UNITED STATES
_________________________________
SCHEDULE 14A
_________________________________
Proxy Statement Pursuant to Section 14(a) of
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 under §240.14a
-12
Allarity Therapeutics, Inc.
(Name of Registrant as Specified In Its Charter)
______________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
☒
No fee required
☐
Fee paid previously with preliminary materials
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a
-6
(i)(1) and 0
-11
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
the Securities Exchange Act of 1934
Allarity Therapeutics, Inc.
July 1, 2024
Dear Stockholders:
I am pleased to invite you to attend the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of Allarity Therapeutics, Inc. (the “Company,” “we,” “us” or “our”) on Friday, July 26, 2024 at 10:00 a.m., Eastern Time.
As we believe that a virtual meeting format expands stockholder access and participation and improves communications, the Annual Meeting will be held in a virtual meeting format only.
You or your proxyholder will be able to attend the Annual Meeting, vote, and submit your questions during the meeting only via live audio webcast by visiting
https:
//
meetnow.global
/
MHULKLQ
. To participate in the meeting, you will need to review the information included on your proxy card. You will not be able to attend the meeting in person.
The attached Notice of Annual Meeting of Stockholders (the “Notice Card”) and the 2024 Proxy Statement (the “Proxy Statement”) have been made part of this invitation. Details regarding the Annual Meeting and the business to be conducted at the Annual Meeting are more fully described in the accompanying Notice Card and Proxy Statement. You are entitled to vote at our Annual Meeting and any adjournments, continuations or postponements only if you were a stockholder as of June 14, 2024.
Your vote is very important, regardless of the number of shares of our voting securities that you own. Whether or not you expect to attend the Annual Meeting online, please vote as promptly as possible by following the instructions in the accompanying Proxy Statement to ensure your representation and the presence of a quorum at the Annual Meeting.
Details regarding logging onto and attending the virtual meeting over the website and the business to be conducted at the Annual Meeting are described in the accompanying Notice Card and Proxy Statement. Whether or not you attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. After reading the Proxy Statement, even if you intend to attend the Annual Meeting, we ask that you please promptly vote via the Internet or by telephone, or when you receive a paper proxy card, please promptly submit your proxy by dating, signing, and returning the enclosed proxy card in the enclosed postage
-prepaid
envelope, to ensure that your votes are counted. If you vote via the Internet, vote by telephone, or submit your proxy card, you can still attend the Annual Meeting virtually. Please review the instructions on each of your voting options described in the accompanying Proxy Statement and Proxy Card.
If your shares are held in the name of a broker, trust, bank or other nominee, and you receive these materials through your broker or through another intermediary, please complete and return the materials in accordance with the instructions provided to you by such broker or other intermediary, or you may also virtually attend the Annual Meeting and vote online during the Annual Meeting.
Our board of directors and management look forward to your attendance at the Annual Meeting.
/s/ Gerald W. McLaughlin
Gerald W. McLaughlin
Chairman
of our Board
24 School Street, 2
nd
Floor
Boston, Massachusetts 02108
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Friday, July 26, 2024, 10:00 a.m., Eastern Time
The 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of Allarity Therapeutics, Inc. (the “Company,” “we,” “us” or “our”), will be held on Friday, July 26, 2024, at 10 a.m., Eastern Time. The Annual Meeting will be a completely virtual meeting of stockholders via live audio webcast at https: // meetnow.global / MHULKLQ .
Items of Business
1. To elect two (2) Class II directors, Gerald W. McLaughlin and Laura E. Benjamin, to serve until the 2027 annual meeting of stockholders or until their respective successors are duly elected and qualified (the “Director Proposal”);
2. To ratify the appointment of Wolf Company, P.C., as our independent registered public accounting firm for the fiscal year ending December 31, 2024 (the “Independent Auditor Proposal”);
3. To approve an amendment to our Certificate of Incorporation, to decrease the number of authorized shares from 750,500,000 to 250,500,000, and to decrease the number of our common stock from 750,000,000 to 250,000,000, in substantially the form attached to the Proxy Statement as Appendix A (the “Share Decrease Proposal”);
4. To approve an amendment to our Certificate of Incorporation, in substantially the form attached to the Proxy Statement as Appendix B , to, at the discretion of our board of directors, effect a reverse stock split with respect to our issued and outstanding common stock, par value $0.0001 per share, at a ratio between 1 -for-5 and 1 -for-30 , with the board of directors having the discretion as to whether or not the reverse stock split is to be effected, with the exact ratio of any reverse stock split (the “Split Ratio”) to be set within the above range as determined by the board of directors in its discretion, and without a corresponding reduction in the total number of authorized shares of common stock (the “Reverse Stock Split Proposal”);
5. To approve an amendment to our Amended and Restated 2021 Equity Incentive Plan (the “2021 Plan”), in substantially the form attached to the Proxy Statement as Appendix C , to increase the aggregate number of shares of common stock authorized for grant under the 2021 Plan from 2,168,330 to 8,565,154 (or the quotient obtained by dividing such number by the Split Ratio, if the Reverse Stock Split Proposal is approved and implemented) (the “2021 Plan Amendment Proposal”);
6. To approve an amendment to our Certificate of Incorporation, in substantially the form attached to the Proxy Statement as Appendix D , to limit the liability of certain officers as permitted by Delaware Law (the “Officer Exculpation Amendment Proposal”);
7. To approve the adjournment of the meeting, if necessary or advisable, to solicit additional proxies in favor of the Director Proposal, the Independent Auditor Proposal, the Share Decrease Proposal, the Reverse Stock Split Proposal, the 2021 Plan Amendment Proposal or the Officer Exculpations Amendment Proposal (the “Adjournment Proposal”);
8. To transact such other business as may properly come before the Annual Meeting or any continuation, postponement or adjournment thereof.
Record Date
The record date for the Annual Meeting is June 14, 2024 (the “Record Date”). Only holders of shares of common stock as of the close of business on the Record Date are entitled to notice of the Annual Meeting and to vote on all business transacted at the Annual Meeting or any continuation, postponement or adjournment thereof. A complete list of such stockholders will be open to the examination of any stockholder for a period of ten days prior to the Annual Meeting for a purpose germane to the meeting by sending an email to us at investorrelations@allarity.com, stating the purpose of the request and providing proof of ownership of Company stock.
If you have questions about your stock ownership, you may contact us or our transfer agent, Computershare, at (800) 736 -3001 .
Voting Your Proxy
Your vote is important. Voting your shares will ensure the presence of a quorum at the Annual Meeting and will save us the expense of further solicitation. Stockholders are encouraged to attend, participate in and vote at the Annual Meeting. Whether or not you plan to virtually attend the Annual Meeting, your vote is important. Please promptly complete and return your signed proxy card in the enclosed envelope or submit your proxy by telephone or via the Internet as described on your proxy card or voting instruction form. As described in the 2024 Proxy Statement (the “Proxy Statement”), you will be able to virtually attend and participate in the Annual Meeting online, vote your shares electronically, and submit your questions during the meeting by visiting https: // meetnow.global / MHULKLQ . To participate in the Annual Meeting, you must have your control number that is shown on your proxy card.
Please refer to the accompanying Proxy Statement for additional details and important information about the Annual Meeting.
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By order of the board of directors, |
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/s/ Gerald W. McLaughlin |
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Gerald W. McLaughlin |
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Chairman of our Board |
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July 1, 2024 |
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ii
iii
Allarity Therapeutics, Inc.
PROXY STATEMENT
This 2024 proxy statement (the “Proxy Statement”) includes certain information about Allarity Therapeutics, Inc. (the “Company,” “we,” “us” or “our”), and is being solicited by our board of directors (our “Board”), in connection with our 2024 Annual Meeting of Stockholders to be held virtually on Friday, July 26, 2024 at 10:00 a.m., Eastern Time and any continuation, postponement or adjournment thereof (the “Annual Meeting”). You should read this Proxy Statement carefully before voting at the Annual Meeting. For more complete information regarding our 2023 performance, you are encouraged to review our 2023 Annual Report to Stockholders (the “2023 Annual Report”) or our Annual Report on Form 10
-K
for the fiscal year ended December 31, 2023 (the “2023 Form 10
-K
”).
We are very pleased that the 2024 Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted solely online via live webcast. You will be able to attend and participate in the 2024 Annual Meeting online, vote your shares electronically and submit your questions prior to and during the meeting by visiting:
https:
//
meetnow.global
/
MHULKLQ
at the meeting date and time described in the accompanying proxy statement. There is no physical location for the 2024 Annual Meeting.
We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings for our stockholders and us. We believe that hosting a virtual meeting will enable greater stockholder attendance and participation from any location around the world.
IMPORTANT INFORMATION REGARDING DELIVERY OF PROXY MATERIALS
The Securities and Exchange Commission has adopted rules regarding how companies must provide proxy materials to their stockholders. These rules are often referred to as “notice and access,” under which a company may select either of the following options for making proxy materials available to its stockholders:
•
the full set delivery option; or
•
the notice only option.
A company may use a single method for all of its stockholders, or use full set delivery for some while adopting the notice only option for others.
Full Set Delivery Option
Under the full set delivery option, a company delivers all proxy materials to its stockholders by mail as it would have done prior to the change in the rules. In addition to delivery of proxy materials to stockholders, the company must post all proxy materials on a publicly
-accessible
website and provide information to stockholders about how to access the website. In connection with our Annual Meeting, we have elected to use the full set delivery option. Accordingly, you will receive all proxy materials by mail. These proxy materials include the attached Notice of Annual Meeting of Stockholders (the “Notice Card”), this Proxy Statement, proxy card and the 2023 Form 10
-K
.
24 School Street, 2
nd
Floor
Boston, Massachusetts 02108
FOR THE 2024 ANNUAL MEETING OF STOCKHOLDERS
1
Notice Only Option
Under the notice only option, which we have elected NOT to use for the Annual Meeting, a company must post all proxy materials on a publicly -accessible website. Instead of delivering proxy materials to its stockholders, the company instead delivers a “Notice of Internet Availability of Proxy Material.” The notice includes, among other things:
• information regarding the date and time of the Annual Meeting as well as the items to be considered at the meeting;
• information regarding the website where the proxy materials are posted; and
• various means by which a stockholder can request paper or e -mail copies of the proxy materials
If a stockholder requests paper copies of the proxy materials, these materials must be sent to the stockholder within three business days and by first class mail.
We May Use the Notice Only Option in the Future
Although we have elected to use the full set delivery option in connection with the Annual Meeting, we may choose to use the notice only option in the future. By reducing the amount of materials that a company needs to print and mail, the notice only option provides an opportunity for cost savings as well as conservation of paper products. Many companies that have used the notice only option have also experienced a lower participation rate resulting in fewer stockholders voting at their annual meeting. We plan to evaluate the future possible cost savings as well as the possible impact on stockholder participation as we consider future use of the notice only option.
Delivery of Proxy Materials
On or about July 1, 2024, this Proxy Statement, an accompanying proxy card, the Notice Card and the 2023 Form 10 -K , will be mailed to stockholders and will be made available to stockholders on our Investor Relations website at https: // www.edocumentview.com / ALLR2024 . Our website is not part of this Proxy Statement; references to our website address in this Proxy Statement are intended to be inactive textual references only.
The only outstanding voting securities of the Company are shares of our common stock, of which there were 25,587,301 shares outstanding as of the Record Date. The holders of one -third (33.33%) of the voting power of the stock issued, outstanding and entitled to vote at the Annual Meeting present in person or represented by proxy, are required to hold the Annual Meeting.
2
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
When and where will the Annual Meeting be held?
The Annual Meeting will be held on Friday, July 26, 2024 at 10:00 a.m., via webcast. Record holders of shares of our common stock as of the close of business on June 14, 2024, the record date for the Annual Meeting (the “Record Date”), are entitled to vote at the Annual Meeting on all matters to be voted upon.
How do I attend the Annual Meeting?
The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively by webcast. You are entitled to participate in the Annual Meeting only if you were our stockholder as of the close of business on the Record Date, or if you hold a valid proxy for the Annual Meeting. No physical meeting will be held.
You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting https: // meetnow.global / MHULKLQ . You also will be able to vote your shares online by attending the Annual Meeting by webcast.
To participate in the Annual Meeting, you will need to review the information included on your proxy card or on the instructions that accompanied your proxy materials.
If you hold your shares through an intermediary, such as a bank or broker, you must register in advance using the instructions below.
The online meeting will begin promptly at 10:00 a.m., Eastern Time. We encourage you to access the meeting prior to the start time leaving ample time for the check in. Please follow the registration instructions as outlined in this Proxy Statement.
