UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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PRECISION THERAPEUTICS INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Date Filed:
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PRECISION THERAPEUTICS INC.
2915 Commers Drive, Suite 900
Eagan, Minnesota 55121
Telephone: (651) 389-4800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on December 28, 2018
Dear Stockholder:
You are cordially invited to attend the Annual
Meeting of Stockholders (the “Annual Meeting”) of Precision Therapeutics Inc. (the “Company” or “Precision”)
on December 28, 2018, at 3:00 PM (Central Standard Time) at the offices of the Company’s counsel, Maslon LLP, 3300 Wells
Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402 for the following purpose:
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1.
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To elect six members of the Board of Directors of the Company to hold office until the next annual meeting or until their successors
are duly elected and qualified.
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2.
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To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for
the fiscal year ending December 31, 2018.
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To conduct any other business as more fully described in the proxy statement accompanying this Notice.
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These items of business are more fully described
in the proxy statement accompanying this Notice.
The record date for the Annual Meeting is November
28, 2018. Only stockholders of record at the close of business on that date are entitled to vote at the meeting or any adjournment
thereof, or by proxy.
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By Order of the Board of Directors,
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Sincerely,
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/s/ Carl Schwartz
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Carl Schwartz
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Chief Executive Officer
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Eagan, Minnesota
December 7, 2018
You are cordially invited to attend the meeting in person. Whether
or not you expect to attend the meeting, please vote your shares. You may submit your proxy card or voting instruction card by
completing, signing, dating and mailing your proxy card or voting instruction card in the envelope provided or vote by facsimile,
email or over the Internet as instructed in the proxy statement. Any stockholder attending the meeting may vote in person, even
if you already returned a proxy card or voting instruction card and intend to change your original vote. Please note, however,
that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain
a legal proxy issued in your name from that record holder.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE
STOCKHOLDER MEETING TO BE HELD ON DECEMBER 28, 2018:
The Proxy Statement is
available at http://investors.skylinemedical.com
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
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PROPOSAL 1: ELECTION OF DIRECTORS
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6
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INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
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8
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TRANSACTIONS WITH RELATED PERSONS
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RELATED PARTY TRANSACTIONS
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EQUITY COMPENSATION PLAN INFORMATION
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EXECUTIVE COMPENSATION
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15
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DIRECTOR COMPENSATION
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20
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PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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FORM 10-K
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OTHER MATTERS
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PRECISION THERAPEUTICS INC.
2915 Commers Drive, Suite 900
Eagan, Minnesota 55121
Telephone: (651) 389-4800
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 28, 2018
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I receiving these materials?
We have sent you this proxy statement and the
enclosed proxy card because the Board of Directors (the “Board of Directors” or the “Board”) of Precision
Therapeutics Inc. (the “Company”) is soliciting your proxy to vote at the Annual Meeting of Stockholders of the Company
(the “Annual Meeting”) to be held at the offices of the Company’s counsel, Maslon LLP on December 28, 2018, at
3:00 PM (Central Standard Time), including any adjournments or postponements of the Annual Meeting. You are invited to attend the
Annual Meeting to vote on the proposals described in this proxy statement. However, you do not need to attend the meeting to vote
your shares. Instead, you may simply complete, sign and return the enclosed proxy card, or follow the instructions below to submit
your proxy by facsimile, email or on the Internet.
The Company intends to mail this proxy statement
and accompanying proxy card on or about December 7, 2018, to all stockholders of record entitled to vote at the Annual
Meeting.
Who can vote at the Annual Meeting?
Only stockholders of record at the close of business on November 28, 2018, will be entitled to vote at the
Annual Meeting. On the record date, there were 12,991,748 shares of common stock of the Company outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If, on November 28, 2018, your shares were registered
directly in your name with the Company’s transfer agent, Corporate Stock Transfer, Inc., then you are a stockholder of record.
As a stockholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting,
we urge you to vote your shares by completing, signing, dating and mailing your proxy card in the envelope provided or vote by
proxy via facsimile, email or on the Internet as instructed below to ensure your vote is counted.
Beneficial Owner: Shares Registered in the Name of a Broker or
Bank
If, on November 28, 2018, your shares were held,
not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial
owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The
organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As
a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You
are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares
in person at the meeting unless you request and obtain a valid legal proxy from your broker or other agent.
What am I voting on?
There are two matters scheduled for a vote:
1.
To elect six members of the Board of Directors of the Company to hold office until the next annual meeting or until their successors
are duly elected and qualified.
2.
To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for
the fiscal year ending December 31, 2018.
How do I vote?
For Proposal 1, you may either vote “FOR”
all the nominees to the Board of Directors or you may “Withhold” your votes for any nominee you specify. For Proposal
2, you may vote “FOR” or “AGAINST” or abstain from voting.
The procedures for voting are as follows:
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may
vote in person at the Annual Meeting, vote by proxy using the enclosed proxy card, vote by proxy via facsimile, email or on the
Internet. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still
attend the meeting and vote in person even if you have already voted by proxy.
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To vote using the proxy card, simply complete, sign and date the
enclosed proxy card and return it promptly in the envelope provided. If you return your signed proxy card to us before the Annual
Meeting, we will vote your shares as you direct.
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To vote by email, complete, sign and date the enclosed proxy card and scan and email it to cdalton@corporatestock.com. Your vote must be received by 4:00 PM Eastern Time (3:00 PM Central Standard Time) on December 28, 2018, to be counted.
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To vote by facsimile, complete, sign and date the enclosed proxy card and fax it to (303) 282-5800. Your vote must be received by 4:00 PM Eastern Time (3:00 PM Central Standard Time) on December 28, 2018, to be counted.
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To vote in person, come to the Annual Meeting, and we will give you a ballot when you arrive. If you would like directions to the offices of the company’s counsel, Maslon LLP, please call (651) 389-4800.
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Internet Voting
We are providing Internet proxy voting to
allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions.
However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet
access providers and telephone companies.
Beneficial Owner: Shares Registered in the Name of Broker or
Bank
If you are a beneficial owner of shares registered
in the name of your broker, bank, or other agent, you should receive a proxy card and voting instructions with these proxy materials
from that organization rather than from us. Simply complete and mail the proxy card to ensure that your vote is submitted to your
broker or bank. Alternatively, you may vote over the Internet as instructed by your broker or bank. To vote in person at the Annual
Meeting, you must obtain a valid legal proxy from your broker, bank, or other agent. Follow the instructions from your broker or
bank included with these proxy materials or contact your broker or bank to request a proxy form.
How many votes do I have?
On each matter to be voted upon, you have one
vote for each share of common stock you own as of November 28, 2018.
What if I return a proxy card but do not make specific choices?
If you return a signed and dated proxy card
without marking any voting selections, the shares represented by that proxy will be voted as follows: “FOR” Precision
Proposal No. 1 to elect six members to its Board of Directors to hold office until the next annual meeting or until their successors
are duly elected and qualified; and “FOR” Precision Proposal No. 2 to ratify the appointment of Deloitte & Touche
LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018.
Who is paying for this proxy solicitation?
The Company will pay for the entire cost of
soliciting proxies. In addition to these mailed proxy materials, our directors and employees may also solicit proxies in person,
by telephone, email or by other means of communication. Directors and employees will not be paid any additional compensation for
soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to
beneficial owners.
What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, your
shares are registered in more than one name or are registered in different accounts. Please complete, sign and return each proxy
card to ensure that all of your shares are voted.
Are proxy materials available on the Internet?
This proxy statement is available at http://investors.skylinemedical.com.
Can I change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before
the final vote at the Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any one of three
ways:
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You may send a written notice to the Secretary of the Company before the Annual meeting stating that you would like to revoke your proxy.
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If you have signed and returned a paper proxy card, you may sign a new proxy card bearing a later date and submit it as instructed above.
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If you have voted by telephone or Internet, you may cast a new vote by telephone or over the Internet as instructed above.
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You may attend the Annual Meeting and vote in person, but attendance alone will not revoke a proxy. You must specifically request at the meeting that your proxy be revoked.
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If your shares are held by your broker or bank
as a nominee or agent, you should follow the instructions provided by your broker or bank.
How are votes counted?
Votes will be counted by the inspector of election
appointed for the meeting, who will separately count for the election of directors, “FOR,” “WITHHOLD” and
broker non-votes; and with respect to the other proposals, votes “FOR” and “AGAINST” votes, abstentions
and broker non-votes. Abstentions will be counted towards the vote total for each proposal and will have the same effect as “Against”
votes. Broker non-votes have no effect and will not be counted towards the vote total for any proposal, except for Proposal 2,
for which broker non-votes will have the same effect as “Against” votes.
Is cumulative voting permitted for the election of directors?
No. You will not be permitted to cumulate your
votes for the election of directions. Under Delaware law, stockholders are not entitled to cumulative voting rights unless a corporation’s
certificate of incorporation explicitly authorizes such rights. The Company’s certificate of incorporation does not authorize
cumulative voting rights for stockholders.
What are “broker non-votes”?
