|
Item 10.
|
Directors, Executive Officers, and Corporate
Governance
|
Board of Directors and Executive Officers
|
Name
|
|
Age
|
|
Positions
with the Company
|
|
David
Patterson
|
|
66
|
|
Chief
Executive Officer, Chief Financial Officer/Treasurer/Secretary and
Director
|
|
Susan
Weisman
|
|
56
|
|
Chief
Financial Officer (since April 26, 2017)
|
|
Michaela
Ott
|
|
51
|
|
Chief
Operating Officer and Director
|
|
Michael
Ott
|
|
52
|
|
Subsidiaries
Chief Executive Officer and Director
|
|
John H.
Abeles, M.D.
|
|
72
|
|
Director
|
|
Augusto
Ocana M.D. and J.D,
|
|
72
|
|
Director
|
|
W.
Austin Lewis, IV
|
|
41
|
|
Director,
Head of Audit Committee (since February 12, 2016)
|
|
Eric
Goehausen
|
|
40
|
|
Director
(since February 16, 2017)
|
Board of Directors
The
Company believes that our Board should be composed of individuals
with sophistication and experience in many substantive areas that
impact its business. We believe that experience, qualifications, or
skills in the following areas are most important: accounting and
finance; design, innovation and engineering; strategic planning;
human resources and development practices; and board practices of
other corporations. These areas are in addition to the personal
qualifications described in this section. The Company believes that
all of our current Board members possess the professional and
personal qualifications necessary for board service, and have
highlighted particularly noteworthy attributes for each Board
member in the individual biographies below. The principal
occupation and business experience, for at least the past five
years, and educational background of each current director is as
follows:
David Patterson, Age 66, Chief Executive Officer, President and
Chief Financial Officer
David
E. Patterson is a Healthcare Executive with over 30 years of
progressive experience in consulting, large product company
executive positions and managed care payer-provider relations
experience with large insurance company. He has an extensive
history of increasing responsibility, achievement of growth in all
positions across product/ technology and payer-service segments of
healthcare. From July 2014 until the present, Mr. Patterson
operated Patterson Group, LLC, where he provided advisory services
to Healthcare Technology, Pharmaceutical and Healthcare Information
Technology companies, providing current and past company support.
Also during 2014, Mr. Patterson was also engaged as a Consultant by
Fusion Alliance where he provided business development services to
support a project to create a healthcare vertical to serve the
Accountable Care Organization market. From November 2009 through
June 2013, Mr. Patterson served as Vice President of Business
Development and Marketing for Symbios Medical Products, LLC,
reporting to the CEO with a focus on business plan preparation,
capital raising/investor introductions, assessment of potential
sales and distribution companies and product management via market
creation programs. From August 2005 through October 2009, Mr.
Patterson served as a Consultant to Philips Medical Systems where
he was responsible for leading a team in the development of the
Ambient Experience (AE) solution within Philips Healthcare to
enhance customer loyalty and increase capital equipment purchases.
The objective was to develop a path to commercialization of patient
centric solutions by understanding customer needs and effects of
enhanced care environments on patient outcomes and operational
efficiency for healthcare providers. Additionally was asked to lead
a team within Philips to develop a set of technology and business
solutions to support building a service utilizing RFID/RTLS
technology and eventually branching out to process improvement
consulting and middleware/software offerings for health systems.
Mr. Patterson obtained a B.S. Degree in Economics from Purdue
University. He does not, and has not served as an officer or
director of any other company required to file reports with the
Securities and Exchange Commission.
Susan Weisman. Age 56, Chief Financial Officer
On
April 26, 2017 Susan Weisman was appointed Chief Financial Officer
of the Company. Ms. Weisman is a Finance Executive with over 30
years of progressive experience in consulting, executive positions
with both public and private companies and various industries,
including financial services, technology, real estate, medical
services and manufacturing. She has an extensive history of
increasing responsibility, achievement of growth in all positions
across product/service/technology. From August 2008 until the
present, Ms. Weisman operated Finance and Strategic Consultants,
LLC, where she provided advisory services to the Company as well as
a healthcare service provider and a healthcare technology, various
other technology companies, financial services companies as well as
real estate and various other industries. From September 20008 to
October 2010 Ms. Weisman worked for AFC, LLC., an investment
company of Mitsui & Co (USA) as Chief Financial Officer, Acting
Chief Executive Officer and Chief Liquidation Officer a sub-prime
auto finance company reporting to Mitsui & Co (USA). From
September 2007 to August 2008, Ms. Weisman was the Chief Financial
Officer and Chief Operating Officer for CU Business Capital, LLC.
