Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
(Mark One)
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☒
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Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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For the fiscal year ended December 31, 2019
or
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☐
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Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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For the transition period from
to
Commission file number 001-32954
CLEVELAND BIOLABS, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE
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20-0077155
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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73 High Street, Buffalo, NY 14203
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(716) 849-6810
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(Address of principal executive offices)
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Telephone No.
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Securities Registered Pursuant to Section 12(b) of the
Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered |
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Common Stock, par value $0.005 per share
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CBLI
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NASDAQ Capital Market |
Securities Registered Pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities
Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90
days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12
months (or for such shorter period that the registrant was required
to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company or an emerging growth company. See
definition of "large accelerated filer," "accelerated filer,"
"smaller reporting company" and "emerging growth company" in Rule
12b-2 of the Exchange Act. (Check one):
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☒
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Smaller reporting company
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☒
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Emerging growth company
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☐
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with new or revised financial accounting standards
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the
Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common
equity held by non-affiliates as of the last business day of the
registrant’s most recently completed second fiscal quarter, June
28, 2019, was $16,382,447. There were 11,403,239 shares of common
stock outstanding as of April 15, 2020.
EXPLANATORY NOTE
Cleveland Biolabs, Inc. (which may be referred to herein as “we,”
“us,” “our” or the “Company”) is filing this Amendment No. 1 to our
Annual Report on Form 10-K for the fiscal year ended March 31, 2019
to include information required by Items 10, 11, 12, 13 and 14 of
Part III of Form 10-K. This information was previously omitted from
our original filing of our Annual Report on Form 10-K in reliance
on General Instruction G(3) to Form 10-K, which permits the
information in the above-referenced items to be incorporated in the
Form 10-K by reference from a definitive proxy statement if such
statement is filed no later than 120 days after the Company’s
fiscal year end. The Company is filing this Amendment No. 1 to
include the Part III information in its Form 10-K because the
Company does not expect to file a definitive proxy statement
containing this information before that date.
This Amendment No. 1 to Form 10-K amends and restates Items
10 through 14 and amends and supplements Item 15 of the Annual
Report on Form 10-K we filed on April 15, 2020 (the “Original Form
10-K”), and deletes the reference on the cover of the Original Form
10-K to the incorporation by reference to portions of the
definitive proxy statement with respect to our Annual Meeting of
Stockholders for 2020 into Part III of the Original Form 10-K.
Except as expressly set forth herein, this Amendment No. 1 does not
reflect events occurring after the date that the Original Form 10-K
was filed or modify or update any of the other disclosures
contained therein in any way other than as required to reflect the
amendments discussed above. In addition, in connection with the
filing of this Form 10-K/A and pursuant to Rule 12b-15 under the
Securities Exchange Act of 1934 (the “Exchange Act”), we are
including certain currently dated certifications. The remainder of
the Original Form 10-K filed with the Securities and Exchange
Commission (the “SEC”) on April 15, 2020 remains unchanged.
Cleveland BioLabs,
Inc.
Form 10-K/A
For the Fiscal Year Ended December 31, 2019
INDEX
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
MANAGEMENT AND CORPORATE GOVERNANCE
The Board of Directors
Set forth below are the names of all of our directors, their ages,
their offices in the Company, if any, their principal occupations
or employment for the past five years, the length of their tenure
as directors and the names of other public companies in which such
persons hold or have held directorships during the past five years.
Additionally, we have set forth below information about the
specific experience, qualifications, attributes or skills that led
our board of directors (our “Board”) to conclude at the time of
each person’s nomination for election that such individual should
serve as a director. There are no family relationships between or
among any director or executive officer.
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Name
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Age
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Position with the Company
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Alexander Andryuschechkin (1)
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36
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Director
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Anna Evdokimova
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44
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Director
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Ivan Fedyunin
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32
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Director
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Randy S. Saluck (1)
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54
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Director
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Daniil Talyanskiy
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35
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Director
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Lea Verny (1)
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54
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Chair of the Board
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(1)
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Member of the Audit Committee
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Alexander Andryuschechkin. Mr. Andryushechkin was appointed
to the Company’s Board to fill a vacancy in July 2016. He currently
serves as the Chief Financial Officer and a board member of
Generium JSC, a private biotech pharmaceutical manufacturing
company based in the Russian Federation. He also currently serves
as the Chief Financial Officer of IBC Generium LLC, a private
pharmaceutical research and development company based in the
Russian Federation. He has served as a board member of Affitech A/S
and Kirov Plasma JSC since 2017. From 2012 to 2016, Mr.
Andryushechkin was the Head of Finance of ASG LLC, a manufacturing
company, where he was responsible for corporate finance and
investment management. From 2010 to 2016, Mr. Andryushechkin was a
member of the board of Festival City LLC, a real estate development
company, where he focused on business development activities. From
2012 to 2014, Mr. Andryushechkin was Chairman of the Board ASTOR
CJSC, where he focused on financial management. Mr. Andryushechkin
graduated from the Omsk State University with a Master’s Degree in
Economics in 2005 and a post-graduate degree in Economics and
Management in 2008. Mr. Andryushechkin’s experience in corporate
finance and financial management, including investment management
and business valuation, make him an important asset to our
Board.
Anna Evdokimova. Ms. Evdokimova was appointed to the
Company’s Board in 2015. Ms. Evdokimova has served as Venture
Capital Investment Director of Millhouse LLC, an asset management
company, since May 2015 and served as the Deputy Head of Corporate
Finance from 2006 to May 2015. She also has served on the board of
directors of Russia Forest Product since 2008, on the board of
directors of Novotalk since 2015, on the board of directors of
Anyclip Ltd since 2015, on the board of directors of Storedot since
2016, and on the board of directors of each of SaferPlace,
Oncotartis Inc., and Incuron Inc. since 2018. From 2002 to 2004,
Ms. Evdokimova worked as the Head of Corporate Finance of a major
Russian oil and gas company, Slavneft. In 1998, Ms. Evdokimova
joined Russian-listed oil major Sibneft and served as Head of
Export Finance through 2002. Ms. Evdokimova holds a Bachelor’s
degree from Moscow State Linguistic University and a Master’s of
Business Administration in finance from Fordham University. Ms.
Evdokimova was originally appointed to our Board, and was
subsequently selected as a director nominee in each successive
election thereafter, under the terms of the Davidovich Purchase
Agreement (as defined below) with Mr. Davidovich, our majority
stockholder, which granted to him the right to designate a majority
of the nominees who stand for election to our Board, subject to the
terms and conditions of the Davidovich Purchase Agreement. Ms.
Evdokimova’s experience in international finance, particularly with
respect to entities operating within the Russian Federation, make
her an important asset to our board.
