Interests of Directors and Executive Officers
Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership of shares of our Common Stock.
Reservation of Right to Abandon Reverse Stock Split
We reserve the right to not file the Certificate of Amendment and to abandon any reverse stock split without further action by our stockholders at any time before the effectiveness of the filing with the Secretary of the State of Delaware of the Certificate of Amendment, even if the authority to effect these amendments is approved by our stockholders at the annual meeting. By voting in favor of a reverse stock split, you are expressly also authorizing the Board of Directors to delay, not proceed with, and abandon, these proposed amendments if it should so decide, in its sole discretion, that such action is in the best interests of our stockholders.
Vote Required
The affirmative vote of the majority of the outstanding shares of Common Stock entitled to vote on such matter is required for the approval of the Certificate of Amendment to our Restated Certificate of Incorporation to effect the Reverse Stock Split of our Common Stock.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE CERTIFICATE OF AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION TO EFFECT THEA REVERSE STOCK SPLIT OF OUR COMMON STOCK. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” THE APPROVAL OF THE CERTIFICATE OF AMENDMENTPROPOSAL NO. 2 UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.
PROPOSAL 3
APPROVAL OF AN AMENDMENT OF OUR RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO 150,000,000
Our Restated Certificate of Incorporation currently authorizes the issuance of 50,000,000 shares of Common Stock, par value $0.01 per share. On March 14, 2024, our Board of Directors approved a proposal to amend our Restated Certificate of Incorporation to increase the number of shares of Common Stock that we are authorized to issue from 50,000,000 shares to 150,000,000 shares, subject to stockholder approval.
Our Board of Directors believes the proposed amendment to be advisable and in the best interests of the Company and our stockholders and is accordingly submitting the proposed amendment to be voted on by the stockholders in order to give the Company more flexibility in considering the planning for and responding quickly to future corporate needs, including, but not limited to, capital raising transactions, grants under equity compensation plans, stock splits, potential strategic transactions, including mergers, acquisitions, stock dividends and other general corporate transactions. If the authorization of an increase in the available Common Stock is not approved, the delay and expense incident to obtaining future approval of stockholders could impair our ability to address those corporate needs.
As of March 15, 2024, of the 50,000,000 currently authorized shares of Common Stock, 26,256,197 were issued and outstanding. Additionally, 23,345,827 shares were reserved for issuance under our 2014 Equity Incentive Plan, our Employee Stock Purchase Plan and pursuant to the conversion of shares underlying preferred stock and the exercise of outstanding warrants.
Based on these issued and reserved shares of Common Stock, we currently have 397,976 shares of Common Stock remaining available for issuance in the future for other corporate purposes.
Text of the Amendment
Our Board of Directors proposes to amend subsection (A) of Article IV of our Restated Certificate of Incorporation so that it would read in its entirety as follows:
“The total number of shares of all classes of stock which the Corporation shall have authority to issue is 160,000,000, consisting of 150,000,000 shares of Common Stock, par value $0.01 per share (the “Common Stock”), and 10,000,000 shares of Preferred Stock, par value $0.01 per share (the “Preferred Stock”).”
The Certificate of Amendment attached hereto as Appendix C reflects the changes that will be implemented to our Restated Certificate of Incorporation if this Proposal No. 3 is approved by the stockholders.
Purpose of the Amendment
Our Board of Directors is recommending this increase in the authorized Common Stock primarily to have additional shares available for use as our Board of Directors deems appropriate or necessary. As such, the primary purpose of the proposed amendment is to provide us with greater flexibility with respect to managing our Common Stock in connection with such corporate purposes as may, from time to time, be considered advisable by our Board of Directors.
As further described in Proposal 6, on January 31, 2024, we entered into a securities purchase agreement with institutional investors, pursuant to which we sold to the investors (i) 15,800,000 shares Common Stock (ii) pre-funded Common Stock purchase warrants to purchase an aggregate of up to 11,354,237 shares of Common Stock at an exercise price of $0.0001 per share, (iii) Tranche A Common Stock purchase warrants to purchase up to 24,687,295 shares of Common Stock at an exercise price of $0.6076 per share (“the Tranche A Warrants”), and (iv) Tranche B Common Stock purchase warrants to purchase up to 24,687,295 shares of Common Stock at an exercise price of $0.6076 per share (the “Tranche B Warrants”). Pursuant to the securities purchase agreement, we agreed to seek shareholder approval to allow the issuance of the shares of Common Stock underlying the Tranche A Warrants and the Tranche B Warrants, as contemplated by Proposal No. 4, and to
increase the number of authorized shares of Common Stock sufficient for the issuance of the shares of Common Stock underlying the Tranche A Warrants and the Tranche B Warrants, as contemplated by this Proposal No. 3.
The newly authorized shares of Common Stock would be issuable for any proper corporate purpose including flexibility in considering the planning for future corporate needs, including, but not limited to, capital raising transactions, grants under equity compensation plans, stock splits, potential strategic transactions, including mergers, acquisitions, stock dividends and other general corporate transactions.
Our Board of Directors has determined that having an increased number of authorized but unissued shares of Common Stock would allow us to take prompt action with respect to corporate opportunities that develop, without the delay and expense of convening a special meeting of stockholders for the purpose of approving an increase in our capitalization.
Rights of Additional Authorized Shares
Any authorized shares of Common Stock, if and when issued, would be part of the Company’s existing class of Common Stock and would have the same rights and privileges as the shares of Common Stock currently outstanding. Current stockholders do not have pre-emptive rights with respect to Common Stock, nor do they have cumulative voting rights. Should the Board of Directors issue additional shares of Common Stock, existing Stockholders would not have any preferential rights to purchase any of such shares, and their percentage ownership of the Company’s then outstanding Common Stock could be reduced.
