United
States
Securities
and Exchange Commission
Washington,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
(Amendment
No. )
Filed
by the Registrant ☒ |
Filed
by a Party other than the Registrant ☐ |
Check
the appropriate box:
☐ |
Preliminary
Proxy Statement |
|
|
☐ |
Confidential,
For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
|
|
☒ |
Definitive
Proxy Statement |
|
|
☐ |
Definitive
Additional Materials |
|
|
☐ |
Soliciting
Materials Pursuant to Rule 14a-12 |
CINGULATE
INC.
(Name
of Registrant as Specified in Its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check all boxes that apply):
☒ |
No
fee required. |
|
|
☐ |
Fee
paid previously with preliminary materials |
|
|
☐ |
Fee
computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
CINGULATE
INC.
1901 W. 47th Place
Kansas
City, Kansas 66205
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
be held on June 8, 2022
To
the Stockholders of Cingulate Inc.
NOTICE
IS HEREBY GIVEN that the Annual Meeting of Stockholders (the “Annual Meeting”) of Cingulate Inc. (the “Company”)
will be held on June 8, 2022, beginning at 10:00 a.m. Central Time. The Annual Meeting will be held solely in a virtual meeting format
online at www.meetnow.global/MPQLHZL. You will not be able to attend the Annual Meeting at a physical location. If you
plan to attend the Annual Meeting, please review and follow the instructions in the “General Information” section
of the accompanying proxy statement. At the Annual Meeting, stockholders will act on the following matters:
|
● |
To
elect Patrick Gallagher and Peter J. Werth as Class I directors to hold office until our
annual meeting of stockholders to be held in 2025 and until their successors have been duly
elected; |
|
|
|
|
● |
To
ratify the appointment of KPMG LLP as our independent registered public accounting firm for
the year ending December 31, 2022; and |
|
|
|
|
● |
To
consider any other matters that may properly come before the Annual Meeting or any adjournment of postponement thereof. |
Only
stockholders of record at the close of business on April 13, 2022 are entitled to receive notice of and to vote at the Annual Meeting
or any postponement or adjournment thereof. A list of the stockholders entitled to vote at the Annual Meeting will be available during
ordinary business hours ten (10) days before the Annual Meeting at the Company’s principal place of business located at 1901 W.
47th Place, Kansas City, Kansas 66205 and on the date of the Annual Meeting, on the virtual platform for the meeting at www.meetnow.global/MPQLHZL.
Your
vote is important. Whether you plan to attend the meeting or not, you may vote your shares by telephone or the Internet or by completing
and returning your proxy card in the envelope provided. If your shares are held in “street name” by your bank, broker or
other nominee, your bank, broker or other nominee will be unable to vote your shares without instructions from you. You should instruct
your bank, broker or other nominee to vote your shares in accordance with the procedures provided by your bank, broker or other nominee.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 8, 2022.
Our
proxy materials, including our Proxy Statement for the 2022 Annual Meeting, our Annual Report for the fiscal year ended December 31,
2021 and proxy card are available on the Internet at www.envisionreports.com/CING. Under Securities and Exchange Commission
rules, we are providing access to our proxy materials by notifying you of the availability of our proxy materials on the Internet.
|
By
Order of the Board of Directors |
|
|
|
/s/
Craig S. Gilgallon |
|
Craig
S. Gilgallon |
|
Executive
Vice President, General Counsel and Secretary |
April
22, 2022 |
|
Kansas
City, Kansas |
|
TABLE
OF CONTENTS
CINGULATE
INC.
1901 W. 47th Place
Kansas
City, Kansas 66205
PROXY
STATEMENT
GENERAL
INFORMATION
This
proxy statement contains information related to our Annual Meeting of Stockholders to be held on June 8, 2022 at 10:00 a.m. Central Time,
or at such other time and place to which the Annual Meeting may be adjourned or postponed (the “Annual Meeting”). The enclosed
proxy is solicited by the Board of Directors (the “Board”) of Cingulate Inc. (the “Company”). The proxy materials
relating to the Annual Meeting are being mailed to stockholders entitled to vote at the meeting on or about April 22, 2022.
When
and where will the Annual Meeting be held?
The
Annual Meeting will be held on June 8, 2022, at 10:00 a.m., Central Time, in a virtual meeting format online at www.meetnow.global/MPQLHZL,
and at any adjournment or postponement thereof. You will not be able to attend the Annual Meeting at a physical location. If you plan
to attend the Annual Meeting, please review the instructions under “How can I attend and vote at the Annual Meeting?”
below.
What
is the purpose of the Annual Meeting?
We
are calling the Annual Meeting to seek the approval of our stockholders:
| ● | To
elect Patrick Gallagher and Peter J. Werth as Class I directors to hold office until our
annual meeting of stockholders to be held in 2025 and until their successors have been duly
elected; |
| ● | To
ratify the appointment of KPMG LLP as our independent registered public accounting firm for
the year ending December 31, 2022; and |
| ● | To
consider any other matters that may properly come before the Annual Meeting or any adjournment
or postponement thereof. |
What
are the Board’s recommendations?
The
Board recommends you vote:
| ● | FOR
the election of Patrick Gallagher and Peter J. Werth as Class I directors to hold office
until our annual meeting of stockholders to be held in 2025 and until their successors have
been duly elected; and |
| ● | FOR
the ratification of the appointment of KPMG LLP as our independent registered public
accounting firm for the year ending December 31, 2022. |
Why
did I receive a notice in the mail regarding the Internet availability of the proxy materials instead of a paper copy of the proxy materials?
In
accordance with rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to furnish to our stockholders
this Proxy Statement and our Annual Report by providing access to these documents on the Internet rather than mailing printed copies.
Accordingly, a Notice of Internet Availability of Proxy Materials (the “Notice”) is being mailed to our stockholders of record
and beneficial owners, which will direct stockholders to a website where they can access our proxy materials and view instructions on
how to vote online or by telephone. If you would prefer to receive a paper copy of our proxy materials, please follow the instructions
included in the Notice.
Who
is entitled to vote at the Annual Meeting?
Only
stockholders of record at the close of business on the record date, April 13, 2022, are entitled to receive notice of, and to vote the
shares of common stock that they held on that date at, the Annual Meeting, or any adjournment or postponement thereof. Holders of our
common stock are entitled to one vote per share on each matter to be voted upon.
As
of the record date, we had 11,309,412 outstanding shares of common stock.
Who
can attend the meeting?
All
stockholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting.
What
constitutes a quorum?
The
presence at the Annual Meeting, in person or by proxy, of the holders of one third of our common stock outstanding on the record date
will constitute a quorum for the Annual Meeting. Signed proxies received but not voted and broker non-votes will be included in the calculation
of the number of shares considered to be present at the Annual Meeting.
How
can I attend and vote at the Annual Meeting?
For
registered stockholders: If on the record date your shares were registered directly in your name with our transfer agent, Computershare
Trust Company, N.A. (“Computershare”), then you are a stockholder of record (also known as a “record holder”).
Stockholders of record at the close of business on the record date will be able to attend the Annual Meeting, vote, and submit questions
during the Annual Meeting by visiting www.meetnow.global/MPQLHZL at the meeting date and time. We encourage you to access
the meeting prior to the start time. Online access will begin at 9:45 a.m., Central Time. To access the Annual Meeting, you will need
the 15-digit control number located in the shaded bar on the proxy card.
For
beneficial owners: If on the record date your shares were not registered directly in your name with Computershare but instead
held by an intermediary, such as a bank, broker or other nominee, then you are the beneficial owner of shares held in “street name.”
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 must register in advance to attend the Annual Meeting, vote and submit questions. To register in advance you
will need to obtain a legal proxy from the bank, broker or other nominee that holds your shares giving you the right to vote the shares.
Once you have received a legal proxy form from your bank, broker or other nominee, forward the email with your name and the legal proxy
attached or send a separate email with your name and legal proxy attached labeled “Legal Proxy” in the subject line to Computershare,
at legalproxy@computershare.com. Requests for registration must be received no later than 5:00 p.m., Central Time, on June 3,
2022. You will then receive a confirmation of your registration, with a control number, by email from Computershare. At the time of the
meeting, go to www.meetnow.global/MPQLHZL and enter your control number. If you do not have your control number you may
attend as a guest (non-stockholder) by going to www.meetnow.global/MPQLHZL and entering the requested information. Please
note that guest access is in listen-only mode and you will not have the ability to ask questions or vote during the Annual Meeting.
Do
I need to attend the Annual Meeting?
No.
It is not necessary for you to attend the virtual Annual Meeting in order to vote your shares. You may vote by telephone, through the
Internet or by mail, as described in more detail below.
How
do I vote my shares without attending the Annual Meeting?
Stockholder
of record: shares registered in your name. If you are a stockholder of record, you may authorize a proxy to vote on your behalf
at the Annual Meeting in any of the following ways:
By
Telephone or via the Internet. You can submit a proxy to vote your shares by telephone or via the Internet by following the instructions
on the enclosed proxy card. Proxies submitted by telephone or via the Internet must be received by 11:59 p.m., Central Time, on the day
before the Annual Meeting. Have your proxy card in hand as you will be prompted to enter your control number.
By
Mail. You can submit a proxy to vote your shares by mail if you received a printed proxy card by completing, signing, dating and
promptly returning your proxy card in the postage-prepaid envelope provided with the materials. Proxies submitted by mail must be received
by the close of business on June 7, 2022 in order to ensure that your vote is counted.
To
facilitate timely receipt of your proxy, we encourage you to vote via the Internet or telephone following the instructions on the enclosed
proxy card promptly. If you are submitting your proxy by telephone or through the Internet, your voting instructions must be received
by 11:59 p.m., Central Time on the day before the Annual Meeting.
Submitting
your proxy by mail, by telephone or through the Internet will not prevent you from casting your vote at the Annual Meeting. You are encouraged
to submit a proxy by mail, by telephone or through the Internet even if you plan to attend the Annual Meeting via the virtual meeting
website to ensure that your shares are represented at the Annual Meeting.
If
you return your signed proxy card, but do not mark the boxes showing how you wish to vote, your shares will be voted (1) “FOR”
the election of Patrick Gallagher and Peter J. Werth as Class I directors, (2) “FOR” the ratification of the
appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2022, (3) “FOR”
the approval of the proposal to adjourn the Annual Meeting if necessary or appropriate and (4) in accordance with the proxy holders’
best judgment as to any other business that properly comes before the Annual Meeting.
Beneficial
owner: shares registered in the name of bank, broker or other nominee. If you are a beneficial owner of shares registered
in the name of your bank, broker or other nominee, you should have received voting instructions from that organization rather than from
us. Simply complete and mail the voting instruction form to ensure that your vote is counted. Alternatively, you may vote by telephone
or over the Internet as instructed by your bank, broker or other nominee. Follow the instructions from your broker, bank or other nominee
included with this proxy statement, or contact your bank, broker or other nominee to request a proxy form.
Even
if you plan to attend the Annual Meeting live via the Internet, we encourage you to vote in advance by Internet, telephone, or mail so
that your vote will be counted if you later decide not to attend the Annual Meeting live via the Internet.
May
I change my vote after I have mailed my proxy card or after I have submitted my proxy by telephone or through the Internet?
Yes.