Ivan Fedyunin. Mr. Fedyunin was appointed to the Company’s
Board to fill a vacancy in August 2018. Since 2017, he has served
as an expert in healthcare and life science investments at
Millhouse LLC, an asset management company, where his
responsibilities include evaluating companies for investment
consideration and portfolio management. From October 2014 through
April 2017, Mr. Fedyunin served as R&D director of Pharmapark
LLC, a private Russian pharmaceutical company, where his
responsibilities included the supervision of the research and
development department. From February 2013 through April 2017, he
was a chief operating officer of Promogen-Mab LLC, a drug
development company, where he supervised research and development
and had a senior management role. Since June of 2017, Mr. Fedyunin
has served on the boards of directors of Melcap Systems Ltd.,
BroadQ Technologies Limited, Vigorous Solutions Ltd., and Ocular
Discovery Ltd., each of which is a private company in the medical
device, biopharmaceutical or pharmaceutical space based in the
State of Israel. In 2012, Mr. Fedyunin earned his PhD degree in
biochemistry from Potsdam University, Germany while working at both
Potsdam University and Max Planck Institute of Colloids and
Interfaces. Mr. Fedyunin graduated from the Moscow State
University, Russia with a major in biochemistry in 2008. Mr.
Fedyunin was originally appointed to our Board, and was
subsequently selected as a director nominee in each successive
election thereafter, under the terms of the Davidovich Purchase
Agreement with Mr. Davidovich, our majority stockholder, which
granted to him the right to designate a majority of the nominees
who stand for election to our Board, subject to the terms and
conditions of the Davidovich Purchase Agreement. Mr. Fedyunin’s
experience in portfolio management makes him an important asset to
our Board.
Randy S. Saluck. J.D., MBA, Mr. Saluck previously served as
one of our directors from May 2013 until April 2016 and was
subsequently reappointed to the Board in July 2016 to fill a
vacancy. Since 2017, Mr. Saluck has been the Chief Executive
Officer and a Director of Libertas Funding LLC, a company focused
on providing funding for small businesses. Since 2015, Mr. Saluck
has been part-time Chief Financial Officer and General Counsel of
Convexity Scientific, LLC., a private medical device company on
whose board he served from February 2016 to October 2017 as a
director. From 2005 to 2017, Mr. Saluck was the Managing Member of
Mortar Rock Capital Management, LLC and the Portfolio Manager of
Mortar Rock Capital LP, a value-oriented investment fund. Since
2014, Mr. Saluck has served as the Chief Strategic Officer of
Accelerated Pharma, Inc., a company focused on genomic technology
to develop drugs for oncology and other indications. From 2002 to
2005, Mr. Saluck was a portfolio manager at the investment fund of
Meisenbach Capital, LP and, from 2000 to 2002, Mr. Saluck was a
senior analyst at Tyndall Partners, LLC, which invested in
value-oriented equities and distressed debt. From 1999 to 2000, Mr.
Saluck was an analyst at Highfields Capital Management, LLC, where
he was responsible for special situations and risk arbitrage. Prior
thereto, Mr. Saluck was an investment banker focused on mergers and
acquisitions involving a variety of industries at Salomon Brothers
Inc. Before becoming an investment banker, Mr. Saluck was a
corporate and securities attorney, working at Cahill Gordon &
Reindel LLP and then Tenzer Greenblatt LLP. As an attorney, Mr.
Saluck worked with numerous small capitalization companies
assisting them in the execution of their financing and strategic
plans. He received a Bachelor’s degree from the University of
Pennsylvania, a Juris Doctor degree from the University of Virginia
and an MBA from the Wharton School of the University of
Pennsylvania with a concentration in finance and accounting. Mr.
Saluck currently serves on the board of directors of the
Connecticut Region of the Anti-Defamation League. Mr. Saluck
provides our board with stockholder perspective and experience in
public finance and investor relationships.
Daniil Talyanskiy. Mr. Talyanskiy was appointed to the
Company’s Board in July 2016 to fill a vacancy. He has served as
the First Deputy CEO and Chief Business Officer of IBC Generium
LLC, a private pharmaceutical research and development company
based in the Russian Federation, since 2011. Since 2017, Mr.
Talyanskiy has served as a board member of Generium JSC, a private
biotech pharmaceuticals manufacturing company based in the Russian
Federation for which he has also served as First Deputy CEO since
2013. He has also served as a Board Member of Affitech A/S and
Oncotartis Inc. since 2017. He was also a member of the Supervisory
Board of co.don AG (CNWKk.DE), a regenerative pharmaceuticals
manufacturing company from 2015 to 2016. Prior to joining IBC
Generium LLC, from 2008 to 2011, Mr. Talyanskiy was the Head of
Corporate University in UIC Oboronprom JSC. From 2006 to 2008, Mr.
Talyanskiy worked in various investment companies as an Investment
Manager. Mr. Talyanskiy graduated from the Togliatti Academy of
Management with a Master’s Degree in Management in 2007. Mr.
Talyanskiy's experience in business development of pharmaceuticals
make him an important asset to our Board.
Lea Verny. Ms. Verny was first elected to the Company’s
Board in April 2016 and has served as board chair since July 2016.
She has collaborated with London-based SP Angel Corporate Finance
LLP on a variety of projects including private equity, corporate
finance and advisory, and project finance, since 2008. Prior to
that, Ms. Verny served as a private banker with Banque Pictet,
Switzerland. From 2001 to 2007, Ms. Verny was a Director in
Corporate Finance and Advisory of HSBC Bank plc in London and
served as a Head of Investment Banking with HSBC Bank in Russia.
From 1997 to 2001, Ms. Verny was a representative of the HSBC
Investment Bank plc in Russia. From 1995 to 1997, Ms. Verny had
established and served as a Director of the Russian European Center
for Economic Policy, the European Commission's TACIS Program's
funded organization that, through teams of Western experts,
provided economic policy advice to Russian authorities. Since
December 2016, Ms. Verny has served as a director for Zoltav
Resources, Inc., a Russian-focused oil and gas exploration and
production company. Ms. Verny holds a Bachelor's degree in
Statistics and International Relations from the Hebrew University
in Jerusalem as well as a Master in Business Administration Degree
from INSEAD in France. Ms. Verny was originally selected as a
nominee for election to our Board, and was subsequently selected as
a director nominee in each successive election thereafter, under
the terms of the Davidovich Purchase Agreement with Mr. Davidovich,
our majority stockholder, which granted to him the right to
designate a majority of the nominees who stand for election to our
Board, subject to the terms and conditions of the Davidovich
Purchase Agreement. Ms. Verny's international banking experience
makes her an important asset to our Board and Audit Committee.
