(1) Amounts reflect the grant date fair value of option awards granted in 2023 and 2022 in accordance with Accounting Standards Codification Topic 718. For information regarding assumptions underlying the valuation of equity awards, see Note 6 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. These amounts do not correspond to the actual value that may be received by the named executive officers if the stock options are exercised.
(2) Amounts reflect, in accordance with Accounting Standards Codification Topic 718, the grant date fair value of options to purchase the Company’s common stock granted to the respective named executive officer in payment of the incentive bonus earned by each such named executive officer for fiscal 2023. The amount of incentive bonus earned for 2023 was determined by the Compensation Committee on the grant date of September 15, 2024 and was paid in the form of fully vested options granted on such date in lieu of cash. The value of option grants was calculated on September 15, 2024, using the simplified method and based on the Black-Scholes option pricing model, with the inputs being a stock price of $1.20, an exercise price of $1.20, an expected term of 5 years, a risk-free rate of 3.37%, a volatility of 118% and an expected dividend rate of 0%. These amounts do not correspond to the actual value that may be received by the named executive officers if the stock options are exercised.
(3) Laxminarayan Bhat has served as Chief Executive Officer and President since the formation of Old Reviva in May 2006.
(4) Narayan Prabhu began serving as our Chief Financial Officer on December 14, 2020.
If we terminate Dr. Bhat’s employment without Cause or Dr. Bhat terminates his employment for Good Reason (each as defined in the Bhat Employment Agreement), Dr. Bhat will be entitled to receive (i) the Accrued Amounts (as defined in the Bhat Employment Agreement), and subject to Dr. Bhat’s execution and nonrevocation of a release of claims, (ii) eighteen (18) months of his Base Salary plus one and one-half times his annual Target Bonus (reduced to six (6) months of Base Salary and one-half of his annual Target Bonus if Dr. Bhat’s employment is terminated after the third anniversary of the effective date of the Bhat Employment Agreement) payable in equal installments in accordance with the Company’s normal payroll practices, (iii) twelve (12) months of service credit under all outstanding unvested equity incentive awards granted during Dr. Bhat’s employment (reduced to six (6) months of service credit if Dr. Bhat’s employment is terminated after the third anniversary of the effective date of the Bhat Employment Agreement) and (iv) reimbursement of COBRA coverage for up to eighteen (18) months. If Dr. Bhat’s employment is terminated on account of his death or Disability (as defined in the Bhat Employment Agreement), Dr. Bhat will be entitled to receive the Accrued Amounts and a lump sum payment equal to eighteen (18) months Base Salary and Target Bonus. In addition, if we terminate Dr. Bhat’s employment without Cause or Dr. Bhat terminates his employment for Good Reason within twelve (12) months following a Change in Control (as defined in the Bhat Employment Agreement), Dr. Bhat will be entitled to receive (i) the Accrued Amounts and, subject to Dr. Bhat’s execution and nonrevocation of a release of claims, (ii) a lump sum payment equal to 1.5 times his Base Salary and Target Bonus for the year in which the termination occurs, (iii) accelerated vesting of all of his outstanding equity incentive awards and cash incentive payments and (iv) reimbursement of COBRA coverage for up to eighteen (18) months.
Simultaneously with the execution of the Merger Agreement, Dr. Bhat entered into a non-competition and non-solicitation agreement (the “Non-Competition Agreement”), which became effective on December 14, 2020, pursuant to which Dr. Bhat agreed not to compete with Tenzing, Reviva and their respective affiliates during the three (3) year period following the Closing in North America, Europe or India or in any other markets in which Tenzing and Reviva are engaged. Dr. Bhat also agreed during such three (3) year restricted period to not solicit employees or customers of such entities. The Non-Competition Agreement also contains customary confidentiality and mutual non-disparagement provisions.
On February 8, 2023, our Compensation Committee (i) awarded Dr. Bhat a $160,000 bonus for 2022, representing 40% of his then-current base salary, (ii) set Dr. Bhat’s new base salary for 2023 at $450,000, effective as of January 1, 2023, and (iii) determined that Dr. Bhat is eligible to receive a 2023 bonus at a target level of 50% of his then-current base salary, subject to the satisfaction of certain subjective and/or objective criteria established and approved by our Compensation Committee. On April 25, 2023, our Compensation Committee awarded Dr. Bhat an option to purchase 443,000 shares of our common stock at an exercise price of $6.74 per share, based on the closing price of our common stock on the grant date in accordance with the terms of the Reviva Pharmaceuticals Holdings, Inc. 2020 Equity Incentive Plan (the “2020 Plan”).
On September 15, 2024, our Compensation Committee determined the amount of incentive bonus earned by Dr. Bhat for 2023 and awarded Dr. Bhat an option to purchase 158,451 shares of our common stock at an exercise price of $1.20 per share, based on the closing price of our common stock on September 13, 2024, in accordance with the terms of the 2020 Plan.
Narayan Prabhu.
On December 14, 2020, an offer letter Old Reviva entered into with Narayan Prabhu, dated October 19, 2020, became effective (the “Prabhu Offer Letter”). The Prabhu Offer Letter provides for Mr. Prabhu to serve as Chief Financial Officer reporting to our Chief Executive Officer or our Board and provides for an annual base salary of $275,000. Pursuant to the Prabhu Offer Letter, Mr. Prabhu’s employment with the Company will be at-will.
In addition, Mr. Prabhu is eligible for a discretionary bonus. Pursuant to the Prabhu Offer Letter, on April 14, 2021, Mr. Prabhu was granted options to purchase up to fifty thousand (50,000) shares of our common stock pursuant to our 2020 Plan. Pursuant to the terms of the Prabhu Offer Letter, Mr. Prabhu is also eligible to receive, from time to time, equity awards under our 2020 Plan, or any other equity incentive plan that we may adopt in the future, and the terms and conditions of such awards, if any, will be determined by our Board, or a committee thereof, in their discretion. The Prabhu Offer Letter contains customary confidentiality and assignment of inventions provisions.
On February 8, 2023, our Compensation Committee (i) awarded Mr. Prabhu a $137,500 bonus for 2022, representing 50% of his then-current base salary (and taking into account that no bonus was paid to Mr. Prabhu for 2021), (ii) set Mr. Prabhu’s new base salary for 2023 at $325,000, effective as of January 1, 2023, and (iii) determined that Mr. Prabhu is eligible to receive a 2023 bonus at a target level of 41% of his then-current base salary, subject to the satisfaction of certain subjective and/or objective criteria established and approved by our Compensation Committee. On April 25, 2023, our Compensation Committee awarded Mr. Prabhu an option to purchase 170,000 shares of our common stock at an exercise price of $6.74 per share, based on the closing price of our common stock on the grant date in accordance with the terms of our 2020 Plan. The option was immediately vested as to 50% of the shares subject thereto on the grant date, and provides for vesting as to an additional 1.389% of the shares subject thereto on the last day of each month thereafter.
On September 15, 2024, our Compensation Committee determined the amount of incentive bonus earned by Mr. Prabhu for 2023 and awarded Mr. Prabhu an option to purchase 95,940 shares of our common stock at an exercise price of $1.20 per share, based on the closing price of our common stock on September 13, 2024, in accordance with the terms of the 2020 Plan.
Outstanding Equity Awards at Fiscal Year-End
—
2023
The following table summarizes, for each of the named executive officers, the number of shares of our common stock underlying outstanding stock options held as of December 31, 2023.
|
|
Option Awards
|
|
|
|
Number of securities underlying
unexercised options
|
|
|
Option exercise
price ($)
|
|
|
Option expiration
date
|
|
|
Name
|
|
Exerciseable
|
|
|
Unexerciseable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laxminarayan Bhat, PhD (CEO)
|
|
|
276,877
|
|
|
|
166,123
|
(1)
|
|
$
|
6.74
|
|
|
04/24/2033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Narayan Prabhu (CFO)
|
|
|
37,500
|
|
|
|
12,500
|
(2)
|
|
$
|
4.30
|
|
|
April 13, 2031
|
|
|
|
|
106,249
|
|
|
|
63,751
|
(1)
|
|
$
|
6.74
|
|
|
April 24, 2033
|
|
(1) Represents options to purchase shares of our common stock granted on April 25, 2023 with an exercise price of $6.74 per share. The shares underlying the option provide for vesting starting April 25, 2023 with 50% vesting immediately on April 25, 2023, then straight-line on a monthly basis over the following 36 months from April 2023 to March 2026. The award was made pursuant to the 2020 Plan.