You may revoke your proxy or change your vote at any time before the proxy is exercised at the Annual Meeting. You may revoke your proxy
by delivering a signed written notice of revocation stating that the proxy is revoked and bearing a date later than the date of the proxy
to the Company’s Secretary, Craig S. Gilgallon, at Cingulate Inc., 1901 W. 47th Place, 3rd Floor, Kansas
City, Kansas 66205. You may also revoke your proxy or change your vote by submitting another proxy by telephone or through the Internet
in accordance with the instructions on the enclosed proxy card. You may also submit a later-dated proxy card relating to the same shares.
If you voted by completing, signing, dating and returning the enclosed proxy card, you should retain a copy of the voter control number
found on the proxy card in the event that you later decide to revoke your proxy or change your vote by telephone or through the Internet.
Alternatively, your proxy may be revoked or changed by attending the Annual Meeting via the virtual meeting website and voting at the
meeting by following the internet voting instructions on your proxy card. However, simply attending the Annual Meeting without voting
will not revoke or change your proxy. “Street name” holders of shares of our common stock should contact their bank, broker,
trust or other nominee to obtain instructions as to how to revoke or change their proxies.
What
is the difference between holding shares as a stockholder of record and as a beneficial owner?
Many
of our stockholders hold their shares through a broker, bank or other nominee rather than directly in their own name. As summarized below,
there are some distinctions between shares held of record and those owned beneficially.
Stockholder
of Record
If
your shares are registered directly in your name with our transfer agent, Computershare, you are considered, with respect to those shares,
the stockholder of record. As the stockholder of record, you have the right to grant your voting proxy directly to us or to vote in person
at the Annual Meeting.
Beneficial
Owner
If
your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held
in street name, and these proxy materials are being forwarded to you by your broker, bank or nominee which is considered, with respect
to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker as to how to vote and are
also invited to attend the Annual Meeting. However, because you are not the stockholder of record, you may not vote these shares in person
at the Annual Meeting unless you obtain a signed proxy from the record holder giving you the right to vote the shares. If you do not
vote your shares or otherwise provide the stockholder of record with voting instructions, your shares may constitute broker non-votes.
The effect of broker non-votes is more specifically described in “What vote is required to approve each proposal?”
below.
What
vote is required to approve each proposal?
The
holders of one-third of our common stock outstanding on the record date must be present, in person or by proxy, at the Annual Meeting
in order to have the required quorum for the transaction of business. Pursuant to Delaware corporate law, abstentions and broker non-votes
will be counted for the purpose of determining whether a quorum is present.
Assuming
that a quorum is present, the following votes will be required:
|
● |
With
respect to the first proposal (election of directors, “Proposal 1”), directors
are elected by a plurality of the votes present in person or represented by proxy and entitled
to vote, and the director nominees who receive the greatest number of votes at the Annual
Meeting (up to the total number of directors to be elected) will be elected. As a result,
abstentions and “broker non-votes” (see below), if any, will not affect the outcome
of the vote on this proposal. |
|
|
|
|
● |
With
respect to the proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending
December 31, 2022 (“Proposal 2”) and approval of any other matter that may properly come before the Annual Meeting, the
affirmative vote of a majority of the total votes cast on these proposals, in person or by proxy, is required to approve these proposals.
As a result, abstentions and “broker non-votes” (see below), if any, will not affect the outcome of the vote on these
proposals. |
Holders
of the common stock will not have any dissenters’ rights of appraisal in connection with any of the matters to be voted on at the
Annual Meeting.
What
is a “broker non-vote”?
Banks
and brokers acting as nominees are permitted to use discretionary voting authority to vote proxies for proposals that are deemed “routine”
by the New York Stock Exchange, but are not permitted to use discretionary voting authority to vote proxies for proposals that are deemed
“non-routine” by the New York Stock Exchange. The determination of which proposals are deemed “routine” versus
“non-routine” may not be made by the New York Stock Exchange until after the date on which this proxy statement has been
mailed to you. As such, it is important that you provide voting instructions to your bank, broker or other nominee, if you wish to determine
the voting of your shares.
A
broker “non-vote” occurs when a proposal is deemed “non-routine” and a nominee holding shares for a beneficial
owner does not have discretionary voting authority with respect to the matter being considered and has not received instructions from
the beneficial owner.
The
election of directors (proposal 1) is generally not considered to be a “routine” matter and brokers are not permitted to
vote on these matters if the broker has not received instructions from the beneficial owner. Accordingly, it is particularly important
that beneficial owners instruct their brokers how they wish to vote their shares. The ratification of our independent registered public
accounting firm (proposal 2) is generally considered to be a “routine” matter, and hence your brokerage firm may be able
to vote on proposal 2 even if it does not receive instructions from you, so long as it holds your shares in its name.
Who
will count the votes?
Our
transfer agent, Computershare, will serve as inspector of election at the Annual Meeting and will tabulate and certify the votes.
Where
can I find the voting results of the Annual Meeting?
The
Company will publish final voting results of the Annual Meeting in a Current Report on Form 8-K within four business days after the Annual
Meeting.
How
are we soliciting this proxy?
We
are soliciting this proxy on behalf of our Board and will pay all expenses associated therewith. Some of our officers, directors and
other employees also may, but without compensation other than their regular compensation, solicit proxies by further mailing or personal
conversations, or by telephone, facsimile or other electronic means.
We
will also, upon request, reimburse brokers and other persons holding stock in their names, or in the names of nominees, for their reasonable
out-of-pocket expenses for forwarding proxy materials to the beneficial owners of the capital stock and to obtain proxies.
PROPOSAL
1: ELECTION OF DIRECTORS
Our
Certificate of Incorporation provides that the number of directors shall be established from time to time by our Board. Our Board has
fixed the number of directors at seven, and we currently have seven directors serving on the Board.
Our
Certificate of Incorporation provides that the Board be divided into three classes, designated as Class I, Class II and Class III. Each
class must consist, as nearly as may be practicable, of one-third of the total number of directors constituting the entire Board. Each
class of directors shall serve for a term ending on the date of the third annual meeting of stockholders following the annual meeting
at which such class of directors was elected; provided, that each director initially assigned to Class I shall serve for a term expiring
at the 2022 annual meeting of stockholders; each director initially assigned to Class II shall serve for a term expiring at the 2023
annual meeting of stockholders; and each director initially assigned to Class III shall serve for a term expiring at the 2024 annual
meeting of stockholders; provided further, that the term of each director will continue until the election and qualification of his or
her successor and is subject to his or her earlier death, disqualification, resignation or removal. Generally, vacancies or newly created
directorships on the Board will be filled only by vote of a majority of the directors then in office and will not be filled by the stockholders.
A director appointed by the Board to fill a vacancy will hold office until the next election of the class for which such director was
chosen, subject to the election and qualification of his or her successor and his or her earlier death, disqualification, resignation
or removal.
Messrs.
Gallagher and Werth have been nominated by the Board to stand for election. As the directors assigned to Class I, the current term for
each of Messrs. Gallagher and Werth will expire at the Annual Meeting. If elected by the stockholders at the Annual Meeting, Messrs.
Gallagher and Werth will each serve for a term expiring at the annual meeting of stockholders to be held in 2025 subject to the election
and qualification of his successor or until his earlier death, resignation or removal.
Directors
are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on the
election of directors. Stockholders may not vote, or submit a proxy, for a greater number of nominees than the nominees named below.
The nominees receiving the highest number of affirmative votes will be elected. Unless otherwise directed, shares represented by executed
proxies will be voted for the election of the nominees named below. Each person nominated for election has agreed to serve if elected,
and management has no reason to believe that any nominee will be unable to serve. If, however, prior to the Annual Meeting, the Board
should learn that any nominee will be unable to serve for any reason, the proxies that otherwise would have been voted for this nominee
will be voted for a substitute nominee as selected by the Board. Alternatively, the proxies, at the Board’s discretion, may be
voted for that fewer number of nominees as results from the inability of any nominee to serve. The Board has no reason to believe that
any of the nominees will be unable to serve.
The
following table sets forth the director name, class, age as of March 28, 2022, and other information for each member of our Board:
Name |
|
Class |
|
Age |
|
Director
Since |
|
Current
Term
Expires |
|
Expiration
of
Term
For
Which
Nominated |
|
Skills
and
Experience |
Patrick
Gallagher |
|
I |
|
57 |
|
2014 |
|
2022 |
|
2025 |
|
Life
Sciences, Finance and Capital Raising |
Peter
J. Werth |
|
I |
|
83 |
|
2018 |
|
2022 |
|
2025 |
|
Life
Sciences, International Markets, Commercialization, Product Development, Manufacturing and Corporate Development |
Jeff
Conroy |
|
II |
|
56 |
|
2018 |
|
2023 |
|
|
|
Life
Sciences, Finance, International Markets, Product Development, Sales & Marketing and Corporate Development |
Gregg
Givens |
|
II |
|
61 |
|
2021 |
|
2023 |
|
|
|
Finance,
Accounting, Capital Raising, International Markets and Corporate Development |
Curt
Medeiros |
|
II |
|
46 |
|
2021 |
|
2023 |
|
|
|
Life
Sciences, International Markets and Commercialization |
Jeff
Hargroves
|
|
III |
|
55 |
|
2018 |
|
2024 |
|
|
|
Life
Sciences, Finance, Capital Raising, International Markets, Product Development, Commercialization and Corporate Development |
Shane
J. Schaffer |
|
III |
|
47 |
|
2012 |
|
2024 |
|
|
|
Life
Sciences, Commercialization, Product Development, Clinical and CEO |
Class
I Nominees for Election for a Term Expiring at the 2025 Annual Meeting
Patrick
Gallagher, MBA, CFA has served as a member of our Board of Directors since January 2014. Mr. Gallagher has served as Senior Managing
Director at Laidlaw & Co., and as Managing Partner at Laidlaw Venture Partners, since September 2014. Since January 2018, he has
also served as the Chief Executive Officer and as a member of the Board of Directors of Voltron Therapeutics, a privately held biotechnology
company. Mr. Gallagher also serves as the Chief Executive Officer and a member of the Board of Directors at PD Theranostics, Inc. positions
he has held since April 2018, and has served as Treasurer of Aerwave Medical, Inc. since November 2020. Prior to his current roles, Mr.
Gallagher was a founding partner and Chief Executive Officer of BDR Research Group, LLC, from July 2001 through October 2010. Previously,
he served as a Management Consultant for CHD Bioscience, Inc. from July 2012 through August 2014. He has served a member of the Board
of Directors of BioSig Technologies, Inc. (NASDAQ: BSGM) since July 2014, Evermore Global since June 2015, and Algorithm Sciences, Inc.
since May 2019. Mr. Gallagher earned his Master in Business Administration from Penn State University and his Bachelor of Science in
Finance from the University of Vermont. We believe that Mr. Gallagher’s extensive experience in the life sciences industry qualifies
him to serve on our Board of Directors.
Peter
J. Werth has served on our Board of Directors since June 2018. Mr. Werth is Founder and Chief Executive Officer of ChemWerth Inc.,
a full-service generic drug development and supply company providing Active Pharmaceutical Ingredients to regulated markets worldwide.
Mr. Werth previously served as Vice President at Ganes Chemicals, a subsidiary of Siegfried Chemicals, from March 1975 through May 1982.