Executive Officers
The following table sets forth certain information regarding our
executive officers. The Board elects officers annually and such
executive officers serve at the discretion of the Board. There are
no family relationships between or among any of our directors or
executive officers.
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Name
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Age
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Position
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Langdon Miller, MD
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66
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President
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Andrei Gudkov, Ph.D., D. Sci.
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63
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Chief Scientific Officer
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Christopher Zosh
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44
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Interim Principal Executive Officer and
Principal Financial Officer; Vice President of Finance
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Langdon L. Miller, MD. Dr. Miller has been our President and
Chief Medical Officer since 2015. He previously served as a
strategic adviser to the Company beginning in 2014. Dr. Miller has
maintained a drug development consultancy, Sound Clinical
Solutions, SP, located in Seattle, WA since 2013 and has served as
a consulting Chief Medical Officer to Oncternal Therapeutics, Inc.,
located in San Diego, CA, since August 2016. Dr. Miller has served
on the board of Dunn Gardens, a private, not-for-profit
organization, since 2013 and was appointed to the board of Swedish
Club, a private, not-for-profit organization in April of 2019.
Since April 2018, Dr. Miller has also served as Executive Vice
President and Chief Medical Officer of VelosBio Inc., a private
biopharmaceutical company. Dr. Miller has more than 25 years of
experience in the design and conduct of translational and clinical
drug development programs in oncology (both in hematological and
solid tumors) and orphan diseases (including cystic fibrosis,
muscular dystrophy, and hemophilia). He has worked in all phases
(phase 1-4) of drug development, from first-in-human studies
through pivotal registration-directed trials to medical affairs
programs and has filed multiple INDs, CTAs, NDAs and orphan drug
applications. Dr. Miller played major roles in the development of
filgrastim and sargramostim, in the regulatory approvals of
irinotecan, exemestane, epirubicin, dexrazoxane, sunitinib, and
idelalisib in several cancers, and in validating new endpoints for
Duchenne muscular dystrophy and cystic fibrosis. He has extensive
experience in the generation, analysis, presentation, and
justification of drug development programs before regulatory
authorities, advisory committees, investigators, investors, and
business development partners. He has authored over 100 regulatory
documents and publications. Dr. Miller has held leadership
positions in government and in large and small biopharmaceutical
companies. He was a Senior Investigator at the National Cancer
Institute from 1989 to 1995 before transitioning to industry at the
Pharmacia Corporation, where he held positions of increasing
responsibility from 1995 to 2003, eventually heading oncology drug
development there as Clinical Vice President, Global Clinical
Research. He built the clinical development team at PTC
Therapeutics where he was Chief Medical Officer from 2003 to 2010
before moving to Calistoga Pharmaceuticals as Executive Vice
President of Research and Development from 2010 to 2011. Upon
Calistoga’s acquisition by Gilead Sciences, he became Vice
President of Clinical Research Oncology at Gilead Sciences from
2011 to 2013. He holds a Doctorate of Medicine from Northwestern
University and completed his residency in internal medicine at the
University of Minnesota and an oncology fellowship at Stanford
University.
Andrei Gudkov, Ph.D., D. Sci. Dr. Gudkov has served as our
Chief Scientific Officer since our inception in June 2003 and
served as a director from our inception in June 2003 until April
2016. Since 2007, Dr. Gudkov has served as Senior Vice President of
Basic Science and Chairman of the Department of Cell Stress Biology
at Roswell Park Cancer Institute. He also serves as a Director for
Everon Biosciences, Inc., Oncotartis Inc., Incuron Inc., and Chief
Science Officer of Genome Protection, Inc., an anti-aging drug
development company jointly owned by the Company. From 2001 to
2007, he was Chairman of the Department of Molecular Biology at the
Lerner Research Institute at the Cleveland Clinic and Professor of
Biochemistry at Case Western Reserve University. Prior to this, he
was a tenured faculty member in the Department of Molecular
Genetics at the University of Illinois at Chicago, where his lab
concentrated on the development of new functional gene discovery
methodologies and the identification of new candidate cancer
treatment targets. Before immigrating to the United States in 1990,
Dr. Gudkov worked at The National Cancer Research Center in Moscow,
where he led a broad research program focused on virology and
cancer drug resistance. Dr. Gudkov holds a Ph.D. and D. Sci. Degree
in Experimental Oncology from the Cancer Research Center (Moscow,
Russia).
Christopher Zosh has served as Vice President of Finance of
the Company since January 1, 2019 and in December 2019, was
designated by our Board as our interim principal executive officer
and principal financial officer. Prior to that, he served as Acting
Finance Director of the Company, from July 2017 through December
2018, and Senior Accountant, from June 2014 through June 2017,
where his responsibilities have included overseeing the Company’s
internal accounting and financial reporting functions. Since July
1, 2017, he has also served on the board of directors of Panacela
Labs, Inc., a joint venture between the Company and Joint Stock
Company “Rusnano,” a Russian investment fund, in which the Company
holds a 66.77% equity interest. Prior to joining the Company, Mr.
Zosh held several positions over his fourteen-year career with
Sodexo, a facilities management and food service company to
schools, universities, hospitals, senior living communities, venues
and other vital industries, the most recent of which was Financial
Accounting Analyst. In addition, Mr. Zosh served as an Orthopedic
Specialist in the United States Army Reserves. He holds a
bachelor’s degree in business administration with a concentration
in accounting from the State University of New York at Buffalo.
Code of Ethics for Senior Executives and Financial Officers,
Code of Business Conduct and Ethics for Directors and Code of
Conduct
The Board has adopted a Code of Ethics for Senior Executives and
Financial Officers that is specifically applicable to executive
officers and senior financial officers, including our principal
executive officer and principal financial officer. Additionally,
the Board has adopted the Code of Business Conduct and Ethics for
Directors that is specifically applicable to our directors. Both
the Code of Ethics for Senior Executives and Financial Officers and
the Code of Business Conduct and Ethics for Directors are posted on
our website, www.cbiolabs.com, under the link “Investors” and the
section therein titled “Corporate Governance.” We have also adopted
a Code of Conduct in order to promote honest and ethical conduct
and compliance with the laws and governmental rules and regulations
to which we are subject. The Code of Conduct is applicable to all
of our employees, officers and directors, and is posted on our
website, www.cbiolabs.com, under the link “Investors” and the
section therein titled “Corporate Governance.” The Company intends
to satisfy the requirement to disclose any amendment to, or waivers
from, a provision of its code of ethics by posting such information
at this same website.
Audit Committee
Our Company has a separately designated standing audit committee
(the “Audit Committee”). Our Audit Committee met four times during
fiscal year 2019. This committee currently has three members,
Messrs. Saluck (Chair) and Andryuschechkin and Ms. Verny.