From 2004 to 2007, a credit union service organization. Ms. Weisman
was Chief Financial Officer and Director of Coach Industries Group,
a company required to file reports with the Securities and Exchange
Commission, a financial services company offering lease finance,
insurance, independent contractor settlement to commercial fleet
operators, as well as the manufacturer of modified commercial
vehicles. From 1990 to 2000, Ms. Weisman was Controller and acting
CFO of a $4.2 Billion savings bank holding company, BankAtlantic
Bancorp, a company required to file reports with the Securities and
Exchange Commission which included BankAtlantic, a federal savings
bank, BankAtlantic Development Corporation, a real estate
development company, Ryan, Beck & Co. an investment banking
company and various internet start-up investments. From 1986 to
1990 Ms. Weisman worked for KPMG, LLC, a global accounting firm.
Ms. Weisman obtained a B.S. Degree in Economics from City
University of New York - Brooklyn College. Ms. Weisman is a
certified public accountant – New York (inactive
status).
Michaela Ott, Age 51, Chief Operating Officer and
Director
On
October 26, 2016 Michaela Ott resigned as Chief Executive Officer
and is now the Chief Operating Officer of MEDITE. Michaela Ott was
appointed to serve as Chief Executive Officer and is member of the
board of directors concurrently with the acquisition of MEDITE on
April 3, 2014 through October 26, 2016. Mrs. Ott has served as
Co-President of MEDITE GmbH since 2006 and as a director of MEDITE
Enterprises, Inc. since 2013. Ms. Ott has a degree in Industrial
Business Management, was a major shareholder and COO of a Fiber
Optic manufacturer company before and possesses particular
knowledge and experience that strengthen the Board’s
collective qualifications, skills, and experience. Mrs. Ott is not
an officer or director of any other publicly traded
company.
Michael Ott, Age 52, Chairman of the Board, Subsidiaries Chief
Executive Officer and Director
On
October 26, 2016 Michael Ott resigned as President and Operating
officer and is now Chairman of the Board of MEDITE and President of
MEDITE GmbH and CytoGlobe. Michael Ott was appointed to serve as
President and Chief Operating officer and is member of the board of
directors concurrently with the acquisition of MEDITE on April 3,
2014 through October 26, 2016. Mr. Ott has served as Co-President
of MEDITE GmbH since 2006 and as Chief Executive Officer and
President of MEDITE Enterprises, Inc. since 2013. Mr. Ott has a
Master of Business Administration in international management, has
experience as CFO of a German medical device stock listed company,
served as CEO of a German laser technology company and possesses
particular knowledge and experience that strengthen the
Board’s collective qualifications, skills, and experience.
Mr. Ott is not an officer or director of any other publicly traded
company.
John H. Abeles, M.D., Age 72, Director
John H.
Abeles, M.D, has been a director of the Company since May 1999. Dr.
Abeles is President of MedVest, Inc., a venture capital and
consulting firm he founded in 1980. He is also General
Partner of Northlea Partners, Ltd., a family investment
partnership. Dr. Abeles previously served as a senior
medical executive at Sterling Drug Company, Pfizer, Inc. and Revlon
Healthcare, Inc. and subsequently was a medical analyst at Kidder,
Peabody & Co. Dr. Abeles is a director of a number of
companies operating in the medical device and healthcare fields,
including publicly-traded companies DU.S. Pharmaceuticals, Inc. and
CombiMatrix Corp. Dr. Abeles has also served as a director
of I-Flow Corporation (now a subsidiary of Kimberly Clark
Corporation) and Oryx Technology Corp. Dr. Abeles possesses
particular knowledge and experience in medical education, venture
capital and finance, and the pharmaceutical industry that
strengthen the Board’s collective qualifications, skills, and
experience. Dr. Abeles invested $50,000 through Northlea Partners,
Ltd.in the Company’s secured promissory notes and received
75,000 warrants to purchase shares of common stock.
Augusto Ocana, M.D. and J.D., Age 72, Director
Augusto
Ocana, M.D. and J.D.
has previously served as Chief
Executive Officer of the Company from November 2006 to July 2007
and as President of International Operations from 2007 through
2008. He has acted as a consultant to the Company since then. He
also served as the President of Worldwide Business of the Company
since 2006. Prior to this, from 1999 to 2006, he was a Senior Vice
President, General Manager and Director of C.H. Werfen, S.A., where
he focused on sales and market development. Prior to this, he
served in sales and management roles for several corporations,
including Abbott Laboratories. As a result of these and other
professional experiences, Mr. Ocana possesses particular knowledge
and experience in sales, marketing, and management which
strengthens the Board’s collective qualifications, skills,
and experience.
William Austin Lewis IV, Age 41, Director
William
Austin Lewis IV currently serves as the CEO, CFO and Director of
Paid Inc. (PAYD). Mr. Lewis also serves as a member of the Audit
Committees and Compensation Committees for MAM Software, Inc.
(MAMS), and FlouroPharma Medical, Inc.
