UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
SCHEDULE 14A
(Rule 14a 101)
_________________
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULED 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. __)
| | | | | | | | |
| Filed by the Registrant | | ☒ |
| Filed by a Party other than the Registrant | | ☐ |
Check the appropriate box:
| | | | | | | | |
| ☐ | | Preliminary Proxy Statement |
| ☐ | | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | | Definitive Proxy Statement |
| ☐ | | Definitive Additional Materials |
| ☐ | | Soliciting Material Pursuant to §240.14a-12 |
SenesTech, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check in the appropriate box):
| | | | | | | | |
| ☒ | | No fee required. |
| ☐ | | Fee paid previously with preliminary materials. |
| ☐ | | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a- 6(i)(1) and 0-11. |
SENESTECH, INC.
23460 N. 19th Ave., Suite 110
Phoenix, Arizona 85027
July 31, 2023
Dear Stockholder:
We cordially invite you to attend a special meeting of stockholders (the “Special Meeting”) of SenesTech, Inc., a Delaware corporation, which will be held on Friday, August 18, 2023, at 10:00 a.m., local time, at 23460 N. 19th Ave., Suite 110, Phoenix, Arizona 85027.
Details regarding the Special Meeting and the business to be conducted at the Special Meeting are more fully described in the accompanying Notice of Special Meeting of Stockholders and proxy statement. You are entitled to vote at the Special Meeting and any adjournments, continuations or postponements thereof only if you were a stockholder as of July 28, 2023.
Your vote is very important, regardless of the number of shares of our voting securities that you own. Whether or not you expect to attend the Special Meeting in person, please vote as promptly as possible by following the instructions in the accompanying proxy statement to ensure your representation and the presence of a quorum at the Special Meeting. As an alternative to voting in person during the Special Meeting, you may vote via the Internet, by telephone or by signing, dating and returning the accompanying proxy card.
If your shares are held in the name of a broker, trust, bank or other nominee, and you receive these materials through your broker or through another intermediary, please complete and return the materials in accordance with the instructions provided to you by such broker or other intermediary, or you may also attend the meeting and vote in person during the meeting.
On behalf of management and our Board of Directors, I urge you to submit your vote as soon as possible, even if you currently plan to attend the Special Meeting in person.
If you have any questions regarding the attached proxy statement or need assistance in voting your shares of common stock or preferred stock, please contact our proxy solicitor, Alliance Advisors, LLC, by telephone at 1-800-574-5925 (stockholders) and 928-779-4143 (brokers, banks and other nominees), or by e-mail at snes@allianceadvisors.com.
On behalf of management and our Board of Directors, we thank you for your continued support and interest in SenesTech, Inc.
Sincerely,
/s/ Joel L. Fruendt
Joel L. Fruendt
President and Chief Executive Officer
SENESTECH, INC.
NOTICE OF ANNUALSPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 26,AUGUST 18, 2023
Dear Stockholder:
The Annual MeetingNotice is hereby given that a special meeting of Stockholdersstockholders (the “Annual“Special Meeting”) of SenesTech, Inc., a Delaware corporation, will be held on Monday, June 26,Friday, August 18, 2023, at 12:10:00 p.m.a.m., Mountain Standard Time, at the Company’s principal executive offices locatedlocal time, at 23460 N. 19th19th Ave., Suite 110, Phoenix, Arizona 85027. Additional information regarding attending the Annual Meeting, voting your shares and submitting questions can be found in the Proxy Statement.
The AnnualSpecial Meeting will be held for the following purposes:
1.To elect Jake S. Leach as a Class I director, to serve for a three-year term until the 2026 annual meeting of stockholders and until his successor is duly elected and qualified;
2.To provide a non-binding advisory vote on the compensation of our named executive officers for fiscal 2022 (“say-on-pay”);
3.To approve an amendment to our 2018 Equity Incentive PlanAmended and Restated Certificate of Incorporation, as amended (the “2018 Plan”“Charter”), to increaseeffect a reverse stock split of the outstanding shares of our common stock, by a ratio of not less than 1-for-2 shares and not more than 1-for-12 shares, with the exact ratio to be set at a whole number within this range by our Board of shares available for issuance under the 2018 Plan by 500,000 sharesDirectors in its sole discretion (the “2018 Plan Amendment”“Reverse Stock Split Proposal”);
4.2.To ratifyapprove an adjournment of the appointmentSpecial Meeting, to a later date or dates, if necessary, to permit further solicitation and vote of M&K CPAS, PLLC as our independent registered public accounting firm forproxies in the fiscal year ending December 31, 2023;event there are not sufficient votes in favor of the Reverse Stock Split Proposal (the “Adjournment Proposal”); and
5.3.To transact such other business as may properly come before the meetingSpecial Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy Statementproxy statement accompanying this Notice of AnnualSpecial Meeting of Stockholders.
Our boardBoard of directorsDirectors has fixed the close of business on April 27,July 28, 2023 as the record date for the determination of stockholders entitled to vote at this meeting.the Special Meeting. Only stockholders of record at the close of business on April 27,July 28, 2023 are entitled to receive notice of, and to vote at, the meetingSpecial Meeting and any adjournment thereof. A complete list of registered stockholders entitled to vote at the Special Meeting will be available for inspection at our offices during regular business hours for the 10 calendar days prior to the Special Meeting and during the Special Meeting.
It is important that your shares be represented and voted, regardless of whether you plan to attend the Annual Meeting.Special Meeting in person. You may vote in advance of the AnnualSpecial Meeting on the Internet, by telephone or by completing and mailing a proxy or voting card. Voting in advance by Internet, telephone or mail will ensure your shares are represented at the AnnualSpecial Meeting. If you attend the meeting in person, you may choose to revoke your proxy and vote in person.
We are furnishing proxy materials to our stockholders throughperson during the Internet as permitted under the rules of the Securities and Exchange Commission. Under these rules, many of our stockholders will receive a Notice of Internet Availability of Proxy Materials instead of a paper copy of this Notice of Annual Meeting of Stockholders, the Proxy Statement, our proxy card, and our Annual Report on Form 10-K, for the fiscal year ended December 31, 2022. We believe this process gives us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and postage. If requested, stockholders will receive a paper copy of the proxy materials by mail.
On behalf of management and our boardBoard of directors,Directors, we thank you for your continued support and interest in SenesTech, Inc.
| | | | | | | | |
| | Sincerely, |
| | /s/ Joel L. Fruendt |
| | Joel L. Fruendt |
| | President and Chief Executive Officer |
Sincerely,/s/ Joel L. Fruendt
Joel L. Fruendt
President and Chief Executive Officer
Phoenix, Arizona
April 28,
July 31, 2023
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on June 26, 2023: The proxy statement and annual report to stockholders are available at http://senestech.investorroom.com/.
TABLE OF CONTENTS
SENESTECH, INC.
PROXY STATEMENT
FOR THE 2023 ANNUALSPECIAL MEETING OF STOCKHOLDERS
PROCEDURAL MATTERS
General
The enclosed proxy is being solicited by the boardour Board of directorsDirectors for use at our 2023 Annualthe Special Meeting, of Stockholders (the “Annual Meeting”) to be held on Monday, June 26,Friday, August 18, 2023 at 12:10:00 p.m.a.m., Mountain Standard Time,local time, or at any adjournment or postponement thereof, for the purposes set forth herein and in the accompanying Notice of AnnualSpecial Meeting of Stockholders.
This year’s Annual The Special Meeting will be held at our principal executive offices which are located at 23460 N. 19th Avenue,Ave., Suite 110, Phoenix, Arizona 85027, and the85027. Our telephone number at suchour principal executive offices is (928) 779-4143. As used in this proxy statement, “we,” “us,” “our” and “our company” refer to SenesTech, Inc., a Delaware corporation.
On or about May 5,August 3, 2023, we are mailing to stockholders entitled to vote at the AnnualSpecial Meeting, a Notice of Internet Availability of Proxy Materials (the “Notice”) instead of a paper copycopies of this proxy statement. The Notice contains instructions on how to access those documents over the Internet, whichof Special Meeting and proxy statement are also available online at http://senestech.investorroom.com/www.proxyvote.com. The Notice also contains instructions on how to request a paper copy of our proxy materials, including this proxy statement and a form of proxy card or voting instruction card.
We were incorporated under Delaware law, which specifically permits electronically transmitted proxies, provided that the transmission set forth or be submitted with information from which it can reasonably be determined that the transmission was authorized by the stockholder. The electronic voting procedures provided for the Annual Meeting are designed to authenticate each stockholder by use of a control number to allow stockholders to vote their shares and to confirm that their instructions have been properly recorded.
Record Date and Outstanding Shares
Only stockholders of record at the close of business on April 27,July 28, 2023, (the “record date”)or the record date, are entitled to receive notice of and to vote at the AnnualSpecial Meeting. Our only outstanding voting securities are shares of common stock, $0.001 par value.value (“Common Stock”). As of the record date, 2,964,485 shares of our common stockCommon Stock were issued and outstanding, which shares of common stock areCommon Stock were held by approximately 694 stockholders of record.
Can I Submit Questions DuringStockholders Entitled to Vote at the Annual Meeting?Special Meeting
Questions pertinent to meeting mattersHolders of record of our Common Stock as of the close of business on the record date will be answered duringentitled to notice of and to vote at the AnnualSpecial Meeting subjectand at any adjournments or postponements thereof. Holders of record of shares of our Common Stock have the right to time constraints. Questions regarding personalvote on all matters including those relatingbrought before the Special Meeting.
You do not need to employment, productsattend the Special Meeting to vote your shares. Instead, you may vote your shares by marking, signing, dating and returning the enclosed proxy card or servicesvoting through the Internet or suggestions for product innovations may not be considered pertinentby telephone.
Voting Rights of the Stockholders
Each share of our Common Stock outstanding as of the record date is entitled to meetingone vote per share on all matters and therefore may not be answered.properly brought before the Special Meeting.
How Do I Vote?To Vote
Whether you plan to attend the AnnualSpecial Meeting or not, we urge you to submit your voting instructions by proxy. Voting by proxy will not affect your right to attend the AnnualSpecial Meeting. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via the Internet or telephone. If you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the boardour Board of directors’Directors’ recommendations as noted below. If you neither submit by proxy nor vote your shares during the AnnualSpecial Meeting, your shares will not be voted if you are a registered stockholder. If your shares are held in street name, your broker, bank or other holder of record may vote your shares on certain “routine” matters. See “Quorum; Abstentions; Broker Non-Votes; Results” below for more information.
If your shares are registered directly in your name through our stock transfer agent, Transfer Online, or you have stock certificates registered in your name, you may vote:
•By the Internet or by telephone. telephone. Follow the instructions included in the proxy card to submit your voting instructions over the Internet or by telephone.
•By mail. mail. If you received a proxy card by mail, you can have your shares voted by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, they will be voted in accordance with the boardour Board of directors’Directors’ recommendations as noted below.
•DuringIn person at the Annual Meeting. Special MeetingYou. If you attend the Special Meeting, you may present yourdeliver a completed signed and dated proxy card in person or you may vote by completing a ballot, which will be available at the Annual Meeting to the Inspector General. If you sign the proxy card but do not specify how you want your shares voted, they will be voted in accordance with the board of directors’ recommendations as noted below.Special Meeting.
Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m. Eastern Daylight Time on June 25,August 17, 2023.
If your shares are held in “street name” (held in the name of a bank, broker or other holder of record), you will receive instructions from the holder of record. You must follow the instructions of the holder of record in order for your shares to be voted. Telephone and Internet voting also will be offered to stockholders owning shares through certain banks and brokers.
Revocability of Proxies
If you give us your proxy, you may change or revoke it at any time before the AnnualSpecial Meeting. You may change or revoke your proxy in any one of the following ways:
•if you received a proxy card, by signing a new proxy card with a date later than your previously delivered proxy and submitting it as instructed above;
•by submitting your proxy by the Internet or by telephone as instructed above; or
•by notifying the Corporate Secretary of our company in writing before the AnnualSpecial Meeting that you have revoked your proxy; or
•by attending the Special Meeting in person and voting in person. Attending the Special Meeting in person will not in and of itself revoke a previously submitted proxy. You must specifically request at the Special Meeting that it be revoked.
Solicitation
We have retained Alliance Advisors, LLC (“Alliance”) to act as a proxy solicitor for the AnnualSpecial Meeting. We have agreed to pay Alliance Advisors, LLC $9,000, plus reasonable out-of-pocket expenses, for proxy solicitation services and, if needed, additional fees for telephone solicitation. All related costs will be borne by us. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. Proxies may also be solicited by certain of our directors, officers or administrative employees without the payment of any additional consideration. Solicitation of proxies may be made by mail, by telephone, by email, in person or otherwise.
Stockholders of Record and “Street Name” Holders
Where shares are registered directly in the holder’s name, that holder is the stockholder of record with respect to those shares. If shares are held by an intermediary, meaning in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered the stockholder of record as to those shares. Those shares are said to be held in “street name” on behalf of the beneficial owner of the shares. Street-name holders generally cannot directly vote their shares and must instead instruct the broker or other nominee how to vote their shares using the voting instruction form provided by that broker or other nominee. Many brokers also offer the option of giving voting instructions over the internet or by telephone. Instructions for giving your vote as a street-name holder are provided on your voting instruction form.
Quorum; Abstentions; Broker Non-Votes; Results
At the AnnualSpecial Meeting, an inspector of elections will determine the presence of a quorum and tabulate the results of the voting by stockholders. A quorum exists when holders of one-third (1/3) of the stock issued and outstanding and entitled to vote are present in person or represented by proxy. A quorum is necessary for the transaction of business at the AnnualSpecial Meeting.
Broker non-votes can occur as to shares held in street name. Under the current rules that govern brokers and other nominee holders of record, if a street-name holder does not give instructions to its broker or other nominee, such broker or other nominee will be able to vote such shares only with respect to proposals for which the broker or other nominee has discretionary voting authority, i.e., “routine” matters under The Nasdaq Stock Market LLC, or Nasdaq, rules. A “broker non-vote” occurs when a broker or other nominee submits a proxy for the AnnualSpecial Meeting but does not vote on a particular proposal because such broker or other nominee either does not exercise its discretionary voting authority or does not have discretionary voting power with respect to that proposal and has not received instructions from the beneficial owner.
The “routine” proposalBoth of the proposals you are being asked to vote on at the AnnualSpecial Meeting, isincluding the ratification of M&K CPAS, PLLC as our independent registered public accounting firm forReverse Stock Split Proposal and the fiscal year ending December 31, 2023 (Proposal Four). The other
proposals concerning the election of directors (Proposal One), say-on-pay (Proposal Two) and amendment to the 2018 Plan (Proposal Three)Adjournment Proposal, are considered “non-routine” matters, which means that your bank or broker will not be permitted to vote your shares on such proposals at the Annual Meeting unless you provide proper voting instructions. Accordingly, stockholders“routine.” Stockholders are urged to give their bank or broker instructions on voting their shares on all matters.
Abstentions and broker non-votes are treated as shares present for the purpose of determining whether there is a quorum for the transaction of business at the AnnualSpecial Meeting.
We intend to publish final voting results of the AnnualSpecial Meeting in a Current Report on Form 8-K, which we expect will be filed within four business days of the AnnualSpecial Meeting. If final voting results are not available to us in time to file a Current
Report on Form 8-K within four business days after the AnnualSpecial Meeting, we intend to file a Current Report on Form 8-K to publish results as to matters for which we have final votes and, within four business days after the final results are known to us, file an additional Current Report on Form 8-K to publish the final results.
Required Votes and Voting
Each holder of common stockCommon Stock is entitled to one vote for each share held. Assuming that a quorum is present at the AnnualSpecial Meeting, the following votes will be required:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Proposal | | Voting Options | | Vote Required to Adopt
Adopt the
Proposal | | Effect of
Abstentions | | Effect of Broker
Non-Votes |
1.Election of director | | For or withhold on each nominee. | | Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election. The nominee for election to the board of directors who receive the greatest number of votes cast “FOR” the election of the directors by the shares present, in person or by proxy, will be elected to the board of directors. | | No effect. | | No effect. |
2.Non-binding advisory vote on the compensation of our named executive officers for fiscal 2022 (“say-on-pay”)Reverse Stock Split Proposal
| | For, against or abstain.abstain | | The advisoryTo be approved by stockholders, this proposal must receive the affirmative “FOR” vote of a majority of the votes cast by holders of the outstanding shares of Common Stock present in person or represented by proxy at the Special Meeting and entitled to vote on the compensation of our named executive officers is non-binding, but our board of directors will consider the input of stockholders based on a majority of votes cast for the say-on-pay proposal. | | No effect.effect | | No effect.Brokers have discretion to vote |
3.2.Approval of the amendment to our 2018 Plan to increase the number of shares of common stock available for issuance under the 2018 Plan by 500,000 sharesAdjournment Proposal
| | For, against or abstain.abstain | | “FOR” votes fromTo be approved by stockholders, this proposal must receive the holdersaffirmative “FOR” vote of athe majority of the voting power of the outstanding shares of Common Stock present in person or represented by proxy at the Special Meeting and entitled to vote on thisthe proposal. | | Against. | | No effect. |
4.Ratification of Appointment of M&K CPAS, PLLC as our independent registered public accounting firm for fiscal year 2023
| | For, against, or abstain. | | “FOR” votes from the holders of a majority of shares present and entitled to vote on this proposal. | | Against.Against | | Brokers have discretion to vote.vote |
All shares entitled to vote and represented by properly executed, unrevoked proxies received before the AnnualSpecial Meeting will be voted at the AnnualSpecial Meeting in accordance with the instructions given on those proxies. If no instructions are given on a properly executed proxy, the shares represented by that proxy will be voted “FOR” the director nominee,Reverse Stock Split Proposal and “FOR” the approval of the compensation of our named executive officers for fiscal 2022, “FOR” the approval of the amendment to our 2018 Plan to increase the number of authorized common stock available for issuance under the 2018 Plan by 500,000
shares and “FOR” ratification of appointment of M&K CPAS, PLLC as our independent registered public accounting firm for the fiscal year ending December 31, 2023.Adjournment Proposal.