The Board has determined that Mr. Saluck is an “audit committee
financial expert,” as the Securities and Exchange Commission has
defined that term in Item 407 of Regulation S-K.
The Audit Committee generally has direct responsibility and
oversight for our accounting policies and internal controls,
financial reporting practices, and legal and regulatory compliance.
More specifically, the Audit Committee is responsible for reviewing
and discussing the annual audited financial statements and
disclosures with management and our independent auditor; reviewing
the financial statements and disclosures provided in our quarterly
and periodic reports with management and the independent auditor;
and overseeing the external audit coverage, including appointment
and replacement of the independent auditor and pre-approval of all
audit and non-audit services to be performed by the independent
auditor.
Item 11.
Executive Compensation
EXECUTIVE OFFICER AND DIRECTOR COMPENSATION
Summary Compensation Table
The following table shows the total compensation paid or accrued
during the last two fiscal years ended December 31, 2019 and 2018
to our (1) President, (2) Chief Science Officer, (3) Vice President
of Finance, and (4) former Chief Executive Officer.
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Name and Principal
Position
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Year
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Salary
($)
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All Other Compensation
($)
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Total ($)
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Langdon L. Miller
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2019
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73,725
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—
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77,625
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President
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2018
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119,550
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—
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119,550
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Andrei Gudkov
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2019
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66,138
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—
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66,138
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Chief Science Officer
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2018
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110,941
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—
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110,941
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Christopher Zosh
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2019
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92,463
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11,031
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103,494
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Vice President of Finance*
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2018
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73,031
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9,161
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82,192
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Yakov Kogan
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2019
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264,323
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50,607
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(1)
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314,930
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Former Chief
Executive Officer*
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2018
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276,000
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10,800
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286,800
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* Following Dr. Kogan’s resignation, which became effective
as of December 13, 2019, Christopher Zosh was designated by the
Board as interim Principal Executive Officer and Principal
Financial Officer on December 13, 2019.
(1) Includes accrued time off that Dr.
Kogan was compensated for upon his resignation.
Narrative Disclosure to Summary Compensation Table
Langdon L. Miller, MD
On July 9, 2015, the Company entered into an employment agreement
with the Company’s President and Chief Medical Officer, Langdon
Miller, MD (the “Miller Agreement”). Pursuant to the terms of the
Miller Agreement, Dr. Miller will serve as the Company’s President
and Chief Medical Officer until the earlier of July 9, 2020 or his
termination pursuant to the terms of the agreement. Under the
Miller Agreement, Dr. Miller will be classified as an hourly exempt
employee and will receive an initial base salary of $300,000, which
is subject to review by the Board (or a committee thereof) in its
sole discretion, but may not be decreased other than in the
instance of an across-the-board salary reduction affecting all
executive officers of the Company. In the event Dr. Miller works
more than 1,000 hours during any annual period, upon approval by
the Company, Dr. Miller shall thereafter be paid an hourly rate of
$350 per hour for work conducted for the remainder of the year.
Additionally, Dr. Miller shall be eligible to participate in the
Company’s Annual Executive Bonus Plan based on a base pay rate
equal to 50% of Dr. Miller’s base salary, subject to the terms and
conditions of such plan, as revised from time to time. The Company
is required to reimburse Dr. Miller for all reasonable business
expenses incurred by him in performing the services under the
Miller Agreement.
If Dr. Miller’s employment is terminated by the Company for reason
other than death, Disability or Cause, or Dr. Miller resigns for
Good Reason (each as defined in the Miller Agreement), then Dr.
Miller will be entitled to continuing payments of his base salary
in effect immediately preceding the date of termination for a
period of twelve (12) months (the “Severance Period”).
Additionally, Dr. Miller’s issued and outstanding options will
continue to vest according to their established schedules
throughout the Severance Period, and all vested options will remain
exercisable throughout the Severance Period, but in no event later
than the expiration date of such options. If Dr. Miller is
terminated by the Company for reason other than death, Disability
or Cause, or Dr. Miller resigns for Good Reason, in either case
within twelve (12) months following a Change in Control (as defined
in the Company’s Equity Incentive Plan), then, in addition to
receiving the severance benefits described above, Dr. Miller’s
issued and outstanding options will become immediately vested and
will remain exercisable through the Severance Period, but in no
event later than the expiration date of such options.
Andrei Gudkov, Ph.D., D. Sci.
On July 9, 2015, the Company entered into an employment agreement
with the Company’s Chief Science Officer, Andrei Gudkov, Ph.D., D.
Sci. (the “Gudkov Agreement”). Pursuant to the terms of the Gudkov
Agreement, Dr. Gudkov will serve as the Company’s Chief Science
Officer until the earlier of July 8, 2020 or his termination
pursuant to the terms of the agreement. Under the Gudkov Agreement,
Dr. Gudkov will receive an initial base salary of $110,941, which
is subject to review by the Board (or a committee thereof) in its
sole discretion, but may not be decreased other than in the
instance of an across-the-board salary reduction affecting all
executive officers of the Company. Additionally, Dr. Gudkov shall
be eligible to participate in the Company’s Annual Executive Bonus
Plan based on a base pay rate equal to 2x of Dr. Gudkov’s base
salary, subject to the terms and conditions of such plan, as
revised from time to time. The Company is required to reimburse Dr.
Gudkov for all reasonable business expenses incurred by him in
performing the services under the Gudkov Agreement.
If Dr. Gudkov’s employment is terminated by the Company for reason
other than death, Disability or Cause, or Dr. Gudkov resigns for
Good Reason (each as defined in the Gudkov Agreement), then (i) Dr.
Gudkov will be entitled to continuing payments of his base salary
for a period of twelve (12) months (the “Severance Period”), which
base salary shall equal the greater of (y) Dr. Gudkov’s base salary
in effect immediately preceding the date of termination and (z)
$138,677. Additionally, Dr. Gudkov’s issued and outstanding options
will continue to vest according to their established schedules
throughout the Severance Period, and all vested options will remain
exercisable throughout the Severance Period, but in no event later
than the expiration date of such options. If Dr. Gudkov is
terminated by the Company for reason other than death, Disability
or Cause, or Dr. Gudkov resigns for Good Reason, in either case
within twelve (12) months following a Change in Control (as defined
in the Company’s Equity Incentive Plan), then, in addition to
receiving the severance benefits described above, Dr. Gudkov's
issued and outstanding options will become immediately vested and
will remain exercisable through the Severance Period, but in no
event later than the expiration date of such options.
Christopher Zosh
On December 13, 2019, the Company appointed Christopher Zosh, who
was serving in the capacity of Vice President of Finance, to serve
as the Company’s interim principal executive officer, principal
financial officer and principal accounting officer while the
Company’s board of directors continues its search for a permanent
Chief Executive Officer. Mr. Zosh succeeds Yakov Kogan, whose
resignation as Chief Executive Officer became effective on December
13, 2019.
