WHERE YOU CAN FIND MORE INFORMATION
We are subject to the S1.
The process of the Ordinary Shares becoming shares tradable on the OTCBB will be carried out in accordance with the U.K law requirement for a notarial deed of share transfer. The details relating to issuance of common stock tradable on the OTCBB will be provided in a further announcement, will be made available to Shareholders on the Company’s website at www.nwbio.com. and will be provided directly by letter or e-mail where necessary.
The issuance of shares of common stock on the U.S. OTCBB does not provide any guarantee of liquidity in trading in the Company’s Ordinary Shares.
CORPORATE GOVERNANCE MATTERS
Director Independence
In making director independence determinations, the Board utilizes the independence criteria included in the listing standards of the NASDAQ Stock Market (“NASDAQ”) and, with respect to independence determinations for members of our Audit Committee, thereporting requirements of Rule 10A-3 under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). For a director to be considered independent under NASDAQ listing standards, the Board must affirmatively determine that the director has no relationship that would interfereand file annual, quarterly and current reports, proxy statements and other information with the exercise of independent judgment in carrying out his or her responsibilities as a director. Linda F. Powers, who is a member of each of our three standing committees (described below)SEC. You may read and copy these reports, proxy statements and other information at the SEC’s public reference facilities at 100 F Street, N.E., does not qualify as an “independent director” under NASDAQ listing standards or Rule 10A-3.
We are considered a “controlled company” under NASDAQ listing standards because a group holds more than 50% of the voting power. As such, NASDAQ listing standards do not require a majority of our Board to consist of independent directors.
Committees of the Board of Directors
Our Board of Directors consists of one non-employee director, Linda F. Powers, and one employee director, Alton L. Boynton . Both directors fulfill the dutiesRoom 1580, Washington, D.C. 20549. You can request copies of these committees.
The Board has established three standing committees: the Audit Committee, the Compensation Committee and the Nominations Committee. It is the Board’s intention to appoint additional independent non-employee directorsdocuments by writing to the BoardSEC and to these committees in due course.
Audit Committee
The Audit Committee’s primary responsibilities are to assist the Board in overseeing (a) our accounting and financial principles and policies and our internal controls and procedures, (b) the preparation of our financial statements and the financial information we provide to our stockholders and (c) the independence, qualifications and performance of our independent public accountants and our annual audit. Within these general areas of responsibility, the Audit Committee is solely responsiblepaying a fee for the selection, compensation and oversight of our independent public accountants and our annual audit process. The committee also is responsible for reviewing our audited and interim financial statements and overseeing our internal control, disclosure controls and procedures and matters related to our code of conduct. The Board has adopted a written charter forcopying cost. Please call the Audit Committee, a copy of which is attached to this proxy statement as Appendix A. The Board has determined that Linda F. Powers is not an “independent director” under NASADQ listing standards or Rule 10A-3 under the Exchange Act because of her affiliation with Toucan Capital Fund II, LP (“Toucan Capital”) and Toucan Partners, LLC (“Toucan Partners”), which, collectively, hold approximately 48.5% of our outstanding common stock and loaned significant amounts of capital to us. See “Transactions with Related Persons”SEC at 1-800-SEC-0330 for more information on our relationship with Toucan Capital and Toucan Partners.
Compensation Committee
The Compensation Committee’s primary responsibilities are to determineabout the overall compensation levels of our executive officers, assist the Board in determining compensation levels for our non-employee directors and administer our equity compensation plans. The Board has adopted a written charter for the Compensation Committee, a copy of which is attached to this proxy statement as Appendix B.
Nominations Committee
The Nominations Committee’s primary responsibilities are to identify and nominate membersoperation of the Board, recommend directors to be appointed to Board committees andpublic reference facilities. SEC filings are also available at the chairs of such committees, and overseeSEC’s website at http://www.sec.gov. Our Common Stock is listed on the annual evaluationOTCQB tier of the Board. The Board has adopted a written charter forOTC Markets, and you can read and inspect our filings at the Nominations Committee, a copyoffices of which is attached to this proxy statement as Appendix C. The Nominations Committee will consider nominees recommended by stockholders pursuant to the procedures outlined in the Company’s bylaws and as set forth below.Financial Industry Regulatory Authority, Inc. at 1735 K Street, Washington, D.C. 20006.
Board and Committee Meetings
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The BoardSEC allows us to “incorporate by reference” information that we file with them. Incorporation by reference allows us to disclose important information to you by referring you to those other documents. The information incorporated by reference is an important part of Directors met five times during the fiscal year ended December 31, 2008this Proxy Statement, and 2 times during the period from January 1, 2009 through July 20, 2009. All directors attended at least 75% of the meetings of the Board and of the committees on which they served. The Audit Committee met four times during the fiscal year ended December 31, 2008 and two times during the period from January 1, 2009 through July 20, 2009. The Compensation Committee met one time during the fiscal year ended December 31, 2008 and once from the period from January 1, 2009 through July 20, 2009. The Nominations Committee held no meetings during the fiscal year ended December 31, 2008 and the period from January 1, 2008 through July 20, 2009.
The Nominations Committee is responsible for annually reviewinginformation that we file later with the Board the requisite skillsSEC will automatically update and criteria for prospective directors and the structure, size and composition of the Board as a whole. Although there are no set criteria considered by the Nominations Committee in evaluating potential director nominees, the committee does consider the skills and expertise that will be needed to be represented on the Board, succession planning and the time commitments required of directors.
For a stockholder to submit a candidate for the consideration of the Nominations Committee, the stockholder must timely notify our corporate secretary at the address set forth under “Communication with the Board of Directors” below. To make such a nomination in advance of the next year’s annual meeting, a stockholder must provide written notification to our secretary not less than 120 days nor more than 150 days in advance of the first anniversary of the date on which the proxy statement in connection with the previous year’s annual meeting was first mailed. However, if we do not hold an annual meeting or the date of such annual meeting of has been changed by more than 30 days from the date first contemplated by the previous year’s proxy statement, we must receive the stockholder’s notice at least 80 days prior to the date on which we distribute the proxy statement with respect to the upcoming meeting.
supersede this information. The notice must include the information specified in our bylaws, including the following: (a) as to each proposed nominee (i) such person’s exact name, (ii) such person’s age, principal occupation, business address and telephone number, and residence address and telephone number, (iii) the number of shares (if any) of each class of our capital stock beneficially owned by each such nominee, and (iv) any other information concerning the nominee that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Exchange Act (including such person’s notarized written acceptance of such nomination, consent to being named in the proxy statement as a nominee and statement of intention to serve as a director if elected); and (b) as to the stockholder giving the notice (i) the name and address, as they appear in our records, of such stockholder; (ii) the class and number of our shares which are beneficially owned by such stockholder; and (iii) the dates upon which such stockholder acquired such shares of stock and documentary support for any claims of beneficial ownership. In addition, notices must include a description of all arrangements or understandings between the stockholder giving the notice and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by such stockholder.