If any other matters are properly presented for consideration at the AnnualSpecial Meeting, which may include, for example, a motion to adjourn the Annual Meeting to another time or place (including, without limitation, for the purpose of soliciting additional proxies), the persons named in the enclosed proxy and acting thereunder will have discretion to vote on those matters as they deem advisable. We do not currently anticipate that any other matters will be raised at the AnnualSpecial Meeting.
Deadlines for Receipt of Stockholder Proposals
StockholderPursuant to our Amended and Restated Bylaws, because this is a Special Meeting of Stockholders and we are not electing directors, our stockholders may not propose business to be brought at the Special Meeting.
As previously stated in our proxy statement filed with the SEC on April 28, 2023, stockholder proposals may be included in our proxy statement and form of proxy for an annual meeting so long as they are provided to us on a timely basis and satisfy the other conditions set forth in Rule 14a-8 under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”),or the Exchange Act, regarding the inclusion of stockholder proposals in company-sponsored proxy materials. For a stockholder proposal to be considered timely pursuant to Rule 14a-8 for inclusion in our proxy statement and form of proxy for the annual meeting to be held in 2024, we must receive the proposal at our principal executive offices, addressed to our Secretary, no later than December 29, 2023. Any proposals received after such date will be considered untimely. Submitting a stockholder proposal does not guarantee that it will be included in our proxy statement and form of proxy.
In addition, a stockholder proposal that is not intended for inclusion in our proxy statement and form of proxy under Rule 14a-8 (including director nominations) shall be considered “timely” as calculated in accordance with Rule 14a-4(c) under the Exchange Act, and may be brought before the 2024 annual meeting of stockholders provided that we receive information and notice of the proposal addressed to our Secretary at our principal executive offices, no earlier than February 20, 2024 and no later than March 21, 2024.
Further, our Amended and Restated Bylaws, as amended, (“Bylaws”),or Bylaws, provide that only such business shall be conducted at an annual meeting of stockholders as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be brought in accordance with Section 2.4 of our Bylaws.
All notices of stockholder proposals, whether or not intended to be included in our proxy materials, should be in writing and sent to our principal executive offices, located atat: SenesTech, Inc., 23460 N. 19th Avenue,19th Ave., Suite 110, Phoenix, Arizona 85027, Attention: Secretary.
Paper Copy of Proxy Materials
If you want to receive a paper copy of these proxy materials, including any documents incorporated herein by reference but excluding exhibits to the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (our “2022 Annual Report”) you may request one at no cost to you by writing to SenesTech, Inc., 23460 N. 19th Avenue, Suite 110, Phoenix, Arizona 85027, Attention: Secretary.
Annual Report and Other Matters
Our 2022 Annual Report, which was made available to stockholders with or preceding this proxy statement, contains financial and other information about our company, but is not incorporated into this proxy statement and is not to be considered a part of these proxy materials or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act. The information contained in the “Report of the Audit Committee” shall not be deemed “filed” with the Securities and Exchange Commission (the “SEC”) or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act.
PROPOSAL ONE
APPROVAL OF THE REVERSE STOCK SPLIT PROPOSAL
ELECTION OF DIRECTOR
GeneralBackground and Proposed Amendment
Our Bylaws provide thatAmended and Restated Certificate of Incorporation, as amended (the “Charter”), currently authorizes us to issue a total of 110,000,000 shares of stock, consisting of 100,000,000 shares of Common Stock, and 10,000,000 shares of Preferred Stock.
On July 21, 2023, subject to stockholder approval, our Board of Directors approved an amendment to our Charter to effect a reverse stock split (the “Reverse Stock Split”) of our issued and outstanding Common Stock by a ratio of not less than 1-for-2 and not more than 1-for-12. The exact ratio of the authorized numberReverse Stock Split will be set within this range as determined by our Board of directorsDirectors in its sole discretion prior to the time of the Reverse Stock Split and will be publicly announced by us prior to the effective time.
The primary goals of the Reverse Stock Split are to increase the per share market price of our Common Stock to meet the minimum per share bid price requirements for continued listing on The Nasdaq Capital Market and to assist in our capital-raising efforts. The Reverse Stock Split is not intended as, and will not have the effect of, a “going private transaction” covered by Rule 13e-3 promulgated under the Exchange Act. The Reverse Stock Split is not intended to modify the rights of existing stockholders in any material respect.
If the Reverse Stock Split Proposal is approved by our stockholders and the Reverse Stock Split is effected, up to every 12 shares of our outstanding Common Stock would be combined and reclassified into one share of Common Stock. The actual timing for implementation of the Reverse Stock Split would be determined by our Board of Directors based upon its evaluation as to when such action would be most advantageous to our company and our stockholders. Notwithstanding approval of the Reverse Stock Split Proposal by our stockholders, our Board of Directors will have the sole authority to elect whether or not and when to amend our Charter to effect the Reverse Stock Split. If the Reverse Stock Split Proposal is approved by our stockholders, our Board of Directors will make a determination as to whether effecting the Reverse Stock Split is in the best interests of our company are fixedand our stockholders in light of, among other things, our ability to increase the trading price of our Common Stock without effecting the Reverse Stock Split, the per share price of the Common Stock immediately prior to the Reverse Stock Split and the expected stability of the per share price of the Common Stock following the Reverse Stock Split. If our Board of Directors determines that it is in the best interests of our company and our stockholders to effect the Reverse Stock Split, it will hold a board meeting to determine the ratio of the Reverse Stock Split. For additional information concerning the factors our Board of Directors will consider in deciding whether to effect the Reverse Stock Split, see “— Determination of the Reverse Stock Split Ratio” and “— Board Discretion to Effect the Reverse Stock Split.”
The text of the proposed amendment to the Charter to effect the Reverse Stock Split is included as Annex A to this proxy statement (the “Reverse Stock Split Charter Amendment”). If the Reverse Stock Split Proposal is approved by our stockholders, we will have the authority to file the Reverse Stock Split Charter Amendment with the Secretary of State of the State of Delaware, which will become effective upon its filing; provided, however, that the Reverse Stock Split Charter Amendment is subject to revision to include such changes as may be required by the board of directors from time to time. The board of directors is currently set at seven directors. Following the expirationoffice of the termSecretary of current director, Marc Dumont,State of the State of Delaware and as our Board of Directors deems necessary and advisable. Our Board of Directors has determined that the amendment is advisable and in the best interests of our company and our stockholders and has submitted the amendment for consideration by our stockholders at the Annual Meeting,Special Meeting.
Reasons for the boardReverse Stock Split
We are submitting this proposal to our stockholders for approval in order to increase the trading price of directors has setour Common Stock to continue to meet the sizeminimum per share bid price requirement for continued listing on The Nasdaq Capital Market and to assist in our capital-raising efforts, which we also believe may assist in our capital raising efforts by making our Common Stock more attractive to a broader range of investors. Accordingly, we believe that the Reverse Stock Split is in our stockholders’ best interests.
While we have not yet received a letter from the Listing Qualifications Department of the board at six directors. If for any reason directors are not elected atNasdaq Stock Market indicating that, based upon the annual meetingclosing bid price of our stockholders, they may be elected at any special meetingCommon Stock for a 30 consecutive business day period, we have not met the minimum bid price of $1.00 per share required for continued listing on the stockholdersNasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2), our common stock has recently closed below $1.00 per share. Accordingly, we believe that the Reverse Stock Split is duly called and heldour best proactive option for that purpose inensuring an adequate margin for continuing to meet the manner provided bycriteria to satisfy the Bylaws.
Currently, the board of directors is divided into three classes, and directors in each class are elected to serve a three-year term.minimum per share bid price requirement for continued listing on The term of the current Class I directors expires at this year’s Annual Meeting. The term of the Class II directors expires at our 2024 annual meeting of stockholders, and the term of the Class III directors expires at the 2025 annual meeting of stockholders.Nasdaq Capital Market. A director serves in office until a successor is duly elected and qualified, unless the director is removed, resigns or, by reason of death or other cause, is unable to serve in the capacity of director. Any additional directorships resulting from an increasedecrease in the number of directorsoutstanding shares of our Common Stock resulting from the Reverse Stock Split should, absent other factors, assist in ensuring that the per share market price of our Common Stock remains above the requisite price for continued listing. However, we cannot provide any assurance that our minimum bid price would currently be distributed amongremain over the three classes so that, as nearly as possible, each class will consistminimum bid price requirement of one third of the total number of directors.
Set forth below is certain information regarding the director nominees and each of the incumbent directors whose terms will continueThe Nasdaq Capital Market following the Annual Meeting.Reverse Stock Split.
Nominee for Director
The board of directors has nominated Jake S. Leach as a Class I director. Mr. Leach will stand for re-election at our Annual Meeting of Stockholders subject to election for a three-year term expiring at our 2026 annual meeting of stockholders.
Unless otherwise instructed,We also believe that the proxy holders will voteReverse Stock Split and the proxies received by them forresulting increase in the election of Mr. Leach to the board of directors. This individual has indicated that he will serve if elected. We do not anticipate that this nominee will be unable or unwilling to stand for election, but if that occurs, all proxies received may be voted by the proxy holders for another person nominated by the board of directors. As there is one nominee, proxies may be voted for one person.
Nominee and Continuing Directors
The following table sets forth the names and certain information as of the record date regarding the nominees and each directorper share price of our company continuingCommon Stock could encourage increased investor interest in office after the Annual Meeting:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name of Director | | Age | | Position | | Director
Since | | Term Expires |
| Jake S. Leach | | 45 | | Director(1) | | 2020 | | 2023 (Class I) |
| Jamie Bechtel, JD, Ph.D. | | 50 | | Chair of the Board and Director(2)(3) | | 2018 | | 2024 (Class II) |
| Delphine François Chiavarini | | 47 | | Director(1)(2) | | 2018 | | 2024 (Class II) |
| Phil N. Grandinetti III | | 51 | | Director(3) | | 2020 | | 2024 (Class II) |
| Joel L. Fruendt | | 62 | | Director, President and
Chief Executive Officer | | 2022 | | 2025 (Class III) |
| Matthew K. Szot | | 47 | | Vice Chair of the Board(4) and Director(1)(2)(3) | | 2015 | | 2025 (Class III) |
____________
(1)Member of the audit committee.
(2)Member of the nominatingour Common Stock and corporate governance committee.
(3)Member of the compensation committee.
(4)This position will be eliminated in June 2023.
Director Nominee
Jake S. Leach has served as a directorpromote greater liquidity for our stockholders. A greater price per share of our company since November 2020. Mr. Leach is currently the Executive Vice President and Chief Operating OfficerCommon Stock could allow a broader range of DexCom, Inc., a company that develops, manufacturers, and distributes continuous glucose monitoring systems for diabetes management. Since joining Dexcom, Inc.institutions to invest in March 2004, Mr. Leach served as Executive Vice President and Chief Technology Officer from September 2018 to August 2022, Senior Viceour Common Stock (namely,
President of Research and Development (“R&D”)funds that are prohibited or discouraged from January 2015 to September 2018, and Vice President, R&D from January 2011 to January 2015. Mr. Leach holds a Bachelor of Science degree in Electrical Engineeringbuying stocks with a minorprice below a certain threshold), potentially increasing marketability, trading volume and liquidity of our Common Stock. Many institutional investors view stocks trading at low prices as unduly speculative in Biomedical Engineering from the University of California, Los Angeles.nature and, as a result, avoid investing in such stocks. We believe that Mr. Leach is qualifiedthe Reverse Stock Split will provide our Board of Directors flexibility to serve asmake our Common Stock a membermore attractive investment for these institutional investors, which we believe will enhance the liquidity for the holders of our boardCommon Stock and may facilitate future sales of directorsour Common Stock. The Reverse Stock Split could also increase interest in our Common Stock for analysts and brokers who may otherwise have policies that discourage or prohibit them in following or recommending companies with low stock prices. Additionally, because brokers’ commissions on transactions in low-priced stocks generally represent a higher percentage of his executive leadership experience with publicly-traded companies, including operations and corporate strategy, as well as his R&D and innovative technology experience, and his commitmentthe stock price than commissions on higher-priced stocks, the current average price per share of our Common Stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher.
Our Board of Directors intends to quality and extensive knowledge of domestic and international regulatory requirements.
Vote Required
Ifeffect the Reverse Stock Split only if it believes that a quorum is present,decrease in the nominee for election to the board of directors receiving the greatest number of votes cast “FOR”shares outstanding is in the election of the directors by the shares represented at the Annual Meeting will be elected to our board of directors for a three-year term.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF THE BOARD’S CLASS I DIRECTOR NOMINEE.
Continuing Directors
Jamie Bechtel, JD, Ph.D. has served as a directorbest interests of our company since January 2018. Dr. Bechteland our stockholders and is likely to improve the foundertrading price of Kito Impact Foundation,our Common Stock and improve the likelihood that we will be allowed to maintain our listing on The Nasdaq Capital Market. Accordingly, our Board of Directors approved the Reverse Stock Split as being in the best interests of our company.
Risks Associated with the Reverse Stock Split
The Reverse Stock Split May Not Increase the Price of our Common Stock Over the Long-Term.
As noted above, the purpose of the Reverse Stock Split is to increase the per share market price of our Common Stock to meet the minimum stock price standards of The Nasdaq Capital Market and to assist in our capital-raising efforts. However, the effect of the Reverse Stock Split on the market price of our Common Stock cannot be predicted with any certainty, and we cannot assure you that the Reverse Stock Split will accomplish this objective for any meaningful period of time, or at all. While we expect that the reduction in the number of outstanding shares of Common Stock will proportionally increase the market price of our Common Stock, we cannot assure you that the Reverse Stock Split will increase the market price of our Common Stock by a non-profit focused on integrating corporate social responsibility into smallmultiple of the Reverse Stock Split ratio, or result in any permanent or sustained increase in the market price of our Common Stock. The market price of our Common Stock may be affected by other factors which may be unrelated to the number of shares outstanding, including our business and medium sized businesses,financial performance, general market conditions and she has beenprospects for future success.
The Reverse Stock Split May Decrease the Chief Executive Officer since February 2018. In addition, Dr. Bechtel was a co-founderLiquidity of New Course,our Common Stock.
Our Board of Directors believes that the Reverse Stock Split may result in an organization focused on women-led conservation initiatives,increase in the market price of our Common Stock, which could lead to increased interest in our Common Stock and she has been a board member since August 2009. Dr. Bechtel holds a Ph.D. from Boston University, a law degree from Boston Collegepossibly promote greater liquidity for our stockholders. However, the Reverse Stock Split will also reduce the total number of outstanding shares of Common Stock, which may lead to reduced trading and a bachelor’s degree from Boston University. We believe that Dr. Bechtel is qualified to servesmaller number of market makers for our Common Stock, particularly if the price per share of our Common Stock does not increase as a memberresult of the Reverse Stock Split.
The Reverse Stock Split May Result in Some Stockholders Owning “Odd Lots” That May Be More Difficult to Sell or Require Greater Transaction Costs per Share to Sell.
If the Reverse Stock Split is implemented, it will increase the number of stockholders who own “odd lots” of less than 100 shares of Common Stock. A purchase or sale of less than 100 shares of Common Stock (an “odd lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own fewer than 100 shares of Common Stock following the Reverse Stock Split may be required to pay higher transaction costs if they sell their Common Stock.
The Reverse Stock Split May Lead to a Decrease in our Overall Market Capitalization.
The Reverse Stock Split may be viewed negatively by the market and, consequently, could lead to a decrease in our overall market capitalization. If the per share market price of our board of directors because she is a highly regarded leaderCommon Stock does not increase in international conservation, and her work has ledproportion to strategic advances in the fields of conservation, sustainable finance and biology.
Delphine François Chiavarini has served as a directorReverse Stock Split ratio, then the value of our company, since June 2018. Since June 2017, Ms. Chiavarini has served as Vice President and General Manager of U.S. at Moen,measured by our market capitalization, will be reduced. Additionally, any reduction in our market capitalization may be magnified as a faucet manufacturing company, where she is responsible for developing strategies for profitable growth, increasing Moen’s market share and ensuring winning execution in the U.S. market. Before joining Moen, from August 2014 to June 2017, Ms. Chiavarini was Senior Vice President and General Manager of Food and Beverage North America at Ecolab, a global leader in water, hygiene and energy technologies and services that protect people and vital resources. Ms. Chiavarini earned both a bachelor’s and a master’s degree from Audencia Business School in Nantes, France, and attended executive programs at The University of Chicago Booth School of Business and the Wharton Schoolresult of the Universitysmaller number of Pennsylvania. We believe that Ms. Chiavarinitotal shares of Common Stock outstanding following the Reverse Stock Split.
Potential Consequences if the Reverse Stock Split Proposal is qualifiedNot Approved
If the Reverse Stock Split Proposal is not approved by our stockholders, our Board of Directors will not have the authority to serve as a membereffect the Reverse Stock Split Charter Amendment to, among other things, facilitate the continued listing of our board of directors because of her experience developing strategies for profitable growth and her experience as an executive at multiple companies.
Phil N. Grandinetti III has served as a directorCommon Stock on The Nasdaq Capital Market by increasing the per share market price of our company since November 2020. In March 2013, Mr. Grandinetti co-founded WITHit,Common Stock help ensure a wearable tech accessory company,share price high enough to satisfy the $1.00 per share minimum bid price requirement and he serves as its Chief Customer Officer. From February 2005 to March 2013, Mr. Grandinetti served as Vice President of Sales at LightWedge, a global e-book, e reader and tablet accessories brand. Prior to LightWedge, Mr. Grandinetti served as Senior Vice President of Worldwide Sales of GSM Products, an innovative outdoor products company, from February 2002 to February 2005. Mr. Grandinetti has a J.D. from the University of San Diego School of Law and is licensedassist in the State of California, as well as a B.A. from the University of Iowa in Economics and Political Science. We believe that Mr. Grandinetti is qualified to serve as a memberour capital-raising efforts. The inability of our boardBoard of directors because of his experience with retail salesDirectors to effect the Reverse Stock Split could expose us to delisting from The Nasdaq Capital Market and marketing and the development and commercialization of new products.
