UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. ___)
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| ☒ | Preliminary Proxy Statement |
| ☐ | | Confidential, forFor Use of the Commission Only (as permittedPermitted by Rule 14a-6(e)(2)) |
| ☐ | | Definitive Proxy Statement |
| ☐ | | Definitive Additional Materials |
| ☐ | | Soliciting Material Pursuant to Section§ 240.14a-12 |
MEDOVEX CORP.
(Name of Registrant as Specified In Itsin its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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MEDOVEX CORP.
3279 Hardee Avenue1950 AIRPORT ROAD, SUITE A
Atlanta, GeorgiaATLANTA, GA 30341
Telephone: (844) 633-6839
To our Shareholders:
Dear Shareholder:
On behalf of the Board of Directors and management, I am pleased to invite you to attend the AnnualSpecial Meeting of Shareholders of MedoveX Corp. (theCorporation (“MedoveX” or, the “Company” or “MedoveX”) to be held on [______________] at [__]:[__] a.m. local time, at the offices of Womble, Carlyle, Sandridge & Rice, LLPCompany’s headquarters located at 271 17th Street NW1950 Airport Road, Suite 2400A, Atlanta, GA 30363-1017 on November 10, 2016 at 1:00 p.m. EDT.30341.
The notice of annual meetingSpecial Meeting and proxy statement accompanying this letter describe the specific business to be acted upon at the meeting.
In addition to the specific matters to be acted upon, there will be a report on the progress of the Company and an opportunity for questions of general interest to the shareholders.
Your vote is important. Whether or not you plan to attend the meeting in person, you are requested to complete, sign, date, and promptly return the enclosed proxy card in the envelope provided. Your proxy will be voted at the annual meetingSpecial Meeting in accordance with your instructions. If you do not specify a choice on one of the proposals described in this proxy statement, your proxy will be voted as recommended by the Board of Directors. If you hold your shares through an account with a brokerage firm or other nominee or fiduciary such as a bank, please follow the instructions you receive from such brokerage firm or other nominee or fiduciary to vote your shares.
If you plan to attend the meeting in person, please respond affirmatively to the request for that information by marking the box on the proxy card. You will be asked to present valid picture identification. Cameras, recording devices, and other electronic devices will not be permitted at the meeting.
| | Sincerely, /s/ Jarrett Gorlin Jarrett Gorlin Chief Executive Officer |
MEDOVEX CORP.
3279 Hardee Avenue1950 AIRPORT ROAD, SUITE A
Atlanta, GeorgiaATLANTA, GA 30341
Telephone: (844) 633-6839
[_____], 2017
NOTICE OF 2016 ANNUALSPECIAL MEETING OF SHAREHOLDERS
Dear Shareholder:
On behalf of the Board of Directors and management, I invite you to attend the Annuala Special Meeting of Shareholders of MedoveX Corp. (the(“MedoveX” or, the “Company” or “MedoveX”) to be held at the offices of Womble, Carlyle, Sandridge & Rice, LLPCompany’s headquarters located at 271 17th Street NW1950 Airport Road, Suite 2400A, Atlanta, GA 30363-1017-30341, on November 10, 2016[________], 2017, at 1:00 p.m. EDT.
At[__]:[__] A.M. local time, for the annual meeting, we will ask you to:purposes of considering the following proposals:
1. | Elect as directors1. | To grant the nominees namedBoard of Directors the authority, in its sole direction, in determining a higher stock price that may be required to comply with the proxy statement; |
2. | Ratify the retention of Frazier & Deeter, LLC as the independent registered public accounting firmcontinued listing qualifications for the fiscal year ending December 31, 2017;NASDAQ Capital Market, to approve an amendment to our Articles of Incorporation to effect a reverse stock split of our issued and outstanding common stock by a ratio of not less than one-for-two and not more than one-for-five at any time prior to [_________], 2018, with the exact ratio to be set at a whole number within this range as determined by the Board of Directors; |
3. | Approve | |
| 2. | To approve the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of 30%up to 25% below the market price of our common stock, as required by and in accordance with NASDAQ Marketplace Rule 5635(d); |
4. | Approve
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| 3. | To approve the issuance of securities in one or more non-public offerings to the Company’s officers and/or directors or their affiliates, where the maximum discount at which securities will be offered will be equivalent to a discount of 20%up to 15% below the market price of our common stock, as required by and in accordance with NASDAQ Marketplace Rule 5635(d)5635(c); |
5. | Approve
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| 4. | To approve any change of control that would result from the potential issuance of securities in the non-public offerings following approval of Proposal 32 or Proposal 4,3, as required by and in accordance with NASDAQ Marketplace Rule 5635(b); |
6. | Allow
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| 5. | To allow officers, directors and employees of the Company to participate in the below market offerings approved pursuant to Proposal 3 or Proposal 4,2, as required by and in accordance with NASDAQ Marketplace Rule 5635(c); |
7. | Approve an amendment to the Company’s 2013 Stock Incentive Plan to increase the authorized number of shares of common stock that may be issued under the Plan by 500,000 shares, as required by and in accordance with NASDAQ Marketplace Rule 5635(c); and
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8. | Transact any6. | To transact such other such business as may properly come before the meeting or any adjournment or postponementadjournments thereof. |
The Board of Directors unanimously recommends a vote FOR granting the electionBoard of eachDirectors the authority, in its sole discretion, in determining a higher stock price that may be required to comply with the continued listing qualifications for the NASDAQ Capital Market, to approve an amendment to our Articles of Incorporation to effect a reverse stock split of our issued and outstanding common stock by a ratio of not less than one-for-two and not more than one-for-five at any time prior to [_____], 2018, with the nominees for director named inexact ratio to be set at a whole number within this range as determined by the proxy statement;Board of Directors; FOR the ratification of the retention of Frazier & Deeter, LLC as the independent registered public accounting firm for the fiscal year ending December 31, 2017; FOR approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of 30%up to 25% below the market price of our common stock; FORapproval of the issuance of securities in one or more non-public offerings to the Company’s officers and/or directors or their affiliates, where the maximum discount at which securities will be offered will be equivalent to a discount of up to 15% below the market price of our common stock; FORany change of control that could result from the potential issuance of securities in the non-public offerings following approval of Proposal 2 or Proposal 3; andFORallowing officers, directors and employees of the Company to participate in the below market offerings approved pursuant to Proposal 2.
Shareholders of record at the close of business on [_____], 2017, will be entitled to notice of and to vote at the Special Meeting.
| By Order of the Board of Directors /s/ Jarrett Gorlin Jarrett Gorlin Chief Executive Officer |
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, WE URGE YOU TO VOTE AND SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE TO ENSURE THE PRESENCE OF A QUORUM. TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY EXACTLY AS YOUR NAME APPEARS ON IT AND RETURN IMMEDIATELY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, OR VOTE BY PROXY ON THE INTERNET OR BY TELEPHONE.
MEDOVEX CORP.
1950 AIRPORT ROAD, SUITE A
ATLANTA, GA 30341
Telephone: (844) 633-6839
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [_____], 2017
INFORMATION CONCERNING SOLICITATION OF PROXIES AND VOTING
General
The enclosed proxy is solicited by the Board of Directors of MedoveX Corporation, a Nevada corporation (referred to as the “Company,” “we,” “us,” or “our”) in connection with the solicitation of proxies by our Board of Directors (the “Board”) for use at the Special Meeting of Shareholders to be held at the Company’s headquarters located at 1950 Airport Road, Suite A, Atlanta, GA, 30341 on [_____], 2017 at [__]:[__] A.M. local time and at any adjournments thereof, for the purposes set forth herein and in the accompanying notice of Special Meeting of Shareholders. Whether or not you expect to attend the meeting in person, please vote your shares as promptly as possible to ensure that your vote is counted.
These proxy solicitation materials are first being mailed on or about [______], 2017 to all shareholders entitled to vote at the meeting.
What is the purpose of the meeting?
You will be voting on:
1.
Granting the Board of Directors the authority, in its sole direction, in determining a higher stock price that may be required to comply with the continued listing qualifications for the NASDAQ Capital Market, to approve an amendment to our Articles of Incorporation to effect a reverse stock split (the “Reverse Stock Split”) of our issued and outstanding common stock by a ratio of not less than one-for-two and not more than one-for-five at any time prior to [_____], 2018, with the exact ratio to be set at a whole number within this range as determined by the Board of Directors;
2.
Approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of 20%up to 25% below the market price of our common stock; FORstock, as required by and in accordance with NASDAQ Marketplace Rule 5635(d);
3.
Approval of the issuance of securities in one or more non-public offerings to the Company’s officers and/or directors or their affiliates, where the maximum discount at which securities will be offered will be equivalent to a discount of up to 15% below the market price of our common stock, as required by and in accordance with NASDAQ Marketplace Rule 5635(c);
4.
Approval of any change of control that couldwould result from the potential issuance of securities in the non-public offerings following approval of Proposal 32 or Proposal 4; FOR approval to allow3, as required by and in accordance with NASDAQ Marketplace Rule 5635(b);
5.
Allowing officers, directors and employees of the Company to participate in the below market offerings approved pursuant to Proposal 32, as required by and in accordance with NASDAQ Marketplace Rule 5635(c); and
6.
Transacting any other such business as may properly come before the meeting or Proposal 4; and FOR approval of an amendment to the Company’s 2013 Stock Incentive Plan to increase the number of shares of common stock that may be issued under the Plan by 500,000 shares.
Shareholders of record at the close of business on September 23, 2016, will be entitled to notice of and to vote at the 2016 Annual Meeting and any adjournmentsadjournment or postponementspostponement thereof.
By Order of the Board of Directors,
| Sincerely,
/s/ Jarrett Gorlin
Jarrett Gorlin
Chief Executive Officer
|
YOUR VOTE AT THE ANNUAL MEETING IS IMPORTANT
Your vote is important. Please vote as promptly as possible even if you plan to attend the meeting.
For information on how to vote your shares, please see the instruction form from your broker or other fiduciary, as applicable, as well as “Information About the 2016 Annual Meeting and Voting” in the proxy statement accompanying this notice.
We encourage you to vote by completing, signing, and dating the proxy card, and returning it in the enclosed envelope.
If you have questions about voting your shares, please contact our Corporate Secretary at MedoveX Corp., at 1735 Buford Hwy Ste 215-113, Cumming GA 30041, telephone number (844) 633-6839.
If you decide to change your vote, you may revoke your proxy in the manner described in the attached proxy statement at any time before it is voted.
We urge you to review the accompanying materials carefully and to vote as promptly as possible. Note that we have enclosed with this notice (i) our Annual Report to Shareholders, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, (ii) our quarterly report on Form 10-Q for the quarter ended June 30, 2016 (the “quarterly report”), and (iii) a Proxy Statement.
THE PROXY STATEMENT, ANNUAL REPORT TO STOCKHOLDERS AND QUARTERLY REPORT ARE AVAILABLE AT: http:/www.hivedms.com/mdvx
By Order of the Board of Directors,
| Sincerely,
Charles Farrahar
Corporate Secretary
|
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON NOVEMBER 10, 2016 AT 1:00 P.M. EDT.
The Notice of Annual Meeting of Shareholders, our Proxy Statement Annual Report to Shareholders for the fiscal year ended December 31, 2015, and our quarterly report on Form 10-Q for the quarter ended June 30, 2016 are available at:
http:/www.hivedms.com/mdvx
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MEDOVEX CORP.
3279 Hardee Avenue
Atlanta, Georgia 30341
(844) 633-6839
PROXY STATEMENT FOR ANNUAL MEETING
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 10, 2016:
THE PROXY STATEMENT, ANNUAL REPORT TO SHAREHOLDERS, AND QUARTERLY REPORT ARE AVAILABLE AT: http:/www.hivedms.com/mdvx
SHAREHOLDERS CAN REQUEST A COPY OF THE PROXY STATEMENT, ANNUAL REPORT, QUARTERLY REPORT, AND FORM OF PROXY FOR THIS MEETING AND FUTURE MEETINGS BY CALLING (844) 633-6839 OR SENDING AN EMAIL TO cfarrahar@medovex.com.
This proxy statement provides information that you should read before you vote on the proposals that will be presented to you at the 2016 Annual Meeting of Shareholders of MedoveX Corp.
The 2016 Annual Meeting will be held on November 10, 2016 at 1:00 p.m. local time, at the offices of Womble, Carlyle, Sandridge & Rice, LLP at 271 17th Street NW Suite 2400 Atlanta, GA 30363-1017.
On or about October 5, 2016, we mailed this proxy statement, our 2015 Annual Report and our quarterly report, in paper copy. For information on how to vote your shares of our common stock, see the instructions included on the proxy card, or the instruction form you receive from your broker or other fiduciary, as well as the information under “Information About the 2016 Annual Meeting and Voting” in this proxy statement. Shareholders who, according to our records, owned shares of the Company’s common stock at the close of business on September 23, 2016, will be entitled to vote at the 2016 Annual Meeting.
If you would like to attend the meeting and vote in person, please send an email to cfarrahar@medovex.com and directions will be provided to you.
Information About the 2016 Annual Meeting and Voting
Why am I receiving these proxy materials?
The Board of Directors (“Board”) of MedoveX Corp. (the “Company”) is asking for your proxy for use at the 2016 Annual Meeting of Shareholders of the Company, to be held at the offices of Womble, Carlyle, Sandridge & Rice, LLP at 271 17th Street NW Suite 2400 Atlanta, GA 30363 on November 10, 2016, at 1:00 p.m. local time, and at any adjournment or postponement of the meeting. As a shareholder, you are invited to attend the meeting and are entitled to and requested to vote on the items of business described in this proxy statement.
This proxy statement is furnished to shareholders of MedoveX Corp., a Nevada corporation, in connection with the solicitation of proxies by the Board for use at the 2016 Annual Meeting of Shareholders (the “Annual Meeting”).
Sharing the Same Last Name and Address
We are sending only one copy of our Annual Report to Shareholders, our quarterly report, and our proxy statement to shareholders who share the same last name and address, unless they have notified us that they want to continue receiving multiple copies. This practice, known as “householding,” is designed to reduce duplicate mailings and save significant printing and postage costs.
If you received a householded mailing this year and you would like to have additional copies of our Annual Report to Shareholders, our quarterly report, and our proxy statement mailed to you or you would like to opt out of this practice for future mailings, we will promptly deliver such additional copies to you if you submit your request to Charles Farrahar, our Corporate Secretary at 1735 Buford Hwy Ste 215-113, Cumming GA 30041, or call us at (844) 633-6839. You may also contact us in the same manner if you received multiple copies of the Annual Meeting materials and would prefer to receive a single copy in the future.
Who is soliciting my vote?
The Board is soliciting your vote.
When were the enclosed solicitation materials first given to shareholders?
We expect to mail to shareholders of the Company this proxy statement, a proxy card, our 2015 Annual Report, and our quarterly report on or about October 5, 2016.
What is the purpose of the meeting?
You will be voting on:
1. | Election of the nominees named in the proxy statement as directors; |
2. | Ratification of the appointment of Frazier & Deeter, LLC as the independent certified public accountants of the Company for the fiscal year ending December 31, 2017; |
3. | Approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of 30% below the market price of our common stock, as required by and in accordance with NASDAQ Marketplace Rule 5635(d); |
4. | Approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of 20% below the market price of our common stock, as required by and in accordance with NASDAQ Marketplace Rule 5635(d); |
5. | Approval of any change of control that would result from the potential issuance of securities in the non-public offerings following approval of Proposal 3 or Proposal 4, as required by and in accordance with NASDAQ Marketplace Rule 5635(b); |
6. | Allow officers, directors and employees of the Company to participate in the below market offerings approved pursuant to Proposal 3 or Proposal 4, as required by and in accordance with NASDAQ Marketplace Rule 5635(c); |
7. | Approval of an amendment to the Company’s 2013 Stock Incentive Plan to increase the authorized number of shares of common stock that may be issued under the Plan by 500,000 shares, as required by and in accordance with NASDAQ Marketplace Rule 5635(c); and |
8. | Transact any other such business as may properly come before the meeting or any adjournment or postponement thereof. |
What are the Board’s recommendations?