Code of Ethics
We have adopted a code of ethics, as defined by Item 406 of Regulation S-K. Our code of ethics is applicable to the chief executive officer, the chief financial officer, the principal accounting officer or persons performing similar functions. We have posted the code of ethics on our website and it may be accessed at www.nwbio.com/about_code.php. In addition, we will post on our website any amendments to our code of ethics and any waivers under the code granted to any of our directors or executive officers.
Communication with the Board of Directors
We have established a procedure by which our stockholders may communicate directly with our Board. All communications should be in written form and directed to our corporate secretary at the following address:
Northwest Biotherapeutics, Inc.
7600 Wisconsin Avenue, Suite 750
Bethesda, Maryland 20814
Attention: Secretary
NON-EMPLOYEE DIRECTOR COMPENSATION
The following table sets forth certain information concerning compensation paid or accrued to the Company’s directors during the year ended December 31, 2008. Only our non-employee directors receive director fees.
Name and Principal Position | | Year | | Fees Earned or Paid in Cash | | | All Other Compensation (1) | | | Total | |
Linda F. Powers | | 2007 | | $ | 60,970 | | | $ | — | | | $ | 60,970 | |
Chairperson of the Board of Directors | | | | | | | | | | | | | | |
Effective June 22, 2007,documents we are required to pay Linda F. Powers, as Chairperson and a non-executive member of the Board, £50,000 (approximately $100,000) per annum for her services.incorporating by reference are:
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EXECUTIVE COMPENSATION
Report of the Compensation Committee
We, the Compensation Committee of the Board of Directors, have reviewed and discussed the Compensation Discussion and Analysis (“CD&A”) within the Executive Compensation section of this proxy statement with the Company’s management. Based on such review and discussion, we have recommended to the Board that the CD&A be included in this proxy statement and the Company’sOur Annual Report on Form 10-K for the fiscal year endingended December 31, 2008.
2016, filed on April 17, 2017; Our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2017, June 30, 2017 and September 30, 2017, filed on May 15, 2017, August 21, 2017 and November 20, 2017, respectively;
The material in this report of the Compensation Committee is not “soliciting material,” is not deemed “filed”•
Our Current Reports on Form 8-K filed with the SEC on January 19, 2017, February 8, 2017, March 7, 2017, March 10, 2017, March 23, 2017 (both filings), April 5, 2017, April 7, 2017, April 25, 2017, May 26, 2017, May 31, 2017, June 13, 2017, June 19, 2017, June 27, 2017, July 21, 2017, July 26, 2017, August 7, 2017 (both filings), August 8, 2017, September 22, 2017 (with regards to the first filing only), October 16, 2017, November 21, 2017, December 7, 2017, December 21, 2017 (with regards to Items 3.03 and is not5.03 only), January 4, 2018, January 5, 2018, January 16, 2018, January 25, 2018, February 21, 2018, March 2, 2018, March 7, 2018, March 15, 2018 and March 20, 2018;
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Our Definitive Proxy Statement on Schedule 14A, filed on January 9, 2018;
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All of our filings pursuant to the Exchange Act after the date of filing this Proxy Statement and prior to completion of the solicitation of proxies made hereby; and
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The description of our Common Stock contained in our Registration Statement on Form 8-A filed on November 14, 2012, including any amendments or reports filed for the purpose of updating that description.
In addition, all documents (other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed in such forms that are related to such items unless such Form 8-K expressly provides to the contrary) subsequently filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, are deemed to be incorporated by reference into, anyand to be a part of, our filings under the Securities Actthis Proxy Statement.
We will furnish without charge to you, on written or the Exchange Act, whether made before or after the date hereof and irrespectiveoral request, a copy of any general incorporation language contained in such filing.
Compensation Discussion and Analysis
Our Process
Typically, our executive compensation is comprehensively assessed and analyzed annually; however, given our limited funding since 2002, our executives have received infrequent increases in their compensation. During 2008, our executives did not receive an increase in their base salaries. During 2007, our Chief Technical Officer received an increase in base salary based on performance and in order to take steps to be more competitive in the market. During 2008, our executives also received equity based incentives. Normally, the review process includes, but is not limited to, the following steps:
| · | The Compensation Committee reviews the performance of the Chief Executive Officer and other senior executives; |
| · | The current annual compensation of senior management and long-term compensation grants made over the past few years are reviewed; |
| · | The appropriate performance metrics and attributes of annual and long-term programs for the next year are considered and discussed; |
| · | The entirety of our compensation program is considered; |
| · | For our top officers, if peer group compensation is available for their position, we use a blend of survey and peer compensation for comparison, as we compete not only in our own market, but nationally and across industries, for talent; |
| · | The compensation practices of our peer companies are reviewed, including their practices with respect to equity and other grants, benefits and perquisites; |
| · | The compensation of our management team from the standpoint of internal equity, complexity of the job, scope of responsibility and other factors is assessed; and |
| · | Management’s stock ownership is reviewed. |
Management has the following involvement with the executive compensation process:
| · | The Chief Executive Officer reviews recommendations from the Chief Financial Officer regarding salaries, annual and long-term incentive targets, and plan amendments and design before recommendations are submitted to the Compensation Committee for approval; and |
| · | The Chief Executive Officer and Chief Financial Officer are both involved in establishing and recommending to the Compensation Committee financial goals for the incentive programs based on management’s operational goals and strategic plans. |
Compensation Goals
Our philosophy regarding executive compensation is to attract and retain highly qualified people by paying competitive salaries, and to link the financial interests of our senior management to those of our stockholders by tying compensation to the achievement of operational and financial objectives. Our compensation package for our officers includes both short-term and long-term features in the forms of base salary and equity-based incentives in the form of stock options, which are granted periodically at the discretion of the Compensation Committee.