How do I register to attend the Annual Meeting virtually on the Internet?
If you are a registered shareholder (i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attend the Annual Meeting virtually on the Internet. Please follow the instructions on the notice or proxy card that you received.
If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the Annual Meeting virtually on the Internet.
To register to attend the Annual Meeting online by webcast you must submit proof of your proxy power (legal proxy) reflecting your holdings of the Company along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on July 31, 2024.
You will receive a confirmation of your registration by email after we receive your registration materials.
Requests for registration should be directed to us at the following:
By email
Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com
By mail
Computershare
Allarity Legal Proxy
P.O. Box 43001
Providence, RI 02940
-3001
3
What if I have trouble accessing the Annual Meeting virtually?
The virtual meeting platform is fully supported across browsers (MS Edge, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most up -to -date version of applicable software and plugins. Note: Internet Explorer is not a supported browser. Participants should ensure that they have a strong WiFi connection wherever they intend to participate in the meeting. We encourage you to access the meeting prior to the start time. For further assistance should you need it you may call Local 1 -888-724-2416 or International +1 781 -575-2748 .
Why are you holding a virtual meeting instead of a physical meeting?
We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings for our stockholders and us. We believe that hosting a virtual meeting will enable more of our stockholders to attend and participate in the meeting since our stockholders can participate from any location around the world with Internet access.
What am I being asked to vote on at the Annual Meeting?
You are being asked to vote on the following seven proposals described in this Proxy Statement:
1. To elect two (2) Class II directors, Gerald W. McLaughlin and Laura E. Benjamin, to serve until the 2027 annual meeting of stockholders or until their respective successors are duly elected and qualified (the “Director Proposal”);
2. To ratify the appointment of Wolf Company, P.C., as our independent registered public accounting firm for the fiscal year ending December 31, 2024 (the “Independent Auditor Proposal”);
3. To approve an amendment to our Certificate of Incorporation, to decrease the number of authorized shares from 750,500,000 to 250,500,000, and to decrease the number of our common stock from 750,000,000 to 250,000,000, in substantially the form attached to the Proxy Statement as Appendix A (the “Share Decrease Proposal”);
4. To approve an amendment to our Certificate of Incorporation, in substantially the form attached to the Proxy Statement as Appendix B , to, at the discretion of our board of directors, effect a reverse stock split with respect to our issued and outstanding common stock, par value $0.0001 per share, at a ratio between 1 -for-5 and 1 -for-30 , with our board of directors having the discretion as to whether or not the reverse stock split is to be effected, with the exact ratio of any reverse stock split (the “Split Ratio”) to be set within the above range as determined by the board of directors in its discretion, and without a corresponding reduction in the total number of authorized shares of common stock (the “Reverse Stock Split Proposal”);
5. To approve an amendment to our Amended and Restated 2021 Equity Incentive Plan (the “2021 Plan”), in substantially the form attached to the Proxy Statement as Appendix C , to increase the aggregate number of shares of common stock authorized for grant by from 2,168,330 to 8,565,154 (or the quotient obtained by dividing such number by the Split Ratio, if the Reverse Stock Split Proposal is approved and implemented) (the “2021 Plan Amendment Proposal”);
6. To approve an amendment to our Certificate of Incorporation, in substantially the form attached to the Proxy Statement as Appendix D , to limit the liability of certain officers as permitted by Delaware Law (the “Officer Exculpation Amendment Proposal”);
7. To approve the adjournment of the meeting, if necessary or advisable, to solicit additional proxies in favor of the Director Proposal, the Independent Auditor Proposal, the Share Decrease Proposal, the Reverse Stock Split Proposal, the 2021 Plan Amendment Proposal, or the Officer Exculpation Amendment Proposal (the “Adjournment Proposal”);
Could other matters be decided at the Annual Meeting?
At the date of this Proxy Statement, we do not know of any matters to be raised at the Annual Meeting other than those referred to in this Proxy Statement. If other matters are properly presented at the Annual Meeting or any adjournment or postponement thereof for consideration, and you are a registered stockholder and have submitted a proxy card, the persons named in your proxy card (the “Named Proxies”) will have the discretion to vote on those matters for you.
4
When is the Record Date, and who is entitled to vote?
All holders of record of shares of our common stock at the close of business on June 14, 2024 are entitled to notice of and to vote at the Annual Meeting and any continuation, postponement or adjournment thereof.
At the close of business on the Record Date, there were 25,587,301 shares of our common stock issued and outstanding and entitled to vote. Each share of common stock entitles its holder to one vote.
How do I vote my shares without attending the Annual Meeting?
You may vote your shares prior to the Annual Meeting in any of the following three ways:
• Internet — To vote through the Internet before the Annual Meeting, go to https://www.edocumentvi ew.co m/ALLR2024 to complete an electronic proxy card. You will need to review the information included on your proxy card. We encourage you to vote via the Internet.
• Telephone — To vote over the telephone, dial toll -free 1 -800-652-VOTE (8683) using a touch -tone telephone and follow the recorded instructions. You will be asked to provide the company number and control number from the proxy card.
• Mail — To vote using the proxy card, simply complete, sign and date the proxy card that was delivered to you by mail and return it promptly in the envelope provided. If you return your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct.
If your shares are held in the name of a bank, broker or other nominee, you will receive instructions on how to vote from the bank, broker or other nominee. You must follow the instructions of such bank, broker or other nominee in order for your shares to be voted.
What is the deadline for submitting a proxy?
In order to be counted, proxies submitted by beneficial owners via the Internet and telephone voting facilities will close for stockholders of record as of the Record Date at 11:59 p.m., Eastern Time, on July 25, 2024. Proxy cards with respect to shares held of record must be received prior to the start of the Annual Meeting.
How does our Board recommend that I vote?
Our Board recommends that you vote:
• FOR each of the Class II director nominees to our Board set forth in this Proxy Statement.
• FOR the ratification of the appointment of Wolf Company, P.C. as our independent registered public accounting firm for our fiscal year ending December 31, 2024.
• FOR the approval of an amendment to our Certificate of Incorporation, to decrease the number of authorized shares from 750,500,000 to 250,500,000 and decrease the number of common stock from 750,000,000 to 250,000,000.
• FOR the Reverse Stock Split Proposal.
• FOR the approval of an amendment to our equity incentive plan to increase the aggregate number of shares of common stock authorized for issuance by 6,396,824 shares.
• FOR the approval of an amendment to our Certificate of Incorporation, to limit liability of officers as permitted by Delaware law.
• FOR the approval of an adjournment of the annual meeting if necessary or advisable to solicit additional proxies in favor of the Director Proposal, the Independent Auditor Proposal, the Share Decrease Proposal, the Reverse Stock Split Proposal, the 2021 Plan Amendment Proposal or the Officer Exculpation Amendment Proposal.
5
How many votes are required to approve each proposal?
|
Proposals |
Voting Options |
Vote Required |
Broker
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Effect of
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Effect of
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Proposal 1 —
|
For or withhold with respect to each nominee |
Plurality of the votes cast by the holders of shares of our common stock entitled to vote on the matter (two nominees receiving the highest number of affirmative “FOR” votes will be elected) |
No |
No effect |
No effect |
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Proposal 2 —
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For, against, or abstain |
Affirmative vote of the holders of a majority of shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote on the matter |
Yes |
N/A |
Against |
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Proposal 3 — Share Decrease
|
For, against, or abstain |
Affirmative vote of the holders of a majority of outstanding shares of our common stock |
Yes |
N/A |
Against |
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Proposal 4 —
|
For, against, or abstain |
Affirmative vote of the holders of a majority of the votes cast affirmatively or negatively (votes cast for the proposal must exceed votes cast against the proposal to approve it) |
Yes |
N/A |
No effect |
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Proposal 5 —
|
For, against, or abstain |
Affirmative vote of the holders of a majority of shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote on the matter |
No |
No effect |
Against |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Proposal 6 —
|
For, against, or abstain |
Affirmative vote of the holders of at least 66 - 2 /3% of outstanding shares of our common stock |
No |
Against |
Against |
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Proposal 7 —
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For, against, or abstain |
Affirmative vote of the holders of a majority of shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote on the matter |
Yes |
N/A |
Against |
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Class I |
Class II |
Class III* |
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Thomas H. Jensen |
Gerald W. McLaughlin |
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Joseph W. Vazzano |
Laura E. Benjamin |
____________
* Currently vacant.
Mr. McLaughlin and Dr. Benjamin have been, upon the recommendation of the Nominating and Corporate Governance Committee, nominated by our Board to stand for election. As the directors assigned to Class II, the current terms of service of Mr. McLaughlin and Dr. Benjamin will expire at the Annual Meeting. If elected by the stockholders at the Annual Meeting, Mr. McLaughlin and Dr. Benjamin will each serve for a term expiring at our annual meeting of stockholders to be held in 2027 (the “2027 Annual Meeting”) and the election and qualification of his or her successor or until his or her earlier death, resignation or removal.
Each person nominated for election has consented to be named and to serve as a director if elected at the Annual Meeting, and management has no reason to believe that any nominee will be unable to serve. If, however, prior to the Annual Meeting, our Board should learn that any nominee will be unable to serve for any reason, the proxies that otherwise would have been voted for this nominee will be voted for a substitute nominee as selected by our Board. Alternatively, the proxies, at our Board’s discretion, may be voted for that fewer number of nominees as results from the inability of any nominee to serve. Our Board has no reason to believe that any of the nominees will be unable to serve.
Director Director Nominee Qualifications and Biographical Information
The following pages contain professional and other biographical information as of the Record Date for each director nominee and each director whose term as a director will continue after the Annual Meeting, including all positions they hold, their principal occupation and business experience for the past five years, and the names of other publicly traded companies of which the director or nominee currently serves as a director or has served as a director during the past five years.
9
We believe that all of our directors and nominees possess the characteristics noted in our Nominating and Corporate Governance Committee Policy Regarding Qualifications of Directors attached as Appendix A to our Nominating Corporate Governance and Committee charter. In accordance with that policy, our Board and the Nominating and Corporate Governance Committee consider personal and professional integrity; satisfactory levels of education and/or business experience; broad -based business acumen; an appropriate level of understanding of our business and its industry and other industries relevant to our business; the ability and willingness to devote adequate time to the work of our Board and its committees, as applicable; skills and personality that complement those of our other directors that helps build a board that is effective, collegial and responsive to the needs of our Company; strategic thinking and a willingness to share ideas; a diversity of experiences, expertise and background; and the ability to represent the interests of all of our stockholders. The information presented below regarding each nominee and continuing director also sets forth specific experience, qualifications, attributes and skills that led our Board to the conclusion that such individual should serve as a director in light of our business and structure.
Class I Directors Whose Terms Expire at the 2026 Annual Meeting of Stockholders
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Name and Position |
Age |
Director Since |
Current Position |
|||
|
Thomas H. Jensen |
45 |
2022 |
Director, Chief Executive Officer |
|||
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Joseph W. Vazzano |
40 |
2023 |
Director |
Thomas H. Jensen. Mr. Jensen was appointed to our Board on July 7, 2022, and on December 8, 2023, Mr. Jensen, was appointed by our Board as Chief Executive Officer. Mr. Jensen was our Senior Vice President, Investor Relations since July 2022, and was previously our Senior Vice President, Information Technology since July 2021, and the Senior Vice President, Information Technology of Allarity Therapeutics A/S, our predecessor, since June 2020. Since January 2006, Mr. Jensen has served as the Chief Technology Officer of the Medical Prognosis Institute. Mr. Jensen previously served as the Chief Technology Officer of our predecessor from 2004 to June 2020. Mr. Jensen co -founded Allarity Therapeutics A/S in 2004. Mr. Jensen also established and currently leads our laboratories in Denmark. Alongside nurturing our global laboratories, Mr. Jensen is instrumental in building our investor relations operations, securing operational financing, and fostering our business growth. Amongst Mr. Jensen’s accolades are his inventions of molecular biological guidelines combined with techniques for high quality reproducible RNA extraction and downstream processing. This allows for high resolution analysis of cancer patients’ biopsies. Mr. Jensen’s inventions are an important foundation of the DRP® -Drug Response Prediction platform. Mr. Jensen holds a Bachelor of Science degree in Biology from the Technical University of Denmark and conducted further studies in Biology at the University of Copenhagen. We believe that Mr. Jensen is qualified to serve on our Board based on his extensive experience in investor relations, business operations and strong track record with our ongoing development.