Potential Adverse Effects of Amendment
Future issuances of Common Stock could have a dilutive effect on the Company’s earnings per share, book value per share and the voting power and interest of current Stockholders. In addition, the availability of additional shares of Common Stock for issuance could, under certain circumstances, discourage or make more difficult any efforts to obtain control of the Company.
Effectiveness of Amendment
If the proposed amendment is adopted, it will become effective upon the filing of a certificate of amendment to our Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, which the Company expects to file promptly after the Annual Meeting. If the proposed amendment is not approved by the Company’s Stockholders, the number of authorized shares of Common Stock will remain unchanged.
Vote Required
The affirmative vote of the majority of the outstanding shares of Common Stock entitled to vote on such amendment is required for the approval of the proposed amendment to our Restated Certificate of Incorporation.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE PROPOSED AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO 150,000,000. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” THE APPROVAL OF PROPOSAL NO. 3 UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.
PROPOSAL 4
APPROVAL OF
CONTENTSAN AMENDMENT OF OUR RESTATED CERTIFICATE OF INCORPORATION TO ADJUST VOTING REQUIREMENTS FOR CERTAIN FUTURE AMENDMENTS On March 14, 2024, our Board of Directors approved a proposal, subject to stockholder approval, to amend our Restated Certificate of Incorporation to adjust the voting requirements for certain future amendments relating to (i) reverse stock splits, and (ii) increases or decreases to the authorized shares of common stock, in each case to reflect recent adoption of Section 242(d)(2) of the Delaware General Corporation Law (the “DGCL”).
Our Board of Directors believes the proposed amendment to be advisable and in the best interests of the Company and our stockholders and is accordingly submitting the proposed amendment to be voted on by the stockholders in order to align the voting thresholds for the matters described above with Section 242(d)(2) of the DGCL and to reduce the potential expense and time required to implement reverse stock splits and increases or decreases in authorized shares to the extent required in the future.
Text of the Amendment
Our Board of Directors proposes to amend Article IX of our Restated Certificate of Incorporation to add the following sentence at the end of such Article:
“Notwithstanding the foregoing sentence and any other provisions to the contrary contained in this Restated Certificate of Incorporation or the Bylaws, any amendment to this Certificate of Incorporation that relates to the matters set forth in Section 242(d)(2) of the GCL shall, so long as the conditions of Section 242(d)(2)(A) are satisfied, only require the vote of stockholders as set forth in Section 242(d)(2) of the GCL.”
The Certificate of Amendment attached hereto as Appendix D reflects the changes that will be implemented to our Restated Certificate of Incorporation if this Proposal No. 4 is approved by the stockholders.
Purpose of the Amendment
Our Board of Directors is recommending this amendment to the voting thresholds required for reverse stock splits and increases or decreases in our authorized shares of stock in order to reduce the potential expense and time required to obtain stockholder approval for such amendments if they are required in the future. Currently, our Restated Certificate of Incorporation requires the affirmative vote of the majority of the outstanding shares of Common Stock for these amendments. Consequently, these amendments currently require a significantly higher voting threshold than most other proposals, which generally require the affirmative vote of a majority of the voting power of the outstanding voting stock present in person or represented by proxy and entitled to vote on the proposal. The higher voting thresholds for reverse stock splits and increases or decreases to authorized shares of stock may require us to engage proxy solicitors to help solicit the requisite votes or, in the event that we are not able to reach the required thresholds, could result in such proposals either not receiving shareholder approval or requiring the adjournment of the meeting for further solicitation. In the future we may need to implement reverse stock splits, such as the reverse stock split contemplated by Proposal No. 2, in order to comply with Nasdaq continued listing requirements. Our ability to conduct equity offerings, to offer equity incentives to our directors, officers and employees, and to engage in strategic transactions may also require us to increase our authorized shares of stock. By adjusting the voting thresholds for reverse stock splits and increases or decreases in authorized shares of stock, our charter will be aligned with Section 242(d) of the DGCL and may allow us to reduce the time and cost of obtaining stockholder approval for any such amendments to the extent they are required in the future.
Effects of the Amendment
If the proposed Amendment is approved, our Restated Certificate of Incorporation will, consistent with Section 242(d)(2) of the DGCL: (i) allow reverse stock splits to be approved by the affirmative vote of a majority of the votes cast that are entitled to vote thereon, and (ii) allow approval of an increase or decrease in the number of authorized shares by the affirmative vote of a majority of the votes cast that are entitled to vote thereon, as well as the affirmative vote of a majority of votes cast of the class of stock that is being increased or decreased.The reduced voting thresholds permitted by Section 242(d)(2) of the DGCL will only apply to the extent the applicable class of stock is listed on a national securities exchange immediately before the charter amendment’s effective date and the Company will meet exchange listing requirements regarding the minimum number of shareholders immediately after the amendment’s effective date.
If the proposed amendment is not approved by the Company’s Stockholders, amendments to our Restated Certificate of Incorporation to effect reverse stock splits or increases or decreases to authorized shares of stock will continue to require the affirmative vote of a majority of the outstanding shares of Common Stock entitled to vote thereon.
Effectiveness of Amendment
If the proposed amendment is adopted, it will become effective upon the filing of a certificate of amendment to our Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, which we expect to file promptly after the Annual Meeting.
Vote Required
The affirmative vote of two-thirds of the outstanding shares of Common Stock entitled to vote on such amendment is required for the approval of the proposed amendment to our Restated Certificate of Incorporation.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE PROPOSED AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION TO ADJUST VOTING REQUIREMENTS FOR CERTAIN FUTURE AMENDMENTS. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” THE APPROVAL OF PROPOSAL NO. 4 UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.