Elements of Executive Compensation
Base Salaries
Base salaries for all executive officers are reviewed annually. The Compensation Committee reviews the compensation of the President and Chief Executive Officer. The President and Chief Executive Officer reviews the compensation of the other executive officers. The Compensation Committee also consults with the President and Chief Executive Officer with respect to the compensation package for all other executive officers. In evaluating salaries, each officer’s individual performance during the prior year, as well as salary levels in the biotechnology industry for comparable positions are considered. In determining how the respective officer contributes to the Company, current corporate performance, as well as the potential for future performance gains, is considered. No specific weight is attributed to the foregoing for purposes of determining base salaries.
Equity-Based Incentives
We provide our executive officers with long-term incentives through our 1998 Plan, 1999 Plan, 2001 Plan, Employee Plan and beginning in 2007, our 2007 Stock Option Plan (each, as defined under “Equity Plans” below), all described in more detail below. On June 22, 2007, we amended the 1998 Plan, 1999 Plan, 2001 Plan and Employee Plan such that no further stock option grants may be made under any of such plans. The primary objective of these plans is to provide an incentive for employees, including our executive officers, to make decisions and take actions that maximize long-term stockholder value. The plans are designed to promote this long-term focus by using discretionary grants and long-term vesting periods. Subject to the terms of the plans, the Compensation Committee determines the terms and conditions of options granted under the plans, including the exercise price, which is based on fair value of our stock on the date of grant. For various motivation and retention considerations, option awards granted subsequent to our initial public offering in December 2001 generally vest over four years. The Compensation Committee believes that stock options provide an incentive for employees, allowing us to attract and retain high quality management and staff. Although, we did not issue any stock options to our executives during the year ended December 31, 2006, we did issue stock options to our executives in 2007. No stock options were issued to our executives in 2008.
Employee and Executive Benefits
Our executives participate in many of the same employee benefit programs as our other employees. The core employee benefit programs include a tax-qualified retirement plan, medical coverage, dental coverage, life insurance, disability coverage, and vacation. The tax qualified retirement plan is a 401(k) plan. We made matching contributions to each employee’s 401(k) plan account of $0.50 for each dollar contributed on the first $3,000 of compensation contributed to the plan. Our matching contribution policy was terminated effective March 2006. All of these matching contribution amounts to our Named Executive Officers are shown in the All Other Compensation footnote to the Summary Compensation Table following this section.
Perquisites
Historically, we have offered only a very limited number of perquisites to our executives as an incremental benefit to recognize their position within the Company. No perquisites of any kind were offered to executives in 2008.
Compensation of the President and Chief Executive Officer
In assembling the compensation package for our President and Chief Executive Officer, the Compensation Committee considers our annual and long-term performance, the performance of the President and Chief Executive Officer, and our cash resources and needs. Although the Committee’s overall goal is to set the President and Chief Executive Officer’s salary at the median level for competitors that are similar in industry size and performance, the actual level approved by the Committee may be higher or lower based upon the Committee’s subjective evaluation of the foregoing. Consistent with the foregoing, the Compensation Committee set the base salary for the President and Chief Executive Officer at $331,250 for fiscal 2008. The President and Chief Executive Officer did not receive a bonus for 2008. In connection with our initial public offering on the Alternative Investment Market of the London Stock Exchange (“AIM”), the Board of Directors committed to award the President and Chief Executive Officer an option to purchase shares of our common stock. This stock option award, which is shown in the “Grants of Plan-Based Awards” table below, was granted in December 2007.
Accounting for Stock-based Compensation
Effective January 1, 2006, we measure and recognize compensation expense in accordance with SFAS 123(R), which requires that compensations expense relating to share-based payment transactions be recognized in the financial statements based on the fair value of the equity or liability instruments issued.
Prior to January 1, 2006, we accounted for our stock-based compensation plans under the measurement and recognition provision of APB 25, and related interpretations. Under this method, stock option awards generally did not result in compensation expense, since their exercise price was typically equal to the market price of our common stock on the date of grant.
The Compensation Committee considers the accounting treatment of equity and performance based compensation when approving awards.
Summary Compensation
We did not issue any option or stock awards to our executives in the year ended December 31, 2006. The Company granted options to its executive officers and management in December 2007.
Summary Compensation Table
The following table sets forth certain information concerning compensation paid or accrued to the Company’s named executive officers, as determined in accordance with Item 402(a) of Regulation S-K (the “Named Executive Officers”), during the years ended December 31, 2008 and 2007.
Summary Compensation Table
The following table sets forth certain information concerning compensation paid or accrued to our named executive officers (the “Named Executive Officers”) during the years ended December 31, 2008, 2007 and 2006.
Name and Principal Position | | Year | | Salary | | | Bonus | | | Option Awards(3) | | | All Other Compensation(1) | | | Total | |
| | | | | | | | | | | | | | | | | | | | | | |
Alton L. Boynton, Ph.D. | | 2008 | | $ | 331,250 | | | | — | | | $ | — | | | $ | 504 | | | $ | 331,754 | |
President, Chief Executive | | 2007 | | $ | 331,250 | | | | — | | | $ | 2,011,680 | | | $ | 1,828 | | | $ | 2,344,758 | |
Officer, Chief Scientific Officer and Secretary(2) | | 2006 | | $ | 330,802 | | | | — | | | | — | | | $ | 2,993 | | | $ | 333,795 | |
| | | | | | | | | | | | | | | | | | | | | | |
Marnix L. Bosch, Ph.D., M.B.A. | | 2008 | | $ | 250,000 | | | | — | | | $ | — | | | $ | 672 | | | $ | 250,672 | |
Chief Technical Officer | | 2007 | | $ | 224,980 | | | | — | | | $ | 471,661 | | | $ | 482 | | | $ | 697,123 | |
| | 2006 | | $ | 167,021 | | | | — | | | $ | 1,344 | | | $ | 982 | | | $ | 169,347 | |
(1) | All Other Compensation for the years ended December 31, 2008, 2007 and 2006 consisted of Company-paid premiums on term life insurance coverage up to 1.5 times the employee’s annual salary and earned but unpaid accrued vacation payments. Additionally in 2006, we provided matching contributions to the employee’s 401(k) plan accounts up to a maximum of $3,000. |
(2) | Dr. Boynton was appointed as our Chief Executive Officer in June 2007. Dr. Boynton served as our Chief Operating Officer and our principal executive officer during 2006. |
(3) | Represents the amount recognized for financial statement reporting purposes for 2008, 2007 and 2006 in respect of outstanding option awards in accordance with SFAS 123(R), excluding any impact of assumed forfeiture rates. The assumptions made in valuing option awards reported in this column are discussed in Note 3, Stock-Based Compensation Plans to our consolidated financial statements for the years ended December 31, 2008, 2007 and 2006, included elsewhere in this Annual Report on Form 10-K. |
Given our financial status, there are no regularly scheduled increases in compensation.