Broker non-votes occur when a beneficial owner
of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to
vote on matters deemed “non-routine.” Generally, if shares are held in street name, the beneficial owner of the shares
is entitled to give voting instructions to the broker or nominee holding the shares. If the beneficial owner does not provide voting
instructions, the broker or nominee can still vote the shares with respect to matters that are considered to be “routine,”
but not with respect to “non-routine” matters. Proposal 2 is a matter considered routine under the NYSE rules. All
other proposals are matters considered non-routine by the New York Stock Exchange, and therefore, there may be broker non-votes
on these proposals.
How many votes are needed to approve each proposal?
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For Proposal 1, the election of directors, who are elected by a plurality of the votes of the shares present in person or represented by proxy and entitled to vote on the election of directors at the Annual Meeting, the nominees receiving the most “For” votes will be elected. Only votes “For” or “Withheld” will affect the outcome.
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To be approved, Proposal 2 must receive a “For” vote from majority of shares of capital stock of the Company present in person or represented by proxy and entitled to vote at the Annual Meeting.. If you “Abstain” from voting, it will have the same effect as an “Against” vote. There will be no broker non-votes on Proposal No. 2.
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What is the quorum requirement?
A quorum of the Company’s stockholders
is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority of the outstanding
shares are present at the meeting in person or represented by proxy. On the record date, there were 12,991,748 shares outstanding
and entitled to vote. Thus, the holders of 6,495,875 shares must be present in person or represented by proxy at the meeting to
have a quorum.
Your shares will be counted towards the quorum
only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person
at the meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the holders
of a majority of shares present at the meeting in person or represented by proxy, or the chairman of the meeting, may adjourn the
meeting to another date.
How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced
at the Annual Meeting. Final voting results will be published in a Current Report on Form 8-K, which we will file within four business
days after the meeting.
When are stockholder proposals due for the 2019 Annual Meeting?
If you would like to submit a proposal for us
to include in the proxy statement for our 2018 annual meeting, you must comply with Rule 14a-8 under the Exchange Act and the advance
notice provisions of our Amended and Restated Bylaws. You must also make sure that we receive your proposal at our executive offices
(sent c/o Secretary) by August 6, 2019, if the annual meeting is held within 30 days of December 28, 2019. If the annual meeting
is not held within 30 days of such date, then the Company will disclose the deadline for such proposals, if different. Any stockholder
proposal included in our proxy statement will also be included on our form of proxy so that stockholders can indicate how they
wish to vote their shares on the proposal.
If you would like to recommend a person for
consideration as a nominee for election as a director at our 2019 annual meeting, you must comply with the advance notice provisions
of our Amended and Restated Bylaws. These provisions require that we receive your nomination at our executive offices (sent c/o
Secretary) no earlier than September 28, 2019 and no later than October 28, 2019.
If you would like to present a proposal at our
2019 annual meeting without including it in our proxy statement, you must comply with the advance notice provisions of our Amended
and Restated Bylaws. These provisions require that we receive your nomination at our executive offices (sent c/o Secretary) no
earlier than September 28, 2019 and no later than October 28, 2019. If the annual meeting is not held within 30 days of such date,
then the Company will disclose the deadline for such proposals, if different.
If the presiding officer at the 2019 annual
meeting of stockholders determines that a stockholder proposal or stockholder director nomination was not submitted in compliance
with the advance notice provisions of our Amended and Restated Bylaws, the proposal or nomination will be ruled out of order and
not acted upon.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors shall be comprised of
such number of directors as determined by the board, and directors need not be stockholders of the Company. Vacancies on the Board
of Directors may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board of
Directors to fill a vacancy shall serve for the remainder of the full term and until the director’s successor is elected
and qualified.
The directors of the Company do not have a definite
term of office and each director serves until his or her successor is elected and duly qualified. The Board has established a Governance/Nominating
Committee, which considers director candidates, including those recommended by stockholders, and recommends candidates to the full
Board for approval. To nominate a director, stockholders must submit such nomination in writing to our Secretary at 2915 Commers
Drive, Suite 900, Eagan, Minnesota 55121.
The Board has (i) ratified the number of directors
as six and (ii) nominated six directors (Messrs. McGoldrick, Reding, Krochuk, Engle, Gabriel, and Dr. Schwartz) for re-election
at the Annual Meeting.
Directors are elected by a plurality of the
votes of the shares present in person or represented by proxy and entitled to vote on the election of directors at the Annual Meeting.
The nominees receiving the most “For” votes (among votes properly cast in person or by proxy) will be elected. If no
contrary indication is made, shares represented by executed proxies will be voted “For” the election of the nominees
named above or, if any nominee becomes unavailable for election as a result of an unexpected occurrence, “For” the
election of a substitute nominee designated by the Board. Each nominee has agreed to serve as a director if elected, and the Company
has no reason to believe that any nominee will be unable to serve.
The following is a brief biography for each
nominee for director.
Name
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Age (1)
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Position
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Thomas J. McGoldrick (3) (4) (5)
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77
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Director, Chairman of the Board
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Andrew P. Reding (2)
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48
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Director
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Carl Schwartz (5)
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77
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Director, Chief Executive Officer
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Timothy A. Krochuk (2) (4) (5)
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49
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Director
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J. Melville Engle (2) (3)
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68
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Director
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Richard L. Gabriel (5)
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70
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Director
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(1) As of the date of this proxy statement.
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
(4) Member of the Governance/Nominating Committee
(5) Member of the Merger & Acquisition Committee
Nominees for election
Thomas J. McGoldrick
. Mr. McGoldrick
has served as a Director of the Company since 2005. Prior to that, he served as Chief Executive Officer of Monteris Medical Inc.
from November 2002 to November 2005. He has been in the medical device industry for over 30 years and was co-founder and Chief
Executive Officer of Fastitch Surgical in 2000. Fastitch is a start-up medical device company with unique technology in surgical
wound closure. Prior to Fastitch, Mr. McGoldrick was President and Chief Executive Officer of Minntech from 1997 to 2000. Minntech
was a $75 million per year publicly traded (NASDAQ-MNTX) medical device company offering services for the dialysis, filtration,
and separation markets. Prior to employment at Minntech from 1970 to 1997, he held senior marketing, business development and international
positions at Medtronic, Cardiac Pacemakers, Inc. and Johnson & Johnson. Mr. McGoldrick is on the Board of Directors of two
other start-up medical device companies.
Andrew P. Reding
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Mr. Reding
is an executive with extensive experience in sales and marketing of capital equipment for the acute care markets. He has served
as a director of the Company since 2006 and he is currently the President and Chief Executive Officer of TRUMPF Medical Systems,
Inc., a position he has held since April 2007. Prior to that, he was Director of Sales at Smith & Nephew Endoscopy and prior
to that, he served as Vice President of Sales and Director of Marketing with Berchtold Corporation from 1994 to 2006. His experience
is in the marketing and sales of architecturally significant products for the operating room, emergency department and the intensive
care unit. Mr. Reding has successfully developed high quality indirect and direct sales channels, implemented programs to interface
with facility planners and architects and developed GPO and IDN portfolios. Mr. Reding holds a bachelor’s degree from Marquette
University and an MBA from The University of South Carolina.
Carl Schwartz
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Dr. Schwartz
was the owner manager of dental groups in Burton, Michigan and Grand Blanc, Michigan. Dr. Schwartz previously served on the Board
of Delta Dental Corporation of Michigan, was a member of the Michigan Advisory Board for Liberty Mutual Insurance and was a member
of the Board of Trustees of the Museum of Contemporary Art in Florida. In 1988 Dr. Schwartz joined a family business becoming chief
executive officer of Plastics Research Corporation, a Flint, Michigan, manufacturer of structural foam molding, a low-pressure
injection molding process. While there he led its growth from $2 million in revenues and 20 employees, to its becoming the largest
manufacturer of structural foam molding products under one roof in the U.S. with more than $60 million in revenues and 300 employees
when he retired in 2001. He holds B.A. and D.D.S. degrees from the University of Detroit.
J. Melville Engle
. Mr. Engle
was appointed to Board on October 27, 2016. Mr. Engle has worked in the healthcare industry for the past three decades. Since
2012, he has served as President and Chief Executive Officer of Engle Strategic Solutions, a consulting company focused on CEO
development and coaching, senior management consulting, corporate problem solving and strategic and operational planning. He is
Chairman of the Board of Windgap Medical, Inc., and has held executive positions at prominent companies including Chairman and
Chief Executive Officer at ThermoGenesis Corp., Regional Head/Director, North America at Merck Generics, President and Chief Executive
Officer of Dey, L.P. and CFO, at Allergan, Inc. In addition to ThermoGenesis, he has served on the Board of Directors of several
public companies, including Oxygen Biotherapeutics and Anika Therapeutics. Mr. Engle holds a BS in Accounting from the University
of Colorado and a MBA in Finance from the University of Southern California. He has served as a Trustee of the Queen of the Valley
Medical Center Foundation, was a Board Member of the Napa Valley Community Foundation, and at the Napa College Foundation. He
was also Vice Chair of the Thunderbird Global Council at the Thunderbird School of Global Management in Glendale, Arizona.
Timothy A. Krochuk
. Mr. Krochuk
is Co-Founder, Managing Member and Co-CEO of Shepherd Kaplan Krochuk, one of the largest privately held wealth management firms.