(2) Represents options to purchase shares of our common stock granted on April 14, 2021 with an exercise price of $4.30 per share. The shares underlying the option provide for vesting starting December 2020 with 25% after a one-year cliff in December 2021, then straight-line on a monthly basis over the following 36 months from January 2022 to December 2023. The award was made pursuant to the 2020 Plan.
PAY VERSUS PERFORMANCE
Pay Versus Performance Table
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid (as defined in Item 402(v) of Regulation S-K) and certain financial performance of the Company. We are also permitted to report as a “smaller reporting company” as defined under the U.S. federal securities laws. Accordingly, we have not included a tabular list of financial performance measures, and the table below does not include a column for a “Company-Selected Measure” as defined in Item 402(v) of Regulation S-K. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
|
Year
|
|
Summary
Compensation
Table Total for PEO
($) (1)
| |
|
Compensation
Actually Paid
to PEO
($)(2)
| |
|
Average
Summary
Compensation
Table Total for
Non-PEO
NEOs
($) (3)
| |
|
Average
Compensation
Actually
Paid to
Non-PEO
NEOs
($) (4)
| |
|
Value of
Initial Fixed
$100
Investment
Based on
Total
Shareholder
Return
($)(5)
| |
|
Net Loss
($) (6)
|
|
(a)
|
|
|
(b)
|
|
|
|
(c)
|
|
|
|
(d)
|
|
|
|
(e)
|
|
|
|
(f)
|
|
|
|
(g)
|
|
2023
|
|
|
2,764,747
|
|
|
|
2,271,344
|
|
|
|
1,248,778
|
|
|
|
1,077,236
|
|
|
|
178.20
|
|
|
|
(39,260,837)
|
|
2022
|
|
|
560,000
|
|
|
|
560,000
|
|
|
|
380,544
|
|
|
|
389,846
|
|
|
|
147.06
|
|
|
|
(28,261,442)
|
(1)The dollar amounts reported in column (b) are the amounts of total compensation reported for Laxminarayan Bhat, PhD, the Company’s Chief Executive Officer for the 2023 and 2022 periods.
(2) The dollar amounts under column (c) represent the amount of "compensation actually paid" to Laxminarayan Bhat, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Bhat during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the adjustments in the table below were made to Mr. Bhat's total compensation for each year to determine the compensation actually paid.
(3) The dollar amounts reported in column (d) represent the amounts of total compensation reported for non-PEO NEOs. The non-PEO NEO for the 2023 period was Narayan Prabhu, the Company’s Chief Financial Officer. The non-PEO NEOs for the 2022 period were Narayan Prabhu, the Company’s Chief Financial Officer, and Marc Cantillon, MD, the Company’s Chief Medical Officer.
(4) The dollar amounts under column (e) represent the amount of "compensation actually paid" to Narayan Prabhu and Marc Cantillon, the Non-PEO NEOs within the applicable years, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Prabhu and Dr. Cantillon during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the adjustments in the table below were made to Mr. Prabhu and Mr. Cantillon's total compensation for each year to determine the compensation actually paid.
(5) Pursuant to the SEC rules, the total shareholder return ("TSR") figures assume an initial investment of $100 on December 31, 2021. Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. The calculation of TSR was based upon the closing price of a share of the Common Stock on the last day of its 2023, 2022 and 2021 fiscal years, which prices were $5.15, $4.25, $2.89 respectively.
PEO
|
Year
|
|
2023
|
|
|
2022
|
|
|
Summary Compensation Table Total
|
|
|
2,764,747
|
|
|
|
560,000
|
|
|
Deduct: Option and Stock Awards Included in Summary Compensation Table (a)
|
|
|
(2,314,747
|
)
|
|
|
-
|
|
|
Add: Fair Value of Equity Awards Granted in Fiscal Year and Unvested as of Year-End (b)
|
|
|
553,368
|
|
|
|
-
|
|
|
Add: Fair Value of Equity Awards Granted in Fiscal Year and Vested as of Year-End (c)
|
|
|
1,267,976
|
|
|
|
-
|
|
|
Add: Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Fiscal Years (d)
|
|
|
-
|
|
|
|
-
|
|
|
Add: Change in Fair Value as of Vesting Date of Equity Awards Granted in Prior Years which Vested in Fiscal Year (e)
|
|
|
-
|
|
|
|
-
|
|
|
Compensation Actually Paid
|
|
|
2,271,344
|
|
|
|
560,000
|
|
Average Non-PEO NEOs
|
Year
|
|
2023
|
|
|
2022
|
|
|
Summary Compensation Table Total
|
|
|
1,248,778
|
|
|
|
380,543
|
|
|
Deduct: Option and Stock Awards Included in Summary Compensation Table (a)
|
|
|
(923,788
|
)
|
|
|
-
|
|
|
Add: Fair Value of Equity Awards Granted in Fiscal Year and Unvested as of Year-End (b)
|
|
|
254,744
|
|
|
|
|
|
|
Add: Fair Value of Equity Awards Granted in Fiscal Year and Vested as of Year-End (c)
|
|
|
485,301
|
|
|
|
-
|
|
|
Add: Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Fiscal Years (d)
|
|
|
5,742
|
|
|
|
12,575
|
|
|
Add: Change in Fair Value as of Vesting Date of Equity Awards Granted in Prior Years which Vested in Fiscal Year (e)
|
|
|
6,449
|
|
|
|
(3,273
|
)
|
|
Compensation Actually Paid
|
|
|
1,077,236
|
|
|
|
389,846
|
|
Analysis of the Information Presented in the Pay Versus Performance Table
Analysis of the Information Presented in the Pay Versus Performance Table
As described in more detail above under “Executive Compensation,” the Company’s executive compensation program reflects a performance-driven compensation philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, those Company measures are not financial performance measures and are therefore not presented in the Pay Versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with “compensation actually paid” (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance table above.
Compensation Actually Paid and Cumulative TSR
The charts below shows the relationship between the compensation actually paid to our PEO and the average compensation actually paid to our non-PEO NEOs, on the one hand, to the Company’s cumulative TSR over the two years presented in the table, on the other hand.
Compensation Actually Paid and Net Loss
The chart below shows the relationship between the compensation actually paid to our PEO and the average compensation actually paid to our non-PEO NEOs, on the one hand, to the Company’s net loss, on the other hand.
DIRECTOR COMPENSATION
Director Compensation
The following table sets forth information concerning the compensation paid to certain of our non-employee directors during 2023.
|
Name
|
|
Fees
earned
or paid
in cash
($)
|
|
|
Stock
awards
($)
|
|
|
Option
awards
($) (1)
|
|
Non-equity
incentive plan
compensation
($)
|
|
|
Nonqualified
deferred
compensation
earnings
($)
|
|
|
All other
compensation
($)
|
|
|
Total
($)
|
|
|
Les Funtleyder
|
|
|
51,250
|
|
|
|
-
|
|
|
|
36,760
|
(2)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
88,010
|
|
|
Richard Margolin
|
|
|
45,000
|
|
|
|
-
|
|
|
|
36,760
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
81,760
|
|
|
Purav Patel
|
|
|
53,750
|
|
|
|
-
|
|
|
|
36,760
|
(4)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
90,510
|
|
|
Parag Saxena
|
|
|
70,250
|
|
|
|
-
|
|
|
|
36,760
|
(5)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
107,010
|
|
|
(1)
|
Amounts reflect the aggregate grant date fair value of each stock option granted in 2023 in accordance with the Accounting Standards Codification Topic 718. These amounts do not correspond to the actual value that may be received by the directors if the stock options are exercised.
