ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
Directors and Executive Officers
The following table sets forth the names and ages
of all of our directors and executive officers as of May 1, 2023. Our officers are appointed by, and serve at the pleasure of, the Board.
Name |
|
Age |
|
Position |
Neil (Indranil) Dey |
|
59 |
|
President, Chief Executive Officer and Director |
Kenneth Fisher |
|
44 |
|
Chief Financial Officer |
Dr. Jason Cook |
|
41 |
|
Chief Technology Officer |
Douglas C. Wurth |
|
58 |
|
Director |
Svetlana Dey |
|
51 |
|
Director |
Donald R. Chase |
|
76 |
|
Director |
Fred S. Zeidman |
|
76 |
|
Director |
Gary Gemignani |
|
57 |
|
Director |
Neil Dey, President, Chief Executive Officer
and Director
Mr. Dey co-founded Bluejay Diagnostics in 2015.
In 2008, Mr. Dey co-founded Lana Management and Business Research International, LLC (“LMBRI”), and served as Chief Operating
Officer of LMBRI from 2008 through 2015. LMBRI is a management consulting company focused on product launch and marketing in the medical
field in the U.S., Japan and EU. During his tenure with LMBRI, he spent approximately eight years consulting with Toray Industries, Hitachi
Chemicals (now Showa Denko Materials Co. Ltd.), Fujifilm (Fuji Chemicals), Merck & Co., SRI International, among others. From 2005
to 2007, Mr. Dey served as Vice President of Business Development and Market for Definines, AG. From 2001 to 2005, Mr. Dey served as Head
of Business Development, Western U.S. for IMPATH, Inc., where he was responsible for three business units and the introduction of Her2neu
diagnostics for breast cancer treatment with Herceptin. Earlier positions include Chief Business Officer for Genmethrax, Inc.; Manager,
Technology Licensing, Thomas Jefferson Medical University; and Manager, Technology Licensing, Ciba Geigy (Novartis). Mr. Dey earned both
Bachelor of Science and Master of Science degrees in Biochemistry from Visva-Bharati University in India and a Ph.D. in Lipid Membrane
Biochemistry from Biological Research Center in Hungary. He also earned a Master’s in Business Administration (Fulbright Scholarship)
from the University of Cambridge. We believe Mr. Dey’s history with our company, coupled with his extensive business development
experience in the medical device industry, provide him with the qualifications to serve as a director.
Kenneth Fisher, Chief Financial Officer
Mr. Fisher joined us in March 2022. Mr. Fisher
is an accomplished financial professional and Certified Public Accountant. From July 2010 to November 2021, he was Executive Vice President,
Chief Financial Officer and Treasurer of Meridian Bancorp, Inc. and its subsidiary, East Boston Savings Bank (merged with Rockland Trust
in November 2021). Prior to that, he served as Vice President and Treasurer at Beverly National Bank and as a senior auditor at Parent,
McLaughlin & Nangle, CPAs (now Marcum LLP). He received his Bachelor’s Degree in Business Administration from the Isenberg School
of Management at the University of Massachusetts at Amherst and is a graduate of the New England School for Financial Studies.
Dr. Jason Cook, Chief Technology Officer
Dr. Cook joined us in 2021. From 2014 to 2021,
Dr. Cook served as the Chief Executive Officer of NanoHybrids, Inc., a nanotechnology company specializing in the development and manufacture
of theranostic nanoparticle platform technologies. He was also a Director and served as Chairman of its Board from 2020 to 2021, and from
2014 to 2017, he served as Senior Scientist developing many of the core technologies of the company. Dr. Cook earned a Ph.D. in Biomedical
Engineering from University of Texas at Austin, focusing on medical diagnostic system design and development. His postdoctoral work focused
on the improvement of bioconjugation strategies of nanoparticles for molecular targeting. Dr. Cook also serves as an ad-hoc reviewer for
numerous panels at the National Institute of Health and peer reviewed scientific journals.
Douglas C. Wurth, Chairman of the Board
Mr. Wurth has served as Chairman of the Board
of Bluejay Diagnostics since 2017. Since 2016, Mr. Wurth has been a private investor. Mr. Wurth has served as Chief Executive Officer
and a Director of Good Works II Acquisition Corp. since February 2021, and Co- Chairman of Good Works Acquisition Corp. since October
2020. Mr. Wurth led major businesses within J.P. Morgan Asset Management during his nearly 20 years at J.P Morgan from 1997 to 2016. Mr.