PROPOSAL 5
APPROVAL OF THE KIORA PHARMACEUTICALS, INC. 2024 EQUITY INCENTIVE PLAN
Overview
We are proposing that our stockholders approve the Kiora Pharmaceuticals, Inc. 2024 Equity Incentive Plan, which we refer to as the 2024 Plan. Our board of directors believes that our continued growth and success depends, in large part, on our ability to maintain a competitive position by attracting, retaining and motivating key employees with experience and ability, which is vital to our future success, and to align our employees’ compensation with building shareholder value. Our 2024 Plan is an integral part of this strategy. The 2024 Plan is designed to attract, motivate and retain employees, directors and consultants of the Company and to further the growth and financial success of the Company by aligning the interests of such persons through ownership with the interests of our stockholders.
Our 2014 Equity Incentive Plan, as amended, which we refer to as the 2014 Plan, was originally adopted by our board of directors on April 24, 2014 and has a ten year term that expires on April 24, 2024. The adoption of the 2024 Plan is necessary not only to retain current employees but also to attract new talent as we grow, and the approval of the 2024 Plan is therefore critical to our long-term success.
On March 14, 2024, the board of directors approved the 2024 Plan, subject to stockholder approval.
The 2024 Plan includes an “evergreen” provision. Under the evergreen provision, the maximum number of shares of stock available for grant and issuance under the 2024 Plan will increase on January 1 of each year during the term of the plan by a number of shares of common stock equal to the lesser of (i) 4% of the shares of common stock outstanding on December 31 of the prior year, or (ii) the number of shares determined by our board of directors.
Our board of directors believes that the adoption of the 2024 Plan is in the best interests of, and will provide long-term advantages to, us and our stockholders and recommends the approval by our stockholders of the 2024 Plan. Stock options and other stock-based incentive awards are given to the employees, officers, directors and consultants of our Company upon whose judgment, initiative and efforts we largely depend for the successful conduct of our business. These incentives provide our employees with a proprietary interest in our Company, thereby stimulating their commitment on our behalf and strengthening their desire to remain with us. Our board of directors anticipates that this direct stake in the future success of our Company also assures a closer alignment of the interests of employees with those of our stockholders.
If we cannot adopt a new equity incentive plan to replace the 2014 Plan, it could have a negative impact on our ability to retain and attract key employees. Accordingly, we are seeking stockholder approval of the 2024 Plan. In the event that the 2024 Plan is not approved by stockholders, we will not be able to grant any new awards under the 2014 plan after it terminates.
2024 Equity Incentive Plan Highlights
Some of the key features of the 2024 Plan that reflect our commitment to effective management of incentive compensation are as follows:
• No Liberal Share Recycling. The 2024 Plan provides that only shares covering awards that are canceled, forfeited or terminated without issuance of the full number of shares of Common Stock to which the award is related will again be available for issuance under the 2024 Plan. The following shares will not be added back to the aggregate plan limit: (i) shares subject to an award not delivered to a participant because the award is exercised through a reduction of shares subject to the award, (ii) if a stock appreciate right is settled in shares, the number of shares subject to the stock appreciate right that are not delivered to the participant upon such settlement, (iii) shares subject to an award not delivered to a participant because such shares are withheld to satisfy tax withholding obligations related to the award or are applied to pay the
exercise price of an option or stock appreciate right, (iv) shares tendered by a participant to pay the exercise price of an option or stock appreciate right, or (v) shares reacquired by us on the open market or otherwise using cash proceeds from the exercise of an option.
• No Repricing or Cash Buyouts. Stock option and stock appreciation right repricing (including reducing the exercise price of stock options or replacing an award with cash or another award type) is prohibited without stockholder approval under the 2024 Plan.
• No Dividends on Unvested Restricted Shares or Restricted Stock Units. Under the 2024Plan, holders of unvested restricted stock or restricted stock units will not have any rights to receive dividends with respect to those awards.
• Minimum Vesting Period. Generally, all awards will have a minimum vesting period of at least one year, subject to an exception of 5% of the aggregate shares authorized for grant under the 2024 Plan and certain other limited exceptions as described below and in the 2024 Plan.
• Awards Subject to Forfeiture or Clawback. Awards under the 2024 Plan will be subject to clawback pursuant to the terms of our Clawback Policy.
• No Automatic “Single Trigger” Vesting. The 2024 Plan does not contain an automatic single-trigger vesting provision that would accelerate awards solely upon a change in control.
Overhang
As of March 15, 2024, outstanding awards under 2014 Plan covered 1,020,358 shares, which represented approximately 4% of our outstanding shares of common stock as of that date. If the 2024 Plan is approved, the 5,000,000 newly authorized shares requested would represent, as of March 15, 2024, 19% of our outstanding shares of common stock, 13% of our outstanding shares of common stock plus shares of common stock underlying pre-funded warrants, and 5% of our fully diluted common stock, assuming the exercise of all outstanding warrants and stock options and the conversion of all outstanding shares of preferred stock.
Overhang is calculated as the total of (a) shares underlying outstanding awards plus shares of common stock available for issuance under future equity awards, divided by (b) the total shares of common stock outstanding plus shares underlying outstanding awards plus shares available for issuance under future equity awards. The number of shares available for issuance under future equity awards excludes the 492,254 shares available for grant under the 2014 Plan because, upon approval of the 2024 Equity Incentive Plan, no further shares will be granted as awards under the 2014 Plan and the remaining shares reserved under the 2014 Plan will be cancelled.