Joseph W. Vazzano . Mr. Vazzano joined Abeona Therapeutics, Inc. (Nasdaq: ABEO) as Chief Financial Officer in March 2022. While at Abeona, Mr. Vazzano has secured multiple equity raises including private placements, a registered direct offering, and at the market transactions. Before joining Abeona, Mr. Vazzano worked at Avenue Therapeutics, Inc. (Nasdaq: ATXI) from August 2017 to January 2022, most recently serving as Avenue’s Chief Financial Officer. During his tenure at Avenue, Mr. Vazzano secured multiple equity financings and served in a leadership role for signing a complex, two -stage acquisition of Avenue with future contingent value rights. Previously, Mr. Vazzano served as Assistant Corporate Controller at Intercept Pharmaceuticals, Inc. (Nasdaq: ICPT) from October 2016 to July 2017, where he helped grow the finance and accounting department during the company’s transition from a development -stage company to a fully integrated commercial organization. Prior to Intercept, Mr. Vazzano has held various finance and accounting roles at Pernix Therapeutics, Inc. and NPS Pharmaceuticals. Mr. Vazzano began his career at KPMG, LLP and has a Bachelor of Science degree in Accounting from Lehigh University and is a Certified Public Accountant in the State of New Jersey. We believe that Mr. Vazzano is qualified to serve on our Board based on his extensive experience in executive leadership, finance and accounting background, knowledge of life sciences industry.
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Class II Nominees for Election to Three-Year Terms Expiring No Later than the 2027 Annual Meeting
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Name and Position |
Age |
Director Since |
Current Position |
|||
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Gerald W. McLaughlin |
56 |
2022 |
Director, Chairman of our Board |
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Laura E. Benjamin |
59 |
2023 |
Director |
Gerald W. McLaughlin. Mr. McLaughlin was appointed to our Board in October 2022 and has been our Chairman since January 2023. Mr. McLaughlin has extensive experience serving as a senior executive and board member in the biopharmaceutical industry, including financings, mergers acquisitions, licensing, product development, commercialization, lifecycle management, and operations. Since 2021, Mr. McLaughlin has served as the chief executive officer and board member of Life Biosciences LLC, a biotechnology company. Previously, Mr. McLaughlin was the President and Chief Executive Officer for Neos Therapeutics, Inc., a commercial stage pharmaceutical company from 2018 to 2021. He also served as president and Chief Executive Officer of AgeneBio, Inc., a clinical -stage biopharmaceutical company developing therapies for neurological and psychiatric diseases from 2014 to 2018. Mr. McLaughlin holds a B.A. in Economics from Dickinson College and an MBA from the Villanova School of Business. We believe that Mr. McLaughlin is qualified to serve on our Board based on his extensive experience in leading operational and executive management roles in the life sciences industry.
Laura E. Benjamin. Dr. Benjamin is the Chief Executive Officer and President of BioHybrid Solutions, a private biotechnology company headquartered in Pittsburgh, PA. From 2018 to 2023 she was the founder and Chief Executive Officer of OncXerna Therapeutics, Inc., a precision medicine clinical stage oncology company that had clinical programs in ovarian and gastric cancer and developed an RNA based diagnostic built on a machine learning AI platform. Other past roles include Vice President in Oncology at Eli Lilly, where she led cancer discovery and translational discovery teams in New York and Indianapolis from 2009 to 2016, and Associate Professor in the Department of Pathology at Harvard Medical School where she joined the faculty after completion of a postdoctoral fellowship in 1999. Dr. Benjamin received a B.A. in Biology from Barnard College, Columbia University and a Ph.D. in Molecular Biology from the University of Pennsylvania. We believe that Dr. Benjamin is qualified to serve on our Board based on her extensive experience in leading operational and executive management roles in the life sciences industry.
Class III Directors Whose Terms Expire at the 2025 Annual Meeting of Stockholders
A Class III director seat is currently vacant. Our Board anticipates filling this vacant board position in the future.
If a quorum is present at the Annual Meeting, the election of directors will be determined by a plurality of the votes cast by the holders of shares of our common stock entitled to vote on this proposal. Accordingly, the two (2) nominees receiving the highest number of affirmative “FOR” votes from votes cast at the Annual Meeting or represented by proxy and entitled to vote on this proposal will be elected. If you do not instruct your broker how to vote with respect to this proposal, your broker, bank, or other nominee may not vote for this proposal, and those votes will be counted as “broker non -votes .” Broker non -votes will have no effect on this proposal. You may vote “FOR” or “WITHHOLD” authority to vote for each of the nominees. If you “WITHHOLD” authority to vote with respect to one or more nominees, your vote will have no effect on the election of such nominees.
Our Board unanimously recommends a vote FOR the election of each of Mr. McLaughlin and Dr. Benjamin as a Class II director to our Board to hold office until the 2027 Annual Meeting and until his or her successor has been duly elected and qualified.
11
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has appointed Wolf Company, P.C. (Boston, MA, PCAOB ID: 392) (“Wolf”) as our independent registered public accounting firm for the fiscal year ending December 31, 2024. The Audit Committee and our Board seek to have the stockholders ratify the Audit Committee’s appointment of Wolf.
Although we are not required to seek stockholder approval of this appointment, our Board considers the selection of the independent registered public accounting firm to be an important matter of stockholder concern and is submitting the appointment of Wolf for ratification by stockholders as a matter of good corporate practice. If the appointment of wolf is not ratified by the stockholders, the Audit Committee will consider the vote of our stockholders and may appoint another independent registered public accounting firm or may decide to maintain its appointment of Wolf.
Representatives of Wolf are expected to attend the Annual Meeting and to have an opportunity to make a statement and be available to respond to appropriate questions from stockholders.
Changes in Independent Registered Public Accounting Firm
On August 8, 2022, our former independent registered public accounting firm, Marcum LLP (“Marcum”) notified us in writing that our client -auditor relationship had ceased to be effective as of August 5, 2022. Marcum’s reports on the financial statements for the year ended December 31, 2021, did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles but it included an explanatory paragraph concerning the uncertainty of our ability to continue as a going concern.
On August 12, 2022, we reported that during the fiscal year ended December 31, 2021, and subsequent interim period preceding Marcum’s resignation on August 5, 2022, there were no disagreements with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of Marcum, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report. Additionally, during this time period, there were no reportable events as described in Item 304(a)(1)(v) of Regulation S -K , except that, as previously disclosed in our Annual Report on Form 10 -K for the year ended December 31, 2021, and Form 10 -Q for the quarterly period ended March 31, 2022, we identified material weaknesses in our internal controls over financial reporting because we did not have a formal process for period end financial closing and reporting, we historically had insufficient resources to conduct an effective monitoring and oversight function independent from our operations and we lacked accounting resources and personnel to properly account for accounting transactions such as the issuance of warrants with a derivative liability component. We also provided Marcum with a copy of the disclosures that we were making in response to Item 4.01 on the Form 8 -K and requested that Marcum furnish us with a letter addressed to the SEC stating whether it agrees with our statements contained in the Form 8 -K and, if not, stating the respects in which it does not agree.
On August 23, 2022, Marcum provided a letter regarding our disclosure contained in our Form 8 -K filed with the SEC on August 12, 2022, which agreed with our statements made in the third sentence of the preceding paragraph regarding the existence of material weaknesses in our internal control over financial reporting; however, Marcum disagreed regarding the description of such material weaknesses. Marcum indicated that the material weaknesses as disclosed in our Annual Report on Form 10 -K for the year ended December 31, 2021, and Quarterly Report on Form 10 -Q for the quarterly period ended March 31, 2022, were as follows: (i) a lack of accounting resources required to fulfill GAAP and SEC reporting requirements; (ii) a lack of comprehensive GAAP accounting policies and financial reporting procedures; (iii) lack of adequate procedures and controls to appropriately account for accounting transactions including liability and the valuation allowance on the deferred tax asset relating to the net operating losses; and (iv) a lack of segregation of duties given the size of the finance and accounting team. In addition, Marcum stated that our disclosure did not include any reference to its resignation because of the impairment of its independence. Finally, Marcum indicated that our disclosure did not provide disclosure of a reportable event under Item 304(a)(1)(v)(C) of Regulation S -K , as Marcum indicated that information had come to its attention during the time period covered by Item 304(a)(1)(iv) of Regulation S -K , that if further investigated may have caused Marcum to be unwilling to rely on management’s representations or be associated with our financial statements; however, due to the Marcum’s resignation as a result of the impairment of its independence, Marcum did not conduct such further investigation.
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With regard to Marcum’s August 23, 2022, letter as it relates to material weaknesses in our internal controls over financial reporting, we believe that we have provided the information required under Item 304(a)(1)(v)(A) in the Form 8 -K filed with the SEC on August 12, 2022. With regard Marcum’s statement in its August 23, 2022, letter regarding management’s representations, we respectfully disagree that there were events that occurred that rose to a level that would have impaired independence, or there was information, if further investigated, would require disclosure under Item 304(a)(1)(v)(C). Prior to its resignation, Marcum did not inform the Audit Committee of the information stated in their letter and if they had done so, we believe that we would have addressed any issues Marcum would have raised with the Audit Committee to the satisfaction of Marcum. A copy of Marcum’s letter to the SEC required by Item 304(a) of Regulation S -K is included as Exhibit 16.1(n) to the registration statement filed with the SEC on April 14, 2024.
Fees Paid to the Independent Registered Public Accounting Firm
The following table presents fees for professional audit services rendered by Wolf for the audit of our annual financial statements for fiscal year 2023 and fiscal year 2022, and fees billed for other services rendered by Wolf during fiscal year 2023 and fiscal year 2022. The following table also presents aggregate fees billed by our former auditor Marcum for fiscal 2022.
|
2023 |
2022 |
|||||
|
Audit fees (1) |
$ |
440,000 |
$ |
1,135,616 |
||
|
Tax fees |
|
— |
|
— |
||
|
Audit related fees (2) |
|
237,000 |
|
377,582 |
||
|
Total |
$ |
637,000 |
$ |
1,513,198 |
||
____________
(1) Audit fees represent fees for professional services provided in connection with the audit of our annual financial statements and the review of our quarterly financial statements and this information is presented as of the latest practicable date for the 2023 Form 10 -K .
(2) All other fees include fees billed by our independent auditors for products or services other than as described in the immediately preceding two categories including those services normally provided in connection with statutory or regulatory filings or engagements including comfort letters, consents and other services related to SEC matters.
Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
Our Audit Committee’s policy is to pre -approve all audit and permissible non -audit services provided by our independent registered public accounting firm. These services may include audit services, audit -related services, tax services and other services. Pre -approval is detailed as to the service or category of services and is generally subject to a specific budget.
Our independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by our independent registered public accounting firm in accordance with this preapproval, and the fees for the services performed to date.
None of the services described above was approved pursuant to the de minimis exception provided in Rule 2 -01 (c)(7)(i)(C) of Regulation S -X promulgated by the SEC.
If a quorum is present at the Annual Meeting, ratification of the appointment of Wolf will require the affirmative vote of the holders of a majority of shares of our common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal. This proposal is a routine matter, and brokers and other nominees may generally vote in their discretion on routine matters, and therefore broker non -votes are not expected on this proposal. Abstentions will have the same effect as an “AGAINST” vote on this proposal.
Our Board unanimously recommends a vote FOR the ratification of the appointment of Wolf as our independent registered public accounting firm for our fiscal year ending December 31, 2024.
13
The Audit Committee operates pursuant to a charter which is reviewed annually by the Audit Committee. Additionally, a brief description of the primary responsibilities of the Audit Committee is included in this Proxy Statement under the “ Corporate Governance — Audit Committee ” section of this Proxy Statement. Under the Audit Committee charter, management is responsible for the preparation, presentation and integrity of our financial statements, the appropriateness of accounting principles and financial reporting policies and for establishing and maintaining our internal control over financial reporting. The independent registered public accounting firm is responsible for auditing our financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States.
In the performance of its oversight function, the Audit Committee reviewed and discussed with management and Wolf, as our independent registered public accounting firm, our audited financial statements for the fiscal year ended December 31, 2023. The Audit Committee also discussed with our independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the Securities and Exchange Commission (the “SEC”). In addition, the Audit Committee (i) received and reviewed the written disclosures and the letters from our independent registered public accounting firm required by applicable requirements of the PCAOB regarding such independent registered public accounting firm’s communications with the Audit Committee concerning independence and (ii) discussed with our independent registered public accounting firm their independence from us.
Based upon the review and discussions described in the preceding paragraph, the Audit Committee recommended to our Board that our audited financial statements be included in its Annual Report on Form 10 -K for the fiscal year ended December 31, 2023 filed with the SEC.