As Co-CEO, he is actively involved in the development of the firm’s intellectual property, consulting tools and technological
capabilities. Mr. Krochuk is a portfolio manager for the private equity and real estate investment funds. He has been involved
in investment management and research since 1992 and was previously the youngest diversified portfolio manager in the history
of Fidelity Investments. During his tenure at Fidelity, he used advanced quantitative techniques to study a variety of industries.
He was responsible for the development, programming and implementation of investment models used in managing over $20 billion
in public mutual funds. Mr. Krochuk holds the Chartered Financial Analyst designation, and serves on the board of, or in an advisory
capacity to, a number of private and public companies in the United States and Canada. He is a member of the Young Presidents’
Organization (YPO) and holds the Master Professional Director Certification. Mr. Krochuk holds an A.B. in Economics from Harvard
College.
Richard L. Gabriel
. Mr. Gabriel
was appointed to the Board on December 1, 2016. He has more than 40 years of relevant healthcare experience, including two decades
of executive leadership and as a director and consultant to development-stage companies. In addition, serving as chief operating
officer of GLG Pharma since 2009, from 2003 until 2009 Mr. Gabriel was chief executive officer of DNAPrint Genomics and DNAPrint
Pharmaceuticals. He is currently a director of Windgap Medical. Mr. Gabriel holds an MBA from Suffolk University in Boston, and
a BS in Chemistry from Ohio Dominican College in Columbus.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF
EACH NOMINEE NAMED ABOVE.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Independence of the Board of Directors
Under NASDAQ listing standards, a majority of
the members of a listed company’s Board of Directors must qualify as “independent,” as affirmatively determined
by the board of directors. The Board of Directors consults with our counsel to ensure that the Board of Directors’ determinations
are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including
those set forth in pertinent listing standards of the NASDAQ, as in effect from time to time.
Consistent with these considerations, after
review of all relevant transactions or relationships between each director, or any of his or her family members, and the Company,
its senior management, and its independent registered public accounting firm, the Board of Directors has affirmatively determined
that the following directors and nominees are independent directors within the meaning of the NASDAQ listing standards: Messrs.
McGoldrick, Reding, Krochuk, Engle and Gabriel. In making this determination, the Board of Directors found that none of these directors
and nominees had a material or other disqualifying relationship with the Company.
Leadership structure
Effective May 5, 2016, the board of directors
appointed Carl Schwartz as Interim Chief Executive Officer and appointed Thomas J. McGoldrick as Chairman of the Board. Effective
December 1, 2016, the Board of Directors appointed Carl Schwartz as Chief Executive Officer. The Board believes that this division
of leadership is in the best interests of the Company and its stockholders at this time.
Oversight of risk management
Board-level risk oversight is primarily performed
by our full Board, although the Audit Committee oversees our internal controls and regularly assesses financial and accounting
processes and risks. Our risk oversight process includes an ongoing dialogue between management and the Board and the Audit Committee,
intended to identify and analyze risks that face the Company. Through these discussions with management and their own business
experience and knowledge, our directors are able to identify material risks for which a full analysis and risk mitigation plan
are necessary. The Board (or the Audit Committee, with respect to risks related to internal controls, financial and accounting
matters) monitors risk mitigation action plans developed by management, in order to ensure such plans are implemented and are effective
in reducing the targeted risk.
Code of ethics and business conduct
On November 14, 2008, the Board adopted the
Code of Ethics of Precision Therapeutics Inc. that applies to all officers, directors and employees of the Company. We intend to
maintain the highest standards of ethical business practices and compliance with all laws and regulations applicable to our business.
The Code of Ethics is available in print to any stockholder requesting a copy in writing from our Corporate Secretary at our executive
office set forth on the cover page of this proxy statement.
Stockholder communications with the Board of Directors
Stockholders may send communications to the
Company’s Board of Directors, or to any individual Board member, by means of a letter to such individual Board member or
the entire Board addressed to:
Board of Directors (or named Board member)
Precision Therapeutics Inc.
Attention: Chief Financial Officer
2915 Commers Drive, Suite 900
Eagan, Minnesota 55121
If a stockholder is unsure as to which category
the concern relates, the stockholder may communicate it to any one of the independent directors in care of Chief Financial Officer
at the address of our principal executive offices listed above. All stockholder communications sent in care of our Chief Financial
Officer will be forwarded promptly to the applicable director(s).
Meetings of the Board of Directors
The Board of Directors met 4 times during the
fiscal year ended December 31, 2017. All directors attended at least 100% of the aggregate of the meetings of the Board of Directors
and of the committees on which they served and which were held during the period for which they were directors or committee members.
In addition, the directors often communicate informally to discuss the affairs of the Company and, when appropriate, take formal
action by written consent, in accordance with the Company’s Certificate of Incorporation, as amended, Amended and Restated
Bylaws and Delaware law.
Information regarding committees of the Board of Directors
During the fiscal year ended December 31, 2017,
the Board of Directors maintained four committees: the Audit Committee, the Compensation Committee, the Governance/Nominating Committee
and the Merger & Acquisition Committee. The following table provides membership and meeting information for fiscal year 2017
for each of the committees of the Board of Directors in existence through December 31, 2017:
Name
|
Audit
|
Compensation
|
Governance / Nominating
|
Merger & Acquisition
|
Thomas J. McGoldrick
|
|
X
|
X
|
X
|
Andrew P. Reding
|
X
|
|
|
|
Carl Schwartz
|
|
|
|
X
|
Timothy A. Krochuk
|
X
|
|
X
|
X
|
J. Melville Engle
|
X
|
X
|
|
|
Richard L. Gabriel
|
|
|
|
X
|
Total Meetings in Fiscal Year 2017
|
4
|
3
|
1
|
1
|
Below is a description of each committee of
the Board of Directors as such committees are presently constituted. The Board of Directors has determined that each current member
of each committee meets the applicable SEC and NASDAQ rules and regulations regarding “independence” and that each
member is free of any relationship that would impair his individual exercise of independent judgment with regard to the Company.
Family Relationships
There are no family relationships among our
directors and executive officers.
Audit Committee of the Board; Audit Committee Financial Expert
The Audit Committee of the Board of Directors
was established by the Board in accordance with Section 3(a)(58)(A) of the Exchange Act to oversee the Company’s corporate
accounting and financial reporting processes and audits of its financial statements.
The functions of the Audit Committee include,
among other things:
|
☐
|
serving as an independent and objective party to monitor the Company’s financial reporting process and internal control system;
|
|
☐
|
coordinating, reviewing and appraising the audit efforts of the Company’s independent auditors and management and, to the extent the Company has an internal auditing or similar department or persons performing the functions of such department (“internal auditing department” or “internal auditors”), the internal auditing department; and
|
|
☐
|
communicating directly with the independent auditors, financial and senior management, the internal auditing department, and the Board of Directors regarding the matters related to the committee’s responsibilities and duties.
|
Both our independent registered public accounting
firm and management periodically meet privately with the Audit Committee.
Our Audit Committee currently consists of Mr.
Krochuk, as the chairperson, Mr. Reding and Mr. Engle. Mr. Krochuk has a strong and vast financial history specializing as an investment
advisor. He qualifies as a financial expert and meets independence within the meaning of NASDAQ’s listing standards. Each
Audit Committee member is a non-employee director of the Board. The Board of Directors reviews the NASDAQ listing standards definition
of independence for Audit Committee members on an annual basis and has determined that all current members of our Audit Committee
are independent (as independence is currently defined in Rule 5605(a)(2) of the NASDAQ listing standards). The Audit Committee
met 4 times in fiscal year 2016 and 4 times in fiscal year 2017.
Compensation Committee
The Compensation Committee of the Board of Directors
currently consists of two directors, Mr. Engle, as the chairperson, and Mr. McGoldrick. All members of the Compensation Committee
were appointed by the Board of Directors, and such committee consists entirely of directors who are “outside directors”
for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), “non-employee directors”
for purposes of Rule 16b-3 under the Exchange Act and “independent” as independence is currently defined in Rule 4200(a)
(15) of the NASDAQ listing standards. In fiscal 2016, the Compensation Committee met two times. The Compensation Committee met
3 times during fiscal year 2017. The functions of the Compensation Committee include, among other things:
The functions of the Compensation Committee
include, among other things:
|
☐
|
Approving the annual compensation packages, including base salaries, incentive compensation, deferred compensation and stock-based compensation, for our executive officers;
|
|
☐
|
Administering our stock incentive plans, and subject to Board approval in the case of executive officers, approving grants of stock, stock options and other equity awards under such plans;
|
|
☐
|
Approving the terms of employment agreements for our executive officers;
|
|
☐
|
Developing, recommending, reviewing and administering compensation plans for members of the Board of Directors;
|
|
☐
|
Reviewing and discussing the compensation discussion and analysis with management; and
|
|
☐
|
Preparing any compensation committee report required to be included in the annual proxy statement.
|
All Compensation Committee approvals regarding
compensation to be paid or awarded to our executive officers are rendered with the full power of the Board, though not necessarily
reviewed by the full Board.
Our Chief Executive Officer may not be present
during any Board or Compensation Committee voting or deliberations with respect to his compensation. Our Chief Executive Officer
may, however, be present during any other voting or deliberations regarding compensation of our other executive officers but may
not vote on such items of business.