The Board recommends a vote:
| “FOR” election of the nominees named in the proxy statement as directors;
|
2. | “FOR” ratification of the appointment of Frazier & Deeter, LLC as the independent certified public accountants of the Company for the fiscal year ending December 31, 2017;
|
3. | “FOR” approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of 30%“FOR” granting the Board of Directors the authority, in its sole direction, in determining a higher stock price that may be required to comply with the listing qualifications for the NASDAQ Capital Market, to approve an amendment to our Articles of Incorporation to effect a reverse stock split (the “Reverse Stock Split”) of our issued and outstanding common stock by a ratio of not less than one-for-two and not more than one-for-five at any time prior to [_____], 2018, with the exact ratio to be set at a whole number within this range as determined by the Board of Directors;
2. “FOR” approval of the issuance of securities in one or more non-public offerings of an amount of securities where the maximum discount at which securities will be offered will be equivalent to a discount of up to 25% below the market price of our common stock; 3. “FOR” approval of the issuance of securities in one or more non-public offerings to the Company’s officers and/or directors or their affiliates, where the maximum discount at which securities will be offered will be equivalent to a discount of up to 15% below the market price of our common stock; 4. “FOR”approval of any change of control that would result from the potential issuance of securities in the non-public offerings following approval of Proposal 2 or Proposal 3; and 5. “FOR”allowing officers, directors and employees of the Company to participate in the below market offerings approved pursuant to Proposal 2. |
4. | “FOR” approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of 20% below the market price of our common stock;
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5. | “FOR” approval of any change of control that would result from the potential issuance of securities in the non-public offerings following approval of Proposal 3 or Proposal 4;
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6. | “FOR” approval to allow officers, directors and employees of the Company to participate in the below market offerings approved pursuant to Proposal 3 or Proposal 4; and
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7. | “FOR” approval of an amendment to the Company’s 2013 Stock Incentive Plan to increase the authorized number of shares of common stock that may be issued under the Plan by 500,000 shares.
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Who is entitled to vote at the meeting, what is the “record date”, and how many votes do they have?
Holders of record of our common stock at the close of business on September 23, 2016[_______], 2017 (the “record date”“Record Date”) will be entitled to vote at the meeting. Each share of common stock has one vote. There were 13,999,136[_______] shares of common stock outstanding on the record date. Record Date.
What is a quorum of shareholders?
In order to carry on the business of the AnnualSpecial Meeting, a quorum must be present. If a majority of the shares outstanding and entitled to vote on the record dateRecord Date are present, either in person or by proxy, we will have a quorum at the meeting. Any shares represented by proxies that are marked for, against, withhold, or abstain from voting on a proposal will be counted as present in determining whether we have a quorum. If a broker, bank, custodian, nominee, or other record holder of our common stock indicates on a proxy card that it does not have discretionary authority to vote certain shares on a particular matter, and if it has not received instructions from the beneficial owners of such shares as to how to vote on such matters, the shares held by that record holder will not be voted on such matter (referred to as “broker non-votes”) but will be counted as present for purposes of determining whether we have a quorum. Since there were 13,999,136[_______] shares of common stock outstanding on September 23, 2016,[_______], 2017, the presence of holders of 6,999,568[_______] shares will represent a quorum. We must have a quorum to conduct the meeting.
How many votes does it take to pass each matter?
Proposal 1: Election of DirectorsReverse Stock Split | | The nominees for director who receive the most votes (also known as a plurality) will be elected. You may vote either FOR allgrant of the nominees, WITHHOLD your vote from all of the nominees or WITHHOLD your vote from any one of the nominees. Votes that are withheld will not be included in the vote tally for the election of directors. Brokerage firms do not havediscretionary authority to vote customers’ unvoted shares heldthe Board of Directors, in determining a higher stock price that may be required to comply with the continued listing qualifications to amend the Company’s Articles of Incorporation to effectuate the Reverse Stock Split by a ratio of not less than one-for-two and not more than one-for-five at any time prior to [_____], 2018, with the exact ratio to be set at a whole number within this range as determined by the firms in street name for the electionBoard of directors. As a result, any shares not voted by a beneficial owner will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. |
Proposal 2: Ratification of the Appointment of Frazier & Deeter, LLC as Our Independent Public Accountant for the Fiscal Year Ending December 31, 2017 | | The appointment of Frazier & Deeter, LLC as our independent public accountant for the fiscal year ending December 31, 2017 will be ratified if the votes cast in favor of the proposal exceed the votes cast against the proposal.
Abstentions and broker non-votes will not be counted as votes cast either for or against any of the proposals being presented to shareholders and will have no impact on the result of the vote on these proposals. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name, as defined below, on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to appoint our independent accountant. However, if our stockholders do not ratify the appointment of Frazier & Deeter, LLC as our independent public accountant for the fiscal year ending December 31, 2017, the Audit Committee of the Board may reconsider its appointment.
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Proposal 3:Approval of the Issuance of Securities in One or More Non-Public Offerings at a Maximum Discount Price Equivalent to 30% Below the Market Price of our Common Stock | | The issuance of securities in one or more non-public offerings, where the maximum discount at which such securities will be offered will be equivalent to a discount of 30% below the market price of our common stock will be approved if the votes cast in favor of the proposal exceeds the votes cast against the proposal.
In the event both Proposal 3 and Proposal 4 are approved by stockholders, only Proposal 3 shall be deemed to have any effect.Directors.
Abstentions and broker non-votes will not be counted as votes cast either for or against any of the proposals being presented to shareholders and will have no impact on the result of the vote on these proposals. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name, as defined below, on this proposal only if the brokerage firm has received voting instructions from their customers. Brokerage firms that have not received voting instructions from their clients may not vote on any proposal other than the appointment of Frazier & Deeter LLC.proposal. Such broker non-votes will not be considered in determining the number of votes necessary for approval of this proposal and will have no effect on the outcome of this proposal. |
Proposal 4:2: Approval of the Issuance of Securities in One or More Non-Public Offerings at a Maximum Discount Price Equivalent to 20%up to 25% Below the Market Price of our Common Stock | | The issuance of securities in one or more non-public offerings of an amount of securities, where the maximum discount at which such securities will be offered will be equivalent to a discount of 20%up to 25% below the market price of our common stock will be approved if the votes cast in favor of the proposal exceeds the votes cast against the proposal. In the event both Proposal 3 and Proposal 4 are approved by stockholders, only Proposal 3 shall be deemed to have any effect.
Abstentions and broker non-votes will not be counted as votes cast either for or against any of the proposals being presented to shareholders and will have no impact on the result of the vote on these proposals. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name, as defined below, on this proposal only if the brokerage firm has received voting instructions from their customers. Brokerage firms that have not received voting instructions from their clients may not vote on any proposal other than the appointment of Frazier & Deeter LLC.proposal. Such broker non-votes will not be considered in determining the number of votes necessary for approval of this proposal and will have no effect on the outcome of this proposal. |
Proposal 5:3: Approval of the Issuance of Securities in One or More Non-Public Offerings to the Company’s Officers and/or Directors or Their Affiliates at a Maximum Discount Price Equivalent to up to 15% Below the Market Price of our Common Stock | | The issuance of securities in one or more non-public offerings to the Company’s officers and/or directors or their affiliates, where the maximum discount at which such securities will be offered will be equivalent to a discount of up to 15% below the market price of our common stock will be approved if the votes cast in favor of the proposal exceeds the votes cast against the proposal. Abstentions and broker non-votes will not be counted as votes cast either for or against any of the proposals being presented to shareholders and will have no impact on the result of the vote on these proposals. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name, as defined below, on this proposal only if the brokerage firm has received voting instructions from their customers. Brokerage firms that have not received voting instructions from their clients may not vote on any proposal. Such broker non-votes will not be considered in determining the number of votes necessary for approval of this proposal and will have no effect on the outcome of this proposal. |
Proposal 4: Approval of Any Change of Control that Could Result From the Potential Issuance of Securities in One or More Non-Public Offering as Authorized by the Stockholders in Proposal 32 or Proposal 43 | | Any change of control that would result from the potential issuance of securities in the non-public offerings following the approval of Proposal 3 or Proposal 4 will be approved if the votes cast in favor of the proposal exceed the votes cast against the proposal. Abstentions and broker non-votes will not be counted as votes cast either for or against any of the proposals being presented to shareholders and will have no impact on the result of the vote on these proposals. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name, as defined below, on this proposal only if the brokerage firm has received voting instructions from their customers. Brokerage firms that have not received voting instructions from their clients may not vote on any proposal other than the appointment of Frazier & Deeter LLC.proposal. Such broker non-votes will not be considered in determining the number of votes necessary for approval of this proposal and will have no effect on the outcome of this proposal. |
Proposal 6:5: Approval to Allow Officers, Directors and Employees of the Company to Participate in the Below Market Offerings Approved Pursuant to Proposal 3 or Proposal 42 | | Officers, directors and employees of the Company will be allowed to participate in the below market offerings pursuant to Proposal 3 or Proposal 42 if the votes cast in favor of the proposal exceed the votes cast against the proposal. Abstentions and broker non-votes will not be counted as votes cast either for or against any of the proposals being presented to shareholders and will have no impact on the result of the vote on these proposals. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name, as defined below, on this proposal only if the brokerage firm has received voting instructions from their customers. Brokerage firms that have not received voting instructions from their clients may not vote on any proposal other than the appointment of Frazier & Deeter LLC. Such broker non-votes will not be considered in determining the number of votes necessary for approval of this proposal and will have no effect on the outcome of this proposal. |
Proposal 7: Approval of an Amendment to the Company’s 2013 Stock Incentive Plan to Increase the Number of Shares of Common Stock that May Be Issued Under the Plan by 500,000 Shares. | | An amendment to the Company’s 2013 Stock Incentive Plan to increase the number of shares of common stock that may be issued under the Plan by 500,000 shares if the votes cast in favor of the proposal exceed the votes cast against the proposal.
Abstentions and broker non-votes will not be counted as votes cast either for or against any of the proposals being presented to shareholders and will have no impact on the result of the vote on these proposals. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name, as defined below, on this proposal only if the brokerage firm has received voting instructions from their customers. Brokerage firms that have not received voting instructions from their clients may not vote on any proposal other than the appointment of Frazier & Deeter LLC. Such broker non-votes will not be considered in determining the number of votes necessary for approval of this proposal and will have no effect on the outcome of this proposal.
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Who can attend the meeting?
All shareholders as of September 23, 2016 (record date)[________], 2017, the Record Date, or their duly appointed proxies, may attend the meeting.
What do I need to attend the meeting?
In order to be admitted to the meeting, a shareholder must present proof of ownership of common stock. If your shares are held in the name of a broker, bank, custodian, nominee, or other record holder (“street name”), you must obtain a proxy, executed in your favor, from the holder of record (that is, your broker, bank, custodian, or nominee) to be able to vote at the meeting. You will also be required to present a form of photo identification, such as a driver’s license.
What is a proxy?
A proxy is another person you authorize to vote on your behalf. We ask shareholders to instruct the proxy how to vote so that all common shares may be voted at the meeting even if the holders do not attend the meeting.
How are abstentions and broker non-votes treated?
Abstentions and broker non-votes count for purposes of determining the presence of a quorum. Abstentions and broker non-votes will not be counted as votes cast either for or against any of the proposals being presented to shareholders and will have no impact on the result of the vote on these proposals.
How do I vote?
If you are a shareholder of record, you may vote by mailing a completed proxy card or in person at the AnnualSpecial Meeting.
If you are a street name holder (meaning that your shares are held in a brokerage account by a bank, broker or other nominee), you may direct your broker or nominee how to vote your shares; however, you may not vote in person at the AnnualSpecial Meeting unless you have obtained a signed proxy from the record holder giving you the right to vote your beneficially owned shares.
You must be present, or represented by proxy, at the meeting in order to vote your shares. You can submit your proxy by completing, signing, and dating your proxy card and mailing it in the accompanying pre-addressed envelope. YOUR PROXY CARD WILL BE VALID ONLY IF YOU COMPLETE, SIGN, DATE, AND RETURN IT BEFORE THE MEETING DATE.
How will my proxy vote my shares?
If your proxy card is properly completed and received, and if it is not revoked, before the meeting, your shares will be voted at the meeting according to the instructions indicated on your proxy card. If you sign and return your proxy card, but do not give any voting instructions, your shares will be voted as follows:
| “FOR” election of the nominees named in the proxy statement as directors;
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2. | “FOR” ratification of the appointment of Frazier & Deeter, LLC as the independent certified public accountants of the Company for the fiscal year ending December 31, 2017;
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3. | “FOR” approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of 30% below the market price of our common stock;
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4. | “FOR” approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of 20% below the market price of our common stock;
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5. | “FOR” approval of any change of control that would result from the potential issuance of securities in the non-public offerings following approval of Proposal 3 or Proposal 4;
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6. | “FOR” approval to allow officers, directors and employees of the Company to participate in the below market offerings approved pursuant to Proposal 3 or Proposal 4; and
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7. | “FOR” approval of an amendment to the Company’s 2013 Stock Incentive Plan to increase the authorized number of shares of common stock that may be issued under the Plan by 500,000 shares.
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“FOR” granting the Board of Directors the authority, in its sole direction, in determining a higher stock price that may be required to comply with the listing qualifications for the NASDAQ Capital Market, to approve an amendment to our Articles of Incorporation to effect a reverse stock split (the “Reverse Stock Split”) of our issued and outstanding common stock by a ratio of not less than one-for-two and not more than one-for-five at any time prior to [_____], 2018, with the exact ratio to be set at a whole number within this range as determined by the Board of Directors;
2.
“FOR” approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of up to 25% below the market price of our common stock;
3.
“FOR” approval of the issuance of securities in one or more non-public offerings to the Company’s officers and/or directors or their affiliates, where the maximum discount at which securities will be offered will be equivalent to a discount of up to 15% below the market price of our common stock;
4.
“FOR”approval of any change of control that would result from the potential issuance of securities in the non-public offerings following approval of Proposal 2 or Proposal 3; and
5.
“FOR”allowing officers, directors and employees of the Company to participate in the below market offerings approved pursuant to Proposal 2.
To our knowledge, no other matters will be presented at the meeting. However, if any other matters of business are properly presented, the proxy holders named on the proxy card are authorized to vote the shares represented by proxies according to their judgment.
If my shares are held in “street name” by my broker, will my broker vote my shares for me?
If your shares are held in a brokerage account, you will receive from your broker a full meeting package including a voting instruction form to vote your shares. Your brokerage firm may permit you to provide voting instructions by telephone or by the internet. Brokerage firms have the authority under NASDAQ rules to vote their clients’ unvoted shares on certain routine matters.
The following matters, are considered a routine matter under the rules of the NASDAQ. Therefore, if you do notbut cannot vote on these proposals,non-routine matters such as Proposal No. 1, Proposal No. 2, Proposal No. 3, Proposal No. 4 and Proposal No. 5. If the organization that holds your brokerage firm may chooseshares does not receive instructions from you on how to vote for you or leave your shares unvoted on this proposal:
● | Proposal 2: Ratification of the appointment of our independent registered public accounting firm. |
NASDAQ rules, however, do not permit brokerage firms to vote their clients’ unvoted shares in:
| Proposal 1: Election of directors; |
| Proposal 3: Approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of 30% below the market price of our common stock; |
| Proposal 4: Approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of 20% below the market price of our common stock; |
| Proposal 5: Approval of any change of control that would result from the potential issuance of securities in the non-public offerings following approval of Proposal 3 or Proposal 4; |
| Proposal 6: Approval to allow officers, directors and employees of the Company to participate in the below market offerings approved pursuant to Proposal 3 or Proposal 4; and |
| Proposal 7: Approval of an amendment to the Company’s 2013 Stock Incentive Plan to increase the authorized number of shares of common stock that may be issued under the Plan by 500,000 shares. |
Therefore, if you do not vote on these proposals,a non-routine matter, the organization that holds your shares will remain unvotedinform the inspector of election that it does not have the authority to vote on those proposals. this matter with respect to your shares. This is generally referred to as a “broker non-vote.” We urgestrongly encourage you to provide voting instructions to brokers holding shares in order to ensure your brokerage firm so that your voteshares will be cast on those proposals.voted at the Special Meeting in the manner you desire.
What does it mean if I receive more than one proxy card or instruction form?
If you receive more than one proxy card or instruction form, it means that you have multiple accounts with our transfer agent and/or a broker or other nominee or fiduciary or you may hold your shares in different ways or in multiple names (e.g., joint tenancy, trusts, and custodial accounts). Please vote all of your shares.
How do I revoke my proxy and change my vote prior to the meeting?
If you are a registered shareholder (meaning your shares are registered directly in your name with our transfer agent) you may change your vote at any time before voting takes place at the meeting. You may change your vote by:
| Delivering another proxy card or voter instruction form to MedoveX Corp., ATTN: Corporate Secretary, 1735 Buford Hwy Ste 215-113 Cumming GA 30041, with a written notice dated later than the proxy you want to revoke stating that the proxy is revoked. |
Delivering another proxy card or voter instruction form to MedoveX Corp., ATTN: Corporate Secretary, 1950 Airport Road, Suite A, Atlanta, GA 30341, with a notice dated later than the proxy you want to revoke stating that the proxy is revoked.
| You may complete and send in another proxy card or voting instruction form with a later date. |
You may complete and send in another proxy card or voting instruction form with a later date.
| You may attend the meeting and vote in person. |
You may attend the meeting and vote in person.
For shares you hold beneficially or in “street name,” you may change your vote by submitting new voting instructions to your bank, broker or other nominee or fiduciary in accordance with that entity’s procedures, or if you obtained a legal proxy form giving you the right to vote your shares, by attending the meeting and voting in person.
Who pays for the proxy solicitation and how will the Company solicit votes?