No further shares will be granted as awards under the 2014 Plan after April 24, 2024. The following table includes information regarding outstanding equity awards and shares available for future awards under the 2014 Plan as of March 15, 2024.
| | | | | |
Total shares of common stock available for grant under the 2014 Plan | 492,254 | |
Total number of outstanding options | 803,570 | |
Weighted average exercise price of outstanding options | $ | 3.97 | |
Weighted average remaining term of outstanding options (years) | 9.33 | |
Total shares underlying outstanding unvested restricted stock and RSUs | 216,788 | |
Total shares of common stock outstanding | 26,256,197 | |
Based solely on the closing price of our common stock as reported on The Nasdaq Capital Market on March 14, 2024, the maximum aggregate market value of the 5,000,000 shares that could potentially be issued under the 2024 Plan is approximately $3.12 million. The shares available for issuance by us under the 2024 Plan will be authorized but unissued shares.
The following description of certain features of the 2024 Plan, is intended to be a summary only. The summary is qualified in its entirety by the full text of the 2024 Plan that is attached hereto as Appendix A.
Summary of the 2024 Plan
The 2024 Plan will be administered by our compensation committee.
Share Reserve. The number of shares available for future awards under the 2024 Plan as of the date of the Annual Meeting will be the sum of (1) 5,000,000, and (2) any shares subject to outstanding awards under the 2014 Plan that are terminated, canceled, surrendered or forfeited. The number of shares reserved for issuance under the 2024 Plan will be increased automatically on January 1 of each year during the term of the plan by a number equal to the smallest of:
•4% of the shares of common stock outstanding on December 31 of the prior year; or
•the number of shares determined by our board of directors.
In general, if awards under the 2024 Plan are forfeited, terminate, or expire for any reason before being exercised or settled in full, then such shares will again become available for awards. If restricted shares or shares issued upon exercise of options are reacquired by us pursuant to a forfeiture provision or, subject to the limitations on repricings in the 2024 Plan, a repurchase right at no greater than their original exercise or purchase price (if any), then such shares shall again become available for issuance under the 2024 Plan. Further, to the extent an award is settled in cash rather than shares, the cash settlement shall not reduce the number of shares available for issuance under the 2024 Plan.
Notwithstanding the foregoing, the following shares shall not again become available for issuance under the 2024 Plan: (i) shares subject to an award not delivered to a participant because the award is exercised through a reduction of shares subject to the award, (ii) if a SAR is settled in shares, the number of shares subject to the SAR that are not delivered to the participant upon such settlement, (iii) shares subject to an award not delivered to a participant because such shares are withheld to satisfy tax withholding obligations related to the award or are applied to pay the exercise price of an option or SAR, (iv) shares tendered by a participant to pay the exercise price of an option or SAR, or (v) shares reacquired by us on the open market or otherwise using cash proceeds from the exercise of an option.
In addition, the number of shares that we may issue under the 2024 Plan will not be reduced by the number of shares subject to any awards we grant in substitution or assumption of any outstanding awards that were previously issued by a corporation acquired by us, provided that shares subject to any award that is assumed or substituted by us will not again become available for grant to the extent the assumed or substituted award is later forfeited, expired or settled in cash.
Administration. Our compensation committee will administer the 2024 Plan. The committee will have complete discretion to make all decisions relating to the 2024 Plan and outstanding awards, including interpreting the 2024 Plan and modifying outstanding awards.
Eligibility. Employees, non-employee directors and consultants who provide services to us or our subsidiaries will be eligible to participate in our 2024 Plan.
Types of Award. Our 2024 Plan provides for the following types of awards:
•incentive and nonstatutory stock options;
•stock appreciation rights;
•restricted stock awards;
•restricted stock units;
•performance cash awards; and
•other awards.
Incentive Stock Option Limit. No more than 5,000,000 shares of our common stock may be issued under the 2024 Plan upon the exercise of incentive stock options.
Performance Cash Award Limit: No participant shall be paid more than $6,000,000 in cash in any fiscal year pursuant to performance cash awards.
No Repricings.Other than in connection with certain corporate transactions, including stock splits, stock dividends, mergers, spin-offs and certain other similar transactions, unless stockholder approval is obtained, neither the compensation committee nor any other person may decrease the exercise price for any outstanding option or stock appreciation right after the date of grant nor cancel or allow an optionee to surrender an outstanding option or stock appreciation right to us as consideration for the grant of a new option or stock appreciation right with a lower exercise price or the grant of another type of award the effect of which is to reduce the exercise price of any outstanding option or stock appreciation right or take any other action with respect to an option or stock appreciation right that would be treated as a repricing under the rules and regulations of Nasdaq.
Minimum Vesting Requirements. No award will be granted with a lapse of any vesting obligations earlier than at least one year following the date of grant. Notwithstanding the foregoing, the compensation committee may grant up to a maximum of five percent of the aggregate number of shares available for issuance under the 2024 Plan (subject to certain equitable adjustments), without regard to the minimum vesting requirement, and the minimum vesting requirement does not apply to (i) any substitute awards (as defined in the 2024 Plan), (ii) awards to directors that vest on the earlier of the one year anniversary of the date of grant or the next annual meeting of stockholders which is at least 50 weeks after the immediately preceding year’s annual meeting, and (iii) the compensation committee’s discretion to provide for accelerated exercisability or vesting of any award, including in cases of retirement, death, disability or a change-in-control, in the terms of the award or otherwise.
Clawback and Recoupment. Awards under the 2024 Plan will be subject to recovery or “clawback” by the Company in accordance with our Clawback Policy.