Mr. Zosh is currently an at-will employee of the Company, and as
such, is eligible to participate in the Company’s plans and
arrangements that do not discriminate in scope, terms or operation
in favor of executive of officers or directors and that are
generally available to all salaried employees of the Company. There
were no immediate changes to Mr. Zosh’s compensation package in
connection with his designation as principal executive officer,
principal financial officer and principal accounting officer. His
current base annual salary is $115,000
Yakov Kogan, Ph.D., MBA
On July 9, 2015, the Company entered into an employment agreement
with the Company’s Chief Executive Officer, Yakov Kogan, Ph.D., MBA
(the “Kogan Agreement”). Pursuant to the terms of the Kogan
Agreement, Dr. Kogan was to serve as the Company’s Chief Executive
Officer until the earlier of July 9, 2020 or his termination
pursuant to the terms of the agreement. Under the Kogan Agreement,
Dr. Kogan was entitled to receive an initial base salary of
$276,000, which was subject to review by the Board (or a committee
thereof) in its sole discretion, but could not be decreased other
than in the instance of an across-the-board salary reduction
affecting all executive officers of the Company. Additionally, Dr.
Kogan was eligible to participate in the Company’s Annual Executive
Bonus Plan based on a base pay rate equal to the greater of (y) Dr.
Kogan’s base salary on the date the annual bonus was measured (i.e.
the last day of the year) and (z) $345,000, subject to the terms
and conditions of such plan, as revised from time to time. The
Company was required to reimburse Dr. Kogan for all reasonable
business expenses incurred by him in performing the services under
the Kogan Agreement.
As a result of his resignation without Good Reason (defined in the
Kogan Agreement) on December 13, 2020, Dr. Kogan was entitled to
unpaid Base Salary through the date of his resignation and payment
of his accrued paid time off.
Outstanding Equity Awards at Fiscal Year-End
The following table shows grants of stock options outstanding on
the last day of the fiscal year ended December 31, 2019, including
both awards subject to performance conditions and
non-performance-based awards, to each of the executive officers
named in the Summary Compensation Table. There were no stock option
exercises by any of our named executive officers during the fiscal
year ended December 31, 2019. There were no outstanding stock
awards that were not then exercisable to the executive officers
named in the Summary Compensation Table on the last day of the
fiscal year ended December 31, 2019. All balances shown in the
table below have been adjusted to account for the 1:20 reverse
split of the Company’s common stock that was effected on January
28, 2015. All awards are fully vested.
|
|
|
Option Awards
|
|
|
|
Name
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Langdon L. Miller
|
10,000
|
|
3.00
|
|
5/4/2025
|
|
Andrei Gudkov
|
6,250
|
|
3.20
|
|
4/22/2025
|
|
|
7,500
|
|
13.60
|
|
3/13/2024
|
|
|
4,203
|
|
30.80
|
|
5/12/2023
|
|
|
2,813
|
|
67.00
|
|
1/22/2022
|
|
|
7,481
|
|
143.20
|
|
3/20/2021
|
|
|
5,250
|
|
68.80
|
|
5/17/2020
|
|
Christopher Zosh
|
125
|
|
10.40
|
|
6/16/2024
|
| |
300
|
|
3.20
|
|
4/22/2025
|
Potential Payments upon Termination or Change-In-Control
Please reference the above section "Narrative Disclosure to Summary
Compensation Table," for a description of potential payments upon
termination or change-in-control for each of the executive officers
named in the Summary Compensation Table. The severance payments and
termination-related equity acceleration of each of the executive
officers in the Summary Compensation Table are subject to his
execution of a release of claims against us. In addition, each
executive officer named in the Summary Compensation Table is
subject to confidentiality restrictions at all times, as well as
non-competition and non-solicitation restrictions, during his
employment and for a period of 24 months thereafter.
Retirement Plans, Perquisites and Other Personal
Benefits
Our executive officers are eligible to participate in the same
group insurance and employee benefit plans as our other salaried
employees. These benefits include medical, dental, vision, and
disability benefits and life insurance.
We have adopted a tax-qualified employee savings and retirement
plan, our 401(k) Plan, for eligible U.S. employees, including our
named executive officers. Eligible employees may elect to defer a
percentage of their eligible compensation in the 401(k) Plan,
subject to the statutorily prescribed annual limit. We make
matching contributions on behalf of all participants in the 401(k)
Plan in an amount equal to the Safe Harbor limitation of up to 4%
of salary. Matching contributions vest immediately and all employee
contributions are at all times fully vested. We intend the 401(k)
Plan, and the accompanying trust, to qualify under Sections 401(a)
and 501 of the Internal Revenue Code so that contributions by
employees to the 401(k) Plan, and income earned (if any) on plan
contributions, are not taxable to employees until withdrawn from
the 401(k) Plan, and so that we will be able to deduct our
contributions, if any, when made. The trustee under the 401(k)
Plan, at the direction of each participant, may invest the assets
of the 401(k) Plan in any of a number of investment options.
Director Compensation
Of the directors on our Board during fiscal 2019, Ms. Evdokimova
and Messrs. Nechaev, Fedyunin and Persiyanov (collectively, the
"Millhouse Directors") are each employees of Millhouse LLC, an
asset management company of which Mr. Davidovich serves as the
Chief Executive Officer. Ms. Evdokimova and Messrs. Fedyunin and
Persiyanov were selected as director nominees under the terms of
our securities purchase agreement with Mr. Davidovich, which grants
him the right to designate a majority of the nominees who stand for
election to our Board. Mr. Persiyanov resigned from our Board
effective June 1, 2019. The Millhouse Directors are each paid
employees of Millhouse LLC, and were employed by Millhouse LLC
prior to the time of their original appointment or election to the
Board. The Millhouse Directors, along with Messrs. Andryuschechkin
and Talyanskiy, do not receive compensation for board service from
the Company; however the remaining two board members do receive
compensation for board service. The following is a description of
the cash compensation arrangements under which the other directors
are currently compensated for board and committee services.
|
Position
|
Annual Fee
|
|
|
Compensated
Directors
|
|
Board Member
|
$
|
30,000
|
|
|
Ms. Verny, Mr. Saluck
|
|
Board Chair
|
5,000
|
|
|
Ms. Verny
|
|
Audit Committee Chair
|
5,000
|
|
|
Mr. Saluck
|
In addition to annual cash compensation, the Company from time to
time compensates members of the Board with equity in the form of
options to purchase shares of our common stock. In 2019, the
Company did not grant stock options to any member of the Board for
services performed since our 2019 Annual Meeting. Each of our
directors is also reimbursed for reasonable out-of-pocket expenses
incurred in attending our board or board committee meetings.