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The Audit Committee: |
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Jospeh W. Vazzano, Chair |
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Gerald W. McLaughlin |
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Laura E. Benjamin |
14
DECREASE OF AUTHORIZED SHARES FROM 750,500,000 TO 250,500,000 AND
DECREASE OF COMMON STOCK FROM 750,000,000 TO 250,000,000
Under our Certificate of Incorporation, the total number of shares of all classes of capital stock that we are authorized to issue is 750,500,000 shares, consisting of (i) 750,000,000 shares of common stock, par value $0.0001 per share and (ii) 500,000 shares of preferred stock, par value $0.0001 per share. Our Board has determined that it is advisable to decrease our shares of capital stock form 750,000,000 to 250,500,000 and shares of our common stock from 750,000,000 to 250,000,000 and recommends that our stockholders approve an amendment to our Certificate of Incorporation, to effect the proposed decreases. The full text of the proposed amendment to our Certificate of Incorporation is attached to this Proxy Statement as Appendix A . However, the text of the proposed amendment is subject to revision to include such changes as may be required by the Secretary of State of the State of Delaware and as our Board deems necessary and advisable to effect the proposed amendment to our Certificate of Incorporation. If approved by our stockholders, we intend to file the amendment with the Secretary of State of Delaware as soon as practicable following the Annual Meeting, and the amendment will be effective upon filing. If this proposal is not approved by our stockholders, our Certificate of Incorporation will continue as currently in effect.
As described above, there are a significant number of authorized but unissued shares of our common stock and preferred stock relative to the number of shares outstanding.
We are mindful of the potential negative effects of a large number of authorized but unissued shares of our common stock. For instance, future issuances of common stock or securities convertible into common stock could have a negative impact on our earnings per share and book value per share and would dilute the voting power and ownership of our existing stockholders. In addition, the availability of a substantial number of authorized but unissued shares of common stock could, under certain circumstances, discourage or make more difficult efforts to obtain control of us. Further, a Delaware corporation’s franchise tax fees increase with the number of authorized shares of its capital stock. Therefore, having a larger number of authorized shares results in higher Delaware franchise tax obligations.
We believe that the number of shares of our common stock and preferred stock that are currently authorized, 750,500,000 shares, provides significantly more available shares than are necessary for our reasonably foreseeable future needs. As a result, our Board has approved and is recommending that our stockholders approve a reduction in the number of shares of our common stock that we are authorized to issue from 750,000,000 shares to 250,000,000. Our Board believes 250,000,000 authorized shares of common stock will provide us with sufficient flexibility to issue shares of our common stock and preferred stock as needed for general corporate purposes for the foreseeable future. In addition, a reduction to the authorized shares of our common stock will have the immediate effect of reducing our Delaware franchise tax obligations by an estimated amount of $98,000 annually.
Potential Adverse Effects of the Amendment
Although our Board believes 250,000,000 authorized shares of common stock and 500,000 authorized shares of preferred stock will be sufficient for our expected purposes for the foreseeable future, these expectations could turn out to be incorrect and we may require additional authorized shares sooner than we expect. In that case, we would be forced to obtain the approval of our stockholders to effect an increase to our authorized shares. The stockholder approval process can be time -consuming and is subject to a variety of SEC rules that implement waiting periods throughout the process, which could prevent us from obtaining any increase to our authorized shares in a timely manner. Moreover, our stockholders may not approve any future proposal to increase our authorized shares. Either of these outcomes could force us to forego opportunities that we believe to be valuable or prevent us from using equity for compensation or other corporate purposes, which could limit our flexibility and prospects and strain our cash resources.
15
Procedure for Effecting the Amendment
If the proposed amendment is approved and adopted by our stockholders at the Annual Meeting, it will become effective upon filing with the Secretary of State of the State of Delaware our Certificate of Incorporation in substantially the form attached as Appendix A to this Proxy Statement. Subject to the discretion of our Board, which could elect to abandon the amendment at any time before or after stockholder approval, we expect to file the certificate of amendment with the Secretary of State of the State of Delaware as soon as practicable following stockholder approval.
Approval of this proposal requires the affirmative vote of the holders of a majority of outstanding shares of our common stock. This proposal is a routine matter, and brokers and other nominees may generally vote in their discretion on routine matters, and therefore broker non -votes are not expected on this proposal. Abstentions will have the same effect as an “AGAINST” vote on this proposal.
Our Board unanimously recommends a vote FOR the approval of an amendment to our Certificate of Incorporation, to decrease the number of authorized shares from 750,500,000 to 250,500,000 and decrease the number of common stock from 750,000,000 to 250,000,000.
16
reverse stock split
Our Board approved and declared advisable, subject to stockholder approval, a certificate of amendment to our Certificate of Incorporation, which would effect a reverse stock split of our outstanding common stock by combining outstanding shares of common stock into a lesser number of outstanding shares of common stock at a ratio of not less than 1 -for-5 and not more than 1 -for-30 (the “Reverse Stock Split”) at any time prior to the one -year anniversary of the date on which the Reverse Stock Split is approved by our stockholders at the Annual Meeting, with the exact ratio to be set within this range by our Board at its sole discretion. The form of the proposed certificate of amendment to our Certificate of Incorporation to effect the Reverse Stock Split is attached as Appendix B to this Proxy Statement (the “Reverse Split Amendment”).
Upon the effectiveness of the Reverse Split Amendment, the outstanding shares of our common stock will be reclassified and combined into a lesser number of shares such that one share of our common stock will be issued for a specified number of shares in accordance with the ratio for the Reverse Stock Split selected by our Board. The number of shares of our common stock underlying outstanding equity awards and available for future awards under our equity incentive plans, as well as the number of shares issuable upon exercise of outstanding warrants, would also be proportionately reduced in the same manner as a result of the Reverse Stock Split. The Reverse Split Amendment that will be filed to effect the Reverse Stock Split will include the Reverse Stock Split ratio fixed by our Board, within the range approved by our stockholders.
If the Reverse Stock Split Proposal is approved by our stockholders, our Board would have the sole discretion to effect the amendment and Reverse Stock Split at any time prior to the one -year anniversary of the date on which the Reverse Stock Split is approved by our stockholders at the Annual Meeting, and to fix the specific ratio for the Reverse Stock Split, provided that the ratio would be not less than 1 -for-5 and not more than 1 -for-30 . We believe that enabling our Board to fix the specific ratio of the Reverse Stock Split within the stated range will provide us with the flexibility to implement the split in a manner designed to maximize the anticipated benefits to us and our stockholders, as described below. The determination of the ratio of the Reverse Stock Split will be based on a number of factors, described further below under the heading “ Determination of the Reverse Stock Split Ratio .”
If the Reverse Stock Split Proposal is approved by our stockholders and our Board determines to effect the Reverse Stock Split, the Reverse Stock Split will become effective upon the time specified in the Reverse Split Amendment, as filed with the Secretary of State of the State of Delaware. The exact timing of the filing of the Reverse Split Amendment and the Reverse Stock Split will be determined by our Board based on its evaluation as to when such action will be the most advantageous to us and our stockholders. Our Board reserves the right, notwithstanding stockholder approval and without further action by our stockholders, to abandon the Reverse Split Amendment and the Reverse Stock Split if, at any time prior to the effectiveness of the filing of the Reverse Split Amendment with the Secretary of State of the State of Delaware, our Board, in its sole discretion, determines that it is no longer in our best interest and the best interests of our stockholders to proceed. If our Board does not effect any Reverse Stock Split on or prior to the one -year anniversary of the Annual Meeting, stockholder approval would again be required prior to implementing any reverse stock split.
Reasons for the Reverse Stock Split
Regaining Compliance with the Minimum Bid Price Rule
Our primary objective in asking for the authority to effect the Reverse Stock Split is to raise the per share trading price of shares of our common stock. Shares of our common stock are publicly traded and listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “ALLR.” To maintain listing, Nasdaq requires, among other things, that our common stock maintain a minimum closing bid price of $1.00 per share (the “Minimum Bid Price Rule”).
On June 18, 2024, we received a written notice from Nasdaq notifying us that we failed to comply with the Minimum Bid Price Rule. Normally, a company would be afforded a 180 -calendar day period to demonstrate compliance with the Minimum Bid Price Rule. However, we are not eligible for any compliance period specified in Rule 5810(c)(3)(A) because we effected one or more reverse stock splits over the prior two -year period with a
17
cumulative ratio of 250 shares or more to one. Accordingly, the Nasdaq staff determined to delist our securities from Nasdaq (the “Staff Determination”). Unless we request an appeal of the Staff Determination, trading of shares of our common stock will be suspended at the opening of business on June 27, 2024, and a Form 25 -NSE will be filed with the SEC, which will remove our securities from listing and registration on Nasdaq. On June 25, 2024, we requested a hearing before a Nasdaq Hearings Panel (the “Panel”), to appeal the Staff Determination, which request was granted and would stay any delisting action pending the issuance of the Panel’s determination. A hearing on the matter is scheduled for July 30, 2024, where we intend to presented our compliance plan.
While we intend to monitor the closing price of shares of our of common stock and consider available options depending on the trading price of shares of our common stock, no assurance can be made that we will in fact be able to comply with the Minimum Bid Price Rule. Reducing the number of outstanding shares of our common stock should, absent other factors, result in an increase in the per share market price of our common stock, although we cannot provide any assurance that our minimum bid price would, following the Reverse Stock Split, remain over any applicable minimum bid price requirements. Accordingly, our Board believes that it is in our and our stockholders best interest that our Board has the ability to effect, in its discretion, the Reverse Stock Split to improve the price level of our common stock so that we are able to maintain continued compliance with the Minimum Bid Price Rule and minimize the risk of future delisting from Nasdaq.
Additional Reasons to Effect the Reverse Stock Split
In addition to the primary purpose for effecting the Reverse Stock Split, an increase in the per -share trading price of shares of our common stock is expected to:
• increase the acceptability of shares of our common stock to long -term investors who may not find our shares attractive at their current prices due to the trading volatility often associated with stocks below certain prices;
• make shares of our common stock eligible for investment by brokerage houses and institutional investors that have internal policies and practices that either prohibit them from investing in low -priced stocks or tend to discourage individual brokers from recommending low -priced stocks to their customers or by restricting or limiting the ability to purchase such stocks on margin; and
• make shares of our common stock more attractive for investors who may be dissuaded from purchasing stocks below certain prices because the brokerage commissions, as a percentage of the total transaction value, tend to be higher for such low -priced stocks.
In evaluating whether to effect the Reverse Stock Split, our Board has taken, and will take, into consideration negative factors associated with reverse stock splits. These factors are delineated under the heading “ Certain Risks Associated with the Reverse Stock Split .” In approving and recommending the Reverse Stock Split Proposal, our Board determined that these potentially negative factors were significantly outweighed by the potential benefits.
Although we expect that the Reverse Stock Split will increase the market price of our common stock as a result of having fewer outstanding shares, the Reverse Stock Split may not result in a permanent increase in the market price of our common stock, which will continue to be dependent on many factors, including general economic, market, and industry conditions and other factors detailed from time to time in the reports we file with the SEC. In addition, there can be no assurance that our common stock will not be delisted due to a failure to meet other continued listing requirements of Nasdaq even if the market price per post -split share of our common stock remains in excess of $1.00.
Determination of the Reverse Stock Split Ratio
If our stockholders approve the Reverse Stock Split Proposal, our Board will be authorized to proceed with the Reverse Stock Split. The exact ratio of the Reverse Stock Split, within the 1 -for-5 to 1 -for-30 range, would be determined by our Board in its sole and absolute discretion and publicly announced by us prior to the effective time of the Reverse Stock Split. In determining whether to proceed with the Reverse Stock Split and setting the appropriate ratio for the Reverse Stock Split, our Board will consider, among other things, factors such as:
• the historical trading prices and trading volume of our common stock;
• the number of shares of our common stock outstanding;
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• the then -prevailing and expected trading prices and trading volume of our common stock and the anticipated impact of the Reverse Stock Split on the trading market for our common stock;
• our ability to maintain our listing on Nasdaq;
• the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs;
• business developments affecting us; and
• prevailing general market and economic conditions.
Certain Risks Associated with the Reverse Stock Split
Before voting on this proposal, you should consider the following risks associated with the implementation of the Reverse Stock Split.
• Although we expect that the Reverse Stock Split will result in an increase in the market price of our common stock, we cannot assure you that the Reverse Stock Split, if implemented, will increase the market price of our common stock in proportion to the reduction in the number of shares of common stock outstanding or result in a permanent increase in the market price. The effect the Reverse Stock Split may have upon the market price of our common stock cannot be predicted with any certainty, and the history of similar reverse stock splits for companies in similar circumstances to ours is varied. The market price of our common stock is dependent on many factors, including our business and financial performance, general market conditions, prospects for future success, and other factors detailed from time to time in the reports we file with the SEC. Accordingly, the total market capitalization of our common stock after the proposed Reverse Stock Split may be lower than the total market capitalization before the proposed Reverse Stock Split and, in the future, the market price of our common stock following the Reverse Stock Split may not exceed or remain higher than the market price prior to the proposed Reverse Stock Split.