Joel L. Fruendt has served ascould have a director and Chief Executive Officer ofnegative impact on our company since November 2022 and as President since December 2022. Mr. Fruendt previously served as the President and Chief Executive Officer of Safe Reflections, Inc., a provider of colorfast, durable, reflective solutions to the occupational safety and military training apparel markets, from 2020 to 2022. Mr. Fruendt held various management roles at Clarke Environmental Inc., a pest control product and services company, from 2005 to 2020, including Vice President and General Manager and Vice President and General Manager – Sales. From 2000 to 2005, Mr. Fruendt served as the Vice President – Sales at Moore Diversified Products, a plastic conduit products and custom metal enclosures manufacturing company. From 1992 to 2000, Mr. Fruendt served as the Vice President, GM – NSC Division with Waste Management Inc., a thermoplastic liner, geotextile, and geosynthetic construction products manufacturing and installation company.
Matthew K. Szot has served as a director of our company since December 2015 and currently serves as Vice Chairman of the board. He is currently the Chief Financial Officer of Cadrenal Therapeutics, Inc. (Nasdaq: CVKD), a late-stage biopharmaceutical company where he has served since May 2022. From March 2010 to November 2021, Mr. Szot servedcapital-raising efforts.
as the Chief Financial Officer of S&W Seed Company, a Nasdaq-listed agricultural seed biotechnology company. Since September 2020, Mr. Szot has served on the board of directors and as ChairmanDetermination of the Audit and Compensation committeesReverse Stock Split Ratio
Our Board of INVO Bioscience, Inc,Directors believes that stockholder approval of a Nasdaq-listed medical device company. From June 2018 to August 2019, Mr. Szot served on the boardrange of directors and as Chairman of the Audit Committee of Eastside Distilling, Inc. a Nasdaq-listed craft spirits company. From February 2007 to October 2011, Mr. Szot served as Chief Financial Officer for Cardiff Partners, LLC, a strategic consulting company that provided executive financial services to various publicly-traded and privately-held companies. From 2003 to December 2006, Mr. Szot served as Chief Financial Officer and Secretary of Rip Curl, Inc., a market leader in wetsuit and action sports apparel products. From 1996 to 2003, Mr. Szot was a Certified Public Accountant with KPMG and served as an Audit Manager for various publicly traded companies. Mr. Szot has a Bachelor of Science degree in Agricultural Economics/Accountancy from the University of Illinois, Champaign-Urbana andpotential Reverse Stock Split ratios is a Certified Public Accountant in the statebest interests of California.our company and stockholders because it is not possible to predict market conditions at the time the Reverse Stock Split would be implemented. We believe that Mr. Szot is qualifieda range of Reverse Stock Split ratios provides us with the most flexibility to serve as a member of our board of directors because of his experience and knowledge of corporate finance, mergers and acquisitions, corporate governance, as well as other operational, financial and accounting matters gained as a past and present chief financial officer and director of other public and private companies.
Executive Officers
The following table sets forthachieve the names and certain information regarding our executive officers asdesired results of the record date:
| | | | | | | | | | | | | | |
Name | | Age | | Position |
Joel L. Fruendt | | 62 | | President, Chief Executive Officer and Director |
Thomas C. Chesterman | | 63 | | Executive Vice President, Chief Financial Officer, Treasurer and Secretary |
Mr. Fruendt’s biographical details are set out under the heading “Continuing Directors” above.
Thomas C. Chesterman joinedReverse Stock Split. The Reverse Stock Split ratio to be selected by our company in September 2015 and has served as our Executive Vice President, Chief Financial Officer, Treasurer and Secretary since December 2015. He has over 25 years of experience as the chief financial officer of a public company in the life science, technology and telecommunications industries. Most recently, he was the Vice President and Treasurer of General Communication Inc., a telecommunications company in Alaska, from 2013 to 2015. Previously, he was the Chief Financial Officer of life science companies Bionovo Inc. from 2007 to 2012, Aradigm Corp. from 2002 to 2007 and Bio-Rad Laboratories, Inc. from 1996 to 2002. Mr. Chesterman is adept at a variety of capital market access techniques and has significant experience in developing the operational and financial infrastructures in companies to help support successful and rapid growth. Mr. Chesterman earned a bachelor’s degree from Harvard University and an M.B.A. from the University of California at Davis.
There are no family relationships among any of our directors and executive officers.
CORPORATE GOVERNANCE
Board of Directors Leadership Structurewill be not less than 1-for-2 and not more than 1-for-12.
Our Corporate Governance Principles provide our board of directors with flexibility in determining the appropriate leadership structure for our company. Our board of directors has elected to separate the roles of Chief Executive Officer and ChairThe selection of the Board. These positions are currently held by Mr. Fruendt, specific Reverse Stock Split ratio will be based on several factors, including, among other things:
•our Presidentability to maintain the listing of our Common Stock on The Nasdaq Capital Market;
•the historical trading price and Chief Executive Officer,trading volume of our Common Stock;
•the trading price and Dr. Bechtel,trading volume of our ChairCommon Stock immediately prior to the Reverse Stock Split;
•the expected stability of the Board. The board of directors believes that a leadership structure that separates these roles is appropriate for our company due to the differences between the two roles. The Chief Executive Officer is responsible for setting our strategic direction, providing day-to-day leadership and managing our business, while the Chair of the Board provides guidance to the Chief Executive Officer, sets the agendas for and chairs board meetings, presides over executive sessions of the independent directors, establishes priorities and procedures for the work of the full board of directors and provides information to the membersper share price of our boardCommon Stock following the Reverse Stock Split;
•the likelihood that the Reverse Stock Split will result in increased marketability and liquidity of directorsour Common Stock;
•the number of shares of our Common Stock outstanding;
•prevailing market conditions;
•general economic conditions in advance of such meetings.our industry; and
•our market capitalization before and after the Reverse Stock Split.
We believe that granting our Board of Directors Role in Risk Oversight
Onethe authority to set the ratio for the Reverse Stock Split is essential because it allows us to take these factors into consideration and to react to changing market conditions. If our Board of Directors chooses to implement the Reverse Stock Split, we will make a public announcement regarding the determination of the key functionsReverse Stock Split ratio.
Board Discretion to Effect the Reverse Stock Split
If the Reverse Stock Split proposal is approved by our stockholders, our Board of Directors will have the discretion to implement the Reverse Stock Split or to not effect the Reverse Stock Split at all. Our Board of Directors currently intends to effect the Reverse Stock Split. If the trading price of our board of directors is informed oversightCommon Stock increases without effecting the Reverse Stock Split, the Reverse Stock Split may not be necessary. Following the Reverse Stock Split, if implemented, there can be no assurance that the market price of our risk management process. Our boardCommon Stock will rise in proportion to the reduction in the number of directorsoutstanding shares resulting from the Reverse Stock Split or that the market price of the post-split Common Stock can be maintained above $1.00. There can also be no assurance that our Common Stock will not be delisted from The Nasdaq Capital Market for other reasons.
If our stockholders approve the Reverse Stock Split Proposal at the Special Meeting, the Reverse Stock Split will be effected, if at all, only upon a determination by our Board of Directors that the Reverse Stock Split is in the best interests of our company and our stockholders at that time. No further action on the part of the stockholders will be required to either effect or abandon the Reverse Stock Split. If our Board of Directors does not have a standing risk management committee, but rather administersimplement the Reverse Stock Split prior to the one-year anniversary of the date on which the reverse stock split is approved by our stockholders at the Special Meeting, the authority granted in this oversight function directly throughproposal to implement the Reverse Stock Split will terminate and the Reverse Stock Split Charter Amendment will be abandoned.
The market price of our boardCommon Stock is dependent upon our performance and other factors, some of directorswhich are unrelated to the number of shares outstanding. If the Reverse Stock Split is effected and the market price of our Common Stock declines, the percentage decline as an absolute number and as a whole, as well as through various standing committees that address risks inherent in their respective areas of oversight. In particular, our board of directors is responsible for monitoring and assessing strategic risk exposure, and our audit committee is responsible for considering and discussing our major financial risk exposures and the steps our management has taken to monitor and control these exposures. The audit committee also has the responsibility to issue guidelines and policies to govern the process by which risk assessment and management is undertaken and to monitor compliance with legal and regulatory requirements. Our compensation committee assesses and monitors whether anypercentage of our compensation policiesoverall market capitalization may be greater than would occur in the absence of the Reverse Stock Split. Furthermore, the reduced number of shares that will be outstanding after the Reverse Stock Split could significantly reduce the trading volume and programsotherwise adversely affect the liquidity of our Common Stock.
We have not proposed the potentialReverse Stock Split in response to encourage excessive risk-taking.
Director Independence
Generally, underany effort of which we are aware to accumulate our shares of Common Stock or obtain control of our company, nor is it a plan by management to recommend a series of similar actions to our Board of Directors or our stockholders. Notwithstanding the continued listing requirements and rulesdecrease in the number of Nasdaq, independent directors must compriseoutstanding shares of Common Stock following the Reverse Stock Split, our Board of Directors does not intend for this transaction to be the first step in a majority of a listed company’s board of directors. Our board of directors has undertaken a review of its composition, the composition of its committees and the independence of each director. Our board of directors has determined that Dr. Bechtel and Ms. Chiavarini, and Messrs. Dumont, Leach, Grandinetti and Szot are independent“going private transaction” within the meaning of Nasdaq listing standardsRule 13e-3 of the Exchange Act.
Effects of the Reverse Stock Split
Effects of the Reverse Stock Split on Issued and that noneOutstanding Shares.
If the Reverse Stock Split is effected, it will reduce the total number of such directors has any relationship withissued and outstanding shares of Common Stock, including shares held by our company that would interfere with the exerciseas treasury shares, by a Reverse Stock Split ratio of their independent business judgment. The board also determined that Mr. Fruendt, our current President and Chief Executive Officer, is not independent.1-for-2 to 1-for-12. Accordingly, a majorityeach of our directors are independent,stockholders will own fewer shares of Common Stock as required under applicable Nasdaq rules. In making this determination, our boarda result of directors considered the currentReverse Stock Split. However, the Reverse Stock Split will affect all stockholders uniformly and prior relationships that each non-employee director has withwill not affect any stockholder’s percentage ownership interest in our company, and all other facts and circumstances our board of directors deemed relevant in determining their independence, includingexcept to the beneficial ownership of our capital stock by each non-employee director.
Additionally, in determining the independence of Dr. Bechtel, the board of directors considered her position as the Chief Executive Officer of Kito Impact Foundation, which has provided consulting services for the past five years to our company. Kito Impact Foundation received $50,400 per year for such services, which included partnership development and positioning services, with a focus on our company’s strategic agenda. Consulting services with the Kito Impact Foundation were terminated in February 2023.
There are no arrangements or understandings between any director or nominee and any other person or entity other than our company pursuant to which the director or nominee receives compensation in connection with that person’s candidacy or service as a director.
Diversity Matrix
Our board of directors believesextent that the mix of directors should provideReverse Stock Split would result in an adjustment to a range of expertise and perspectives and is committed to actively seeking highly qualified women and individuals from underrepresented groups.
Our nominating and corporate governance committee, and any search firm that it engages, are directed to include women and candidates from underrepresented groups, including candidates who self-identify as Black or African American, Hispanic or Latinx, Native American or Alaska Native, Native Hawaiian or Pacific Islander, two or more races or ethnicities, or as LGBTQ+, when recommending directors for approval to the full board of directors and for stockholder approval.
Currently, of our seven directors, two directors, including the Chair of the board, self-identify as women.stockholder’s
| | | | | | | | | | | | | | |
Board Diversity Matrix (as of April 27, 2023) |
| | Female | | Male |
| Part : Gender Identity | | | | |
| Directors | | 2 | | 5 |
| Part II: Demographic Background | | | | |
| White | | 2 | | 5 |
Standing Committeesownership of Common Stock due to the treatment of fractional shares in the Reverse Stock Split. Therefore, voting rights and Attendance
The board of directors held a total of six meetings during 2022. All directors attended more than 75%other rights and preferences of the aggregateholders of Common Stock will not be affected by the Reverse Stock Split (other than as a result of the meetingstreatment of fractional shares). Common Stock issued pursuant to the Reverse Stock Split will remain fully paid and nonassessable, and the par value per share of Common Stock will remain $0.001.
As of the record date, we had 2,964,485 shares of Common Stock outstanding. For purposes of illustration, if the Reverse Stock Split is effected at a ratio of 1-for-2 or 1-for-12, the number of issued and outstanding shares of Common Stock after the Reverse Stock Split would be approximately 1,482,243 shares and 247,040 shares, respectively.
We are currently authorized to issue a maximum of 100,000,000 shares of our boardCommon Stock. As of directorsthe record date, there were 2,964,485 shares of our Common Stock issued and committees thereof, if any,outstanding. Although the number of authorized shares of our Common Stock will not change as a result of the Reverse Stock Split, the number of shares of our Common Stock issued and outstanding will be reduced in proportion to the ratio selected by our Board of Directors. Thus, the Reverse Stock Split will effectively increase the number of authorized and unissued shares of our Common Stock available for future issuance by the amount of the reduction effected by the Reverse Stock Split.
Following the Reverse Stock Split, our Board of Directors will have the authority, subject to applicable securities laws, to issue all authorized and unissued shares without further stockholder approval, upon such terms and conditions as our Board of Directors deems appropriate. In addition, some of the additional shares underlie stock options and warrants, which such director served duringcould be exercised after the period forReverse Stock Split Charter Amendment is effected.
Effects of the Reverse Stock Split on Outstanding Equity Awards and Plans.
If the Reverse Stock Split is effected, the terms of equity awards granted under the Incentive Plan, including (i) the number of shares and type of Common Stock (or the securities or property) which the director has been a director or committee member during 2022. The independent directors meet in executive session from time to time.
Our board of directors utilizes an audit committee, a compensation committee, and a nominating and corporate governance committee as standing committees comprised solely of independent board members. In 2022, the audit committee held four meetings, the compensation committee held four meetings and the nominating and corporate governance committee held five meetings. Information about these standing committees is set forth below.
Our board of directors forms ad hoc committees from time-to-time to assist the board in fulfilling its responsibilities with respect to matters that arethereafter may be made the subject of awards; (ii) the ad hoc committee’s mandate.
Audit Committee
The audit committee currently consistsnumber of Matthew Szot, who isshares and type of Common Stock (or other securities or property) subject to outstanding awards; (iii) the chair, Delphine François Chiavarini, Marc Dumontnumber of shares and Jake S. Leach. The boardtype of directors has determined that, after considerationCommon Stock (or other securities or property) specified as the annual per-participant limitation under the Incentive Plan; (iv) the option price of all relevant factors, each outstanding stock option; (v) the amount, if any, paid for forfeited shares in accordance with the terms of the current audit committee members qualifiesIncentive Plan; and (vi) the number of or exercise price of shares then subject to outstanding stock appreciation rights previously granted and unexercised under the Incentive Plan, will be proportionally adjusted to the end that the same proportion of our issued and outstanding shares of Common Stock in each instance shall remain subject to exercise at the same aggregate exercise price; subject to adjustments for any fractional shares as an “independent” directordescribed herein and provided, however, that the number of shares of Common Stock (or other securities or property) subject to any award shall always be a whole number. In addition, the total number of shares of Common Stock that may be the subject of future grants under applicable SECthe Incentive Plan, as well as any plan limits on the size of such grants (e.g., the Incentive Plan’s limit on the number of stock options or stock appreciation rights that may be granted to our executive officers in any calendar year) will be adjusted and Nasdaq rules. Each memberproportionately decreased as a result of the audit committee is able to read and understand fundamental financial statements, including our consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows. Further, no memberReverse Stock Split.
Effects of the audit committee has participatedReverse Stock Split on Voting Rights.
Proportionate voting rights and other rights of the holders of Common Stock would not be affected by the Reverse Stock Split (other than as a result of the treatment of fractional shares). For example, a holder of 1% of the voting power of the outstanding Common Stock immediately prior to the effective time of the Reverse Stock Split would continue to hold 1% of the voting power of the outstanding Common Stock after the Reverse Stock Split.
Effects of the Reverse Stock Split on Regulatory Matters.
We are subject to the periodic reporting and other requirements of the Exchange Act. The Reverse Stock Split will not affect our obligation to publicly file financial and other information with the SEC.
Effects of the Reverse Stock Split on Authorized Share Capital.
The total number of shares of capital stock that we are authorized to issue will not be affected by the Reverse Stock Split.
Treatment of Fractional Shares in the preparationReverse Stock Split
We do not intend to issue fractional shares in the event that a stockholder owns a number of our financial statements at any time during the past three years. The boardshares of directors has designated Mr. Szot as an “audit committee financial expert” as defined under applicable SEC rules and has determinedCommon Stock that Mr. Szot possesses the requisite “financial sophistication” under applicable Nasdaq rules. The audit committee operates under a written charter setting forth the functions and responsibilities of the audit committee, which is periodically reviewednot evenly divisible by the audit committee and byReverse Stock Split ratio. If the boardReverse Stock Split is effected, each fractional share of directors as appropriate. A current copyCommon Stock will be:
•rounded up to the nearest whole share of the audit committee charter is available on our website at http://senestech.investorroom.com on the “Documents and Policies” page under the heading “Corporate Governance.” The functionsCommon Stock, if such shares of the audit committee include:Common Stock are held directly; or
•overseeingrounded down to the engagementnearest whole share of our independent public accountants, including pre-approvalCommon Stock, if such shares are subject to an award granted under the Incentive Plan, in order to comply with the requirements of servicesSections 409A and review of independence and quality control procedures424 of the independent public accountants;
•reviewing our accounting policies, judgments and assumptions used in the preparation of our financial statements;
•reviewing our audited financial statements and discussing them with the independent public accountants and our management;
•meeting separately with the independent public accountants and our management to consider the adequacy of our internal controls;
•establishing procedures regarding complaints concerning accounting or auditing matters, reviewing and, if appropriate, approving earnings press releases, related-party transactions, reviewing compliance with ourInternal Revenue Code of Business Conduct and Ethics, and reviewing our investment policy and compliance therewith;
•reviewing our investment policy and financial plans, reporting recommendations to our full board of directors for approval and authorizing actions; and
•discussing with our general counsel (if any) or outside counsel any legal matters brought to the Committee’s attention that could reasonably be expected to have a material impact on our financial statements.1986 (the “Code”).