The following table shows the total compensation paid or accrued
during the fiscal year ended December 31, 2019 to each of our
directors by the Company.
|
Name
|
|
Paid or
earned
in cash ($)
|
|
Total
($)
|
|
Randy S. Saluck, J.D., MBA (1)
|
|
35,000
|
|
|
35,000
|
|
|
Lea Verny (2)
|
|
35,000
|
|
|
35,000
|
|
|
Anna Evdokimova (2)
|
|
—
|
|
|
—
|
|
|
Ivan Fedyunin (2)
|
|
—
|
|
|
—
|
|
|
Ivan Persiyanov (2)
|
|
—
|
|
|
—
|
|
|
Alexander Andryuschechkin (2)
|
|
—
|
|
|
—
|
|
|
Daniil Talyanskiy (2)
|
|
—
|
|
|
—
|
|
|
(1)
|
Mr. Saluck held 20,250 options at December 31, 2019
|
|
(2)
|
Mmes. Verny, Evdokimova and Messrs. Fedyunin, Andryushechkin and
Talyanskiy held no stock options as of December 31, 2019.
|
Item 12.
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information with respect to
the beneficial ownership of our common stock as of April 15, 2020
for (a) the executive officers named in the Summary Compensation
Table in the section titled “Executive Officer and Director
Compensation,” (b) each of our directors, (c) all of our current
directors and executive officers as a group and (d) stockholders
that beneficially owned more than 5% of our common stock.
Beneficial ownership is determined in accordance with the rules of
the Securities and Exchange Commission and includes voting or
investment power with respect to the securities. We deem shares of
common stock that may be acquired by a person or group within 60
days of April 15, 2020 pursuant to the exercise of options or
warrants to be outstanding and beneficially owned by such person or
group for the purpose of computing the percentage ownership of such
individual or group, but are not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person
shown in the table. Except as indicated in footnotes to this table,
we believe that the stockholders named in this table have sole
voting and investment power with respect to all shares of common
stock shown to be beneficially owned by them based on information
provided to us by these stockholders. Percentage of ownership is
based on 11,403,239 shares of common stock outstanding on April 15,
2020.
|
Name
|
|
Outstanding
Shares
Beneficially
Owned
|
|
Rights to
Acquire
Beneficial
Ownership
|
|
Total
Shares
Beneficially
Owned
|
|
Percent
|
|
5% or greater shareholders
|
|
|
|
|
|
|
|
|
|
|
David Davidovich (1)
|
|
6,459,948
|
|
|
—
|
|
|
6,459,948
|
|
|
56.65
|
%
|
|
James W. Harpel (2)
|
|
773,931
|
|
|
__
|
|
|
773,931
|
|
|
6.78
|
%
|
|
Directors and Named Executive Officers
|
|
|
|
|
|
|
|
|
|
Alexander Andryuschechkin
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
|
Anna Evdokimova
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
|
Ivan Fedyunin
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
|
Randy S. Saluck, J.D., MBA
|
|
140
|
|
|
20,250
|
|
(3)
|
20,390
|
|
|
*
|
|
|
Daniil Talyanskiy
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
|
Lea Verny
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
|
Andrei Gudkov, Ph.D., D. Sci.
|
|
75,869
|
|
|
33,497
|
|
|
109,366
|
|
|
*
|
|
|
Langdon L. Miller, MD
|
|
—
|
|
|
10,000
|
|
(4)
|
10,000
|
|
|
*
|
|
|
Christopher Zosh
|
|
—
|
|
|
425
|
|
(5)
|
425
|
|
|
*
|
|
|
Yakov Kogan, Ph.D., MBA
|
|
33,125
|
|
(6)
|
—
|
|
|
33,125
|
|
|
*
|
|
|
All current executive officers and directors as a group
(10 persons)
|
|
109,134
|
|
|
64,172
|
|
|
173,306
|
|
|
1.51
|
%
|
* Represents beneficial ownership of less
than 1% of the outstanding shares of our common stock.
(1) David Davidovich reported sole
voting and dispositive power with respect to 6,459,948 shares of
our common stock in a Statement on Schedule 13D filed with the SEC
on July 21, 2015. Mr. Davidovich's address is APT 3, 21 Manresa
Road, London, United Kingdom, SW3 SLZ.
(2) James W. Harpel reported sole
voting and dispositive power with respect to 597,209 shares of our
common stock and shared voting and dispositive power over 176,722
shares of our common stock on Schedule 13G filed with the SEC on
January 24, 2020. Mr. Harpel reported that the shares with respect
to which he has shared voting and dispositive power are owned by
six trusts over which Mr. Harpel has Power of Attorney and shares
with the trustees of such trusts the power to vote or dispose the
shares held by such trusts. Mr. Harpel’s address is Palm Beach
Capital, 525 South Flagler Drive, Suite 201, West Palm Beach, FL
33401.
(3) These shares of common stock can
be acquired through the exercise of options that are directly owned
by Mr. Saluck. Upon acquisition, Mr. Saluck will have sole voting
and investment power over such shares.
(4) These shares of common stock can
be acquired through the exercise of options that are directly owned
by Dr. Miller. Upon acquisition, Dr. Miller will have sole voting
and investment power over all such shares.
(5) These shares of common stock can
be acquired through the exercise of options that are directly owned
by Mr. Zosh. Upon acquisition, Mr. Zosh will have sole voting and
investment power over such shares.
(6) Dr. Kogan’s shares beneficially
owned is reported as of December 13, 2019, which is the effective
date of his resignation from the Company.
Change of Control of the Company
On July 9, 2015, we closed a private placement transaction with
David Davidovich, a venture capital investor, pursuant to which the
Company issued and sold to Mr. Davidovich an aggregate of 6,459,948
shares of the Company’s common stock, for an aggregate purchase
price of approximately $25 million, or $3.87 per share, under the
terms of the Securities Purchase Agreement between the Company and
Mr. Davidovich, dated June 24, 2015 (the “Davidovich Purchase
Agreement”). Under the Davidovich Purchase Agreement, Mr.
Davidovich also has the right to nominate for election to the Board
a majority of directors until such time when he no longer holds a
majority of the issued and outstanding common stock of the Company.
As a result of the closing of the issuance and sale of the shares
to Mr. Davidovich under the terms of the Davidovich Purchase
Agreement, Mr. Davidovich assumed effective control of the Company
through his ownership of approximately 60% (since reduced to 56.65%
due to the subsequent issuance of additional shares of common
stock) of our outstanding shares of common stock and his right to
nominate for election to the Board a majority of our directors.