From 1965 through 1975, Mr. Werth worked in Research and Development for Upjohn Pharmaceuticals, now Pfizer (NYSE: PFE). In addition
to serving on the Board of Cingulate, Mr. Werth serves on the Board of Directors of VM Pharma LLC since December 2010, VM Therapeutics
LLC since May 2012, Alopexx Vaccines LLC since June 2012, Altos Therapeutics LLC since December 2012, VM Oncology LLC since August 2014,
Nuance Designs of CT LLC since January 2015, Perseus Science Group LLC since January 2015, Alzeca Biosciences, Inc. since July 2017,
Likarda LLC since August 2017, Techtona LLC since September 2017, Bright Path Pharma/Labs since November 2017, MedRhythms LLC since June
2018 and Bastion Healthcare LLC since September 2020. He earned his Master of Science in Organic Chemistry from Stanford University and
his Bachelor of Science in Chemistry and Math from Fort Hays State University. We believe that Mr. Werth’s extensive experience
in the life sciences industry and his knowledge in business and international markets qualifies him to serve on our Board of Directors.
Class
II Directors Continuing in Office until the 2023 Annual Meeting
Jeff
Conroy has served on our Board of Directors since May 2018. Mr. Conroy currently serves as the Chairman and Chief Executive Officer
of Embody, Inc., a medical device company he co-founded in April 2014. He also has served as a Director of Odyssey Group International,
Inc. (OTC: ODYY) since January 2020. Mr. Conroy was the Managing Director of Windward Investments from May 2012 through December 2019.
Previously, he was the Managing Director of Adjuvant Partners from January 2000 through May 2012. Mr. Conroy is a Director and Past Chairman
of the Virginia Biotechnology Association and serves on the Virginia Bioscience Healthcare Research Corporation’s (VBHRC) Board
of Directors. Mr. Conroy holds a Bachelor of Science in Business Administration from Providence College. We believe that Mr. Conroy’s
experience in the life sciences industry and his knowledge in financial and corporate development qualifies him to serve on our Board
of Directors.
Gregg
Givens has served on our Board of Directors since July 2021. Mr. Givens currently serves as the Chief Financial Officer at Park University,
a position he has held since March 2020. From November 2018 to November 2021, Mr. Givens served as a member of the Board of Directors
of Excel Industries, Inc. Previously, Mr. Givens served as a member of the Board of Directors at Asurion, Inc. from January 2006 to July
2007. From May 1996 through April 2018, Mr. Givens served in various positions at DST Systems, Inc. (NYSE: DST), including as Senior
Vice President, Chief Financial Officer and Treasurer. Mr. Givens received his Bachelor of Science in Accountancy from the University
of Missouri and is a Certified Public Accountant. We believe Mr. Givens’ extensive financial and accounting experience qualifies
him to serve on our Board of Directors.
Curt
Medeiros, MBA has served on our Board of Directors since July 2021. Since January 2022, Mr. Medeiros has served as the Chief Executive
Officer and a board member of Ovation.io, Inc., a software and data company in the laboratory and life sciences industry. He has served
as a Strategic Advisor to HealthRhythms and DermTech since June 2021. Mr. Medeiros served as the President and Chief Operating Officer
at Ontrak, Inc., from December 2019 through June 2021 (NASDAQ: OTRK). From June 2010 to November 2019, he served in various positions
at UnitedHealth Group, including President of UnitedHealth Group subsidiaries OPTUM Analytics and OPTUM Life Sciences. Mr. Medeiros received
his Bachelor of Science in Chemical Engineering from Massachusetts Institute of Technology and his Master in Business Administration
from Harvard Business School. We believe Mr. Medeiros’ extensive experience in the life sciences industry qualifies him to serve
on our Board of Directors.
Class
III Directors Continuing in Office until the 2024 Annual Meeting
Jeff
Hargroves has served as a member of our Board of Directors since June 2018. In July 2001, Mr. Hargroves founded ProPharma Group,
at which he served as a Board Member through its sale in September 2020. He served as President and Chief Executive Officer of ProPharma
Group from its inception until May 2018. Previously, he served as the Director of Production at Ivy Animal Health (subsidiary of Elanco)
from 1999 through 2001, and prior to that, as a Director of ALZA (subsidiary of Johnson and Johnson) from 1996 through 1999. Mr. Hargroves
earned both his Bachelor of Science in Computer Engineering and Bachelor of Science in Electrical Engineering from the University of
Missouri. We believe that Mr. Hargroves’ experience in product launch and commercialization in the pharmaceutical industry and
his extensive knowledge in financial management and corporate development qualifies him to serve on our Board of Directors.
Shane
J. Schaffer, PharmD co-founded Cingulate in 2012 and has since served as its Chief Executive Officer and Chairman of the Board of
Directors. Prior to his work at Cingulate, Dr. Schaffer served as the Managing Director of Sabre Scientific Solutions, from July 2009
through December 2012. Previously, Dr. Schaffer worked as a Director of National Accounts at Pri-Med Access from September 2008 through
May 2009, Senior Marketing at Sanofi from February 2004 through December 2007, and as a Marketing Manager at Novartis from June 2001
through October 2003. From July 1999 through June 2001, he served as Chief Fellow of the Rutgers Pharmaceutical Industry Fellowship Program
and was Senior Fellow at Warner Lambert/Parke Davis and Pfizer. From June 1997 to July 1999, he worked as a clinical research associate
at Hoechst Marion Roussel. Dr. Schaffer has 25 years’ experience in drug development, commercialization and biotech commercial
operation. Dr. Schaffer received his Doctor of Pharmacy from The University of Kansas School of Pharmacy. We believe that Dr. Schaffer’s
extensive knowledge of the pharmaceutical industry, his clinical and commercial background in a wide range of therapeutic areas, and
his experience serving as our Chief Executive Officer, qualifies him to serve on our Board of Directors.
Board
Membership Diversity
In
accordance with Nasdaq’s new Board Diversity Rules (Rule 5605(f) and Rule 5606), the following Board Diversity Matrix presents
our Board diversity statistics. The minimum diversity objective for small reporting companies listed on the Nasdaq Capital Market on
or after August 6, 2021 is two diverse directors by August 6, 2026 or two years from the date of listing, whichever is later, including
one who self-identifies as female, and one who self-identifies as either female, an underrepresented minority or LGBTQ+. “Underrepresented
Minority” means an individual who self-identifies as one or more of the following: Black or African American, Hispanic or Latinx,
Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or Two or More Races or Ethnicities. “Two or More
Races or Ethnicities” means a person who identifies with more than one of the following categories: White (not of Hispanic or Latinx
origin), Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander.
Our Board does not currently include any diverse directors; however, we intend to have at least two diverse directors by the August 6,
2026, the deadline set forth in the Nasdaq rules.
Board
Diversity Matrix (As of April 22, 2022) |
Total
Number of Directors | |
7 | |
| |
Female | |
Male | |
Non-Binary | |
Did
Not Disclose Gender | |
Part
I: Gender Identity | |
| |
| |
| |
| |
Directors | |
- | |
6 | |
- | |
1 | |
Part
II: Demographic Background | |
| |
| |
| |
| |
African
American or Black | |
- | |
- | |
- | |
| |
Alaskan
Native or Native American | |
- | |
- | |
- | |
| |
Asian | |
- | |
- | |
- | |
| |
Hispanic
or Latinx | |
- | |
- | |
- | |
| |
Native
Hawaiian or Pacific Islander | |
- | |
- | |
- | |
| |
White | |
- | |
6 | |
- | |
| |
Two
or More Races or Ethnicities | |
- | |
- | |
- | |
| |
LGBTQ+ | |
- | |
Did
Not Disclose Demographic Background | |
1 | |
THE
BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF THE DIRECTOR NOMINEES.
CORPORATE
GOVERNANCE
Board
of Director Composition
Our
Board currently consists of seven members. Our directors hold office until their successors have been elected and qualified or until
the earlier of their death, resignation or removal.
Corporate
Governance Guidelines
Our
Board adopted Corporate Governance Guidelines, a copy of which can be found in the “Corporate Governance—Governance Documents”
section of the “Investors” page of our website located at www.cingulate.com. Among the topics addressed in our Corporate
Governance Guidelines are:
-
Board size, independence and qualifications |
|
-
Communications with directors |
-
Executive sessions of independent directors |
|
-
Interaction with investors and others |
-
Board leadership structure |
|
-
Board access to senior management |
-
Selection of new directors |
|
-
Board access to independent advisors |
-
Director orientation and continuing education |
|
-
Board self-evaluations |
-
Limits on board service |
|
-
Board meetings |
-
Change of principal responsibilities |
|
-
Meeting attendance by directors and non-directors |
-
Term limits |
|
-
Meeting materials |
-
Director responsibilities |
|
-
Board committees, responsibilities and independence |
-
Director compensation |
|
-
Succession planning |
-
Stock ownership |
|
-
Risk management |
Board
and Committee Meetings
During
2021, our Board met once. The Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee did not meet
during 2021, as our IPO closed on December 10, 2021. Each of the incumbent directors attended at least 75% of the total of the meetings
of the Board during 2021.
Director
Attendance at Annual Meeting of Stockholders
This
is our first annual meeting of stockholders since our IPO. Board members are encouraged to attend all stockholder meetings.
Executive
Sessions
Non-employee
directors meet regularly (a minimum of two times per year) in executive session without management present. Currently, all non-employee
directors, except Patrick Gallagher, are independent. The non-employee directors in attendance determine which member will preside at
the executive session.
Director
Independence
Pursuant
to the rules of Nasdaq, a director will only qualify as an “independent director” if, in the opinion of that company’s
board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director.
Our
Board has determined that Jeff Conroy, Gregg Givens, Jeff Hargroves, Curt Medeiros, and Peter J. Werth are “independent directors”
as such term is defined by Nasdaq Marketplace Rule 5605(a)(2). Due to Laidlaw & Company (UK) Ltd. acting as co-lead book-running
underwriter for our IPO and Patrick Gallagher’s position as Senior Managing Director at Laidlaw & Co and as Managing Partner
at Laidlaw Venture Partners, our Board determined that Mr. Gallagher is not an independent director. In addition, Shane Schaffer is not
an independent director due to his position as Chief Executive Officer of the Company.
Committees
of the Board of Directors
Our
Board has established an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. Our Board may
establish other committees to facilitate the management of our business. The composition and functions of each committee are described
below. Members serve on these committees until their resignation or until otherwise determined by our Board. Each of these committees
operate under a charter that has been approved by our Board, which can be found in the “Corporate Governance—Committee Charters”
section of the “Investors” page of our website located at www.cingulate.com.
Audit
Committee. Our Audit Committee consists of Gregg Givens, Curt Medeiros, and Jeff Hargroves, with Gregg Givens serving as the Chairman
of the Audit Committee. Our Board has determined that the three directors currently serving on our Audit Committee are independent within
the meaning of the Nasdaq Marketplace Rules and Rule 10A-3 under the Exchange Act. In addition, our Board has determined that Gregg Givens
qualifies as an audit committee financial expert within the meaning of SEC regulations and the Nasdaq Marketplace Rules.
The
Audit Committee’s primary responsibilities are to (i) oversee and monitor our financial reporting process, internal control system
and disclosure controls and procedures, (ii) review and evaluate the audit performed by our registered independent public accountants
and report to the Board any substantive issues found during the audit; (iii) oversee communication among our registered independent public
accountants, senior management and the Board; (iv) appoint, compensate and oversee the work of our registered independent public accountants;
(v) oversee compliance with legal and regulatory requirements; (vi) review and approve all related party transactions; and (vii) oversee
compliance with our Code of Business Conduct and Ethics.