Grants of Plan-Based Awards in 2008
The following table provides information about equity awards granted to the Named Executive Officers during the year ended December 31, 2007. We did not grant any stock appreciation rights or restricted stock to Named Executive Officers during the fiscal year ended December 31, 2007. Grants of stock options were made under the 2007 Plan. No equity awards were granted in 2008 and some vested stock options were forfeited.
Name | | Grant Date | | All Other Option Awards: Number of Securities Underlying Options | | | Exercise or Base Price of Option Awards(3) | | | Grant Date Closing Price of Common Stock | | | Grant Date Value of Option Awards(4) | |
Dr. Alton Boynton (1) | | 12/31/2007 | | | 2,807,048 | (1) | | $ | 0.60 | | | $ | 2.54 | | | $ | 7,016,782 | |
Dr. Marnix L. Bosch(2) | | 12/31/2007 | | | 1,081,539 | (4) | | $ | 0.60 | | | $ | 2.54 | | | $ | 2,703,524 | |
(1) | This option was granted under the 2007 Stock Option Plan. This option grant vests over a three and one-half year period. Approximately 29% the option grant was vested immediately upon grant with respect to prior service performed. Approximately 17% vests on the first anniversary of the AIM offering (June 22, 2008) and the remaining portion vests in equal monthly installments over the remaining three year vesting period. |
(2) | This option was granted under the 2007 Stock Option Plan. This option grant vests over a three and one-half year period. Approximately 19% of the option grant was vested immediately upon grant with respect to prior service performed. Approximately 21% vests on the first anniversary of the AIM offering (June 22, 2008) and the remaining portion vests in equal monthly installments over the remaining three year vesting period. |
(3) | This column shows the exercise price of stock option awards. The exercise prices of the options granted to Messrs. Boynton and Bosch are equal to the conversion price of warrants issued to Toucan Partners under the Conversion Agreement. |
(4) | This column shows the full grant date fair value of stock options under SFAS No. 123(R) granted to the Named Executive Officers in 2007. Generally, the grant date fair value is the amount that the Company would record as compensation expense in its financial statements over the award’s vesting schedule, excluding the impact of forfeiture assumptions. |
Grants of Plan-Based Awards in 2008
The following table provides information about equity awards granted to the Named Executive Officers during the year ended December 31, 2008. We did not grant any stock options, stock appreciation rights or restricted stock to Named Executive Officers during the fiscal year ended December 31, 2008.
Outstanding Equity Awards at Fiscal Year-End
The following table shows outstanding stock option awards classified as exercisable and unexercisable as of December 31, 2008.
(a) | | (b) | | | (c) | | | (d) | | (e) |
| | Number of Securities | | | Number of Securities | | | Option | | |
| | Underlying Unexercised | | | Underlying Unexercised | | | Exercise | | Option |
| | Options (#) | | | Options (#) | | | Price | | Expiration |
Name | | Exercisable | | | Unexercisable | | | ($) | | Date |
Alton L. Boynton | | | 11,014 | (1) | | | 0 | | | $ | 12.85 | | 11/16/09 |
| | | 5,286 | (1) | | | 0 | | | | 18.75 | | 04/18/11 |
| | | 6,666 | (1) | | | 0 | | | | 1.35 | | 2/18/13 |
| | | 125,142 | (2) | | | 1,251,420 | | | | 0.60 | | 12/31/11 |
Anthony P. Deasey(3) | | | — | | | | — | | | | | | |
Marnix L. Bosch | | | 1,000 | (4) | | | 0 | | | | 12.75 | | 5/16/10 |
| | | 333 | (4) | | | 0 | | | | 18.75 | | 11/14/10 |
| | | 333 | (4) | | | 0 | | | | 18.75 | | 09/20/11 |
| | | 833 | (4) | | | 0 | | | | 75.00 | | 01/10/12 |
| | | 3,194 | (4) | | | 139 | | | | 1.35 | | 2/18/13 |
| | | 4,000 | (4) | | | 1,333 | | | | 1.80 | | 12/01/13 |
| | | 273,502 | (5) | | | 558,038 | | | | 0.60 | | 12/31/11 |
(1) | These options were granted under the 1999 Plan, the 2001 Plan and under Dr. Boynton’s previous employment agreement. Each of these option grants vests over a four year period. One-fourth of each option grant vests on the first anniversary of the grant date and the remaining three-fourths of each grant vests in equal monthly installments over the remaining three year vesting period. |
(2) | This option was granted under the 2007 Stock Option Plan. This option grant vests over a three and one-half year period. Approximately 29% the option grant was vested immediately upon grant with respect to prior service performed. Approximately 17% vests on the first anniversary of the AIM offering (June 22, 2008) and the remaining portion vests in equal monthly installments over the remaining three year vesting period. These options were granted in recognition of past service to the Company and have an exercise price of $0.60 per share, which is equal to the conversion price of warrants issued to Toucan Partners under the Conversion Agreement. In accordance with Dr. Boynton’s option agreement as options to 1,430,846 shares had not been exercised as of December 31, 2008 such options were forfeited. |
(3) | Mr. Deasey resigned on August 12, 2008 and in accordance with his option agreement all of his vested and unvested options were forfeited. |
(4) | These options were granted under the 1999 Plan and the 2001 Plan. Each of these option grants vests over a four year period. One-fourth of each option grant vests on the first anniversary of the grant date and the remaining three-fourths of each grant vests in equal monthly installments over the remaining three year vesting period. |
(5) | This option was granted under the 2007 Stock Option Plan. This option grant vests over a three and one-half year period. Approximately 19% of the option grant was vested immediately upon grant with respect to prior service performed. Approximately 21% vests on the first anniversary of the AIM offering (June 22, 2008) and the remaining portion vests in equal monthly installments over the remaining three year vesting period. These options were granted in recognition of past service to the Company and have an exercise price of $0.60 per share, which is equal to the conversion price of warrants issued to Toucan Partners under the Conversion Agreement. In accordance with Dr. Bosch’s option agreement as options to purchase 250,000 shares had not been exercised as of December 31, 2008 such options were forfeited. |
Option Exercises and Stock Vested
No options were exercised by and no stock awards vested for the Named Executive Officers during 2007.