Wurth was the Chief Executive Officer of Alternative Investments in Asset Management, and Chief Executive Officer of J.P. Morgan’s
International Private Bank, where he led the expansion of the franchise in Asia, Latin America and Europe while based in New York, Hong
Kong, and London. Since leaving J.P. Morgan, Mr. Wurth has invested in and helped lead several private companies, of which he is Chairman
of the Board of Standard Power and Vestrata, and a board member of Triax Technologies. Before joining J.P. Morgan, Mr. Wurth practiced
law at the New York firm Skadden, Arps, Slate, Meagher & Flom from 1992 to 1995, and served as General Counsel to former U.S. Senator
Robert Dole’s 1996 presidential campaign. Mr. Wurth earned a Bachelor of Arts degree from the University of Notre Dame and a J.D.
from the University of Virginia School of Law. We believe that Mr. Wurth is well qualified to serve on our Board due to his overall leadership
experience, his experience in the private equity and alternative investments industry and his legal expertise.
Donald R. Chase, Director
Mr. Chase has served on our Board since 2017.
Mr. Chase has been a member of the Board of Directors of Millyard Bank since 2020. Mr. Chase was a member of Board of Directors of Merchants
Bank and Merchants Bancshares, Inc., in South Burlington. VT, from 2015 through 2017. Mr. Chase was Chairman of the Board of NUVO Bank
and Trust Company of Springfield, Massachusetts since its inception in 2008 through 2015. Mr. Chase served as President and Chief Executive
Officer, Vice Chairman, and a Director of Westbank Corporation and its wholly-owned subsidiary, Westbank from 1988 to 2007. Mr. Chase
is active in a number of commercial real estate, farming and ranching activities and serves in a number of civic roles. He is former Chairman
of the Board of Trustees for the Eastern States Exposition in West Springfield, MA. Mr. Chase is also a commissioner of the Board of Public
Safety for the City of West Springfield, MA and is a former member of the Massachusetts Board of Agriculture. Mr. Chase is a veteran of
the United States Army during which he served in combat in Vietnam from 1967 through 1969. Mr. Chase graduated with honors from Western
New England University with a Bachelor of Science degree in Accounting. We believe that Mr. Chase is well qualified to serve on our Board
due to his executive experience and his financial expertise.
Fred S. Zeidman, Director
Mr. Zeidman has served on our Board since May
2021. Mr. Zeidman is Chairman of WoodRock & Co., an investment banking service business and serves as Chairman and CEO of Good Works
Acquisition Corp. and Chairman of Good Works II Acquisition Corp, both publicly held SPACs and Mr. Zeidman served as Chairman of Gordian
Group LLC, a U.S. investment bank specializing in board level advice in complex, distressed or “story” financial matters.
Mr. Zeidman, Chairman Emeritus of the United States Holocaust Memorial Council was appointed by President George W. Bush in March 2002
and served in that position from 2002-2010. A prominent Houston-based business and civic leader, Mr. Zeidman also is Chairman Emeritus
of the University of Texas Health Science System Houston. He was National Chairman of the Development Corp of Israel Campaign (Israel
Bonds) and served on the Board of the National World War II Museum. Mr. Zeidman was the former CEO, President and Chairman of Seitel,
Inc., a Houston-based onshore seismic data provider where he was instrumental in the successful turnaround of the Company. He served as
lead Director of Straight Path Communications, Inc. until its sale to Verizon in 2018. He was also Director of REMA a division of NRG
Corp. and he further serves on the board of Prosperity Bank and was formerly Restructuring Officer of TransMeridian Exploration Inc. and
Chief Bankruptcy Trustee of AremisSoft Corp. He held the post of Chairman of the Board and CEO of Unibar Corporation, the largest domestic
independent drilling fluids company, until its sale to Anchor Drilling Fluids in 1992. Mr. Zeidman holds a Bachelor’s degree from
Washington University in St. Louis and a Master’s in Business Administration from New York University. We believe that Mr. Zeidman
is well qualified to serve on our Board due to his extensive leadership and corporate finance experience, as well has his relationships
in the investing and investment banking businesses.
Svetlana Dey, Director
Ms. Svetlana Dey has been member of Bluejay’s
Board since 2015. Ms. Dey co-founded Bluejay Diagnostics in 2015. She also co-founded LMBRI in 2008, a management consulting company focused
on product launch and marketing in the medical field in the U.S., Japan and India. Ms. Dey has served as LMBRI’s President and CEO
since 2008. Prior to LMBRI, Ms. Dey spent more than 15 years in healthcare consulting businesses. In these roles, she has been involved
in management and operations of healthcare and life sciences products development, sales and marketing operations and general management.
Ms. Dey earned a Master’s Degree in Mathematics from the State University of Mari El Republic, Russia. We believe Ms. Dey’s
history with our company, coupled with her extensive experience in the healthcare industry, provide her with the qualifications to serve
as a Director.