(FPMI). Since 2004, Mr. Lewis has served as Chief
Executive Officer of Lewis Asset Management Corporation, an
investment management company he founded, where he is also the
Portfolio and Chief Investment Officer of the Lewis Opportunity
Fund, one of the funds under management. Prior to founding Lewis
Asset Management, Mr. Lewis held a variety of positions with
investment firms, including Puglisi & Co., Thompson Davis &
Co., and Branch Cabell & Company. Mr. Lewis holds a Bachelor of
Science in Finance and a Bachelor of Science in Financial Economics
from James Madison University. Mr. Lewis has invested in $100,000
of the Company’s secured promissory notes at December 31,
2016 and has received warrants totaling 190,000 shares of the
Company’s common stock.
Eric M. Goehausen, Age 40, Director
Eric M. Goehausen has been the managing member of New Harbor
Merchant Partners, a private family investment office that invests
in growth-oriented businesses and special situations since 2003.
Mr. Goehausen also currently serves as the Director of Revenue
Growth of the Clinical Solutions Team of Anthem, Inc., a Fortune 30
company.
Mr.
Goehausen has more than 17 years of corporate advisory, CFO and
executive-level financial management responsibilities, having led
all facets of financial operations including financial, planning
and analysis; accounting; treasury; profit improvement; M&A
activity; bank and Board reporting and compliance; restructuring
and transformational events for private-equity owned and public
companies ranging from $100M to $4B in revenue.
Mr.
Goehausen started his career in investment banking with JPMorgan
Chase in 1998, where he focused on mergers, acquisitions, leveraged
buyouts, and corporate financings. In 2003, Eric formed New
Harbor Merchant Partners, a private investment firm focused on
providing strategic capital and advisory services to middle market
companies and business leaders. From 2006 through 2011, Mr.
Goehausen was with the global professional services firm Alvarez
& Marsal where he focused on restructuring, turnaround advisory
and interim management of private equity controlled and public
companies with revenue ranging from $100 million to $4
billion. Mr. Goehausen was then Vice President of Corporate
Development for a publicly-traded dental products manufacturing
company prior to its sale, and subsequently Chief Financial Officer
of a private equity controlled education Management Company. Mr.
Goehausen earned his Master of Business Administration, With
Honors, from The University of Chicago Booth School of Business
with concentrations in Accounting, Finance and Entrepreneurship,
and earned his Bachelor of Science in Business with a major in
Finance, Cum Laude, from Miami University in Oxford, OH. He
has completed advanced studies in Corporate Finance and
International Securities Markets at the London School of Economics,
as well as Financial Markets, Institutions and Money & Banking
at Northwestern University, and holds his CIRA
certification.
Mr.
Goehausen has not, and does not now serve as an officer or director
of any other company required to file reports with the
SEC.
Code of Ethics
The
Company has adopted its
Code of
Ethics and Business Conduct for Officers, Directors and
Employees
that applies to all of our officers, directors and
employees, including its principal executive officer, principal
financial officer, and principal accounting officer or controller,
or persons performing similar functions. The Company filed the code
as an exhibit to our Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2003, as filed with the Commission on April
14, 2004. The Code of Ethics is also available on our website at
www.medite-group.com
.
Board of Directors and Committee Information
The
Board of Directors currently has one standing committee – the
Audit Committee. The Compensation Committee and the Nominating and
Corporate Governance Committee are going to be re-established with
current Directors of the Board in the future.
Audit Committee
The
Audit Committee currently consists of Mr. Lewis (Chairman, since
February 12, 2016) who replaced Mr. Milley (Chairman until February
12, 2016) and Dr. Abeles, both of whom are independent under
applicable independence requirements. The Board of Directors
has determined that Mr. Lewis qualifies as an “audit
committee financial expert” as defined in Item 407(d) (5)
(ii) of Regulation S-K promulgated under the Exchange
Act.
The
Audit Committee acts pursuant to a written charter, which charter
authorizes the committee’s overview of the financial
operations and management of the Company, including a required
review process for all quarterly, annual, and special filings with
the Commission, review of the adequacy and efficacy of the
accounting and financial controls of the Company as well as the
quality of accounting principles and financial disclosure
practices, and communications with the Company’s independent
registered public accounting firm and members of financial
management. A copy of the Audit Committee’s charter was filed
as an appendix to the Company’s definitive proxy statement
for its 2007 annual stockholders meeting, as filed with the SEC on
May 15, 2007, and is available on our website. The Audit
Committee met 6 times in 2016.