Compensation
Committee. Our Compensation Committee consists of Jeff Conroy, Gregg Givens, and Peter J. Werth, with Jeff Conroy serving as the
Chairman of the Compensation Committee. Our Board has determined that the three directors currently serving on our Compensation Committee
are independent under the listing standards, are “non-employee directors” as defined in rule 16b-3 promulgated under the
Exchange Act.
The
Compensation Committee’s primary responsibilities are to review and approve all forms of non-equity and equity-based compensation
of our executive officers and directors and to administer our equity-based compensation plans. The Compensation Committee also reviews
and approves corporate goals and objectives relevant to the compensation of our Chief Executive Officer and evaluates performance in
light of the goals and objectives.
Compensation
Consultant
In
accordance with its authority to retain consultants and advisors, and in connection with our IPO, the Compensation Committee has directly
engaged Pay Governance LLC to provide executive and director compensation consulting services to the Compensation Committee. In 2021,
Pay Governance LLC provided services to the Compensation Committee, which included providing information and data on current trends and
developments in executive and director compensation, establishing a peer group, analyzing benchmarking data for our peer group and establishing
an equity incentive plan. The Compensation Committee evaluated whether any of the work performed by Pay Governance LLC during 2021 raised
any conflict of interest and determined that it did not.
Nominating
and Corporate Governance Committee. Our Nominating and Corporate Governance Committee consists of Jeff Hargroves, Jeff Conroy, and
Curt Medeiros, with Jeff Hargroves serving as the Chairman of the Nominating and Corporate Governance Committee. All members of the Nominating
and Corporate Governance Committee are independent directors as defined under the Nasdaq listing standards. The Nominating and Corporate
Governance Committee (i) identifies, reviews the qualifications of, and recommends to the Board individuals to be elected to the Board
and (ii) considers recommendations from stockholders if submitted in a timely manner in accordance with the procedures set forth in our
bylaws and will apply the same criteria to all persons being considered. The Nominating and Corporate Governance Committee also oversees
the annual evaluation of the Board and its committees.
Director
Nominations Process
The
Nominating and Corporate Governance Committee is responsible for recommending candidates to serve on our Board and its committees. In
considering whether to recommend any particular candidate to serve on the Board or its committees or for inclusion in the Board’s
slate of recommended director nominees for election at an annual meeting of stockholders, the Nominating and Corporate Governance Committee
considers the criteria set forth in our Corporate Governance Guidelines. Specifically, the Nominating and Corporate Governance Committee
may take into account many factors, including: personal and professional integrity, ethics and values; experience in corporate management,
such as serving as an officer or former officer of a publicly held company; strong finance experience; relevant social policy concerns;
experience relevant to the Company’s industry; experience as a board member of another publicly held company; relevant academic
expertise or other proficiency in an area of the Company’s operations; diversity of expertise and experience in substantive matters
pertaining to the Company’s business relative to other Board members; diversity of background and perspective, including, but not
limited to, with respect to age, gender, race and ethnicity; practical and mature business judgment, including, but not limited to, the
ability to make independent analytical inquiries; and any other relevant qualifications, attributes or skills In determining whether
to recommend a director for re-election, the Nominating and Corporate Governance Committee may also consider the director’s past
attendance at meetings and participation in and contributions to the activities of the Board.
We
do not have a formal policy with regard to the consideration of diversity in identifying director nominees. The Board evaluates each
individual in the context of the Board as a whole, with the objective of assembling a group that can best perpetuate the success of the
business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in these various
areas.
In
identifying prospective director candidates, the Nominating and Corporate Governance Committee may seek referrals from other members
of the Board, management, stockholders and other sources, including third party recommendations. The Nominating and Corporate Governance
Committee also may, but need not, retain a search firm in order to assist it in identifying candidates to serve as directors of the Company.
The Nominating and Corporate Governance Committee uses the same criteria for evaluating candidates regardless of the source of the referral
or recommendation. When considering director candidates, the Nominating and Corporate Governance Committee seeks individuals with backgrounds
and qualities that, when combined with those of our incumbent directors, provide a blend of skills and experience to further enhance
the Board’s effectiveness. In connection with its annual recommendation of a slate of nominees, the Nominating and Corporate Governance
Committee also may assess the contributions of those directors recommended for re-election in the context of the Board evaluation process
and other perceived needs of the Board.
Each
of the director nominees to be elected at the Annual Meeting was evaluated in accordance with our standard review process for director
candidates in connection with their initial appointment and their nomination for election at the Annual Meeting. When considering whether
the directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board to satisfy
its oversight responsibilities effectively in light of our business and structure, the Board focused primarily on the information discussed
in each of the member’s biographical information set forth above. We believe that our directors provide an appropriate mix of experience
and skills relevant to the size and nature of our business. This process resulted in the Board’s nomination of the incumbent directors
named in this Proxy Statement and proposed for election by you at the Annual Meeting.
Stockholder
Nominations for Directorships
Stockholders
may recommend individuals to the Nominating and Corporate Governance Committee for consideration as potential director candidates by
submitting their names and background to the Secretary of the Company at the address set forth below under “Stockholder Communications”
in accordance with the provisions set forth in our bylaws. All such recommendations will be forwarded to the Nominating and Corporate
Governance Committee, which will review and only consider such recommendations if appropriate biographical and other information is provided,
including, but not limited to, the items listed below, on a timely basis. All stockholder recommendations for director candidates must
be received by the Company in the timeframe(s) set forth under the heading “Stockholder Proposals” below.
|
● |
the
name and address of the stockholder and the beneficial owner, if any; |
|
|
|
|
● |
a
representation that the stockholder is a record holder of the Company’s securities entitled to vote at the meeting upon such
nomination and intends to appear in person or by proxy at the meeting to propose such nomination; |
|
|
|
|
● |
the
name, age, business and residential address, and principal occupation or employment of the proposed director candidate; |
|
|
|
|
● |
a
description of any arrangements or understandings between the proposed director candidate and any other person or entity other than
the Company; and |
|
|
|
|
● |
the
consent of the proposed director candidate to be named in the proxy statement relating to the Company’s annual meeting of stockholders
and to serve as a director if elected at such annual meeting. |
Assuming
that appropriate information is provided for candidates recommended by stockholders, the Nominating and Corporate Governance Committee
will evaluate those candidates by following substantially the same process, and applying substantially the same criteria, as for candidates
submitted by members of the Board or other persons, as described above and as set forth in its written charter.
Board
Leadership Structure
The
Board believes that it should have the flexibility to make determinations as to whether the same individual should serve as both the
Chief Executive Officer and the Chairman of the Board, taking into account changing needs and circumstances of both the Company and the
Board over time. In determining the appropriate leadership structure, the Board considers, among other things, the current composition
of the Board, the role of the Lead Independent Director, if any, and challenges and opportunities specific to the Company. Currently,
the Chief Executive Officer and Chairman positions are held by Shane J. Schaffer. Periodically, our Board assesses these roles and the
Board leadership structure to ensure the interests of Cingulate and our stockholders are best served. Our Board has determined that its
current leadership structure is appropriate given the efficiencies of having a single individual fulfill both roles, the benefit of having
a single source of leadership and authority for the Board, and Dr. Schaffer’s extensive knowledge of all aspects of Cingulate,
our business and risks.
Role
of Board in Risk Oversight Process
While
management is responsible for assessing and managing our risks, our Board is responsible for overseeing management’s efforts to
assess and manage risk. This oversight is conducted by our full Board, which has responsibility for general oversight of risks, and standing
committees of our Board. Our Board satisfies this responsibility through full reports by each committee chair regarding the committee’s
considerations and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within
our company. Our Board believes that full and open communication between management and the Board is essential for effective risk management
and oversight.
The
Audit Committee is responsible for discussing the Company’s policies with respect to risk assessment and risk management, including
guidelines and policies to govern the process by which the Company’s exposure to financial risk is handled. In accordance with
those policies, our Board and the Board committees shall have an active role in overseeing management of the Company’s risks. Our
Board regularly reviews information regarding the Company’s credit, liquidity and operations, as well as the risks associated with
each. The Compensation Committee oversees the management of risks relating to the Company’s executive compensation plans and arrangements.
The Audit Committee oversees financial and cybersecurity risks. The Nominating and Corporate Governance Committee manages risks associated
with the independence of our Board and potential conflicts of interest.
Stockholder
Communications
Any
stockholder or any other interested party who desires to communicate with our Board, our non-management directors or any specified individual
director, may do so by directing such correspondence to the attention of our Secretary, Craig S. Gilgallon, at Cingulate Inc., 1901 W.
47th Place, 3rd Floor, Kansas City, Kansas 66205. Our Secretary will forward the communication to the appropriate
director or directors.
Code
of Business Conduct and Ethics
Our
Board adopted a Code of Business Conduct and Ethics (the “Code of Conduct”) that applies to our employees, officers and directors.
A copy of the Code of Conduct is posted on the Corporate Governance section of the Investor Relations page of our website, which is located
at www.cingulate.com/investors. We intend to disclose future amendments to certain provisions of the Code of Conduct, or waivers of such
provisions applicable to any principal executive officer, principal financial officer, principal accounting officer or controller, or
persons performing similar functions, and our directors, on our website identified above or in filings with the SEC.
Anti-Hedging
Policy
Our
Board has adopted a Statement of Company Policy on Insider Trading and Policy Regarding Special Trading Procedures, which applies to
all of our directors, officers and employees. The policy prohibits our directors, officers and employees from engaging in hedging or
monetization transactions, such as zero-cost collars and forward sale contracts.
EXECUTIVE
OFFICERS
The
following table provides information regarding our executive officers with their respective ages as of March 28, 2022:
Name |
|
Age |
|
Position |
|
|
|
|
|
Shane
J. Schaffer, PharmD |
|
47 |
|
Chief
Executive Officer and Chairman of the Board |
Louis
G. Van Horn, MBA |
|
63 |
|
Executive
Vice President and Chief Financial Officer |
Laurie
A. Myers, PhD |
|
65 |
|
Executive
Vice President and Chief Operating Officer |
Craig
S. Gilgallon, Esq. |
|
50 |
|
Executive
Vice President, General Counsel and Secretary |
Raul
R. Silva, MD |
|
64 |
|
Executive
Vice President and Chief Science Officer |
Matthew
Brams, MD |
|
58 |
|
Executive
Vice President and Chief Medical Officer |
See
page 10 of this Proxy Statement for Mr. Schaffer’s biography.
Louis
G. Van Horn, MBA has served as our Executive Vice President and Chief Financial Officer since May 2017. He previously served as a
consultant with Tarsus CFO Services, LLC from December 2016 to May 2017. From December 2004 through June 2016, Mr. Van Horn served as
Executive Vice President and Chief Financial Officer of Store Financial Services, LLC. Previously, Mr. Van Horn served as Vice President
and Comptroller of Kansas City Southern (NYSE: KSU) from June 1988 to December 2003. He previously held financial positions at Yellow
Freight Systems and PricewaterhouseCoopers. Mr. Van Horn received his Master of Business Administration from the University of Missouri
– Kansas City, and a Bachelor of Arts in Accounting from Westminster College. Mr. Van Horn is a Certified Public Accountant.