Gary Gemignani, Director
Mr. Gemignani joined Bluejay’s Board in November
2021. Mr. Gemignani previously served as EVP, Chief Financial Officer of Solta Medical, a division of Bausch Health. Prior to Solta Medical,
Mr. Gemignani served as EVP and CFO of Acacia Pharma Group plc from 2020 to 2022. Prior to Acacia Pharma he served as CFO of Synergy Pharmaceuticals
Inc. from 2017 to 2019 where he successfully led the sale of this Nasdaq-listed company’s assets to Bausch Health. Synergy Pharmaceuticals
Inc. filed a petition in the United States Bankruptcy Court for the Southern District of New York in December 2018 under Chapter 11 of
the U.S. Bankruptcy Code. Previously, Mr. Gemignani served as CEO and CFO of Biodel Inc., overseeing business and strategic planning,
operations and financing activities of the company. Prior to this, Mr. Gemignani served in senior and executive financial and operational
roles with multiple public and private companies including, Prudential Financial, Gentium, Novartis and Wyeth. Mr. Gemignani started his
career at Arthur Andersen & Co. We believe that Mr. Gemignani is well qualified to serve on our Board due to his extensive accounting
and financial experience, as well as his public company expertise.
Family Relationships
Ms. Svetlana Dey is married to Mr. Neil Dey. There
are no other directors that are related to any other director or executive officer of our company or our subsidiaries, and there are no
arrangements or understandings between a director and any other person pursuant to which such person was elected as director.
GOVERNANCE OF THE COMPANY
Our Board of Directors
Our Board oversees the business affairs of Bluejay
and monitors the performance of management. Members of the Board discussed various business matters informally on numerous occasions throughout
the year 2022. The Board held nine meetings during 2022. We believe that such interaction between fellow Board members and with management
provided proper oversight of the Company. Each incumbent director attended at least 75% of the total number of meetings of the Board
and committee meetings of which such director was a member (held during the period for which such director was in office).
Board Committees
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. Our Board has adopted written charters for each of our Audit, Compensation, and Nominating and Corporate
Governance Committees, which are available on our website at https://ir.bluejaydx.com/corporate-governance/governance-overview.
The chart below shows the current membership and
chairperson of each of our three standing Board committees and the number of committee meetings held during our last fiscal year. Each
member of the Audit, Compensation, and Nominating and Corporate Governance Committee meets the applicable independence requirements of
the SEC and the Nasdaq listing rules for service on our Board and each committee on which she or he serves.
Name |
|
Audit |
|
Compensation |
|
Nominating
and
Corporate
Governance |
Donald R. Chase |
|
Member |
|
Chair |
|
Member |
Neil (Indranil) Dey |
|
— |
|
— |
|
— |
Svetlana Dey |
|
— |
|
— |
|
— |
Gary Gemignani |
|
Chair |
|
Member |
|
— |
Douglas C. Wurth |
|
Member |
|
Member |
|
Member |
Fred S. Zeidman |
|
— |
|
— |
|
Chair |
Total Meetings in 2022 |
|
6 |
|
3 |
|
2 |
Audit Committee. The members of the Audit
Committee are Mr. Gemignani (Chairperson), Mr. Wurth and Mr. Chase. Each member of the Audit Committee is independent as defined by the
Nasdaq Rules. In addition, each member of the Audit Committee satisfies the additional requirements of the SEC and Nasdaq Rules for audit
committee membership, including the additional independence requirements and the financial literacy requirements. The Board has determined
that at least one member of the Audit Committee, Mr. Gemignani, is an “audit committee financial expert” as defined in the
SEC’s rules and regulations. The primary purpose of the Audit Committee is to oversee the quality and integrity of our accounting
and financial reporting processes and the audit of our financial statements. The Audit Committee is responsible for selecting, compensating,
overseeing and terminating the selection of our independent registered public accounting firm.
Nominating and Corporate Governance Committee.
The members of the Nominating and Corporate Governance Committee are Mr. Zeidman (Chairperson), Mr. Wurth and Mr. Chase. Each member of
the Nominating and Corporate Governance Committee is independent as defined by Nasdaq Rules. The primary functions and responsibilities
of the Nominating and Corporate Governance Committee are to: (a) determine the qualifications, qualities, skills, and other expertise
required to be a director; (b) identify and screen individuals qualified to become members of the Board; (c) make recommendations to the
Board regarding the selection and approval of the nominees for director; and (d) review and assess the adequacy of our corporate governance
policies and procedures.
Compensation Committee. The members of
the Compensation Committee are Mr. Chase (Chairperson), Mr. Wurth and Mr. Gemignani. Each member of the Compensation Committee is independent
as defined by Nasdaq Rules. The Compensation Committee is responsible for, among other things, reviewing and making recommendations to
the Board with respect to the annual compensation for our Chief Executive Officer. The Compensation Committee also is responsible for
reviewing and making recommendations to the Board the annual compensation and benefits for our other executive officers. The Compensation
Committee also, among other things, reviews compensation of the Board, reviews and makes recommendations on all new executive compensation
programs that are proposed for adoption and administers the Company’s equity incentive plans. The Compensation Committee is responsible
for, among other things, reviewing and making recommendations to the Board with respect to the annual compensation for our Chief Executive
Officer and Chief Financial Officer.