We will pay all of the expenses involved in preparing, assembling and mailing these proxy materials and all costs of preparing, printing,soliciting proxies. In addition to the solicitation by mail, proxies may be solicited by our officers and mailing the notice of Annual Meeting of Shareholders, this proxy statement, the enclosed proxy card, our 2015 Annual Report and our June 30, 2016 Quarterly Report. Weother employees by telephone or in person. Such persons will receive no compensation for their services other than their regular salaries. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of the shares held of record by such persons, and we may reimburse brokerage firms and otherssuch persons for reasonable out of pocket expenses incurred by them in connection withso doing.
What happens if additional materials are presented at the Special Meeting?
Other than the items of business described in this Proxy Statement, we are not aware of any other business to be acted upon at the Special Meeting. If you grant a proxy, the persons named as proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the Special Meeting.
What is “householding” and how does it affect me?
Record holders who have the same address and last name will receive only one copy of their forwarding of proxy solicitation materials to beneficial owners. The solicitation of proxies will be conducted primarily by mail, but may also include telephone, facsimile, or oral communications by directors, officers, or regular employees of the Company acting without special compensation.
We have retained Broadridge Financial Solutions, Inc. to aid in the distribution of proxy materials, unless we are notified that one or more of these record holders wishes to continue receiving individual copies. This procedure will reduce our printing costs and postage fees. Shareholders who participate in householding will continue to provide votingreceive separate proxy cards.
If you are eligible for householding, but you and tabulation servicesother record holders with whom you share an address, receive multiple copies of these proxy materials, or if you hold MedoveX stock in more than one account, and in either case you wish to receive only a single copy of each of these documents for the Annual Meeting. For these services, we will pay total fees of approximately $your household, please contact our Corporate Secretary, Charles Farrahar, at MedoveX Corp., ATTN: Corporate Secretary, 1950 Airport Road, Suite A, Atlanta, GA 30341; or by telephone: ([*]844) 633-6839..
ProposalsIf you participate in householding and wish to receive a separate copy of these proxy materials, or if you do not wish to continue to participate in householding and prefer to receive separate copies of these documents in the future, please contact our Corporate Secretary as indicated above. Beneficial owners can request information about householding from their brokers, banks or other holders of record.
Do I have dissenters’ (appraisal) rights?
Appraisal rights are not available to MedoveX shareholders with respect to any of the proposals described above to be Presentedbrought before the Special Meeting.
Shareholder List
The shareholder list as of the Record Date will be available for examination by any shareholder at our corporate office, 1950 Airport Road, Suite A, Atlanta, GA 30341, beginning [_________], 2017, which is at least ten business days prior to the date of the Special Meeting. The shareholder list will also be available at the Annual MeetingSpecial Meeting.
Is my vote kept confidential?
Proxy instructions, ballots and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the Company or to third parties, except:
| ● | as necessary to meet applicable legal requirements; |
| ● | to allow for the tabulation and certification of votes; and |
| ● | to facilitate a successful proxy solicitation. |
Occasionally, shareholders provide written comments on their proxy cards, which may be forwarded to the Company’s management and the Board of Directors.
Where do I find the voting results of the Special Meeting?
We will present five proposalsannounce voting results at the meeting. We haveSpecial Meeting and also in our Current Report on Form 8-K, which we anticipate filing within four (4) business days of the Special Meeting.
Who can help answer my questions?
You can contact our corporate headquarters at MedoveX Corporation, 1950 Airport Road, Suite A, Atlanta, GA 30341, by phone at (844) 633-6839, or by sending a letter to our Corporate Secretary, with any questions about any proposal described in this proxy statement allor how to execute your vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information is presented for each person we know to be a beneficial owner of the proposals that we expect will be made at the meeting. If any other proposal5% or more of our securities, each of our directors and executive officers, and our officers and directors as a group.
The percentage of common equity beneficially owned is properly presented at the meeting, we will, to the extent permitted by applicable law, use your proxy to vote yourbased upon 20,922,634 shares of common stock onissued and outstanding as of [_____], 2017, the Record Date.
The number of shares beneficially owned by each stockholder is determined under the rules issued by the Securities and Exchange Commission and includes voting or investment power with respect to such proposal in our best judgment.securities.
PROPOSALS OF SECURITY HOLDERS AT 2017 ANNUAL MEETING
Any shareholder wishingUnder these rules, beneficial ownership includes any shares as to present a proposal which the individual or entity has sale or shared voting power or investment power. Unless otherwise indicated, the address of all listed stockholders is intended to be presented atc/o MEDOVEX, 1950 Airport Road, Suite A, Atlanta, Georgia 30341. Unless otherwise indicated each of the 2017 Annual Meeting of Shareholders should submit such proposalstockholders listed has sole voting and investment power with respect to the Company at its principal executive offices no later than June 7, 2017. It is suggested that any proposals be sent by certified mail, return receipt requested. If we hold our 2017 Annual Meeting of Shareholders more than 30 days before or after November 10, 2017 (the one-year anniversary date of the 2016 Annual Meeting of Shareholders), we will disclose the new deadline by which shareholders proposals must be received under Item 5 of Part II of our earliest possible Quarterly Report on Form 10-Q, or, if impracticable, by any means reasonable determinedshares beneficially owned, subject to inform shareholders.
OTHER MATTERS
Should any other matter or business be brought before the meeting, a vote may be cast pursuant to the accompanying proxy in accordance with the judgment of the proxy holder. The Company does not know of any such other matter or business.
INCORPORATION BY REFERERENCE
The Commission allows us to "incorporate by reference" into this proxy statement documents that we file with the SEC. This means that we can disclose important information to you by referring to those documents. The information incorporated by reference is considered to be a part of this proxy statement, and later information that we file with the Commission will update and supersede that information. This proxy statement incorporates by reference our (i) annual report on Form 10-K for the fiscal year ended December 31, 2015 and (ii) quarterly report on Form 10-Q for the quarter ended June 30, 2016 that we have previously filed with the Commission. The Form 10-K and Form 10-Q contain important information about us and our financial condition and a copy of each is being delivered with this proxy statement.
ADDITIONAL INFORMATIONcommunity property laws where applicable.
Additional information about our Company is contained in our current and periodic reports filed with the Commission. These reports, their accompanying exhibits and other documents filed with the Commission may be inspected without charge at the Public Reference Room maintained by the Commission at 100 F. Street, N.E., Washington, D.C. 20549. You can obtain information about operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission at www.sec.gov | Number of Beneficial Ownership (1) | | |
| Directors and Named Executive Officers: | | | |
| Scott M.W. Haufe, M.D., Director | 798,349 | (2)(3) | 3.7% |
| Sablowski, Manfred, Officer | 84,987 | (4) | *% |
| Jarrett Gorlin, Director and Officer | 774,607 | (5)(6)(12) | 3.6% |
| Larry W. Papasan, Co-chair of the Board of Directors | 225,315 | (3) | 1.1% |
| John C. Thomas, Jr., Director | 97,139 | | *% |
| Patrick Kullmann, Officer | 262,622 | (7)(8) | 1.2% |
| Jeffery Wright, Officer | 53,002 | (9) | *% |
| Major General C.A. “Lou” Hennies, Director | 128,527 | (3) | *% |
| James R. Andrews, M.D., Director | 128,527 | (3) | *% |
| Ron Lawson, Director | 155,435 | (10) | *% |
| Steve Gorlin, Co-chair of the Board of Directors | 1,215,020 | | 5.7% |
| Randal R. Betz, M.D., Director | 162,016
| (11) | *% |
| Mogford Jon, Director | 78,019 | (13) | *% |
| Dennis Moon, Officer | 228,795 | (14) | 1.1% |
| Officers and Directors as a Group (14 persons) | 4,392,360
| | 20.6% |
| | | | |
| 5% Shareholders | | | |
HS Contrarian Investments, LLC (15) | 1,098,901 | (16) | 5.3% |
| 68 Fiesta Way | | | |
| Fort Lauderdale, FL 33301 | | | |
* Less than 1%. Copies of such materials can be obtained from the Public References of the Commission at prescribed parties.
| (1) | Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to shares beneficially owned and options exercisable within 60 days. Beneficial ownership is based on information furnished by the individuals or entities. |
| (2) | Includes 532,335 shares held by Morgan Stanley Smith Barney custodian for Nicole Haufe Roth IRA, 25,000 shares held by Haufe Family Limited Partnership and 209,275 shares held by Nicole Haufe. Mr. Haufe disclaims beneficial ownership of the shares. |
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| (3) | Includes 10,000 shares pursuant to options exercisable within 60 days. |
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| (4) | Includes 80,387 shares pursuant to options exercisable within 60 days. |
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| (5) | Includes 125,000 shares held by Mr. Gorlin's spouse, Deborah Gorlin. Mr. Gorlin disclaims beneficial ownership of Deborah Gorlin’s shares. |
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| (6) | Includes 32,435 shares pursuant to options exercisable within 60 days. |
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| (7) | Includes 96,788 shares held by Pamela M.C. Kullmann. Mr. Kullmann disclaims beneficial ownership of Pamela M.C. Kullmann’s shares |
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| (8) | Includes 53,796 shares pursuant to options exercisable within 60 days. |
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| (9) | Includes 53,026 shares pursuant to options exercisable within 60 days. |
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| (10) | Includes 150,000 shares pursuant to options exercisable within 60 days. |
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| (11) | Includes 10,000 shares pursuant to options exercisable within 60 days. Excludes warrants to purchase 5,495 shares of common stock at an exercise price of $1.15 per share for a period of three years not exercisable within 60 days. |
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| (12) | Includes 506,837 shares held by The Jarrett S. & Rebecca L. Gorlin Family Limited Partnership. Mr. Gorlin disclaims beneficial ownership of the shares. |
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| (13) | Includes 75,000 shares pursuant to options exercisable within 60 days. |
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| (14) | Includes 35,219 shares pursuant to options exercisable within 60 days. |
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| (15) | John Stetson is the Managing Member of HS Contrarian Investments, LLC and in such capacity, is deemed to hold voting and dispositive power of the securities held by HS Contrarian Investments, LLC. |
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| (16) | Excludes warrants to purchase 549,451 shares of common stock at an exercise price of $1.15 per share for a period of three years not exercisable within 60 days. |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Proxy Statement contains “forward-looking statements” and information relating to our business that are based on our beliefs as well as assumptions made by us or based upon information currently available to us. When used in this Proxy Statement, the words anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should” and similar expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements relating to our performance in “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.2016. These statements reflect our current views and assumptions with respect to future events and are subject to risks and uncertainties. Actual and future results and trends could differ materially from those set forth in such statements due to various factors. Such factors include, among others: general economic and business conditions; industry capacity; industry trends; competition; changes in business strategy or development plans; project performance; availability, terms, and deployment of capital; and availability of qualified personnel. These forward-looking statements speak only as of the date of this Proxy Statement. Subject at all times to relevant securities law disclosure requirements, we expressly disclaim any obligation or undertaking to disseminate any update or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Our Board currently consists of ten (10) members. The Nominating and Corporate Governance Committee and Board have unanimously approved the recommended slate of ten directors.
The following table shows the Company’s nominees for election to the Board. Each nominee, if elected, will serve until the next Annual Meeting of Shareholders and until a successor is named and qualified, or until his or her earlier resignation or removal. All nominees are members of the present Board of Directors. We have no reason to believe that any of the nominees is unable or will decline to serve as a director if elected. Unless otherwise indicated by the shareholder, the accompanying proxy will be voted for the election of the ten (10) persons named under the heading “Nominees for Directors.” Although the Company knows of no reason why any nominee could not serve as a director, if any nominee shall be unable to serve, the accompanying proxy will be voted for a substitute nominee.
NOMINEES FOR DIRECTOR
Name of Nominee | | Age | | Position(s) |
Steve Gorlin | | 78 | | Director, Co-Chairman of the Board |
Major General C.A “Lou” Hennies | | 78 | | Director |
James R. Andrews, M.D. | | 74 | | Director |
Scott M. W. Haufe, M.D. | | 50 | | Director |
Ron Lawson | | 72 | | Director |
Randal R. Betz, M.D. | | 64 | | Director |
John C. Thomas, Jr | | 62 | | Director |
Jon Mogford | | 48 | | Director |
Larry Papasan | | 75 | | Director, Co-Chairman of the Board |
Jarrett Gorlin | | 40 | | Chief Executive Officer and Director |
The Nominating and Corporate Governance Committee and the Board seek, and the Board is comprised of, individuals whose characteristics, skills, expertise, and experience complement those of other Board members. We have set out below biographical and professional information about each of the nominees, along with a brief discussion of the experience, qualifications, and skills that the Board considered important in concluding that the individual should serve as a current director and as a nominee for re-election as a member of our Board.
Steve Gorlin. Steve Gorlin is the Co-founder of Debride Inc., the first company acquired by MedoveX. Over the past 40 years, Mr. Gorlin has founded several biotechnology and pharmaceutical companies, including HycorBiomedical, Inc. (acquired by Agilent), Theragenics Corporation (NYSE: TGX) , CytRx Corporation (NASDAQ: CYTR), Medicis Pharmaceutical Corporation (sold to Valeant for approximately $2.6 billion), EntreMed, Inc. (NASDAQ: ENMD), MRI Interventions (MRIC), DARA BioSciences, Inc. (NASDAQ: DARA), MiMedx (NASDAQ: MDXG), and Medivation, Inc. (NASDAQ: MDVN). Mr. Gorlin served for many years on the Business Advisory Council to the Johns Hopkins School of Medicine and on The Johns Hopkins BioMedical Engineering Advisory Board. He presently serves on the board of directors of the Andrews Institute. Mr. Gorlin founded a number of non-medical related companies, including Perma-Fix, Inc., Pretty Good Privacy, Inc. (sold to Network Associates), and NTC China. He started The Touch Foundation, a nonprofit organization for the blind and was a principal financial contributor to the founding of Camp Kudzu for diabetic children. Presently, he serves as a member of the board of directors and of the executive committee of DemeRx, Inc., Conkwest, Inc., and is on the Board of NTC China, Inc.
Major General C.A. “Lou” Hennies. Mr. Hennies became a director of the Company in September 2013. Lou Hennies is a career soldier having served his country in uniform for 41 years where he rose through the ranks from enlisted status to that of a commissioned officer retiring in 2001 as a Major General.
He served a total of 37 months in combat in Republic of Vietnam as a Company/Troop commander of four units and as a battalion/squadron staff officer in the 4th Battalion, 23rd Infantry Regiment, 25th Infantry Division, Cu Chi, and the 7th Squadron, 17th Air Cavalry in II Corps. Stateside he commanded another Air Cavalry Troop followed by command of the 1st Squadron, 17th Air Cavalry in the 82nd Airborne Division.
Selected for Brigadier General in 1986, he subsequently served as the Army’s Deputy Chief of Public Affairs and Director of Army Safety and Commanding General of the U.S Army Safety Center. Initially retiring in 1991, he returned to service in 1995 as The Adjutant General (TAG) of the Alabama Army and Air National Guard and as a Cabinet Officer in the Administration of Governor Fob James Jr.
He is a graduate of the Army’s Command and General Staff College, The Army War College, and The Center for Creative Leadership. A graduate of the University of Nebraska-Omaha with a Bachelor Degree in Political Science, he also holds a Master of Arts Degree in Journalism from the University of Nebraska-Lincoln and a Master of Science in Public Administration from Shippensburg University, Pennsylvania.
His awards and decorations include the Army Distinguished Medal with Oak Leaf Cluster, the Silver Star, the Legion of Merit with Oak Leaf Cluster, the Distinguished Flying Cross, the Soldiers Medal, the Bronze Star with “V” device and 5 Oak Leaf Clusters, the Purple Heart, the Air Medal with “V” (2) and numeral 29, and the Alabama Distinguished Medal with Oak Leaf Cluster. He is also a recipient of numerous foreign decorations from the Republic of Vietnam and the Republic of Korea.
He has been awarded the Army Aviation Order of Saint Michael (Gold), the Infantry’s Order of Saint Maurice (Primercius) and the Army Aviation Hall of Fame Medallion and has been inducted into the Infantry Officer Candidate Hall of Fame, the Army Aviation Hall of Fame, and the Air Force Gathering of Eagles Class of 2000.
James R. Andrews, M.D. James R. Andrews, M.D., has served as a Director of the Company since September 2013. Dr. Andrews is recognized throughout the world for his scientific and clinical research contributions in knee, shoulder and elbow injuries, and his skill as an orthopedic surgeon. Dr. Andrews is a founder and current Medical Director for the American Sports Medicine Institute, a non-profit organization dedicated to the prevention, education and research in orthopaedic and sports medicine, as well as the Andrews Research and Education Institute.
He is Clinical Professor of Orthopaedic Surgery at the University of Alabama Birmingham Medical School, the University of Virginia School of Medicine and the University of South Carolina Medical School. He is Adjunct Professor in the Department of Orthopaedic Surgery at the University of South Alabama and Clinical Professor of Orthopaedics at Tulane University School of Medicine.