• If the Reverse Stock Split is consummated, but the trading price of our common stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of the Reverse Stock Split.
• Although our Board believes that the decrease in the number of shares of our common stock outstanding as a consequence of the Reverse Stock Split and the anticipated increase in the market price of our common stock could encourage interest in our common stock and possibly promote greater liquidity for our stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the Reverse Stock Split.
• Furthermore, the implementation of the Reverse Stock Split would not change the total number of shares of our common stock authorized for issuance. As a result, the number of shares of our common stock available for issuance following the implementation of the Reverse Stock Split would increase to the extent the Reverse Stock Split reduces the number of outstanding shares of our common stock. Such available shares may be used for future corporate purposes, including future acquisitions, investment opportunities, the establishment of collaboration or other strategic agreements, capital raising transactions involving equity or convertible debt securities, future at -the -market offerings of common stock, or issuance under current or future employee equity plans, and the issuance of equity securities in connection with such transactions may result in potentially significant dilution of our current stockholders’ ownership interests in us.
• In addition, although the purpose of the Reverse Stock Split is not to establish any barriers to a change of control or acquisition of us, investors might consider the increased proportion of unissued authorized shares to issued shares to have an anti -takeover effect under certain circumstances because the proportion allows for dilutive issuances. We are not aware of any attempt or plan to obtain control of us. We currently have no plans, proposals or arrangements to issue any shares of common stock that would become newly available for issuance as a result of the Reverse Stock Split.
• The Reverse Stock Split may result in some stockholders owning “odd lots” of fewer than one hundred (100) shares of our common stock on a post -split basis. These odd lots may be more difficult to sell, or require greater transaction costs per share to sell, than shares in “round lots” of even multiples of one hundred (100) shares.
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Principal Effects of the Reverse Stock Split
Effects of the Reverse Stock Split on Issued and Outstanding Shares
If the Reverse Stock Split is effected, it will reduce the total number of issued and outstanding shares of Common Stock, including shares held by us as treasury shares, by a Reverse Stock Split ratio between 1 -for-5 and 1 -for-30 . Accordingly, each of our stockholders will own fewer shares of common stock as a result of the Reverse Stock Split. However, the Reverse Stock Split will affect all stockholders uniformly and will not affect any stockholder’s percentage ownership interest in us, except to the extent that the Reverse Stock Split would result in an adjustment to a stockholder’s ownership of common stock due to the treatment of fractional shares in the Reverse Stock Split. Therefore, voting rights and other rights and preferences of the holders of common stock will not be affected by the Reverse Stock Split (other than as a result of the treatment of fractional shares). Common stock issued pursuant to the Reverse Stock Split will remain fully paid and nonassessable, and the par value per share of common stock will remain $0.0001.
As of the Record Date, we had 25,587,301 shares of common stock outstanding. For purposes of illustration, if the Reverse Stock Split is effected at a ratio between 1 -for-5 and 1 -for-30 , the number of issued and outstanding shares of common stock after the Reverse Stock Split would be approximately 5,117,460 shares and 852,910 shares, respectively.
We are currently authorized to issue a maximum of 750,000,000 shares of our common stock. Although the number of authorized shares of our common stock will not change as a result of the Reverse Stock Split, the number of shares of our common stock issued and outstanding will be reduced in proportion to the ratio selected by our Board. Thus, the Reverse Stock Split will effectively increase the number of authorized and unissued shares of our common stock available for future issuance by the amount of the reduction effected by the Reverse Stock Split.
Following the Reverse Stock Split, our Board will have the authority, subject to applicable securities laws, to issue all authorized and unissued shares without further stockholder approval, upon such terms and conditions as our Board deems appropriate. Except as disclosed in this Proxy Statement, and our intent to raise capital through the issuance of our equity and equity -based securities in order to achieve our business objectives, we do not currently have any other plans, proposals or understandings to issue the additional shares that would be available if the Reverse Stock Split is approved and effected, but some of the additional shares underlie warrants, which could be exercised after the Reverse Stock Split Amendment is effected.
Effects of the Reverse Stock Split on Outstanding Equity Awards and Plans
If the Reverse Stock Split is effected, the terms of equity awards granted under the 2021 Plan including (i) the number of shares and type of common stock (or the securities or property) which thereafter may be made the subject of awards; (ii) the number of shares and type of common stock (or other securities or property) subject to outstanding awards; (iii) the number of shares and type of common stock (or other securities or property) specified as the annual per -participant limitation under the 2021 Plan; (iv) the option price of each outstanding stock option; and (v) the amount, if any, paid for forfeited shares in accordance with the terms of the 2021 Plan, will be proportionally adjusted to the end that the same proportion of our issued and outstanding shares of Common Stock in each instance shall remain subject to exercise at the same aggregate exercise price; subject to adjustments for any fractional shares as described herein and provided, however, that the number of shares of common stock (or other securities or property) subject to any award shall always be a whole number. In addition, the total number of shares of common stock that may be the subject of future grants under the 2021 Plan, as well as any plan limits on the size of such grants (e.g., the 2021 Plan’s limit on the number of stock options or stock appreciation rights that may be granted to our executive officers in any calendar year) will be adjusted and proportionately decreased as a result of the Reverse Stock Split.
Effects of the Reverse Stock Split on Voting Rights
Proportionate voting rights and other rights of the holders of common stock would not be affected by the Reverse Stock Split (other than as a result of the treatment of fractional shares). For example, a holder of 1% of the voting power of the outstanding common stock immediately prior to the effective time of the Reverse Stock Split would continue to hold 1% of the voting power of the outstanding common stock after the Reverse Stock Split.
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Effects of the Reverse Stock Split on Regulatory Matters
We are subject to the periodic reporting and other requirements of the Exchange Act. The Reverse Stock Split will not affect our obligation to publicly file financial and other information with the SEC.
Effects of the Reverse Stock Split on Authorized Share Capital
The total number of shares of capital stock that we are authorized to issue will not be affected by the Reverse Stock Split.
Procedures for Effecting a Reverse Stock Split and Exchange of Stock Certificates
Reverse Split Amendment
If stockholders approve the Reverse Stock Split Proposal, and if our Board determines to effect the Reverse Stock Split (with the ratio to be determined in the sole discretion of our Board within the parameters described), we will file the Reverse Split Amendment, in substantially the form attached to the Proxy Statement as Appendix B , with the Secretary of State of the State of Delaware, reflecting such Reverse Stock Split ratio determined by our Board. The Reverse Stock Split will become effective at the time and on the date of filing of, or at such later time as is specified in the Reverse Split Amendment, which we refer to as the “effective time” and the “effective date,” respectively. The effective time of the Reverse Split Amendment and the Reverse Stock Split shall be determined in the sole discretion of our Board and in accordance with applicable law. The text of the Reverse Split Amendment is subject to modifications to include such changes as may be required by the office of the Secretary of State of the State of Delaware and as our Board deems necessary and advisable to effect the Reverse Stock Split.
Registered Holders of Common Stock
Certain of our registered stockholders hold some or all of their shares electronically in book -entry form with our transfer agent. These stockholders do not hold physical certificates evidencing their ownership of our common stock. However, they are provided with a statement reflecting the number of shares of our common stock registered in their accounts. If a stockholder holds shares of common stock in book -entry form with our transfer agent, no action needs to be taken to receive post -Reverse Stock Split shares.
Beneficial Owners of Common Stock
Upon the Reverse Stock Split, we intend to treat stockholders holding our common stock in “street name,” through a bank, broker, or other nominee, in the same manner as registered stockholders whose shares are registered in their names. Brokers, banks, or other nominees will be instructed to process a reverse stock split for their beneficial holders holding our common stock in “street name.” However, these banks, brokers, or other nominees may have different procedures than registered stockholders for processing a reverse stock split. If you hold your shares with a bank, broker, or other nominee and if you have any questions in this regard, we encourage you to contact your nominee.
Treatment of Fractional Shares
We would not issue fractional shares in connection with the reverse stock split. Instead, any fractional share resulting from the reverse stock split because the stockholder owns a number of shares not evenly divisible by the Split Ratio would be rounded up to the next whole share.
No action is proposed herein for which the laws of the State of Delaware, our Certificate of Incorporation, or our Bylaws provide a right to our stockholders to dissent and obtain an appraisal of, or payment for, such stockholders’ common stock.
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The Reverse Stock Split would not affect the par value of our common stock per share, which would remain $0.0001 par value per share, while the number of outstanding shares of common stock would decrease, in accordance with the Reverse Stock Split ratio. As a result, as of the effective time of the Reverse Stock Split, the stated capital attributable to common stock on our balance sheet would decrease, and the additional paid -in capital account on our balance sheet would increase by an offsetting amount. Following the Reverse Stock Split, the reported per -share net income or loss would be higher because there would be fewer shares of common stock outstanding and we would adjust historical per -share amounts set forth in our future financial statements.
Reservation of Right to Abandon the Amendment to our Certificate of Incorporation
As previously stated, our Board reserves the right, notwithstanding stockholder approval and without further action by the stockholders, to elect not to proceed with the Reverse Stock Split if, at any time prior to effectiveness of the Reverse Split Amendment, our Board, in its sole discretion, determines that it is no longer in our and our stockholders best interests to proceed with the Reverse Stock Split. By voting in favor of the Reverse Stock Split, you are expressly also authorizing our Board to delay or abandon the Reverse Stock Split. If our Board does not effect any Reverse Stock Split on or prior to the one -year anniversary of the Annual Meeting, stockholder approval would again be required prior to implementing any reverse stock split.
Material U.S. Federal Income Tax Consequences of the Reverse Stock Split to U.S. Holders
The following discussion summarizes certain material U.S. federal income tax considerations of the Reverse Stock Split. This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, the final, temporary, and proposed U.S. Treasury Regulations promulgated thereunder, and administrative rulings and judicial decisions now in effect, all of which are subject to change at any time or subject to different interpretations (possibly with retroactive effect). This discussion does not purport to deal with all aspects of U.S. federal income taxation that may be relevant to the Reverse Stock Split in light of a stockholder’s personal circumstances or to certain types of stockholders that may be subject to special tax treatment, such as, but not limited to, banks and other financial institutions, retirement plans, employee stock ownership plans, regulated investment companies or real estate investment trusts, partnerships or other pass -through entities for U.S. federal income tax purposes (or investors in such entities), tax -exempt entities or organizations, United States expatriates, persons that have a principal place of business or “tax home” outside of the United States, persons subject to special rules under Section 892 of the Code, persons who receive our securities through the exercise of employee stock options or otherwise as compensation, controlled foreign corporations, passive foreign investment companies, corporations that accumulate earnings to avoid U.S. federal income tax, insurance companies, “S” corporations, dealers in securities and foreign currencies, traders in securities that elect to use a mark -to -market method of accounting for their securities, brokers, persons who hold our securities as part of a hedge, straddle, conversion, integrated, or other risk reduction or constructive sale transaction, persons required to report income no later than when such income is reported on an “applicable financial statement,” “U.S. holders” (as defined below) whose functional currency is not U.S. dollars, U.S. holders that hold our stock through non -U .S. brokers or other non -U .S. intermediaries, or persons subject to the alternative minimum tax. In addition, this summary does not include any description of the tax laws of any state, local, or non -U .S. jurisdiction that may be applicable to a particular stockholder and does not consider any aspects of U.S. federal tax law other than income taxation (such as estate and gift tax or Medicare contribution tax laws). In addition, this summary does not include any description of the tax laws of any state, local, or non -U .S. jurisdiction that may be applicable to a particular stockholder and does not consider any aspects of U.S. federal tax law other than income taxation (such as estate and gift tax or Medicare tax). In addition, this discussion is limited to persons who hold our common stock as a “capital asset” (generally, property held for investment) within the meaning of Section 1221 of the Code.
As used herein, the term “U.S. holder” means a beneficial owner of common stock that is, for U.S. federal income tax purposes:
• an individual who is a citizen or resident of the United States;
• a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any political subdivision thereof;
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• a trust if it (1) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person; or
• an estate the income of which is subject to U.S. federal income taxation regardless of its source.