BothEffective Time of the Reverse Stock Split
If the Reverse Stock Split Proposal is approved by our independent registered accounting firmstockholders, the Reverse Stock Split would become effective, if at all, when the Reverse Stock Split Charter Amendment is accepted and internal financial personnel regularly meet withrecorded by the office of the Secretary of State of the State of Delaware. However, notwithstanding approval of the Reverse Stock Split Proposal by our audit committeestockholders, our Board of Directors will have the sole authority to elect whether or not and have unrestricted accesswhen to amend our Charter to effect the Reverse Stock Split.
Exchange of Share Certificates
If the Reverse Stock Split is effected, each certificate representing pre-Reverse Stock Split shares of Common Stock will be deemed for all corporate purposes to evidence ownership of post-Reverse Stock Split Common Stock at the effective time of the Reverse Stock Split. As soon as practicable after the effective time of the Reverse Stock Split, the Transfer Agent will mail a letter of transmittal to our stockholders containing instructions on how a stockholder should surrender its, his or her certificate(s) representing pre-Reverse Stock Split shares of Common Stock to the audit committee.Transfer Agent in exchange for certificate(s) representing post-Reverse Stock Split shares of Common Stock. No certificate(s) representing post-Reverse Stock Split shares of Common Stock will be issued to a stockholder until such stockholder has surrendered all certificate(s) representing pre-Reverse Stock Split shares of Common Stock, together with a properly completed and executed letter of transmittal, to the Transfer Agent. No stockholder will be required to pay a transfer or other fee to exchange its, his or her certificate(s) representing pre-Reverse Stock Split shares of Common Stock for certificate(s) representing post-Reverse Stock Split shares of Common Stock registered in the same name.
Compensation CommitteeStockholders who hold uncertificated shares of Common Stock electronically in “book-entry” form will have their holdings electronically adjusted by the Transfer Agent (and, for beneficial owners, by their brokers or banks that hold in “street name” for their benefit, as the case may be) to give effect to the Reverse Stock Split. If any certificate(s) or book-entry statement(s) representing pre-Reverse Stock Split shares of Common Stock to be exchanged contain a restrictive legend or notation, as applicable, the certificate(s) or book-entry statement(s) representing post-Reverse Stock Split shares of Common Stock will contain the same restrictive legend or notation.
Our compensation committee currently consistsAny stockholder whose share certificate(s) representing pre-Reverse Stock Split shares of Jamie Bechtel, whoCommon Stock has been lost, stolen or destroyed will only be issued post-Reverse Stock Split Common Stock after complying with the requirements that we and the Transfer Agent customarily apply in connection with lost, stolen or destroyed certificates.
STOCKHOLDERS SHOULD NOT DESTROY STOCK CERTIFICATES REPRESENTING PRE-REVERSE STOCK SPLIT SHARES OF COMMON STOCK AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATES REPRESENTING PRE-REVERSE STOCK SPLIT SHARES OF COMMON STOCK UNTIL THEY ARE REQUESTED TO DO SO.
Appraisal Rights
Under the Delaware General Corporation Law, our stockholders are not entitled to appraisal or dissenter’s rights with respect to the Reverse Stock Split, and we will not independently provide our stockholders with any such rights.
Regulatory Approvals
The Reverse Stock Split will not be consummated, if at all, until after approval of our stockholders is obtained. We are not obligated to obtain any governmental approvals or comply with any state or federal regulations prior to consummating the chair, Phil Grandinetti III and Matthew Szot. EachReverse Stock Split other than the filing of the currentReverse Stock Split Charter Amendment with the Secretary of State of the State of Delaware.
Accounting Treatment of the Reverse Stock Split
If the Reverse Stock Split is effected, the par value per share of our Common Stock will remain unchanged at $0.001. Accordingly, on the effective date of the Reverse Stock Split, the stated capital on our consolidated balance sheets attributable to our Common Stock will be reduced in proportion to the size of the Reverse Stock Split ratio, and the additional paid-in-capital account will be increased by the amount by which the stated capital is reduced. Our stockholders’ equity, in the aggregate, will remain unchanged. Per share net income or loss will be increased because there will be fewer shares of Common Stock outstanding. The Common Stock held in treasury will be reduced in proportion to the Reverse Stock Split ratio. We do not anticipate that any other accounting consequences, including changes to the amount of stock-based compensation committee members has been determined by our board of directorsexpense to be independentrecognized in accordance with Nasdaq standards. Each member of our compensation committee is alsoany period, will arise as a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act. The compensation committee operates under a written charter, which is periodically reviewed by the compensation committee and by the board of directors as appropriate. A current copyresult of the compensation committee charter is available on our website at http://senestech.investorroom.com on the “Documents and Policies” page under the heading “Corporate Governance.” The functionsReverse Stock Split.
Certain U.S. Federal Income Tax Consequences of the compensation committee include:Reverse Stock Split
•reviewingThe following is a discussion of certain material U.S. federal income tax consequences of the Reverse Stock Split. This discussion is included for general information purposes only and if deemed appropriate, recommendingdoes not purport to our boardaddress all aspects of directors policies, practices and procedures relating to the compensation of our officers and other managerial employees and the establishment and administration of our employee benefit plans;
•reviewing, at least annually, our compensation philosophy;
•reviewing and recommending to the board of directors for approval the corporate goals and objectivesU.S. federal income tax law that may be relevant to the Chief Executive Officer and other executive officers;
•reviewing and approving any employment agreements, severance agreements or special compensation or change-in-control arrangements with executive officers;
•determining or recommending to the board of directors the compensation of our executive officers;
•advising and consulting with our officers regarding managerial personnel and development;
•overseeing our compliance with the Nasdaq requirement that, with limited exceptions, stockholders approve equity compensation plans;
•monitoring our compliance with applicable legal requirements of the Sarbanes Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to employee compensation and benefits; and
•evaluating the performance of the Chief Executive Officer.
As part of its process to determine the compensation level of each executive officer, the compensation committee evaluates, among other things, the Chief Executive Officer’s assessment of the other executive officers and recommendations regarding their compensation in light of the goals and objectives of our executive compensation program. The compensation committee may delegate certain of its responsibilities, as it deems appropriate, to compensation subcommittees or to our officers, but it has not elected to do so to date.
Pursuant to its charter, the compensation committee has sole authority to retain and/or replace, as needed, any independent legal counsel, compensation and benefits consultants and other experts or advisors as the compensation committee believes to be necessary or appropriate.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee currently consists of Delphine François Chiavarini, whotheir particular circumstances. This discussion is the chair, Jamie Bechtel, Marc Dumont, and Matthew Szot. K.C. Kavanagh was a committee member until her resignation from the board, which was effective September 1, 2022. Each of the current nominating and corporate governance committee members has been determined by the board of directors to be independent in accordance with Nasdaq standards. The nominating and corporate governance committee operates under a written charter, which is periodically reviewed by the nominating and corporate governance committee and by our board of directors as appropriate. A current copy of the nominating and corporate governance committee charter is availablebased on our website at http://senestech.investorroom.com/ on the “Documents and Policies” page under the heading “Corporate Governance.” The functions of the nominating and corporate governance committee include:
•evaluating the composition, compensation, size and governance of our board of directors and its committees and make recommendations regarding future planning and the appointment of directors to our committees;
the Code and current Treasury Regulations, administrative rulings and court decisions, all of which are subject to change, possibly on a retroactive basis, and any such change could affect the continuing validity of this discussion.
All stockholders are urged to consult with their own tax advisors with respect to the tax consequences of the Reverse Stock Split. This discussion does not address the tax consequences to stockholders that are subject to special tax rules, such as banks, insurance companies, regulated investment companies, personal holding companies, foreign entities, partnerships, nonresident alien individuals, broker-dealers and tax-exempt entities, persons holding shares as part of a straddle, hedge, conversion transaction or other integrated investment, U.S. holders (as defined below) subject to the alternative minimum tax or the unearned income Medicare tax and U.S. holders whose functional currency is not the U.S. dollar. This summary also assumes that the pre-Reverse Stock Split shares of Common Stock were, and the post-Reverse Stock Split shares of Common Stock will be, held as a “capital asset,” as defined in Section 1221 of the Code.
As used herein, the term “U.S. holder” means a holder that is, for U.S. federal income tax purposes:
•evaluating and recommending candidates for election to our boarda citizen or resident of directors;the United States;
•establishing a policy for considering stockholder nominees for election to our boardcorporation or other entity taxed as a corporation created or organized in or under the laws of directors; andthe United States, any state thereof or the District of Columbia;
•reviewing our corporate governance principlesan estate the income of which is subject to U.S. federal income tax regardless of its source; or
•a trust (A) if a U.S. court is able to exercise primary supervision over the administration of the trust and providing recommendationsone or more “U.S. persons” (as defined in the Code) have the authority to control all substantial decisions of the trust or (B) that has a valid election in effect to be treated as a U.S. person.
In general, no gain or loss should be recognized by a stockholder upon the exchange of pre-Reverse Stock Split Common Stock for post-Reverse Stock Split Common Stock. The aggregate tax basis of the post-Reverse Stock Split Common Stock should be the same as the aggregate tax basis of the pre-Reverse Stock Split Common Stock exchanged in the Reverse Stock Split. A stockholder’s holding period in the post-Reverse Stock Split Common Stock should include the period during which the stockholder held the pre-Reverse Stock Split Common Stock exchanged in the Reverse Stock Split.
As noted above, we will not issue fractional shares of Common Stock in connection with the Reverse Stock Split. In certain circumstances, stockholders who would be entitled to receive fractional shares of Common Stock because they hold a number of shares not evenly divisible by the Reverse Stock Split ratio will automatically be entitled to receive an additional fraction of a share of Common Stock to round up to the board regarding possible changes.
Director Nomination Processnext whole post-Reverse Stock Split share of Common Stock. The U.S. federal income tax consequences of the receipt of such an additional fraction of a share of Common Stock is not clear.
The boardtax treatment of directors has determined that director nomination responsibilities should be overseen bya stockholder may vary depending upon the nominatingparticular facts and corporate governance committee. Onecircumstances of the nominating and corporate governance committee’s goalssuch stockholder. Each stockholder is urged to assemble a board that brings to us a variety of perspectives and skills derived from high quality business and professional experience. Factors considered by the nominating and corporate governance committee include character, judgment, knowledge, skill, integrity, diversity, includingconsult with such stockholder’s own tax advisor with respect to race, gender, ethnicity and similar characteristics, age, expertise, length of service, independence, experience with businesses and other organizations of comparable size, including experience in animal and health sciences, business, finance, administration or public service, the relevance of a candidate’s experience to our needs and experience of other board members, familiarity with national and international business matters, experience with accounting rules and practices, the desire to balance the considerable benefit of continuity with the periodic injectiontax consequences of the fresh perspective provided by new members, and the extent to which a candidate would be a desirable addition to the board of directors and any committeesReverse Stock Split.
Vote Required
The approval of the boardReverse Stock Split Proposal requires the affirmative “FOR” vote of directors. In addition, directors are expected to be able to exercise their best business judgment when acting on behalf of our company and our stockholders, act ethically at all times and adhere to the applicable provisions of our Code of Business Conduct and Ethics. Other than consideration of the foregoing and applicable SEC and Nasdaq requirements, unless determined otherwise by the nominating and corporate governance committee, there are no stated minimum criteria, qualities or skills for director nominees. However, the nominating and corporate governance committee may also consider such other factors as it may deem are in the best interests of our company and our stockholders. In addition, at least one member of the board of directors serving on the audit committee should meet the criteria for an “audit committee financial expert” having the requisite “financial sophistication” under applicable Nasdaq and SEC rules, and a majority of the members of our board of directors should meet the definition of “independent director” under applicable Nasdaq rules. The board of directors is committed to actively seeking highly qualified women and individuals from underrepresented groups. The nominating and corporate governance committee and any search firm that it engages are directed to include women and candidates from underrepresented groups in each search pool form which the nominating and corporate governance committee selects director candidates.
The nominating and corporate governance committee identifies director nomineesvotes cast by first evaluating the current membersholders of the boardoutstanding shares of directors willingCommon Stock present in person or represented by proxy at the Special Meeting and entitled to continue in service. Current membersvote on the proposal. Each of the board of directors with skillsfailure to vote by proxy or to vote in person, an abstention and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the board of directors with that of obtaining a new perspective. The nominating and corporate governance committee also takes into account an incumbent director’s performance as a board member. If any member of the board of directors does not wish to continue in service, if the nominating and corporate governance committee decides not to re-nominate a member for reelection, if the board decided to fill a director position that is currently vacant or if the board of directors decides to recommend that the size of the board of directors be increased, the nominating and corporate governance committee identifies the desired skills and experience of a new nominee in light of the criteria described above. Current members of the board of directors and management are polled for suggestions as to individuals meeting the nominating and corporate governance committee’s criteria. Research may also be performed to identify qualified individuals.
It is the policy of the nominating and corporate governance committee to consider suggestions for persons to be nominated for director that are submitted by stockholders. The nominating and corporate governance committeebroker non-vote will evaluate stockholder suggestions for director nominees in the same manner as it evaluates suggestions for director nominees made by management, then-current directors or other appropriate sources. Stockholders suggesting persons as director nominees should send information about a proposed nominee to our Secretary at our principal executive offices as referenced above byhave no later than 120 days before the anniversary of the release date of the prior year’s proxy statement, which date is identified in the section titled “Deadlines for Receipt of Stockholder Proposals.” This information should be in writing and should include a signed statement by the proposed nominee that the nominee is willing to serve as a director of our company, a description of the proposed nominee’s relationship to the stockholder and any information that the stockholder feels will fully inform the nominating and corporate governance committee about the proposed nominee and the nominee’s qualifications. The nominating and corporate governance committee may request further information from the proposed nominee and the stockholder making the recommendation. In addition, a stockholder may nominate one or more persons for election as a director at our annual meeting of stockholders if the stockholder complies with the notice, information, consent and other provisions relating to stockholder nominees contained in our bylaws. Please see the section above titled
“Deadlines for Receipt of Stockholder Proposals” for important information regarding stockholder proposals, including director nominations.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics in compliance with applicable rules of the SEC that applies to all of our directors, officers and other employees and consultants. A copy of this policy is available on our website at http://senestech.investorroom.com/effect on the “Documents and Policies” page under the heading “Corporate Governance,” or free of charge upon written request to the attention of our Secretary, by regular mail at our principal executive offices, email to inquiries@senestech.com or fax at 928-526-0243. WeReverse Stock Split Proposal. A vote on this proposal will disclose, on our website, any amendment to, orbe considered a waiver from, a provision of our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and that relates to any element of the Code of Business Conduct and Ethics enumerated in applicable rules of the SEC. In addition, we have adopted a policy for research misconduct, which also applies to all officers, directors and employees.
Anti-Hedging Practices
Although“routine” matter. Therefore, we do not haveexpect any broker non-votes on this proposal and a formal policy relatedfailure to hedging transactions, we discourage our management and directors from engaging in hedging and monetization transactions in connection with our securities, such as zero-cost collars, prepaid variable forward sale contracts, equity swaps and exchange funds.
DIRECTOR COMPENSATION
The following table sets forth information regarding compensation earned byinstruct your broker, bank or paidother nominee on how to our non-employee directors during the year ended December 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or Paid in Cash ($)(1) | | Option Awards ($)(2) | | All Other Compensation ($) | | Total
($) |
Jamie Bechtel, JD, Ph.D(3) | | $ | 69,500 | | | $ | 65,000 | | | $ | 46,200 | | (3) | | $ | 180,700 | |
| Delphine François Chiavarini | | 39,500 | | | 39,000 | | | — | | | | 78,500 | |
Marc Dumont(4) | | 24,500 | | | 29,000 | | | — | | | | 53,500 | |
Phil N. Grandinetti III(5) | | — | | | 76,000 | | | — | | | | 76,000 | |
K.C. Kavanagh(6) | | 31,500 | | | — | | | — | | | | 31,500 | |
Jake S. Leach(5) | | — | | | 60,000 | | | — | | | | 60,000 | |
| Matthew K. Szot | | 57,000 | | | 63,000 | | | — | | | | 120,000 | |
____________
(1)Represents the cash amounts paid in 2022, representing the second half of the 2021-2022 board service year and the first half of the 2022-2023 board service year—“board service year” represents board service from Annual Meeting to Annual Meeting, which is generally June to the following June. Cash amounts paid in four equal installments on July 1st, October 1st, January 2nd and April 1st. This includes any additional cash compensation for service on ad hoc committees.
(2)Represents the aggregate grant date fair value of option awards granted in 2022, determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC 718”). As of December 31, 2022, the total number ofvote your shares subject to outstanding stock options held by each non-employee director was as follows: Dr. Bechtel, 16,771; Ms. Chiavarini, 10,294; Mr. Dumont, 7,864; Mr. Grandinetti, 18,306; Mr. Leach, 14,947; and Mr. Szot, 15,494. This includes any additional equity compensation for service on ad hoc committees.
(3)Amount paid to Kito Impact Foundation, of which Dr. Bechtel serves as Chief Executive Officer, in fiscal year 2022 for consulting services.
(4)Mr. Dumont iswill not continuingnecessarily count as a director after completion of his current term, which expires at the Annual Meeting.vote against this proposal.
(5)Messrs. Grandinetti and Leach did not receive any cash compensation in 2022 as both elected to receive their full compensation in option awards.
(6)Ms. Kavanagh resigned effective September 1, 2022.
2022 Non-Employee Director Compensation Program
On June 23, 2022, the board adopted a revised non-employee director compensation program (the “Director Compensation Program”), for providing cash and equity compensation to our non-employee directors for their service on the board and committees of the board.