He serves as Medical Director for Auburn University Intercollegiate Athletics and Team Orthopaedic Surgeon; Senior Orthopaedic Consultant at the University of Alabama; Orthopaedic Consultant for the college athletic teams at Troy University, University of West Alabama, Tuskegee University and Samford University. He serves on the Tulane School of Medicine Board of Governors.
Dr. Andrews serves on the Medical and Safety Advisory Committee of USA Baseball and on the Board of Little League Baseball, Inc. He has been a member of the Sports Medicine Committee of the United States Olympic Committee and served on the NCAA Competitive Safeguards in Medical Aspects of Sports Committee.
In the professional sports arena, Dr. Andrews is Senior Consultant for the Washington Redskins Football team; Medical Director for the Tampa Bay Rays Baseball team and Medical Director of the Ladies Professional Golf Association.
Dr. Andrews serves as the National Medical Director for Physiotherapy Associates, a national outpatient rehabilitation provider. He serves on the board of directors of Fast Health Corporation and Robins Morton Construction Company. He has a Doctor of Laws Degree from Livingston University and Doctor of Science Degrees from Troy and Louisiana State Universities. He has recently written a book, Any Given Monday, about sports injuries and how to prevent them for athletes, parents and coaches.
Scott M. W. Haufe, M.D. Scott M. W. Haufe, M.D., is a co-founder of Debride and has been a Director of the Company since September 2013. Dr. Haufe is a board certified physician in the fields of Anesthesiology, Pain Medicine and Hospice /Palliative Medicine. He began his career in the field of Anesthesiology where he served as Chief of Anesthesiology and Pain Management with St. Lucie Anesthesia Associates until 1998 while continuing his passion for research. Beginning in 1993, Dr. Haufe was first published and has since authored numerous peer reviewed journal articles. Specifically, in 2005, he was recognized for his publication on the endoscopic treatment for sacroilitis. During 2006, he again authored the first paper on intradiscal stem cell therapy in an attempt to rejuvenate the human disc and in 2010 he developed a minimally invasive procedure for resolving spinal arthritis and subsequently published his findings in the Internal Journal of Med Sci. Additionally, he is named on multiple patents for treating pain related issues. Dr. Haufe earned his MD from the University of South Florida College of Medicine in 1992 with honors and completed his residency in Anesthesiology in 1996. He currently practices in Destin, FL with Anesthesia, Inc., and is affiliated with Sacred Heart Hospital, Destin Surgery Center, and Healthmark Medical Center. He is a member of the American Society of Anesthesiologists and the Florida Society of Anesthesiologists.PROPOSAL NO. 1
Larry Papasan. Larry Papasan has served as Chairman of the board of directors of the Company since September 2013. From July 1991 until his retirement in May 2002, Mr. Papasan served as President of Smith & Nephew Orthopedics. He has been a Director and Chairman of the board of directors of BioMimetic Therapeutics, Inc. [NasdaqGM:BMTI] since August 2005. BioMimetic Therapeutics is developing and commercializing bio-active recombinant protein-device combination products for the healing of musculoskeletal injuries and disease, including orthopedic, periodontal, spine and sports injury applications. Mr. Papasan has also served as a member of the board of directors of Reaves Utility Income Fund [NasdaqCM:UTG], a closed-end management investment company, since February 2003 and of Triumph Bancshares, Inc. (a bank holding company) since April 2005. Mr. Papasan also serves as a Director of SSR Engineering, Inc., AxioMed Spine Corporation, and MiMedx Group, Inc.
John C. Thomas, Jr. John Thomas has been a director of the Company since September 2013 and currently serves as a director and the CFO/corporate secretary for CorMatrix Cardiovascular, Inc., a privately held medical device company which he joined in 2001. Over the past 24 years, Mr. Thomas has served as the CFO of numerous startup companies and managed their financing activities from the initial financing up to their initial public offering. Some of these companies are still private and some have become public entities. The companies in the health care industry that have gone public while Mr. Thomas was the CFO include CytRx Corporation (1986 – 1990), CytRx Biopool (1988 – 1991), Medicis Pharmaceutical Corporation (1988 –1991), EntreMed, Inc. (1991 – 1997), DARA BioSciences, Inc. (1998 – 2009) and, MiMedx, Inc. (2006 – 2009). He has also been the CFO of Surgi-Vision, Inc., a private research company involved in MRI technology (1998 – 2010). Mr. Thomas has also been the CFO of Motion Reality, Inc., a privately-held company with proprietary software that captures and analyzes motion data since 1991. Presently, he serves as a member of the board of directors of QLT, Inc., (QLT) a publicly traded medical company and Conkwest, Inc. a privately held company. Mr. Thomas is a certified public accountant.
Ron Lawson. Ron Lawson became a director of the Company in August 2016 following the voluntary resignation of Thomas Hills. Mr. Lawson has over 35 years of experience in the orthopedic industry. In 1996, he served as the Senior Vice President of Worldwide Sales and Customer Service for Pfizer’s Orthopedic Division, Howmedica. In 1998, upon Stryker Corporation’s acquisition of Howmedica, Mr. Lawson was appointed to serve as Senior Vice President of Sales, Marketing and Product Development. In 2000, he was asked to lead the revitalization of Stryker’s European business as its President, EMEA and in 2001, was promoted to Group President, International. From 2005 to 2007, Mr. Lawson served as Stryker’s Group President for International and Global Orthopedics where he was focused on strengthening the Stryker Orthopedic business worldwide. Since 2009, Mr. Lawson has been a member of the Lawson Group where he provides strategic consulting services specializing in orthopedic medical technology.
Mr. Lawson previously served as Chairman of the Board of IMDS, Corporation and also served as a member of the Health Care Advisory Board of Arsenal Capital Partners. He presently serves as a Director of Plasmology 4, Corporation as well as a Director of DJO Global, a Blackstone company.
Randal R. Betz, M.D. Dr. Randal Betz has been a director of the Company since September 2013. Dr. Betz is an orthopedic spine surgeon with a private practice in Princeton, New Jersey. Dr. Betz has held hospital positions as Chief of Staff at Shriners Hospitals for Children and Medical Director of Shriners’ Spinal Cord Injury Unit. Dr. Betz is also a Professor of Orthopedic Surgery at Temple University School of Medicine.
Dr. Betz earned a Medical Degree from Temple University School of Medicine and was awarded the Alpha Omega Alpha honor. His Internship in general surgery and Residency in Orthopedic Surgery were at Temple University Hospital. Dr. Betz’s Fellowship in Pediatric Orthopedics was at the Alfred I DuPont Institute. Since his graduate work, Dr. Betz has had postdoctoral fellowship experiences with ABC Traveling Fellowship, North American Traveling Fellowship, SRS Traveling fellowship and the Berg-Sloat Traveling Fellowship. Many national and international professional societies count Dr. Betz as a member including: the Academic Orthopedic Society, American Academy for Cerebral Palsy and Developmental Medicine, American Academy of Orthopedic Surgeons, American Orthopedic Association, American Paraplegia Society, American Spinal Injury Association, British Scoliosis Society, International Functional Electrical Stimulation Society, North American Spine Society, Pediatric Orthopedic Society of North America, Scoliosis Research Society, and Spinal Deformity Education Group. For many of these organizations, Dr. Betz has fulfilled the roles of board of director member, committee member and President of the Scoliosis Research Society in 2005.
In addition to an active hospital practice in pediatric spinal surgery, research is an important area of Dr. Betz’s career. He is a recipient of many research grants and he has ten patents, including several involving research in spinal deformities: fusionless treatment of spinal deformities. Dr. Betz is author of several medical texts. He has contributed 45 chapters to medical books and written 280 peer-reviewed or invited articles. Worldwide, Dr. Betz has delivered hundreds of paper presentations and invited lectures. Dr. Betz is on the Editorial Board of the Journal of Pediatric Orthopedics and a Reviewer for the Journal of Bone and Joint Surgery, Journal of Pediatric Orthopedics, and Spine.
Jarrett Gorlin. Jarrett Gorlin has served as the Chief Executive Officer, President, and a Director of the Company since November, 2013. Prior to joining the Company, Mr. Gorlin served as the President of Judicial Correction Services, Inc. (“JCS”), the largest provider of private probation services in the country, which he co-founded in 2001. In 2011, he successfully negotiated the sale of JCS to Correctional Healthcare Companies (“CHC”), after which he has continued to serve as the President of JCS. Under Mr. Gorlin’s leadership, JCS made INC. Magazine’s list of the Fastest Growing Companies in America in 2010, 2011, and 2012. Mr. Gorlin began his career by becoming the youngest rated commercial helicopter pilot at the age of 16, and becoming the chief pilot for the Fulton County Sheriff’s Office in Atlanta, Georgia. Mr. Gorlin has served a Captain and Commander at the Fulton County Sheriff’s Office where he has worked from 1996 to present. He continues to serve his community through law enforcement as the commander of a reserve unit overseeing 90 deputy sheriffs, who work in the courts, jail and warrant divisions. Mr. Gorlin also serves as a political advisor and consultant to many elected officials in the Atlanta area, including the current sitting Sheriff of Fulton and Clayton County, Georgia. He has also served on the campaign finance committee for the former Governor of Georgia Roy Barnes.
Jon Mogford, PH.D. Dr. Mogford serves as the Vice Chancellor for Research for The Texas A&M University System and provides research and development leadership to the System’s eleven universities and seven state agencies encompassing 30,000 faculty and staff, >135,000 students, a budget of more than $4 billion and research expenditures of more than $945 million annually. As the leader of the A&M System Office of Research, he develops strategic partnerships with external agencies, foundations, academic institutions, and commercial corporations to enhance the system’s mission of research, teaching, service, and economic development for the state of Texas.
Prior to joining the Texas A&M University System in 2011, Dr. Mogford served as a program manager and then Deputy Director of the Defense Sciences Office (DSO) of the Defense Advanced Research Projects Agency (DARPA) in the U.S. Department of Defense. As DSO Deputy Director, he provided strategic planning and implementation of ≈$400M/year in R&D in the physical, biomedical and material sciences. He provided leadership to 20 Program Managers in the development and management of office investments ranging from the fundamental sciences to commercial transition efforts for both defense and non-defense applications. Dr. Mogford led expansion of formal working relationship between DARPA and the FDA to improve the ability of each organization to meet mission goals, which was highlighted as a DARPA-FDA-NIH partnership by the White House. He is the recipient of the Secretary of Defense Medal for Outstanding Public Service.
His DARPA programs included scar-free regeneration of wounds, metabolic control strategies for survival of severe blood loss, biomarker-responsive biomaterials for drug delivery, stem cell-based bioreactor production of universal donor red blood cells, computational design of novel proteins, and active hemostatic biomaterials for treatment internal and external wounds. He has authored or co-authored 29 peer-reviewed publications.
Dr. Mogford obtained his bachelor’s degree in Zoology from Texas A&M University and doctorate in Medical Physiology from the Texas A&M University Health Science Center, College Station, Texas. His research in vascular physiology continued at the University of Chicago as a Postdoctoral fellow from 1997-98. Dr. Mogford transitioned his research focus to the field of wound healing at Northwestern University, both as a Research Associate and also as a Research Assistant Professor from 1998-2003. He then served as a Life Sciences Consultant to DARPA on the Revolutionizing Prosthetics program from 2003-2005.
AUTHORIZE THE BOARD OF DIRECTORS, UNANIMOUSLY RECOMMENDS THATWITHOUT FURTHER ACTION BY SHAREHOLDERS,
TO APPROVE AN AMENDMENT TO THE SHAREHOLDERS VOTE “FOR” THE ELECTIONCOMPANY’S ARTICLES OF ALL OF THE NOMINEES FOR DIRECTOR.INCORPORATION TO
EFFECT A REVERSE STOCK SPLIT
Information about theOur Board of Directors has adopted a resolution declaring advisable and Committees
Corporate Governancerecommending to the shareholders for their approval a proposal to amend the Company's restated certificate of incorporation, as amended to date, to effect a reverse stock split of the Company's issued and outstanding common stock at any whole number ratio between, and inclusive of, one-for-two and one-for- five (the "Reverse Stock Split"). Approval of this Proposal No. 1 would grant our Board the authority, without further action by the shareholders, to carry out the Reverse Stock Split, at any time within twelve months after the date shareholder approval for the Reverse Stock Split is obtained from our shareholders, with the exact exchange ratio and timing of the Reverse Stock Split (if at all) to be determined at our Board's discretion.
Director IndependenceOur Board's decision whether or not (and when) to effect a Reverse Stock Split (and at what whole number ratio to effect the Reverse Stock Split) will be based on a number of factors, including market conditions, existing and anticipated trading prices for our common stock and the continued listing requirements of the NASDAQ Capital Market ("NASDAQ"). In August 2016, we received a notification from NASDAQ indicating that the Company was not in compliance with NASDAQ Listing Rule 5550(b), which requires a minimum of $2,500,000 stockholders’ equity for continued listing on NASDAQ. On July 14, 2017, we conducted a private placement offering of our securities with selected accredited investors for total net proceeds of $2,690,000 (the “Offering”). As a result of the Offering, we had a Stockholders’ equity of more than $2,500,000.Our Board of Directors has adopted resolutions to authorize the Board, in its sole direction, to amend the Company’s Articles of Incorporation to effect the Reverse Stock Split of our issued and outstanding common stock, to comply with the continued listing requirements of the NASDAQ Capital Market as described below and directing such proposal to be submitted to the holders of our common stock for their approval.
The Company has determined thatamendment to the Company’s Certificate of Incorporation to effect the Reverse Stock Split of our issued and outstanding common stock, if approved by the shareholders, will be substantially in the form set forth on Major General C.A. “Lou” Hennies, Scott M. W. Haufe, M.D., Ron Lawson, John C. Thomas, Jr. Appendix Aand Larry Papasan are "independent" as defined (subject to any changes required by and determined under,applicable law). If approved by the applicable director independence standardsholders of The NASDAQour common stock, the Reverse Stock Market LLC. If elected, Dr. Jon Mogford, PH.D. will also qualify as independent under the NASDAQ definition of “independent.”
Liability and IndemnificationSplit proposal would permit (but not require) our Board of Directors and OfficersOur Articles of Incorporation provide that to the fullest extent permitted under Nevada law, our directors will not be personally liable to the Company or its stockholders for monetary damages for breach of the duty of care, breach of fiduciary duty or breach of any other duties as directors. Our Articles of Incorporation also provide for indemnificationeffect a reverse stock split of our directorsissued and officersoutstanding common stock at any time prior to [_____], 2018 by a ratio of not less than one-for-two and not more than one-for-five, with the Companyexact ratio to the fullest extent permitted by law.
Role of Board in Risk Oversight ProcessOur board of directors has responsibility for the oversight of the Company’s risk management processes and, either asbe set at a whole or throughnumber within this range as determined by our Board of Directors in its committees, regularly discusses with managementsole discretion. We believe that enabling our major risk exposures, their potential impact on our businessBoard of Directors to implement the Reverse Stock Split and set the steps we take to manage them. The risk oversight process includes receiving regular reports from board committees and members of senior management to enable our board to understandratio within the company’s risk identification, risk management and risk mitigation strategies with respect to areas of potential material risk, including operations, finance, legal, regulatory, strategic and reputational risk.
The audit committee reviews information regarding liquidity and operations, and oversees our management of financial risks. Periodically, the audit committee reviews our policies with respect to risk assessment, risk management, loss prevention and regulatory compliance. Oversight by the audit committee includes direct communication with our external auditors, and discussions with management regarding significant risk exposures and the actions management has taken to limit, monitor or control such exposures. The compensation committee is responsible for assessing whether any of our compensation policies or programs has the potential to encourage excessive risk-taking. The nominating/corporate governance committee manages risks associatedstated range will provide us with the independence offlexibility to implement the board, corporate disclosure practices, and potential conflicts of interest. While each committee is responsibleReverse Stock Split in a manner designed to maximize the anticipated benefits for evaluating certain risks and overseeingour shareholders including maintaining compliance with the management of such risks, the entire board is regularly informed through committee reports about such risks. Matters of significant strategic risk are considered by our board as a whole.
Board Committees and IndependenceOur board of directors has established an audit committee, a nominating and corporate governance committee and a compensation committee, each of which operates under a charter that has been approved by our board.
Each of the Company's current independent directors, Major General C.A. “Lou” Hennies, Scott M. W. Haufe, M.D., Ron Lawson, John C. Thomas Jr., and Larry Papasan, are independent under the rules of the NASDAQ Capital Market. Accordingly, our board has determined that all of the members of each of the board’s three standing committees are independent as defined under the rulescontinued listing standards of the NASDAQ Capital Market. In addition, all membersdetermining a ratio, if any, following the receipt of shareholder approval, our Board of Directors may consider, among other things, factors such as:
| the continued listing requirements in accordance with the NASDAQ Marketplace Rules; |
| the historical trading price and trading volume of our common stock; |
| the number of shares of our common stock outstanding; |
| the then-prevailing trading price and trading volume of our common stock and the anticipated impact of the Reverse Stock Split on the trading market for our common stock; |
| the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs; and |
| prevailing general market and economic conditions. |
The purpose of asking for authorization to implement the reverse stock split at a ratio to be determined by the Board, as opposed to a ratio fixed in advance, is to give the Board the flexibility to take into account then-current market conditions and changes in the price of our common stock and to respond to other developments that may be deemed relevant when considering the appropriate ratio.