Compensation Committee Interlocks and Insider Participation
As indicated above, the Compensation Committee
consists of Mr. Engle and Mr. McGoldrick. No member of the Compensation Committee has ever been an executive officer or employee
of ours. None of our officers currently serves, or has served during the last completed year, on the compensation committee or
the Board of Directors of any other entity that has one or more officers serving as a member of the Board of Directors or the Compensation
Committee.
Governance/Nominating Committee
The Governance/Nominating Committee of the Board
of Directors currently consists of Mr. McGoldrick, as the chairperson, and Mr. Krochuk, each of whom is an “independent director,”
as such term is defined by The NASDAQ Market Listing Rule 5605(a)(2), and free from any relationship that, in the opinion of the
Board, would interfere with the exercise of his or her independent judgment as a member of the Committee.
Structure and Meetings
The chairperson of the Governance/Nominating
Committee presides at each meeting and, in consultation with the other members of the Governance/Nominating Committee, sets the
frequency and length of each meeting and the agenda of items to be addressed at each meeting. The chairperson of the Governance/Nominating
Committee ensures that the agenda for each meeting is circulated to each Committee member in advance of the meeting. The Governance/Nominating
Committee reports its actions and recommendations to the Board.
Goals and Responsibilities
In furtherance of its purposes, the Governance/Nominating
Committee:
|
☐
|
Evaluates the composition, organization and governance of the Board, determines future requirements and make recommendations to the Board for approval;
|
|
☐
|
Determines desired Board and committee skills and attributes and criteria for selecting new directors;
|
|
☐
|
Reviews candidates for Board membership consistent with the Committee’s criteria for selecting new directors and annually recommend a slate of nominees to the Board for consideration at the Company’s annual stockholders’ meeting;
|
|
☐
|
Reviews candidates for Board membership, if any, recommended by the Company’s stockholders;
|
|
☐
|
Conducts the appropriate and necessary inquiries into the backgrounds and qualifications of possible director candidates;
|
|
☐
|
Evaluates and considers matters relating to the qualifications and retirement of directors;
|
|
☐
|
Develops a plan for, and consults with the Board regarding, management succession; and
|
|
☐
|
Advises the Board generally on corporate governance matters.
|
In addition, the Committee, if and when deemed
appropriate by the Board or the Committee, will develop and recommend to the Board a set of corporate governance principles applicable
to the Company, and review and reassess the adequacy of such guidelines annually and recommend to the Board any changes deemed
appropriate. The Committee also advises the Board on (a) committee member qualifications, (b) appointments, removals and rotation
of committee members, (c) committee structure and operations (including authority to delegate to subcommittees), and (d) committee
reporting to the Board. Finally, the Committee performs any other activities consistent with this Charter, the Company’s
Certificate of Incorporation, Bylaws and governing law as the Committee or the Board deems appropriate.
Committee Resources
The Governance/Nominating Committee has the
authority to obtain advice and seek assistance from internal or external legal, accounting or other advisors. The Committee has
the sole authority to retain and terminate any search firm to be used to identify director candidates, including sole authority
to approve such search firm’s fees and other retention terms.
The Governance/Nominating Committee met one
time during fiscal year 2017.
Merger & Acquisition Committee
The Merger & Acquisition Committee of the
Board of Directors currently consists of Dr. Carl Schwartz, as the chairperson, Mr. Timothy Krochuk, Mr. Richard Gabriel and Mr.
Thomas McGoldrick, three of whom are “independent directors” as such item is defined by The NASDAQ Market Listing
Rule 5605(a)(2), and free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or
her independent judgment as a member of the committee. Dr. Schwartz is not deemed to be independent. The Merger & Acquisition
Committee is a newly formed committee constructed in December 2016 with the function of advising the Company toward any considered
mergers, acquisitions, joint ventures and/or consolidations of any type. The Merger & Acquisition Committee met one time during
fiscal year 2017.
Diversity
The Board of Directors does not currently have
a policy regarding attaining diversity on the Board.
TRANSACTIONS WITH RELATED PERSONS
The Audit Committee has the responsibility to
review and approve all transactions to which a related party and the Company may be a party prior to their implementation, to assess
whether such transactions meet applicable legal requirements. Except as described in this proxy statement, since the beginning
of fiscal 2015, there were no related party transactions arising or existing requiring disclosure as required pursuant to NASDAQ
listing standards, SEC rules and regulations or the Company’s policy and procedures.
RELATED PARTY TRANSACTIONS
In connection with the sale of the Series A
Preferred Shares on February 4, 2014, Joshua Kornberg, our former President and Chief Executive Officer and a current director
of the Company, was one of the purchasers. Mr. Kornberg purchased 19,231 Series A Preferred Shares for a purchase price of $25,000
and received warrants to purchase 52 shares of common stock. In August 2015, the holders of Series A Preferred Shares exchanged
them for the Units sold in our public offering at that time. In that exchange, 250 shares of Series A Convertible Stock held by
Mr. Kornberg were exchanged for 2,778 Units.
SOK Partners, LLC (“SOK”), a significant
stockholder with Mr. Kornberg and Dr. Samuel Herschkowitz as managing partners, invested in the July 2014 offering of convertible
notes and warrants. In November 2014, the convertible noteholders agreed to convert certain balances of the convertible notes in
connection with the public offering of the Existing Units, in consideration of the agreement to issue certain additional shares.
In connection with the Unit Offering in August 2015, all such convertible notes were redeemed at a redemption price of 140% of
the principal amount thereof, plus accrued and unpaid interest. The Company paid approximately $163,000 to SOK in redemption of
its convertible note.
One of the Company’s directors, Richard
L. Gabriel, is the Chief Operating Officer and serves as a director of GLG Pharma (“GLG”). Another Company director,
Tim Krochuk, is on the supervisory board for GLG. In September 20, 2016, the Company entered into a partnership and exclusive reseller
agreement with GLG. Under the terms of the agreement, GLG intends to develop rapid diagnostic tests that utilize fluid and tissue
collected by the STREAMWAY System during procedures. The Company agreed to issue an aggregate of 400,000 shares of common stock
to GLG in four separate tranches of 100,000 shares of common stock in each tranche. The shares reserved in each tranche would be
released after the achievement of certain development milestones designated in the agreement. In addition, the Company will pay
a royalty to GLG on the sale of individual tests. Also, on November 1, 2016, the Company announced that it agreed to grant GLG
exclusive rights to market and distribute the STREAMWAY System in the U.K. On November 2, 2016, the Company announced that it agreed
to grant GLG the same rights in Poland and certain other countries in Central Europe. In April 2017, the partnership and exclusive
reseller agreement between the Company and GLG was terminated. In November 2017, the Company announced that GLG was entering into
a strategic partnership with a venture formed by the Company and Helomics Corporation, intended to use these companies’ combined
technologies to bring personalized medicines and testing to certain ovarian and breast cancer patients. The partnership is expected
to create new revenue streams to be shared between the Skyline-Helomics venture and GLG.
In April 2018, one of the Company’s directors,
Richard L. Gabriel, executed a six-month consulting contract to help guide operations for the Company’s wholly-owned subsidiary
TumorGenesis. Under the terms of the agreement Mr. Gabriel will receive $12,000 monthly cash payment. In addition, Mr. Gabriel
will receive a grant of 240,000 performance-based restricted stock units (“RSU’s”) under the Company’s
Amended and Restated 2012 Stock Incentive Plan, with the vesting and payment of the RSU’s based on performance milestones
as set forth in the agreement. In October 2018, this agreement was extended for another 6 months.
EQUITY COMPENSATION PLAN INFORMATION
The following table presents the equity compensation
plan information as of December 31, 2017:
|
Number of Securities to be Issued upon Exercise of Outstanding Restricted Stock, Warrants and Options (a)
|
Weighted Average Exercise Price of Outstanding Options, Warrants (b)
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
|
Equity compensation plans approved by security holders (1)
|
2,616,070
|
2.00
|
2,292,382
|
Equity compensation plans not approved by security holders
|
-
|
-
|
-
|
(1) Consists of outstanding options under the 2008 Equity Incentive
Plan and the 2012 Stock Incentive Plan. The remaining share authorization under the 2008 Equity Incentive Plan was rolled over
to the current 2012 Stock Incentive Plan. On December 28, 2017 Precision’s shareholders approved an amendment to the Company’s
Amended and Restated 2012 Stock Incentive Plan to increase the reserve of shares of Common Stock authorized for issuance thereunder
to 5,000,000.
EXECUTIVE COMPENSATION
Overview
This section describes the material elements
of the compensation awarded to, earned by or paid to our Chief Executive Officer and our two most highly compensated executive
officers other than our Chief Executive Officer, as determined in accordance with SEC rules, collectively referred to as the “named
executive officers.”