Pension Plans, Deferred Compensation and Severance Agreements
We do not currently offer any such plans or compensation or have any such agreements in place.
Employment Agreements, Termination and Change-in-Control Arrangements
On June 22, 2007, an employment agreement between the Company and Alton L. Boynton, Ph.D. became effective. Under the terms of the agreement, Dr. Boynton is employed as President and Chief Executive Officer of the Company. Pursuant to the terms of the agreement, Dr. Boynton is paid annual compensation of $331,250 for his services. The agreement provides for standard benefits, including coverage under our medical, dental, vision, life and disability polices. Dr. Boynton is eligible to participate in our 401(k) plan and to receive a bonus at the discretion of the Board. In connection with his employment with us, Dr. Boynton is subject to a noncompetition obligation for one year following the termination of his employment with us.
Except as relates to the vesting of Dr. Boynton’s stock options, Dr. Boynton is not entitled to any benefits upon the termination of his employment or a change-in-control of the Company under his employment agreement. With respect to Dr. Boynton’s stock options,
| · | if his employment with us is terminated for Cause (as defined below), Dr. Boynton’s unvested stock options as of the date of termination will be forfeited, and Dr. Boynton’s stock options that have vested as of the date of termination will expire 24 hours after such termination date. “Cause” is defined under Dr. Boynton’s employment agreement as, but is not limited to, malfeasance, material non-performance or materially inadequate performance by Dr. Boynton of his duties to us following written notice or other communication from the Board of such inadequate performance and a one-time reasonable cure period. |
| · | if his employment with us is terminated without Cause, Dr. Boynton’s unvested stock options will continue to vest in accordance with their respective vesting schedules and will be exercisable during their full exercise period, if Dr. Boynton (a) executes a separation and release agreement reasonably acceptable to the Company and (b) agrees not to do not work for or with a company that is developing immunotherapies for cancer in any capacity (including as an employee, director, adviser or collaborator) while any vesting period is continuing. |
| · | if Dr. Boynton resigns from his employment with us for any reason, Dr. Boynton’s unvested stock options as of the date of resignation will be forfeited. If Dr. Boynton resigns upon at least 90 days advance notice, and during the period between the giving of his resignation notice and the effective date of his resignation, devotes his best efforts, in good faith, to our business and any personnel transition, then his stock options which have vested as of the effective date of his resignation will be exercisable for 90 days following the last day of his employment with us. If Dr. Boynton’s resignation does not comply with the notice, best efforts and good faith requirements described above, and then his stock options which have vested as of the effective date of his resignation will be exercisable for 15 days following the last day of his employment with us. |
Equity Plans
We maintain several plans under which our directors and employees may be granted equity awards, generally in the form of stock options. A brief description of these plans follows. Effective June 22, 2007, we amended our then-existing equity plans other than the 2007 Plan such that no further option grants may be made under those plans. Currently, equity grants may be made only under the 2007 Plan.
1998 Stock Plan
The 1998 Stock Plan (the “1998 Plan”) was adopted by our Board in July 1998 and approved by our stockholders in February 1999. This plan provided for the grant to our employees, including officers and employee directors, of “incentive stock options” within the meaning of Section 422 of the Code, and for the grant of non-statutory stock options to our employees, officers, directors, including non-employee directors, and consultants. To the extent an optionee would have the right in any calendar year to exercise for the first time one or more incentive stock options for shares having an aggregate fair market value, under all of our plans and determined as of the grant date, in excess of $100,000, any such excess options will be treated as non-statutory options. A total of 27,535 shares of our common stock have been reserved for issuance under this plan and, as of December 31, 2007, net of forfeitures, a total of 23,783 of such shares remained available for additional option grants.
The Compensation Committee serves as the administrator of our 1998 Stock Plan. Subject to the terms of this plan, the administrator determines the terms of options granted, including the number of shares subject to the option, exercise price, term and exercisability. The exercise price of all incentive stock options granted under this plan must be at least equal to the fair market value of our common stock on the date of grant. The exercise price of any incentive stock option granted to an optionee who owns stock representing more than 10% of the total combined voting power of our outstanding capital stock, or a 10% Stockholder, must be at least equal to 110% of the fair market value of our common stock on the date of grant. The exercise price of all non- statutory stock options cannot be less than 85% of the fair market value of our common stock on the date of grant, and in the case of 10% Stockholders, the exercise price cannot be less than 110% of the fair market value of our common stock. The term of options granted under this plan may not exceed 10 years, and the term of an incentive stock option granted to a 10% Stockholder may not exceed five years. An option may not be transferred by the optionee other than by will or the laws of descent or distribution. Each option may be exercised during the lifetime of the optionee only by such optionee. Generally, each option granted under this plan becomes exercisable as to 25% of the total number of shares subject to the option after the first anniversary following the date of grant, with subsequent equal monthly vesting over three years, subject to the optionee’s continued relationship with us as an employee, director or consultant, as the case may be.
Our Board has the authority to amend or terminate this plan, but such action will not adversely affect any outstanding option without the optionee’s consent. If not terminated earlier, this plan will terminate in July 2008.
1999 Executive Stock Plan
The 1999 Executive Stock Plan (the “1999 Plan”) was adopted by our Board in November 1999. This plan provided for the grant of non-statutory stock options to our employees, officers, directors, including non-employee directors, and consultants. A total of 39,078 shares of our common stock have been reserved for issuance under this plan, and, as of December 31, 2007, net of forfeitures, a total of 28,064 shares remained available for granting under this plan.