Rationale for a Reverse Split
National Securities Listing
Our primary reason for seeking to effectuate the Reverse Stock Split is that the Reverse Stock Split could better enable us to continue the listing of our common stock on the NASDAQ Capital Market. The NASDAQ Capital Market requires a bid price of $1.00 per share for continued listing. The Company’s common stock is currently trading at below $1.00 per share. Therefore, the Reverse Stock Split could help us maintain our listing on the NASDAQ Capital Market.
Certain Risks Associated with Not Adopting the Reverse Stock Split Charter Amendment
Failure to carry out the Reverse Stock Split also carries several significant risks:
●
If our stockholders do not approve the Reserve Stock Split, we may be unable to meet the minimum stockholders’ equity requirement necessary to maintain the listing of our common stock on the Nasdaq Capital Market which could result in a lack of liquidity for our common stock.
Procedure for Implementing the Reverse Stock Split
The Reverse Stock Split, if approved by our shareholders, would become effective upon the filing (the “Effective Time”) of a certificate of amendment to our Articles of Incorporation with the Secretary of State of the audit committee meetState of Nevada. The exact timing of the independence requirements contemplatedfiling of the certificate of amendment that will effect the Reverse Stock Split will be determined by our Board of Directors based on its evaluation as to when such action will be the most advantageous to the Company and our shareholders. In addition, our Board of Directors reserves the right, notwithstanding shareholder approval and without further action by the shareholders, to elect not to proceed with the Reverse Stock Split if, at any time prior to filing the certificate of amendment to the Company’s Articles of Incorporation, our Board of Directors, in its sole discretion, determines that it is no longer in our best interest and the best interests of our shareholders to proceed with the Reverse Stock Split. If a certificate of amendment effecting the Reverse Stock Split has not been filed with the Secretary of State of the State of Nevada by the close of business on [______], 2018, our Board of Directors will abandon the Reverse Stock Split.
Effect of the Reverse Stock Split on Holders of Outstanding Common Stock
Depending on the ratio for the Reverse Stock Split determined by our Board of Directors, a minimum of two and a maximum of five shares of existing common stock will be combined into one new share of common stock. The table below shows, based on the 20,922,634 shares of common stock outstanding as of the Record Date, the number of outstanding shares of common stock (excluding Treasury shares) that would result from the listed hypothetical reverse stock split ratios (without giving effect to the treatment of fractional shares):
| Reverse Stock Split Ratio | | Approximate Number of Outstanding Shares of Common Stock Following the Reverse Stock Split |
| 1-for-2 | | 10,461,317 | |
| 1-for-3 | | 6,974,212 | |
| 1-for-4 | | 5,230,659 | |
| 1-for-5 | | 4,184,527 | |
The actual number of shares issued after giving effect to the Reverse Stock Split, if implemented, will depend on the Reverse Stock Split ratio that is ultimately determined by our Board of Directors.
The Reverse Stock Split will affect all holders of our common stock uniformly and will not affect any shareholder’s percentage ownership interest in the Company, except that as described below in “Fractional Shares,” record holders of common stock otherwise entitled to a fractional share as a result of the Reverse Stock Split will be rounded up to the next whole number. In addition, the Reverse Stock Split will not affect any shareholder’s proportionate voting power (subject to the treatment of fractional shares).
The Reverse Stock Split may result in some shareholders owning “odd lots” of less than 100 shares of common stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares.
Effect on Convertible Shares, Options, Warrants and Other Securities
All outstanding options, warrants and other securities, entitling their holders to purchase or acquire shares of our common stock would be adjusted as a result of the Reverse Stock Split, as required by the terms of each security. In particular, the conversion ratio for each security would be reduced proportionately, and the exercise price, if applicable, would be increased proportionately, in accordance with the terms of each security and based on the exchange ratio implemented in the Reverse Stock Split.
Beneficial Holders of Common Stock (i.e. shareholders who hold in street name)
Upon the implementation of the Reverse Stock Split, we intend to treat shares held by shareholders through a bank, broker, custodian, or other nominee in the same manner as registered shareholders whose shares are registered in their names. Banks, brokers, custodians, or other nominees will be instructed to effect the Reverse Stock Split for their beneficial holders holding our common stock in street name. However, these banks, brokers, custodians, or other nominees may have different procedures than registered shareholders for processing the Reverse Stock Split. Shareholders who hold shares of our common stock with a bank, broker, custodian, or other nominee and who have any questions in this regard are encouraged to contact their banks, brokers, custodians or other nominees.
Registered “Book-Entry” Holders of Common Stock (i.e. shareholders that are registered on the transfer agent’s books and records but do not hold stock certificates)
Certain of our registered holders of common stock may hold some or all of their shares electronically in book-entry form with the transfer agent. These shareholders do not have stock certificates evidencing their ownership of the common stock. They are, however, provided with a statement reflecting the number of shares registered in their accounts.
Shareholders who hold shares electronically in book-entry form with the transfer agent will not need to take action (the exchange will be automatic) to receive whole shares of post-Reverse Stock Split common stock, subject to adjustment for treatment of fractional shares.
Holders of Certificated Shares of Common Stock
Shareholders holding shares of our common stock in certificated form will be sent a transmittal letter by our transfer agent after the Effective Time. The letter of transmittal will contain instructions on how a shareholder should surrender his, her or its certificate(s) representing shares of our common stock (the “Old Certificates”) to the transfer agent in exchange for certificates representing the appropriate number of whole shares of post-Reverse Stock Split common stock (the “New Certificates”). No New Certificates will be issued to a shareholder until such shareholder has surrendered all Old Certificates, together with a properly completed and executed letter of transmittal, to the transfer agent. No shareholder will be required to pay a transfer or other fee to exchange his, her or its Old Certificates. Shareholders will then receive a New Certificate(s) representing the number of whole shares of common stock that they are entitled as a result of the Reverse Stock Split, subject to the treatment of fractional shares described below. Until surrendered, we will deem outstanding Old Certificates held by shareholders to be cancelled and only to represent the number of whole shares of post-Reverse Stock Split common stock to which these shareholders are entitled, subject to the treatment of fractional shares. Any Old Certificates submitted for exchange, whether because of a sale, transfer or other disposition of stock, will automatically be exchanged for New Certificates. If an Old Certificate has a restrictive legend on the back of the Old Certificate(s), the New Certificate will be issued with the same restrictive legends that are on the back of the Old Certificate(s).
SHAREHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Fractional Shares
We do not currently intend to issue fractional shares in connection with the Reverse Stock Split. Therefore, we will not issue certificates representing fractional shares. In lieu of issuing fractions of shares, we will round up to the next whole number.
Effect of the Reverse Stock Split on Employee Plans, Options, Restricted Stock Awards and Units, Warrants, and Convertible or Exchangeable Securities
Based upon the Reverse Stock Split ratio determined by the Board of Directors, proportionate adjustments are generally required to be made to the per share exercise price and the number of shares issuable upon the exercise or conversion of all outstanding options, warrants, convertible or exchangeable securities entitling the holders to purchase, exchange for, or convert into, shares of common stock. This would result in approximately the same aggregate price being required to be paid under such options, warrants, convertible or exchangeable securities upon exercise, and approximately the same value of shares of common stock being delivered upon such exercise, exchange or conversion, immediately following the Reverse Stock Split as was the case immediately preceding the Reverse Stock Split. The number of shares deliverable upon settlement or vesting of restricted stock awards will be similarly adjusted, subject to our treatment of fractional shares. The number of shares reserved for issuance pursuant to these securities will be proportionately based upon the Reverse Stock Split ratio determined by the Board of Directors, subject to our treatment of fractional shares.
Accounting Matters
The proposed amendment to the Company’s Articles of Incorporation will not affect the par value of our common stock per share, which will remain $0.001 par value per share. As a result, as of the Effective Time, the total of the stated capital attributable to common stock and the additional paid-in capital account on our balance sheet will not change due to the Reverse Stock Split. Reported per share net income or loss will be higher because there will be fewer shares of common stock outstanding.
No Going Private Transaction
Notwithstanding the decrease in the number of outstanding shares following the implementation of the Reverse Stock Split, the Board of Directors does not intend for this transaction to be the first step in a “going private transaction” within the meaning of Rule 10A-3 under13e-3 of the Securities Exchange Act of 1934, orand the Exchange Act.implementation of the proposed reverse stock split will not cause the Company to go private.
Audit CommitteeCertain Federal Income Tax Consequences of the Reverse Stock Split
The membersfollowing summary describes certain material U.S. federal income tax consequences of the Reverse Stock Split to holders of our audit committeecommon stock:
Unless otherwise specifically indicated herein, this summary addresses the tax consequences only to a beneficial owner of our common stock that is a citizen or individual resident of the United States, a corporation organized in or under the laws of the United States or any state thereof or the District of Columbia or otherwise subject to U.S. federal income taxation on a net income basis in respect of our common stock (a “U.S. holder”). A trust may also be a U.S. holder if (1) a U.S. court is able to exercise primary supervision over administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person. An estate whose income is subject to U.S. federal income taxation regardless of its source may also be a U.S. holder. This summary does not address all of the tax consequences that may be relevant to any particular investor, including tax considerations that arise from rules of general application to all taxpayers or to certain classes of taxpayers or that are John C. Thomas, Jr., Ron Lawsongenerally assumed to be known by investors. This summary also does not address the tax consequences to (i) persons that may be subject to special treatment under U.S. federal income tax law, such as banks, insurance companies, thrift institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, U.S. expatriates, persons subject to the alternative minimum tax, traders in securities that elect to mark to market and Larry Papasan. Mr. Thomas chairsdealers in securities or currencies, (ii) persons that hold our common stock as part of a position in a “straddle” or as part of a “hedging,” “conversion” or other integrated investment transaction for federal income tax purposes, or (iii) persons that do not hold our common stock as “capital assets” (generally, property held for investment).
If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the audit committee. The audit committee’s main function is to overseebeneficial owner of our accounting and financial reporting processes, internal systemscommon stock, the U.S. federal income tax treatment of control, independent registered public accounting firm relationshipsa partner in the partnership will generally depend on the status of the partner and the auditsactivities of the partnership. Partnerships that hold our financial statements. This committee’s responsibilities include, among other things:common stock, and partners in such partnerships, should consult their own tax advisors regarding the U.S. federal income tax consequences of the Reverse Stock Split.
● | appointing, approving the compensation of and assessing the independence of our registered public accounting firm; |
● | overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of reports from such firm; |
● | reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures; |
● | monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics; |
● | overseeing our internal audit function; |
● | overseeing our risk assessment and risk management policies; |
● | establishing policies regarding hiring employees from the independent registered public accounting firm and procedures for the receipt and retention of accounting related complaints and concerns; |
● | meeting independently with our internal auditing staff, independent registered public accounting firm and management; |
● | reviewing and approving or ratifying any related person transactions; and |
● | preparing the audit committee report required by the Securities and Exchange Commission, or SEC, rules. |
This summary is based on the provisions of the Internal Revenue Code of 1986, as amended, U.S. Treasury regulations, administrative rulings and judicial authority, all as in effect as of the date of this proxy statement. Subsequent developments in U.S. federal income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax consequences of the Reverse Stock Split.
All audit and non-audit services, other than de minimis non-audit services, to be provided to us by our independent registered public accounting firm must be approved in advance by our audit committee.PLEASE CONSULT YOUR OWN TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE INTERNAL REVENUE CODE AND THE LAWS OF ANY OTHER TAXING JURISDICTION.
Our board of directors has determined that John C. Thomas, Jr. is an “audit committee financial expert” as defined in applicable SEC rules.
Nominating and Corporate Governance CommitteeU.S. Holders
The membersReverse Stock Split should be treated as a recapitalization for U.S. federal income tax purposes. Therefore, a shareholder generally will not recognize gain or loss on the Reverse Stock Split, except to the extent of our nominatingcash, if any, received in lieu of a fractional share interest in the post-Reverse Stock Split shares. The aggregate tax basis of the post-split shares received will be equal to the aggregate tax basis of the pre-split shares exchanged therefore (excluding any portion of the holder’s basis allocated to fractional shares), and corporate governance committee are Major General C.A. “Lou” Hennies, Ron Lawsonthe holding period of the post-split shares received will include the holding period of the pre-split shares exchanged. A holder of the pre-split shares who receives cash will generally recognize gain or loss equal to the difference between the portion of the tax basis of the pre-split shares allocated to the fractional share interest and Larry Papasan. Mr. Hennies chairs the nominatingcash received. Such gain or loss will be a capital gain or loss and corporate governance committee. This committee’s responsibilities include, among other things:will be short term if the pre-split shares were held for one year or less and long term if held more than one year. No gain or loss will be recognized by us as a result of the Reverse Stock Split.
● | identifying individuals qualified to become members of our board of directors; |
● | recommending to our board of directors the persons to be nominated for election as directors and to each of our board’s committees; |
● | developing, recommending to the board, and assessing corporate governance principles, codes of conduct and compliance mechanisms; and |
● | overseeing the evaluation of our board of directors. |
Compensation CommitteeVote Required
The membersaffirmative vote from the holders of a majority of shares of our compensation committee are Larry Papasan, Major General C.A. “Lou” Hennies and Scott M. W. Haufe, M.D. Mr. Papasan chairscommon stock outstanding on the compensation committee. This committee’s responsibilities include, among other things:Record Date.
● | reviewing and recommending corporate goals and objectives relevant to the compensation of our chief executive officer and other executive officers; |
● | making recommendations to our board of directors with respect to, the compensation level of our executive officers; |
● | reviewing and recommending to our board of directors employment agreements and significant arrangements or transactions with executive officers; |
● | reviewing and recommending to our board of directors with respect to director compensation; and |
● | overseeing and administering our equity-based incentive plans; |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE REVERSE STOCK SPLIT.
Compensation Committee Interlocks and Insider Participation
None of our executive officers serves as a member of the compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our board of directors or our compensation committee. Mr. Gorlin, CEO and Director, will abstain on any board vote involving executive compensation by the board as a whole.
Our nominating and corporate governance committee will be responsible for reviewing with the board of directors, on an annual basis, the appropriate characteristics, skills and experience required for the board of directors as a whole and its individual members. In evaluating the suitability of individual candidates (both new candidates and current members), the nominating and corporate governance committee, in recommending candidates for election, and the board of directors, in approving (and, in the case of vacancies, appointing) such candidates, will take into account many factors, including the following:
| personal and professional integrity, ethics and values; |
| experience in corporate management, such as serving as an officer or former officer of a publicly-held company; |
| development or commercialization experience in large medical products companies; |
| experience as a board member or executive officer of another publicly-held company; |
| strong finance experience; |
| diversity of expertise and experience in substantive matters pertaining to our business relative to other board members; |
| diversity of background and perspective, including with respect to age, gender, race, place of residence and specialized experience; |
| conflicts of interest; and |
| practical and mature business judgment. |
Currently, our board of directors evaluates each individual in the context of the board of directors as a whole, with the objective of assembling a group that can best maximize the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in these various areas.
Code of Business Conduct and EthicsPROPOSAL NO. 2
We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the code will be posted on the Corporate Governance section of our website, www.MedoveX.com. In addition, we intend to post on our website all disclosures that are required by law or the listing standards of The NASDAQ Capital Market concerning any amendments to, or waivers from, any provision of the code. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this Annual Report.
Procedures for Security Holders to Recommend Nominees for Election as DirectorsThere have been no material changes to the procedures by which security holders may recommend nominees to the board of directors since the Company last described such procedures or any material changes thereto.
Company Policy as to Director Attendance at Annual Meetings of StockholdersThe Company's policy encourages board members to attend annual meetings of stockholders.
Section 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires each person who is a director or officer or beneficial owner of more than ten percent (10%) of the common stock of the Company to file reports in connection with certain transactions.
Based solely upon the review of forms or representations furnished to the Company during or with respect to the most recent completed fiscal year, the following officers, directors or beneficial owners of more than ten percent (10%) of any class of equity securities of the Company registered pursuant to Section 12 of the Exchange Act failed to timely file Form 4 with respect to shares of common stock acquired during or with respect to the most recent completed fiscal year: (i) Randal Betz failed to timely file one (1) Form 4 to report one (1) transaction therein; (ii) Steve Gorlin failed to timely file two (2) Form 4’s to report five (5) transactions therein; (iii) Patrick Kullmann failed to file one (1) Form 4 to report (1) transaction therein; and (iv) Dennis Moon failed to file one (1) Form 4 to report one (1) transaction therein.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
On January 31, 2013, Debride entered into a Contribution and Royalty Agreement with Scott W. Haufe, M.D., a Director of the Company, pursuant to which agreement, Debride acquired all of Dr. Haufe’s right, title and ownership of U.S. Patent 8,167,879 B2, together with all of Dr. Haufe’s right, title and interest in and to the Debride intellectual property in exchange for shares of common stock of Debride. The agreement provides that Dr. Haufe shall receive a royalty of one (1%) percent of Debride’s net sales during the life of the patent.
