted on the matter
because either no instructions are given by the beneficial
owner as to how to vote the shares or the broker is not
permitted under applicable rules because of the subject
matter of the proposal to vote such shares, but whose
shares are present on at least one matter. Such shares
will be deemed present in determining a quorum but they
will not be counted as voting on each proposal at this
Meeting; accordingly, they will not have any effect on
any of the proposals presented to the stockholders at
this Meeting.
YOU SHOULD SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY
CARD IN THE ENVELOPE PROVIDED.
Bohemia, New York, November 1, 2002
/s/Robert P. Nichols
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ROBERT P. NICHOLS
Secretary
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SCIENTIFIC INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
November 18, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph I. Kesselman and Arthur M.
Borden, 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 2002 Annual Meeting of Stockholders of the Company (the "Annual
Meeting"), to be held at the Princeton Club, 15 West 43rd Street,
New York, New York, on Monday, November 18, 2002 at 10:30 a.m. New
York time, and any 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 C DIRECTORS NAMED BELOW AND PROPOSALS 2 AND 3
AND AGAINST THE STOCKHOLDER PROPOSAL.
1. Election of Class C Directors:
Roger B. Knowles Joseph G. Cremonese
FOR both Nominess [ ] WITHHOLD for both Nominess [ ]
If you do not wish your shares voted FOR a nominee, draw a line
through that person's name above.
2. Proposal to approve the Company's 2002 Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to ratify the appointment of Nussbaum, Yates & Wolpow,
P.C., as independent auditors of the Company for the fiscal year
ending June 30, 2003.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Stockholder Proposal.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
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.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE, PLEASE VOTE,
SIGN AND DATE ON REVERSE SIDE AND RETURN PROMPTLY.
PROPERLY EXECUTED AND RETURNED PROXY CARDS WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
INSTRUCTIONS TO THE CONTRARY ARE MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF EACH OF THE NAMED NOMINEES AS DIRECTORS AND
APPROVAL OF PROPOSALS NO. 2 AND 3 LISTED ON THE REVERSE SIDE,
AND AGAINST THE STOCKHOLDER PROPOSAL 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 bing 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
below. 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 president or other
authorized officer. If a partnership,
please sign in the partnership name
by authorized person.)
Dated:_____________________ _______________________________________
Signature
PLEASE COMPLETE, SIGN, DATE
AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED
ENVELOPE. _____________________________________
Signature, if held by joint owners