In connection with the closing of Mr. Davidovich’s purchase, on
July 9, 2015, we also entered into a Registration Rights Agreement
with Mr. Davidovich (the “Registration Rights Agreement”). Pursuant
to the terms of the Registration Rights Agreement, we filed a
registration statement under the Securities Act of 1933 registering
for resale the shares held by Mr. Davidovich. The registration
statement has been declared effective by the SEC and since July 9,
2017 Mr. Davidovich has been able to freely sell some or all of his
shares of our common stock, the effect of which sale or sales may
be that Mr. Davidovich ceases to control the Company.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2019,
regarding shares of common stock that may be issued under the
Company’s equity compensation plans, including the Cleveland
Biolabs, Inc. Equity Incentive Plan, adopted in 2018 (the "Equity
Plan"). Information is included for both equity compensation plans
approved by the Company’s stockholders and not approved by the
Company’s stockholders (which date back to before the Company
became a reporting company under the Exchange
Act).
|
Plan Category
|
|
(a)
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
|
|
(b)
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
(c)
Number
of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column
(a))
|
|
Equity compensation plans approved by security holders
(1)
|
|
136,105
|
|
|
$
|
40.07
|
|
|
461,452
|
|
|
Equity compensation plans not approved by security
holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
136,105
|
|
|
$
|
40.07
|
|
|
461,452
|
|
|
(1)
|
Consists of the Equity Plan.
|
Item 13.
Certain Relationships and Related Transactions, and Director
Independence
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Pursuant to our written Related Party Transaction Policy, the Audit
Committee must provide written approval in advance for any
transaction that could involve an actual, potential or perceived
conflict of interest, including transactions where employees or
directors have a substantial financial interest in any of our
competitors, customers or suppliers, or where gifts or loans of
value in excess of $200 are received in a year from our suppliers,
customers or competitors. The policy also requires advance written
approval for any transaction where an employee or director owns a
substantial interest in an entity that has a prospective business
relationship with, or is a competitor of, us. In determining
whether to approve any transaction requiring review under the
policy, the Audit Committee considers whether the terms of the
transaction are fair and on the same basis as would apply for a
non-related party; whether there are business reasons for the
Company to enter into the transaction; whether the transaction
would impair the independence of an independent director; and
whether the transaction would present an improper conflict of
interest for a director or executive of the Company. The following
is a list of transactions with related persons reviewed and
approved by the Audit Committee during the two fiscal years ended
December 31, 2019. There were no transactions with related persons
required to be reported that were not reviewed and approved by the
Audit Committee that were entered into during the year ended
December 31, 2019, except that the transactions involving Norma
Investments Limited described below were approved by the full
Board, with no participation by the interested directors.
Transactions and Relationships with Dr. Gudkov
Our Chief Scientific Officer, Dr. Andrei Gudkov, is the Senior Vice
President of Basic Science and the Chairman of the Department of
Cell Stress Biology at Roswell Park Cancer Institute (“RPCI”). We
subcontract Dr. Gudkov’s laboratory at RPCI from Health Research
Inc. to perform certain research and development studies for us,
and also purchase certain core products and services from RPCI,
including mice, the housing and storage of mice, irradiator
services, DNA sequencing and blood analysis. RPCI also serves as
one of our clinical sites. For the aforementioned services, we paid
Health Research Inc. approximately $0.06 million and $0.2 million
in 2019 and 2018, respectively. In addition, we transferred 23
research scientists to Buffalo BioLabs, Inc. (“BBL”) in the later
part of 2013, an entity then partially-owned by Dr. Gudkov and of
which he is a founder and the Principal Scientific Advisor. We hire
BBL on a project basis to perform research work, as needed. For the
aforementioned services, we paid BBL approximately $0.0 million and
$0.5 million in 2019 and 2018, respectively.
Dr. Gudkov is also an uncompensated member of the board of
directors for Incuron, LLC ("Incuron"). Pursuant to master service
and development agreements we have with Incuron, the Company
performs various research, business development, clinical advisory,
and management services for Incuron. We recognized revenue of $0.4
million and $0.6 million from Incuron for the years ended
December 31, 2019, and 2018, respectively. In addition, we
also recognized $2,268 and $5,178 from Incuron for sublease and
other income for the years ended for the years ended
December 31, 2019, and 2018, respectively.
Transactions and Relationships with GPI and Norma
Investments
As previously disclosed, in the third quarter of 2018, the Company
entered into a series of related transactions under which the
Company and Everon Biosciences, Inc. ("Everon") licensed and
assigned certain intellectual property to Genome Protection, Inc.
("GPI"), a corporation formed by the Company for the purpose of
creating a joint venture with Everon. GPI, which is currently 50%
owned by the Company and 50% owned by Everon, is undertaking a
research and development program aimed at clinical testing of
entolimod and GP532 (a variant of our entolimod drug candidate) and
the development of medications with anti-aging and other
indications associated with genome damage. On August 10, 2018, GPI,
Norma Investments Limited, a British Virgin Islands company
(“Norma”), the Company and Everon entered into that certain Simple
Agreement for Future Equity (the “SAFE”). Norma is controlled by
investor Roman Abramovich, who also controls Millhouse Capital,
LLC, the employer of three members of the Company’s Board, Anna
Evdokimova, Ivan Fedyunin and Ivan Persiyanov, and of which the
Company’s majority stockholder is chief executive officer. Ms.
Evdokimova and Messrs. Fedyunin and Persiyanov did not participate
in the deliberations or vote to approve the Company’s entry into
the SAFE.
Under the SAFE, GPI granted Norma the right to purchase shares of
GPI’s capital stock in exchange for the payment of up to
$30,000,000, of which $10,500,000 was paid shortly after the
execution of the SAFE and the remainder may be paid, if at all, in
tranches over time. The SAFE also provides that, upon the closing
of a transaction in which GPI raises $3,000,000 or more in equity
capital from a third party, Norma has the right to require GPI to
issue to it the number of shares obtained by dividing the purchase
price paid for the SAFE through such date by 50% of the price per
share of the equity securities sold to the third party. If GPI
experiences a change of control event or completes a firm
commitment initial public offering of securities registered under
the Securities Act of 1933, as amended, then GPI will, at Norma’s
option, either (i) pay to Norma an amount equal to the purchase
price paid by Norma through such date under the SAFE plus interest
accrued at a rate of 6.33% per year or (ii) issue to Norma shares
of its common stock in the number obtained by dividing the purchase
price paid by Norma through such date under the SAFE by 50% of the
price per share of GPI’s common stock based on GPI’s valuation
immediately preceding the consummation of either the
change-of-control event or initial public offering. If GPI is
dissolved, terminates its operations, makes a general assignment
for the benefit of its creditors or liquidates or winds up its
affairs, then GPI must pay Norma an amount equal to the purchase
price paid by Norma through such date under the SAFE, prior to any
distributions being made to any holders of GPI’s capital stock,
including the Company. The term of the SAFE is perpetual,
terminating only upon the full repayment or conversion of the
purchase price paid by Norma to GPI in connection with the events
described above.