In September 2013, we entered into a Co-Development Agreement with James Andrews, M.D., a director of the Company, whereby Dr. Andrews committed to further evaluate the Debride and to seek to make modifications and improvements to such technology. In exchange for such services, the Company agreed to pay Dr. Andrews a royalty equal to two (2%) percent of Debride’s net sales during the five (5) year term of the Co-Development Agreement. Upon the termination of the term of the Co-Development Agreement, which has a minimum term of five (5) years, then the royalty payable to Dr. Andrews shall be reduced to one (1%) percent of Debride’s net sales after such termination of products covered by any U.S. patent on which Dr. Andrews is listed as a co-inventor; if any such patents are obtained. Such one (1%) percent royalty shall continue during the effectiveness of such patent. Pursuant to the Co-Development Agreement, Dr. Andrews agreed to assign any modifications or improvements to the Debride to the Company subject to the royalty rights described above.
Several directors of the Company or their family members participated in the 2013 private placement of shares of common stock of the Company at $2.50 per share on the same terms as non-affiliated stockholders. In the aggregate, directors of the Company purchased 137,500 shares in the 2013 private placement. The resale of these shares are subject to a lock up.
The Company pays TAG Aviation (“TAG”), a company owned by CEO Jarrett Gorlin, for approximately 1,200 square feet of office space in Atlanta Georgia for executive office space at a rate of $1,800 per month plus related utilities. The rental rate is 90% of the amount billed to TAG Aviation by the owner of the property. The Company has also chartered aircraft from TAG Aviation. The total amount spent for chartered service with TAG Aviation was approximately $34,000 in 2013 and $33,000 in 2014. The Company believes that such aircraft charter is on terms no less favorable then it would receive from a third party.
On November 9, 2015, we issued a Convertible Promissory Note to Steve Gorlin, a Director of the Company, for the principle amount of up to $2,000,000 which was to be advanced in two installments of $1,000,000 each with the first installment being made upon execution of the promissory note and the second installment to be made by March 1, 2016. The Convertible Note further provided that the principal and accrued but unpaid interest could be converted into common stock at $2.00 per share and that the outstanding principal was to earn interest at a rate of 5.5% per annum and be paid quarterly. We also issued a 3 year warrant to Mr. Steve Gorlin to purchase 500,000 shares of common stock at $2.20 per share.
On January 25, 2016, we entered into a Modification Agreement with Mr. Gorlin whereby Mr. Gorlin agreed to immediately convert the promissory note into an aggregate of 571,429 shares of its common stock, eliminating our $1,000,000 debt obligation and any accrued interest in exchange for amending the conversion price of the promissory note from $2.00 per share to $1.75 per share. In addition, Mr. Gorlin also agreed to acquire 571,429 additional shares of common stock at a price of $1.75 per share for a total purchase price of $1,000,000 within two months from the date of the Modification Agreement. This Modification Agreement also amended the exercise price of the warrant issued as part of the initial issuance from $2.20 per share to $2.00 per share.
On February 16, 2016, we entered into an Amendment to the Modification Agreement in order to reduce the number of share Mr. Gorlin was to receive upon conversion of the $1,000,000 promissory note from 571,429 ($1.75 per share) shares to 552,041 ($1.81 per share) shares. In consideration for reducing the amount of shares of commons stock that Mr. Gorlin was to receive, we agreed to reduce the exercise price of Mr. Gorlin’s 500,000 share warrant from $2.00 per share to $1.825 per share. This Amendment to the Modification Agreement was made to address certain concerns of NASDAQ.
Jarrett Gorlin, Chief Executive Officer of the Company, participated in the April 2016 private placement and acquired 43,028 shares at a purchase price of $1.255 per shares, which was slightly higher from the price of $1.20 paid by other investors. In connection with his purchase, Mr. Gorlin received 21,514 warrants to purchase common stock at an exercise price of $1.30 per share. This price adjustment was made in accordance with certain NASDAQ Marketplace Rules.
PROPOSAL 2 – RATIFY THE RETENTION OF FRAZIER & DEETER LLCAS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017
The Audit Committee has retained Frazier & Deeter LLC as the Company’s independent registered public accounting firm to perform the audit of the Company’s consolidated financial statements for the fiscal year ending December 31, 2016, and the audit of the Company’s internal control over financial reporting as of December 31, 2016.
Frazier & Deeter LLC has confirmed to the Audit Committee and the Company that it complies with all rules, standards, and policies of the Public Company Accounting Oversight Board (“PCAOB”), and the SEC rules governing auditor independence.
Representatives of Frazier & Deeter LLC will be present at the meeting and will have the opportunity to make a statement at the meeting if they wish to do so, and will respond to appropriate questions asked by shareholders. See “Independent Registered Public Accounting Firm Fees and Services” below for a description of the fees paid to firms for the years ended December 31, 2015 and 2014, and other matters relating to the procurement of services.
We are seeking shareholder ratification of the retention of Frazier & Deeter LLC. Although shareholder ratification of the retention of our independent registered public accounting firm is not required, we are submitting the selection of Frazier & Deeter LLC for ratification as a matter of good corporate governance. Even if the selection is ratified, the Audit Committee in its discretion may appoint an alternative independent registered public accounting firm if it deems such action appropriate. If the Audit Committee selection is not ratified, the Audit Committee will take that fact into consideration, together with such other factors as it deems relevant, in deeming its selection of an independent registered public accounting firm.
Marcum LLP (“Marcum”) served as our independent auditors for the fiscal year ended December 31, 2013. On January 27, 2015, we dismissed Marcum, and Frazier & Deeter, LLP became our independent auditor. The decision to change accountants was recommended and approved by our Audit Committee following the Committee’s further process to determine our independent registered public accounting firm.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS SHAREHOLDERS VOTE “FOR” RATIFYING THE RETENTION OF FRAZIER & DEETER LLC AS INDEPENDENT REGISTERED PUBLIC ACOUNTING FIRM FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017.
Independent Registered Public Accounting Firm Fees and Services
Item 14 of Part III of our Annual Report on Form 10-K, as filed (our “Annual Report”) is incorporated herein by reference.
Audit Committee Report
The Audit Committee has reviewed and discussed the audited financial statements with management, which has represented that the financial statements were prepared in accordance with accounting principles generally accepted in the United States. The Audit Committee discussed with management the quality and acceptability of the accounting principles employed, including all critical accounting policies used in the preparation of the financial statements and related notes, the reasonableness of judgments made, and the clarity of the disclosures included in the statements.
The Audit Committee also reviewed our consolidated financial statements for fiscal 2015 with Frazier & Deeter LLC, our independent auditors for fiscal 2015, who are responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States. The Board of Directors has discussed with Frazier & Deeter LLC the matters required to be discussed by Statement on Auditing Standards No. 61, as amended.
The Audit Committee has received the written disclosures and the letter from Frazier & Deeter LLC mandated by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditors’ communications with the Board of Directors concerning independence and has discussed with Frazier & Deeter LLC its independence and has considered whether the provision of non-audit services provided by Frazier & Deeter LLC is compatible with maintaining Fraizer & Deeter LLC’s independence.
Based on the reviews and discussions referred to above, the Board of Directors recommended that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2015 for filing with the Securities and Exchange Commission. The Board of Directors has selected Frazier & Deeter LLC as our independent auditor for 2016.
Respectfully submitted by the Audit Committee,
John C. Thomas, Jr.
Thomas E. Hills
Larry Papasan
The foregoing Audit Committee report does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other filing of our company under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent we specifically incorporate this Audit Committee Report by reference therein.
PROPOSAL 3 – APPROVAL OF ISSUANCE OF SECURITIES IN ONE OR MORE NON-PUBLIC OFFERINGS WHERETHE MAXIMUM DISCOUNT AT WHICH SECURITIES WILL BE OFFERED WILL BE EQUIVALENT
TO A DISCOUNT OF 30%UP TO 25% BELOW THE MARKET PRICE OF OUR COMMON STOCK IN
ACCORDANCE WITH NASDAQ MARKETPLACE RULE 5635(d)
Our common stock is currently listed on The NASDAQ Capital Market and, as such, we are subject to Nasdaq Marketplace Rules. Nasdaq Marketplace Rule 5635(d) ("Rule 5635(d)") requires us to obtain stockholder approval prior to the issuance of our common stock in connection with certain non-public offerings involving the sale, issuance or potential issuance by the Company of common stock (and/or securities convertible into or exercisable for common stock) at a price less than the greater of book or market value equalsequal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance. Shares of our common stock issuable upon the exercise or conversion of warrants, options, debt instruments, currently outstanding debt obligations, preferred stock or other equity securities issued or granted in such non-public offerings including the exercise or conversion of any warrants, options, debt instruments, currently outstanding debt obligations, preferred stock or other equity securities issued in exchange for such securities or in connection with an amendment (including amendment of any outstanding non-convertible debt to add conversion features or exchange of such non-convertible debt for convertible securities) that would permit exercisability or conversion below market, will also be considered shares issued in such a transaction in determining whether the 20% limit has been reached, except in certain circumstances such as issuing warrants that are not exercisable for a minimum of six months and for which stockholder approval is sought under Proposal 3.have an exercise price that exceeds market value. We may effectuate the approved offerings or transactions in one or more transactions, subject to the limitations herein.
In August 2016, we received a notification from NASDAQ indicating that the Company was not in compliance with NASDAQ Listing Rule 5550(b), which requires a minimum of $2,500,000 stockholders’ equity for continued listing on NASDAQ. On July 14, 2017, we conducted a private placement offering of our securities with selected accredited investors for total net proceeds of $2,690,000 (the “Offering”). As a result of the Offering, we had a Stockholders’ equity of more than $2,500,000. While we may be in compliance with NASDAQ Listing Rule 5550(b) at the present time, there can be no assurance that we will continue to maintain such compliance, which may result in the delisting of our shares of common stock on NASDAQ.
We may seek to raise additional capital to implement our business strategy and enhance our overall capitalization.capitalization as well as to meet our continuing shareholder's equity requirements pursuant to Nasdaq Marketplace Rules. We have not determined the particular terms for such prospective offerings.offerings and have no current plans to issue any additional shares. Because we may seek additional capital that triggers the requirements of Rule 5635(d), we are seeking stockholder approval now, so that we will be able to move quickly to take full advantage of any opportunities that may develop in the equity markets.
We hereby submit this Proposal 32 to our stockholdersshareholders for their approval of the potential issuance of shares of our common stock, or securities convertible into our common stock, in one or more non-public capital-raising transactions, or offerings, subject to the following limitations:
| The aggregate number of shares issued in the offerings will not exceed 12,000,000 shares of our common stock, subject to adjustment for any reverse stock split effected prior to the offerings (including pursuant to preferred stock, options, warrants, convertible debt or other securities exercisable for or convertible into common stock); |
| ● | The total aggregate consideration will not exceed $10.5 million; |
| ● | The maximum discount at which securities will be offered (which may consist of a share of common stock and a warrant for the issuance of up to an additional share of common stock) will be equivalent to a discount of 30%up to 25% below the market price of our common stock at the time of issuance in recognition of the limited public float of our traded common stock and historical volatility making the pricing discount of our stock required by investors at any particular time difficult, at this time, to predict. For example, as reported in our Annual Report on Form 10-K filed with the SEC on April 14, 2016, the range of high and low closing prices for our common stock as reported by The Nasdaq Capital Market, for the period December 31, 2014 through December 31, 2015 was $5.35 and $0.87, respectively; |
| The aggregate number of shares issued in the offerings will not exceed 8,000,000 shares of our common stock, subject to adjustment for any reverse stock split effected prior to the offerings (including pursuant to preferred stock, options, warrants, convertible debt or other securities exercisable for or convertible into common stock);
|
| The total aggregate consideration will not exceed $15,000,000;
|
| Such offerings will occur, if at all, on or before November 7, 2017, unless a shorter time is required by NASDAQ;________, 2018; and |
| |
| ● | Such other terms as the Board of Directors shall deem to be in the best interests of the Company and its stockholders,shareholders, not inconsistent with the foregoing. |
The issuance of shares of our common stock, or other securities convertible into shares of our common stock, in accordance with any offerings would dilute, and thereby reduce, each existing stockholder'sshareholder’s proportionate ownership in our common stock. The stockholdersshareholders do not have preemptive rights to subscribe to additional shares that may be issued by the Company in order to maintain their proportionate ownership of the common stock.
The issuance of shares of common stock in one or more non-public offerings could have an anti-takeover effect. Such issuance could dilute the voting power of a person seeking control of the Company, thereby deterring or rendering more difficult a merger, tender offer, proxy contest or an extraordinary corporate transaction opposed by the Company.
The Board of Directors has not yet determined the terms and conditions of any offerings. As a result, the level of potential dilution cannot be determined at this time, but as discussed above, we may not issue more than 8,000,00012,000,000 shares of common stock in the aggregate pursuant to the authority requested from stockholdersshareholders under this proposal (subject to adjustment for any reverse stock split). It is possible that if we conduct a non-public stock offering, some of the shares we sell could be purchased by one or more investors who could acquire a large block of our common stock. This would concentrate voting power in the hands of a few stockholdersshareholders who could exercise greater influence on our operations or the outcome of matters put to a vote of stockholdersshareholders in the future.
We cannot determine what the actual net proceeds of the offerings will be until they are completed, but as discussed above, the aggregate dollar amount of the non-public offerings will be no more than $15,000,000 and the maximum shares of common stock to be issued will be no more than 8,000,000.$10.5 million. If all or part of the offerings is completed, the net proceeds will be used for general corporate purposes. We currently have no arrangements or understandings regarding any specific transaction with investors, so we cannot predict whether we will be successful should we seek to raise capital through any offerings.
Vote Required
The affirmative vote from the holders of a majority of shares of our common stock outstanding on the Record Date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVING THE ISSUANCE OF
SECURITIES IN ONE OR MORE NON-PUBLIC OFFERINGS WHERE THE MAXIMUM DISCOUNT
AT WHICH SECURITIES WILL BE OFFERED WILL BE EQUIVALENT TO A DISCOUNT OF 20%
BELOW THE MARKET PRICE OF OUR COMMON STOCK.
PROPOSAL NO. 3
APPROVAL OF ISSUANCE OF SECURITIES IN ONE OR MORE NON-PUBLIC OFFERINGS TO THE
COMPANY’S OFFICERS AND/OR DIRECTORS OR THEIR AFFILIATES WHERE THE MAXIMUM
DISCOUNT AT WHICH SECURITIES WILL BE OFFERED WILL BE EQUIVALENT TO A DISCOUNT
OF UP TO 15% BELOW THE MARKET PRICE OF OUR COMMON STOCK IN ACCORDANCE WITH
NASDAQ MARKETPLACE RULE 5635(c)
Our common stock is currently listed on The NASDAQ Capital Market and, as such, we are subject to Nasdaq Marketplace Rules. Nasdaq Marketplace Rule 5635(c) ("Rule 5635(c)") requires us to obtain shareholder approval prior to the issuance of our common stock in connection with certain non-public offerings involving the sale, issuance or potential issuance by the Company of common stock (and/or securities convertible into or exercisable for common stock) to the Company’s officers, directors or their affiliates at any discount to the market price of our common stock.
In August 2016, we received a notification from NASDAQ indicating that the Company was not in compliance with NASDAQ Listing Rule 5550(b), which requires a minimum of $2,500,000 stockholders’ equity for continued listing on NASDAQ. On July 14, 2017, we conducted a private placement offering of our securities with selected accredited investors for total net proceeds of $2,690,000 (the “Offering”). As a result of the Offering, we had a Stockholders’ equity of more than $2,500,000. While we may be in compliance with NASDAQ Listing Rule 5550(b) at the present time, there can be no assurance that we will continue to maintain such compliance, which may result in the delisting of our shares of common stock on NASDAQ.
Because we may seek additional capital that triggers the requirements of Rule 5635(c) to ensure that we maintain compliance with NASDAQ Listing Rule 5550(b), we are seeking shareholder approval pursuant to Rule 5635(c) so that we will be able to move quickly and take full advantage of the opportunities that may develop in the equity markets. The Board of Directors desires to give the Company’s shareholders a meaningful opportunity to make an informed decision regarding the maximum discount below the market for our common stock to be authorized for issuance consistent with the principles adopted by NASDAQ.
The Board recommends the shareholders approve the issuance of securities in one or more non-public offerings to our officers and/or directors or their affiliates, where the maximum discount at which securities of the Company will be offered will be equivalent to a discount of up to 15% below the market price for our common stock at the time of issuance. We have not determined the particular terms for such prospective offerings and have no current plans to issue any additional shares.