As used herein, the term “non -U .S. holder” means a beneficial owner of common stock that is neither a U.S. holder nor a partnership or an entity treated as a partnership for U.S. federal income tax purposes. If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of common stock, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership. A beneficial owner that is a partnership and partners in such a partnership are urged to consult their tax advisors about the U.S. federal income tax consequences of owning our common stock.
This discussion is not binding on the Internal Revenue Service (the “IRS”). Except as discussed herein, we have not sought, and will not seek, any ruling from the IRS or an opinion from counsel with respect to the statements made in the following discussion. Accordingly, there can be no assurance that the IRS will not take a position contrary to such statements or that any such contrary position taken by the IRS would not be sustained by a court.
Stockholders are urged to consult their own tax advisors with respect to the application of the U.S. federal income tax laws to their particular situations as well as any tax consequences arising under the U.S. federal estate or gift or other rules or under the laws of any state, local or foreign taxing jurisdiction or under any applicable tax treaty.
Tax Consequences to the Company
The Reverse Stock Split is intended to be treated as a tax deferred “recapitalization” for U.S. federal income tax purposes. If the Reverse Stock Split qualifies as a recapitalization, then we will not recognize gain or loss as a result of the Reverse Stock Split.
Tax Consequences to U.S. Holders
The Reverse Split is intended to constitute a “Recapitalization” within the meaning of Section 368(a)(1)(E) of the Code for U.S. federal income tax purposes. Assuming that such treatment is correct, the Reverse Stock Split generally will not result in the recognition of gain or loss for U.S. federal income tax purposes, except potentially with respect to any additional fractions of a share of our common stock received as a result of the rounding up of any fractional shares that otherwise would be issued, as discussed below. Subject to the following discussion regarding a stockholder’s receipt of a whole share of our common stock in lieu of a fractional share, the adjusted basis of the new shares of common stock will be the same as the adjusted basis of the common stock exchanged for such new shares. The holding period of the new, post -Reverse Split shares of the common stock resulting from implementation of the Reverse Split will include the stockholder’s respective holding periods for the pre -Reverse Split shares. Stockholders who acquired their shares of our common stock on different dates or at different prices should consult their tax advisors regarding the allocation of the tax basis of such shares.
The treatment of the exchange of a fractional share for a whole share in the Reverse Stock Split is not clear under current law, and a U.S. Holder who receives one (1) whole share of our common stock in lieu of a fractional share may recognize income or gain in an amount not to exceed the excess of the fair market value of such share over the fair market value of the fractional share to which such stockholder was otherwise entitled. We are not making any representation as to whether the receipt of one (1) whole share in lieu of a fractional share will result in income or gain to any stockholder, and stockholders are urged to consult their own tax advisors as to the possible tax consequences of receiving a whole share in lieu of a fractional share in the Reverse Split.
The preceding discussion is intended only as a summary of certain material U.S. federal income tax consequences of the Reverse Stock Split. It is not a complete analysis or discussion of all potential tax effects that may be important to a particular holder. All holders of our common stock should consult their own tax advisors as to the specific tax consequences of the Reverse Stock Split for them, including record retention and tax -reporting requirements, and the applicability and effect of any federal, state, local, and non -U .S. tax laws.
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If a quorum is present at the Annual Meeting, approval of this proposal will require the affirmative vote of holders of a majority of the votes cast affirmatively or negatively (excluding abstentions) on the proposal at the Annual Meeting. This proposal is a routine matter, and brokers and other nominees may generally vote in their discretion on routine matters, and therefore broker non -votes are not expected on this proposal. Abstentions will have no effect on the proposal.
Our Board unanimously recommends a vote FOR the Reverse Stock Split Proposal.
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INCREASE OF SHARES AUTHORIZED FOR ISSUANCE UNDER THE ALLARITY THERAP
EUTICS, INC
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2021 EQUITY INCENTIVE PLAN
Our Board is asking our stockholders to approve an amendment to our Amended and Restated 2021 Equity Incentive Plan (the “2021 Plan”) to increase the maximum number of shares available for grant under the 2021 Plan (the “2021 Plan Increase”) from 2,168,330 shares to 8,565,154 shares (or the quotient obtained by dividing such number by the Split Ratio, if the Reverse Stock Split Proposal is approved and implemented).
On June 21, 2024, our Board approved the 2021 Plan Increase, subject to stockholder approval. The 2021 Plan Increase is intended to allow us to maintain a pool of shares available for grant under the 2021 Plan in order to retain, incentivize and reward our current employees, consultants, officers and directors, and to attract new employees, officers and consultants and, where appropriate, new director candidates.
As of the Record Date, there were no shares available for future grants under the 2021 Plan. Approval of the 2021 Plan Increase would increase that number by 6,396,824 shares. If the 2021 Plan Increase is approved, the 6,396,824 total available shares are expected to allow for grants over approximately the next two years based on our current share price and historical grant practices, and assuming a stable grantee population and before giving effect to the Reverse Stock Split Proposal, if approved and implemented. On the Record Date, the last reported sale price for our common stock on the Nasdaq was $0.4549 per share.
The material features of the 2021 Plan are outlined below. This summary is qualified in its entirety by reference to the complete text of the 2021 Plan. Stockholders are encouraged to read the actual text of the 2021 Plan, which is included in the Proxy Statement as Appendix C .
The 2021 Plan became effective on December 20, 2021. It was approved by stockholders in connection with the Recapitalization Share Exchange. The 2021 Plan authorizes the award of stock options, Restricted Stock Awards (“RSAs”), Stock Appreciation Rights (“SARs”), Restricted Stock Units (“RSUs”), cash awards, performance awards and stock bonus awards. We initially reserved 1,211,374 shares of our common stock under the 2021 Plan. The number of shares reserved for issuance under our 2021 Plan will increase automatically on January 1 of each of 2022 through 2031 by the number of shares equal to the lesser of 5% of the aggregate number of outstanding shares of our common stock as of the immediately preceding December 31, or a number as may be determined by our Board. There was no adjustment to increase on January 1, 2022. Our Board approved an increase of 5% of the outstanding shares of common stock at December 30, 2022, or 794,892 shares, effective as of January 1, 2023. As a result, as of January 1, 2023, there was a total of 2,006,266 shares of common stock reserved under the 2021 Plan, of which 1,960,266 were available for issuance.
Upon the closing of the Recapitalization Share Exchange and as of December 31, 2021, we had converted compensatory options to purchase ordinary shares of Allarity Therapeutics A/S to options to purchase 1,174,992 shares of our common stock. Except as specifically provided above, following the effective time of our Recapitalization Share Exchange, each converted option continues to be governed by the same terms and conditions (including vesting and exercisability terms) as were applicable to the corresponding former Compensatory Warrant immediately prior to the effective time.
As of December 31, 2023, there was an option to purchase 382 shares of common stock issued and outstanding.
In addition, the following shares will again be available for issuance pursuant to awards granted under our 2021 Plan:
• shares subject to options or SARs granted under our 2021 Plan that cease to be subject to the option or SAR for any reason other than exercise of the option or SAR;
• shares subject to awards granted under our 2021 Plan that are subsequently forfeited or repurchased by us at the original issue price;
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• shares subject to awards granted under our 2021 Plan that otherwise terminate without such shares being issued;
• shares subject to awards granted under our 2021 Plan that are surrendered, cancelled or exchanged for cash or a different award (or combination thereof); and
• shares subject to awards under our 2021 Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award.
Purpose. The purpose of our 2021 Plan is to provide incentives to attract, retain, and motivate eligible persons whose present and potential contributions are important to our success, and any parents, subsidiaries, and affiliates that exist now or in the future, by offering them an opportunity to participate in our future performance through the grant of awards.
Administration. The 2021 Plan is expected to be administered by our Compensation Committee, all of the members of which are outside directors as defined under applicable federal tax laws, or by our Board acting in place of our Compensation Committee. Subject to the terms and conditions of the 2021 Plan, the Compensation Committee will have the authority, among other things, to select the persons to whom awards may be granted, construe and interpret our 2021 Plan as well as to determine the terms of such awards and prescribe, amend and rescind the rules and regulations relating to the plan or any award granted thereunder. The 2021 Plan provides that our Board or Compensation Committee may delegate its authority, including the authority to grant awards, to one or more executive officers to the extent permitted by applicable law, provided that awards granted to non -employee directors may only be determined by our Board.
Eligibility. The 2021 Plan provides for the grant of awards to our employees, directors and consultants. All of our 5 employees, 3 non -employee directors, and 9 consultants are currently eligible to participate in the 2021 Plan.
Options. The 2021 Plan provides for the grant of both incentive stock options intended to qualify under Section 422 of the Code, and non -statutory stock options to purchase shares of our common stock at a stated exercise price. Incentive stock options may only be granted to employees, including officers and directors who are also employees. The exercise price of stock options granted under the 2021 Plan must be at least equal to the fair market value of our common stock on the date of grant. Incentive stock options granted to an individual who holds, directly or by attribution, more than 10% of the total combined voting power of all classes of our capital stock must have an exercise price of at least 110% of the fair market value of our common stock on the date of grant. Subject to stock splits, dividends, recapitalizations, or similar events, no more than 7,009,980 shares may be issued pursuant to the exercise of incentive stock options granted under the 2021 Plan.
Options may vest based on service or achievement of performance conditions. Our Compensation Committee may provide for options to be exercised only as they vest or to be immediately exercisable, with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest. The maximum term of options granted under the 2021 Plan is 10 years from the date of grant, except that the maximum permitted term of incentive stock options granted to an individual who holds, directly or by attribution, more than 10% of the total combined voting power of all classes of our capital stock is five years from the date of grant.
Restricted stock awards. An RSA is an offer by us to sell shares of our common stock subject to restrictions, which may lapse based on the satisfaction of service or achievement of performance conditions. The price, if any, of an RSA will be determined by the Compensation Committee. Holders of RSAs will have the right to vote and any dividends or stock distributions paid pursuant to unvested RSAs will be accrued and paid when the restrictions on such shares lapse. Unless otherwise determined by the Compensation Committee at the time of award, vesting will cease on the date the participant no longer provides services to us and unvested shares may be forfeited to or repurchased by us.
Stock appreciation rights. A SAR provides for a payment, in cash or shares of our common stock (up to a specified maximum of shares, if determined by our Compensation Committee), to the holder based upon the difference between the fair market value of our common stock on the date of exercise and a predetermined exercise price, multiplied by the number of shares. The exercise price of a SAR must be at least the fair market value of a share of our common stock on the date of grant. SARs may vest based on service or achievement of performance conditions and may not have a term that is longer than 10 years from the date of grant.
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Restricted stock units. RSUs represent the right to receive shares of our common stock at a specified date in the future and may be subject to vesting based on service or achievement of performance conditions. Payment of earned RSUs will be made as soon as practicable on a date determined at the time of grant, and may be settled in cash, shares of our common stock or a combination of both. No RSU may have a term that is longer than 10 years from the date of grant.
Performance awards. Performance awards granted pursuant to the 2021 Plan may be in the form of a cash bonus, or an award of performance shares or performance units denominated in shares of our common stock that may be settled in cash, property or by issuance of those shares subject to the satisfaction or achievement of specified performance conditions.
Stock bonus awards. A stock bonus award provides for payment in the form of cash, shares of our common stock or a combination thereof, based on the fair market value of shares subject to such award as determined by our Compensation Committee. The awards may be granted as consideration for services already rendered, or at the discretion of the Compensation Committee, may be subject to vesting restrictions based on continued service or performance conditions.
Cash awards. A cash award is an award that is denominated in, or payable to an eligible participant solely in, cash.
Dividend equivalents rights. Dividend equivalent rights may be granted at the discretion of our Compensation Committee and represent the right to receive the value of dividends, if any, paid by us in respect of the number of shares of our common stock underlying an award. Dividend equivalent rights will be subject to the same vesting or performance conditions as the underlying award and will be paid only at such time as the underlying award has become fully vested. Dividend equivalent rights may be settled in cash, shares or other property, or a combination thereof as determined by our Compensation Committee.
Change of control. The 2021 Plan provides that, in the event of a corporate transaction, as defined in the 2021 Plan, outstanding awards under the 2021 Plan shall be subject to the agreement evidencing the corporate transaction, any or all outstanding awards may be (a) continued by us, if we are the successor entity; (b) assumed or substituted by the successor corporation, or a parent or subsidiary of the successor corporation, for substantially equivalent awards (including, but not limited to, a payment in cash or the right to acquire the same consideration paid to the stockholders of the company pursuant to the corporate transaction); (c) substituted by the successor corporation of equivalent awards with substantially the same terms for such outstanding awards; (d) accelerated in full or in part as to the exercisability or vesting; (e) settled in the full value of such outstanding award in cash, cash equivalents, or securities of the successor entity (or its parent, if any) with a fair market value equal to the required amount, followed by the cancellation of such awards; or (f) cancelled for no consideration. If applicable, the number and kind of shares and exercise prices of awards being continued, assumed, or substituted shall be adjusted pursuant to the terms of the 2021 Plan.