Stockholder Nominations
There
were no material changes to the procedures by which stockholders
may recommend nominees to the Company’s board of directors
during the 2016 fiscal year.
|
Item 11.
|
Executive Compensation
|
Summary
Compensation Table
The
following table sets forth the compensation earned by the
Company’s principal executive officer, and each of the
Company’s two most highly compensated executive officers
other than the principal executive officer whose compensation
exceeded $100,000 (collectively, the “Named Executive
Officers”), during the years ended December 31, 2016 and
2015.
|
Name and
Principal Position (a)
|
Year
(b)
|
|
|
|
|
|
David
Patterson
|
2016
|
18,462
|
|
125,000
|
-
|
|
CEO
|
2015
|
-
|
-
|
-
|
-
|
|
Michaela Ott
(1)
|
2016
|
149,784
(2)
|
-
|
-
|
-
|
|
COO
|
2015
|
144,691
(2)
|
-
|
-
|
-
|
|
Michael Ott
(3)
|
2016
|
148,769
(4)
|
-
|
-
|
-
|
|
COO and
President
|
2015
|
144,691
(4)
|
-
|
-
|
-
|
|
Robert F.
McCullough, Jr.
(5)
|
2016
|
83,333
(6)
|
-
|
-
|
-
|
|
CFO and Chairman of
the Board
|
2015
|
100,000
(6)
|
-
|
-
|
-
|
|
Name and Principal Position
(a)
|
Year
(b)
|
Nonequity
incentive plan compensation
($)(g)
|
Nonqualified
deferred compensation
earnings ($)
(h)
|
All other
compensation
(i)
|
|
|
David
Patterson
|
2016
|
|
|
|
$
18,462
|
|
CEO
|
2015
|
-
|
-
|
-
|
-
|
|
Michaela Ott
(1)
|
2016
|
-
|
-
|
-
|
149,784
|
|
COO
|
2015
|
-
|
-
|
-
|
144,691
|
|
Michael Ott
(3)
|
2016
|
-
|
-
|
-
|
148,769
|
|
Chairman of the
Board
|
2015
|
-
|
-
|
-
|
144,691
|
|
Robert F.
McCullough, Jr.
(5)
|
2016
|
-
|
-
|
-
|
83,333
|
|
CFO through
November 5, 2016 and Chairman of the Board through October 26,
2016
|
2015
|
-
|
-
|
-
|
100,000
|
|
(1)
|
Mrs.
Michaela Ott served as Chief Executive Officer from April 3, 2014
through October 26, 2016, after the acquisition of
MEDITE.
|
|
(2)
|
Salary
converted to USD based on agreement with MEDITE GmbH in EURO
currency
|
|
(3)
|
Mr.
Michael Ott, served as Chief Operating Officer from April 3, 2014
through October 26, 2016, after the acquisition of
MEDITE.
|
|
(4)
|
Salary
converted to USD based on agreement with MEDITE GmbH in EURO
currency
|
|
(5)
|
Mr. McCullough
served as Chief Executive Officer from October 2007
through April 3, 2014, and as Chief Financial Officer
since September 2005 through November 2016.
|
|
(6)
|
Mr.
McCullough has deferred payment of 100% of his salary earned in
2016 and 2015.
|
|
(7)
|
Stock
award vests over a 3 year period. Represents 250,000 shares of
common stock issued in October 2016 pursuant to his employment
agreement.
|
Outstanding Equity Awards at Fiscal Year-End
The
Company’s named executive officers did not own any
outstanding equity awards as of December 31, 2015, as the Company
has no plans in place (see below). On October 31, 2016, pursuant to
his employment agreement, David E. Patterson was granted 250,000
restricted shares of the Company’s common stock
(the “Shares”). The Shares will vest
in
three (3) equal installments on each of the first three
annual anniversary dates of Mr. Patterson’s appointment, so
long as he remains employed by the Company through each such
vesting date.
Narrative Disclosure to Summary Compensation Table
Mrs.
Ott earned an annual salary of $149,784 in 2016 and $144,693 in
2015 based on the employment agreement with MEDITE GmbH, Germany.
Included in total wages for 2016 were $38,160 accrued for unpaid
wages.
Mr. Ott
earned an annual salary of $148,769 in 2016 and $144,691 in
2015 based on the employment agreement with MEDITE GmbH,
Germany. Included in total wages for 2016 were $15,640 accrued
for unpaid wages.
Mr.
McCullough earned an annual salary of $83,333 in 2016 and $100,000
in 2015, respectively, and has elected to defer payment of 100% of
such salary.
Equity Incentive Plan and Employee Stock Purchase Plan
N/A
Potential Payments Upon Termination or
Change-in-Control
The
Company does not offer or have in place any formal severance,
change in control or similar compensation programs for our officers
or employees. Rather, we individually negotiate with those
employees for whom such compensation is deemed necessary. The
Company’s restricted stock grants to its CEO and other
officers does require an accelerated vesting upon a change in
control. We are obligated to provide warrants to our outside
directors upon the occurrence of certain changes in control. For
more information, see “Compensation of Directors”
below.