The annual cash and equity components of the Director Compensation Program are as follows:
| | | | | | | | | | | | | | |
| | Cash | | Equity |
| Retainer for service on the board | | $ | 17,000 | | | $ | 25,000 | |
| Additional retainer for service on the board – Chair | | 20,000 | | | 20,000 | |
Additional retainer for service on the board – Vice Chair(1) | | 15,000 | | | 20,000 | |
| Incremental retainers for chair of committees: | | | | |
| Audit | | 15,000 | | | 10,000 | |
| Compensation | | 15,000 | | | 10,000 | |
| Nominating and Corporate Governance | | 15,000 | | | 10,000 | |
| | | | |
| | | | |
| | | | |
| Incremental retainers for members of committees: | | | | |
| Audit | | 5,000 | | | 4,000 | |
| Compensation | | 5,000 | | | 4,000 | |
| Nominating and Corporate Governance | | 5,000 | | | 4,000 | |
| | | | |
| | | | |
| | | | |
____________(1)This position will be eliminated in June 2023.
The options granted to non-employee directors pursuant to the Director Compensation Program will have an exercise price equal to the closing market price of our common stock on the date of grant. The options will vest in equal quarterly installments over a one-year period, and the options will expire on the fifth anniversary of the date of the grant.
Our board of directors forms ad hoc committees from time-to-time to assist the board in fulfilling its responsibilities with respect to matters that are the subject of the ad hoc committee’s mandate. The directors serving on such ad hoc committees are compensated as appropriate, though not to exceed the compensation for participation in standing committees.
In addition, we reimburse non-employee directors for reasonable travel expenses for participation in board meetings and for travel conducted on behalf of our business.
EXECUTIVE COMPENSATION
2022 Summary Compensation Table
The following table sets forth the compensation earned during the past two fiscal years by (i) our principal executive officer, (ii) our former principal executive officer, and (iii) our two most highly compensated executive officers other than the principal executive officer who were serving as executive officers at the end of 2022 (collectively, “named executive officers”).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | | Year | | Salary
($) | | Bonus
($) | | Stock Awards ($)(1) | | Option Awards ($)(1) | | All Other
Compensation ($) | | Total
($) |
Joel L. Fruendt(2) | | 2022 | | $ | 43,808 | | | $ | 20,000 | | | $ | 50,945 | | | $ | 124,538 | | | $ | — | | | $ | 239,291 | |
| President and Chief Executive Officer | | 2021 | | — | | | — | | | — | | | — | | | — | | | — | |
Kenneth Siegel(3) | | 2022 | | 282,968 | | | — | | | — | | | 66,660 | | | 297,411 | | | 647,039 | |
| Former President and Chief Executive Officer | | 2021 | | 275,000 | | | 50,000 | | | — | | | 123,204 | | | 4,944 | | | 453,148 | |
Thomas C. Chesterman(4) | | 2022 | | 250,000 | | | — | | | — | | | 87,192 | | | 11,431 | | | 348,623 | |
| Executive Vice President, Chief Financial Officer, Treasurer and Secretary | | 2021 | | 250,000 | | | 25,000 | | | — | | | — | | | 4,284 | | | 279,284 | |
| Nicole C. Williams | | 2022 | | 185,417 | | | 75,000 | | | — | | | 72,822 | | | — | | | 333,239 | |
Former Chief Revenue Officer(5) | | 2021 | | 102,083 | | | — | | | — | | | 26,768 | | | — | | | 128,851 | |
__________
(1)Amounts presented reflect the aggregate grant date fair value of the awards, determined in accordance with ASC 718. Assumptions used in the calculation of these award amounts are set forth in Note 6 (Stock-based Compensation) to the financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
(2)Mr. Fruendt was appointed Chief Executive Officer in November 2022 and President in December 2022.
(3)Mr. Siegel retired in November 2022. Other compensation for 2022 includes severance of $275,000 and health insurance premiums of $17,515 and life and disability insurance premiums of $4,896.
(4)Other compensation for 2022 consists of life and disability insurance premiums.
(5)Ms. Williams’ employment with our company terminated as of April 20, 2023.
Outstanding Equity Awards at December 31, 2022
The following table sets forth outstanding equity awards held by each of our named executive officers as of December 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
| | Date of Grant | | Number of
securities underlying outstanding options (#) | Option exercise price ($)(1) | | Option expiration date | | Number of shares or units of stock that have not vested (#) | | Market value of shares or units of stock that have not vested ($) |
| Name | | | Exercisable | | Unexercisable | | | | |
| Joel L. Fruendt | | 12/14/2022 | | — | | | 71,500 | | (2) | | $ | 2.66 | | | 12/14/2027 | | 18,799 | (3) | | $ | 50,945 | |
| Kenneth Siegel | | 02/14/2019 | | 21 | | | — | | | | 341.60 | | 11/15/2027 | | — | | | | — | |
| | | 06/18/2019 | | 1,750 | | | — | | | | 568.00 | | 11/15/2027 | | — | | | | — | |
| | | 07/31/2020 | | 5,099 | | | — | | | | 36.00 | | 11/15/2027 | | — | | | | — | |
| | | 05/03/2021 | | 6,000 | | | — | | | | 31.80 | | 11/15/2027 | | — | | | | — | |
| | 02/17/2022 | | 7,500 | | | — | | | | 16.38 | | 11/15/2027 | | — | | | | — | |
| Thomas C. Chesterman | | 12/1/2015 | | 300 | | | — | | | | 200.00 | | 12/01/2025 | | — | | | | — | |
| | | 9/20/2019 | | 125 | | | — | | | | 400.00 | | 9/20/2024 | | — | | | | — | |
| | | 7/31/2020 | | 1,042 | | | 208 | | (4) | | 36.00 | | 7/31/2025 | | — | | | | — | |
| | 02/17/2022 | | 833 | | | 2,167 | | (2) | | 16.38 | | 02/17/2027 | | — | | | | — | |
| | 12/14/2022 | | — | | | 34,750 | | (2) | | 2.66 | | 12/14/2027 | | — | | | | — | |
Nicole C. Williams(5) | | 6/2/2021 | | 625 | | | 625 | | (2) | | 33.40 | | 6/2/2026 | | — | | | | — | |
| | 2/17/2022 | | 833 | | | 2,167 | | (2) | | 16.38 | | 2/17/2027 | | — | | | | — | |
| | 12/14/2022 | | — | | | 26,500 | | (2) | | 2.66 | | 12/14/2027 | | — | | | | — | |
____________
(1)The option exercise price is the closing price of our common stock on the grant date, as adjusted for reverse stock splits where applicable.
(2)The options vest in equal monthly installments over a period of three years.
(3)The restricted stock units were to vest quarterly over a period of one year. In March 2023, the board of directors accelerated the restricted stock units so that they were 100% vested.
(4)The options vest in equal quarterly installments over a period of three years.
(5)Ms. Williams’ employment with our company terminated as of April 20, 2023.
Employment Agreements
We have entered into agreements with our named executive officers, which include provisions regarding post-termination compensation. We do not have a formal severance policy or plan applicable to our executive officers as a group.
Joel L. Fruendt
On November 9, 2022, we entered into an employment letter agreement with Mr. Fruendt to serve as our Chief Executive Officer. Under the terms of this employment letter agreement, Mr. Fruendt receives an annual base salary of $340,000 and received an inducement stock option to purchase 3.5% of the then outstanding shares of our common stock, which vest on a quarterly basis over a three-year period. Mr. Fruendt will be eligible to receive an annual incentive bonus with a target value equal to 60% of his annual base salary, subject to his achievement of performance objectives to be mutually agreed upon by Mr. Fruendt and our board of directors. In addition, after each full year of employment with our company, subject to board approval, Mr. Fruendt will be eligible to receive additional equity incentive grants consistent with timing for our other employees. Mr. Fruendt also received a one-time cash bonus of $20,000 and a one-time inducement grant of restricted stock units (the “RSUs”) with an aggregate value of $50,945. The RSUs were to vest quarterly over a 12-month period which the board subsequently accelerated to be fully vested as of March 2023. Mr. Fruendt is also eligible to participate in the standard benefits, vacation, and expense reimbursement plans offered to similarly situated employees, and entered into our standard form of indemnification agreement applicable to our directors and officers.
In the event of Mr. Fruendt’s termination by us without Cause or Mr. Fruendt’s resignation for Good Reason (as such terms are defined in his employment letter agreement), Mr. Fruendt will be entitled to severance benefits equal to 12 months’ continuation of his then base salary. In addition, we will reimburse Mr. Fruendt for COBRA premiums in effect on the date of termination for coverage in effect for him and, if applicable, his spouse and dependent children on such date under our
group health plan(s). Finally, the vesting of Mr. Fruendt’s options will be accelerated such that he will be deemed vested in those shares subject to the options.
Kenneth Siegel
We entered into an employment letter agreement with Mr. Siegel on May 15, 2019 to serve as our President and Chief Executive Officer. Under the terms of the employment letter agreement, Mr. Siegel received an annual base salary of $275,000 and a one-time signing bonus of a stock option representing 1,750 shares of our common stock, which vested quarterly over a three-year period and was subject to the terms and conditions of the 2018 Plan and standard form of option agreement. Mr. Siegel was also eligible to receive an annual incentive bonus with a target value equal to 50% of his annual base salary, payable in cash, subject to his achievement of performance objectives to be determined by the compensation committee or board of directors. In addition, after each full year of employment with our company, subject to board approval, Mr. Siegel was entitled to receive an annual option grant, valued at 35% of his then base salary, subject to such vesting terms as determined by the board in its discretion. The initial option and additional options that were granted to Mr. Siegel will remain exercisable for five years following the end of his continuous service with our company. Mr. Siegel was also eligible to participate in the standard benefits, vacation and expense reimbursement plans offered to similarly situated employees. Mr. Siegel entered into our company’s standard form of indemnification agreement applicable to its directors and officers.
In connection with the retirement of Mr. Siegel, we entered into a separation agreement with Mr. Siegel on December 29, 2022. Pursuant to the separation agreement, we will provide Mr. Siegel the following severance benefits: (a) we will pay the equivalent of 12 months base salary in effect as of November 15, 2022; (b) if Mr. Siegel timely elects continued medical and dental insurance continuation rights under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), we will continue to pay the cost of the COBRA premiums until the earlier of (i) November 30, 2023, (ii) the date Mr. Siegel became eligible for health insurance coverage through a new employer, or (iii) the date Mr. Siegel ceases to be eligible for COBRA continuation coverage for any reason, including plan termination; and (c) we accelerated the vesting on all of Mr. Siegel’s outstanding equity awards so that he is deemed fully vested in all such awards. In addition, notwithstanding anything in the applicable equity award agreements, grant notices, or plan documents, all of Mr. Siegel’s outstanding equity awards will be exercisable until the date that is five years after November 15, 2022. Except as modified by the separation agreement, Mr. Siegel’s outstanding equity awards will continue to be governed by the terms of the applicable equity award agreements, grant notices, and plan documents.
Thomas C. Chesterman
We entered into an employment offer letter with Mr. Chesterman on November 20, 2015 to serve as our Chief Financial Officer. Pursuant to this agreement, we pay Mr. Chesterman a salary of $250,000 per year. In addition, Mr. Chesterman is eligible for a performance bonus, which amounts will be determined at least annually by mutual agreement based on achievement of personal and company goals, and which will be targeted to be no less than $200,000 per year. The target for the performance bonus has been subsequently revised and is now targeted to be to up to 50% of Mr. Chesterman’s base annual salary.
Mr. Chesterman is entitled to accrue four weeks paid vacation and ten days of sick leave per calendar year and may participate in our standard benefits plans.
Per the employment offer letter, on November 20, 2015, we granted Mr. Chesterman a stock option to purchase 300 shares of our common stock at an exercise price equal to $200.00 per share, which option vested over a four-year vesting schedule, with 1⁄48th of the option vesting monthly beginning on January 1, 2016.
Nicole C. Williams
Under the terms of an employment letter agreement between Ms. Williams and our company dated May 1, 2021, Ms. Williams received an annual base salary of $175,000 and received a one-time signing bonus of stock options representing 1,250 shares of common stock, which vested on a monthly basis over a three-year period and are subject to the terms and conditions of the 2018 Plan and standard form of option agreement. In addition, under the employment letter, Ms. Williams is eligible to receive an annual incentive bonus with a target value equal to $75,000, or as otherwise determined by our board of directors, payable in cash, subject to her achievement of performance objectives determined by our Chief Executive Officer. In addition, after each full year of employment, Ms. Williams was eligible to receive an annual option grant consistent with her role as a member of our leadership team, and subject to the board’s approval. Ms. Williams was also eligible to participate in the standard benefits, vacation and expense reimbursement plans offered to similarly situated employees, and entered into our standard form of indemnification agreement applicable to our directors and officers.
Ms. Williams’ employment with our company terminated on April 20, 2023. Pursuant to a separation agreement between us and Ms. Williams, provided that such agreement is not rescinded by Ms. Williams, Ms. Williams will receive severance equal to six months continuation of her base salary. In addition, we will reimburse Ms. Williams for COBRA premiums in effect on the date of termination for coverage in effect for her and, if applicable, her spouse and dependent children on such date under our group health plan(s) for the first six months after the date of termination.
Insurance Premiums
We pay 75% of the premiums for medical insurance and dental insurance for all full-time employees, including our named executive officers. We also offer high deductible plan options that include a healthcare flexible spending account component for all full-time employees, including our named executive officers. These benefits are available to all full-time employees, subject to applicable laws.
Equity Compensation Plan Information
The following table presents certain information regarding our common stock that may be issued under our equity plans, including upon the exercise of options and vesting of RSUs granted to employees, consultants or directors as of December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | |
| Plan category | | Number of
securities to
be issued
upon exercise of
outstanding
options,
warrants and
rights
(a) | | Weighted-
average
exercise price of
outstanding
options,
warrants and
rights
(b) | | Number of
securities
remaining
available for future
issuance
under equity compensation plans
(excluding
securities
reflected in
column (a))
(c) |
| Equity compensation plans approved by security holders | | 4,596,495 | | | $ | 7.30 | | | 164,486 |
| Equity compensation plans not approved by security holders | | 117,799 | (1) | | 2.66 | | | — |
| Total | | 4,714,294 | | | 7.20 | | | 164,486 |
____________
(1)Amount includes 18,799 RSUs granted and unvested as of December 31, 2022.
Options to purchase our common stock and RSUs are outstanding under the 2018 Plan and options are outstanding under our 2015 Equity Incentive Plan (the “2015 Plan”). The 2018 Plan was approved by our stockholders at our 2018 Annual Meeting of Stockholders and replaced the 2015 Plan for purposes of new equity grants. The 2018 Plan enables us to grant options, restricted stock, RSUs and certain other equity-based compensation to our officers, directors, employees and consultants. Our stockholders have approved additional amendments to the 2018 Plan to increase the number of shares of our common stock available for issuance under the 2018 Plan as follows: on July 8, 2020, by 40,000 shares; on June 26, 2021, by 150,000 shares; and on October 12, 2022, by 150,000 shares.
Pay Versus Performance
As required by Item 402(v) of Regulation S-K and Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of our company for each of the last two completed fiscal years. The information provided below does not necessarily reflect value actually received or realized by the executives or how our compensation committee evaluates compensation decisions in light of company or individual performance.
Pay Versus Performance Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year(1) (a) | | Summary Compensation Table for PEO 1(2) (b) | | Summary Compensation Table for PEO 2(2) (b) | | Compensation Actually Paid to PEO 1(3) (c) | | Compensation Actually Paid to PEO 2(3) (c) | | Average Summary Compensation Table Total for Non-PEO NEOs(4) (d) | | Average Compensation Actually Paid to Non-PEO NEOs(5) (e) | | Value of Initial Fixed $100 Investment Based on Total Shareholder Return(6) (f) | | Net Loss(7) (g) |
| 2022 | | $ | 239,291 | | | $ | 647,039 | | | $ | 63,808 | | | $ | 282,968 | | | $ | 340,931 | | | $ | 255,209 | | | $ | 15.00 | | | $ | (9,695,000) | |
| 2021 | | $ | — | | | $ | 453,148 | | | $ | — | | | $ | 325,000 | | | $ | 310,318 | | | $ | 294,792 | | | $ | 57.59 | | | $ | (8,268,000) | |
____________
(1)We are a smaller reporting company pursuant to Rule 405 of the Securities Act of 1933, as mended (the “Securities Act”), and as such, we are only required to include information for the past two fiscal years in this table for this proxy statement.
(2)The dollar amounts reported in columns (b) are the amounts of total compensation reported for Mr. Fruendt (our current President and Chief Executive Officer since November 14, 2022) (“PEO 1”) and Mr. Siegel (our former Chief Executive Officer who retired from that position in November 2022) (“PEO 2,” together with PEO-1, “PEO”), respectively, for each corresponding year in the “Total” column of the 2022 Summary Compensation Table. Refer to the “2022 Summary Compensation Table.”
(3)The dollar amounts reported in columns (c) represent the amount of “compensation actually paid” to Messrs. Fruendt and Siegel 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 Messrs. Fruendt and Siegel during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the adjustments made to Messrs. Fruendt’s and Siegel’s total compensation for each year to determine the compensation actually paid are shown in the “Adjustments to Compensation Actually Paid” table below.
(4)The dollar amounts reported in column (d) represent the average of the amounts reported for our named executive officers as a group (excluding, in the case of 2022, Messrs. Fruendt and Siegel, and, in the case of 2021, Mr. Siegel) (“Non-PEO NEOs”) in the “Total” column of the Summary Compensation Table in each applicable year. The Non-PEO NEOs included for purposes of calculating the average amounts in each applicable year are Thomas C. Chesterman and Nicole C. Williams for fiscal 2022 and Thomas C. Chesterman and Steven Krause for fiscal 2021.
(5)The dollar amounts reported in column (e) represent the average “compensation actually paid” to the Non-PEO NEOs as a group, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the Non-PEO NEOs during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the adjustments made to the average total compensation for the Non-PEO NEOs for each year to determine the average compensation actually paid are shown in the “Adjustments to Compensation Actually Paid” table below.
(6)Cumulative total shareholder return is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between our share price at the end and the beginning of the measurement period by our share price at the beginning of the measurement period. No dividends were paid on stock or option awards in 2021 or 2022.