|
|
|
|
(2)
|
The aggregate number of shares of common stock underlying stock options outstanding as of December 31, 2023 held by Mr. Funtleyder were 8,200.
|
|
|
|
(3)
|
The aggregate number of shares of common stock underlying stock options outstanding as of December 31, 2023 held by Dr. Margolin were 8,200.
|
|
|
|
(4)
|
The aggregate number of shares of common stock underlying stock options outstanding as of December 31, 2023 held by Mr. Patel were 8,200.
|
|
|
|
(5)
|
The aggregate number of shares of common stock underlying stock options outstanding as of December 31, 2023 held by Mr. Saxena were 8,200.
|
Non-Employee Director Compensation
On the recommendation of our compensation committee, on June 15, 2021, our Board approved a non-employee director compensation policy (the “Non-Employee Director Compensation Policy”). On February 10, 2023, our compensation policy approved certain amendments to equity compensation provisions of the policy (the “February 2023 Amendments”), providing that going forward the equity compensation component of the policy shall consist of equity grants of fixed quantities of shares in lieu of grants determined by reference to a dollar value of shares, as described below. The Non-Employee Director Compensation Policy provides for the following compensation:
The Non-Employee Director Compensation Policy provides for the following cash compensation. The cash compensation component of the Non-Employee Director Compensation Policy was unchanged by the February 2023 Amendments:
|
●
|
Each non-employee director is entitled to receive an annual cash retainer fee of $32,500, except that the Chairman of the Board is entitled to receive an annual cash retainer fee of $57,500;
|
|
●
|
Each non-employee director sitting on the Audit Committee is entitled to receive an annual cash retainer fee of $7,500, except that the Chairman of the Audit Committee is entitled to receive an annual cash retainer fee of $15,000;
|
|
●
|
Each non-employee director sitting on the Compensation Committee is entitled to receive an annual cash retainer fee of $5,000, except that the Chairman of the Compensation Committee is entitled to receive an annual cash retainer fee of $10,000;
|
|
●
|
Each non-employee director sitting on the Governance Committee is entitled to receive an annual cash retainer fee of $3,750, except that the Chairman of the Governance Committee is entitled to receive an annual cash retainer fee of $7,750; and
|
|
●
|
No per meeting fees shall be paid.
|
All annual cash retainer fees under the Non-Employee Director Compensation Policy will be paid quarterly in arrears.
The Non-Employee Director Compensation Policy also provides generally for certain equity compensation under the 2020 Plan, or any other equity incentive plan the Company may adopt in the future, as described below. Prior to the adoption of the February 2023 Amendments, the equity compensation under the Non-Employee Director Compensation Policy consisted of, and was paid in accordance with, the following:
|
●
|
Each non-employee director was entitled to receive, upon initial election, a one-time initial equity grant of nonqualified stock options in respect of a whole number of shares of our common stock with an approximate value of $20,000. All of the shares subject to the initial equity grant shall vest 33% per year over three years from the date of initial election, provided that the recipient remains a director of through each vesting date.
|
|
●
|
Each non-employee director was entitled to receive an annual equity grant of nonqualified stock options in respect of a whole number of shares of the our common stock with an approximate value of $20,000. All of the shares subject to the annual equity grant shall cliff vest after 1-year, provided that the recipient remains a director through the vesting date.
|
From and after the adoption of the February 2023 Amendments, the equity compensation under the Non-Employee Director Compensation Policy consists of, and is paid in accordance with, the following:
|
●
|
Each non-employee director is entitled to receive, upon initial election, a one-time initial equity grant of nonqualified stock options in respect of 8,200 shares of our common stock. All of the shares subject to the initial equity grant shall vest 33% per year over three years from the date of initial election, provided that the recipient remains a director of through each vesting date.
|
|
●
|
Each non-employee director is entitled to receive an annual equity grant of nonqualified stock options in respect of 8,200 shares of our common stock. All of the shares subject to the annual equity grant shall cliff vest after 1-year, provided that the recipient remains a director through such vesting date. Annual equity grants for directors who are initially elected in the 12 months following the most recent annual grant will be pro-rated on a monthly basis based on time of election as appropriate.
|
Indemnification Agreements
On December 14, 2020, the Board adopted and entered into (a) a form of indemnification agreement (the “Indemnification Agreement”) between the Company and each of its directors and executive officers, except for Parag Saxena, and (b) a form of indemnification agreement (the “Saxena Indemnification Agreement”) with Parag Saxena.
The Indemnification Agreement requires us to indemnify each director and officer to the fullest extent permitted by applicable law, for certain expenses, including attorneys’ fees, judgments, penalties, fines and settlement amounts actually and reasonably incurred in any threatened, pending or completed action, suit, claim, investigation, inquiry, administrative hearing, arbitration or other proceeding to which the director or officer was, or is threatened to be made, a party by reason of the fact that such director or officer is or was a director, officer, employee or agent of us. Subject to certain limitations, the Indemnification Agreement provides for the advancement of expenses incurred by the indemnitee, and the repayment to us of the amounts advanced to the extent that it is ultimately determined that the indemnitee is not entitled to be indemnified by us. The Indemnification Agreement also creates certain rights in favor of us, including the right to assume the defense of claims and to consent to settlements. The Indemnification Agreement does not exclude any other rights to indemnification or advancement of expenses to which the indemnitee may be entitled under applicable law, our Certificate of Incorporation, or our bylaws, any agreement, a vote of stockholders or disinterested directors, or otherwise.
The Saxena Indemnification Agreement is on substantially the same form as the Indemnification Agreement, except that it includes a provision specifying that the we will act as the indemnitor of first resort and that we will not assert that Mr. Saxena, as indemnitee under the Saxena Indemnification Agreement, must seek expense advancement or reimbursement, or indemnification, from any stockholder of the Company and/or certain of any such stockholder’s affiliates who Mr. Saxena may have rights to indemnification, advancement of expenses and/or insurance from, before we must perform our expense advancement and reimbursement, and indemnification obligations, under the Saxena Indemnification Agreement.
EQUITY COMPENSATION PLAN INFORMATION
2020 Equity Incentive Plan
On December 14, 2020, the 2020 Plan became effective. The general purpose of the 2020 Plan is to provide a means whereby employees, officers, directors, consultants, advisors or other individual service providers may develop a sense of proprietorship and personal involvement in our development and financial success, and to encourage them to devote their best efforts to us, thereby advancing our interests and the interests of our stockholders.
2006 Equity Incentive Plan
Old Reviva’s board of directors adopted, and Old Reviva’s stockholders approved, the Reviva Pharmaceuticals, Inc. 2006 Equity Incentive Plan (the “2006 Plan”), effective as of August 2006. The 2006 Plan provided for the grant of incentive stock options, or ISOs, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, to Old Reviva’s employees, and for the grant of nonstatutory stock options, or NSOs, and restricted stock awards to Old Reviva’s employees, officers, directors and consultants; provided such consultants render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. As of 2016, no new grants of awards are permitted under the 2006 Plan.
The 2006 Plan was amended to change its name to the Reviva Pharmaceuticals Holdings, Inc. 2006 Equity Incentive Plan (the “Amended 2006 Plan”), and each outstanding option to acquire Old Reviva common stock (whether vested or unvested) under the Amended 2006 Plan was assumed by us and automatically converted into an option to acquire shares of our common stock, with its price and number of shares equitably adjusted based on the conversion of the shares of common stock of Old Reviva into shares of our common stock pursuant to the Merger Agreement.