Our Chief Executive Officer and Chief Financial
Officer review the performance of our other executive officers (other than himself) and based on that review, they then make
recommendations to the Compensation Committee about the compensation of executive officers (other than themselves). Neither our Chief
Executive Officer or Chief Financial Officer participate in any deliberations or approvals by the Board or the Compensation Committee
with respect to their own compensation.
Board Member Attendance at Annual Meetings
We do not have a formal policy regarding Board
attendance at our annual meetings, however, all of our directors are invited to the annual meeting. This Annual Meeting will be our second
Annual Meeting as a public company.
Board Leadership Structure and Role in Risk
Oversight
Our Board recognizes that one of its key responsibilities
is to evaluate and determine its optimal leadership structure so as to provide effective oversight of management. Mr. Wurth serves as
Chairman of the Board and Mr. Dey serves as our Chief Executive Officer. Although our Board does not have a policy with regard to the
separation of the offices of Chairman of the Board and Chief Executive Officer, we believe such separation serves an important governance
purpose.
Although management is responsible for the day-to-day
management of the risks we face, our Board and its committees take an active role in overseeing management of our risks and have the ultimate
responsibility for the oversight of risk management. Our Board regularly reviews information regarding our operational, financial, legal
and strategic risks. Specifically, senior management attends periodic meetings of the Board, provides presentations on operations including
significant risks, and are available to address any questions or concerns raised by our Board.
In addition, our committees assist our Board in
fulfilling its oversight responsibilities regarding risks. Our Audit Committee coordinate the Board’s oversight of our internal
control over financial reporting, disclosure controls and procedures, related party transactions and code of conduct and corporate governance
guidelines and management reports on these areas. Our Compensation Committee assists the Board in fulfilling its oversight responsibilities
with respect to the management of risks arising from our compensation policies and programs. When any of the committees receives a report
related to material risk oversight, the chairperson of the relevant committee will report on the discussion to the full Board.
Nomination of Director Candidates
We receive suggestions for potential director
nominees from many sources, including members of the Board, advisors, and stockholders. Any such nominations, together with appropriate
biographical information, should be submitted to the Chairperson of the Nominating and Corporate Governance Committee in the manner discussed
below. Any candidates submitted by a stockholder or stockholder group are reviewed and considered in the same manner as all other candidates.
Qualifications for consideration as a Board nominee
may vary according to the particular areas of expertise being sought as a complement to the existing board composition. However, minimum
qualifications include high level leadership experience in business activities, breadth of knowledge about issues affecting the Company,
experience on other boards of directors, preferably public company boards, and time available for meetings and consultation on Company
matters. Our Nominating and Corporate Governance Committee does not have a formal policy with regard to the consideration of diversity
in identifying director candidates but seeks a diverse group of candidates who possess the background, skills and expertise to make a
significant contribution to the Board, to the Company and our stockholders. Candidates whose evaluations are favorable are recommended
by our Nominating and Corporate Governance Committee to the full Board for consideration. The full Board selects and recommends candidates
for nomination as directors for stockholders to consider and vote upon at the annual meeting.
A stockholder wishing to nominate a candidate
for election to our Board at any annual meeting at which the Board has determined that one or more directors will be elected must submit
a written notice of his or her nomination of a candidate to the Chairperson of the Nominating and Corporate Governance Committee (c/o the
Corporate Secretary), providing the candidates name, biographical data and other relevant information together with a consent from the
nominee. Pursuant to our Bylaws, the submission must be received at our principal executive offices no less than 90 days and no more than
120 days prior to the anniversary date of our last annual meeting so as to permit the Board time to evaluate the qualifications of the
nominee.
We have not employed an executive search firm,
or paid a fee to any other third party, to locate qualified candidates for director positions.
Stockholder Communications with Directors
Persons wishing to write to our Board, or to a
specified director or committee of the Board, should send correspondence to the Corporate Secretary at 360 Massachusetts Avenue, Suite
203, Acton, MA 01720. Electronic submissions of stockholder correspondence will not be accepted.
The Corporate Secretary will forward to the directors
all communications that, in his or her judgment, are appropriate for consideration by the directors. Examples of communications that would
not be appropriate for consideration by the directors include commercial solicitations and matters not relevant to the stockholders, to
the functioning of the Board or to the affairs of Bluejay. Any correspondence received that is addressed generically to the Board will
be forwarded to the Chairman of the Board.
Anti-Hedging Policy
Our policies prohibit directors, officers and
other employees from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange
funds), or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value
of our equity securities without our prior approval.
Code of Ethics
We have adopted a written code of ethics that
applies to our directors, principal executive officer, principal financial officer, principal accounting officer or controller and any
persons performing similar functions. The code of ethics is on the “Investors – Corporate Governance Overview” section
on our website at bluejaydx.com. We intend to disclose any future amendments to, or waivers from, the code of ethics within four business
days of the waiver or amendment through a website posting or by filing a Current Report on Form 8-K with the SEC.