(7)The dollar amounts reported represent the amount of net loss reflected in our audited financial statements for the applicable year.
Adjustments to Compensation Actually Paid
As noted above in footnotes 3 and 5 to the Pay Versus Performance Table, in accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to (i) Messrs. Fruendt’s and Siegel’s total compensation for each fiscal year, as applicable, to determine the compensation actually paid to each of them, and (ii) the average total compensation for the Non-PEO NEOs as a group for each fiscal year to determine the average compensation actually paid to them. The methodology used to determine compensation actually paid is further described in footnotes (1), (2) and (3) below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FY2022 | | FY2021 |
| PEO 1 | | PEO 2 | | Non-PEO NEOs Average (1) | | PEO 2 | | Non-PEO NEOs Average (1) |
| Total from Summary Compensation Table | $ | 239,291 | | | $ | 647,039 | | | $ | 340,931 | | | $ | 453,148 | | | $ | 310,318 | |
| Adjustments for stock and option awards: | | | | | | | | | |
Deduct: Summary Compensation Table amounts (2)
| (175,483) | | | (66,660) | | | (80,007) | | | (123,204) | | | (13,384) | |
Add: Fair value of equity granted during fiscal year, outstanding and unvested as of end of fiscal year (3) | 200,252 | | | — | | | 62,699 | | | 43,616 | | | — | |
Add (deduct): Change in fair value of equity granted in prior year that is outstanding at beginning and end of fiscal year (3) | — | | | (101,523) | | | (11,622) | | | (87,204) | | | (11,327) | |
Add (deduct): Change in fair value for awards granted in prior fiscal years that vested in fiscal year (3) | — | | | (52,238) | | | (3,264) | | | (16,598) | | | (4,770) | |
| Total adjustments for stock and option awards | 24,769 | | | (220,421) | | | (32,194) | | | (183,390) | | | (29,481) | |
| Compensation actually paid (as calculated) | $ | 264,060 | | | $ | 426,618 | | | $ | 308,738 | | | $ | 269,758 | | | $ | 280,838 | |
____________
(1)For the Non-PEO NEOs as a group in each applicable year, amounts presented represent averages.
(2)The grant date fair value of equity awards represents the sum of the totals of the amounts reported in the “Stock Awards” and/or “Option Awards” columns, as applicable, in the 2022 Summary Compensation Table for the applicable year.
(3)The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following, to the extent applicable: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year.
Description of Relationship Between Compensation Actually Paid and Cumulative Total Shareholder Return
As presented in the table above, compensation actually paid to our PEOs, along with the average compensation actually paid to our Non-PEO NEOs are not directly correlated with total shareholder return. Total compensation actually paid to our PEOs increased from 2021 to 2022 by an aggregate of $22,000. Non-PEO NEOs’ total average amount of compensation actually paid also increased by approximately $31,000. While seeing an overall increase in compensation to our officers, we experienced a decrease of $43 in total shareholder return from 2021 to 2022. We utilize several performance measures to align compensation for our executive officers, but those measures tend not to be financial performance measures, such as total shareholder return. Stock options are an integral part of our executive compensation and are used as bonuses or incentives when performance measures have been achieved.
Description of Relationship Between Compensation Actually Paid and Net Income (Loss)
We have reported a net loss in both 2021 and 2022, which increased by $1.4 million. Regardless of our continued net loss, compensation actually paid to both PEOs and Non-PEO NEOs increased from 2021 to 2022. We have not historically looked to net income (loss) as a guide to measure performance for our executive officers.
All information provided above under the “Pay Versus Performance” heading will not be deemed to be incorporated by reference into any filing of the company under the Securities Act or the Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent we specifically incorporate such information by reference.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 27, 2023, information regarding beneficial ownership of our common stock by:
•each person, or group of affiliated persons, known by us to beneficially own more than 5% of our outstanding shares of common stock;
•each of our named executive officers;
•each of our directors; and
•all of our current executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power.
The number of shares listed below under the heading “Total Shares Beneficially Owned” is the aggregate beneficial ownership for each stockholder and includes:
•common stock beneficially owned;
•common stock warrants exercisable;
•currently vested and exercisable options and RSUs; and
•stock options and RSUs that are not currently vested and exercisable but will become so within 60 days of April 27, 2023.
Of this total amount, the number of shares of common stock underlying options and RSUs that are currently vested and stock options and RSUs that are not currently vested but will become vested within 60 days after April 27, 2023 are deemed outstanding for the purpose of computing the percentage ownership of common stock outstanding beneficially owned by a stockholder, director or executive officer, or the Deemed Outstanding Shares, and are also separately listed below under the heading “Number of Shares Issuable Upon Exercise of Warrants, Options and Vesting of RSUs Exercisable or Vested” but the Deemed Outstanding Shares are not treated as outstanding for the purpose of computing the percentage ownership of our common stock outstanding beneficially owned by any other person. This table is based on information supplied by officers, directors, principal stockholders and filings made with the SEC. Percentage ownership is based on 2,964,485 shares of common stock outstanding as of April 27, 2023.
Unless otherwise indicated below, to our knowledge, all persons named in the table have sole voting and dispositive power with respect to their shares of common stock, except to the extent authority is shared by spouses under community property laws.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o SenesTech, Inc., 23460 N. 19th Avenue, Suite 110, Phoenix, Arizona 85027.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name of Beneficial Owner | | Number of
Shares
Beneficially
Held | | Number of Shares Issuable Upon Exercise of Warrants, Options and Vesting of RSUs Exercisable or Vested as of April 27, 2023 | | Total Shares
Beneficially Owned |
| Shares | | Percent |
| Directors and Named Executive Officers: | | | | | | | | | | |
| Joel L. Fruendt | | 13,225 | | | 11,916 | | | 25,141 | | * |
| Kenneth Siegel | | 1,757 | | | 20,370 | | | 22,127 | | * |
| Thomas C. Chesterman | | 25 | | | 8,798 | | | 8,823 | | * |
| Nicole C. Williams | | — | | | 6,584 | | | 6,584 | | * |
| Jamie Bechtel, JD, Ph.D. | | 143 | | | 16,771 | | | 16,914 | | * |
| Delphine François Chiavarini | | 67 | | | 10,294 | | | 10,361 | | * |
Marc Dumont(1) | | 373 | | | 7,864 | | | 8,237 | | * |
| Phil N. Grandinetti III | | — | | | 18,306 | | | 18,306 | | * |
| Jake S. Leach | | 7,500 | | | 14,947 | | | 22,447 | | * |
| Matthew K. Szot | | 234 | | | 15,494 | | | 15,728 | | * |
| All current executive officers and directors as a group (8 persons) | | 21,567 | | | 104,390 | | | 125,957 | | 4.10 | % |
| 5% Owners: | | | | | | | | | | |
Armistice Capital, LLC(1) | | 367,570 | (2) | | — | (3) | | 367,570 | | 9.99 | % |
| Lind Global Fund II LP | | 285,715 | (4) | | — | (5) | | 285,715 | | 9.64 | % |
| Intracoastal Capital LLC | | 31,765 | (6) | | 122,263 | (7) | | 154,028 | | 4.99 | % |
____________
* Represents beneficial ownership of less than one percent (1%).
(1)Includes shares of common stock held by Marc Dumont and Patrick Dumont, JTWROS, an affiliate of Mr. Dumont.
(2)Based on the statement on Schedule 13G filed with the SEC on February 14, 2023, each of Armistice Capital, LLC and Steven Boyd has shared voting and dispositive power over 81,855 shares. Also includes 285,715 shares acquired by Armistice Capital Master Fund Ltd. in our recent registered direct offering. The address of Armistice Capital, LLC is 510 Madison Avenue, 7th Floor, New York, New York 10022.
(3)Does not include 2,934,575 shares of common stock underlying warrants held by Armistice Capital, LLC, which includes a provision limiting the holder’s ability to exercise the warrants if such exercise would cause the holder to beneficially own greater than 9.99% of our company, and 285,715 shares of common stock underlying warrants held by Armistice Capital Master Fund Ltd., which includes a provision limiting the holder’s ability to exercise the warrants if such exercise would cause the holder to beneficially own greater than 4.99% of our company.
(4)Based on the statement on Schedule 13G filed with the SEC on April 17, 2023, each of Lind Global Fund II LP, Lind Global Partners II LLC, and Jeff Easton has sole voting and dispositive power over 285,715 shares. The address of Lind Global Fund II LP is 444 Madison Avenue, Floor 41, New York, New York 10022.
(5)Consists of common stock underlying warrants held by Lind Global Fund II LP, which include a provision limiting the holder’s ability to exercise the warrants if such exercise would cause the holder to beneficially own greater than 4.99% of our company. Does not include, 292,299 shares of common stock underlying such warrants, the exercise of which would result in beneficial ownership by the holder of more than 9.99% of our company.
(6)Based on the statement on Schedule 13G filed with the SEC on April 19, 2023, each of Intracoastal Capital LLC, Mitchell P. Kopin, and Daniel B. Asher have shared voting and dispositive power over 13,715 shares. The address of Intracoastal Capital LLC and Mr. Kopin is 245 Palm Trail, Delray Beach, Florida 33483, and the address of Mr. Asher is 111 W. Jackson Boulevard, Suite 200, Chicago, Illinois 60604.
(7)Includes (i) 13,715 shares of common stock underlying warrants held by Intracoastal Capital LLC, and (ii) 108,548 shares of common stock underlying warrants held by Intracoastal Capital LLC, which include a provision limiting the holder’s ability to exercise the warrants if such exercise would cause the holder to beneficially own greater than 4.99% of our company. Does not include 35,560 shares of common stock underlying such warrants, the exercise of which would result in beneficial ownership by the holder of more than 4.99% of our company.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC reports of ownership on Form 3 and changes in ownership on Form 4 and
Form 5. Officers, directors and greater-than-10% stockholders are required by the SEC to furnish to us copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms received by us, forms filed electronically by the reporting person or written representations from certain reporting persons, we believe that all Section 16(a) filing requirements during the fiscal year ended December 31, 2022 were met in a timely manner by our officers, directors and greater-than-10% beneficial owners.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For the fiscal years ended December 31, 2022 and 2021, we were not a party to any transactions that require disclosure under Item 404 of Regulation S-K.
Indemnification Agreements
We have entered into indemnification agreements with each of our directors and executive officers. These agreements provide for the indemnification of such persons for all reasonable expenses and liabilities incurred in connection with any action or proceeding brought against them by reason of the fact they are or were serving in such capacity. We believe that these charter provisions and indemnification agreements are necessary to attract and retain qualified persons as directors, officers and employees. Furthermore, we have obtained director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services to us.
Policies and Procedures for Transactions with Related Persons
We have adopted a policy that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of our common stock and any members of the immediate family of any of the foregoing persons are not permitted to enter into a related person transaction with us without the prior consent of our audit committee. Any request for us to enter into a transaction with an executive officer, director, nominee for election as a director, beneficial owner of more than 5% of any class of our voting securities or any member of the immediate family of any of the foregoing persons, in which the amount involved requires disclosure under Item 404 of Regulation S-K and such person would have a direct or indirect interest, must first be presented to our audit committee for review, consideration and approval. In approving or rejecting any such proposal, our 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 and the extent of the related person’s interest in the transaction.
In addition, if a related person transaction will compromise the independence of one of our directors, our audit committee may recommend that our board of directors reject the transaction if it could affect our ability to comply with securities laws and regulations or Nasdaq listing requirements.
PROPOSAL TWO
ADVISORY VOTE ON EXECUTIVE COMPENSATION (“SAY-ON-PAY”)
Background
The Dodd-Frank Act enables our stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules.
Summary
We are asking our stockholders to provide advisory approval of the compensation of our named executive officers (which consist of our President and Chief Executive Officer, our former President and Chief Executive Officer, and two additional executive officers) as such compensation is described in the “Executive Compensation” section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure set forth in this proxy statement. Our philosophy with respect to compensation for our executives and key employees is designed to attract and retain people who share our vision and values and who can consistently perform in such a manner that enables us to achieve our strategic goals. Our executive compensation programs are designed to (1) motivate and reward our executive officers, (2) retain our executive officers and encourage quality service, (3) incentivize our executive officers to appropriately manage risks while improving our financial results and (4) align executive officers’ interests with those of our stockholders. Under these programs, our executive officers are rewarded for the achievement of company objectives and the realization of increased stockholder value. The compensation policies developed by the compensation committee are based on the philosophy that compensation should reflect both company-wide performance, financial and operational performance, and the individual performance of the executive, including management of personnel under his or her supervision. The compensation committee’s objectives when setting compensation for our executive officers include:
•setting compensation levels that are sufficiently competitive such that they will motivate and reward the highest quality individuals to contribute to our goals, objectives and overall financial success. This is done in part through reviewing and comparing the compensation of other companies in our peer group;
•retaining executives and encouraging their continued quality service, thereby encouraging and maintaining continuity of the management team. Our competitive base salaries combined with cash and equity incentive bonuses, retirement plan benefits and the vesting requirements of our equity-based incentive awards, encourage high-performing executives to remain with our company;
•incentivizing executives to appropriately manage risks while attempting to improve our financial results, performance and condition; and
•aligning executive and stockholder interests. The compensation committee believes the use of equity compensation as a key component of executive compensation is a valuable tool for aligning the interests of our executive officers with those of our stockholders.
Our compensation program is designed to reward superior performance of both our company and of each individual executive and seeks to encourage actions that drive our business strategy. Our compensation strategy is to provide a competitive opportunity for senior executives, taking into account their total compensation packages. The following is a summary of some of the material elements of our compensation for our executive officers. We urge our stockholders to review the executive compensation tables for more information.
Base Salaries
We provide each of our named executive officers with a base salary to compensate them for services rendered during the fiscal year and sustained performance. The purpose of the base salary is to reflect job responsibilities, value to our company and competitiveness of the market. Salaries for our named executive officers are determined by the compensation committee, based on the following factors: nature and responsibility of the position and, to the extent available, salary norms for comparable positions; the expertise of the individual executive; and the competitiveness of the market for the executive’s services.
Performance Cash-Based Incentive Bonuses
Our practice is to award cash-based incentive bonuses, based in part on the achievement of performance objectives or significant accomplishments as established by the compensation committee from time-to-time in its discretion. These performance objectives and significant accomplishments are, in part, developed in partnership with the executive and are discussed on an ongoing basis throughout the year.
Equity-Based Incentive Awards
Our equity-based incentive awards are designed to align the interests of our employees and consultants, including our named executive officers, with those of our stockholders. Our compensation committee is responsible for approving equity grants. Vesting of the stock option and restricted stock unit awards is tied to continuous service with our company and serves as an additional retention measure and long-term incentive.
Board Recommendation
The boardOur Board of directors believes thatDirectors recommends a vote “FOR” the information provided above and withinapproval of the “Executive Compensation” section of this proxy statement demonstrates that our executive compensation program is designed appropriately and is working to ensure that management’s interests are aligned with our stockholders’ interests to support long-term value creation.
The following resolution is submitted for a stockholder vote at the meeting:
RESOLVED, that the stockholders of our company approve, on an advisory basis, the compensation of our named executive officers, as disclosed in the executive compensation section set forth in this proxy statement.
The say-on-pay vote is advisory, and therefore not binding on our company, the board of directors, or the compensation committee. Although non-binding, the vote will provide information to the compensation committee and our board of directors regarding investor sentiment about our executive compensation philosophy, policies and practices, which the compensation committee and our board of directors will be able to consider when determining executive compensation for the years to come.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” ADOPTION OF THE RESOLUTION APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DESCRIBED IN THE EXECUTIVE COMPENSATION SECTION IN THIS PROXY STATEMENT.
Reverse Stock Split Proposal.
PROPOSAL THREE
TWO
APPROVAL OF THE AMENDMENT OF 2018 EQUITY INCENTIVE PLANADJOURNMENT PROPOSAL
Background
We are seeking stockholder approvalOur Board of an amendment to the 2018 Plan to increaseDirectors believes that if the number of shares of common stock available for issuance underour Common Stock outstanding and entitled to vote at the 2018 Plan by 500,000 shares.
FollowingSpecial Meeting is insufficient to approve the recommendation byReverse Stock Split, it is in the best interests of the stockholders to enable our compensation committee, our boardBoard of directors unanimously approved the 2018 Plan Amendment on March 12, 2023, subject to stockholder approval.
In November 2022, we amended our amended and restated certificate of incorporation to effect a 1-for-20 reverse split of our issued and outstanding shares of common stock. The following 2018 Plan Amendment discussion reflects the effect of this reverse stock split for all issued and outstanding common stock and options for common stock and per share amounts presented herein.
Purpose and Background
The 2018 Plan is the sole available plan for granting equity compensation to our employees, officers, directors and consultants. The 2018 Plan’s current authorized share reserve is 342,500 shares plus shares that have or may become available for issuance under the 2018 Plan from the 2015 Plan since the 2018 Plan’s inception of up to an aggregate maximum of 6,114 shares. As of April 27, 2023, there are only 164,522 shares remaining available for future grant under the 2018 Plan, an insufficient amount to recruit and retain our employees and directors, particularly in this challenging business environment.
As of April 27, 2023, the closing sales price of a share of our common stock as reported on the Nasdaq Capital Market was $1.18 per share. The weighted average exercise price of our 280,448 stock options outstanding at April 27, 2023 was $17.11 per share.
In orderDirectors to continue to have an appropriate supply of shares for equity incentivesseek to recruit, hire and retain the talent required to successfully execute our business plans, our board of directors believes that we will need the additional 500,000 new shares to be available under the 2018 Plan. Although the additional shares will increase the potential dilution to stockholders, our board of directors, in consultation with the compensation committee, believes our equity compensation program is well-managed, reasonable and within market norms with the addition of the new shares.
In determining theobtain a sufficient number of additional new sharesvotes to allocateapprove the Reverse Stock Split Proposal.