Adjustment. In the event of a change in the number of outstanding shares of our common stock without consideration by reason of a stock dividend, extraordinary dividend or distribution, recapitalization, stock split, reverse stock split, subdivision, combination, consolidation reclassification, spin -off or similar change in our capital structure, appropriate proportional adjustments will be made to the number and class of shares reserved for issuance under our 2021 Plan; the exercise prices, number and class of shares subject to outstanding options or SARs; the number and class of shares subject to other outstanding awards; and any applicable maximum award limits with respect to incentive stock options.
Exchange, repricing, and buyout of awards. Our Compensation Committee may, with the consent of the respective participants, issue new awards in exchange for the surrender and cancelation of any or all outstanding awards. Our Compensation Committee may also reduce the exercise price of options or SARs or buy an award previously granted with payment in cash, shares, or other consideration, in each case, subject to the terms of the 2021 Plan.
Director compensation limits. No non -employee director may receive awards under the 2021 Plan with a grant date value that when combined with cash compensation received for his or her service as a director, exceeds $750,000 in a calendar year or $1,000,000 in the calendar year of his or her initial service.
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Clawback; transferability. All awards will be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by our Board (or a committee thereof) or required by law during the term of service of the award holder, to the extent set forth in such policy or applicable agreement. Except in limited circumstances, awards granted under our 2021 Plan may generally not be transferred in any manner prior to vesting other than by will or by the laws of descent and distribution.
Amendment and termination. Our Board may amend the 2021 Plan at any time, subject to stockholder approval as may be required. The 2021 Plan will terminate 10 years from the date our Board adopts the plan unless it is terminated earlier by our Board. No termination or amendment of the 2021 Plan may adversely affect any then -outstanding award without the consent of the affected participant, except as is necessary to comply with applicable laws.
The discussion above is intended only as a summary and does not purport to be a complete discussion of all potential tax effects relevant to recipients of awards under the 2021 Plan. Among other items this discussion does not address are tax consequences under the laws of any state, locality, or foreign jurisdiction, or any tax treaties or conventions between the United States and foreign jurisdictions. This discussion is based upon current law and interpretational authorities which are subject to change at any time.
Consequences of Failing to Approve the Proposal
If the amendment to increase the number of shares authorized under our 2021 Plan is not approved by stockholders, the 2021 Plan will continue in full force and effect in accordance with its terms. Once the share reserve under the 2021 Plan is exhausted, we may elect to provide compensation through other means, such as cash -settled awards or other cash compensation, to assure that we and our affiliates can attract and retain qualified personnel.
If a quorum is present at the Annual Meeting, approval of this proposal will require the affirmative vote of the holders of a majority of shares of our common stock present in person or represented by proxy and entitled to vote on this proposal. If you do not instruct your broker how to vote with respect to this proposal, your broker, bank, or other nominee may not vote for this proposal, and those votes will be counted as “broker non -votes .” Broker non -votes will have no effect on the outcome of this proposal. Abstentions will have the same effect as an “AGAINST” vote on this proposal.
Our Board unanimously recommends a vote FOR the approval of an amendment to our equity incentive plan to increase the aggregate number of shares of common stock authorized for issuance by 6,396,824 shares.
28
OFFICER EXCULPATION AMENDMENT PROPOSAL
Our Board approved and declared advisable, subject to stockholder approval, a certificate of amendment to our Certificate of Incorporation, which would permit the exculpation of certain officers in specific circumstances, as permitted by law (the “Officer Exculpation Amendment”). The State of Delaware, which is our state of incorporation, enacted legislation that amended Section 102(b)(7) of the Delaware General Corporation Law (“DGCL”) to enable Delaware corporations to limit the personal liability of officers for breaches of the duty of care in limited circumstances. Amended DGCL Section 102(b)(7) only permits exculpation for direct claims brought by stockholders for breach of an officer’s fiduciary duty of care, including class actions, but does not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by the corporation itself or for derivative claims brought by stockholders in the name of the corporation. Furthermore, the limitation on liability does not apply to breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit.
Our Board believes it is important to provide protection from certain liabilities and expenses that may discourage prospective or current officers from serving corporations. Without such protection, qualified officers might be deterred from serving as officers due to exposure to personal liability and the risk that substantial expense will be incurred in defending lawsuits, regardless of merit. In considering the Officer Exculpation Amendment, our Board took into account the narrow class and type of claims that such officers would be exculpated from liability pursuant to amended DGCL Section 102(b)(7), the limited number of officers that would be impacted, and the benefits our Board believes would accrue to us by providing exculpation in accordance with amended DGCL Section 102(b)(7), including, without limitation, the ability to attract and retain key officers and the potential to reduce future litigation costs associated with frivolous lawsuits.
Our Board balanced these considerations with our corporate governance practices and determined that it is advisable and in our and our stockholders best interests and to amend the current exculpation and liability provision in our Certificate of Incorporation, to extend exculpation protection to certain of our officers in addition to our directors.
Text of the Officer Exculpation Amendment
Article EIGHTH of our Certificate of Incorporation already eliminates the monetary liability of our directors to the fullest extent permitted by law, as it currently exists or as it may be amended in the future but does not include a provision that allows to extend analogous protections to our officers. The Officer Exculpation Amendment would amend Article EIGHTH of our Certificate of Incorporation, to read in its entirety as follows:
“ EIGHTH: The liability of the directors and officers for monetary damages shall be eliminated to the fullest extent under applicable law.
To the fullest extent permitted by applicable law, the Corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers and agents of the Corporation (and any other persons to which applicable law permits the Corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise in excess of the indemnification and advancement otherwise permitted by such applicable law. If applicable law is amended after approval by the stockholders of this Article EIGHTH to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer to the Corporation shall be eliminated or limited to the fullest extent permitted by applicable law as so amended.
Any repeal or modification of this Article EIGHTH shall only be prospective and shall not affect the rights or protections or increase the liability of any director or officer under this Article EIGHTH in effect at the time of the alleged occurrence of any act or omission to act giving rise to liability or indemnification.”
29
The proposed certificate of amendment to our Certificate of Incorporation, reflecting the foregoing Officer Exculpation Amendment is attached as Appendix D to this Proxy Statement. The text of the Officer Exculpation Amendment is subject to modifications to include such changes as may be required by the office of the Secretary of State of the State of Delaware and as our Board deems necessary and advisable to effect the Officer Exculpation Amendment.
Effect of the Officer Exculpation Amendment
The proposed Officer Exculpation Amendment would allow for the exculpation of our officers to the fullest extent permitted by the DGCL. As described above, this means that the proposed Officer Exculpation Amendment would allow for the exculpation of covered officers only in connection with direct claims brought by stockholders, including class actions, but would not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by us or for derivative claims brought by stockholders in our name. The Officer Exculpation Amendment would not limit the liability of officers for any breach of the duty of loyalty to us or our stockholders, any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, or any transaction from which the officer derived an improper personal benefit.
The Officer Exculpation Amendment also provides that if the DGCL is further amended to eliminate or limit the liability of officers, the liability of such officers will be limited or eliminated to the fullest extent permitted by law, as so amended.
The proposed Officer Exculpation Amendment would not be retroactive to acts or omissions occurring prior to its effective date.
Reasons for Adoption of the Officer Exculpation Amendment
Our Board believes it is appropriate for public companies in states that allow exculpation of officers to have exculpation clauses in their certificates of incorporation. The nature of the role of directors and officers often requires them to make decisions on crucial matters. Frequently, directors and officers must make decisions in response to time -sensitive opportunities and challenges, which can create a substantial risk of investigations, claims, actions, suits, or proceedings seeking to impose liability on the basis of hindsight, especially in the current litigious environment and regardless of merit. Limiting concern about personal risk would empower both directors and officers to best exercise their business judgment in furtherance of stockholder interests. We observe numerous public companies incorporated in the State of Delaware having adopted or having attempted to adopt exculpation clauses that limit the personal liability of officers in their certificates of incorporation. Failing to adopt the proposed Officer Exculpation Amendment could impact our recruitment and retention of exceptional officer candidates who conclude that the potential exposure to liabilities, costs of defense, and other risks of proceedings exceeds the benefits of serving as our officer.
For the reasons stated above, our Board unanimously determined that the proposed Officer Exculpation Amendment is advisable and in our and our stockholders best interests and authorized and approved the proposed Officer Exculpation Amendment and directed that it be considered at the Annual Meeting. Our Board believes the proposed Officer Exculpation Amendment would better position us to attract top officer candidates and retain our current officers and enable the officers to exercise their business judgment in furtherance of the interests of the stockholders without the potential for distraction posed by the risk of personal liability. Additionally, it would align the protections for our officers with those protections currently afforded to our directors.
The proposed Officer Exculpation Amendment is not being proposed in response to any specific resignation, threat of resignation, or refusal to serve by any officer.
If our stockholders approve the Officer Exculpation Amendment, our Board has authorized our officers to file the Officer Exculpation Amendment with the Delaware Secretary of State, which we anticipate doing as soon as practicable following stockholder approval of the Officer Exculpation Amendment at the Annual Meeting, and the Officer Exculpation Amendment would become effective upon acceptance by the Delaware Secretary of State.
30
If our stockholders do not approve the Officer Exculpation Amendment, our current exculpation provisions relating to directors will remain in place, and the Officer Exculpation Amendment will not be filed with the Delaware Secretary of State.
Approval of this proposal requires the affirmative vote of the holders of at least sixty -six and two -thirds percent (66 -2 /3%) of the outstanding shares of our common stock. If you do not instruct your broker how to vote with respect to this proposal, your broker, bank, or other nominee may not vote for this proposal, and those votes will be counted as “broker non -votes .” Broker non -votes and abstentions will have the same effect as an “AGAINST” vote on this proposal.
Our Board unanimously recommends a vote FOR the approval of an amendment to our Certificate of Incorporation to limit liability of officers as permitted by Delaware law.
31
TO APPROVE THE ADJOURNMENT OF THE ANNUAL MEETING, IF NECESSARY OR ADVISABLE,
TO SOLICIT ADDITIONAL PROXIES
In this proposal, we are asking our stockholders to authorize us to adjourn the Annual Meeting to another time, if necessary or advisable, to solicit additional proxies in the event there are not sufficient votes to approve the Director Proposal, the Independent Auditor Proposal, the Share Decrease Proposal, the Reverse Stock Split Proposal, the 2021 Plan Amendment Proposal, or the Officer Exculpation Amendment Proposal as described in this Proxy Statement at the Annual Meeting. If our stockholders approve the proposals, we could adjourn the Annual Meeting without a vote on Proposal 7 to solicit additional proxies and/or to seek to convince stockholders to change their votes in favor of such proposals.
If it is necessary or advisable to adjourn the Annual Meeting, no notice of any adjournment of less than thirty (30) days is required to be given if the time and place of the adjourned meeting, and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, are announced at the meeting at which adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At the adjourned meeting, we may transact any business which might have been transacted at the original meeting.
Approval of this proposal will require the affirmative vote of the holders of a majority of shares of our common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal. This proposal is a routine matter, and brokers and other nominees may generally vote in their discretion on routine matters, and therefore broker non -votes are not expected on this proposal. Abstentions will have the same effect as an “AGAINST” vote on this proposal.
Our Board unanimously recommends a vote FOR the approval of an adjournment of the annual meeting if necessary or advisable to solicit additional proxies in favor of the Director Proposal, the Independent Auditor Proposal, the Share Decrease Proposal, the Reverse Stock Split Proposal, the 2021 Plan Amendment Proposal or the Officer Exculpation Amendment Proposal.