Summary Compensation Table for Fiscal 2017 and 2016
The following table provides information regarding
the compensation earned during the fiscal years ended December 31, 2017 and December 31, 2016 by each of the Named Executive Officers:
Name and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Stock Awards
|
|
(1) Option Awards
|
|
(5) All Other Compensation
|
|
Total Compensation
|
Carl Schwartz, CEO (6)
|
|
2017
|
|
$83,375
|
|
-
|
|
-
|
|
$437,466
|
|
-
|
|
$520,841
|
|
|
2016
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
David O. Johnson, COO (3)
|
|
2017
|
|
$180,800
|
|
$36,000
|
|
-
|
|
$345,798
|
|
-
|
|
$562,598
|
|
|
2016
|
|
$149,053
|
|
$36,000
|
|
$97,950
|
|
$10,920
|
|
-
|
|
$293,923
|
Bob Myers, CFO (4)
|
|
2017
|
|
$165,800
|
|
$43,000
|
|
-
|
|
$328,194
|
|
-
|
|
$536,994
|
|
|
2016
|
|
$131,234
|
|
$33,000
|
|
$90,938
|
|
$10920
|
|
-
|
|
$266,092
|
Joshua Kornberg, former CEO and President (2)
|
|
2017
|
|
-
|
|
-
|
|
-
|
|
-
|
|
$616,595
|
|
$616,595
|
|
|
2016
|
|
$118,284
|
|
-
|
|
$90,351
|
|
-
|
|
$149,500
|
|
$358,135
|
(1) Represents the actual compensation cost granted during 2017
and 2016 as determined pursuant to FASB ASC 718 – Stock Compensation utilizing the assumptions discussed in Note 3, “Stock
Options and Warrants,” in the notes to the financial statements included in this report.
(2) Effective May 5, 2016, Mr. Kornberg resigned as the Chief Executive
Officer and President and an employee of Precision. In connection with Mr. Kornberg’s resignation, the Company and Mr. Kornberg
entered into a separation agreement on June 13, 2016 (the “Separation Agreement”). In 2015 Mr. Kornberg also received
options to purchase 253 shares of common stock as fees for serving on the Board of Directors. Mr. Kornberg’s minimum bonus
for 2015 was 75% of his base salary or $206,250. During 2015 he also received $356,691 in additional bonuses, in recognition of
bonus amounts from prior years that were waived. In 2015 he also received bonus options to purchase 8,366 shares of common stock
at $65.75 per share. In 2016, Mr. Kornberg received $18,685 as part of his salary that was paid through his settlement contract.
The restricted stock award for $90,351 was part of his severance settlement. All of Mr. Kornberg’s options to purchase stock
were cancelled as part of his settlement contract.
(3) Effective August 6, 2018, Mr. Johnson was appointed Senior Vice
President of Operations of the Company’s Skyline Medical business unit and is no longer Chief Operating Officer. Mr. Johnson’s
minimum bonus for 2017 was 20% of his base salary or $36,000 that was accrued in 2017; his minimum bonus for 2016 was 20% of his
base salary, or $36,000 that was accrued in 2016. During 2017 he received $36,000 in recognition of bonus amounts accrued in 2016;
in 2016 he received $36,000 in income from additional bonuses in recognition of bonus amounts from 2015. In 2017, he also received
bonus options to purchase 320,422 shares of common stock at $1.47 per share. In 2017, 154,422 shares vested with the
remainder vesting at 20,750 shares quarterly throughout 2018 and 2019. In 2016, he also received bonus options to purchase 3,574
shares of common stock at $4.20 per share. In 2016, Mr. Johnson exercised stock options valued at $97,950.
(4) Mr. Myers’s minimum bonus for 2017 was 20% of his base
salary or $33,000 that was accrued in 2017; his minimum bonus for 2016 was 20% of his base salary, or $33,000 that was accrued
in 2016. During 2017 he received $43,000 in bonus amounts $33,000 that was accrued in 2016; in 2016 he received $33,000 in income
from additional bonuses in recognition of bonus amounts from 2015. In 2017, he also received bonus options to purchase 304,110
shares of common stock at $1.47 per share. In 2017, 138,110 shares vested with the remainder vesting at 20,750 shares
quarterly throughout 2018 and 2019. In 2016, he also received bonus options to purchase 3,574 shares of common stock at $4.20 per
share. In 2016, Mr. Myers exercised stock options valued at $90,938.
(5) Mr. Kornberg’s All Other Compensation in 2017 consists
of $616,595 in severance. In 2016, it consists of $137,500 in severance and $12,000 in medical reimbursement.
(6) Dr. Schwartz became a director on March 23, 2016 and served
as Executive Chairman from October 11, 2016 to December 1, 2016. On December 1, 2016 he was appointed Chief Executive Officer.
In 2017, Dr. Schwartz received options to purchase 2,381 shares of common stock as fees for serving on the Board of Directors.
He also received options to purchase 166,000 shares of common stock at $1.47 vesting at 20,750 shares per quarter throughout 2018
and 2019. Additionally, Dr. Schwartz received options to purchase 239,230 shares of common stock at $1.47 per share all vesting
in 2017 in lieu of cash compensation for all 2017 and part of 2016. Dr. Schwartz did not receive a salary, bonus or other payment
during 2016. Dr. Schwartz received options to purchase 4,920 shares of common stock as fees for serving on the Board of Directors.
Dr. Schwartz also received options to purchase 7,143 shares of common stock in 2016 as fees for serving on the Medical Advisory
Committee. Certain of those options, 8,929 shares, did not vest until January 2017.
Outstanding Equity Awards at Fiscal Year-end for Fiscal 2017
The following table sets forth certain information
regarding outstanding equity awards held by the Named Executive Officers as of December 31, 2017:
|
|
Grant Date
|
|
Number of Securities Underlying Options Exercisable
|
|
Number of Securities Underlying Options Unexercisable
|
|
Option Exercise Price
|
|
Option Expiration Date
|
Carl Schwartz
|
|
3/31/2016
|
|
588
|
|
-
|
|
4.25
|
|
3/31/2026
|
|
|
6/30/3016
|
|
1,334
|
|
-
|
|
3.75
|
|
6/30/2026
|
|
|
9/30/2016
|
|
1,212
|
|
-
|
|
4.13
|
|
9/30/2026
|
|
|
12/31/2016
|
|
8,929
|
|
-
|
|
2.80
|
|
12/31/2026
|
|
|
3/31/2017
|
|
2,381
|
|
-
|
|
2.10
|
|
3/31/2027
|
|
|
6/22/2017
|
|
376,886
|
|
-
|
|
1.47
|
|
6/22/2027
|
|
|
11/10/2017
|
|
28,344
|
|
-
|
|
1.47
|
|
11/10/2027
|
|
|
1/2/2018
|
|
141,753
|
|
-
|
|
0.97
|
|
1/2/2028
|
|
|
6/30/2018
|
|
44,899
|
|
-
|
|
1.13
|
|
6/30/2028
|
|
|
8/1/2018
|
|
44,899
|
|
-
|
|
1.16
|
|
8/1/2028
|
|
|
Grant Date
|
|
Number of Securities Underlying Options Exercisable
|
|
Number of Securities Underlying Options Unexercisable
|
|
Option Exercise Price
|
|
Option Expiration Date
|
David O. Johnson
|
|
8/13/2012
|
|
534
|
|
-
|
|
150.0
|
|
8/13/2022
|
|
|
3/18/2013
|
|
507
|
|
-
|
|
148.25
|
|
3/18/2023
|
|
|
3/6/2014
|
|
167
|
|
-
|
|
431.25
|
|
3/6/2024
|
|
|
9/16/2016
|
|
3,574
|
|
-
|
|
4.20
|
|
9/16/2026
|
|
|
6/22/2017
|
|
320,422
|
|
-
|
|
1.47
|
|
6/22/2027
|
Bob Myers
|
|
8/13/2012
|
|
534
|
|
-
|
|
150.00
|
|
8/13/2022
|
|
|
3/18/2013
|
|
422
|
|
-
|
|
148.25
|
|
3/18/2023
|
|
|
3/6/2014
|
|
140
|
|
-
|
|
431.25
|
|
3/6/2024
|
|
|
9/16/2016
|
|
3,574
|
|
-
|
|
4.20
|
|
9/16/2026
|
|
|
6/22/2017
|
|
304,110
|
|
-
|
|
1.47
|
|
6/22/2027
|
Executive Compensation Components for Fiscal 2017
Base Salary.
Base salary is an important element of Precision’s
executive compensation program as it provides executives with a fixed, regular, non-contingent earnings stream to support annual
living and other expenses. As a component of total compensation, Precision generally sets base salaries at levels believed to attract
and retain an experienced management team that will successfully grow its business and create stockholder value. Precision also
utilizes base salaries to reward individual performance and contributions to Precision’s overall business objectives but
seek to do so in a manner that does not detract from the executives’ incentive to realize additional compensation through
Precision’s stock options and restricted stock awards.
Precision’s Compensation Committee reviews
the Chief Executive Officer’s salary at least annually. The Compensation Committee may recommend adjustments to the Chief
Executive Officer’s base salary based upon the Compensation Committee’s review of his current base salary, incentive
cash compensation and equity-based compensation, as well as his performance and comparative market data. The Compensation Committee
also reviews other executives’ salaries throughout the year, with input from the Chief Executive Officer. The Compensation
Committee may recommend adjustments to other executives’ base salary based upon the Chief Executive Officer’s recommendation
and the reviewed executives’ responsibilities, experience and performance, as well as comparative market data.