ITEM 11. EXECUTIVE COMPENSATION
Executive Officer Compensation
The following Summary Compensation Table shows,
for the fiscal years ended December 31, 2022 and December 31, 2021, information regarding the compensation awarded to our three
most highly compensated executive officers for 2022: Neil Dey, our President and Chief Executive Officer; Kenneth Fisher, our Chief Financial
Officer; and Jason Cook, our Chief Technology Officer. We refer to these officers as our “named executive officers” (“NEOs”).
Name and Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Option Awards ($)(4) | | |
Non-Equity Incentive Plan Compensation ($) | | |
All Other Compensation ($) | | |
Total ($) | |
Neil Dey(1) | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
President & Chief
Executive Officer | |
2022 | | |
| 337,436 | | |
| 70,000 | (8) | |
| 12,281 | | |
| - | | |
| 5,721 | (7) | |
| 425,438 | |
| |
2021 | | |
| 137,500 | | |
| 44,110 | (5) | |
| - | | |
| - | | |
| - | | |
| 181,610 | |
Kenneth Fisher (2)
Chief
Financial Officer | |
2022 | | |
| 204,135 | | |
| 99,000 | (10) | |
| 67,600 | | |
| - | | |
| 3,438 | (7) | |
| 374,173 | |
Jason Cook(3) Chief Technology Officer | |
2022 | | |
| 212,103 | | |
| 60,720 | (9) | |
| 4,632 | | |
| - | | |
| 5,596 | (7) | |
| 283,051 | |
| |
2021 | | |
| 100,833 | | |
| 16,636 | (5) | |
| 46,250 | | |
| - | | |
| 90,000 | (6) | |
| 253,719 | |
(1) |
While Mr. Dey served as our President and CEO for all of 2022 and 2021, Mr. Dey only was paid salary from July 1, 2021 to December 31, 2021 during 2021. |
(2) |
Mr. Fisher was hired and appointed Chief Financial Officer on March 23, 2022. Compensation reported in 2022 is for a partial year of employment. |
(3) |
Dr. Cook was hired and appointed Chief Technology Officer on July 1, 2021. Prior to that Dr. Cook was a non-employee consultant to the Company. Compensation reported in 2021 is for a partial year of employment and Dr. Cook’s 2021 total includes compensation paid to him as a non-employee consultant prior to July 1, 2021. |
(4) |
The amounts in this column represent the aggregate grant date fair value of option awards granted to each NEO, computed in accordance with FASB ASC Topic 718, as further described in Note 9 of the notes to our Consolidated Financial Statements included our Annual Report, which contains a discussion of all assumptions made by us in determining the grant date fair value of our equity awards. |
(5) |
The amounts in this column represent the cash bonuses earned in 2022 but paid in 2023. |
(6) |
Included in this amount is $30,000 in employee
relocation compensation and $60,000 in compensation paid to Dr. Cook for his services as a non-employee consultant prior to becoming the
Company’s Chief Technology Officer on July 1, 2021.
|
|
|
(7) |
The amounts represent matching contributions made by the Company under its 401(k) Plan. |
|
|
(8) |
Mr. Dey’s 2022 bonus amount was paid through the issuance fully vested restricted stock units granted in 2023, rather than in cash. |
|
|
(9) |
50% of Dr. Cook’s 2022 bonus amount was paid through the issuance of fully restricted stock units granted in 2023, and 50% was paid in cash in 2023. |
|
|
(10) |
50% of Mr. Fisher’s 2022 bonus amount was paid through the issuance of fully vested restricted stock units granted in 2023, and 50% was paid in cash in 2023. |
Narrative to Summary Compensation Table
Neil Dey, Chief Executive Officer and President
In July 2021, we entered into an employment agreement
with Mr. Dey (such agreement, as subsequently amended and restated, the “Dey Agreement”). The Dey Agreement provides for an
initial annual base salary for Mr. Dey of $250,000, which increased to $350,000 in November 2021. On January 12, 2023, Mr. Dey’s
annual base salary was increased to $372,750, then on January 27, 2023 Mr. Dey’s annual base salary was decreased to $275,000. The
agreement also provides eligibility for an annual bonus targeted at 50% of his base salary. The annual bonus is payable in a combination
of cash and equity as determined at the sole discretion of the Compensation Committee of the Board. Mr. Dey is entitled to participate
in certain of the Company’s benefit plans available to other executives.
Under the Dey Agreement, Mr. Dey is entitled to
receive certain benefits upon termination of employment under certain circumstances. If we terminate Mr. Dey’s employment for any
reason other than “Cause” (as such term is defined in the Dey Agreement), Mr. Dey will receive cash severance equal to twelve
months base salary plus a pro-rata portion of the target annual bonus in addition to any unpaid salary, bonus, and unused vacation time
not already paid.