Under the SAFE, the parties agree that GPI’s board of directors
(the “GPI Board”) will consist of four members, two of whom will be
selected by Norma, one of whom will be selected by the Company and
one of whom will be selected by Everon. The SAFE also provides that
the parties agreed that a quorum of the GPI Board will require that
at least one of the directors selected by Norma be present.
Additionally, the SAFE sets forth a number of actions that GPI will
be prohibited from taking without the unanimous consent of all of
the members of the GPI Board, including, among other things,
effecting a change of control transaction, terminating its
operations, dissolving or liquidating, amending its organizational
documents, transferring or licensing its intellectual property or
issuing any shares of capital stock. The SAFE sets forth other
matters that must be approved by a majority of the members of the
GPI Board, including the incurrence of indebtedness exceeding
$100,000, granting a lien or other encumbrance on GPI’s assets,
entering into a related party transaction and hiring, terminating
or setting the compensation of executive officers. The Company and
Everon have each guaranteed, to the extent of their powers as
stockholders of GPI, the due and punctual performance by GPI of all
of its obligations under the SAFE, and have also agreed to
indemnify, on a joint and several basis, Norma for any losses
arising out of any misrepresentation or any material breach of the
SAFE, up to the amount of the purchase price paid by Norma under
the SAFE.
In connection with the execution of the SAFE, the Company, Everon,
GPI and Norma entered into that certain Director Designation
Agreement, dated as of August 10, 2018 (the “Director Designation
Agreement”), pursuant to which the parties made certain commitments
as to voting and transfer of their shares of GPI and GPI’s
governance. Under the terms of the Director Designation Agreement,
the parties agreed that the GPI Board will consist of four members,
two of whom will be selected by Norma, one of whom will be selected
by the Company and one of whom will be selected by Everon. Each
party to the Director Designation Agreement also commits to (i)
vote its GPI capital stock for the selected designees of the other
parties, (ii) cause the director(s) appointed by it to nominate for
election the selected designees of the other parties, (iii) vote
its GPI capital stock for the removal of a member of the GPI Board
if the party that originally selected such person so requests and
(iv) to cause the director(s) appointed by it to vote to fill any
vacancy created by the death, resignation or removal of a party’s
designee director with the replacement designee selected by such
party.
Similar to the SAFE, the Director Designation Agreement sets forth
a number of actions that GPI will be prohibited from taking without
the unanimous consent of all of the members of the GPI Board,
including, among other things, effecting a change of control
transaction, terminating its operations, dissolving or liquidating,
amending its organizational documents, transferring or licensing
its intellectual property or issuing any shares of capital stock.
The Director Designation Agreement sets forth other matters that
must be approved by a majority of the members of the GPI Board,
including the incurrence of indebtedness exceeding $100,000,
granting a lien or other encumbrance on GPI’s assets, entering into
a related party transaction and hiring, terminating or setting the
compensation of executive officers.
The Director Designation Agreement also contains a right of first
refusal in favor of Norma under which if either the Company or
Everon desires to sell its shares in GPI to a third party, it must
first give notice to Norma, which then has the right to purchase
some or all of such shares on the same terms and conditions as the
selling stockholder had proposed to sell the shares to a third
party. If Norma does not elect to purchase all of the shares that
either the Company or Everon proposed to sell, then the Company or
Everon, respectively, may sell such shares to the third party.
Norma is not, however, required to first offer any shares of GPI it
proposes to sell to the Company or Everon before selling such
shares to a third party.
The Company recognized $7,409 and $1,725 in sublease and other
income from GPI for the year ended December 31, 2019 and 2018,
respectively.
Parent of Smaller Reporting Company
We have no parent company, though David Davidovich may be
considered to be our parent by virtue of (i) his ownership of
56.65% of our outstanding shares of common stock and (ii) his
ability to select a majority of the individuals nominated for
annual election to our board under the terms the Davidovich
Purchase Agreement.
INDEPENDENCE
Because David Davidovich holds more than 50% of the voting
power for the election of our directors, the Company is a
“controlled company” within the meaning of the NASDAQ Stock Market
Rules, and therefore exempt from a number of corporate governance
rules applicable to non-controlled companies. Although we are not
required to have a majority of independent directors as a result of
our status as a “controlled company,” our Board has affirmatively
determined that all of our directors are “independent.” Mme. Verny
and each of Messrs. Saluck and Andryuschechkin are independent
under The NASDAQ Stock Market Rules and the Securities Exchange Act
of 1934 (the “Exchange Act”) for purposes of serving on the Audit
Committee. Each of Mme. Evdokimova and Messrs. Talyanskiy, and
Fedyunin are independent under such rules for purposes of board
service.
Item 14.
Principal Accounting Fees and Services
Principal Accountant Fees and Services
Meaden & Moore, Ltd. acts as the principal auditor for us and
also provides certain audit-related services. We have entered into
an engagement agreement with Meaden & Moore, Ltd. that sets
forth the terms by which Meaden & Moore, Ltd. will perform
audit services for us. That agreement is subject to alternative
dispute resolution procedures and an exclusion of punitive
damages.
The Audit Committee pre-approves all services provided to us by
Meaden & Moore, Ltd.. In pre-approving services, the Audit
Committee considers whether such services are consistent with the
SEC’s rules on auditor independence. The fees for the services
provided to us by Meaden & Moore, Ltd. are set forth below.
Audit Fees
Audit Fees were $115,900 for the year ended December 31, 2019 and
were $118,500 for the year ended December 31, 2018. Audit Fees
consisted of work performed in the audit of financial statements
and work performed in connection with quarterly financial statement
reviews, statutory audits, consultation regarding financial
accounting and/or reporting standards, filings with the SEC and
comfort letters.
Audit-Related Fees
There were no amounts billed by Meaden & Moore, Ltd. for
Audit-Related Fees during the years ended December 31, 2019 and
December 31, 2018.
Tax Fees
There were no amounts billed by Meaden & Moore, Ltd. for Tax
Fees during the years ended December 31, 2019 and December 31,
2018.
All Other Fees
There were no amounts billed by Meaden & Moore, Ltd. for Other
Fees during the years ended December 31, 2019 and December 31,
2018.
PART IV
Item 15.
Exhibits, Financial Statement Schedules
The following documents are filed as part of this report:
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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CLEVELAND BIOLABS, INC.
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Dated:
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April 29, 2020
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By:
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/s/CHRISTOPHER ZOSH
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Christopher Zosh
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Vice President of Finance
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