Laurie
A. Myers, PhD, MBA has served as our Executive Vice President and Chief Operating Officer since April 2018 and previously served
as a member of our Board of Directors from June 2013 through April 2018 and as our Senior Vice President of Operations from November
2017 to April 2018. Dr. Myers also serves as a Member of the Board of Advisors of Linea System, LLC, a position she has held since September
2020. Dr. Myers previously served as the Head of Marketing of Fidia Pharma USA Inc., a wholly owned subsidiary of Fidia Farmaceutici
from September 2014 through November 2017. Dr. Myers was an Adjunct Professor at the College of New Jersey School of Business from January
2012 through December 2014, and served as President and a Member of the Board of the Hallett David Strategic Group from January 2010
through September 2014. Dr. Myers received her Doctor of Philosophy in Toxicology from Rutgers Medical School and Rutgers School of Pharmacy,
her Masters in Business Administration from St. Joseph’s University and her Master of Science and Bachelor of Science from the
University of Scranton.
Craig
S. Gilgallon, Esq. co-founded Cingulate in 2013 and has served as our Executive Vice President, General Counsel and Board Secretary
since our inception. Previously, he served as our Director of Operations from March 2017 through November 2017. Since 2012, Mr. Gilgallon
has served as a partner at the law firm of Pawar Gilgallon & Rudy, LLC. Prior to that, he served as the owner of the Law Office of
Craig S. Gilgallon from October 2004 through August 2012. Mr. Gilgallon received his Juris Doctor from the Thomas Jefferson School of
Law and his Bachelor of Science from Ithaca College.
Raul
R. Silva, MD co-founded Cingulate in 2013 and has served as our Executive Vice President and Chief Science Officer since January
2018. He has been in private practice since 2009. Previously, Dr. Silva served as Executive Director of Rockland Children’s Psychiatric
Center from 2006-2009. He also served as Vice Chairman of The New York University Child Study Center 2005 through 2009. Dr. Silva served
as Deputy Director of Child Psychiatry at Bellevue Hospital Center from 1999 through 2006. Prior to that, he was Director of Child and
Adolescent Psychiatry at St. Luke’s/Roosevelt Hospital in New York City from 1995 through 1990. He completed his fellowship in
child and adolescent psychiatry at Columbia University’s St. Luke’s/Roosevelt Hospital Center in 1990 Dr. Silva completed
a psychopharmacology research fellowship at New York University Medical Center. Dr. Silva is board certified in general, child and adolescent
psychiatry. Dr. Silva received his Doctor of Medicine degree from Ross University and his Bachelor of Science in Biology from Fairleigh
Dickinson University.
Matthew
N. Brams, MD co-founded Cingulate in 2013 and has served as our Executive Vice President and Chief Medical Officer since January
2018 and served as a director of Cingulate from January 2018 through July 2021. Dr. Brams served as a Principal of Bayou City Research,
a position he held from April 1999 to January 2021. Prior to that, he served as a consultant medical director and/or admitting Psychiatrist
at numerous medical facilities including Taylor Recover Center (April 2019 to present); Lakeview Health Rehabilitation Center (2018-2019);
The Parc, Houston Tx (2012-2015); GeroPsych Unit Gulf Coast Hospital (2009-Present). Dr. Brams has been integral to the research teams
for all the major pharmaceutical companies participating in the ADHD clinical arena. Dr. Brams completed residency and fellowship at
Baylor College of Medicine in adult and child psychiatry, respectively. He is Board certified in Adult and Child Psychiatry (1994) and
is an acting Senior Board Examiner for the American Board of Psychiatry and Neurology. He received his Doctor of Medicine from The University
of Texas Science Center and his Bachelor of Arts in Biology from the University of Texas.
EXECUTIVE
OFFICER AND DIRECTOR COMPENSATION
The
following tables and accompanying disclosure set forth information about the compensation earned by our named executive officers during
2021. Our named executive officers include our principal executive officer and the three most highly-compensated executive officers (other
than our principal executive officer) serving as executive officers as of December 31, 2021 as set forth below:
|
● |
Shane
J. Schaffer, Chief Executive Officer and Chairman of the Board; |
|
|
|
|
● |
Laurie
A. Myers, Executive Vice President and Chief Operating Officer; |
|
|
|
|
● |
Louis
G. Van Horn, Executive Vice President and Chief Financial Officer; and |
|
|
|
|
● |
Craig
S. Gilgallon, Esq., Executive Vice President, General Counsel and Secretary. |
SUMMARY
COMPENSATION TABLE
The
following table sets forth information regarding compensation awarded to, earned by or paid to each of our named executive officers for
the years shown.
Name
and Principal
Position | |
Year | | |
Salary
($) | | |
Bonus
($) | | |
Stock
Awards ($)(1) | | |
Option
Awards ($)(2) | | |
Non-Equity
Incentive Plan
Compensation ($) | | |
All
Other Compensation ($) | | |
Total
($) | |
Shane
J. Schaffer, | |
| 2021 | | |
| 475,000 | | |
| - | | |
| 3,000 | | |
| 920,799 | | |
| - | | |
| - | | |
| 1,398,799 | |
Chairman
and CEO | |
| 2020 | | |
| 275,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 275,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Laurie
A. Myers | |
| 2021 | | |
| 400,000 | | |
| - | | |
| 3,000 | | |
| 345,302 | | |
| - | | |
| - | | |
| 748,302 | |
EVP
and COO (3) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Louis
G. Van Horn, | |
| 2021 | | |
| 380,000 | | |
| - | | |
| 3,000 | | |
| 345,302 | | |
| - | | |
| - | | |
| 728,302 | |
EVP
and CFO | |
| 2020 | | |
| 238,499 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 238,499 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Craig
S. Gilgallon | |
| 2021 | | |
| 380,000 | | |
| - | | |
| 3,000 | | |
| 345,302 | | |
| - | | |
| - | | |
| 728,302 | |
EVP,
GC and Secretary | |
| 2020 | | |
| 235,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 235,000 | |
(1) | In
April 2021, we granted 22,507 Class C profits interests (PIUs) to each named executive officer.
These PIUs were intended to constitute profits interests for U.S. federal income tax purposes.
We accounted for these awards under ASC Topic 718, Compensation – Stock Compensation
(FASB ASC Topic 718), as equity classified awards. In connection with the Reorganization
Merger, all outstanding PIU’s were exchanged for shares of Cingulate common stock.
The exchange of PIU’s for common stock created a modification of the terms, character
and rights of the PIU’s and achievement of performance was considered probable. This
resulted in the Company recognizing a noncash modification charge, which charge was calculated
based on the Company’s assessment of the fair value of the shares of Cingulate common
stock on the date of the modification. The dollar value reflected in the table above reflects
the fair value of the PIUs granted in 2021. See Note 8 to our consolidated financial statements
for the year ended December 31, 2021 for additional information. |
| |
| During
2020, we granted PIUs to the named executive officers. These PIUs were intended to constitute
profits interests for U.S. federal income tax purposes. As the future achievement of the
thresholds and targets to achieve payout of the PIUs was not deemed probable, the PIUs were
determined to have zero value as of the date of grant. See Note 8 to our consolidated
financial statements for the year ended December 31, 2021 for additional information. |
(2) | The
amounts reflect the grant date fair value of the non-qualified stock option awards on December
7, 2021, in accordance with FASB ASC Topic 718. The fair market value of the option awards
was determined using the Black-Scholes Model. See Note 10 to our consolidated financial statements
for the year ended December 31, 2021 for the assumptions used in calculating the grant date
fair value of the option awards. |
| |
(3) | Ms.
Myers was not a named executive officer in 2020; therefore, compensation information is not
presented for that year. |
| |
| Employee
Benefit Plans |
We
currently provide broad-based health and welfare benefits that are available to all of our employees, including our named executive officers,
including medical, dental, and vision insurance.
401(k)
Plan
We
sponsor a 401(k) savings plan (the “401(k) Plan”) for all eligible employees. Under the 401(k) Plan, we do not make matching
contributions into the 401(k) Plan other than the annual required safe harbor match.
Employment
Arrangements with our Named Executive Officers
Shane
J. Schaffer
On
September 23, 2021, we entered into an employment agreement with Dr. Schaffer. Under the terms of Dr. Schaffer’s employment agreement,
he holds the position of Chief Executive Officer and receives a base salary of $475,000 annually. In addition, Dr. Schaffer is eligible
to receive an annual bonus, with a target amount equal to twenty-five percent (25%) of Dr. Schaffer’s annual base salary. The actual
amount of each bonus will be determined by the sole discretion of our Compensation Committee and will be based upon both the Company’s
performance and Dr. Schaffer’s individual performance. Pursuant to the terms of his employment agreement, Dr. Schaffer is also
eligible to participate in all incentive and deferred compensation programs available to other executives or officers of the Company,
and will be eligible to participate in any employee benefit plans and equity plans that we may adopt, which plans may be amended by the
Company from time to time in its sole discretion.
We
may terminate Dr. Schaffer’s employment at any time without cause upon providing written notice to Dr. Schaffer, and Dr. Schaffer
may terminate his employment at any time for any reason, including for Good Reason (as that term is defined in Dr. Schaffer’s employment
agreement).
If
Dr. Schaffer’s employment is terminated by the Company without cause or by Dr. Schaffer for Good Reason, Dr. Schaffer will be entitled
to receive, subject to his signing a general release of claims in favor of the Company and related persons and entities within twenty-one
(21) days of the date of termination and following the expiration of seven (7) days thereafter, a severance payment of a lump sum amount
in cash equal to one and one half (1 ½) times Dr. Schaffer’s base salary, within 60 days following the date of termination.
In addition, all stock options and stock appreciation rights held by Dr. Schaffer, which would have vested if he had remained employed
for an additional four (4) months following the date of termination, shall become vested and exercisable as of the date of termination
for the remainder of their full term. If Dr. Schaffer’s employment is terminated by the Company without cause or by Dr. Schaffer
for Good Reason within twelve (12) months of a Change of Control, Dr. Schaffer will be entitled to receive, subject to his signing a
general release of claims in favor of the Company and related persons and entities within twenty-one (21) days of the date of termination
and following the expiration of seven (7) days thereafter, a severance payment of a lump sum amount in cash equal to two (2) times Dr.
Schaffer’s base salary, within 60 days following the date of termination; provided however, if any payment or benefits would constitute
an “parachute payment” as defined in Section 280(G) of the Internal Revenue Code, the payments will be the greater of (i)
the largest amount to ensure that no portion of those payments be subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code and (ii) the amount of the full payment, less all taxes, including the excise tax imposed by Section 4999 of the Internal Revenue
Code. In addition, all stock options and stock appreciation rights held by Dr. Schaffer shall become vested and exercisable as of the
date of termination for the remainder of their full term.
Laurie
A. Myers
On
September 23, 2021, we entered into an employment agreement with Ms. Myers. Under the terms of Ms. Myers’ employment agreement,
she holds the positions of Executive Vice President and Chief Operating Officer and receives a base salary of $400,000 annually. In addition,
Ms. Myers is eligible to receive an annual bonus, with a target amount equal to twenty-five percent (25%) of Ms. Myers’ annual
base salary. The actual amount of each bonus will be determined by the sole discretion of our Compensation Committee and will be based
upon both the Company’s performance and Ms. Myers’ individual performance, as recommended by the Chief Executive Officer.
Pursuant to the terms of her employment agreement, Ms. Myers is also eligible to participate in all incentive and deferred compensation
programs available to other executives or officers of the Company, and will be eligible to participate in any employee benefit plans
and equity plans that we may adopt, which plans may be amended by the Company from time to time in its sole discretion.