Compensation of Directors
The
following table sets forth certain information regarding the
compensation of directors for our 2016 fiscal year.
|
|
Fees Earned
or
Paid in Cash
($)
|
|
|
David
Patterson
|
-
(1)
|
-
|
|
Michaela
Ott
|
-
(1)
|
-
|
|
Michael
Ott
|
-
(1)
|
-
|
|
Robert F.
McCullough
|
-
(1)
|
-
|
|
John H. Abeles,
M.D.
|
35,000
(2)
|
35,000
(3)
|
|
Alexander M.
Milley
|
20,000
(4)
|
20,000
(3)
|
|
Augusto Ocana M.D.
and J.D.
|
35,000
(2)
|
35,000
(3)
|
|
Austin
Lewis
|
55,000
(5)
|
55,000
|
|
(1)
|
Mr.
Patterson, Mrs. Ott, Mr. Ott and Mr. McCullough are management
members of our board of directors and not separately compensated
for his service on the board of director
|
|
(2)
|
Represents
director fees with respect to fiscal year 2016. This amount
includes fees payable to each director which were paid through the
issuance of common stock.
|
|
(3)
|
As of
December 31, 2016, each of these directors is entitled to receive
1,000 (100,000 before the reverse split) shares of common stock in
connection with a stock bonus provided to each of our directors in
2009.
|
|
(4)
|
In
February 2016 Mr. Miley resigned from the Board of Directors. The
agreed upon payment was for $5,000 a quarter through the end of
2016, which was paid in stock in June 2016.
|
|
(5)
|
Represents director fees with respect to fiscal year 2016. This
amount includes fees payable to each director which were paid
through the issuance of common stock. As Chairman of the Audit
Committee, $5,000 a quarter is included in fees earned. Mr.
Lewis’s balance of $55,000 was accrued and unpaid as of
December 31, 2016.
|
Narrative Disclosure to Director Compensation Table
The
Company currently pays its outside directors a quarterly fee of
$10,000 as compensation for their service on its board of directors
starting in the second quarter of 2016, and prior to that date,
they received a quarterly fee of $5,000. During the second quarter
of 2016, the Company settled its outstanding directors fees in
common stock. The Company issued 68,750, 55,442, 68,750 shares of
common stock to our director John Abeles for $55,000, Augusta Ocana
for $44,370 and former director Alexander Miley for $55,000,
respectively. The Company issued 63,125 shares of common stock to
Northlea Partners, LLC, for the accrued fees of $50,500, a
Partnership that John Abeles is the General Partner. Since 2009,
its directors have deferred receipt of such fees. It also
reimburses all directors for their reasonable expenses incurred in
connection with attendance at meetings of the board of
directors.
For
information on other consideration received by directors or their
affiliates from the Company, see “Transactions with Related
Persons, Promoters and Certain Control Persons” in Item 13
below.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
Common Stock
The
following table sets forth certain information, as of December 31,
2016, with respect to holdings of our common stock by (i) each
person known by us to be the beneficial owner of more than 5% of
the total number of shares of common stock outstanding as of such
date, (ii) each of our directors and executive officers, and (iii)
all directors and executive officers as a group. Except as
otherwise indicated, the address of each person is c/o MEDITE
Cancer Diagnostics, Inc., 4203 SW 34th Street, Orlando, FL 32811,
U.S. (Go over with Bill O’Neal and
14C)
|
Name and Address of Beneficial Owner
|
Amount
and
Nature
of
Beneficial
Ownership
(1)
|
|
|
|
|
|
|
Michaela
Ott
|
15,000,000
(2)
|
64.02
%
|
|
|
|
|
|
Michael
Ott
|
15,000,000
(3)
|
64.02
%
|
|
|
|
|
|
Robert F.
McCullough, Jr.
|
1,676,907
(4)
|
7.16
%
|
|
|
|
|
|
David
Patterson.
|
250,000
(7)
|
1.07
%
|
|
|
|
|
|
Augusto Ocana, M.D.
and J.D.
|
179,888
|
*
|
|
|
|
|
|
Austin
Lewis
|
194,496
(6)
|
*
|
|
|
|
|
|
John H. Abeles,
M.D.
|
445,618
(5)
|
1.90
|
|
|
|
|
|
All beneficial
owners and management as a group
(7
persons)
|
17,746,906
|
75.74
%
|
* Less
than one percent
|
(1)
|
Unless
otherwise indicated, each of the persons named in the table has
sole voting and investment power with respect to the shares set
forth opposite such person’s name. With respect to each
person or group, percentages are calculated based on the number of
shares beneficially owned, including shares that may be acquired by
such person or group within 60 days of December 31, 2016 upon the
exercise of stock options, warrants or other purchase rights, but
not the exercise of options, warrants or other purchase rights held
by any other person. There were 25,181,987 shares of common stock
outstanding as of the close of business on April 19,
2017.
|
|
(2)
|
Includes:
(i) 7,500,000 shares held by Mrs. Ott’s husband, Michael
Ott.
|
|
(3)
|
Includes:
(i) 7,500,000 shares held by Mr. Ott’s wife, Michaela
Ott.
|
|
(4)
|
Includes
an aggregate 1,662 shares owned by various trusts of which Mr.