Options and Stock Appreciation Rights. The exercise price for options granted under the 2024 Plan may not be less than 100% of the fair market value of our common stock on the grant date.
Optionees may pay the exercise price in cash or, with the consent of the compensation committee and as set forth in the applicable agreement:
•with shares of common stock that are already owned;
•by an immediate sale of the shares acquired through a broker approved by us;
•through a net exercise procedure; or
•by other methods permitted by applicable law.
A participant who exercises a stock appreciation right receives the increase in value of our common stock over the base price. The base price for stock appreciation rights may not be less than 100% of the fair market value of our common stock on the grant date. The settlement value of a stock appreciation right may be paid in cash or shares of common stock or a combination of both.
Options and stock appreciation rights vest at the time or times determined by the compensation committee. Options and stock appreciation rights also expire at the time determined by the compensation committee but in no event more than 10 years after they are granted. These awards generally expire earlier if the participant’s service terminates earlier. No participant may be granted stock options and stock appreciation rights covering more than shares during any single fiscal year, other than to a new employee in the fiscal year in which service commences.
Restricted Shares. Restricted shares may be granted under the 2024 Plan in consideration for (a) cash, (b) property, (c) past or future services rendered to us or our affiliates, (d) subject to the limitation on repricings in the 2024 Plan, cancellation of other equity awards, (e) promissory notes or (f) any other form of legal consideration approved by the Administrator. Restricted shares may be subject to vesting,
which is tied to service, attainment of performance goals, or a combination of both, as determined by the compensation committee. Recipients of restricted shares generally have all of the rights of a stockholder with respect to those shares, including voting rights, except that no dividends or dividend equivalents will not accrue or be paid with respect to unvested restricted shares.
Restricted Stock Units. Restricted stock units, or RSUs, may be granted under the 2024 Plan for no consideration. In general, RSUs awards will be subject to vesting, which may be tied to length of service, attainment of performance goals, or a combination of both, as determined by the compensation committee. Settlement of RSUs may be made in the form of cash, shares or a combination thereof, as determined by the compensation committee. Recipients of RSUs generally will have no voting or dividend rights prior to the time the vesting conditions are satisfied and the award is settled.
Performance Cash Awards. Performance cash awards may be granted under the 2024 Plan. Performance cash awards will be subject to the attainment of performance goals and may be subject to vesting that is tied to length of service. The compensation committee will determine the performance goals and other terms and conditions of performance cash awards.
Performance goals for the grant or vesting of awards under the 2024 Plan include earnings (before or after taxes); earnings per share; earnings before interest, taxes, depreciation and amortization; total stockholder return; stockholders equity or return on equity or average stockholders’ equity; return on assets, investment or capital employed; operating income; gross margin; operating margin; net operating income (before or after taxes); return on operating revenue; specified levels or changes in sales or revenue; expense or cost reduction; working capital; economic value added; market share; cash flow; operating cash flow; cash flow per share; share price; debt reduction; customer satisfaction; contract awards or backlog; or other objective corporate or individual strategic or individual performance goals. Additionally, the compensation committee may select other measures of performance.
Other Awards. The compensation committee may grant other awards based in whole or in part by reference to shares of our Common Stock and may grant awards under other plans and programs that will be settled with shares issued under the 2024 Plan. The compensation committee will determine the terms and conditions of any such awards.
Corporate Transactions. In the event we are a party to a merger, consolidation or a change in control transaction, outstanding awards granted under the 2024 Plan, and all shares acquired under the plan, will be subject to the terms of the definitive transaction agreement (or, if there is no such agreement, as determined by our compensation committee. Unless an award agreement provides otherwise, such treatment shall include (without limitation) any of the following with respect to each outstanding award:
•the continuation, assumption or substitution of an award by us or the surviving entity or its parent;
•the cancellation of options and stock appreciation rights without payment of any consideration;
•the cancellation of the awards in exchange for a payment equal to the product of the number of shares subject to the award multiplied by the excess, if any, of the per stock value of property that a holder of our common stock receives in the transaction over (if applicable) the exercise price of such award. Such payments may be subject to vesting based on a participant’s continued service; or
•the assignment of any repurchase, forfeiture or reacquisition rights in favor of us to the surviving entity or its parent.
The compensation committee has the discretion to provide that an award granted under the 2024 Plan will vest on an accelerated basis if a change in control of our company occurs or if the participant is subject to an involuntary termination, either at the time such award is granted or afterward.
A change in control includes:
•our merger or consolidation with or into another entity after which our stockholders own 50% or less of the voting power of the stock of the surviving entity or its parent;
•a sale or other disposition of all or substantially all of our assets; or
•an acquisition of more than 50% of our outstanding voting stock by any person or group.
The compensation committee is not required to treat all awards, or portions thereof, in the same manner.
Changes in Capitalization. In the event that there is a change in the capital structure of our common stock, such as a stock split, reverse stock split, or dividend paid in common stock, proportionate adjustments will automatically be made to the kind and maximum number of shares:
•reserved for issuance under the 2024 Plan;
•by which the share reserve may increase automatically each year;
•that may be issued upon the exercise of incentive stock options; and
•covered by each outstanding option, stock appreciation right and stock unit, the exercise price applicable to each outstanding option and stock appreciation right, and the repurchase price, if any, applicable to restricted shares.
In the event that there is a declaration of an extraordinary dividend payable in a form other than our common stock in an amount that has a material effect on the price of our common stock, a recapitalization, a spin-off or a similar occurrence, the compensation committee may make such adjustments as it deems appropriate, in its sole discretion, to one or more of the foregoing.