The following table provides information with respect to our compensation plans under which equity compensation was authorized as of December 31, 2023.
|
|
Number of
securities
to be issued
upon
exercise of
outstanding
options,
warrants
and rights
| |
|
Weighted-
average
exercise
price of
outstanding
options,
warrants
and rights
|
|
|
Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
|
|
|
Plan category
|
|
(a)
|
|
|
(b)
|
|
|
(c)(3)
|
|
|
Equity compensation plans approved by security holders (1)
|
|
|
1,580,574
|
(2)
|
|
$
|
6.51
|
|
|
|
1,004,263
|
(4)
|
|
Equity compensation plans not approved by security holders
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Total
|
|
|
1,580,574
|
|
|
$
|
6.51
|
|
|
|
1,004,263
|
|
|
(1)
|
The amounts shown in this row include securities under the Amended 2006 Plan and the 2020 Plan.
|
|
(2)
|
Includes 16,747 and 1,563,827 shares of common stock issuable upon exercise of outstanding options pursuant to the Amended 2006 Plan and the 2020 Plan, respectively, as of December 31, 2023.
|
|
(3)
|
In accordance with the “evergreen”provision in the 2020 Plan, an additional 2,791,856 shares were automatically made available for issuance on the first day of 2024, which represents 10% of the number of shares of the Company’s common stock outstanding on December 31, 2023; these shares are excluded from this calculation as such shares were not available for issuance under the 2020 Plan at year-end 2023 and did not become so available until the first day of 2024.
|
|
(4)
|
Includes 0 and 1,004,263 shares of common stock available for issuance under the Amended 2006 Plan and the 2020 Plan, respectively, as of December 31, 2023.
|
REPORT OF THE AUDIT COMMITTEE*
The undersigned members of the Audit Committee of the Board of Reviva Pharmaceuticals Holdings, Inc. (the “Company”) submit this report in connection with the committee’s review of the financial reports for the fiscal year ended December 31, 2023 as follows:
|
1.
|
The Audit Committee has reviewed and discussed with management the audited financial statements for the Company for the fiscal year ended December 31, 2023.
|
|
|
|
|
2.
|
The Audit Committee has discussed with the Company’s independent auditors the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC.
|
|
|
|
|
3.
|
The Audit Committee has received the written disclosures and the letter from the Company’s independent accountant required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence.
|
|
4.
|
Based on the review and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for filing with the SEC.
|
The Audit Committee of Reviva Pharmaceuticals Holdings, Inc.
Les Funtleyder, Chair
Purav Patel
Richard Margolin
|
*
|
The foregoing report of the Audit Committee is not to be deemed “soliciting material”or deemed to be “filed”with the Securities and Exchange Commission (irrespective of any general incorporation language in any document filed with the Securities and Exchange Commission) or subject to Regulation 14A or the liabilities of Section 18 of the Securities Exchange Act of 1934, except to the extent we specifically incorporate it by reference into a document filed with the Securities and Exchange Commission.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of the Company on October 9, 2024 by:
|
●
|
each person known by the Company to be, or expected to be, the beneficial owner of more than 5% of shares of the Company’s common stock; and
|
|
●
|
each of the Company’s named executive officers and directors.
|
Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days.
The beneficial ownership of the common stock of the Company is based on 33,441,199 shares of common stock issued and outstanding as of October 9, 2024.
|
Name of Beneficial Owner
|
|
Amount and
Nature of
Beneficial
Ownership
|
|
|
Percent of Class
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officers and Directors (1)
|
|
|
|
|
|
|
|
|
|
Laxminarayan Bhat (2)
|
|
|
3,187,860
|
|
|
|
|
9.34%
|
|
Les Funtleyder (3)
|
|
|
13,200
|
|
|
|
|
*
|
|
Richard Margolin (4)
|
|
|
13,200
|
|
|
|
|
*
|
|
Purav Patel (5)
|
|
|
86,555
|
|
|
|
|
*
|
|
Narayan Prabhu (6)
|
|
|
377,697
|
|
|
|
|
1.12%
|
|
Parag Saxena (7) (8)
|
|
|
6,251,606
|
|
|
|
|
16.72%
|
|
All Directors and Executive Officers as a Group (six persons)
|
|
|
9,930,118
|
|
|
|
|
27.18%
|
|
|
|
|
|
|
|
|
|
|
Greater than Five Percent Holders:
|
|
|
|
|
|
|
|
|
|
Tang Capital Partners, L.P. (9)
|
|
|
3,339,975
|
|
|
|
|
9.08%
|
|
Armistice Capital, LLC (10)
|
|
|
1,764,000
|
|
|
|
|
5.27%
|
* Less than one percent.
|
(1)
|
The business address of each of the officers and directors is c/o Reviva Pharmaceuticals Holdings, Inc., 10080 N Wolfe Road, Suite SW3-200, Cupertino, CA 95014.
|
|
(2)
|
Includes (a) 503,011 shares of common stock issuable upon the exercise of stock options held by Dr. Bhat that are exercisable or will be exercisable within 60 days of October 9, 2024, (b) 5,388 shares of common stock held by Dr. Bhat’s spouse and (c) 200,605 shares of common stock issuable upon the exercise of options held by Dr. Bhat’s spouse, that are exercisable or will be exercisable within 60 days of October 9, 2024.
|
|
(3)
|
Includes 13,200 shares of common stock issuable upon the exercise of stock options that are exercisable or will be exercisable within 60 days of October 9, 2024. Does not include 8,200 shares of our common stock issuable upon the exercise of stock options that are not exercisable within sixty days of October 9, 2024.
|
|
(4)
|
Includes 13,200 shares of common stock issuable upon the exercise of stock options that are exercisable or will be exercisable within 60 days of October 9, 2024. Does not include 8,200 shares of our common stock issuable upon the exercise of stock options that are not exercisable within sixty days of October 9, 2024.
|
|
(5)
|
Includes 26,840 shares of common stock issuable upon the exercise of stock options that are exercisable or will be exercisable within 60 days of October 9, 2024. Does not include 9,787 shares of our common stock issuable upon the exercise of stock options that are not exercisable within sixty days of October 9, 2024.
|
|
(6)
|
Includes 277,697 shares of common stock issuable upon the exercise of stock options that are exercisable or will be exercisable within 60 days of October 9, 2024. Does not include 38,822 shares of our common stock issuable upon the exercise of stock options that are not exercisable within sixty days of October 9, 2024.
|
|
(7)
|
Based on the information provided in the Schedule 13D/A filed with the SEC on August 23, 2024, by Mr. Saxena with respect to himself, Vedanta Associates, L.P., Beta Operators Fund, L.P., Vedanta Associates-R, L.P. and Vedanta Partners, LLC. Includes (a) 99,539 shares held by Vedanta Associates, L.P. (b) 399,000 shares held by Beta Operators Fund, L.P., (c) 931,000 shares held by Vedanta Associates-R, L.P., (d) 869,565 shares of common stock issuable upon the exercise of pre-funded warrants held by Beta Operators Fund, L.P., (e) 513,834 shares of common stock issuable upon the exercise of pre-funded warrants held by Vedanta Associates-R, L.P., (f) 585,366 shares of common stock issuable upon exercise of pre-funded warrants held by Vedanta R2 Partners, LP (“Vedanta R2”), (g) 869,565 shares of shares of common stock issuable upon the exercise of warrants held by Beta Operators Fund, L.P., (h) 513,834 shares of common stock issuable upon the exercise of warrants held by Vedanta Associates-R, L.P., (i) 585,366 shares of common stock issuable upon exercise of warrants held by Vedanta R2, and (j) 13,200 shares of common stock issuable upon the exercise of stock options held by Mr. Saxena that are exercisable or will be exercisable within 60 days of October 9, 2024. Vedanta Partners, LLC is the general partner of Vedanta Associates, L.P. and Vedanta Associates-R, L.P. Vedanta Associates, L.P. is the general partner of Beta Operators Fund, L.P. and Vedanta R2. Vedanta Partners, LLC has voting and dispositive power over the securities held by Vedanta Associates, L.P. and Vedanta Associates-R, L.P. Vedanta Associates, L.P. has voting and dispositive power over securities held by Beta Operators Fund L.P. and Vedanta R2. Parag Saxena is the majority member of Vedanta Partners, LLC and controls Vedanta Partners, LLC, Vedanta Associates-R, L.P., Beta Operators Fund, L.P. and Vedanta R2, and may be deemed to be the beneficial owner of such securities. Mr. Saxena, however, disclaims beneficial ownership over any securities owned by Vedanta Associates, L.P., Vedanta Associates-R, L.P., Beta Operators Fund, L.P. and Vedanta R2 in which he does not have any pecuniary interest. Does not include (a) 299,250 shares of common stock issuable upon the exercise of 399,000 warrants held by Beta Operators Fund, L.P. which are subject to a 4.99% beneficial ownership limitation blocker, (b) 698,250 shares of common stock issuable upon the exercise of 931,000 warrants held by Vedanta Associates-R, L.P. which are subject to a 4.99% beneficial ownership limitation blocker, or (c) 8,200 shares of common stock issuable upon the exercise of stock options held by Mr. Saxena that are not exercisable within 60 days of October 9, 2024.