Kenneth Fisher, Chief Financial Officer
In March 2022, we entered into an employment agreement
with Mr. Fisher (such agreement, the “Fisher Agreement”). The Fisher Agreement provides for an initial annual base salary
for Mr. Fisher of $275,000, which shall increase to $300,000 on January 1, 2023 as well as eligibility for an annual bonus targeted at
40% of his base salary. The annual bonus is payable in a combination of cash and equity as determined at the sole discretion of the Compensation
Committee of the Board. Mr. Fisher is entitled to participate in certain of the Company’s benefit plans available to other executives.
Under the Fisher Agreement, Mr. Fisher is entitled
to receive certain benefits upon termination of employment under certain circumstances. If the Company terminates Mr. Fisher’s employment
for any reason other than “Cause” (as such term is defined in the Fisher Agreement), Mr. Fisher will receive cash severance
equal to six months base salary plus a pro-rata portion of the target annual bonus in addition to any unpaid salary, bonus, and unused
vacation time not already paid.
Mr. Fisher was granted a ten-year option to purchase
65,000 shares of common stock at an exercise price of $1.31 per share (the closing price of the Company’s common stock on the date
of the agreement). Of the option grant, 5,000 shares were fully-vested on the date of grant and 60,000 shares will vest in three equal
annual installments on the anniversary dates of the grant, provided Mr. Fisher is employed on each vesting date.
Jason Cook, Chief Technology Officer
In July 2021, we entered into an employment agreement
with Dr. Cook (such agreement, as subsequently amended and restated, the “Cook Agreement”). The Cook Agreement provides for
an initial annual base salary for Dr. Cook of $200,000 as well as eligibility for an annual bonus targeted at 30% of his base salary.
On December 15, 2021, Dr. Cook’s annual base salary was increased to $220,000. The annual bonus is payable in a combination of cash
and equity as determined at the sole discretion of the Compensation Committee of the Board. Dr. Cook is entitled to participate in certain
of the Company’s benefit plans available to other executives and Dr. Cook was provided with a $30,000 relocation allowance to move
to Massachusetts in 2021.
Under the Cook Agreement, Dr. Cook is entitled
to receive certain benefits upon termination of employment under certain circumstances. If the Company terminates Dr. Cook’s employment
for any reason other than “Cause” (as such term is defined in the Cook Agreement), Dr. Cook will receive cash severance equal
to six months base salary plus a pro-rata portion of the target annual bonus in addition to any unpaid salary, bonus, and unused vacation
time not already paid.
In connection with his appointment as Chief Technology
Officer in July 2021, following the effective date of the 2021 Stock Plan, Dr. Cook was issued stock options to purchase 75,000 shares
of common stock on July 7, 2021 at an exercise price of $3.50. These stock options vest as follows: (i) 41,668 vest immediately upon grant,
and (ii) 8,333 each will vest over upon achievement of four performance milestones (total of 33,332).
Outstanding Equity Awards at 2022 Fiscal Year
End
The following table shows certain information
regarding outstanding equity awards held by our NEOs as of December 31, 2022.
| |
Option Awards | | |
|
| |
Number of | | |
Number of | | |
| | |
|
| |
Securities | | |
Securities | | |
| | |
|
| |
Underlying | | |
Underlying | | |
| | |
|
| |
Unexercised | | |
Unexercised | | |
Option | | |
Option |
| |
Options | | |
Options | | |
Exercise | | |
Expiration |
Name | |
(#) Exercisable | | |
(#) Unexercisable | | |
Price ($) | | |
Date |
Neil Dey(1) | |
| - | | |
| 14,116 | | |
$ | 1.09 | | |
2/25/32 |
Kenneth Fisher (2) | |
| 5,000 | | |
| 60,000 | | |
$ | 1.31 | | |
3/25/32 |
Jason Cook (3) | |
| 41,668 | | |
| 33,332 | | |
$ | 3.50 | | |
7/7/31 |
Jason Cook (4) | |
| - | | |
| 5,324 | | |
$ | 1.09 | | |
2/25/32 |
(1) |
On February 25, 2022, Mr. Dey was issued stock options to purchase 14,116 shares of common stock at an exercise price of $1.09 that vest ratably over three years. As of December 31, 2022, none of the options were vested. |
|
|
(1) |
On March 25, 2022, Mr. Fisher was issued stock options per his
employee agreement to purchase 65,000 shares of common stock at an exercise price of $1.31. Of those options 5,000 vested
immediately and the remainder vest ratably over three years. As of December 31, 2022, 5,000 of the options were vested. |
|
|
(3) |
On July 7, 2021, Dr. Cook was issued stock options to purchase 75,000 shares of common stock at an exercise price of $3.50. Of those options 41,668 vested immediately upon grant while the remainder vest upon achievement of certain product development milestones. As of December 31, 2022, 41,668 of the options were vested. |
|
|
(4) |
On February 25, 2022, Dr. Cook was issued stock options to purchase 5,324 shares of common stock at an exercise price of $1.09 that rest ratably over three years. As of December 31, 2022, none of the options were vested. |
Retirement Benefits
We have established a 401(k) tax-deferred savings
plan in 2022, which permits participants, including our NEOs, to make contributions by salary deduction pursuant to Section 401(k) of
the Internal Revenue Code. We are responsible for administrative costs of the 401(k) plan. We may, in our discretion, make matching contributions
to the 401(k) plan. We contributed $14,755 in matching contributions to the 401(k) Plan for NEOs for the year ended December 31, 2022.