In utilizing comparative data, the Compensation
Committee seeks to recommend salaries for each executive at a level that is appropriate after giving consideration to experience
for the relevant position and the executive’s performance. The Compensation Committee reviews performance for both Precision
(based upon achievement of strategic initiatives) and each individual executive. Based upon these factors, the Compensation Committee
may recommend adjustments to base salaries to better align individual compensation with comparative market compensation, to provide
merit-based increases based upon individual or company achievement, or to account for changes in roles and responsibilities.
Stock Options and Other Equity Grants.
Consistent with Precision’s
compensation philosophies related to performance-based compensation, long-term stockholder value creation and alignment of executive
interests with those of stockholders, Precision makes periodic grants of long-term compensation in the form of stock options or
restricted stock to its executive officers, directors and others in the organization.
Stock options provide executive officers with
the opportunity to purchase common stock at a price fixed on the grant date regardless of future market price. A stock option becomes
valuable only if the common stock price increases above the option exercise price and the holder of the option remains employed
during the period required for the option shares to vest. This provides an incentive for an option holder to remain employed by
Precision. In addition, stock options link a significant portion of an employee’s compensation to stockholders’ interests
by providing an incentive to achieve corporate goals and increase stockholder value. Under Precision’s Amended and Restated
2012 Stock Incentive Plan (the “2012 Plan”), Precision may also make grants of restricted stock awards, restricted
stock units, performance share awards, performance unit awards and stock appreciation rights to officers and other employees. Precision
adopted the 2012 Plan to give Precision flexibility in the types of awards that Precision could grant to Precision’s executive
officers and other employees.
Limited Perquisites; Other Benefits.
Precision provides its
employees with a full complement of employee benefits, including health and dental insurance, short term and long-term disability
insurance, life insurance, a 401(k) plan, FSA flex plan and Section 125 plan.
Employment Contracts
Employment Agreement with Chief Executive Officer.
On November 10, 2017, Precision entered into
an employment agreement with Carl Schwartz, who has served as Chief Executive officer since December 1, 2016. The employment agreement
was amended on August 20, 2018. Under the agreement the employment of Dr. Schwartz with Precision is at will.
The annualized base salary for Dr. Schwartz
in 2017 was $250,000, which was increased to $275,000 in 2018. Per the amendment to the employment agreement, the annualized base
salary for Dr. Schwartz, effective August 1, 2018, increased to $400,000. Such base salary may be adjusted by Precision but may
not be reduced except in connection with a reduction imposed on substantially all employees as part of a general reduction.
Dr. Schwartz may receive stock options in lieu
of his base salary. At least ten (10) days before the beginning of each six-month period ending June 30 or December 31 (a “Compensation
Period”) during which Dr. Schwartz is employed under this agreement he may elect to receive non-qualified stock options under
the 2012 Stock Incentive Plan or other applicable equity plan of Precision in effect at the time in payment of all or a portion
of his base salary for such Compensation Period in lieu of cash. Stock options (i) will be granted on the first business day of
such Compensation Period, (ii) will have an exercise price per share equal to the closing sale price of Precision common stock
on the date of grant, (iii) will have an aggregate exercise price equal to the dollar amount of base salary to be received in options,
(iv) will have a term of ten years, and (v) will vest pro rata on a monthly basis over the period of time during which the base
salary would have been earned.
For each fiscal year during the term of the
agreement, beginning in 2017, Dr. Schwartz shall be eligible to receive an annual incentive bonus determined annually at the discretion
of the Compensation Committee of the Board. For 2017, the Compensation Committee will award a bonus based on performance of Dr.
Schwartz and Precision, including the completion of acquisitions and other factors deemed appropriate by the Compensation Committee.
For 2018 and subsequent years, the bonus will be subject to the attainment of certain objectives, which shall be established in
writing by Dr. Schwartz and Precision’s Board of Directors prior to each bonus period. The maximum bonus that may be earned
by Dr. Schwartz for any year will not be less than 150% of Dr. Schwartz’s then-current base salary.
If Precision terminates Dr. Schwartz’s
employment without cause or if the he terminates his employment for “good reason,” he shall be entitled to receive
from Precision severance pay in an amount equal to six months of base salary, in either case less applicable taxes and withholdings.
In that event, he will receive a bonus payment on a pro-rata basis through the date of termination and any accrued, unused vacation
pay. The severance pay, bonus payment, and other consideration are conditioned upon Dr. Schwartz’s execution of a full and
final release of liability. “Cause” is defined to mean the executive engages in willful misconduct or fails to follow
the reasonable and lawful instructions of the Precision’s Board of Directors, if such conduct is not cured within 30 days
after notice; Dr. Schwartz embezzles or misappropriates assets of Precision or any of its subsidiaries; Dr. Schwartz’s violation
of his obligations in the agreement, if such conduct is not cured within 30 days after notice; breach of any agreement between
the Dr. Schwartz and Precision or to which Precision and the Dr. Schwartz are parties, or a breach of his fiduciary responsibility
to the Company; commission by of fraud or other willful conduct that adversely affects the business or reputation of Precision;
or Precision has a reasonable belief the executive engaged in some form of harassment or other improper conduct prohibited by Precision
policy or the law. “Good reason” is defined as (i) a material diminution in Dr. Schwartz’s position, duties,
base salary, and responsibilities; or (ii) Precision’s notice to Dr. Schwartz that his position will be relocated to an office
which is greater than 100 miles from Dr. Schwartz’s prior office location. In all cases of Good Reason, Dr. Schwartz must
have given notice to Precision that an alleged Good Reason event has occurred and the circumstances must remain uncorrected by
Precision after the expiration of 30 days after receipt by Precision of such notice.
During Dr. Schwartz’s employment with
Precision and for twelve months thereafter, regardless of the reason for the termination, he will not engage in a competing business,
as defined in the agreement and will not solicit any person to leave employment with Precision or solicit clients or prospective
clients of Precision with whom he worked, solicited, marketed, or obtained confidential information about during his employment
with the Company, regarding services or products that are competitive with any of Precision’s services or products.
Employment Agreements with Chief Financial Officer and Former
Chief Operating Officer.
On August 13, 2012, Precision entered into employment
agreements with David O. Johnson, who served as Chief Operating Officer from July 1, 2012 through August 6, 2018, and Bob Myers,
who has served as Chief Financial Officer since July 1, 2012 (Messrs. Johnson and Myers are referred to as the “executives”).
Effective August 6, 2018, Mr. Johnson was appointed Senior Vice President of Operations of Precision’s Skyline Medical business
unit. Under the agreements the employment of each of these individuals with Precision is at will. Mr. Myers’ employment agreement
was amended effective August 20, 2018.
The annualized base salaries of Messrs. Johnson
and Myers were $150,000 and $125,000, respectively for their first year employed. Effective July 1, 2013 the annualized base salaries
of Messrs. Johnson and Myers were $180,000 and $150,000, respectively. Effective in March 2014 Mr. Myers annualized base salary
was increased to $165,000. Per the amendment to the employment agreement, effective August 1, 2018, Mr. Myers’ annualized
base salary was increased to $250,000 and, effective August 1, 2019, Mr. Myers’ annualized base salary will increase to $300,000.
Such base salaries may be adjusted by Precision but may not be reduced except in connection with a reduction imposed on substantially
all employees as part of a general reduction. The executives will also each be eligible to receive an annual incentive bonus for
each calendar year at the end of which he remains employed by Precision, subject to the attainment of certain objectives. Under
the original employment agreements, both executives had a minimum bonus guarantee of 20% of their annualized salary. However, per
the amendment to the employment agreement of Mr. Myers, Mr. Myers is eligible to receive a pro-rata annual incentive bonus for
2018 for the period January 1, 2018 through July 31, 2018 that will be not less than 20% of Mr. Myers’ then-current salary.
If the Company terminates the executive’s
employment without cause or if the executive terminates his employment for “good reason,” he shall be entitled to receive
from Precision severance pay in an amount equal to (a) before the first anniversary of the date of the agreement, three months
of base salary, or (b) on or after the first anniversary of the date of the agreement, twelve months of base salary, in either
case less applicable taxes and withholdings. In that event, he will receive a bonus payment on a pro-rata basis through the date
of termination and any accrued, unused vacation pay. The severance pay, bonus payment, and other consideration are conditioned
upon executive’s execution of a full and final release of liability. “Cause” is defined to mean the executive
engages in willful misconduct or fails to follow the reasonable and lawful instructions of the Board, if such conduct is not cured
within 30 days after notice; the executive embezzles or misappropriates assets of Precision or any of its subsidiaries; the executive’s
violation of his obligations in the agreement, if such conduct is not cured within 30 days after notice; breach of any agreement
between the executive and Precision or to which Precision and the executive are parties, or a breach of his fiduciary responsibility
to Precision; commission by of fraud or other willful conduct that adversely affects the business or reputation of Precision; or,
Precision has a reasonable belief the executive engaged in some form of harassment or other improper conduct prohibited by Company
policy or the law. “Good reason” is defined as (i) a material diminution in executive’s position, duties, base
salary, and responsibilities; or (ii) Precision’s notice to executive that his position will be relocated to an office which
is greater than 100 miles from executive’s prior office location. In all cases of Good Reason, executive must have given
notice to Precision that an alleged Good Reason event has occurred, and the circumstances must remain uncorrected by Precision
after the expiration of 30 days after receipt by Precision of such notice.