McCullough is trustee as follows: MJM Educational Trust (150)
shares, PFM Educational Trust (150 shares), CDM Educational Trust
(150) shares and the MPC Trust (1,212 shares).
|
|
(5)
|
Includes:
(i) 192,518 shares owned by Northlea Partners, Ltd., of which Dr.
Abeles is General Partner; and (ii) 1000 shares of common stock
awarded in 2009 that have not yet been issued. Dr. Abeles disclaims
beneficial ownership of all shares owned by, or issuable to,
Northlea Partners except shares attributable to his 1% interest in
Northlea Partners as General Partner. Includes 28,000 warrants to
purchase shares of common stock at exercise prices between $4.00
and $6.00 for Mr. Abeles and 33,750 to Northlea Partners with
similar terms. Includes Northlea Partners 75,000 warrants to
purchase shares of common stock at an exercise price of $0.80 a
share related to the secured promissory notes dated May 26,
2016.
|
|
(6)
|
Includes:
190,000 warrants to purchase shares of common stock at an exercise
price of $0.80 a share related to the issuance of secured
promissory notes issued on December 31, 2015.
|
|
|
|
|
(7)
|
Includes:
250,000 shares of common stock issued related to the employment
contract dated October 31, 2016 with a three year vesting
period..
|
Series E Convertible Preferred Stock
The
following table sets forth certain information with respect to
holdings of our Series E Convertible Preferred Stock by (i) each
person known by us to be the beneficial owner of more than 5% of
the total number of shares of the Company’s Series E
Convertible Preferred Stock outstanding as of such date, (ii) each
of our directors and executive officers, and (iii) all directors
and executive officers as a group.
|
Name and Address of Beneficial Owner
(1)
|
Amount
and
Nature
of
Beneficial
Ownership
(2)
|
|
|
Kevin F. Flynn June
1992 Non-Exempt Trust
120 South LaSalle
Street
Chicago, IL
60602
|
464
(3)
|
35.03
%
|
|
|
|
|
|
Rolf
Lagerquist
4522 CO Road 21
NE
Elgin, MN
55932
|
139
(4)
|
10.51
%
|
|
(1)
|
No
executive officers or directors own any shares of Series E
Convertible Preferred Stock.
|
|
(2)
|
Unless
otherwise indicated, each of the persons named in the table has
sole voting and investment power with respect to the shares set
forth opposite such person’s name. With respect to each
person or group, percentages are calculated based on the number of
shares beneficially owned, including shares that may be acquired by
such person or group upon the exercise of stock options, warrants
or other purchase rights, but not the exercise of options, warrants
or other purchase rights held by any other person. There were
19,022 shares of Series E Convertible Preferred Stock outstanding
as of the close of business on March 31, 2017.
|
|
(3)
|
Converts
into 464 shares of common stock, including shares issuable upon
payment of cumulative dividends.
|
|
(4)
|
Converts
into 139 shares of common stock, including shares issuable upon
payment of cumulative dividends.
|
Equity Compensation Plan Information
|
Plan category
|
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))
|
|
|
|
|
|
|
Equity Compensation Plans Approved by Security Holders
|
|
|
|
|
None
|
—
|
—
|
—
|
|
|
|
|
|
|
Equity Compensation Plans Not Approved by Security
Holders
|
|
|
|
|
Warrants issued for
officer, director and employee compensation (1)
|
390
|
$
1.00
|
—
|
|
|
|
|
|
|
Total
|
390
|
$
1.00
|
—
|
|
(1)
|
The
Company has issued warrants in lieu of cash payment for employment
services, for achieving certain goals or for other corporate
reasons. During fiscal year 2015, it issued no employee warrants to
that non-executive employee which his contract was terminated by
April, 2014.
|
Changes in Control
The
acquisition of MEDITE Enterprise, Inc. in April 2014, in exchange
for the majority of the former CytoCore, Inc. shares is considered
as a reverse merger which subsequently resulted in a change of
control. The new majority shareholders, Michaela and Michael Ott,
CEO and COO respectively, now own 64.02 % of the company’s
common stock.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director
Independence
|
The
following section sets forth information regarding transactions
since January 1, 2014, or any currently proposed transactions,
between the Company and certain related persons. For more
information on the compensation received by the Company’s
directors and officers, and the beneficial ownership of equity
securities of the Company by such individuals, see Item 11 “
Executive Compensation
“ and Item 12 “
Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters
“
above.