Amendments or Termination. Our board of directors may amend or terminate the 2024 Plan at any time and for any or no reason. If not terminated earlier by our board of directors, the 2024 Plan will automatically terminate on the 10th anniversary of the later of (i) the date our board of directors approved the 2024 Plan or (ii) the date when our board of directors approved the most recent increase in the number of shares reserved under the 2024 Plan that was also approved by our stockholders. If our board of directors amends the 2024 Plan, it does not need to ask for stockholder approval of the amendment unless applicable law so requires. The termination or amendment of the 2024 Plan will not affect any award previously granted.
Tax Aspects Under the Code
The following is a summary of the principal federal income tax consequences of certain transactions under the 2024 Plan. It does not describe all federal tax consequences under the 2024 Plan, nor does it describe state or local tax consequences.
Incentive Options. No taxable income is generally realized by the optionee upon the grant or exercise of an incentive option. If shares issued to an optionee pursuant to the exercise of an incentive option are sold or transferred after two years from the date of grant and after one year from the date of exercise, then (1) upon sale of such shares, any amount realized in excess of the option price (the amount paid for the shares) will be taxed to the optionee as a long-term capital gain, and any loss sustained will be a long-term capital loss, and (2) there will be no deduction for us for federal income tax purposes. The exercise of an incentive option will give rise to an item of tax preference that may result in alternative minimum tax liability for the optionee.
If shares acquired upon the exercise of an incentive option are disposed of prior to the expiration of the two-year and one-year holding periods described above (a “disqualifying disposition”), the options are “nonqualified” and generally (a) the optionee will realize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares at exercise (or, if less, the amount realized on a sale of such shares) over the option price thereof, and (b) we will be entitled to deduct such amount. Special rules will apply where all or a portion of the exercise price of the incentive option is paid by tendering shares.
In addition, an incentive option will not be eligible for the tax treatment described above if it is exercised more than three months following termination of employment (or one year in the case of termination of employment by reason of disability). In the case of termination of employment by reason of death, the three-month rule does not apply.
Non-Qualified Options. No income is realized by the optionee at the time the option is granted. Generally (i) at exercise, ordinary income is realized by the optionee in an amount equal to the difference between the option price and the fair market value of the shares on the date of exercise, and we receive a tax deduction for the same amount, and (ii) at disposition, appreciation or depreciation after the date of exercise is treated as either short-term or long-term capital gain or loss depending on how long the shares have been held. Special rules will apply where all or a portion of the exercise price of the non-qualified option is paid by tendering shares. Upon exercise, the optionee will also be subject to Social Security taxes on the excess of the fair market value over the exercise price of the option.
Stock Appreciation Rights. The recipient of a grant of stock appreciation rights will not realize taxable income and we will not be entitled to a deduction with respect to such grant on the date of such grant. Upon the exercise of a stock appreciation rights, the recipient will realize ordinary income equal to the amount of cash (including the amount of any taxes withheld) and the fair market value of any shares received at the time of exercise. In general, we will be entitled to a corresponding deduction, equal to the amount of income realized, subject to the limitations of Section 162(m) of the Code for covered employees.
Restricted Stock. A participant who receives a grant of restricted stock will not recognize any taxable income at the time of the award, provided the shares are subject to restrictions (that is, they are nontransferable and subject to a substantial risk of forfeiture). A participant’s rights in restricted stock awarded under the plan are subject to a substantial risk of forfeiture if the rights to full enjoyment of the shares are conditioned, directly or indirectly, upon the future performance of substantial services by the participant. However, the participant may elect under Section 83(b) of the Code to recognize compensation income in the year of the award in an amount equal to the fair market value of the shares on the date of the award, determined without regard to the restrictions. If the participant does not make a Section 83(b) election within 30 days of receipt of the restricted shares, the fair market value of the shares on the date the restrictions lapse, less any amount paid by the participant for such shares, will be treated as compensation income to the participant and will be taxable in the year the restrictions lapse. We generally will be entitled to a compensation deduction for the amount of compensation income the participant recognizes.
Restricted Stock Units. A participant will not recognize income, and our Company is not entitled to a deduction, upon a grant of restricted stock units. Upon the delivery to a participant of Common Stock or cash in respect of restricted stock units, a participant generally recognizes ordinary compensation income equal to the fair market value of the shares as of the date of delivery or the cash amount less the purchase price (if any) paid by the participant. When the participant recognizes ordinary income, generally we will be entitled to a tax deduction in the same amount. Upon disposition of any shares acquired through a restricted stock unit award, the participant will recognize long-term or short-term capital gain or loss depending upon the sale price and holding period of the shares.
Performance Cash Awards and Other Types of Awards. With respect to performance cash awards and other awards under the 2024 Plan generally when the participant receives payment with respect to an award, the amount of cash and fair market value the stock or of any other property received will be ordinary income to the participant, and the Company generally will be entitled to a tax deduction in the same amount.
Parachute Payments. The vesting of any portion of an option or other award that is accelerated due to the occurrence of a change in control may cause a portion of the payments with respect to such accelerated awards to be treated as “parachute payments” as defined in the Code. Any such parachute payments may be non-deductible to us, in whole or in part, and may subject the recipient to a non-deductible 20% federal excise tax on all or a portion of such payment (in addition to other taxes ordinarily payable).
Limitation on the Company’s Deductions. As a result of Section 162(m) of the Code (as amended by the Tax Cuts and Jobs Act of 2017), our deduction for certain awards under the 2024 Plan may be limited to the extent that any covered employee, including the Chief Executive Officer or other executive officer whose compensation is required to be reported in the summary compensation table, receives compensation in an applicable year in excess of $1 million, including performance-based compensation.