|
|
(8)
|
The business address of Vedanta Associates, L.P., Beta Operators Fund, L.P., Vedanta Associates-R, L.P. and Vedanta Partners, LLC is c/o Vedanta Partners, LLC, 250 West 55th Street, New York, New York 10019.
|
|
(9)
|
Based on the information provided in the Schedule 13G/A filed with the SEC on February 14, 2024 by Tang Capital Partners, L.P. with respect to itself, Tang Capital Management, LLC and Kevin Tang. Includes 3,339,975 shares of common stock issuable upon the exercise of warrants held by Tang Capital Partners, L.P. The exercise of the warrants are subject to a 9.99% beneficial ownership limitation blocker which the holder has elected. Tang Capital Management, LLC is the general partner of Tang Capital Partners, L.P. and has voting and dispositive power over the securities held by Tang Capital Partners, L.P. Kevin Tang is the manager of Tang Capital Management, LLC. The address for Tang Capital Partners, L.P., Tang Capital Management, LLC and Kevin Tang is 4747 Executive Drive, Suite 210, San Diego, CA 92121.
|
|
(10)
|
Based on the information provided in the Schedule 13G filed with the SEC on February 14, 2024 by Armistice Capital, LLC (“Armistice”) with respect to itself and Steven Boyd. Includes 1,764,000 shares of common stock beneficially owned by Armistice, the investment manager of Armistice Capital Master Fund Ltd. (the “Master Fund”), the direct holder of such shares. Pursuant to an Investment Management Agreement, Armistice exercises voting and investment power over the shares held by the Master Fund and thus may be deemed to beneficially own such shares. Mr. Boyd, as the managing member of Armistice, may be deemed to beneficially own the shares held by the Master Fund. The Master Fund specifically disclaims beneficial ownership of the securities of the Company directly held by it by virtue of its inability to vote or dispose of such securities as a result of its Investment Management Agreement with Armistice. Does not include (a) 1,138,000 shares of common stock issuable upon the exercise of the August 2024 pre-funded warrants held by Master Fund which are subject to a 4.99% beneficial ownership limitation blocker, (b) 4,761,905 shares of common stock issuable upon the exercise of the August 2024 warrants held by Master Fund which are subject to a 4.99% beneficial ownership limitation blocker, (c) 2,536,586 shares of common stock issuable upon the exercise of the November 2023 warrants held by Master Fund which are subject to a 4.99% beneficial ownership limitation blocker, and (d) 2,933,300 shares of common stock issuable upon the exercise of the June 2021 warrants held by Master Fund which are subject to a 4.99% beneficial ownership limitation blocker. The address for Armistice and Steven Boyd is 510 Madison Avenue, 7th Floor, New York, New York, 10022.
|
TRANSACTIONS WITH RELATED PERSONS
The following includes a summary of transactions since January 1, 2022, to which we or Tenzing have been a participant in which the amount involved exceeded or will exceed the lesser of (i) $120,000 or (ii) 1% of our average total assets at year end for the last two completed fiscal years, and in which any of our directors, executive officers or beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described in the section entitled “
Executive Compensation
.”
Indian Subsidiary
Mr. Krishnamurthy Bhat, an Indian resident and the brother of Dr. Bhat, the Company’s Chief Executive Officer’s, holds a 1% ownership stake and is a director of the Company’s subsidiary, Reviva Pharmaceuticals India Private Limited. The Indian government regulates ownership of Indian companies by non-residents. Foreign investment in Indian securities is generally regulated by the Consolidated Policy on Foreign Direct Investment issued by the Government and the Foreign Exchange Management Act, 1999, which prevents 100% ownership by a foreign parent company of its Indian subsidiary.
Employment
Reviva employs Seema R. Bhat, the spouse of Laxminarayan Bhat, the Company’s Chief Executive Officer, as its Vice President for Program Portfolio Management, pursuant to an Offer Letter dated March 1, 2011 (the “Bhat 2011 Offer Letter”). In October 2015, Ms. Bhat entered into a letter agreement with Old Reviva pursuant to which Ms. Bhat agreed to a reduction in her base annual salary to $30,000 for an indefinite period of time. Effective since October 2018, Ms. Bhat had agreed to defer her entire salary, without interest. Effective as of October 2, 2020, 35,385 shares of Old Reviva common stock were issued to Ms. Bhat in full satisfaction of the entire deferred salary balance owed to Ms. Bhat, pursuant to a Stock Issuance Agreement and Release.
On June 16, 2021, the Company entered into an Employment Letter with Ms. Bhat (the “Bhat 2021 Employment Letter”), which supersedes the Bhat 2011 Offer Letter. The Bhat 2021 Employment Letter provides for Ms. Bhat to continue to serve as our Vice President for Program Portfolio Management reporting to our Chief Executive Officer or our Board and provides for an annual base salary of $277,000, retroactive to December 15, 2020 (the day following the Business Combination). Under the Bhat 2021 Employment Letter, Ms. Bhat is eligible for annual bonuses in the discretion of our Board. The Bhat 2021 Employment Letter provides that to receive any bonus, Ms. Bhat must be employed by the Company at the time of payment. The Bhat 2021 Employment Letter provides that Ms. Bhat may also receive, in the discretion of our Board, equity awards under the 2020 Plan or any other equity incentive plan that the Company may adopt in the future. The Bhat 2021 Employment Letter contains customary confidentiality and assignment of inventions provisions. On February 8, 2023, our compensation committee (i) awarded Ms. Bhat a $83,100 bonus for 2022, representing 30% of her then-current base salary, (ii) set Ms. Bhat’s new base salary for 2023 at $310,000, effective as of January 1, 2023, and (iii) determined that Ms. Bhat is eligible to receive a 2023 bonus at a target level of 32% of her then-current base salary, subject to the satisfaction of certain subjective and/or objective criteria established and approved by our compensation committee. On April 25, 2023, our compensation committee awarded Ms. Bhat an option to purchase 150,000 shares of our common stock at an exercise price of $6.74 per share, based on the closing price of our common stock on the grant date in accordance with the terms of our 2020 Plan. The option was immediately vested as to 50% of the shares subject thereto on the grant date, and provides for vesting as to an additional 1.389% of the shares subject thereto on the last day of each month thereafter.
Effective since April 2019, Dr. Bhat had agreed to the deferral of his past salary as necessary, without interest. Effective as of October 2, 2020, 132,506 shares of Old Reviva common stock were issued to Dr. Bhat in full satisfaction of the entire deferred salary balance owed to Dr. Bhat, pursuant to a Stock Issuance Agreement and Release.
On September 15, 2024, our Compensation Committee determined the amount of incentive bonus earned by Ms. Bhat for 2023 and awarded Dr. Bhat an option to purchase 77,843 shares of our common stock at an exercise price of $1.20 per share, based on the closing price of our common stock on September 13, 2024, in accordance with the terms of the 2020 Plan.
Participation in 2022 Offering
Vedanta Associates, LP (“VA”), an affiliate of Parag Saxena, the Chairman of our board of directors, or one or more accounts affiliated with VA (such funds or accounts, together with VA, the “Vedanta Accounts”) purchased an aggregate of $3,499,861.13 in pre-funded warrants and common warrants in a private placement which was completed in September 2022. The placement agent received the same commission on the securities purchased by the Vedanta Accounts as they did from any other securities sold to other investors in the offering.
Participation in 2023 Offering
Vedanta R2 Partners, LP (“Vedanta R2”), an investment vehicle managed by certain affiliates of Parag Saxena, the Chairman of our board of directors, of which VA is the general partner, purchased an aggregate of $3,000,000.75 in pre-funded warrants and common warrants in a registered direct offering which was completed in November 2023. The placement agent received the same commission on the securities purchased by Vedanta R2 as they did from any other securities sold to other investors in the offering.