During each executive’s employment with
Precision and for twelve months thereafter, regardless of the reason for the termination, he will not engage in a competing business,
as defined in the agreement and will not solicit any person to leave employment with Precision or solicit clients or prospective
clients of Precision with whom he worked, solicited, marketed, or obtained confidential information about during his employment
with Precision, regarding services or products that are competitive with any of Precision’s services or products.
Potential Payments Upon Termination or Change of Control
Most of Precision’s stock option agreements
provide for an acceleration of vesting in the event of a change in control of Precision as defined in the agreements and in the
2012 Stock Incentive Plan. Additionally, the restricted stock agreements that were awarded to Precision management and directors
in 2013 also provide for an acceleration of vesting in the event there is a change in control as defined in the 2012 Plan. Also,
see “Employment Contracts” above for a description of certain severance compensation arrangements.
DIRECTOR COMPENSATION
Effective in 2013, the Board instituted a quarterly
and an annual stock options award program for all the directors under which they will be awarded options to purchase $5,000 worth
of shares of Precision common stock, par value $0.01 per quarter at an exercise price determined by the close on the last day of
the quarter. Additionally, the directors that serve on a committee will receive options to purchase $10,000 worth of shares of
Precision common stock, par value $0.01 annually, per committee served, at an exercise price determined by the close on the last
day of the year.
Director Compensation Table for Fiscal 2017
The following table summarizes the compensation
paid to each non-employee Precision director in the fiscal year ended December 31, 2017 for services to Precision:
|
|
Fees Paid or Earned in Cash
|
|
Stock Awards
|
|
Option Awards
|
|
Total
|
Thomas McGoldrick
|
|
-
|
|
-
|
|
$252,525 (1)
|
|
$252,525
|
Andrew Reding
|
|
-
|
|
-
|
|
$219,643 (2)
|
|
$219,643
|
Richard Gabriel
|
|
-
|
|
-
|
|
$157,240 (3)
|
|
$157,240
|
Tim Krochuk
|
|
-
|
|
-
|
|
$171,769 (4)
|
|
$171,769
|
J. Melville Engle
|
|
-
|
|
-
|
|
$164,393 (5)
|
|
$164,393
|
Carl Schwartz
|
|
-
|
|
-
|
|
$3,688 (6)
|
|
$3,688
|
(1) Mr. McGoldrick was awarded options to purchase 243,706 shares
of common stock both for serving on the Board and for participating on the Merger & Acquisition, Compensation and Corporate
Governance (Chairman) Committees.
(2) Mr. Reding was awarded options to purchase 207,197 shares of
common stock both for serving on the Board and for participating on the Audit Committee.
(3) Mr. Gabriel was awarded options to purchase 149,373 shares of
common stock for serving on the Board and for participating on the Merger & Acquisition Committee.
(4) Mr. Krochuk was awarded options to purchase 168,876 shares of
common stock for serving on the Board and for participating on the Audit (Chairman), Governance and Merger & Acquisition Committees.
(5) Mr. Engle was awarded options to purchase 158,975 shares of
common stock for serving on the Board and for participating on the Audit and Compensation (Chairman) Committees.
(6) Dr. Schwartz became an employee in November 2017 pursuant to
an employment agreement. Prior to that time, he was awarded options to purchase 2,381 shares of common stock for serving on the
Board.
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee has selected Deloitte &
Touche LLP as Precision’s independent auditors for the fiscal year ending December 31, 2018 and has further directed that
management submit the selection of independent auditors for ratification by the stockholders at the Annual Meeting. Representatives
of Deloitte & Touche LLP are expected to be present at the Annual Meeting. They will have an opportunity to make a statement
if they so desire and will be available to respond to appropriate questions.
Neither the Company’s Amended and Restated
Bylaws nor other governing documents or law require stockholder ratification of the selection of Deloitte & Touche LLP as Precision’s
independent auditors. However, the Audit Committee of the Board is submitting the selection of Deloitte & Touche LLP to the
stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit
Committee of the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee
of the Board in its discretion may direct the appointment of different independent auditors at any time during the year if they
determine that such a change would be in the best interests of the Company and its stockholders.
The affirmative vote of a majority of shares
of capital stock of Precision present in person or represented by proxy at the Annual Meeting and entitled to vote will be required
to ratify the selection of Deloitte & Touche LLP. Abstentions will be counted toward the tabulation of votes cast on proposals
presented to the stockholders and will have the same effect as negative votes.
Principal accounting fees and services
In connection with the audit of the fiscal 2018
financial statements, Precision entered into an engagement agreement with Deloitte & Touche LLP, which sets forth the terms
by which Deloitte & Touche LLP will perform audit services for Precision.
The following table represents aggregate fees
billed to the Company for the fiscal years ended December 31, 2017 and December 31, 2016, by Olsen Thielen & Co., Ltd., the
Company’s principal accountant for those periods. All fees described below were approved by the Audit Committee.
|
|
2017
|
|
2016
|
Audit Fees (1)
|
|
$
|
100,610
|
|
|
$
|
122,559
|
|
Audit-Related Fees (2)
|
|
|
|
|
|
|
|
|
Tax Fees (3)
|
|
|
5,705
|
|
|
|
6,772
|
|
All Other Fees (4)
|
|
|
|
|
|
|
|
|
|
|
$
|
106,315
|
|
|
$
|
129,331
|
|
(1)
|
Audit Fees were principally for services rendered for the audit and/or review of Precision’s consolidated financial statements. Also, includes fees for services rendered in connection with the filing of registration statements and other documents with the SEC, the issuance of accountant consents and comfort letters.
|
(2)
|
There were no audit-related fees in 2017 or 2016.
|
(3)
|
Tax Fees consist of fees billed in the indicated year for professional services performed by Olsen Thielen & Co., Ltd. with respect to tax compliance.
|
(4)
|
All Other Fees consist of fees billed in the indicated year for other permissible work performed by Olsen Thielen & Co., Ltd. that is not included within the above category descriptions.
|
Pre-approval policies and procedures
The Audit Committee is required to pre-approve
the audit and non-audit services performed by Precision’s independent auditors. The Audit Committee may not approve non-audit
services prohibited by applicable regulations of the SEC if such services are to be provided contemporaneously while serving as
independent auditors. The Audit Committee has delegated authority to the Chairman of the Audit Committee to approve the commencement
of permissible non-audit related services to be performed by the independent auditors and the fees payable for such services, provided
that the full Audit Committee subsequently ratifies and approves all such services. The Audit Committee has determined that the
rendering of the services other than audit services by Deloitte & Touche LLP is compatible with maintaining the principal accountant’s
independence.
Resignation of Independent Registered Public Accounting Firm
On April 24, 2018, the Audit Committee formally
approved the engagement of Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public
accounting firm for the fiscal year ending December 31, 2018. On April 25, 2018, the Company accepted the resignation of Olsen
Thielen & Co. (“Olsen”) as the Company’s independent registered public accounting firm.
The reports of Olsen on the Company’s
audited consolidated financial statements for the two most recent fiscal years ended December 31, 2017 and December 31, 2016 did
not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope,
or accounting principles. During the Company’s two most recent fiscal years ended December 31, 2017 and December 31, 2016,
and during the subsequent interim period preceding Olsen’s resignation, there were: (i) no disagreements with Olsen on any
matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedures, which disagreements,
if not resolved to the satisfaction of Olsen would have caused Olsen to make reference to the subject matter of the disagreements
in connection with its reports, and (ii) no reportable events of the type listed in paragraphs (A) through (D) of Item 304(a)(1)(v)
of Regulation S-K.
The Company provided Olsen with a copy of this
Current Report on Form 8-K prior to its filing with the Securities and Exchange Commission and requested that Olsen furnish the
Company with a letter addressed to the SEC stating whether or not Olsen agrees with the above statements. A copy of the letter
from Olsen dated April 25, 2018 was filed as an exhibit with Precision’s Current Report on Form 8-K filed on April 26, 2018.
Engagement of New Independent Registered Public Accounting Firm
As set forth above, concurrent with the decision
to accept the resignation of Olsen as the Company’s independent registered public accounting firm, the Audit Committee approved
the engagement of Deloitte as the Company’s new independent registered public accounting firm, subject to completion of its
standard client acceptance procedures.
During the Company’s two most recent fiscal
years ended December 31, 2017 and December 31, 2016, and during the subsequent interim period preceding Deloitte’s engagement,
neither the Company, nor anyone on its behalf, consulted Deloitte with respect to: (i) the application of accounting principles
to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s
consolidated financial statements, and neither a written report was provided to the Company nor oral advice was provided to the
Company that Deloitte concluded was an important factor considered by the Company in reaching a decision as to the accounting,
auditing, or financial reporting issue or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv)
of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”
THE RATIFICATION OF
Deloitte & Touche LLP
AS THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR
Precision.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of November
28, 2018 certain information regarding beneficial ownership of our common stock by:
|
•
|
Each person known to us to beneficially own 5% or more of our common stock;
|
|
•
|
Each executive officer who in this proxy statement are collectively referred to as the “Named Executive Officers;”
|
|
•
|
Each of our directors; and
|
|
•
|
All of our executive officers (as that term is defined under the rules and regulations of the SEC) and directors as a group.
|
We have determined beneficial ownership in accordance
with Rule 13d-3 under the Exchange Act. Beneficial ownership generally means having sole or shared voting or investment power with
respect to securities. Unless otherwise indicated in the footnotes to the table, each stockholder named in the table has sole voting
and investment power with respect to the shares of common stock set forth opposite the stockholder’s name. We have based
our calculation of the percentage of beneficial ownership on 14,091,748 shares of the Company’s common stock outstanding
on November 28, 2018. Unless otherwise noted below, the address for each person or entity listed in the table is c/o Precision
Therapeutics Inc., 2915 Commers Drive, Suite 900, Eagan, Minnesota 55121.