We
may terminate Ms. Myers’ employment at any time without cause upon providing written notice to Ms. Myers, and Ms. Myers may terminate
her employment at any time for any reason, including for Good Reason (as that term is defined in Ms. Myers’ employment agreement).
If
Ms. Myers’ employment is terminated by the Company without cause or by Ms. Myers for Good Reason, Ms. Myers will be entitled to
receive, subject to her signing a general release of claims in favor of the Company and related persons and entities within twenty-one
(21) days of the date of termination and following the expiration of seven (7) days thereafter, a severance payment of a lump sum amount
in cash equal to one (1) times Ms. Myers’ base salary, within 60 days following the date of termination. In addition, all stock
options and stock appreciation rights held by Ms. Myers, which would have vested if she had remained employed for an additional four
(4) months following the date of termination, shall become vested and exercisable as of the date of termination for the remainder of
their full term. If Ms. Myers’ employment is terminated by the Company without cause or by Ms. Myers for Good Reason within twelve
(12) months of a Change of Control, Ms. Myers will be entitled to receive, subject to her signing a general release of claims in favor
of the Company and related persons and entities within twenty-one (21) days of the date of termination and following the expiration of
seven (7) days thereafter, a severance payment of a lump sum amount in cash equal to one (1) times Ms. Myers’ base salary, within
60 days following the date of termination; provided however, if any payment or benefits would constitute an “parachute payment”
as defined in Section 280(G) of the Internal Revenue Code, the payments will be the greater of (i) the largest amount to ensure that
no portion of those payments be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code and (ii) the amount of
the full payment, less all taxes, including the excise tax imposed by Section 4999 of the Internal Revenue Code. In addition, all stock
options and stock appreciation rights held by Ms. Myers shall become vested and exercisable as of the date of termination for the remainder
of their full term.
Louis
G. Van Horn
On
September 23, 2021, we entered into an employment agreement with Mr. Van Horn. Under the terms of Mr. Van Horn’s employment agreement,
he holds the positions of Executive Vice President and Chief Financial Officer and receives a base salary of $380,000 annually. In addition,
Mr. Van Horn is eligible to receive an annual bonus, with a target amount equal to twenty-five percent (25%) of Mr. Van Horn’s
annual base salary. The actual amount of each bonus will be determined by the sole discretion of our Compensation Committee and will
be based upon both the Company’s performance and Mr. Van Horn’s individual performance, as recommended by the Chief Executive
Officer. Pursuant to the terms of his employment agreement, Mr. Van Horn is also eligible to participate in all incentive and deferred
compensation programs available to other executives or officers of the Company, and will be eligible to participate in any employee benefit
plans and equity plans that we may adopt, which plans may be amended by the Company from time to time in its sole discretion.
We
may terminate Mr. Van Horn’s employment at any time without cause upon providing written notice to Mr. Van Horn, and Mr. Van Horn
may terminate his employment at any time for any reason, including for Good Reason (as that term is defined in Mr. Van Horn’s employment
agreement).
If
Mr. Van Horn’s employment is terminated by the Company without cause or by Mr. Van Horn for Good Reason, Mr. Van Horn will be entitled
to receive, subject to his signing a general release of claims in favor of the Company and related persons and entities within twenty-one
(21) days of the date of termination and following the expiration of seven (7) days thereafter, a severance payment of a lump sum amount
in cash equal to one (1) times Mr. Van Horn’s base salary, within 60 days following the date of termination. In addition, all stock
options and stock appreciation rights held by Mr. Van Horn, which would have vested if he had remained employed for an additional four
(4) months following the date of termination, shall become vested and exercisable as of the date of termination for the remainder of
their full term. If Mr. Van Horn’s employment is terminated by the Company without cause or by Mr. Van Horn for Good Reason within
twelve (12) months of a Change of Control, Mr. Van Horn will be entitled to receive, subject to his signing a general release of claims
in favor of the Company and related persons and entities within twenty-one (21) days of the date of termination and following the expiration
of seven (7) days thereafter, a severance payment of a lump sum amount in cash equal to one (1) times Mr. Van Horn’s base salary,
within 60 days following the date of termination; provided however, if any payment or benefits would constitute an “parachute payment”
as defined in Section 280(G) of the Internal Revenue Code, the payments will be the greater of (i) the largest amount to ensure that
no portion of those payments be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code and (ii) the amount of
the full payment, less all taxes, including the excise tax imposed by Section 4999 of the Internal Revenue Code. In addition, all stock
options and stock appreciation rights held by Mr. Van Horn shall become vested and exercisable as of the date of termination for the
remainder of their full term.
Craig
S. Gilgallon, Esq.
On
September 23, 2021, we entered into an employment agreement with Mr. Gilgallon. Under the terms of Mr. Gilgallon’s employment agreement,
he holds the positions of Executive Vice President and General Counsel and receives a base salary of $380,000 annually. In addition,
Mr. Gilgallon is eligible to receive an annual bonus, with a target amount equal to twenty-five percent (25%) of Mr. Gilgallon’s
annual base salary. The actual amount of each bonus will be determined by the sole discretion of our Compensation Committee and will
be based upon both the Company’s performance and Mr. Gilgallon’s individual performance, as recommended by the Chief Executive
Officer. Pursuant to the terms of his employment agreement, Mr. Gilgallon is also eligible to participate in all incentive and deferred
compensation programs, and other executive retirement plans available to other executives or officers of the Company, and will be eligible
to participate in any employee benefit plans and equity plans that we may adopt, which plans may be amended by the Company from time
to time in its sole discretion.
We
may terminate Mr. Gilgallon’s employment at any time without cause upon providing written notice to Mr. Gilgallon, and Mr. Gilgallon
may terminate his employment at any time for any reason, including for Good Reason (as that term is defined in Mr. Gilgallon’s
employment agreement).
If
Mr. Gilgallon’s employment is terminated by the Company without cause or by Mr. Gilgallon for Good Reason, Mr. Gilgallon will be
entitled to receive, subject to his signing a general release of claims in favor of the Company and related persons and entities within
twenty-one (21) days of the date of termination and following the expiration of seven (7) days thereafter, a severance payment of a lump
sum amount in cash equal to one (1) times Mr. Gilgallon’s base salary, within 60 days following the date of termination. In addition,
all stock options and stock appreciation rights held by Mr. Gilgallon, which would have vested if he had remained employed for an additional
four (4) months following the date of termination, shall become vested and exercisable as of the date of termination for the remainder
of their full term. If Mr. Gilgallon’s employment is terminated by the Company without cause or by Mr. Gilgallon for Good Reason
within twelve (12) months of a Change of Control, Mr. Gilgallon will be entitled to receive, subject to his signing a general release
of claims in favor of the Company and related persons and entities within twenty-one (21) days of the date of termination and following
the expiration of seven (7) days thereafter, a severance payment of a lump sum amount in cash equal to one (1) times Mr. Gilgallon’s
base salary, within 60 days following the date of termination; provided however, if any payment or benefits would constitute an “parachute
payment” as defined in Section 280(G) of the Internal Revenue Code, the payments will be the greater of (i) the largest amount
to ensure that no portion of those payments be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code and (ii)
the amount of the full payment, less all taxes, including the excise tax imposed by Section 4999 of the Internal Revenue Code. In addition,
all stock options and stock appreciation rights held by Mr. Gilgallon shall become vested and exercisable as of the date of termination
for the remainder of their full term.
Outstanding
Equity Awards at 2021 Fiscal Year-End
Name | |
Grant
date (1) | |
Number
of securities underlying unexercised options (#) exercisable | | |
Number
of securities underlying unexercised options (#) unexercisable | | |
Option
exercise price ($) | | |
Option
expiration date |
Shane
J. Schaffer | |
12-7-2021 | |
| - | | |
| 179,668 | | |
$ | 6.00 | | |
12-7-2031 |
Laurie
A. Myers | |
12-7-2021 | |
| - | | |
| 67,376 | | |
$ | 6.00 | | |
12-7-2031 |
Louis
G. Van Horn | |
12-7-2021 | |
| - | | |
| 67,376 | | |
$ | 6.00 | | |
12-7-2031 |
Craig
S. Gilgallon | |
12-7-2021 | |
| - | | |
| 67,376 | | |
$ | 6.00 | | |
12-7-2031 |
(1) |
The
options vest in four equal annual installments beginning on the one-year anniversary of the grant date. |
Director
Compensation
In
2021, we did not maintain any standard fee arrangements for the non-employee members of our Board of Directors for their service as a
director other than for reimbursement of reasonable expenses incurred in attending meetings of our Board of Directors and committees
of the Board of Directors.
2021
Director Compensation Table
Name | |
Fees
earned or paid in cash ($) | | |
Stock
awards ($)(1) | | |
Option awards
($)(2) | | |
Total
($) | |
Jeff
Conroy | |
| — | | |
| 3,600 | | |
| 46,038 | | |
| 49,638 | |
Patrick
Gallagher | |
| — | | |
| 2,400 | | |
| 46,038 | | |
| 48,438 | |
Gregg
Givens | |
| — | | |
| — | | |
| 46,038 | | |
| 46,038 | |
Jeff
Hargroves | |
| — | | |
| 2,400 | | |
| 46,038 | | |
| 48,438 | |
Curt
Medeiros | |
| — | | |
| — | | |
| 46,038 | | |
| 46,038 | |
Peter
Werth | |
| — | | |
| 1,500 | | |
| 46,038 | | |
| 47,538 | |
(1) |
In
April 2021, we granted PIUs to Messrs. Conroy (27,009), Gallagher (18,006), Hargroves (18,006)
and Werth (11,254). These PIUs were intended to constitute profits interests for U.S. federal
income tax purposes. We accounted for these awards under ASC Topic 718, Compensation –
Stock Compensation (FASB ASC Topic 718), as equity classified awards. In connection with
the Reorganization Merger, all outstanding PIU’s were exchanged for shares of Cingulate
common stock. The exchange of PIU’s for common stock created a modification of the
terms, character and rights of the PIU’s and achievement of performance was considered
probable. This resulted in the Company recognizing a noncash modification charge, which charge
was calculated based on the Company’s assessment of the fair value of the shares of
Cingulate common stock on the date of the modification. The dollar value reflected in the
table above reflects the fair value of the PIUs granted in 2021. See Note 8 to our consolidated
financial statements for the year ended December 31, 2021 for additional information |
|
|
(2) |
The
amounts reflect the grant date fair value of the non-qualified stock options awarded on December 7, 2021 in accordance with FASB
ASC Topic 718. The fair market value of the option awards was determined using the Black-Scholes Model. See Note 10 to our consolidated
financial statements for the year ended December 31, 2021 for the assumptions used in calculating the option awards. Each non-employee
director held 8,983 non-qualified stock options as of December 31, 2021. |
2022
Director Compensation Program
Our
Compensation Committee and Board of Directors approved a director compensation program for our non-employee directors, effective beginning
January 1, 2022. This program provides for the following annual cash compensation:
| ● | Director
retainer - $35,000 |
| ● | Committee
chair retainer: |
| ○ | Nominating
and Corporate Governance - $8,000 |
| ● | Committee
member retainer: |
| ○ | Nominating
and Corporate Governance - $4,000 |
If
the Board of Directors appoints a lead independent director, that individual would receive an additional annual cash retainer equal to
$20,000. All cash fees will be paid quarterly in arrears and shall be pro-rated based on the number of whole or partial months served
during a calendar year. Although directors are not paid meeting fees, the lead independent director, if any, and the Chairman of the
Compensation Committee may determine to pay meeting fees for one or more meetings to the extent the number of Board or committee meetings
exceeds the typical number of meetings during the year. We will also reimburse non-employee directors for reasonable expenses incurred
in connection with attending board of director and committee meetings.