New Plan Benefits
No grants have been issued with respect to the additional shares to be reserved for issuance under the 2024 Plan. The number of shares that may be granted to our Chief Executive Officer, executive officers, non-employee directors (other than the automatically granted awards) and non-executive officers under the 2024 Plan is not determinable at this time, as such grants are subject to the discretion of the compensation committee. Information about the non-qualified stock options automatically granted to non-employee directors can be found herein under the heading “Director Compensation.” The following table provides information with respect to the number of shares granted under the 2014 Plan for the fiscal year ended December 31, 2023 to our current executive officers, directors who are not executive officers, and employees during that period. Information about the number of shares granted to our named executive officers can be found herein under the heading “Outstanding Equity Awards at 2023 Fiscal Year End.”
| | | | | | | | |
Name and Position | | Number of Shares Underlying Awards |
Brian M. Strem, Ph.D. – President and Chief Executive Officer | | 251,000 | |
Eric J. Daniels, MD, MBA – Chief Development Officer | | 213,500 | |
Melissa Tosca – Executive Vice President of Finance | | 94,000 | |
All executive officers as a group | | 558,500 | |
All directors who are not executive officers, as a group | | 81,000 | |
Employees as a group (excluding executive officers) | | 314,700 | |
Total | | 954,200 | |
Reference is hereby made to the “Equity Compensation Plan Information” table on page 31 of this Proxy Statement which is incorporated by reference into this Proposal No. 5 and provides certain details on our current plans. Vote Required
The affirmative vote of a majority of the voting power of the outstanding voting stock present in person or represented by proxy at the Annual Meeting and entitled to vote thereon is required for the approval of the 2024 Plan.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE 2024 PLAN. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” THE APPROVAL OF THE 2024 PLAN UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.
PROPOSAL 6
APPROVAL OF THE ISSUANCE OF UP TO 49,374,590 SHARES OF COMMON STOCK UPON THE EXERCISE OF WARRANTS
General
We are asking stockholders to approve the issuance of shares of our Common Stock upon the exercise of Tranche A Warrants and Tranche B Warrants issued in a private placement completed in February 2024, as contemplated by Nasdaq Listing Rule 5635, as described in more detail below.
On January 31, 2024, we entered into a securities purchase agreement with institutional investors, pursuant to which we sold to the investors (i) 15,800,000 shares Common Stock (ii) pre-funded Common Stock purchase warrants to purchase an aggregate of up to 11,354,237 shares of Common Stock at an exercise price of $0.0001 per share, (iii) Tranche A Warrants to purchase up to 24,687,295 shares of Common Stock, and (iv) Tranche B Warrants to purchase up to 24,687,295 shares of Common Stock. Pursuant to the securities purchase agreement, we agreed to seek shareholder approval to allow the issuance of the shares of Common Stock underlying the Tranche A Warrants and the Tranche B Warrants, as contemplated by this Proposal 4, and to increase the number of authorized shares of Common Stock sufficient for the issuance of the shares of Common Stock underlying the Tranche A Warrants and the Tranche B Warrants, as contemplated by Proposal 3. The private placement was conducted to support our operations, including for clinical trials, for working capital and for other general corporate purposes.
The net proceeds to us from the private placement were approximately $13.8 million after payment of the estimated offering expenses and placement agent fees and commissions. We closed the private placement on February 5, 2024.
Description of Warrants
The Warrants will be exercisable upon (i) receipt or shareholder approval allowance their issuance as contemplated by this Proposal 6, and (ii) our filing an amendment to our restated certificate of incorporation to increase the authorized shares of Common Stock in an amount sufficient to permit the exercise in full of the Tranche A Warrants and Tranche B Warrants following stockholder approval of such increase, as contemplated in Proposal 3. We have agreed to hold a stockholder meeting to approval those proposals. In the event that we are unable to obtain stockholder approvals to permit the exercise of the Tranche A Warrants and Tranche B Warrants and to effect an increase in our authorized shares of common stock, the Tranche A Warrants and Tranche B Warrants will not be exercisable and will have no value.
The Tranche A Warrants will expire on the earlier of (i) the five year anniversary of issuance and (ii) 30 days after we announce topline data from a Phase 2 clinical trial (ABACUS-2) of KIO-301 in retinitis pigmentosa (RP) and, following such announcement, the daily volume weighted average price of our Common Stock equals or exceeds $1.1048 for 30 consecutive trading days. The Tranche B Warrants will expire on the earlier of (i) the five year anniversary of issuance and (ii) 30 days after we announce topline data from a Phase 2 clinical trial of KIO-104 for treatment in posterior non-infectious uveitis and, following such announcement, the daily volume weighted average price of our Common Stock equals or exceeds $1.3810 for 30 consecutive trading days. To the extent that the exercise of a Tranche A Warrant or Tranche B Warrant would result in the holder beneficially owning greater than 4.99% (or, at the election of the holder, greater than 9.99%) of our Common Stock immediately following such exercise, the holder will instead receive pre-funded warrants in the form appended to the Tranche A Warrants and Tranche B Warrants. At any time when a registration statement covering the issuance of the shares of common stock issuable upon exercise of the Warrants is not effective, the holder may, at its option, exercise its Warrants on a cashless basis. When exercised on a cashless basis, a portion of the Warrants is cancelled in payment of the purchase price payable in respect of the number of shares of our common stock purchasable upon such exercise.