Indemnification Agreements
The Company has entered into indemnification agreements with each of its directors and named executive officers. These agreements require the Company to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to the Company, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. The Company also intends to enter into indemnification agreements with its future directors and executive officers. For a more fulsome description of the indemnification agreements refer to the disclosure in “
Executive Compensation
”.
Policies and Procedures for Related Party Transactions:
Our Board has adopted a policy that its executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of its common stock, any members of the immediate family of any of the foregoing persons and any firms, corporations or other entities in which any of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest (collectively “related parties”), are not permitted to enter into a transaction with the Company without the prior consent of our Board acting through the Audit Committee or, in certain circumstances, the chairman of the Audit Committee. Any request for the Company to enter into a transaction with a related party, in which the amount involved exceeds $100,000 and such related party would have a direct or indirect interest must first be presented to the Audit Committee, or in certain circumstances the chairman of the Audit Committee, for review, consideration and approval. In approving or rejecting any such proposal, the Audit Committee, or the chairman of the Audit Committee, is to consider the material facts of the transaction, including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, the extent of the benefits to us, the availability of other sources of comparable products or services and the extent of the related party’s interest in the transaction.
PROPOSAL 2:
RATIFY THE APPOINTMENT OF MOSS ADAMS LLP AS THE COMPANY
’
S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2024
The Audit Committee has appointed Moss Adams as the Company’s independent registered public accounting firm to audit the Company’s financial statements for the fiscal year ending December 31, 2024, and will offer a resolution at the Annual Meeting for the Company’s stockholders to ratify the selection. Although stockholder ratification is not required, the designation of Moss Adams is being submitted for ratification at the Annual Meeting because it is perceived to be a matter of good corporate governance practice to submit this issue for ratification by stockholders. Ultimately, the Audit Committee retains full discretion and will make all determinations with respect to the appointment of the Company’s independent registered public accounting firm.
Attendance at Annual Meeting
Representatives of Moss Adams are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire, and are expected to be available to respond to appropriate questions from stockholders.
Additional Information Regarding Change of Independent Auditor
Armanino LLP (“Armanino”) served as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2022 and audited the Company’s financial statements for such year.
As previously disclosed by the Company in its Current Report on Form 8-K filed with the SEC on July 24, 2023, the Company was informed on July 18, 2023 by Armanino, the Company’s then current independent registered public accounting firm, that Armanino would decline to stand for re-appointment after completion of Armanino’s review procedures on the unaudited financial statements of the Company as of and for the three and nine months ended September 30, 2023. Armanino advised the Company that its decision not to stand for reappointment was due to Armanino’s transition away from providing financial statement audit services to public companies. In light of Armanino’s determination, the Audit Committee of the Company’s Board of Directors initiated a process to select a new accounting firm to serve as the Company’s independent registered public accountant.
As previously disclosed by the Company in its Current Report on Form 8-K filed on October 4, 2023 with the SEC, on October 4, 2023, the Audit Committee of the Company’s Board of Directors appointed Moss Adams LLP as the Company’s new independent registered public accounting firm for the fiscal year ending December 31, 2023. Moss Adams LLP’s engagement, which commenced with the audit of the Company’s financial statements for the fiscal year ending December 31, 2023, did not affect Armanino’s review of the Company’s unaudited financial statements for the third quarter of 2023, which Armanino remained engaged to complete. Armanino’s engagement and tenure as the Company’s independent registered public accounting firm ended upon completion of Armanino’s review procedures on the unaudited financial statements of the Company as of and for the three and nine months ended September 30, 2023 and the filing with the SEC of the Company’s Quarterly Report on Form 10-Q for such period.
During the Company’s fiscal years ended December 31, 2021 and 2022, and the subsequent interim period through October 4, 2023, the date of Moss Adams LLP’s engagement, neither the Company nor anyone acting on its behalf consulted with Moss Adams LLP regarding either of the following: (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that Moss Adams LLP concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue, or (ii)any matter that was either the subject of a disagreement, as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions, or a “reportable event,” as described in Item 304(a)(1)(v) of Regulation S-K.
Armanino’s audit reports on the Company's consolidated financial statements as of and for the years ended December 31, 2021 and 2022 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles, except the audit report for the fiscal year ended December 31, 2022 contained a “going concern” explanatory paragraph. During the years ended December 31, 2021 and 2022, and during the subsequent interim period through October 4, 2023, there were no (a) disagreements with Armanino on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Armanino's satisfaction, would have caused Armanino to make reference to the subject matter thereof in connection with its reports for such periods; or (b) reportable events, as described under Item 304(a)(1)(v) of Regulation S-K.
Principal Accountant Audit Fees and Services
The following table summarizes the fees for professional services provided by Moss Adams, our principal accountant, for audit services provided for, and other services provided in, the year ended December 31, 2023:
|
|
Year ended
December 31, 2023
|
|
|
Audit Fees(1)
|
|
$
|
643,101
|
|
|
Audit-Related Fees
|
|
|
-
|
|
|
Tax Fees
|
|
|
-
|
|
|
All Other Fees
|
|
|
-
|
|
|
Total
|
|
$
|
643,101
|
|
|
(1)
|
Audit fees consist of fees incurred for professional services rendered for the audit of our annual financial statements and services that are normally provided by our principal independent registered public accounting firm for the respective fiscal year in connection with regulatory filings or engagements.
|
The following table summarizes the fees for professional services provided by Armanino, our previous principal accountant, for audit services provided for, and other services provided in, the year ended December 31, 2022 and 2023:
|
|
Year ended
December 31, 2023
|
|
|
Year ended
December 31, 2022
|
|
|
Audit Fees(1)
|
|
$
|
115,178
|
|
|
$
|
233,911
|
|
|
Audit-Related Fees
|
|
|
-
|
|
|
|
-
|
|
|
Tax Fees
|
|
|
-
|
|
|
|
-
|
|
|
All Other Fees
|
|
|
-
|
|
|
|
-
|
|
|
Total
|
|
$
|
115,178
|
|
|
$
|
233,911
|
|
|
(1)
|
Audit fees consist of fees incurred for professional services rendered for the audit of our annual financial statements and review of the quarterly financial statements, assistance with registration statements filed with the SEC, and services that are normally provided by our principal independent registered public accounting firm for the respective fiscal year in connection with regulatory filings or engagements.
|
Auditor Independence
In our fiscal year ended December 31, 2023, there were no other professional services provided by Moss Adams that would have required our Audit Committee to consider their compatibility with maintaining the independence of Moss Adams.
Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
Our Audit Committee has established a policy governing our use of the services of our independent registered public accounting firm. Under this policy, our Audit Committee is required to pre-approve all audit and non-audit services performed by our independent registered public accounting firm in order to ensure that the provision of such services does not impair the public accountants’ independence. All fees paid to Moss Adams, for our fiscal year ended December 31, 2023, and to Armanino, for our fiscal year ended December 31, 2022, were pre-approved by our Audit Committee.
Required Vote and Recommendation
In accordance with our bylaws and Delaware law, approval and adoption of this Proposal2 requires the affirmative vote of a majority of the votes cast at the Annual Meeting. As a result, abstentions, if any, will have no effect on the outcome of this Proposal2.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF MOSS ADAMS LLP AS THE COMPANY
’
S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2024.
PROPOSAL 3:
ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
The Board has approved the compensation of our named executive officers as described in this proxy statement under “Executive Compensation” pursuant to Item 402 of Regulation S-K. The Board and the Compensation Committee believe that our company’s compensation policies and practices are effective in achieving our goals of motivating our executive officers to further the Company’s long-term strategic plans, enhancing long-term stockholder value and attracting and retaining the highest quality executive and key employee talent available.