Non-employee
directors will receive an annual stock option award, which will vest in a single installment on the first anniversary of the date of
grant. Each non-employee director received a non-qualified stock option award of 9,000 options on February 25, 2022. Newly appointed
non-employee directors will receive an initial non-qualified stock option award of 12,000 options.
Dr.
Schaffer, our Chief Executive Officer, serves as Chairman of our Board of Directors but does not receive additional compensation for
his service as a director. See the Summary Compensation Table for a description of Dr. Schaffer’s 2021 compensation.
Equity
Compensation Plan Information
In
September 2021, our Board of Directors and stockholders adopted the 2021 Omnibus Equity Incentive Plan (the “Equity Plan”),
which provides for the grant of incentive stock options and non-qualified stock options to purchase shares of our common stock and other
types of awards. The general purpose of the Equity Plan is to provide a means whereby eligible employees, officers, non-employee directors
and other individual service providers develop a sense of proprietorship and personal involvement in our development and financial success,
and to encourage them to devote their best efforts to our business, thereby advancing our interests and the interests of our stockholders.
The
following table provides information as of December 31, 2021 with respect to shares of our common stock that may be issued pursuant to
our equity compensation plans.
| |
Number
of securities to be issued upon exercise of outstanding options, warrants and rights | | |
Weighted
average exercise price of outstanding options, warrants and rights | | |
Number
of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column a) | |
Plan
category | |
(a) | | |
(b) | | |
(c)(2) | |
Equity
compensation plans approved by security holders (1) | |
| 523,284 | | |
$ | 6.00 | | |
| 562,876 | |
Equity
compensation plans not approved by security holders | |
| — | | |
$ | — | | |
| — | |
Total | |
| 523,284 | | |
$ | 6.00 | | |
| 562,876 | |
|
(1) |
The
amounts shown in this row include securities under the Equity Plan. |
|
(2) |
In
accordance with the “evergreen” provision in our Equity Plan, an additional 841,650 shares of our common stock were automatically
made available for issuance on the first day of 2022, which represents 5% of the number of fully-diluted shares outstanding on December
31, 2021 (rounded to the nearest 1,000 share increment). These shares are excluded from the shares disclosed in the table. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information about the beneficial ownership of our common stock as of April 15, 2022 (unless otherwise noted)
by:
|
● |
each
person or group known to us who beneficially owns more than 5% of our common stock; |
|
|
|
|
● |
each
of our directors; |
|
|
|
|
● |
each
of our Named Executive Officers; and |
|
|
|
|
● |
all
of our directors and executive officers as a group. |
We
have determined beneficial ownership in accordance with the rules of the SEC. Under these rules, beneficial ownership includes any shares
of common stock as to which the individual or entity has sole or shared voting power or investment power. In computing the number of
shares beneficially owned by an individual or entity and the percentage ownership of that person, shares of common stock subject to options
or warrants held by such person that are currently exercisable or will become exercisable within 60 days of April 15, 2022 are considered
outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any other person.
Name
of Beneficial Owner (1) | |
Number
of Shares Beneficially Owned | | |
Percent
of Class
(2) | |
| |
| | |
| |
5%
or Greater Stockholders | |
| | | |
| | |
Sabby
Volatility Warrant Master Fund, Ltd. (3) | |
| 886,254 | | |
| 7.84 | % |
Matthew
Brams, MD (4) | |
| 650,240 | | |
| 5.75 | % |
Named
Executive Officers and Directors | |
| | | |
| | |
Shane
J. Schaffer, Pharm.D. | |
| 890,828 | (5) | |
| 7.83 | % |
Laurie
A. Myers | |
| 46,316 | (6) | |
| * | |
Louis
G. Van Horn, MBA | |
| 156,606 | (7) | |
| 1.38 | % |
Craig
S. Gilgallon, Esq. | |
| 196,287 | (8) | |
| 1.73 | % |
Jeff
Conroy | |
| 4,949 | (9) | |
| * | |
Patrick
Gallagher, MBA | |
| 68,358 | (10) | |
| * | |
Gregg
Givens | |
| 115,818 | (11) | |
| 1.02 | % |
Jeff
Hargroves | |
| -54,143 | (12) | |
| * | |
Curt
Medeiros | |
| 17,532 | (13) | |
| * | |
Peter
J. Werth | |
| 901,880 | (14) | |
| 7.97 | % |
All
Directors and Executive Officers as a group (12
persons) | |
| 3,570,189 | (15) | |
| 31.28 | % |
(1) |
Unless
noted otherwise, the address of all listed stockholder is 1901 W. 47th Place, Kansas City,
KS 66205. Each of the stockholders listed has sole voting and investment power with respect
to the shares beneficially owned by the stockholder unless noted otherwise, subject to community
property laws where applicable. |
|
|
(2) |
We
have determined beneficial ownership in accordance with Rule 13d-3 under the Exchange Act, which is generally determined by voting
power and/or investment power with respect to securities. Percentage ownership is based on 11,309,412 shares of common stock issued
and outstanding as of April 15, 2022, plus any shares issuable upon exercise of options or warrants that are exercisable within 60
days of April 15, 2022 held by such person. |
|
|
(3)
|
Based
on the information provided in the Schedule 13G/A filed with the SEC on January 5, 2022.
Sabby Management, LLC is the investment manager of Sabby Volatility Warrant Master Fund,
Ltd. and shares voting and investment power with respect to these shares in this capacity.
As manager of Sabby Management, LLC, Hal Mintz also shares voting and investment power on
behalf of Sabby Volatility Warrant Master Fund, Ltd. Each of Sabby Management, LLC and Hal
Mintz disclaims beneficial ownership over the securities listed except to the extent of their
pecuniary interest therein. The principal address for Sabby Volatility Warrant Master Fund,
Ltd. is 89 Nexus Way, Camana Bay, Grand Cayman KY1-9007, Cayman Islands. The principal address
for Sabby Management, LLC and Hal Mintz is 10 Mountainview Road, Suite 205, Upper Saddle
River, New Jersey 07458.
|
|
|
(4) |
Dr.
Brams is our Executive Vice President and Chief Medical Officer. Does not include 16,992 shares of our common stock issuable upon
the exercise of stock options that are not exercisable within sixty days of April 15, 2022. |
|
|
(5) |
Includes
(i) 66,500 shares of our common stock issuable upon exercise of warrants that are currently
exercisable and (ii) 807,828 shares of common stock held by Fountainhead Shrugged, LLC. Dr.
Schaffer is the manager of Fountainhead Shrugged, LLC and has voting and investment power
over the securities held by Fountainhead Shrugged, LLC. Does not include 247,168 shares of
our common stock issuable upon the exercise of stock options that are not exercisable within
sixty days of April 15, 2022. |
(6)
(7) |
Does
not include 97,376 shares of our common stock issuable upon the exercise of stock options
that are not exercisable within sixty days of April 15, 2022.
Includes
141,606 shares of common stock held by Louis G. Van Horn Trust, 12/23/19. Mr. Van Horn is the Trustee of Louis G. Van Horn Trust,
12/23/19 and has voting and investment power over the securities held by Louis G. Van Horn Trust, 12/23/19. Does not include 97,376
shares of our common stock issuable upon the exercise of stock options that are not exercisable within sixty days of April 15, 2022.
|
(8)
(9)
(10)
(11) |
Includes
(i) 5,016 shares of our common stock issuable upon exercise of warrants that are currently
exercisable and (ii) 185,296 shares of common stock held by The Limerick Group, LLC . Mr.
Gilgallon is the sole member of The Limerick Group, LLC and has voting and investment power
over the securities held by Limerick Group, LLC. Does not include 97,376 shares of our common
stock issuable upon the exercise of stock options that are not exercisable within sixty days
of April 15, 2022.
Does
not include 17,983 shares of our common stock issuable upon the exercise of stock options that are not exercisable within sixty days
of April 15, 2022.
Does
not include 17,983 shares of our common stock issuable upon the exercise of stock options that are not exercisable within sixty days
of April 15, 2022.
Includes
(i) 16,500 shares of our common stock issuable upon exercise of warrants that are currently exercisable and (ii) 30,000 shares of
common stock held by Mr. Givens’ children.. Does not include 17,983 shares of our common stock issuable upon the exercise of
stock options that are not exercisable within sixty days of April 15, 2022.
|
(12) |
Includes
(i) 8,300 shares of our common stock issuable upon exercise of warrants that are currently
exercisable and (ii) 37,543 shares of common stock held by Hargroves Family Investments,
LLC. Mr. Hargroves is the manager of Hargroves Family Investments, LLC and has voting and
investment power over the securities held by Hargroves Family Investments, LLC. Does not
include 17,983 shares of our common stock issuable upon the exercise of stock options that
are not exercisable within sixty days of April 15, 2022.
|
(13)
(14) |
Does
not include 17,983 shares of our common stock issuable upon the exercise of stock options
that are not exercisable within sixty days of April 15, 2022.
Includes
(i) 8,300 shares of our common stock issuable upon exercise of warrants that are currently exercisable and (ii) 871,731 shares of
common stock held by Werth Family Investment Associates. Mr. Werth is the manager of Werth Family Investment Associates LLC and has
voting and investment power over the securities held by Werth Family Investment Associates LLC. Does not include 17,983 shares of
our common stock issuable upon the exercise of stock options that are not exercisable within sixty days of April 15, 2022.
|
(15) |
Does
not include 674,678 shares of our common stock issuable upon the exercise of stock options that are not exercisable within sixty
days of April 15, 2022. |
TRANSACTIONS
WITH RELATED PERSONS
The
following is a description of transactions since January 1, 2020 to which we have been a participant in which the amount involved exceeded
or will exceed $120,000 and in which any of our directors, executive officers or holders of more than 5% of our voting securities, or
any members of their immediate family, had or will have a direct or indirect material interest, other than compensation arrangements.
Related
Party Notes
On
February 26, 2020, CTx issued a $314,000 promissory note (the “February Note”) to Matthew Brams, our Chief Medical Officer.
On September 30, 2020, we issued a $40,000 promissory note (the “September Note”, and together with the February Note, the
“Brams Notes”) to Mr. Brams. The Brams Notes accrued interest at the rate of 8% per annum. The principal of the Brams Notes
and accrued interest thereon was convertible, at Dr. Brams’ option into preferred units of CTx at a Twenty-Five (25%) Percent discount
to the offered unit price at the time of conversion. We had the right to prepay these notes without penalty or premium. On each of December
30, 2020 and July 1, 2020, we made a $100,000 repayment of the February Note. The February Note, which initially matured on February
24, 2021 was extended for an additional 12 months to February 24, 2022. The September Note, which initially matured on September 30,
2021 was extended to February 24, 2022. On July 1, 2021 we made a $100,000 payment on the February Note and on August 17, 2021, we made
a $50,000 payment on the February Note. As of closing of our IPO, we owed $104,000 and $37,025 in principal and interest, respectively,
on the Brams Notes, which were paid in full in December 2021with IPO proceeds.