Robert F. McCullough, Jr., former Chief Financial Officer and
Director.
On
October 26, 2016 the Board accepted the resignation of Robert F.
McCullough, Jr. as Chairman of the Board. On November 5, 2016,
The Board of the Company held a special meeting and dismissed
Robert F. McCullough, Jr. from his position as Chief Financial
Officer, Secretary and Treasurer. On December 5, 2016, the Company
issued and Information Statement, to holders of the Company’s
outstanding common stock, as of the close of business on November
22, 2016, pursuant to Rule 14c−2 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).
The purpose of the Information Statement was to inform the common
stockholders that we have obtained the written consent of the
holders of the majority of the issued and outstanding shares of our
Common Stock, to remove Robert F. McCullough, Jr., effective
immediately, from the position of Director of the
Company.
Mr.
McCullough loaned to the Company an aggregate $159,500 during the
2013 fiscal year. $40,000 was repaid in 2015 and $20,000 was
repaid during 2016. The Company owes an aggregate outstanding
balance of $50,000 as of December 31, 2016 which is payable upon
demand. The Company is in litigation with Mr.
McCullough.
William Austin Lewis IV, Director and Chairman of the Audit
Committee
Prior
to being a Director of the Company, Mr. Lewis invested $100,000 in
the Company’s secured promissory notes and received 50,000
warrants to purchase the Company’s common stock at
$1.60. The warrants have a term of five years with
anti-dilution features. Subsequent to Mr. Lewis becoming
a Director, the Company agreed to issue an additional 50,000
warrants and reduce the price of the warrants to $0.80 for the
renegotiated terms, eliminating the anti-dilution clause in the
warrants. The Company has not repaid the secured
promissory notes on its maturity date of March 31,
2016. Mr. Lewis will receive 10% of his principal
balance outstanding in warrants for every month that the notes are
not repaid. At December 31, 2016 Mr. Lewis has 190,000 warrants
outstanding. In January 2017, the Company amended the warrants and
reduced the exercise price of the warrants to $0.50 a
share.
Settlement of Fees and Payment of Consulting Fees and Commissions
to Directors
During
the years ended December 31, 2016 and 2015, we engaged in the
following transactions with its directors:
At
December 31, 2015, the Company accrued payments of $5,000 per month
from May 1, 2014 to July 31, 2014, when the contract was terminated
totaling $15,000 to be paid at the Company’s discretion in
stock or cash. During 2016, the Company issued 55,442 shares of
common stock in settlement of this outstanding liability and his
outstanding board fees through December 31, 2016. In addition Dr.
Ocana receives standard board fees.
During
the second quarter of 2016, the Company settled its outstanding
directors fees in common stock. The Company issued 68,750, 55,442,
68,750 shares of common stock to our director John Abeles for
$55,000, Augusta Ocana for $44,370 and former director Alexander
Miley for $55,000, respectively. The Company issued 63,125 shares
of common stock to Northlea Partners, LLC, for the accrued fees of
$50,500, a Partnership that John Abeles is the General
Partner.
During
the period ended October 31, 2016, the Company paid it CEO David
Patterson, through his consulting firm David Patterson, LLC,
$45,000 in consulting fees prior to becoming CEO. The Company also
paid David Patterson, LLC $20,000 as a bonus to David Patterson,
LLC for the period from July 2016 through October
2016.
Related Person Transaction Approval Policy
We
recognize that related person transactions can present potential or
actual conflicts of interest and create the appearance that the
Company’s decisions are based on considerations other than
the best interests of it and its stockholders. The Board of
Directors, therefore, adopted a written policy in May 2008, that
requires the review, approval or ratification of all such
transactions by the Audit Committee of the Board of Directors in
accordance with the procedures established for such
transactions.
For
these purposes, a “related person transaction” is any
transaction, arrangement or relationship (or series of similar
transactions, arrangements or relationships) in which the Company
or any subsidiary is, was or will be a participant and in which a
related person has, had or will have a direct or indirect interest.
A “related person” includes executive officers,
directors and nominees for election as a director, five percent
holders, and any immediate family members of the foregoing. It also
includes entities in which any of the foregoing is employed or is a
partner or principal or in a similar position, or in which such
person has a five percent or greater beneficial ownership
interest.
In
advance of each regularly scheduled Audit Committee meeting,
management must propose those transactions to be entered into by
the Company for the coming calendar quarter, including the material
terms of such transactions, the parties involved, the interests of
the related person(s) in such transactions, and the proposed
aggregate value of each such transaction (if calculable). After
review, the Audit Committee must approve or disapprove such
transactions and at each subsequently scheduled meeting, management
must update the Audit Committee as to any material change to those
proposed transactions. If advance approval of a related person
transaction is not feasible, such transactions may be preliminarily
entered into by management, subject to ratification by the Audit
Committee at its next meeting. A transaction also may be approved
by the Chairman of the Audit Committee, who possesses delegated
authority to act between meetings, in circumstances where it is not
practicable or desirable for the Company to wait until the next
committee meeting.