In accordance with applicable federal securities laws, we are asking stockholders to vote, on an advisory basis, on the approval of the compensation of our named executive officers as disclosed in this proxy statement. This vote gives you the opportunity to express your views on our executive compensation. Because your vote is advisory, it will not be binding upon the Compensation Committee or the Board. However, the Board and the Compensation Committee will review and consider the results of this vote when making future executive compensation decisions.
Proposal 3 is as follows:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in the Company’s proxy statement for the 2024 Annual Meeting, including the various compensation tables and the related narrative disclosures, is hereby approved.”
Required Vote and Recommendation
In accordance with our bylaws and Delaware law, approval and adoption of this Proposal 3 requires the affirmative vote of a majority of the votes cast at the Annual Meeting. As a result, abstentions and “broker non-votes”, if any, will have no effect on the outcome of this Proposal 3.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE APPROVAL, ON AN ADVISORY BASIS, OF THE EXECUTIVE COMPENSATION OF THE COMPANY
’
S NAMED EXECUTIVE OFFICERS.
PROPOSAL 4:
ADVISORY VOTE ON FREQUENCY OF SAY-ON-PAY VOTES
As described in Proposal 3 above, our stockholders are being provided the opportunity to cast an advisory vote to approve executive compensation. The advisory vote on executive compensation described in Proposal 3 above is referred to as a “Say-on-Pay” vote. This Proposal 4 affords you the opportunity to cast an advisory vote on how often we should include a Say-on-Pay vote in our proxy materials in the future and is often referred to as a “Say-on-Frequency” vote. We are required under applicable SEC rules to hold a Say-on-Frequency vote every six years. Under this Proposal 4, stockholders may vote to have the Say-on-Pay vote every 1 year, every 2 years or every 3 years.
As with Proposal 3, your vote on this Proposal 4 is advisory and, therefore, nonbinding. However, we value your opinions, and our Board and Compensation Committee will consider the results of the Say-on-Frequency vote in making future determinations about the frequency of our Say-on-Pay votes.
After careful consideration of the frequency alternatives, our Board believes that conducting an annual “Say-on-Pay” vote is appropriate for the Company and its stockholders at this time. Our Board has determined that an annual “Say-on-Pay” vote will allow our stockholders to provide timely input on our executive compensation philosophy, policies and practices as disclosed in our proxy statement.
Required Vote and Recommendation
In accordance with our bylaws and Delaware law, approval and adoption of this Proposal4 requires the affirmative vote of a majority of the votes cast at the Annual Meeting. As a result, abstentions and “broker non-votes”, if any, will have no effect on the outcome of this Proposal4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE THAT ADVISORY VOTES ON EXECUTIVE COMPENSATION BE HELD EVERY YEAR.
PROPOSAL 5:
APPROVAL OF AN AMENDMENT TO THE COMPANY
’
S CERTIFICATE OF INCORPORATION TO INCREASE OUR AUTHORIZED SHARES OF COMMON STOCK FROM 115,000,000 TO 315,000,000
Our Board has approved, subject to shareholder approval, an amendment to our Certificate of Incorporation to increase our authorized shares of common stock from 115,000,000 to 315,000,000 (the “Charter Amendment”). The increase in our authorized shares of common stock will become effective upon the filing of the Charter Amendment with the Secretary of State of the State of Delaware. If the Charter Amendment to increase our authorized shares of common stock is approved by the stockholders at the Annual Meeting, we intend to file the Charter Amendment as soon as practicable following the Annual Meeting. Our board reserves the right, notwithstanding stockholder approval of the Charter Amendment and without further action by our stockholders, not to proceed with the Charter Amendment at any time before it becomes effective.
The form of Charter Amendment is set forth as
Appendix A
to this proxy statement (subject to any changes required by applicable law).
Outstanding Shares and Purpose of the Proposal
Our Certificate of Incorporation currently authorizes us to issue a maximum of 115,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, $0.0001 par value per share. As of the Record Date, we had no shares of preferred stock issued and outstanding and the Charter Amendment does not affect the number of authorized shares of preferred stock. Our issued and outstanding securities, as of the record date, are as follows:
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33,441,199shares of our common stock;
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30,889,368 shares of our common stock issuable upon the exercise of outstanding warrants; and
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1,813,387 shares of our common stock issuable upon the exercise of outstanding options.
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The approval of the Charter Amendment to increase our authorized shares of common stock is important for our ongoing business. Our Board believes it would be prudent and advisable to have the additional shares available to provide additional flexibility regarding the potential use of shares of common stock for business and financial purposes in the future. Having an increased number of authorized but unissued shares of common stock would allow us to take prompt action with respect to corporate opportunities that develop, without the delay and expense of convening a special meeting of stockholders for the purpose of approving an increase in our authorized shares. The additional shares could be used for various purposes without further stockholder approval. These purposes may include: (i) raising capital, if we have an appropriate opportunity, through offerings of common stock or securities that are convertible into common stock; (ii) expanding our business through potential strategic transactions, including mergers, acquisitions, licensing transactions and other business combinations or acquisitions of new product candidates or products; (iii) establishing strategic relationships with other companies; (iv) exchanges of common stock or securities that are convertible into common stock for other outstanding securities; (v) providing equity incentives pursuant to our 2020 Plan, or another plan we may adopt in the future, to attract and retain employees, officers or directors; and (vi) other general corporate purposes. We intend to use the additional shares of common stock that will be available to undertake any such issuances described above. Because it is anticipated that our directors and executive officers will be granted additional equity awards under our 2020 Plan, or another plan we adopt in the future, they may be deemed to have an indirect interest in the Charter Amendment.
The increase in authorized shares of our common stock under the Charter Amendment will not have any immediate effect on the rights of existing stockholders. However, because the holders of our common stock do not have any preemptive rights, future issuance of shares of common stock or securities exercisable for or convertible into shares of common stock could have a dilutive effect on our earnings per share, book value per share, voting rights of stockholders and could have a negative effect on the price of our common stock.
Disadvantages to an increase in the number of authorized shares of our common stock may include:
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Stockholders may experience further dilution of their ownership.
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Stockholders will not have any preemptive or similar rights to subscribe for or purchase any additional shares of common stock that may be issued in the future, and therefore, future issuances of common stock, depending on the circumstances, will have a dilutive effect on the earnings per share, voting power and other interests of our existing stockholders.
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The additional shares of common stock for which authorization is sought in this proposal would be part of the existing class of common stock and, if and when issued, would have the same rights and privileges as the shares of common stock presently outstanding.
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The issuance of authorized but unissued shares of common stock could be used to deter a potential takeover of us that may otherwise be beneficial to stockholders by diluting the shares held by a potential suitor or issuing shares to a stockholder that will vote in accordance with the Board’s desires. A takeover may be beneficial to independent stockholders because, among other reasons, a potential suitor may offer such stockholders a premium for their shares of stock compared to the then-existing market price. We do not have any plans or proposals to adopt provisions or enter into agreements that may have material anti-takeover consequences.
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We have no specific plan, commitment, arrangement, understanding or agreement, either oral or written, regarding the issuance of the proposed new authorization of common stock subsequent to this proposed increase in the number of authorized shares at this time, and we have not allocated any specific portion of the proposed increase in the authorized number of shares to any particular purpose. However, we have in the past conducted certain public and private offerings of common stock and warrants, and we will continue to require additional capital in the near future to fund our operations. As a result, it is foreseeable that we will seek to issue such additional shares of common stock in connection with any such capital raising activities, or any of the other activities described above. The Board does not intend to issue any common stock or securities convertible into common stock except on terms that the Board deems to be in the best interests of us and our stockholders. We are therefore requesting our stockholders approve this proposal to amend our Certificate of Incorporation to increase our authorized shares of common stock from 115,000,000 shares to 315,000,000 shares.
Required Vote and Recommendation
In accordance with our bylaws and Delaware law, approval and adoption of this Proposal5 requires the affirmative vote of a majority of the votes cast at the Annual Meeting. As a result, abstentions, if any, will have no effect on the outcome of this Proposal5.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO INCREASE OUR AUTHORIZED SHARES OF COMMON STOCK FROM 115,000,000 SHARES TO 315,000,000 SHARES.