Employee, Officer and Director Hedging
Our insider trading policy generally prohibits
our directors, officers and employees from:
| ● | engaging
in short sales of our securities; |
| ● | engaging
in hedging transactions, including, but not limited to, zero-cost collars, forward sale contracts
and many others, which involve the establishment of a short position in our securities and
limit or eliminate a director, officer or employee’s ability to profit from an increase
in the value of our securities; |
| ● | engaging
in transactions in publicly traded options on our securities, such as puts, calls and other
derivative securities, on an exchange or in any other organized market; and |
| ● | holding
securities in a margin account or pledging our securities as collateral for a loan. |
Director
Compensation
Pursuant to our Non-Employee Director Compensation
Policy, each member serving on our Board who was not our employee was eligible to compensation for his or her services as follows for
2022:
|
● |
Audit Committee member: $7,500; |
|
● |
Audit Committee chair: $20,000; |
|
● |
Compensation Committee member: $7,500; |
|
● |
Compensation Committee chair: $20,000; |
|
● |
Nominating and Corporate Governance Committee member: $7,500; and |
|
● |
Nominating and Corporate Governance Committee chair: $20,000 |
The following table shows for the fiscal year
ended December 31, 2022 certain information with respect to the compensation of our non-employee directors.
| |
Fees Earned | | |
Option Awards | | |
Other Compensation | | |
Total | |
Name | |
($) | | |
($)(1) | | |
($) | | |
($) | |
Douglas Wurth | |
| 97,500 | | |
| 56,700 | (2) | |
| - | | |
| 154,200 | |
Donald Chase | |
| 85,000 | | |
| 56,700 | (3) | |
| - | | |
| 141,700 | |
Fred Zeidman | |
| 70,000 | | |
| 35,000 | (4) | |
| - | | |
| 105,000 | |
Svetlana Dey | |
| 50,000 | | |
| 56,700 | (5) | |
| - | | |
| 106,700 | |
Gary Gemignani | |
| 77,500 | | |
| 2,450 | (6) | |
| - | | |
| 79,950 | |
(1) |
The amounts in this column represent the aggregate grant date fair value of option awards granted to each NEO, computed in accordance with FASB ASC Topic 718, as further described in Note 9 of the notes to our Consolidated Financial Statements included our Annual Report, which contains a discussion of all assumptions made by us in determining the grant date fair value of our equity awards. |
|
|
(2) |
Mr. Wurth received stock options to purchase 25,000 shares of common stock on January 10, 2022, with an exercise price of $2.79 that vest over approximately 11 months. Mr. Wurth received an additional stock option grant to purchase 2,500 shares of common stock on March 22, 2022, with an exercise price of $1.26 that vest over approximately 9 months. As of December 31, 2022, Mr. Chase held options to purchase an aggregate of 90,444 shares of common stock, of which 84,543 options were vested. |
|
|
(3) |
Mr. Chase received stock options to purchase 25,000 shares of common stock on January 10, 2022, with an exercise price of $2.79 that vest over approximately 11 months. Mr. Chase received an additional stock option grant to purchase 2,500 shares of common stock on March 22, 2022, with an exercise price of $1.26 that vest over approximately 9 months. As of December 31, 2022, Mr. Chase held options to purchase an aggregate of 184,860 shares of common stock, of which 155,355 options were vested. |
|
|
(4) |
Mr. Zeidman received stock options to purchase 15,000 shares of common stock on January 10, 2022, with an exercise price of $2.79 that vest over approximately 11 months. Mr. Zeidman received an additional stock option grant to purchase 2,500 shares of common stock on March 22, 2022, with an exercise price of $1.26 that vest over approximately 9 months. As of December 31, 2022, Mr. Zeidman held options to purchase an aggregate of 27,500 shares of common stock, of which all options were vested. |
(5) |
Mrs. Dey received stock options to purchase 25,000 shares of common stock on January 10, 2022, with an exercise price of $2.79 that vest over approximately 11 months. Mrs. Dey received an additional stock option grant to purchase 2,500 shares of common stock on March 22, 2022, with an exercise price of $1.26 that vest over approximately 9 months. As of December 31, 2022, Mrs. Dey held options to purchase an aggregate of 27,500 shares of common stock, of which all options were vested. |
|
|
(6) |
Mr. Gemignani received stock options to purchase 2,500 shares of common stock with exercise price of $1.26 that vest over approximately 9 months. As of December 31, 2022, Mr. Gemignani held options to purchase an aggregate of 27,500 shares of common stock, of which all options were vested. |
Securities Authorized for Issuance under Equity
Compensation Plans
The following table sets forth information regarding
our equity compensation plans at December 31, 2022:
Plan category |
|
Number of
securities to
be issued
upon exercise
of outstanding
options,
warrants and
rights
(a) (3) |
|
|
Weighted-average
exercise price of
outstanding
options, warrants
and rights
(b) |
|
|
Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
(c) |
|