In the Adjournment Proposal, we are asking stockholders to authorize the 2018 Plan,holder of any proxy solicited by the Board of Directors to vote in favor of adjourning or postponing the Special Meeting or any adjournment or postponement thereof. If our boardstockholders approve this proposal, we could adjourn or postpone the Special Meeting, and any adjourned session of directors analyzed various factors, including potential dilution, industry plan cost standards, historical grant practices and anticipated equity compensation needs. As of April 27, 2023, 2,964,485 shares of our common stock are outstanding and 7,351,068 shares of our common stock are outstanding on a fully diluted basis (assuming exercise of all outstanding warrants and stock options). The potential dilutionthe Special Meeting, to current stockholders that could result fromuse the additional 500,000 shares requested plus the remaining 164,522 shares available for issuance under the 2018 Plan as of April 27, 2023 would be approximately 9% of our fully diluted shares outstanding. We believe this amount is less than the median of similarly situated companies. In addition, our approximate annual “burn rate” for grants for fiscal years 2018time to 2022 was on average 12% per year, based on the average number of shares subject to all equity awards made under the 2018 Plan during eachsolicit additional proxies in favor of the five fiscal year periods divided by the average number of shares of common stock outstanding as reported in the Form 10-Ks for each of the five fiscal year end periods. We believe this amount is below typical annual usage for companies of similar size and character.Reverse Stock Split Proposal.
Practically, equity grants will only be effective if the grants represent sufficient value, and we believe that management will be most aligned with stockholders if the grants represent meaningful equity-based compensation.
Under applicable Nasdaq rules, we are required to obtain stockholderAdditionally, approval of the 2018 Plan Amendment. If the 2018 Plan Amendment is approved, the 2018 Plan Amendment will become effective as of the date of the Annual Meeting. If the 2018 Plan Amendment proposal is not approved, we may continue to grant awards under the 2018 Plan in accordance with the current terms and the current limited share reserve remaining available and, thereafter, we will be unable to grant equity compensation on a basis consistent with our historical practice. As a result, we may need to consider other compensation alternatives, such as cash compensation. Replacing equity with cash would increase cash compensation expense and divert cashAdjournment Proposal could mean that, could otherwise be used for our business operations or reinvested in the business. As such, our board of directors recommends that stockholders approve the 2018 Plan Amendment.
The principal features of the 2018 Plan, taking into account the effect of the 2018 Plan Amendment, are summarized below. This summary does not contain all information about the 2018 Plan, as amended by the 2018 Plan Amendment, and is qualified in its entirety by reference to the text of the 2018 Plan, as amended by the 2018 Plan Amendment.
Executive officers and directors have a financial interest in this proposal because they are eligible to participate in the 2018 Plan.
Description of the 2018 Plan, As Amended
Purpose. The purpose of the 2018 Plan is to help us secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of our company and provide a means by which the eligible recipient may benefit from increases in value of our common stock.
Eligibility. Our 2018 Plan allows for the grant of incentive stock options to our employees and for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and other stock awards to our employees, officers, directors and consultants. As of April 27, 2023, approximately 27 employees, including four executive officers and six non-employee directors, were eligible to participate in the 2018 Plan.
Authorized Shares. The maximum number of shares of our common stock authorized for issuance under our 2018 Plan is 842,500, which includes the requested 500,000 shares. In addition, the 2018 Plan authorizes for issuance (i) shares that remained available for new grants under the 2015 Plan on the date the board of directors originally approved the 2018 Plan (which amount was 2,608 shares) and (ii) shares subject to outstanding awards under the 2015 Plan on that date that subsequently cease to be subject to such awards. As of April 27, 2023, 602 shares remain subject to outstanding awards under the 2015 Plan. To the extent such outstanding awards under the 2015 Plan are exercised for or settled in shares, those shares will not become available for issuance under the 2018 Plan.
To the extent that stock awards granted under our 2018 Plan expire or terminate without being exercised in full or are settled in cash, then any such expiration, termination or settlement will not reduce the number of shares available for issuance under our 2018 Plan. Additionally, shares issued pursuant to stock awards under our 2018 Plan that we repurchase or that are forfeited, as well as shares used to pay the exercise price of a stock award or to satisfy the tax withholding obligations related to a stock award, become available for future grant under our 2018 Plan.
Subject to the 2018 Plan’s share reserve, incentive stock options can be granted under the 2018 Plan in an amount not to exceed three times the total authorized share reserve of the 2018 Plan (under the tax rules for incentive stock options, certain shares that are subsequently repurchased by us or forfeited under the 2018 Plan cannot be used again for future grants of incentive stock options).
2018 Plan Administration. Our board of directors and/or compensation committee of our board of directors administers our 2018 Plan and the stock awards granted under it (references to “board” below generally refer to both our board of directors and the compensation committee). Subject to the terms of the 2018 Plan, the board of directors has the authority to select the individuals to receive awards, determine the terms and conditions of all awards and interpret the provisions of the 2018 Plan and any awards, notices or agreements executed or entered into under the 2018 Plan. The board may amend the 2018 Plan or any awards granted under the 2018 Plan in these and other respects with the written consent of any adversely affected participant, although certain material amendments to the 2018 Plan require stockholder approval. Our board is also authorized to delegate to officers the authority to make grants to non-officer employees, within limits prescribed by the board, the 2018 Plan and applicable law.
Corporate Transactions. Our 2018 Plan provides that our board of directors will determine how each outstanding award will be treated in the event of certain specified significant corporate transactions, including (1) a sale or other disposition of all or substantially all of our assets, (2) the sale or disposition of at least 90% of our outstanding securities, (3) the consummation of a merger or consolidation where we do not survive the transaction and (4) the consummation of a merger or consolidation where we do survive the transaction but the shares of our common stock outstanding prior to such transaction are converted or exchanged into other property by virtue of the transaction.
The board of directors may (1) arrange for the assumption, continuation or substitution of a stock award by a successor corporation, (2) arrange for the assignment of any reacquisition or repurchase rights held by us to a successor corporation, (3) accelerate the vesting, in whole or in part, of the stock award and provide for its termination prior to the transaction, (4) arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by us, (5) cancel or arrange for the cancellation of the stock award prior to the transaction in exchange for a cash payment, if any, determined by the board or (6) make a payment, in the form determined by the board, equal to the excess, if any, of the value of the property the participant would have received upon exercise of the stock award prior to the transaction over any exercise price payable by the participant in connection with the exercise. The board of directors is not obligated to treat all stock awards, even thosereceive proxies indicating that are of the same type, or all participants in the same manner.
In the event of a change in control, awards granted under the 2018 Plan will not receive automatic acceleration of vesting and exercisability, although this treatment may be provided for in an award agreement. Under the 2018 Plan, a change in
control is defined to include (1) the acquisition by any person of more than 50% of the combined voting power of our then outstanding stock, (2) a merger, consolidation or similar transaction in which our stockholders immediately prior to the transaction do not own, directly or indirectly, more than 50% of the combined voting power of the surviving entity (or the parent of the surviving entity), (2) our stockholders approve or our board of directors approves a plan of complete dissolution or liquidation or a complete dissolution or liquidation of us otherwise occurs except for a liquidation into a parent corporation, (3) a sale, lease, exclusive license or other disposition of all or substantially all of the assets to an entity that did not previously hold more than 50% of the voting power of our stock and (5) individuals who constitute our incumbent board of directors ceasing to constitute at least a majority of our board of directors.
Types of Awards. The 2018 Plan permits the grant of any or all of the following types of awards.
Stock Options. Incentive stock options and nonstatutory stock options are granted pursuant to stock option agreements adopted by the board of directors. The board of directors determines the exercise price for stock options, within the terms and conditions of the 2018 Plan, provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value of our common stock on the date of grant. Options granted under the 2018 Plan vest at the rate specified in the stock option agreement as determined by the board of directors.
Restricted Stock Unit Awards. Restricted stock unit awards are granted pursuant to restricted stock unit award agreements adopted by the board of directors. Restricted stock unit awards may be granted in consideration for any form of legal consideration that may be acceptable to our board of directors and permissible under applicable law. A restricted stock unit award may be settled by cash, delivery of stock, a combination of cash and stock as deemed appropriate by the board of directors or in any other form of consideration set forth in the restricted stock unit award agreement. Additionally, dividend equivalents may be credited in respect of shares covered by a restricted stock unit award. Except as otherwise provided in the applicable award agreement, restricted stock units that have not vested will be forfeited upon the participant’s cessation of continuous service for any reason.
Restricted Stock Awards. Restricted stock awards are granted pursuant to restricted stock award agreements adopted by the board of directors. A restricted stock award may be awarded in consideration for cash, check, bank draft or money order, past services to us or any other form of legal consideration that may be acceptable to our board of directors and permissible under applicable law. The board of directors determines the terms and conditions of restricted stock awards, including vesting and forfeiture terms. If a participant’s service relationship with us ceases for any reason, we may receive through a forfeiture condition or a repurchase right any or all of the shares of common stock held by the participant that have not vested as of the date the participant terminates service with us.
Stock Appreciation Rights. Stock appreciation rights are granted pursuant to stock appreciation grant agreements adopted by the board of directors. The board of directors determines the purchase price or strike price for a stock appreciation right, which generally cannot be less than 100% of the fair market value of our common stock on the date of grant. A stock appreciation right granted under the 2018 Plan vests at the rate specified in the stock appreciation right agreement as determined by the board of directors.
Other Stock Awards. The board of directors may grant other awards based in whole or in part by reference to our common stock. The board of directors will set the number of shares under the stock award and all other terms and conditions of such awards.
Repricing. The 2018 Plan prohibits the board of directors, without stockholder approval, from lowering the exercise or grant price of an option after it is granted, except in connection with capitalization adjustments provided under the 2018 Plan, taking any other action that is treated as a repricing under generally accepted accounting principles, canceling an option at a time when its exercise or grant price exceeds the fair market value of the underlying stock, in exchange for cash, another option or stock appreciation right, restricted stock, or other equity award, or issuing an option or stock appreciation right or amending an outstanding option or stock appreciation right to provide for the grant or issuance of a new option or stock appreciation right on exercise of the original option or stock appreciation right.
Changes to Capital Structure. In the event there is a specified type of change in our capital structure, such as a stock split, reverse stock split or recapitalization, appropriate adjustments will be made to (i) the class and maximum number of shares reserved for issuance under the 2018 Plan, (ii) the class and maximum number of shares that may be issued upon the exercise of incentive stock options and (iii) the class and number of shares and exercise price, strike price or purchase price, if applicable, of all outstanding stock awards.
Transferability. Under our 2018 Plan, the board of directors may provide for limitations on the transferability of awards, in its sole discretion. Option awards are generally not transferable other than by will or the laws of descent and distribution, except as otherwise provided under our 2018 Plan.
2018 Plan Amendment or Termination. Our board of directors has the authority to amend, suspend or terminate our 2018 Plan, although certain material amendments require the approval of our stockholders, and amendments that would impair the rights of any participant require the consent of that participant.
U.S. Federal Income Tax Information
The following is a general summary of the material U.S. federal income tax consequences of the 2018 Plan to us and to participants in the 2018 Plan who are subject to U.S. federal taxes. The summary is based on the Code, the U.S. Treasury regulations promulgated thereunder, rulings and other guidance issued by the Internal Revenue Service and judicial decisions as in effect as of the date of this proxy statement, all of which are subject to change, possibly with retroactive effect. The summary is not intended to be a complete analysis or discussion of all potential tax consequences that may be relevant or important to participants in the 2018 Plan, including U.S. gift or estate tax consequences or foreign, state or local tax consequences.
Incentive Stock Options. Generally, for U.S. federal income tax purposes, a participant will not recognize any income upon the grant or vesting of an incentive stock option under the 2018 Plan. If a participant exercises an incentive stock option during the participant’s employment as an employee or within three months after the participant’s employment as an employee ends (12 months in the case of permanent and total disability), the participant generally will not recognize income at the time of exercise for regular U.S. federal income tax purposes (although the participant generally will recognize income for alternative minimum tax purposes at that time as if the option were a nonqualified stock option). If a participant sells or exchanges the shares acquired upon exercise of an incentive stock option after the later of (a) one year from the date of exercise and (b) two years from the grant date of the option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the sale or exchange and the option exercise price. If a participant disposes of the shares that the participant receives upon exercise of an incentive stock option before the end of these holding periods, the disposition will constitute a disqualifying disposition, and the participant generally will recognize compensation taxable as ordinary income in the year of the disposition equal to the excess, on the date of exercise of the option, of the fair market value of the shares received over the option exercise price (or generally, if less, the excess of the amount realized on the sale of the shares over the option exercise price), and the participant will recognize capital gain or loss, long-term or short-term, as the case may be, equal to the difference between (i) the amount the participant received and (ii) the option exercise price increased by the amount of compensation income, if any, the participant recognized. Special rules apply if a participant uses already owned shares of our common stock to pay the option exercise price or if the shares of common stock that the participant receives upon exercise are subject to a substantial risk of forfeiture.
Nonqualified Stock Options. Generally, for U.S. federal income tax purposes, a participant will not recognize any income upon the grant or vesting of a nonqualified stock option under the 2018 Plan with an exercise price at least equal to the fair market value of our common stock on the date of grant and no additional deferral feature. Upon exercise of a nonqualified stock option, the participant generally will recognize compensation taxable as ordinary income in an amount equal to the excess of the fair market value of the stock underlying the nonqualified stock option on the date of exercise over the option exercise price. Upon a sale of the shares acquired upon exercise of the nonqualified stock option, the participant generally will recognize short-term or long-term capital gain or loss, depending on how long the participant held the shares, equal to the difference between the amount received from the sale and the fair market value of the shares at the time of exercise of the nonqualified stock option. If a participant pays the option exercise price entirely in cash, the tax basis of the shares that the participant receives upon exercise generally will be equal to their fair market value on the exercise date (but not less than the option exercise price), and the shares’ holding period will begin on the day after the exercise date. Special rules apply if a participant uses already owned shares of our common stock to pay the option exercise price or if the shares of our common stock that the participant receives upon exercise are subject to a substantial risk of forfeiture. The same tax consequences described in this paragraph also apply to an incentive stock option that a participant exercises more than three months after the participant’s termination of employment as an employee (or more than 12 months after termination in the case of permanent and total disability).
Stock Appreciation Rights. A participant generally will not recognize taxable income upon the grant or vesting of a stock appreciation right with a grant price at least equal to the fair market value of our common stock on the date of grant and no additional deferral feature. Upon exercise of a stock appreciation right, a participant will recognize compensation taxable as ordinary income equal to the difference between the fair market value of the underlying shares on the date of exercise and the grant price of the stock appreciation right.
Unrestricted Stock Awards. If a participant receives shares of stock under the 2018 Plan that are not subject to restrictions, the participant generally will recognize compensation taxable as ordinary income at the time of receipt of the shares in an amount equal to the fair market value of the shares at the time of grant minus the amount, if any, paid for the shares. The participant’s holding period for the shares will begin on the date that the participant receives the shares, and the participant’s tax basis in the shares will be the amount of ordinary income the participant recognizes plus the amount, if any, paid for the shares.
Restricted Stock Awards. Upon receipt of a restricted stock award, a participant generally will recognize compensation taxable as ordinary income when the shares cease to be subject to restrictions in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid for the shares. Instead of postponing the federal income tax consequences of a restricted stock award until the restrictions lapse, a participant may elect to recognize compensation taxable as ordinary income in the year of the award in an amount equal to the fair market value of the shares at the time of receipt. This election is made under Section 83(b) of the Code. In general, a Section 83(b) election is made by filing a written notice with the Internal Revenue Service within 30 days of the date of grant of the restricted stock award for which the election is made and must meet certain technical requirements.
The tax treatment of a subsequent disposition of restricted stock will depend upon whether a participant has made a timely and proper Section 83(b) election. If a participant makes a timely and proper Section 83(b) election, when the participant sells the restricted shares, the participant generally will recognize short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant receives from the sale and the tax basis of the shares sold. If no Section 83(b) election is made, any disposition after the restriction lapses generally will result in short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the amount, if any, the participant paid for the shares plus the amount of taxable ordinary income recognized either at the time the restrictions lapsed or at the time of the 83(b) election, if an election was made. If a participant has to forfeit the shares to us (e.g., upon the participant’s termination prior to expiration of the restriction period), the participant may not claim a deduction for the amount of compensation income recognized as a result of making the Section 83(b) election, and the participant generally will have a capital loss equal to the amount, if any, paid for the shares.
Restricted Stock Units. A participant generally will not recognize income at the time a stock unit is granted. When any part of a stock unit is issued or paid, the participant generally will recognize compensation taxable as ordinary income at the time of such issuance or payment in an amount equal to the then fair market value of any shares, cash or property the participant receives.
U.S. Federal Income Tax Consequences to Us. In the foregoing cases, we generally will be entitled to a deduction at the same time and in an amount equal to the ordinary income recognized by the participant, subject to certain limitations on deductions for compensation contained in the Code.
Code Section 409A. We intend that awards granted under the 2018 Plan comply with, or otherwise be exempt from, Section 409A of the Code.
2018 Plan Benefits
All awards to employees, officers, directors and consultants under the 2018 Plan are generally made at the discretion of our compensation committee and/or board of directors. Therefore, the benefits and amounts that will be received or allocated under the 2018 Plan are not generally determinable at this time. However, please refer to the description of grants made to our named executive officers in the last fiscal year described in the “Executive Compensation” section. Grants made to our non-employee directors in the last fiscal year are described in the “Director Compensation” section.
No grants have been made under the 2018 Plan subject to stockholder approval of the 2018 Plan Amendment.
Vote Required
The affirmative “FOR” vote of a majority of the voting powervotes cast by holders of the outstanding shares of common stockour Common Stock present in person or represented by proxy at the annual meetingSpecial Meeting will vote against the Reverse Stock Split Proposal, we could adjourn or postpone the Special Meeting without a vote on the Reverse Stock Split Charter Amendment and use the additional time to solicit the holders of those shares to change their vote in favor of the Reverse Stock Split Proposal.