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PROPOSAL 6:
APPROVAL OF THE ADJOURNMENT OF THE ANNUAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THE NUMBER OF SHARES OF COMMON STOCK PRESENT OR REPRESENTED BY PROXY AT THE ANNUAL MEETING AND VOTING
“
FOR
”
THE ADOPTION OF PROPOSAL 5 ARE INSUFFICIENT TO APPROVE PROPOSAL 5
Adjournment of the Annual Meeting
If the number of shares of common stock present or represented by proxy at the Annual Meeting and voting “FOR” the adoption of Proposal 5 are insufficient to approve Proposal 5, we may move to adjourn the Annual Meeting in order to enable the Board to solicit additional proxies in favor of the adoption of Proposal 5. In that event, we will ask stockholders to vote upon the adjournment proposal, Proposal 6, and not on Proposal 5. If the adjournment is for more than thirty (30)days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
For the avoidance of doubt, any proxy authorizing the adjournment of the Annual Meeting shall also authorize successive adjournments thereof, at any meeting so adjourned, to the extent necessary for us to solicit additional proxies in favor of the adoption of any such proposal.
Required Vote and Recommendation
The approval of this Proposal 6 will require the affirmative vote of a majority of the total votes cast, represented in person or by proxy, at the Annual Meeting. As a result, abstentions and broker non-votes, if any, will not affect the outcome of the vote of this proposal.
THE BOARD RECOMMENDS A VOTE
“
FOR
”
THE ADJOURNMENT OF THE ANNUAL MEETING IF THE NUMBER OF SHARES OF COMMON STOCK PRESENT OR REPRESENTED BY PROXY AT THE ANNUAL MEETING AND VOTING
“
FOR
”
PROPOSAL 5 ARE INSUFFICIENT TO APPROVE PROPOSAL 5.
STOCKHOLDER PROPOSALS
Stockholder Proposals for 2025 Annual Meeting
Any stockholder proposals submitted for inclusion in our proxy statement and form of proxy for our 2025 Annual Meeting of Stockholders in reliance on Rule 14a-8 under the Exchange Act must be received by us no later than June 30, 2025 in order to be considered for inclusion in our proxy statement and form of proxy. Such proposal must also comply with the requirements as to form and substance established by the SEC if such proposals are to be included in the proxy statement and form of proxy. Any such proposal shall be mailed to: Reviva Pharmaceuticals Holdings, Inc., 10080 N Wolfe Rd., Suite SW3-200, Cupertino, California 95014, Attn.: Secretary.
Our bylaws state that a stockholder must provide timely written notice of any nominations of persons for election to our Board or any other proposal to be brought before the meeting together with supporting documentation as well as be present at such meeting, either in person or by a representative. For our 2025 Annual Meeting of Stockholders, a stockholder’s notice shall be timely received by us at our principal executive office no later than September11, 2025 and no earlier than August12, 2025;
provided
,
however
, that in the event the 2025 Annual Meeting of Stockholders is scheduled to be held more than thirty (30) days before the anniversary date of the Annual Meeting (the “Anniversary Date”) or more than sixty (60) days after the Anniversary Date, or if no annual meeting was held in the preceding year, a stockholder’s notice shall be timely if received by our Secretary at our principal executive office not later than the close of business on the later of (i) the ninetieth (90th) day prior to the scheduled date of such annual meeting; and (ii) the tenth (10th) day following the day on which such public announcement of the date of such annual meeting is first made by us. Proxies solicited by our Board will confer discretionary voting authority with respect to these nominations or proposals, subject to the SEC’s rules and regulations governing the exercise of this authority. Any such nomination or proposal shall be mailed to: Reviva Pharmaceuticals Holdings, Inc., 10080 N Wolfe Rd., Suite SW3-200, Cupertino, California 95014, Attn.: Secretary.
Further, if you intend to nominate a director and solicit proxies in support of such director nominee(s) at our 2025 Annual Meeting of Stockholders, you must also provide the notice and additional information required by Rule 14a-19 to: Reviva Pharmaceuticals Holdings, Inc., 10080 N Wolfe Rd., Suite SW3-200, Cupertino, California 95014, Attn.: Secretary, no later than October 14, 2025. This deadline under Rule 14a-19 does not supersede any of the timing requirements for advance notice under our bylaws. The supplemental notice and information required under Rule 14a-19 is in addition to the applicable advance notice requirements under our bylaws, as described in this section, and it shall not extend any such deadline set forth under our bylaws.
ANNUAL REPORT
A copy of our Annual Report on Form 10-K (including our audited financial statements) filed with the SEC is enclosed herewith. Upon written request to the Company, the exhibits set forth on the exhibit index of our Annual Report on Form 10-K may be made available at reasonable charge (which will be limited to our reasonable expenses in furnishing such exhibits). Additional copies of our Annual Report on Form 10-K (including our audited financial statements) may be obtained without charge by writing to Reviva Pharmaceuticals Holdings, Inc., 10080 N Wolfe Rd., Suite SW3-200, Cupertino, California 95014, Attn.: Secretary.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements. This means that only one copy of this proxy statement may have been sent to multiple stockholders in the same household. We will promptly deliver a separate copy of this proxy statement to any stockholder upon written or oral request to: Reviva Pharmaceuticals Holdings, Inc., 10080 N Wolfe Rd., Suite SW3-200, Cupertino, California 95014, Attn.: Secretary, or by phone at
(
408) 501-8881. Any stockholder who wants to receive a separate copy of this proxy statement, or of our proxy statements or annual reports in the future, or any stockholder who is receiving multiple copies and would like to receive only one copy per household, should contact the stockholder’s bank, broker, or other nominee record holder, or the stockholder may contact us at the address and phone number above.
OTHER MATTERS
As of the date of this proxy statement, the Board does not intend to present at the Annual Meeting any matters other than those described herein and does not presently know of any matters that will be presented by other parties. If any other matter requiring a vote of the stockholders should come before the meeting, it is the intention of the persons named in the proxy to vote with respect to any such matter in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the best judgment of the proxy holder.
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By Order of the Board of Directors
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/s/Laxminarayan Bhat
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Laxminarayan Bhat
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Chief Executive Officer
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October28, 2024
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Cupertino, California
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Appendix A
CERTIFICATE OF AMENDMENT OF THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
REVIVA PHARMACEUTICALS HOLDINGS, INC.
A Delaware Corporation
Pursuant to Section 242 of the General Corporation Law of the State of Delaware, Reviva Pharmaceuticals Holdings, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), does hereby certify as follows:
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The name of the Corporation is Reviva Pharmaceuticals Holdings, Inc. The Corporation was incorporated by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware on December 11, 2020 (as further amended and restated, the “Certificate of Incorporation”).
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The Certificate of Incorporation is hereby amended to increase the authorized shares of the Corporation’s common stock, par value $0.0001 per share, by deleting the first paragraph under Section A of Article IV, and replacing such paragraph with the following:
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“The total number of shares of capital stock which the Corporation shall have authority to issue is Three Hundred Twenty Five Million (325,000,000), of which (i) Three Hundred Fifteen Million (315,000,000) shares shall be a class designated as common stock, par value $0.0001 per share (the “Common Stock”), and (ii) Ten Million (10,000,000) shares shall be a class designated as preferred stock, par value $0.0001 per share (the “Preferred Stock”).”
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The Board of Directors of the Corporation has duly adopted a resolution pursuant to Section 242 of the General Corporation Law of the State of Delaware setting forth a proposed amendment to the Certificate of Incorporation and declaring said amendment to be advisable. The requisite stockholders of the Corporation have duly approved said proposed amendment in accordance with Section 242 of the General Corporation Law of the State of Delaware.
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All other provisions of the Certificate of Incorporation shall remain in full force and effect.
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5.
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This Certificate of Amendment and the amendment to the Certificate of Incorporation effected hereby shall be effective immediately upon filing.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its Chief Executive Officer on this _____
day of _______________, 2024.
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REVIVA PHARMACEUTICALS HOLDINGS, INC.
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By:
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__________________________________________
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Name:
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Laxminarayan Bhat
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Title:
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Chief Executive Officer
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