Equity compensation plans approved by security holders (1) |
|
|
589,786 |
|
|
|
1.86 |
|
|
|
1,943,269 |
|
Equity compensation plans not approved by security holders (2) |
|
|
3,371,282 |
|
|
|
6.16 |
|
|
|
- |
|
(1) |
Represents shares of common stock issuable upon exercise of outstanding stock options under our current 2018 and 2021 Stock Plans. |
(2) |
Consists of warrants issued to consultants for services and placement agent and underwriter warrants. |
|
|
(3) |
Does not include outstanding unvested restricted stock awards. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
RELATED PARTY TRANSACTIONS
LMBRI Expense Sharing Agreement
We are a party to an expense sharing agreement with
Lana Management and Business Research International, LLC (“LMBRI”), an entity owned and controlled by Mr. Dey and Ms. Dey,
pursuant to which we reimburse LMBRI monthly for certain shared expenses, including insurance, rent, salaries, telephone, and other miscellaneous
expenses. We are billed up to $4,000 monthly for these expenses through December 31, 2021. On January 1, 2022, the Company moved into
its own leased facility and no longer shared expenses with LMBRI.
The table below summarizes the amounts
incurred, paid, and balances due to LMBRI under this agreement as of and for year’s ended December 31, 2022 and 2021.
|
|
2022 |
|
|
2021 |
|
Expenses from LMBRI |
|
$ |
- |
|
|
$ |
48,000 |
|
Payments to LMBRI |
|
$ |
2,000 |
|
|
$ |
171,102 |
|
Amounts payable to LMBRI |
|
$ |
- |
|
|
$ |
2,000 |
|
NanoHybrids, LLC
In December 2021, we entered into an
agreement with NanoHybrids, LLC (“NanoHybrids”) to utilize our research and development staff and laboratory facility when
available to perform work for NanoHybrids. Any hours worked by our employees for NanoHybrids is billed to NanoHybrids at a bill rate of
the respective employee’s fully burdened personnel cost plus 10%. NanoHybrids is wholly owned by our Chief Technology Officer. The
table below summarizes the amounts earned and due from NanoHybrids as of and for the year’s ended December 31, 2022 and 2021:
| |
2022 | | |
2021 | |
Income from NanoHybrids included in Other Income | |
$ | 163,256 | | |
$ | - | |
Cash receipts from NanoHybrids | |
$ | 143,526 | | |
$ | - | |
Amounts receivable from NanoHybrids included in Prepaids and Other Current Assets | |
$ | 19,731 | | |
$ | - | |
Policies and Procedures for Related Party Transactions
Our Audit Committee Charter provides that our
Audit Committee is responsible for reviewing and approving in advance any related party transaction. This will cover, with certain exceptions
set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar
transactions, arrangements or relationships in which we were or will be a participant to, where the amount involved exceeds the lesser
of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and a related person
had or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the
related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment
by us of a related person. In determining whether to approve a proposed transaction, our Audit Committee will consider all relevant
facts and circumstances including: (i) the materiality and character of the related party’s direct or indirect interest; (ii) the
commercial reasonableness of the terms; (iii) the benefit or perceived benefit, or lack thereof, to us; (iv) the opportunity cost of alternate
transactions; and (v) the actual or apparent conflict of interest of the related party.
Director Independence
The rules of the Nasdaq Stock Market, or the Nasdaq
Rules, require a majority of a listed company’s board of directors to be composed of independent directors. In addition, the Nasdaq
Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and governance
committees be independent. Under the Nasdaq Rules, a director will only qualify as an independent director if, in the opinion of our Board,
that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director. The Nasdaq Rules also require that Audit Committee members satisfy independence criteria set forth in Rule 10A-3 under
the Securities Exchange Act of 1934, as amended, or the Exchange Act. In order to be considered independent for purposes of Rule 10A-3,
a member of an Audit Committee of a listed company may not, other than in his or her capacity as a member of the Audit Committee, the
board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee
from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries.
In considering the independence of Compensation Committee members, the Nasdaq Rules require that our Board must consider additional factors
relevant to the duties of a Compensation Committee member, including the source of any compensation we pay to the director and any affiliations
with our company.
Our Board undertook a review of the composition
of our Board and its committees and the independence of each director. Based upon information requested from and provided by each director
concerning his background, employment and affiliations, including family relationships, our Board has determined that Messrs. Wurth, Chase,
Zeidman, and Gemignani are independent as defined under the Nasdaq Rules.