The Compensation Committee serves as the administrator of this plan. Subject to the terms of this plan, the administrator determines the terms of options granted, including the number of shares subject to the option, exercise price, term and exercisability. The exercise price of options under this plan cannot be less than 85% of the fair market value of our common stock on the date of grant and, in the case of 10% Stockholders, the exercise price cannot be less than 110% of the fair market value of our common stock on the date of grant. The term of options granted under this plan may not exceed 10 years. An option may not be transferred by the optionee other than by will or the laws of descent or distribution. Each option may be exercised during the lifetime of the optionee only by such optionee. Each option granted under this plan becomes exercisable as to 25% of the total number of shares subject to the option on the first anniversary following the date of grant, with subsequent equal monthly vesting over three years, subject to the optionee’s continued relationship with us as an employee or consultant.
Our Board has the authority to amend or terminate this plan, but such action will not adversely affect any outstanding option without the optionee’s consent. If not terminated earlier, this plan will terminate in November 2009.
2001 Stock Plan
The 2001 Stock Plan (the “2001 Plan”) was both adopted by our Board and approved by our stockholders in June 2001. A total of 120,000 shares of our common stock were initially reserved for issuance under this plan. This plan was intended to provide for the grant to our employees, including officers and employee directors, of “incentive stock options” within the meaning of Section 422 of the Code and for the grant of non-statutory stock options to our employees and consultants. The number of shares available for grant under this plan is subject to an automatic annual increase in an amount equal to the lesser of (i) 15% of the aggregate number of shares available for granting for the immediately preceding year; or (ii) 20,000 shares. As of December 31, 2007, net of forfeitures, a total of 162,603 shares remained available under this plan.
The Compensation Committee serves as the administrator of this plan. Subject to the terms of this plan, the administrator determines the terms of options granted, including the number of shares subject to the option, exercise price, term and exercisability. The exercise price of all incentive stock options granted under this plan must be at least equal to the fair market value of our common stock on the date of grant. The term of incentive stock options granted under this plan generally may not exceed 10 years.
Our Board has the authority to amend or terminate this plan, but such action may not adversely affect any outstanding option previously granted under the plan. If this plan is not terminated earlier, no incentive stock options can be granted under the plan on or after the later of June 2011 or the 10th anniversary of the date when our Board adopted, subject to approval by our stockholders, the most recent increase in the number of shares available for grant under the plan.
2001 Non-employee Director Stock Incentive Plan
The 2001 Non-employee Director Stock Incentive Plan (the “Directors Plan”) was adopted by our Board in June 2001. This plan provided for the automatic grant to each of our non-employee directors of a nonstatutory stock option to purchase 333 shares of our common stock on the third business day following each annual meeting of our stockholders. A total of 13,333 shares of common stock have been reserved for issuance under this plan and, as of December 31, 2007, net of forfeitures, a total of 10,500 shares remained available under this plan.
This plan is administered by the Compensation Committee. The exercise price of each option granted pursuant to this plan is the fair market value of the underlying shares of our common stock on the date of grant. Each option granted pursuant to this plan generally becomes exercisable upon six months after the date of grant, subject to certain limitations. Our Board has the authority to amend or terminate this plan, but such action may not adversely affect any outstanding option without the optionee’s consent.
Employee Stock Purchase Plan
Our Employee Stock Purchase Plan (the “Employees’ Plan”) was adopted by our Board and approved by our stockholders in June 2001. A total of 33,333 shares of common stock have been reserved for issuance under this plan and, as of December 31, 2007, 958 shares have been issued under this plan.
This plan is administered by the Compensation Committee and provides a mechanism for eligible employees to purchase shares of our common stock. To facilitate these purchases, eligible participants are assigned plan accounts, to which they may contribute funds via payroll deduction. The purchases are accomplished through the use of six-month offering periods. Purchases pursuant to this plan are made at a price equal to the lower of (i) 85% of the fair market value of our common stock on the last trading day in the offering period; or (ii) 85% of the fair market value of our common stock on the last trading day before the commencement of such offering period. No participant may purchase more than 67 shares of our common stock during any offering period. Additionally, purchases under the plan are limited such that no participant may purchase under the plan, in any offering period that commenced in that calendar year, shares with a fair market value in excess of $25,000 minus the fair market value of any shares that the participant previously purchased in that calendar year. In the case of shares purchased during an offering period that commenced in the preceding calendar year, the limitation is $50,000 minus the fair market value of any shares that the participant purchased during the calendar year of the purchase and the calendar year immediately preceding such purchase.
Our Board has the authority to amend or terminate this plan at any time. Amendments to the plan are subject to approval by our stockholders to the extent required by applicable law.
2007 Plan
The 2007 Plan was adopted by our Board on June 15, 2007. We have reserved a total of 6,000,000 shares of common stock for issuance in respect of options granted under the plan. The plan provides for the grant to employees of the Company, its parents and subsidiaries, including officers and employee directors, of “incentive stock options” within the meaning of Section 422 of the Code and for the grant of non-statutory stock options to the employees, officers, directors, including non-employee directors, and consultants of the Company, its parents and subsidiaries. To the extent an optionee would have the right in any calendar year to exercise for the first time one or more incentive stock options for shares having an aggregate fair market value, under all of the Company’s plans and determined as of the grant date, in excess of $100,000, any such excess options will be treated as non-statutory options. As of December 31, 2008, net of forfeitures, a total of 756,406 shares remained available under this plan.