On
July 25, 2020, CTx issued a $100,000 promissory note (the “July Note”) to Raul R. Silva, our Executive Vice President and
Chief Science Officer. The July Note accrued interest at the rate of 8% per annum. The principal of the July Note and accrued interest
thereon was convertible, at Dr. Silva’s option into preferred units of CTx at a Twenty-Five (25%) Percent discount to the offered
unit price at the time of conversion. We had the right to prepay this note without penalty or premium. The July Note, which initially
matured on July 24, 2021, was extended for an additional seven months to February 24, 2022. As of the closing of our IPO, we owed $100,000
and $11,047 in principal and interest, respectively, on the July Note, which was paid in full in December 2021 with IPO proceeds.
On
February 1, 2020, CTx issued a $500,000 promissory note to Dresch, Inc., a former CTx member (the “Member Note”, and together
with the Brams Notes and the July Note, the “Related Party Notes”). Principal and interest of the Member Note was convertible
upon lender’s notice into preferred units of CTx at the offered unit prices at the time of conversion. On September 30, 2020, $353,665
was converted to 246,096 Preferred Units of CTx at the current unit price in accordance with the terms of the Member Note leaving a note
payable amount of $146,335. The Member Note, which initially matured on February 1, 2021 was extended for an additional 12 months to
February 1, 2022. As of the closing of our IPO, we owed $146,335 and $39,941 in principal and interest, respectively, on the Member Note,
which was paid in full in December 2021 with IPO proceeds.
Initial
Public Offering
Patrick
Gallagher, a member of our Board of Directors, is a Senior Managing Director at Laidlaw & Co. and a Managing Partner at Laidlaw Venture
Partners. Laidlaw & Company (UK) Ltd. acted as co-lead book-running underwriter for our IPO, which closed December 10, 2021. The
discounts and commissions paid to Laidlaw & Company (UK) Ltd. in connection with the IPO were approximately $500,000.
Indemnification
of Officers and Directors
We
have entered into indemnification agreements with each of our current directors and executive officers. These agreements require us to
indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their
service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. We
also intend to enter into indemnification agreements with our future directors and executive officers.
Policies
and Procedures for Related Party Transactions
We
adopted policies and procedures for related party transactions that prohibit our executive officers, directors, nominees for election
as a director, beneficial owners of more than 5% of any class of our common stock, any members of the immediate family of any of the
foregoing persons and any firms, corporations or other entities in which any of the foregoing persons is employed or is a partner or
principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest, or related parties, from
entering into a transaction with us without the prior consent of our board of directors acting through the Audit committee or, in certain
circumstances, the chairman of the Audit committee. Any request for us to enter into a transaction with a related party, in which the
amount involved will, or may be expected to, exceed $100,000 and such related party would have a direct or indirect interest must first
be presented to our Audit committee, or in certain circumstances the chairman of our Audit committee, for review, consideration and approval.
In approving or rejecting any such proposal, our Audit committee is to consider the material facts of the transaction, including, but
not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under
the same or similar circumstances, the extent of the benefits to us, the availability of other sources of comparable products or services
and the extent of the related person’s interest in the transaction.
PROPOSAL
2: RATIFY THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Audit Committee has reappointed KPMG LLP (“KPMG”) as our independent registered public accounting firm to audit the financial
statements of the Company for the fiscal year ending December 31, 2022, and has further recommended that our Board submit their selection
of independent registered public accounting firm for ratification by our stockholders at the Annual Meeting. Neither the accounting firm
nor any of its members has any direct or indirect financial interest in or any connection with us in any capacity other than as public
registered accounting firm.
A
representatives of KPMG will attend the Annual Meeting, will have an opportunity to make a statement and will be available to respond
to appropriate questions from stockholders.
Principal
Accountant Fees and Services
Our
independent registered public accounting firm is KPMG LLP, Kansas City, MO, Auditor Firm ID: 185. The following table summarizes the
fees billed by KPMG for audit and other services provided to the Company for the fiscal years ended December 31, 2021 and 2020:
| |
2021 | | |
2020 | |
Audit
Fees (1) | |
$ | 1,100,000 | | |
$ | 57,500 | |
Audit-Related
Fees | |
| — | | |
| — | |
Tax
Fees (2) | |
| 527,040 | | |
| 85,656 | |
All
Other Fees | |
| — | | |
| — | |
Total | |
$ | 1,627,040 | | |
$ | 143,156 | |
(1) | Audit
fees consist of fees for our quarterly reviews and audits of our financial statements, and
fees relating to our IPO (registration statement reviews and comfort letters). |
| |
(2) | Tax
fees consist of fees for tax compliance services, including preparation and review of tax
returns and general tax consulting services. |
Pre-Approval
Policy
The
Audit Committee or its Chairman pre-approves audit and non-audit services to be rendered to the Company and establishes a dollar limit
on the amount of fees the Company will pay for each category of services. Generally, management will submit to the Audit Committee a
list of services that it recommends the Audit Committee engage the independent registered public accounting firm to provide for the fiscal
year. The Audit Committee is informed from time to time of the non-audit services provided pursuant to the pre-approval process. During
the year, the Audit Committee periodically reviews the types of services and dollar amounts approved and adjusts such amounts, as it
deems appropriate. Unless a service to be provided by the independent registered public accounting firm has received general pre-approval,
it will require specific pre-approval by the Audit Committee or its Chairman. Any service pre-approved by the Chairman will be presented
to the Audit Committee at its next regularly scheduled meeting. The Audit Committee also periodically reviews all non-audit services
to ensure such services do not impair the independence of the Company’s independent registered public accounting firm. All fees
incurred after our IPO in December 2021 have been pre-approved by our Audit Committee.
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF KPMG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FOR THE YEAR ENDING DECEMBER 31, 2022.
REPORT
OF THE AUDIT COMMITTEE*
The
undersigned members of the Audit Committee of the Board of Directors of Cingulate Inc. (the “Company”) submit this report
in connection with the committee’s review of the financial reports for the fiscal year ended December 31, 2021 as follows:
|
1. |
The
Audit Committee has reviewed and discussed with management the audited financial statements
for the Company for the fiscal year ended December 31, 2021. |
|
|
|
|
2. |
The
Audit Committee has discussed with representatives of KPMG LLP, the independent public accounting
firm, the matters required to be discussed by the applicable requirements of the Public Company
Accounting Oversight Board and the Securities and Exchange Commission. |
|
|
|
|
3. |
The
Audit Committee has discussed with KPMG LLP, the independent public accounting firm, the auditors’ independence from management
and the Company has received the written disclosures and the letter from the independent auditors required by applicable requirements
of the Public Company Accounting Oversight Board. |
In
addition, the Audit Committee considered whether the provision of non-audit services by KPMG LLP is compatible with maintaining its independence.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board
of Directors has approved) that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2021 for filing with the Securities and Exchange Commission.
Submitted
by the Audit Committee of the Board of Directors
Gregg
Givens, Chairman
Jeff
Hargroves
Curt
Medeiros
*The
foregoing report of the Audit Committee is not to be deemed “soliciting material” or deemed to be “filed” with
the Securities and Exchange Commission (irrespective of any general incorporation language in any document filed with the Securities
and Exchange Commission) or subject to Regulation 14A of the Securities Exchange Act of 1934, as amended, or to the liabilities of Section
18 of the Securities Exchange Act of 1934, except to the extent we specifically incorporate it by reference into a document filed with
the Securities and Exchange Commission.
STOCKHOLDER
PROPOSALS
Stockholder
Proposals to be Considered for Inclusion in the Company’s Proxy Materials
In
order for a stockholder proposal to be eligible to be included in the Company’s proxy statement and proxy card for the 2023 Annual
Meeting of Stockholders, the proposal must (1) be received by the Company at its principal executive offices, 1901 W. 47th
Place, 3rd Floor, Kansas City, Kansas 66205, Attn: Craig S. Gilgallon, Secretary, on or before December 23, 2022, and (2)
concern a matter that may be properly considered and acted upon at the annual meeting in accordance with applicable laws, regulations
and the Company’s Bylaws and policies, and must otherwise comply with Rule 14a-8 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”).
Director
Nominations and Other Business to be Brought Before the 2023 Annual Meeting of Stockholders
Notice
of any director nomination or the proposal of other business that you intend to present at the 2023 Annual Meeting of Stockholders, but
do not intend to have included in the Company’s proxy statement and form of proxy relating to the 2023 Annual Meeting of Stockholders,
must be received by the Company at its principal executive offices, 1901 W. 47th Place, 3rd Floor, Kansas City,
Kansas 66205, Attn: Craig S. Gilgallon, Secretary, not earlier than the close of business on February 8, 2023 and not later than the
close of business on March 10, 2023. In the event that the date of the 2023 Annual Meeting of Stockholders is more than 30 days before
or more than 70 days after the anniversary date of the 2022 Annual Meeting of Stockholders, the notice must be delivered to the Company
not earlier than the 120th day prior to the 2023 Annual Meeting of Stockholders and not later than the later of the 90th
day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such
annual meeting is first made by the Company. In addition, your notice must include the information required by the Company’s Bylaws
with respect to each director nomination or proposal of other business that you intend to present at the 2023 Annual Meeting of Stockholders.
In
addition to satisfying the foregoing requirements pursuant to the Company’s Bylaws, to comply with the universal proxy rules (once
effective), stockholders who intend to solicit proxies in support of director nominees other than Cingulate’s nominees must provide
notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 9, 2023.
ANNUAL
REPORT
Copies
of our Annual Report on Form 10-K (including audited financial statements) filed with the SEC may be obtained without charge by writing
to Cingulate Inc., 1901 W. 47th Place, 3rd Floor, Kansas City, Kansas 66205, Attn: Craig S. Gilgallon, Secretary.
A request for a copy of our Annual Report on Form 10-K must set forth a good-faith representation that the requesting party was either
a holder of record or a beneficial owner of our common stock on April 13, 2022. Exhibits to the Form 10-K will be mailed upon similar
request and payment of specified fees to cover the costs of copying and mailing such materials.
Our
audited financial statements for the fiscal year ended December 31, 2021 and certain other related financial and business information
are contained in our Annual Report on Form 10-K, which is being made available to our stockholders along with this Proxy Statement, but
which is not deemed a part of the proxy soliciting material.
HOUSEHOLDING
OF ANNUAL MEETING MATERIALS
Some
banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements.
This means that only one copy of this Proxy Statement may have been sent to multiple stockholders in the same household. We will promptly
deliver a separate copy of this Proxy Statement to any stockholder upon written or oral request to: Cingulate Inc., Attn: Craig S. Gilgallon,
Secretary, 1901 W. 47th Place, 3rd Floor, Kansas City, Kansas 66205 or by phone at (913) 942-2300. Any stockholder
who wants to receive a separate copy of this Proxy Statement, or of our proxy statements or annual reports in the future, or any stockholder
who is receiving multiple copies and would like to receive only one copy per household, should contact the stockholder’s bank,
broker, or other nominee record holder, or the stockholder may contact us at the address and phone number above.
OTHER
MATTERS
As
of the date of this proxy statement, the Board does not intend to present at the Annual Meeting any matters other than those described
herein and does not presently know of any matters that will be presented by other parties. If any other matter requiring a vote of the
stockholders should come before the meeting, it is the intention of the persons named in the proxy to vote with respect to any such matter
in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the best judgment
of the proxy holder.
|
By
Order of the Board of Directors |
|
|
|
/s/
Craig S. Gilgallon |
|
Craig
S. Gilgallon |
|
Executive
Vice President, General Counsel and Secretary |
April
22, 2022
Kansas
City, Kansas |
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