32
Our executive officers are appointed by our Board in accordance with our Bylaws. The table below identifies and sets forth certain biographical and other information regarding our executive officers as of July 1, 2024. There are no family relationships among any of our executive officers or directors.
|
Name |
Year First
|
Age |
Position |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Thomas H. Jensen |
2023 |
45 |
Chief Executive Officer |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Joan Y. Brown |
2022 |
70 |
Chief Financial Officer |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Steen Knudsen |
2021 |
63 |
Chief Scientific Officer |
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|
As of July 1 , 2024 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Total Number of Directors |
4 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Female |
Male |
Non-Binary |
Did Not
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Part I: Gender Identity |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Directors |
1 |
1 |
|
2 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Part II: Demographic Background |
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White |
|
2 |
|
|
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Did Not Disclose Demographic Background |
|
2 |
|
|
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Name and Position |
Audit
|
Compensation
|
Nominating
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Gerald W. McLaughlin,
|
P |
Chairman |
Chairman |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Thomas H. Jensen,
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Joseph W. Vazzano,
|
Chairman,* |
P |
P |
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Laura E. Benjamin,
|
P |
P |
P |
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|
Name and Principal Position |
Year |
Salary* |
Bonus (1)* |
All Other
|
Total* |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Thomas H. Jensen (2) |
2022 |
$ |
— |
$ |
— |
$ |
— |
|
$ |
— |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Chief Executive Officer, Corporate Secretary, and Senior Vice President, Investor Relations |
2023 |
$ |
— |
$ |
— |
$ |
24,720 |
(3) |
$ |
24,720 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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|
Joan Y. Brown |
2022 |
$ |
180,000 |
$ |
— |
|
— |
|
$ |
180,000 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Chief Financial Officer, Director of Financial Reporting |
2023 |
$ |
250,000 |
$ |
— |
|
— |
|
$ |
250,000 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Marie Foegh (4) |
2022 |
$ |
340,309 |
$ |
— |
|
— |
|
$ |
340,309 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Former Chief Medical Officer |
2023 |
$ |
365,471 |
$ |
— |
|
— |
|
$ |
365,471 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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James G. Cullem, |
2022 |
$ |
343,410 |
$ |
— |
|
— |
|
$ |
343,410 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Former Chief Executive Officer and Former Chief Business Officer (5) |
2023 |
$ |
405,492 |
$ |
50,000 |
$ |
68,320 |
(6) |
$ |
523,812 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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|
Steen Knudsen |
2022 |
$ |
372,426 |
$ |
— |
|
— |
|
$ |
372,426 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Chief Scientific Officer |
2023 |
$ |
266,215 |
$ |
— |
|
— |
|
$ |
266,215 |
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Name |
Grant
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Number of
|
Number of
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Equity
|
Option
|
Option
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Thomas H. Jensen |
11/24/2021 |
101 |
14 |
(1) |
— |
7,271.21 |
11/23/2026 |
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Chief Executive Officer |
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Joan Y. Brown |
— |
— |
— |
|
— |
— |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Chief Financial Officer, Director of Financial Reporting |
|
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|
Marie Foegh |
11/24/2021 |
49 |
7 |
(1) |
— |
7,271.21 |
11/23/2026 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Former Chief Medical Officer |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Named Executive Officers and Position |
Annual Base
Thomas H. Jensen,
Chief Executive Officer
(1)
$
460,800
James G. Cullem,
Former Chief Executive Officer
,
Chief Business Officer
(2)
$
350,000
Joan Y. Brown,
Chief Financial Officer
(3)
and Director of Financial Reporting
$
250,000
Marie Foegh,
Former Chief Medical Officer
$
331,200
____________ * All compensation amounts are in full numbers and not presented in $1,000’s. (1) Appointed Chief Executive Officer on December 12, 2023. (2) Appointed Chief Executive Officer on January 1, 2023, and Chief Executive Officer in June 2022 and effective December 8, 2023, terminated. (3) Appointed Chief Financial Officer on January 1, 2023, and Chief Financial Officer in June 2022. 42
Material Terms of Consultancy Agreement with Ljungaskog Consulting AB As previously disclosed in our public filings, we had entered into a one -year consultancy agreement (the “Consultancy Agreement”) with Ljungaskog Consulting AB, a Swedish limited liability company (the “Consultant”), owned and managed by Mr. Jensen. We had announced our intention to amend the Consultancy Agreement to clarify the scope of services to be provided by Mr. Jensen, increase his compensation, and extend the agreement’s term to December 1, 2024. However, these amendments did not materialize. Instead, effective June 1, 2024, we entered into a Management Services Agreement (the “MSA”) with the Consultant. The MSA supersedes and replaces the Consultancy Agreement in its entirety. Below is a summary of the material terms and conditions of the MSA. Services to be Performed. The Consultant, via Mr. Jensen, will deliver the scope of services typically expected of a Chief Executive Officer in a publicly held company within our industry. Term. The MSA and all associated obligations will commence on June 1, 2024 and will continue until termination as per the provisions of the MSA, subject to any terms agreed by the parties to survive the termination of the MSA. Monthly Fee. The Consultant shall receive a fixed fee of $43,750 per month for services rendered, payable in two installments (the “Monthly Fee”). The fee is subject to adjustments based upon the Consultant’s performance, with any increases being solely at our discretion. Signing Bonus. Within 30 days from June 1, 2024, we have agreed to pay the Consultant a one -time signing bonus of $100,000 (the “Signing Bonus”) in recognition of the Consultant’s commitment to fullfill the obligations specified in the MSA and the Consultant’s agreement not to terminate the engagement within one year from June 1, 2024 or engage in behavior that would justify termination of the MSA by us for Cause (as defined below). Should the Consultant terminate the MSA before one -year anniversary of June 1, 2024, or should we rightfully terminate the MSA for Cause (as defined below), the Consultant is obligated to repay the full amount of the Signing Bonus to us within 15 days of receiving our written request. Potential Performance Bonuses and Expenses. As long as the MSA is in effect, the Consultant will be eligible for a discretionary performance bonus each calendar year, based on performance metrics that we will determine and approve. Additionally, the Consultant is entitled to reimbursement for reasonable and necessary expenses directly incurred while providing services, provided that any expenses exceeding $5,000 require prior approval from us to qualify for reimbursement. Termination for Convenience by us. We may terminate the MSA at its convenience by providing 15 days’ advance written notice to the Consultant. Upon termination of the MSA for any reason, the Consultant shall be entitled to all monthly fees for services rendered up to and including the effective date of termination (the “Accrued Payments”). Termination for Convenience by the Consultant. The Consultant may terminate the MSA at its convenience by providing 30 days’ advance written notice to us. Should the Consultant terminate the MSA for convenience, it will not be entitled to any additional payments beyond the Accrued Payments. Termination for Cause by us. We may terminate the MSA for Cause (as defined below) immediately upon notice to the Consultant. “Cause” for termination will be considered if: (a) the Consultant fails to perform the services stipulated by the MSA; (b) there is a material breach of any obligation under the MSA by the Consultant; (c) the Consultant engages in fraud, embezzlement, dishonesty, misappropriation of confidential information, or harassment based on membership in a protected class; (d) the Consultant’s behavior causes public disrepute, contempt, or scandal; (e) the Consultant refuses to comply with a directive of our Board; (f) the Consultant delegates the performance of the services to someone other than Mr. Jensen, and, in our reasonable discretion, the delegate is not capable of performing at the level of Mr. Jensen; (g) the Consultant or anyone performing the services on behalf of the Consultant is convicted of a felony or any crime that undermines its ability to perform the services; or (h) the Consultant misappropriates our 43 business opportunity or becomes subject to a conflict of interest. However, for the causes listed in (a), (b), (e), and (f), termination will not be effective until 14 days after the Consultant fails to cure the conduct, following written notice of the intent to terminate for Cause. Upon termination of the MSA for Cause, the Consultant shall only be entitled to the Accrued Payments, with no entitlement to additional payments under the MSA. Termination for Good Reason by the Consultant. The Consultant may terminate the MSA for Good Reason (as defined below) immediately upon notice to us. “Good Reason” includes: (a) a material breach of the MSA by us; (b) a unilateral reduction of the Monthly Fee by us; or (c) a unilateral modification of Mr. Jensen’s from “Chief Executive Officer” by us. However, termination for Good Reason will not be effective unless we fail to remedy the breach within 14 days after receiving written notice from the Consultant detailing the reasons for termination. Upon termination of the MSA for Good Reason by Consultant, the Consultant will be entitled to the Accrued Payments plus an additional nine months of the Monthly Fee, provided that the Consultant fulfills all ongoing obligations under the MSA that survive termination, and within 45 days from the termination date, executes a general release of all claims the Consultant and any agents who performed services under the MSA could assert against us or our affiliates. Material Terms of Employment Agreements During the fiscal year ended December 31, 2023, with the exception of Mr. Jensen, we had employment agreements with the following named executive officers. On January 12, 2023, upon the approval of the Compensation Committee of our Board, we entered into a new separate employment agreement with Mr. Cullem, our former Chief Executive Officer, and Ms. Brown, our Chief Financial Officer, in connection with the additional executive officer positions that they were appointed to in June 2022. These employment agreements with Mr. Cullem and Ms. Brown became retroactively effective as of January 1, 2023, upon the closing of the April offering and superseded the prior employment agreements. Unless otherwise indicated, the following material terms of employment agreements applied to all of the following named executive officers. The employment agreements with each of the following named executive officers provide for at -will employment and may be terminated in writing with at least 30 days’ prior written notice or as otherwise required under applicable law. Under their respective employment agreements, each of the following named executive officers, among other things, are (i) entitled to participate in all of our employee benefit plans and programs as generally maintained and made available to its executive officers by us; (ii) eligible for grants of equity compensation as determined at the sole discretion by the Compensation Committee of our Board; and (iii) entitled to reimbursement of expenses in the course and scope of authorized Company business. In addition, each respective employment agreement also includes customary confidentiality and assignment of intellectual property obligations. Joan Y. Brown . Pursuant to the terms of Ms. Brown’s employment agreement (the “Brown Employment Agreement”), Ms. Brown can resign with or without Good Reason (as such term is defined in the Brown Employment Agreement). If Ms. Brown is terminated without Cause (as defined in the Brown Employment Agreement) or resigns with Good Reason or is terminated by us as a result of a Change -of -Control (as defined in the Brown Employment Agreement), we agreed to provide Ms. Brown with severance pay in an amount equal to 5 months’ pay at Ms. Brown’s final base salary rate, payable in the form of salary continuation. Such severance payments are conditioned upon Ms. Brown’s execution and non -revocation of a general release of claims. Marie Foegh. Dr. Foegh’s employment agreement (the “Foegh Employment Agreement”) can be terminated, in writing with 30 days’ prior written notice, by us for or without Cause (as such term is defined in the Foegh Employment Agreement) and Dr. Foegh can resign with or without Good Reason (as such term is defined in the Foegh Employment Agreement). If Dr. Foegh is terminated without Cause or resigns with Good Reason, we shall provide Dr. Foegh with severance pay in an amount equal to 6 months’ pay at Dr. Foegh’s final base salary rate, payable in the form of salary continuation. In the event Dr. Foegh’s employment is terminated by us as a result of a Change -of -Control (as such term in defined in the Foegh Employment Agreement), we shall provide Dr. Foegh with severance pay in the amount equal to 12 months’ pay. Such severance payments are conditioned on Dr. Foegh’s execution and non -revocation of a general release of claims. On February 28, 2024, we terminated the employment of Dr. Foegh, and her last day of employment was February 29, 2024. Steen Knudsen. Dr. Knudsen’s employment agreement (the “Knudsen Employment Agreement”) is governed by and construed in accordance with Danish law, including the Danish Salaried Employees Act and the Danish Holiday Act. The Knudsen Employment Agreement may be terminated by both parties in accordance with the provisions of the 44 Danish Salaried Employees Act, provided, however, that either party may terminate the employment with 1 months’ notice to the end of a calendar month when the following three conditions have been met: (1) Dr. Knudsen, within a period of 12 consecutive months, has received salary during sick leave for 120 full days inclusive of Sundays and public holidays, (2) notice is served by us immediately upon the expiry of the 120 sick leave days, and (3) notice is served while Dr. Knudsen is still sick. In the event of termination of the Knudsen Employment Agreement, Dr. Knudsen’s entitlement to continuing base pay shall be determined by the Danish Salaried Employees Act. In addition, the Knudsen Employment Agreement is subject to restrictive covenants, including non -compensation and non -solicitation provisions. In compensation for assuming the combined restriction clauses, Dr. Knudsen shall receive a monthly payment, during the restrictive period, equaling 60% of Dr. Knudsen’s final base salary, pension, bonus and all other fringe benefits with a tax value, calculated as per the date of resignation. Such compensation includes a lump sum compensation for the first 2 months, payable on the date of resignation. In the event Dr. Knudsen obtains suitable new employment in the period during which the combined restriction clause applies, the compensation shall, as of the 3 rd month and up to and including the 6 th month after his resignation, be reduced to 24%. We may terminate this combined restriction clause at any time, even after Dr. Knudsen’s resignation, at 1 months’ notice to the end of a month, whereupon our obligation to pay compensation shall cease. Base Salary The employment agreements with the following named executive officers provide for annual base salaries as set forth below. Compensation for Mr. Jensen is based on an hourly rate pursuant to his consultancy agreement as summarized above.
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