Name of Beneficial Owner
|
|
Amount and Nature of Beneficial Ownership
|
|
Percent
of
Class
|
|
|
|
|
|
Officers and Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Johnson
(2)
|
|
|
243,078
|
|
|
|
1.70
|
%
|
|
|
|
|
|
|
|
|
|
Bob Myers
(3)
|
|
|
226,539
|
|
|
|
1.58
|
%
|
|
|
|
|
|
|
|
|
|
Thomas J. McGoldrick
(4)
|
|
|
274,521
|
|
|
|
1.91
|
%
|
|
|
|
|
|
|
|
|
|
Andrew Reding
(5)
|
|
|
234,257
|
|
|
|
1.64
|
%
|
|
|
|
|
|
|
|
|
|
Carl Schwartz
(6)
|
|
|
662,227
|
|
|
|
4.51
|
%
|
|
|
|
|
|
|
|
|
|
Tim Krochuk
(7)
|
|
|
184,350
|
|
|
|
1.29
|
%
|
|
|
|
|
|
|
|
|
|
J. Melville Engle
(8)
|
|
|
174,449
|
|
|
|
1.22
|
%
|
|
|
|
|
|
|
|
|
|
Richard Gabriel
(9)
|
|
|
165,847
|
|
|
|
1.16
|
%
|
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (8 persons)
|
|
|
2,165,268
|
|
|
|
13.38
|
%
|
(1) Under Rule 13d-3, a
beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares;
and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed
to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares
(for example, upon exercise of an option) within 60 days of the date of which the information is provided. In computing the percentage
ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such
person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person
as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number
of shares of common stock actually outstanding.
(2) Effective August 1,
2018 Mr. Johnson is no longer the Chief Operating Officer of Precision Therapeutics Inc. His beneficial ownership includes 876
shares of common stock, and 242,202 shares that are exercisable within 60 days of November 19, 2018.
(3) Includes 761 shares
of common stock, and 225,778 shares that are exercisable within 60 days of November19, 2018.
(4) Includes 64 shares
of common stock, and 274,457 shares that area exercisable within 60 days of November 19, 2018.
(5) Includes 53 shares
of common stock, and 234,204 shares that are exercisable within 60 days of November 19, 2018.
(6) Includes 66,173 shares
of common stock, and 596,054 shares that are exercisable within 60 days of November 19, 2018.
(7) Includes 184,350 shares
that are exercisable within 60 days of November 19, 2018.
(8) Includes 174,449 shares
that are exercisable within 60 days of November 19, 2018.
(9) Includes 164,847 shares
that are exercisable within 60 days of November 19, 2018.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Precision’s officers
and directors, and persons who own more than ten percent of a registered class of Precision’s equity securities, to file
reports of securities ownership and changes in such ownership with the SEC. Officers, directors and greater than ten percent stockholders
also are required by SEC rules to furnish Precision with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished
to Precision, and on written representations from the reporting persons, Precision believes that all Section 16(a) filing requirements
applicable to Precision’s directors and officers were timely met during the fiscal year ended December 31, 2017.
FORM 10-K
A COPY OF THE COMPANY’S FORM 10-K ANNUAL
REPORT, AND ANY AMENDMENTS THERETO, FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017 (WITHOUT EXHIBITS), ACCOMPANIES THIS NOTICE OF
MEETING AND PROXY STATEMENT. NO PART OF THE ANNUAL REPORT IS INCORPORATED HEREIN AND NO PART THEREOF IS TO BE CONSIDERED PROXY
SOLICITING MATERIAL. THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING SOLICITED, UPON WRITTEN REQUEST
OF ANY SUCH PERSON, ANY EXHIBIT DESCRIBED IN THE LIST ACCOMPANYING THE FORM 10-K, UPON THE PAYMENT, IN ADVANCE, OF REASONABLE FEES
RELATED TO THE COMPANY’S FURNISHING SUCH EXHIBIT(S). REQUESTS FOR COPIES OF SUCH EXHIBIT(S) SHOULD BE DIRECTED TO THE COMPANY’S
SECRETARY AT 2915 COMMERS DRIVE, SUITE 900, EAGAN, MINNESOTA, 55121.
OTHER MATTERS
The Board of Directors and management know of
no other matters that will be presented for consideration at the Annual Meeting. However, since it is possible that matters of
which the Board and management are not now aware may come before the meeting or any adjournment of the meeting, the proxies confer
discretionary authority with respect to acting thereon, and the persons named in such properly executed proxies intend to vote,
act and consent in accordance with their best judgment with respect thereto. Upon receipt of such proxies (in the form enclosed)
in time for voting, the shares represented thereby will be voted as indicated thereon and in the proxy statement.
|
By Order of the Board of Directors
|
|
|
|
/s/ Carl Schwartz
|
|
|
|
Carl Schwartz
|
|
Chief Executive Officer
|
Eagan, Minnesota
December 7, 2018
PRECISION THERAPEUTICS INC.
ANNUAL MEETING OF STOCKHOLDERS
December 28, 2018
3:00 PM (Central Standard Time)
At the offices of
Maslon LLP
3300 Wells Fargo Center
90 South Seventh Street
Minneapolis, Minnesota 55402
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 28, 2018:
The Proxy Statement and the Annual Report on Form 10-K, as amended,
of Precision Therapeutics Inc. are available at
http://skylinemedical.investorroom.com
Precision Therapeutics Inc.
|
|
2915 Commers Drive, Suite 900
|
|
Eagan, Minnesota 55121
|
PROXY
|
|
|
This proxy is solicited by the Board of Directors for use at
the Annual Meeting on December 28, 2018.
The shares of common stock you hold in your account will be voted
as you specify on the reverse side.
If no choice is specified, the proxy will be voted “FOR”
each of the directors nominated for re-election in Proposal 1 and “FOR” Proposals 2.
The undersigned hereby appoints
CARL SCHWARTZ AND BOB MYERS,
and each of them individually, with full power of substitution, as Proxies to represent and vote, as designated below, all shares
of common stock of Precision Therapeutics Inc. (the “Company”) registered in the name of the undersigned at the Annual
Meeting of Stockholders of the Company to be held at the offices of the Company’s counsel, Maslon LLP, 3300 Wells Fargo Center,
90 South Seventh Street, Minneapolis, Minnesota 55402 at 3:00 PM (Central Standard Time) on December 28, 2018 (if you need directions
to the Annual Meeting, please contact the Company at (651) 389-4800), and at any adjournment or postponement thereof, and the undersigned
hereby revokes all proxies previously given with respect to the meeting.
See reverse for voting instructions
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope provided.
- - - - - - - - - - - - please detach here - - - - - - - - - - -
- -
The Board of Directors unanimously recommends a vote “FOR”
each of the nominees listed in Proposal 1 and “FOR” Proposals 2 and.
1. To elect six members to the Board of Directors:
|
01 – Thomas J. McGoldrick
02 – Andrew P. Reding
03 – Carl Schwartz
04 – Timothy A. Krochuk
05 – J. Melville Engle
06 – Richard L. Gabriel
|
[_]
Vote FOR all nominees (except as marked)
|
[_]
Vote WITHHELD from all nominees
|
Instructions: To withhold authority to vote for any indicated
nominee, write the number(s) of the nominee(s) in the box provided to the right.
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2. To ratify the appointment of Deloitte & Touche LLP as the Company’s registered public accounting firm for the fiscal year ending December 31, 2018.
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[_]
FOR
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[_]
AGAINST
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[_]
ABSTAIN
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR,
IF NO DIRECTION IS GIVEN, WILL BE VOTED
FOR
PROPOSAL 2 AND
FOR
EACH OF THE DIRECTORS NOMINATED FOR RE-ELECTION IN
PROPOSAL 1.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR,
IF NO DIRECTION IS GIVEN, WILL BE VOTED
FOR
PROPOSAL 2 AND
FOR
EACH OF THE DIRECTORS NOMINATED FOR RE-ELECTION IN
PROPOSAL 1.
Please mark this box if you have an
address change:
[_]
Please indicate your address changes below:
____________________________________
____________________________________
____________________________________
____________________________________
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Date: ____________________________________
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Signature(s) in box
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PLEASE DATE AND SIGN YOUR NAME(S) ABOVE EXACTLY AS SUCH
NAME(S) APPEAR(S) TO THE LEFT, INDICATING, WHERE APPROPRIATE, OFFICIAL POSITION OR REPRESENTATIVE CAPACITY. For stock held in joint
tenancy, each tenant should sign.
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