Equity Compensation Plan Table
The following table sets out information regarding our common stock that may be issued upon the exercise of options, warrants and other rights granted to employees, consultants or directors under all of our existing equity compensation plans, as of December 31, 2008:
Plan category | | Number of Shares to be Issued Upon Exercise of Outstanding Options and Warrants | | | 1. Weighted-Average Exercise Price of Outstanding Options and Warrants | | | Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plans | |
Equity compensation plans approved by security holders | | | 3,159,000 | | | $ | 1.16 | | | | 2,835,232 | |
| | | | | | | | | | | | |
Total | | | 3,159,000 | | | | | | | | 2,835,232 | |
Compensation Committee Interlocks and Insider Participation
From January 1, 2007 to June 22, 2007, Dr. Boynton was the sole member of our Compensation Committee and served as our President, Chief Operating Officer and Chief Scientific Officer. In June 2007, Dr. Boynton was replaced by Linda F. Powers. as the Chair of the Compensation Committee. As described further under “Transactions with Related Persons” below, we are a party to a number of transactions (as such term is defined in Item 404(a) of Regulation S-K) in which Ms. Powers has an interest required to be disclosed in this proxy statement. During 2008, none of our executive officers served as a member of the compensation committee (or other committee serving an equivalent function) of any other entity, one of whose executive officers served as a director on our Board or as a member of our Compensation Committee. None of our executive officers served during 2008 as a director of any other entity, one of whose executive officers served as a director on our Board or as a member of our Compensation Committee.
Transactions with Related Persons
Certain Transactions with Related Persons
Conversion of Preferred Stock and Related Matters
On June 1, 2007, we issued to Toucan Capital a warrant to purchase shares of our Series A-1 cumulative convertible preferred stock (“Series A-1 Preferred Stock” and such warrant, the “Toucan Capital Series A-1 Warrant”) in exchange for the cancellation of all previously issued warrants to purchase Series A-1 Preferred Stock (or, at the election of Toucan Capital, any other equity or debt security of the Company) held by Toucan Capital. The new Toucan Capital Series A-1 Warrant is exercisable for 6,471,333 shares of Series A-1 Preferred Stock plus shares of Series A-1 Preferred Stock attributable to accrued dividends on the shares of Series A-1 Preferred Stock held by Toucan Capital (with each such Series A-1 Preferred Share convertible into 2.67 shares of common stock at $0.60 per share), compared to the 3,062,500 shares of Series A-1 Preferred Stock (with each such Series A-1 Preferred Share convertible into 2.67 shares of common stock at $0.60 per share) that were previously issuable to Toucan Capital upon exercise of the warrants being cancelled.
Also on June 1, 2007, we and Toucan Capital amended Toucan Capital’s warrant to purchase shares of our Series A cumulative convertible preferred stock (“Series A Preferred Stock” and such warrant, the “Toucan Capital Series A Warrant”) to increase the number of shares of Series A Preferred Stock that are issuable upon exercise of the warrant to 32,500,000 shares of Series A Preferred Stock (plus shares of Series A Preferred Stock attributable to accrued dividends on the shares of Series A Preferred Stock held by Toucan Capital) from 13,000,000 shares of Series A Preferred Stock.
In connection with the modifications of the Series A and Series A-1 Preferred Stock warrants, we recognized reductions in earnings applicable to common stockholders in June 2007 of $2.3 million and $16.4 million, respectively. The fair value of the warrant modifications was determined using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%, risk-free interest rate of 5.0% volatility of 398%, and a contractual life of seven years.
On June 15, 2007, we, Toucan Capital, and Toucan Partners entered into a conversion agreement (“Conversion Agreement”) which became effective on June 22, 2007 upon the admission of the Company’s common stock to trade on AIM (“Admission”).
Pursuant to the terms of the Conversion Agreement (i) Toucan Capital agreed to convert and has converted all of its shares of the Company’s Series A Preferred Stock and Series A-1 Preferred Stock (in each case, excluding any accrued and unpaid dividends) into common stock and agreed to eliminate a number of rights, preferences and protections associated with the Series A Preferred Stock and Series A-1 Preferred Stock, including the liquidation preference entitling Toucan Capital to certain substantial cash payments and (ii) Toucan Partners agreed to eliminate all of its existing rights to receive Series A-1 Preferred Stock under certain notes and warrants (and thereafter to receive shares of common stock rather than shares of Series A-1 Preferred Stock), and the rights, preferences and protections associated with the Series A-1 Preferred Stock, including the liquidation preference that would entitle Toucan Partners to certain substantial cash payments. In return for these agreements, the Company issued to Toucan Capital and Toucan Partners 4,287,851 and 2,572,710 shares of common stock, respectively. In connection with the issuance of these shares, we recognized a further reduction of earnings applicable to common stockholders of $12.3 million in June 2007.
Under the terms of the Conversion Agreement (i) the Toucan Capital Series A Warrant is exercisable for 2,166,667 shares of common stock rather than shares of Series A Preferred Stock (plus shares of common stock, rather than shares of Series A Preferred Stock, attributable to accrued dividends on the shares of Series A Preferred Stock previously held by Toucan Capital that were converted into common stock upon Admission, subject to the further provisions of the Conversion Agreement as described below) and (ii) the Toucan Capital Series A-1 Warrant became exercisable for an aggregate of 17,256,888 shares of common stock rather than shares of Series A-1 Preferred Stock (plus shares of common stock, rather than shares of Series A-1 Preferred Stock, attributable to accrued dividends on the shares of Series A-1 Preferred Stock previously held by Toucan Capital that were converted into common stock upon Admission), subject to further provisions of the Conversion Agreement as described below.
As noted above, the 32,500,000 shares of Series A Preferred Stock held by Toucan Capital converted, in accordance with their terms, into 2,166,667 shares of common stock and the 4,816,863 shares of Series A-1 Preferred Stock held by Toucan Capital converted, in accordance with their terms, into 12,844,968 shares of common stock.
Under the terms of the Conversion Agreement, Toucan Capital also agreed to temporarily defer receipt of the accrued and unpaid dividends on its shares of Series A Preferred Stock and Series A-1 Preferred Stock of an amount equal to $334,340 and $917,451, respectively, until not later than September 30, 2007. In September 2007, we paid these dividends in full to Toucan Capital.
As a result of the financings described above, as of July 20, 2009, Toucan Capital held:
| · | an aggregate of 19,299,486 shares of common stock; |
| · | warrants to purchase 14,150,732 shares of common stock at an exercise price of $0.60 per share; and |
| · | warrants to purchase 7,884,357 shares of common stock at an exercise price of $0.15 per share. |
As a result of the financings described above, as of July 20, 2009, Toucan Partners and it Managing Member Ms. Linda Powers held:
| · | an aggregate of 2,572,710 shares of common stock; and |
| · | warrants to purchase 8,832,541 shares of common stock at an exercise price of $0.60 per share. |
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| warrants to purchase 132,500 shares of common stock at an exercise price of $0.40.