Vote Required
The affirmative “FOR” vote of a majority of the shares of Common Stock present in person or represented by proxy at the Special Meeting and entitled to vote on thethis proposal is required to approve this proposal. Each of the failure to vote by proxy or to vote in person and a broker non-vote will have no effect on the 2018 PlanAdjournment Proposal. An abstention will have the same practical effect as shares voteda vote against this proposal. A vote on this proposal will not beAs described above, the Adjournment Proposal is considered a “routine” matter. Therefore, your broker, bank or other nominee may vote your shares without receiving instructions from you on this proposal and accordingly, we do not expect any broker non-votes on this proposal. A failure to instruct your broker, non-votebank or other nominee on how to vote your shares will have no effectnot necessarily count as these votes are not considered “entitled to vote.”a vote against this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE 2018 PLAN AMENDMENT.Board Recommendation
Our Board of Directors recommends that you vote “FOR” the Adjournment Proposal.
PROPOSAL FOUR
RATIFICATIONSECURITY OWNERSHIP OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMCERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The independent registered public accounting firmfollowing table sets forth, as of M&K CPAS, PLLC has acted asJuly 28, 2023, information regarding beneficial ownership of our auditor since December 22, 2014 and has audited our financial statements for Common Stock by:
•each person, or group of affiliated persons, known by us to beneficially own more than 5% of the outstanding shares of Common Stock;
•each of our 2014 to 2022 fiscal years. M&K CPAS, PLLC is responsible for performing an independent auditnamed executive officers;
•each of our financial statementsdirectors; and
•all of our current executive officers and directors as a group.
Beneficial ownership is determined in accordance with auditing standardsthe rules of the SEC and generally acceptedincludes any shares over which a person exercises sole or shared voting or investment power.
The number of shares listed below under the heading “Total Common Shares Beneficially Owned” is the aggregate beneficial ownership of Common Stock for each stockholder and includes:
•Common Stock beneficially owned;
•Common Stock warrants exercisable;
•currently vested and exercisable options; and
•stock options that are not currently vested and exercisable but will become so within 60 days of July 28, 2023.
Of this total amount, the number of shares of Common Stock underlying options that are currently vested and stock options that are not currently vested but will become vested within 60 days after July 28, 2023 are deemed outstanding for the purpose of computing the percentage ownership of Common Stock outstanding beneficially owned by a stockholder, director or executive officer, or the Deemed Outstanding Shares, and are also separately listed below under the heading “Number of Shares Issuable Upon Exercise of Warrants and Options Exercisable or Vested” but the Deemed Outstanding Shares are not treated as outstanding for the purpose of computing the percentage ownership of our Common Stock outstanding beneficially owned by any other person. This table is based on information supplied by officers, directors, principal stockholders and filings made with the SEC. Percentage ownership is based on 2,964,485 shares of Common Stock outstanding as of July 28, 2023.
Unless otherwise indicated below, to our knowledge, all persons named in the United Statestable have sole voting and issuing a report on its audit.dispositive power with respect to their shares of Common Stock, except to the extent authority is shared by spouses under community property laws.
The audit committee has appointed, and
Unless otherwise indicated, the boardaddress of directors has ratified the audit committee’s appointment of, M&K CPAS, PLLC as our independent registered public accounting firm for the fiscal year ending December 31, 2023. Stockholder ratification of the appointment of M&K CPAS, PLLC as our independent registered public accounting firm is not required by the Bylaws or otherwise. In the event that our stockholders fail to ratify the appointment, the audit committee may reconsider its appointment of M&K CPAS, PLLC. Even if the appointment is ratified, the audit committee, in its sole discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the audit committee determines that such a change would beeach beneficial owner listed in the best intereststable below is c/o SenesTech, Inc., 23460 N. 19th Avenue, Suite 110, Phoenix, AZ 85027.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name of Beneficial Owner | | Number of
Shares
Beneficially
Held | | Number of Shares
Issuable
Upon
Exercise of
Warrants and
Options
Exercisable
or Vested as
of July 28, 2023 | | Total Shares
Beneficially Owned |
| Shares | | Percent |
| Directors and Named Executive Officers: | | | | | | | | | | |
| Joel L. Fruendt | | 13,225 | | | 17,874 | | | 31,099 | | 1.04% |
Kenneth Siegel(1) | | 1,757 | | | 20,370 | | | 22,127 | | * |
| Thomas C. Chesterman | | 25 | | | 11,943 | | | 11,968 | | * |
Nicole C. Williams(2) | | — | | | 4,876 | | | 4,876 | | * |
| Jamie Bechtel, JD, Ph.D. | | 143 | | | 16,686 | | | 16,829 | | * |
| Delphine François Chiavarini | | 67 | | | 16,877 | | | 16,944 | | * |
| Phil N. Grandinetti III | | — | | | 30,368 | | | 30,368 | | 1.01% |
| Jake S. Leach | | 7,500 | | | 25,200 | | | 32,700 | | 1.09% |
| Matthew K. Szot | | 234 | | | 25,278 | | | 25,512 | | * |
| All current executive officers and directors as a group (7 persons) | | 21,194 | | | 144,226 | | | 165,420 | | 5.32% |
| 5% Owners: | | | | | | | | | | |
| Armistice Capital, LLC | | 367,570 | (3) | | — | (4) | | 367,570 | | 9.99% |
| Lind Global Fund II LP | | 285,715 | (5) | | — | (6) | | 285,715 | | 9.64% |
| Intracoastal Capital LLC | | 31,765 | (7) | | 122,263 | (8) | | 154,028 | | 4.99% |
____________
* Represents beneficial ownership of less than one percent (1%).
(1)Mr. Siegel retired in November 2022.
(2)Ms. Williams’ employment with our company terminated as of April 2023.
(3)Based on the statement on Schedule 13G filed with the SEC on February 14, 2023, each of Armistice Capital, LLC and Steven Boyd has shared voting and dispositive power over 81,855 shares. Also includes 285,715 shares acquired by Armistice Capital Master Fund Ltd. in our recent registered direct offering. The address of Armistice Capital, LLC is 510 Madison Avenue, 7th Floor, New York, New York 10022.
(4)Does not include 2,934,575 shares of common stock underlying warrants held by Armistice Capital, LLC, which includes a provision limiting the holder’s ability to exercise the warrants if such exercise would cause the holder to beneficially own greater than 9.99% of our company, and our stockholders. A representative285,715 shares of M&K CPAS, PLLC is expectedcommon stock underlying warrants held by Armistice Capital Master Fund Ltd., which includes a provision limiting the holder’s ability to be present at our Annual Meeting, whereexercise the representative will havewarrants if such exercise would cause the opportunityholder to make a statement and to respond to appropriate questions.
Principal Accountant Fees and Services
The aggregate fees billed by M&K CPAS, PLLC are as follows:
| | | | | | | | | | | | | | |
| | Years Ended December 31, |
| | 2022 | | 2021 |
Audit fees(1) | | $ | 58,500 | | | $ | 57,500 | |
Audit-related fees(2) | | 6,608 | | | 7,500 | |
| Tax fees | | — | | | — | |
| All other fees | | — | | | — | |
| Total fees | | $ | 65,108 | | | $ | 65,000 | |
____________
(1)Includes audit fees related to professional services rendered in connection with the auditbeneficially own greater than 4.99% of our annual financial statements, the reviews of the financial statements included in each of our quarterly reports on Form 10-Q, and accounting services that relate to the audited financial statements and are necessary to comply with generally accepted auditing standards.company.
(2)(5)Includes audit-related fees related to reviews of registration statements and and consents related to documentsBased on the statement on Schedule 13G filed with the SEC on April 17, 2023, each of Lind Global Fund II LP, Lind Global Partners II LLC, and our 2022 public offeringJeff Easton has sole voting and our 2021 Registered Direct Offering. Such services were reasonably relateddispositive power over 285,715 shares. The address of Lind Global Fund II LP is 444 Madison Avenue, Floor 41, New York, New York 10022.
(6)Consists of common stock underlying warrants held by Lind Global Fund II LP, which include a provision limiting the holder’s ability to exercise the performance of M&K CPAS, PLLC’s auditwarrants if such exercise would cause the holder to beneficially own greater than 4.99% of our financial statementscompany. Does not include, 292,299 shares of common stock underlying such warrants, the exercise of which would result in beneficial ownership by the holder of more than 9.99% of our company.
(7)Based on the statement on Schedule 13G filed with the SEC on April 19, 2023, each of Intracoastal Capital LLC, Mitchell P. Kopin, and not reported under the caption “Audit fees.”
Pre-Approval PoliciesDaniel B. Asher have shared voting and Procedures
We have implemented pre-approval policiesdispositive power over 13,715 shares. The address of Intracoastal Capital LLC and procedures related to the provision of audit and non-audit services. Under these procedures, our audit committee pre-approves all services to be provided by M&K CPAS, PLLCMr. Kopin is 245 Palm Trail, Delray Beach, Florida 33483, and the estimated fees relatedaddress of Mr. Asher is 111 W. Jackson Boulevard, Suite 200, Chicago, Illinois 60604.
(8)Includes (i) 13,715 shares of common stock underlying warrants held by Intracoastal Capital LLC, and (ii) 108,548 shares of common stock underlying warrants held by Intracoastal Capital LLC, which include a provision limiting the holder’s ability to these services.
All audit, audit-related, and tax services were pre-approvedexercise the warrants if such exercise would cause the holder to beneficially own greater than 4.99% of our company. Does not include 35,560 shares of common stock underlying such warrants, the exercise of which would result in beneficial ownership by the audit committee, which concluded that the provisionholder of such services by M&K CPAS, PLLC was compatible with the maintenancemore than 4.99% of that firm’s independence in the conduct of its auditing functions. Our pre-approval policies and procedures provide for the audit committee’s pre-approval of specifically described audit, audit-related, and tax services on an annual basis, but individual engagements anticipated to exceed pre-established thresholds must be separately approved. The policies and procedures also require specific approval by the audit committee if total fees for audit-related and tax services would exceed total fees for audit services in any fiscal year. The policies and procedures authorize the audit committee to delegate to one or more of its members pre-approval authority with respect to permitted services.our company.
Audit Committee Report
In connection with our financial statements for the fiscal year ended December 31, 2022, the audit committee has:
•reviewed and discussed the audited financial statements with management;
•discussed with our independent registered public accounting firm, M&K CPAS PLLC, the matters required to be discussed by applicable auditing standards, including Auditing Standard No. 1301, Communications with Audit Committees; and
•received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the audit committee concerning independence and discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence.
Based upon these reviews and discussions, the audit committee approved and recommended to the board of directors that our audited financial statements be included in our 2022 Annual Report filed with the SEC.
Submitted by the Audit Committee:
Matthew K. Szot (Chair)
Delphine François Chiavarini
Marc Dumont
Jake S. Leach
OTHER MATTERS
Stockholder Communications with the Board of Directors and Board Attendance at AnnualSpecial Stockholder Meetings
Our stockholders may, at any time, communicate in writing with any member or group of members of our boardBoard of directorsDirectors by sending such written communication to the attention of our Secretary by regular mail to our principal executive offices.
Copies of written communications received by our Secretary will be provided to the relevant director(s) unless such communications are considered, in the reasonable judgment of our Secretary, to be improper for submission to the intended recipient(s). Examples of stockholder communications that would be considered improper for submission include, without limitation, customer complaints, solicitations, communications that do not relate directly or indirectly to us or our business, or communications that relate to improper or irrelevant topics.
The chair of the boardBoard of directorsDirectors is expected to make all reasonable efforts to attend our annualspecial meeting of stockholders. If our board chair is unable to attend an annuala meeting of stockholders for any reason, at least one other member of the boardBoard of directorsDirectors is expected to attend. Other members of the boardBoard of directorsDirectors are expected to attend our annual meeting of stockholders if reasonably possible. All of our directors attended our 2022 annual meeting of stockholders.
Proxy Materials Delivered to a Shared Address
Stockholders who have the same mailing address and last name may have received a notice that your household will receive only one Notice. This practice, commonly referred to as “householding,” is designed to reduce the volume of duplicate information and reduce printing and postage costs. A single Notice will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice, from the Company or from your bank, broker or other registered holder, that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. A number of banks, brokers and other registered holders with account holders who are our stockholders household our proxy materials. If you hold your shares in street name, and no longer wish to participate in householding and would prefer to receive separate proxy materials in the future, or currently receive multiple copies of the proxy materials and would like to request householding, please notify your bank, broker or other registered holder. If you are a holder of record, and no longer wish to participate in householding and would prefer to receive separate proxy materials in the future, or currently receive multiple copies of the proxy materials and would like to request householding, please notify us in writing at SenesTech, Inc., 23460 N. 19th19th Avenue, Suite 110, Phoenix, ArizonaAZ 85027, Attention: Secretary, or by telephone at (928) 779-4143. Any stockholder residing at a shared address to which a single copy of the proxy materials was delivered who wishes to receive a separate copy of our proxy statement may obtain a copy by written request addressed to SenesTech, Inc., 23460 N. 19th19th Avenue, Suite 110, Phoenix, ArizonaAZ 85027, Attention: Secretary. We will deliver a separate copy of our proxy statement to any stockholder who so requests in writing promptly following our receipt of such request.
Transaction of Other Business
Our boardBoard of directorsDirectors knows of no other matters to be submitted at the AnnualSpecial Meeting. If any other business is properly brought before the AnnualSpecial Meeting, proxies will be voted in respect thereof as the proxy holders deem advisable.
ANNEX A
We will provide, without charge upon
FORM OF
CERTIFICATE OF AMENDMENT TO
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
SENESTECH, INC.
SENESTECH, INC., a corporation organized and existing under the written requestGeneral Corporation Law of any beneficial ownerthe State of Delaware (the “Corporation”), does hereby certify as follows:
1.The name of the Corporation is SenesTech, Inc.
2.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 Amended and Restated Certificate of Incorporation of the Corporation and declaring said amendment to be advisable. The requisite stockholders of the Corporation have duly approved the proposed amendment in accordance with Section 242 of the General Corporation Law of the State of Delaware. The amendment amends the Amended and Restated Certificate of Incorporation of the Corporation as follows:
3.Article IV of the Amended and Restated Certificate of Incorporation is hereby amended by deleting the last paragraph of Article IV in its entirety and adding the following paragraph as the last paragraph of such Article IV.
“Upon the filing and effectiveness (the “Effective Time”) of this Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Corporation, each [•](1) shares of ourthe Corporation’s common stock, par value $0.001 per share (“Common Stock”), issued and outstanding or held by the Corporation in treasury stock immediately prior to the Effective Time shall automatically be combined into one (1) validly issued, fully paid and non-assessable share of Common Stock without any further action by the Corporation or the holder thereof, subject to the treatment of fractional interests as described below. Notwithstanding the immediately preceding sentence, no fractional shares will be issued in connection with the reverse stock split. Stockholders of record who otherwise would be entitled to votereceive fractional shares, will automatically be entitled to rounding up of their fractional share to the nearest whole share. No stockholders will receive cash in lieu of fractional shares. Each certificate that immediately prior to the Effective Time represented shares of Common Stock shall thereafter automatically and without the necessity of presenting the same for exchange, subject to the adjustment for fractional shares as described above, represent that number of whole shares of Common Stock into which the shares of Common Stock formerly represented such certificate shall have been combined, provided however, that each person of record holding a certificate that represented shares of Common Stock that were issued and outstanding immediately prior to the Effective Time shall receive, upon surrender of such certificate, a new certificate evidencing and representing the number of whole shares of Common stock after the Effective Time into which the shares of Common Stock formerly represented by such certificate shall have been combined.”
4.The foregoing amendment shall become effective on , 20 , at the Annual Meeting, a copy of our 2022 Annual Report, as filed with the SEC, but excluding exhibits. Written requests should be mailed to our principal executive offices, located at: SenesTech, Inc., 23460 N. 19th Avenue, Suite 110, Phoenix, Arizona 85027, Attention: Secretary.12:01 a.m, Eastern Time.
1 To be any number between and including 2 and 12, at the discretion of the board of directors.
IN WITNESS WHEREOF, SenesTech, Inc. has caused this Certificate of Amendment to be executed as of this , 20 .
| | | | | | | | |
| SENESTECH, INC. |
| By: | |
| | Name: |
| | Title: |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: Signature (Joint Owners)Signature [PLEASE SIGN WITHIN BOX] DateDate SCAN TO VIEW MATERIALS & VOTE 0 0 0 0 0 0 0 0 0 0 0 00 00 61 37 29 _1 R 1. 0. 0. 6 SENESTECH, INC. C/O TRANSFER ONLINE, INC. 512 SE SALMON STREET PORTLAND, OR 97214 VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 06/25/2023. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on 06/25/2023. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. The Board of Directors recommends you vote FOR the following: 1. To elect the nominees listed below as Class I directors, each to serve for a three-year term until 2026; Nominees For Withhold 1A Jake S. Leach The Board of Directors recommends you vote FOR proposals 2, 3 and 4. For Against Abstain 2 To provide a non-binding advisory vote on the compensation of our named executive officers for fiscal 2022 ("say-on-pay"). 3 To approve an amendment to our 2018 Equity Incentive Plan to increase the number of shares available for issuance under the 2018 Plan by 500,000 shares (the "2018 Plan Amendment"). 4 To ratify the appointment of M&K CPAS, PLLC as our independent registered public accounting firm for the fiscal year ending December 31, 2023. NOTE: To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
00 00 61 37 29 _2 R 1. 0. 0. 6 This communication presents only an overview of the more complete proxy materials that are available on the internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Form 10-K are available at www.proxyvote.com SENESTECH, INC. Annual Meeting of Stockholders Monday, June 26, 2023 12:00 P.M. MST This proxy is solicited by the board of directors This proxy will be voted at the annual meeting of stockholders of SenesTech, Inc. (the “Company”) by Joel L. Fruendt and Thomas C. Chesterman (the “Proxy Holders”), as directed. By signing on the reverse side of this ballot, you hereby grant to the Proxy Holders your revocable proxy to vote all of your shares of Company common stock as directed. If no direction is indicated, it will be voted “FOR” the election of the nominee director; "FOR" the say-on-pay proposal; "FOR" the 2018 Plan Amendment proposal; "FOR" the ratification of the appointment of M&K CPAS, PLLC as the independent registered public accounting firm of the Company; and as to such other business as may properly come before the meeting as the Proxy Holders deem advisable. Continued and to be signed on reverse side