The issuance of shares of our common stock, or other securities convertible into shares of our common stock, in accordance with any offerings would dilute, and thereby reduce, each existing shareholder’s proportionate ownership in our common stock. The shareholders do not have preemptive rights to subscribe to additional shares that may be issued by the Company in order to maintain their proportionate ownership of the common stock.
The issuance of shares of common stock in one or more non-public offerings could have an anti-takeover effect. Such issuance could dilute the voting power of a person seeking control of the Company, thereby deterring or rendering more difficult a merger, tender offer, proxy contest or an extraordinary corporate transaction opposed by the Company.
The Board of Directors has not yet determined the terms and conditions of any offerings. As a result, the level of potential dilution cannot be determined at this time, but as discussed above, we may not issue more than ________ shares of common stock in the aggregate pursuant to the authority requested from shareholders under this proposal (subject to adjustment for any reverse stock split). It is possible that if we conduct a non-public stock offering pursuant to this Proposal 3, some of the shares we sell could be purchased by one or more of our officers and/or directors or their affiliates who could acquire a large block of our common stock. This would concentrate voting power in the hands of a few shareholders who could exercise greater influence on our operations or the outcome of matters put to a vote of shareholders in the future.
Vote Required
The affirmative vote from the holders of a majority of shares of our common stock outstanding on the Record Date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVING THE ISSUANCE OF
SECURITIES IN ONE OR MORE NON-PUBLIC OFFERINGS TO THE COMPANY’S OFFICERS
AND/OR DIRECTORS OR THEIR AFFILIATES WHERE THE MAXIMUM DISCOUNT AT WHICH
SECURITIES WILL BE OFFERED WILL BE EQUIVALENT TO A DISCOUNT OF UP TO 15% BELOW
THE MARKET PRICE OF OUR COMMON STOCK.
PROPOSAL NO. 4
APPROVAL OF ANY CHANGE OF CONTROL THAT COULD RESULT FROM THE POTENTIAL
ISSUANCE OF SECURITIES IN THE NON-PUBLIC OFFERINGS FOLLOWING APPROVAL OF
PROPOSAL 2 OR PROPOSAL 3, AS REQUIRED BY AND IN ACCORDANCE WITH NASDAQ
MARKETPLACE RULE 5635(b)
NASDAQ Marketplace Rule 5635(b) (“Rule 5635(b)”) requires us to obtain stockholder approval prior to certain issuances with respect to common stock or securities convertible into common stock which will result in a change of control of the Company. This rule does not specifically define when a change in control of a Company may be deemed to occur. However, guidance suggests that a change of control would occur, subject to certain limited exceptions, if after a transaction a person or an entity will hold 20% or more of the Company’s then outstanding capital stock. For the purpose of calculating the holdings of such person or entity, The NASDAQ Capital Market would take into account, in addition to the securities received by such person or entity in the transaction, all of the shares owned by such person or entity unrelated to the transaction and would assume the conversion of any convertible securities held by such person or entity. We do not anticipate that the issuance of securities pursuant to Proposal 2 or Proposal 3, as applicable, if authorized by the stockholders, will result in a change in control. We are seeking the stockholders’ approval on any change in control in accordance with Rule 5635(b) in the event that potentially issuance of securities in the offerings proposed in Proposal 2 or Proposal 3, as applicable, would result in a change in control.
Shareholders should note that a change of control as described under Rule 5635(b) applies with respect to the application of such NASDAQ Rule. Neither Nevada law nor our articles of incorporation or bylaws requires us to obtain stockholder approval of such change in control.
Vote Required for Approval
The affirmative vote of a majority of the votes cast for this proposal is required to approve the issuance of securities in one or more non-public offerings, as required by and in accordance with NASDAQ Marketplace Rule 5635(d).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVING THE ISSUANCE OF SECURITIES IN ONE OR MORE NON-PUBLIC OFFERINGS WHERE THE MAXIMUM DISCOUNT AT WHICH SECURITIES WILL BE OFFERED WILL BE EQUIVALENT TO A DISCOUNT OF 30% BELOW THE MARKET PRICE OF OUR COMMON STOCK.
PROPOSAL 4 – APPROVAL OF ISSUANCE OF SECURITIES IN ONE OR MORE NON-PUBLIC OFFERINGS WHERE THE MAXIMUM DISCOUNT AT WHICH SECURITIES WILL BE OFFERED WILL BE EQUIVALENT TO A DISCOUNT OF 20% BELOW THE MARKET PRICE OF OUR COMMON STOCK IN ACCORDANCE WITH NASDAQ MARKETPLACE RULE 5635(d)
In the event that the stockholders do not approve Proposal 3, the Board recommends the stockholders approve the following proposal which is identical to Proposal 3 except that the maximum discount at which securities of the Company will be offered will be equivalent to a discount of 20% below the market price of our common stock at the time of issuance. The Board of Directors desires to give the Company’s stockholders a meaningful opportunity to make an informed decision regarding the maximum discount below the market price of our common stock to be authorized for future issuance consistent with the principles adopted by NASDAQ and believes that providing stockholders several options permits a meaningful informed decision. In the event both Proposal 3 and Proposal 4 are approved by stockholders, only Proposal 3 shall be deemed to have any effect.
NASDAQ Marketplace Rule 5635(d) ("Rule 5635(d)") requires us to obtain stockholder approval prior to the issuance of our common stock in connection with certain non-public offerings involving the sale, issuance or potential issuance by the Company of common stock (and/or securities convertible into or exercisable for common stock) at a price less than the greater of book or market value equals 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance. Shares of our common stock issuable upon the exercise or conversion of warrants, options, debt instruments, currently outstanding debt obligations, preferred stock or other equity securities issued or granted in such non-public offerings, including the exercise or conversion of any warrants, options, debt instruments, currently outstanding debt obligations, preferred stock or other equity securities issued in exchange for such securities or in connection with an amendment (including amendment of any outstanding non-convertible debt to add conversion features or exchange of such non-convertible debt for convertible securities) that would permit exercisability or conversion below market, will also be considered shares issued in such a transaction in determining whether the 20% limit has been reached and for which stockholder approval is sought under Proposal 4. We may effectuate the approved offerings or transactions in one or more transactions, subject to the limitations herein.
We may seek to raise additional capital to implement our business strategy and enhance our overall capitalization. We have not determined the particular terms for such prospective offerings. Because we may seek additional capital that triggers the requirements of Rule 5635(d), we are seeking stockholder approval now, so that we will be able to move quickly to take full advantage of any opportunities that may develop in the equity markets.
We hereby submit this Proposal 4 to our stockholders for their approval of the potential issuance of shares of our common stock, or securities convertible into our common stock, in one or more non-public capital-raising transactions, or offerings, subject to the following limitations:
| The maximum discount at which securities will be offered (which may consist of a share of common stock and a warrant for the issuance of up to an additional share of common stock) will be equivalent to a discount of 20% below the market price of our common stock at the time of issuance in recognition of the limited public float of our traded common stock and historical volatility making the pricing discount of our stock required by investors at any particular time difficult, at this time, to predict. For example, as reported in our Annual Report on Form 10-K filed with the SEC on April 14, 2016, the range of high and low closing prices for our common stock as reported by The Nasdaq Capital Market, for the period December 31, 2014 through December 31, 2015 was $5.35 and $0.87, respectively;
|
| The aggregate number of shares issued in the offerings will not exceed 8,000,000 shares of our common stock, subject to adjustment for any reverse stock split effected prior to the offerings (including pursuant to preferred stock, options, warrants, convertible debt or other securities exercisable for or convertible into common stock);
|
| The total aggregate consideration will not exceed $15,000,000;
|
| Such offerings will occur, if at all, on or before November 7, 2017, unless a shorter time is required by NASDAQ; and
|
| Such other terms as the Board of Directors shall deem to be in the best interests of the Company and its stockholders, not inconsistent with the foregoing. |
The issuance of shares of our common stock, or other securities convertible into shares of our common stock, in accordance with any offerings would dilute, and thereby reduce, each existing stockholder's proportionate ownership in our common stock. The stockholders do not have preemptive rights to subscribe to additional shares that may be issued by the Company in order to maintain their proportionate ownership of the common stock.
The issuance of shares of common stock in one or more non-public offerings could have an anti-takeover effect. Such issuance could dilute the voting power of a person seeking control of the Company, thereby deterring or rendering more difficult a merger, tender offer, proxy contest or an extraordinary corporate transaction opposed by the Company.
The Board of Directors has not yet determined the terms and conditions of any offerings. As a result, the level of potential dilution cannot be determined at this time, but as discussed above, we may not issue more than 8,000,000 shares of common stock in the aggregate pursuant to the authority requested from stockholders under this proposal (subject to adjustment for any reverse stock split). It is possible that if we conduct a non-public stock offering, some of the shares we sell could be purchased by one or more investors who could acquire a large block of our common stock. This would concentrate voting power in the hands of a few stockholders who could exercise greater influence on our operations or the outcome of matters put to a vote of stockholders in the future.
We cannot determine what the actual net proceeds of the offerings will be until they are completed, but as discussed above, the aggregate dollar amount of the non-public offerings will be no more than $15,000,000 and the maximum shares of common stock to be issued will be no more than 8,000,000. If all or part of the offerings is completed, the net proceeds will be used for general corporate purposes. We currently have no arrangements or understandings regarding any specific transaction with investors, so we cannot predict whether we will be successful should we seek to raise capital through any offerings.
Vote Required for Approval
The affirmative vote of a majority of the votes cast for this proposal is required to approve the issuance of securities in one or more non-public offerings, as required by and in accordance with NASDAQ Marketplace Rule 5635(d).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVING THE ISSUANCE OF SECURITIES IN ONE OR MORE NON-PUBLIC OFFERINGS WHERE THE MAXIMUM DISCOUNT AT WHICH SECURITIES WILL BE OFFERED WILL BE EQUIVALENT TO A DISCOUNT OF 20% BELOW THE MARKET PRICE OF OUR COMMON STOCK.
PROPOSAL 5 – APPROVAL OF ANY CHANGE OF CONTROL THAT COULD RESULT FROM THE POTENTIAL ISSUANCE OF SECURITIES IN THE NON-PUBLIC OFFERINGS FOLLOWING APPROVAL OF PROPOSAL 3 OR PROPOSAL 4, AS REQUIRED BY AND IN ACCORDANCE WITH NASDAQ MARKETPLACE RULE 5635(b)
NASDAQ Marketplace Rule 5635(b) (“Rule 5635(b)”) requires us to obtain stockholder approval prior to certain issuances with respect to common stock or securities convertible into common stock which will result in a change of control of the Company. This rule does not specifically define when a change in control of a Company may be deemed to occur. However, guidance suggests that a change of control would occur, subject to certain limited exceptions, if after a transaction a person or an entity will hold 20% or more of the Company’s then outstanding capital stock. For the purpose of calculating the holdings of such person or entity, The NASDAQ Capital Market would take into account, in addition to the securities received by such person or entity in the transaction, all of the shares owned by such person or entity unrelated to the transaction and would assume the conversion of any convertible securities held by such person or entity. We do not anticipate that the issuance of securities pursuant to Proposal 3 or Proposal 4, as applicable, if authorized by the stockholders, will result in a change in control. We are seeking the stockholders’ approval on any change in control in accordance with Rule 5635(b) in the event that potentially issuance of securities in the offerings proposed in Proposal 3 or Proposal 4, as applicable, would result in a change in control.
Stockholders should note that a change of control as described under Rule 5635(b) applies with respect to the application of such NASDAQ Rule. Neither Nevada law nor our articles of incorporation or bylaws requires us to obtain stockholder approval of such change in control.
Vote Required for Approval
The affirmative vote from the holders of a majority of shares of our common stock outstanding on the votes cast for this proposal is required to approve any change of control that could result from the potential issuance of securities in the non-public offerings following approval of Proposal 3 or Proposal 4, as required by and in accordance with NASDAQ Marketplace Rule 5635(b).Record Date.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” APPROVING ANY
CHANGE OF CONTROL THAT COULD RESULT FROM THE POTENTIAL ISSUANCE OF
SECURITIES IN THE NON-PUBLIC OFFERINGS FOLLOWING APPROVAL OF PROPOSAL 32 OR PROPOSAL 4.3.
PROPOSAL 6 – NO. 5
APPROVAL TO ALLOW OFFICERS, DIRECTORS AND EMPLOYEES OF THE COMPANY TO
PARTICIPATE IN THE BELOW MARKET OFFERINGS APPROVED PURSUANT TO PROPOSAL 2 3 OR PROPOSAL 4
IN ACCORDANCE WITH NASDAQ MARKETPLACE RULE 5635(c)
Our common stock is currently listed on The NASDAQ Capital Market, and, as such, we are subject to the NASDAQ Marketplace Rules. NASDAQ Marketplace Rule 5635(c) (“Rule 5635(c)”) requires us to obtain stockholdershareholder approval to allow officers, directors and employees of the Company to participate in the below market offerings approved pursuant to Proposal 3 or Proposal 4.2.
As discussed in Proposal 3 or2 and Proposal 43 above, we may seek to raise additional capital to implement our business strategy and enhance our overall capitalization through certain non-public offerings involving the sale, issuance or potential issuance of our common stock (and/or securities convertible into or exercisable for common stock). We have not determined the particular terms for such prospective offerings provided for by Proposal 3 or Proposal 42 above. Because we may seek additional capital that triggers the requirements of Rule 5635(c), we are seeking stockholder approval now, so that we will be able to move more quickly to take advantage of any opportunities that may develop in the equity markets.
We hereby submit this Proposal 65 to our stockholders for their approval to allow officers, directors and employees of the Company to participate in the below market offerings approved pursuant to Proposal 3 or Proposal 4 above.2.
The participation of our officers, directors and employees in the below market offerings approved pursuant to Proposal 3 or Proposal 42 above would dilute, and thereby reduce, each existing stockholder's proportionate ownership in our common stock. The stockholders do not have preemptive rights to subscribe to additional shares that may be issued by the Company in order to maintain their proportionate ownership of the common stock.
The issuance of shares of common stock in one or more non-public offerings could have an anti-takeover effect. Such issuance could dilute the voting power of a person seeking control of the Company, thereby deterring or rendering more difficult a merger, tender offer, proxy contest or an extraordinary corporate transaction opposed by the Company.
The Board of Directors has not yet determined the terms and conditions of any of the proposed offerings provided for by Proposal 3 or Proposal 4.2. As a result, the level of potential dilution cannot be determined at this time. It is possible that if we conduct a non-public stock offering, some of the shares we sell could be purchased by one or more investors who could acquire a large block of our common stock. This would concentrate voting power in the hands of a few stockholders who could exercise greater influence on our operations or the outcome of matters put to a vote of stockholders in the future.
We cannot determine what the actual net proceeds of the offerings will be until they are completed. If all or part of the offerings is completed, the net proceeds will be used for general corporate purposes. We currently have no arrangements or understandings regarding any specific transaction with investors, so we cannot predict whether we will be successful should we seek to raise capital through any offerings.
Vote Required for Approval
The affirmative vote from the holders of a majority of shares of our common stock outstanding on the votes cast for this proposal is required to allow officers, directors and employees of the Company to participate in the below market offerings approved pursuant to Proposal 3 or Proposal 4, as required by and in accordance with NASDAQ Marketplace Rule 5635(c).Record Date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVING OFFICERS,
DIRECTORS AND EMPLOYEES OF THE COMPANY TO PARTICIPATE IN THE BELOW MARKET
OFFERINGS APPROVED PURSUANT TO PROPOSAL 3 OR PROPOSAL 4.2.
OTHER BUSINESS
The Board of Directors knows of no business to be brought before the Special Meeting other than as set forth above. If other matters properly come before the shareholders at the meeting, it is the intention of the persons named on the proxy to vote the shares represented thereby on such matters in accordance with their judgment.
Dated: ________, 2017
WHERE YOU CAN FIND MORE INFORMATION
The Company files annual, quarterly and current reports, proxy statements and other information with the Commission. You can read and copy any materials that the Company files with the Commission at the Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information about the operation of the SEC’s Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission also maintains a Web site that contains information we file electronically with the Commission, which you can access over the Internet at www.sec.gov. The Company is incorporating by reference its Annual Report on Form 10-K filed on March 31, 2017 and its Quarterly Report on Form 10-Q filed on May 15, 2017.
You should rely only on the information contained in, or incorporated by reference as an exhibit to, this Proxy Statement. We have not authorized anyone else to provide you with different information. You should not assume that the information in this Proxy Statement is accurate as of any date other than ________, 2017, or such earlier date as is expressly set forth herein.
APPENDIX A
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
MEDOVEX CORPORATION
MedoveX Corporation, a corporation organized and existing under the laws of the State of Nevada (the “Corporation”) hereby certifies as follows:
1.