Review
and evaluation of a related person transaction include an
examination of all material facts and relevant factors, including
without limitation:
|
|
●
|
the
risks and benefits of such transaction to the Company;
|
|
|
●
|
the
extent of the related person’s interest in the
transaction;
|
|
|
●
|
the
impact on a director’s independence in the event the related
person involved in the transaction is a director, an immediate
family member or an affiliated entity;
|
|
|
●
|
if
applicable, the availability of other sources of comparable
products and services; and
|
|
|
●
|
whether
such transaction is on terms no less favorable than terms generally
available to an unaffiliated third party under the same or similar
circumstances.
|
The
Audit Committee shall approve or ratify only those transactions
that, in light of known circumstances, are in, or are not
inconsistent with, the best interests of the Company and the
Company’s stockholders, as the Audit Committee determines in
good faith. The committee may also determine to provide standing
approval of certain types of transactions. No director shall
participate in any discussion or approval of a related person
transaction for which he or she is a related person, except that
the director is required to provide all material information
concerning such transaction as requested by the Audit Committee or
the Board of Directors.
Director Independence
Upon
consideration of the criteria and requirements regarding director
independence set forth in Rules 5000(a)(19) and 5605(a)(2) of the
rules of the NASDAQ Stock Market, the Company has determined that
Dr. Abeles, Mr. Milley and Mr. Lewis are independent. With regard
to the Company’s audit committee, the board of directors has
determined that Dr. Abeles, Mr. and Mr. Lewis, who constitute all
members of the audit committee, are independent with respect to the
independence criteria for audit committee members set forth in Rule
5605(c)(2) of the rules of the NASDAQ Stock Market and Rule
10A-3(b)(1) of the Exchange Act.
|
Item 14.
|
Principal Accountant Fees and Services
|
On
January 5, 2017 (the “Engagement Date”), upon the
recommendation of the Company’s Audit Committee, the Board of
Directors of the Company KMJ Corbin & Company LLP
(“KMJ”)
as the
Company’s independent registered public accounting firm,
beginning with the period ended December 31, 2016.
WithumSmith+Brown, PC
(“Withum”)
served as the Company’s
independent registered public accounting firm until the January 5,
2017 for the fiscal years ended December 31, 2015.
Fees
The
following table presents fees for the professional services
rendered by KMJ and WSB for fiscal years 2016 and 2015,
respectively:
|
Services Performed
|
|
|
|
Audit
Fees
(1)
|
$
144,344
|
$
174,929
|
|
Audit-Related
Fees
(2)
|
14,500
|
-
|
|
Tax
Fees
(3)
|
21,011
|
9,472
|
|
All Other
Fees
(4)
|
-
|
160,000
|
|
Total
Fees
|
$
179,855
|
$
344,401
|
|
(1)
|
Audit
fees represent fees billed for professional services rendered for
the audit of our annual financial statements and review of the
financial statements included in the Company’s quarterly
reports or services that are normally provided in connection with
statutory and regulatory filings or engagements.
|
|
(2)
|
Audit-related
fees represent fees billed for assurance and related services
reasonably related to the performance of the audit or review of our
financial statements not reported in (1) above, including those
incurred in connection with securities registration and/or other
issues resulting from that process.
|
|
(3)
|
Tax
fees represent fees billed for professional services rendered for
tax compliance, tax provision, tax advice and tax planning
services.
|
|
(4)
|
All
other fees principally would include fees billed for products and
services provided by the accountant, other than the services
reported under the three captions above. The
Company’s former auditor L.J. Soldinger and Associates filed
a claim against the Company in Illinois’ Lake County Superior
Court. The Company believes the claims are without merit and has
adequately reserved for costs associated with the claim at December
31, 2105. In February 2016, the Company settled with our
former accountants in the amount of $160,000 and upon reaching a
settlement, L. J. Soldinger and Associates filed a dismissal of all
claims with the court.
|
Pre-Approval Policies
As
required by applicable law, the Audit Committee is responsible for
the appointment, compensation, retention and oversight of the work
of the Company’s independent registered public accounting
firm. In connection with such responsibilities, the Audit Committee
is required, and it is the Audit Committee’s policy, to
pre-approve the audit and permissible non-audit services (both the
type and amount) performed by its independent registered
public accounting firm in order to ensure that the provision
of such services does not impair the firm’s independence, in
appearance or fact.
The
Audit Committee pre-approved all audit services provided to the
Company during fiscal 2016.