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The investments made by Toucan Capital and Toucan Partners were made pursuant to the terms and conditions of a Recapitalization Agreement originally entered into on April 26, 2004 with Toucan Capital. The Recapitalization Agreement, as amended, originally contemplated the investment of up to $40 million through the issuance of new securities to Toucan Capital and a syndicate of other investors to be determined.
We and Toucan Capital amended the Recapitalization Agreement in conjunction with each successive loan agreement. The amendments generally (i) updated certain representations and warranties of the parties made in the Recapitalization Agreement, and (ii) made certain technical changes in the Recapitalization Agreement in order to facilitate the bridge loans described therein.
Through June 22, 2007, the Company accrued and paid certain legal and other administrative costs on Toucan Capital’s behalf pursuant to the Recapitalization Agreement. Subsequent to June 22, 2007, Toucan Capital has incurred further costs on behalf of the Company, primarily related to travel expenses and fees incurred in connection with efforts to investigate and establish DCVax® businesses in other locations overseas. In addition, effective July 1, 2007, the Company commenced accruing rent expense related to the sublease for its Bethesda, Maryland office space from Toucan Capital Corporation. During the year ended December 31, 2007, the Company recognized approximately $1.0 million of general and administrative costs related to the Recapitalization Agreement, rent expense and costs incurred by Toucan Capital on the Company’s behalf. Approximately $175,000 of these costs relate to activities which took place prior to 2007. During the year ended December 31, 2006, the Company recognized approximately $1.3 million of general and administrative costs related to the Recapitalization Agreement. Pursuant to the terms of the Conversion Agreement, the Recapitalization Agreement was terminated on June 22, 2007.
As of March 31, 2009, Toucan Capital, including the holdings of Toucan Partners, beneficially owned of 21,872,196 shares of our capital stock, representing approximately 48.5% of our outstanding common stock.
Cognate
On July 30, 2004, we entered into a service agreement with Cognate, a contract manufacturing and services organization in which Toucan Capital has a majority interest. In addition, two of the principals of Toucan Capital are members of Cognate’s board of directors and, on May 17, 2007, the managing director of Toucan Capital, Linda F. Powers, was appointed to serve as our director and to serve as the non-executive Chairperson of our Board of Directors. Under the service agreement, we agreed to utilize Cognate’s services for an initial two-year period, related primarily to manufacturing DCVax® product candidates, regulatory advice, research and development preclinical activities and managing clinical trials. The agreement expired on July 30, 2006; however, we continued to utilize Cognate’s services under the same terms as set forth in the expired agreement. On May 17, 2007, we entered into a new services agreement with Cognate pursuant to which Cognate will provide certain consulting and, when needed, manufacturing services to us for our DCVax®-Brain Phase II clinical trial. Under the terms of the new contract, we paid a non-refundable contract initiation fee of $250,000 and committed to pay budgeted monthly service fees of $400,000, subject to quarterly true-ups, and monthly facility fees of $150,000. We may terminate this agreement with 180 days notice and payment of all reasonable wind-up costs and Cognate may terminate the contract in the event that the brain cancer clinical trial fails to complete enrollment by July 1, 2009. However, if such termination by us occurs at any time prior to the earlier of the submission of an FDA biological license application/new drug application on our brain cancer clinical trial or July 1, 2010 or, such termination by Cognate results from failure of the brain cancer clinical trial to complete patient enrollment by July 1, 2009, we are obligated to make an additional termination fee payment to Cognate equal to $2 million.
As of March 31, 2009 and December 31, 2008, the Company owed Cognate approximately $2.6 million and $1.1 million respectively.
Review, Approval or Ratification of Transactions with Related Persons
Our policy with respect to any transaction between the Company and any related person requiring disclosure under Item 404(a) of Regulation S-K, is that such transaction is consummated only if the Audit Committee approves such transaction or if the transaction involves compensation approved or ratified by the Compensation Committee. The Board of Directors has not adopted a written policy reflecting the policy and procedures described above; it intends to do so, but may not.
Audit Committee Report
The Audit Committee acts under a written charter, a copy of which is attached as Appendix A to this proxy statement. We are considered a controlled company, whereby a group holds more than 50% of the voting power, and as such are not required under NASDAQ listing standards to have a majority of our Board of Directors be independent. It is our intention to recruit one or more additional non-executive directors in due course, but we may not be able to do so. The Audit Committee does not include an “audit committee financial expert,” within the meaning of SEC regulations. Although all the Audit Committee members are financially literate, it is our intention to recruit an “audit committee financial expert” in due course.
The Audit Committee has prepared the following report on its activities with respect to the audited consolidated financial statements of the Company for the fiscal year ended December 31, 2008 (for purposes of this report, the “audited financial statements”). The following report of the Audit Committee does not constitute soliciting material and should not be deemed filed ordocuments incorporated by reference into this Proxy Statement, but not delivered with this Proxy Statement, by first class mail or other equally prompt means within one business day of receipt of such request. You should direct any other of our filings under the Securities Act or the Exchange Act, exceptrequests for documents to the extent we specifically incorporate this report by reference in the specified filing.
As part of its specific duties, the Audit Committee reviews the Company’s financial reporting process on behalf of the Board; reviews the financial information issued to stockholders and others, including a discussion of the quality, not only the acceptability, of our accounting principles, the reasonableness of significant judgments, and the clarity of discussions in the financial statements; and monitors our systems of internal control and the audit process. Management is responsible for the preparation, presentation, and integrity of our financial statements, accounting and financial reporting principles, and disclosure controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. Management also is responsible for objectively reviewing and evaluating the adequacy, effectiveness, and quality of our own system of internal control. Our independent registered public accounting firm is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles.
The Audit Committee has met and held discussions with management and Peterson Sullivan, PLLC (“Peterson Sullivan”)Northwest Biotherapeutics, Inc., our independent public accounting firm for the fiscal year ended December 31, 2008. In our discussions, management has represented to the Audit Committee that the Company’s consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States. The Audit Committee also has reviewed and discussed the audited financial statements with management and Peterson Sullivan. The Audit Committee meets with our internal auditors and independent registered public accounting firm, with and without management present, to discuss the results of their examinations, the evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting.
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