Article III of the Corporation’s Amended and Restated Articles shall be amended by adding the following section to the end of Article III of the Amended and Restated Articles, that read as follows, subject to compliance with applicable law:
“Upon the filing and effectiveness (the "Effective Time") pursuant to the Nevada Revised Statutes of this amendment to the Corporation's Amended and Restated Articles of Incorporation, as amended, each shares of Common Stock issued and outstanding immediately prior to the Effective Time either issued and outstanding or held by the Corporation as treasury stock shall 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 (the "Reverse Stock Split"); provided that no fractional shares shall be issued to any holder and that instead of issuing such fractional shares, the Corporation shall round shares up to the nearest whole number. Each certificate that immediately prior to the Effective Time represented shares of Common Stock ("Old Certificates"), shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the treatment of fractional shares as described above."
2.
The foregoing amendment has been duly adopted in accordance with the provisions of the Nevada Revised Statutes 78.385 and 78.390 by the vote of a majority of shares of outstanding common stock of the Corporation entitled to vote thereon.
IN WITNESS WHEREOF, I have signed thie Certificate this day of , 2017.
| Jarrett Gorlin Chief Executive Officer |
YOUR VOTE IS IMPORTANT. PLEASE VOTETODAY. |
Vote by Internet – QUICK *** EASY *** IMMEDIATE
24 Hours a Day, 7 Days a Week or by Mail
| MEDOVEX CORPORATION | Your Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. Votes submitted electronically over the Internet must be received by 7:00 p.m., Eastern Time, on [______], 2017. |
| | |
 INTERNET/MOBILE – proxyvote.equitystock.com Use the Internet to vote your proxy. Have your proxy card available when you access the above website. Follow the prompts to vote your shares. | | |
| | |
 MAIL – Mark, sign and date your proxy card and return it in the postage-paid envelope provided | | |
| | |
| PLEASE DO NOT RETURN THE PROXY CARD IF YOU ARE VOTING ELECTRONICALLY. | | |
|
| PROXY | | Please mark your votes like this | | X |
PROPOSAL 7 – APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2013 STOCK INCENTIVE PLAN TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK THAT MAY BE ISSUED UNDER THE PLAN BY 500,000 SHARES OF COMMON STOCK IN ACCORDANCE WITH NASDAQ MARKETPLACE RULE 5635(c)Our common stock is currently listed on The NASDAQ Capital Market, and, as such, we are subject to the NASDAQ Marketplace Rules. NASDAQ Marketplace Rule 5635(c) (“Rule 5635(c)”) requires us to obtain stockholder approval prior to the issuance of securities when a stock option or purchase plan is to be stablished or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees or consultants. Rule 5635(c) provides that a material amendment would include, but not be limited to, any increase in the number of shares to be issued under the plan, other than to reflect a reorganization, stock split, merger, spinoff or similar transaction.
The Board of Directors approved the Company’s 2013 Stock Incentive Plan (the “Plan”) in October 2013, whereby it authorized the Company to grant incentive stock options to employees and non-statutory stock options to employees, consultants and directors for up to 1,150,000 shares to common stock. To date, the Company has 255,100 shares remaining under the Plan.
The purpose of our Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success.
The Company is seeking stockholder approval to amendment the Company’s 2013 Stock Incentive Plan, in the form of Annex A hereto. No grants have been made to date under the 2013 Plan and the Company is seeking stockholder approval to amend the Plan to increase the authorized number of shares of common stock that may be issued under the Plan by 500,000 shares of common stock. The total number of shares of common stock that may be issued under the 2013 Plan following approval of this Proposal 7 shall be 755,100.
Vote Required for Approval
The affirmative vote of a majority of the votes cast for this proposal is required to approve an amendment to the Company’s 2013 Stock Incentive Plan to increase the authorized number of shares of common stock by 500,000 shares of common stock that may be issued under the Plan, as required by and in accordance with NASDAQ Marketplace Rule 5635(c).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVING AN AMENDMENT TO THE COMPANY’S 2013 STOCK INCENTIVE PLAN TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK BY 500,000 SHARES OF COMMON STOCK THAT MAY BE ISSUED UNDER THE PLAN.
Summary Compensation
The table below sets forth, for the last two fiscal years, the compensation earned by each person acting as our Chief Executive Officer, Chief Financial Officer and three most highly compensated executive officers whose total annual compensation exceeded $100,000 (together, the “Named Executive Officers”).
| Name & Position | Fiscal Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | All Other Compensation ($) | | | Total ($) | |
| Jarrett Gorlin, CEO | 2014 | | | 180,000 | | | | 36,000 | | | | - | | | | - | | | | 216,000 | |
| | 2015 | | | 272,000 | | | | - | | | | | | | | | | | | 272,000 | |
| Patrick Kullmann, COO | 2014 | | | 170,000 | | | | 34,000 | | | | - | | | | - | | | | 204,000 | |
| | 2015 | | | 231,000 | | | | - | | | | | | | | | | | | 231,000 | |
| Charles Farrahar, Former CFO | 2014 | | | 110,000 | | | | 22,000 | | | | - | | | | - | | | | 132,000 | |
| | 2015 | | | - | | | | - | | | | | | | | | | | | - | |
| Jeffery Wright, CFO | 2014 | | | 110,000 | | | | - | | | | - | | | | - | | | | 110,000 | |
| | 2015 | | | 130,000 | | | | - | | | | | | | | | | | | 130,000 | |
| Dennis Moon, VP | 2014 | | | 120,000 | | | | 24,000 | | | | - | | | | - | | | | 144,000 | |
| | 2015 | | | 201,000 | | | | - | | | | | | | | | | | | 201,000 | |
On January 27, 2015, Charles Farrahar resigned from his position as Chief Financial Officer and Treasurer of the Company, and was replaced by Jeffery Wright. Mr. Farrahar remains with the Company on a part-time basis as its Corporate Secretary.
From their first date of employment, the Company entered into Employment and Confidential Information and Inventions Assignment (“Confidentiality”) Agreements with each of its four officers. These agreements are identical with the exception of the salary amount in the Employment Agreement.
The Confidentiality Agreement, among other things, obligates each officer not to disclose Confidential Information (as defined in the Agreement) for a period of 5 years after their last date of employment. It commits the employee to assign any work product developed at MedoveX to the Company and assist with obtaining patents for that work as necessary. It contains a provision prohibiting employees from soliciting clients or hiring Company personnel for a period ofFOR PROPOSAL 1, PROPOSAL 2, years after their separation.
The Employment Agreements are for a term of three years and define the compensation and benefits each employee will receive when they start employment. They also define the circumstances for and the effect on compensation and benefits under the following scenarios: PROPOSAL 3, PROPOSAL 4, AND PROPOSAL 5.
a. | Termination without cause | | FOR | | AGAINST | | ABSTAIN | |
b. | Termination upon death or disability | | | | | | | |
c.1. | TerminationTo grant the Board of Directors the authority, in its sole direction, in determining a higher stock price if required to meet the listing qualifications for one of the national stock exchanges, to approve an amendment to our Certificate of Incorporation to effect a reverse stock split of our issued and outstanding common stock by a ratio of not less than one-for-two and not more than one-for-five at any time prior to [______], 2018, with the exact ratio to be set at a whole number within this range as determined by the Company for cause |
d.Board of Directors | Termination by the employee for good reason, including material diminishment of position, demands to move or change in control of the Company |
e. | Termination by the Company without cause, upon disability or by employee with good reason |
f. | Termination for other reasons | | | | |
If the Company terminates without cause| 2. | To approve the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of up to 25% below the market price of our common stock, as required by and in accordance with Nasdaq Marketplace Rule 5635(d) | | | | | | | |
| | | | | | | | |
| 3. | To approve the issuance of securities in one or more non-public offerings to the Company’s officers and/or directors or their affiliates where the maximum discount at which securities will be offered will be equivalent to a discount of up to 15% below the market price of our common stock, as required by and in accordance with Nasdaq Marketplace Rule 5635(c) | | | | | | | |
| | | | | | | | |
| 4. | To approve any change of control that would result from the potential issuance of securities in the non-public offerings following approval of Proposal 2 or Proposal 3, as required by and in accordance with NASDAQ Marketplace Rule 5635(b) | | | | | | | |
| | | | | | | | |
| 5. | To allow officers, directors and employees of the Company to participate in the below market offerings approved pursuant to Proposal 2, as required by and in accordance with NASDAQ Marketplace Rule 5635(c) | | | | | | | |
PROXY SHARES:
CONTROL NUMBER:
Signature
Signature, if held jointly
Date, 2017.
Note: Please sign exactly as name appears hereon. When shares are held by joint owners, both should sign. When signing as attorney, executor, administrator, trustee, guardian, or the employee terminates with good reason, the employee continues to collect his salary and benefits for 6 months after termination. The Employment Agreement also contains a non-compete clause prohibiting the employee from competing with the Company for 1 year after their separation.corporate officer, please give title as such.
The current annualized salaries of our executive officers are as follows:
| Name & Position | | Annual Salary | |
| Jarrett Gorlin, CEO | | $ | 272,000 | |
| Patrick Kullmann, President & COO | | $ | 231,000 | |
| Jeffery Wright, CFO | | $ | 130,000 | |
| Dennis Moon, VP | | $ | 201,000 | |
| Manfred Sablowski, VP of Sales | | $ | 150,000 | |
The board established a policy of paying outside (non-employee) directors $5,000 per quarter for each full quarter of service.
In 2014, outside directors (totaling 8 persons) were paid $140,000 in director’s fees, but no equity compensation was issued.
In 2015, outside directors (totaling 9 persons) were paid $120,000 in director’s fees. On January 6th, 2016, the Board decided to accrue payment of director fees to all non-employee members of the Board of Directors until such time as the Company is in a more favorable financial position. Whether such directors receive cash or stock grants as payment at that future date will be determined at that time.
Equity awards granted to the named executive officers in 2014 and 2015 were 0 and 200,000, respectively.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information is presented for each person we know to be a beneficial owner of 5% or more of our securities, each of our directors and executive officers, and our officers and directors as a group.Dear Shareholder:
We cordially invite you to attend the Special Meeting of Shareholders of MedoveX Corporation to be held at the Company’s headquarters located at 1950 Airport Road, Suite A, Atlanta, GA 30341, on [_________], 2017, beginning at [__]:[__] A.M. local time.
Please read the proxy statement which describes the proposals and presents other important information and complete, sign and return your proxy promptly in the enclosed envelope.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
MEDOVEX CORPORATION
The percentageundersigned hereby appoints Jarrett Gorlin, Jeffrey Wright and Charles Farrahar, and each of common equity beneficially owned is based upon 14,200,809them, as proxies, each with full powers of substitution, to represent and to vote all shares of Common Stock issued and 14,000,809 shares of Common Stock outstanding as of September 23, 2016, under the assumption that all Streamline shareholders submit their transmittal letters to receive their proportional interest in shares of MedoveX common stock. Corporation, which the undersigned would be entitled to vote, at the Company’s Special Meeting of Shareholders to be held on [______], 2017 at [__]:[__] A. M. local time and at any adjournments thereof, subject to the directions on this Proxy Card.
The number of shares beneficially owned by each stockholderIn their discretion, the proxy is determined underauthorized to vote upon any other matter that may properly come before the rules issued by the Securities and Exchange Commission and includes votingmeeting or investment power with respect to such securities. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sale or shared voting power or investment power. Unless otherwise indicated, the address of all listed stockholders is c/o MEDOVEX, 3279 Hardee Avenue, Atlanta, Georgia 30341. Unless otherwise indicated each of the stockholders listed has sole voting and investment power with respect to the shares beneficially owned, subject to community property laws where applicable.adjournments thereof.
| | | Number of Shares Beneficially Owned(1) | | | Percentage of common equity beneficially owned | |
| Scott M.W. Haufe, M.D., Director | | | 774,110 | (2)(4) | | | 5.5 | % |
| Jarrett Gorlin, Director and Officer | | | 517,037 | (3)(10) | | | 3.6 | % |
| Larry W. Papasan, Director and Co-Chairman | | | 203,576 | (4) | | | 1.4 | % |
| John C. Thomas, Jr., Director | | | 75,400 | | | | 0.5 | % |
| Patrick Kullmann, Officer | | | 233,682 | (5)(8) | | | 1.6 | % |
| Jeffery Wright, Officer | | | 29,875 | (7) | | | 0.2 | % |
| Major General C.A. “Lou” Hennies, Director | | | 106,788 | (4) | | | 0.8 | % |
| James R. Andrews, M.D., Director | | | 106,788 | (4) | | | 0.8 | % |
| Steve Gorlin, Director and Co-Chairman | | | 881,503 | (6) | | | 6.2 | % |
| Randal R. Betz, M.D., Director | | | 106,788 | (4) | | | 0.8 | % |
| Ron Lawson | | | 150,000 | (11)(12) | | | 1.1 | % |
| Dennis Moon, Officer | | | 208,614 | (9) | | | 1.5 | % |
| Manfred Sablowski, Officer | | | 60,225 | (13) | | | 0.4 | % |
| Barry Honig | | | 1,383,457 | (14)(15) | | | 9.7 | % |
| Officers and Directors as a Group (14 persons) | | | 4,837,843 | | | | 34.1 | % |
THE REVERSE SIDE OR, IF NO CHOICE IS SPECIFIED, FOR PROPOSAL 1, PROPOSAL
2, PROPOSAL 3, PROPOSAL 4 AND PROPOSAL 5.
(1) | Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to shares beneficially owned and options exercisable within 60 days. Beneficial ownership is based on information furnished by the individuals or entities. |
(2) | Includes 532,335 shares held by Morgan Stanley Smith Barney custodian for Nicole Haufe Roth IRA, 209,275 shares held by Nicole Haufe and 25,000 shares held by the Haufe Family Limited Partnership. Mr. Haufe disclaims beneficial ownership of the shares. |
(3) | Represents shares held by The Jarrett S. & Rebecca L. Gorlin Family Limited Partnership. Mr. Gorlin disclaims beneficial ownership of the shares. |
(4) | Includes 10,000 shares pursuant to options exercisable within 60 days. |
(5) | Includes 96,788 shares held by Pamela M.C. Kullmann. Mr. Kullmann disclaims beneficial ownership of Pamela M.C. Kullmann’s shares. |
(6) | Includes 125,000 shares held by Mr. Gorlin's spouse, Deborah Gorlin. Mr. Gorlin disclaims beneficial ownership of Deborah Gorlin’s shares. |
(7) | Includes 29,875 shares pursuant to options exercisable within 60 days. |
(8) | Includes 26,163 shares pursuant to options exercisable within 60 days. |
(9) | Includes 15,038 shares pursuant to options exercisable within 60 days. |
(10) | Includes 10,200 shares pursuant to options exercisable within 60 days. |
(11) | Mr. Ron Lawson was appointed to fill a vacancy on the Board of Directors on August 17, 2016. |
(12) | Includes 150,000 shares pursuant to options exercisable within 60 days. |
(13) | Includes 55,625 shares pursuant to options exercisable within 60 days. |
(14) | Includes (i) 325,000 shares of common stock held by spouse, Renee Honig, (ii) 525,371 shares of common stock held by GRQ Consultants, Inc. Roth 401K FBO Barry Honig (the “Roth 401K”) and (iii) 10,586 shares of common stock held by Marlin Capital Investments, LLC (“Marlin”). Barry Honig is the trustee of the Roth 401K and the Managing Member of Marlin, and in such capacities, has voting and dispositive power over the securities held by such entities. |
(15) | Excludes 170,000 shares of common stock underlying warrants that are not exercisable within 60 days. Excludes 112,284 shares of common stock underlying warrants exercisable within 60 days as to which the holder may not convert or exercise, as applicable, in excess of 4.99% together with all shares owned. |
(continued and to be marked, dated and signed, on the other side)
Cost and Method
We will pay all of the costs of soliciting these proxies. In addition to solicitation by mail, our employees, officers and directors may, without additional compensation, solicit proxies by mail, e-mail, facsimile, in person or by telephone or other forms of telecommunication. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses.
Participants in the Proxy Solicitation
Under applicable regulations of the SEC, each of our directors may be deemed to be a participant in our solicitation of proxies in connection with the Annual Meeting. Please refer to the disclosure in this proxy statement for information about our directors who may be deemed participants in the solicitation. Except as described in this proxy statement, there are no agreements or understandings between us and any of our directors or executive officers relating to their employment with us or any future transactions.
As of the date of this proxy statement, the Board knows of no other business that will be presented at the Annual Meeting. If any other business is properly brought before the Annual Meeting, it is intended that proxies in the enclosed form will be voted in respect thereof in accordance with the best judgment and in the discretion of the persons voting the proxies.
Our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, each as filed with the SEC (other than exhibits thereto), which provides additional information about the Company, is available to beneficial owners of our common stock without charge upon written request to: MedoveX Corp., ATTN: Corporate Secretary, 1735 Buford Hwy Ste 215-113 Cumming GA 30041.The information is also publicly available through the EDGAR system at www.sec.gov and is available on our website at www.MedoveX.com.
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