The exercise price of common stock purchasable upon exercise of the Tranche A Warrants and Tranche B Warrants is $0.6076 per share. The exercise price and the number of shares issuable upon exercise of the Tranche A Warrants and Tranche B Warrants is subject to appropriate adjustment in the
event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications or similar events affecting our common stock. Holders of the Tranche A Warrants and Tranche B Warrants are entitled to participate in any subsequent rights offering or distribution of our assets on an as-if-exercised basis. The Tranche A Warrants and Tranche B Warrants may be transferred at the option of the holder upon surrender of the warrants with the appropriate instruments of transfer.
We do not plan on making an application to list the Tranche A Warrants and Tranche B Warrants on The Nasdaq Capital Market, any national securities exchange or other nationally recognized trading system. Our common stock underlying the Tranche A Warrants and Tranche B Warrants is listed on The Nasdaq Capital Market.
Except as otherwise provided in the Tranche A Warrants and Tranche B Warrants (such as the rights described above of a warrant holder upon our sale or grant of any rights to purchase stock, warrants or securities or other property to our stockholders on a pro rata basis) or by virtue of such holder’s ownership of shares of our Common Stock, the holders of the Tranche A Warrants and Tranche B Warrants do not have the rights or privileges of holders of our common stock, including any voting rights, until they exercise their warrants.
No fractional shares of common stock will be issued upon the exercise of the Tranche A Warrants or Tranche B Warrants. Rather, the number of shares of common stock to be issued will be rounded up to the nearest whole number, or, at our election, we may pay cash to such holder in an amount equal to the fraction of a share multiplied by the exercise price.
Purpose of Proposal No. 6
Our Common Stock is listed on The Nasdaq Capital Stock Market and trades under the ticker symbol “KPRX”. Nasdaq Listing Rule 5635(d) requires stockholder approval of transactions other than public offerings of greater than 20% of the outstanding common stock or voting power of the issuer prior to the offering. Nasdaq Listing Rule 5635(d) requires stockholder approval of transactions other than public offerings of greater than 20% of the outstanding common stock or voting power of the issuer prior to the offering for less than the applicable Minimum Price. Under Rule 5635(d), the “Minimum Price” means a price that is the lower of: (i) the closing price immediately preceding the signing of the binding agreement; or (ii) the average closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement. In order for the purchase price in the private placement to comply with the Minimum Price requirement under Nasdaq Listing Rule 5635(d), the Tranche A Warrants and Tranche B Warrants are not exercisable until shareholder approval allowing the issuance of the underlying shares of Common Stock is obtained.
Potential Consequences if Proposal No. 6 is Not Approved
The board of directors is not seeking the approval of our stockholders to authorize our entry into the securities purchase agreement, as the issuance and sale of the securities in the private placement has already occurred. The failure of our stockholders to approve this Proposal No. 6 will mean that we cannot permit exercise of the Tranche A Warrants or Tranche B Warrants. Each warrant has an exercise price of $0.6076 per share, and we would realize an aggregate of approximately $30.0 million in gross proceeds if all of the Tranche A Warrants and Tranche B Warrants are exercised. If the Tranche A Warrants and Tranche B Warrants cannot be exercised, we will not receive any such proceeds, which could adversely impact our ability to fund our operations and advance the clinical trials for our product candidates.
Potential Adverse Effects of Proposal No. 6
If this Proposal No. 6 is approved, existing stockholders will suffer dilution in their ownership interests in the future as a result of the potential issuance of shares of Common Stock upon exercise of the Tranche A Warrants and Tranche B Warrants. Assuming the full exercise of all Tranche A Warrants and Tranche B Warrants, an aggregate of 49,374,590 additional shares of Common Stock will be outstanding, and the ownership interest of our existing stockholders would be correspondingly reduced. The number of shares of Common Stock described above does not give effect to (i) the issuance of shares of Common Stock pursuant to other outstanding options and warrants or (ii) any other future
issuances of our Common Stock. The sale into the public market of these shares also could materially and adversely affect the market price of our Common Stock.
Interests of Certain Persons
Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership of shares of our Common Stock.
Vote Required
The affirmative vote of a majority of the voting power of the outstanding voting stock present in person or represented by proxy at the Annual Meeting and entitled to vote thereon is required for the approval, as contemplated by Nasdaq Listing Rule 5635, of the issuance of up to 49,374,590 shares of Common Stock upon the exercise of the Tranche A Warrants and Tranche B Warrants.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE ISSUANCE OF UP TO 49,374,590 SHARES OF COMMON STOCK UPON THE EXERCISE OF THE TRANCHE A WARRANTS AND TRANCHE B WARRANTS. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” PROPOSAL NO. 6 UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.
PROPOSAL 7
NON-BINDING ADVISORY VOTE ON THE COMPENSATION OF NAMED EXECUTIVE OFFICERS
In accordance with Section 14A of the Exchange Act, the board of directors is asking stockholders to approve an advisory (non-binding) resolution on the compensation of our named executive officers. The vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. The text of the resolution is as follows:
RESOLVED, that the stockholders of Kiora Pharmaceuticals, Inc. approve, on a non-binding, advisory basis, the compensation of the Company’s named executive officers as disclosed in the proxy statement for the Company’s 2024 annual meeting of stockholders pursuant to Item 402 of Regulation S-K, including the Summary Compensation Table and related compensation tables and narrative discussion within the “Executive Compensation” section of the Company’s proxy statement.
We have designed our compensation and benefits program and philosophy to attract, retain and incentivize talented, qualified and committed executive officers that share our philosophy and desire to work toward our goals. We believe that our executive compensation program aligns individual compensation with the short-term and long-term performance of the Company.
The vote regarding the compensation of our named executive officers described in this Proposal No. 7, referred to as a “say-on-pay vote,” is advisory, and is, therefore, not binding on the Company or the board of directors. Although non-binding, the board of directors and the compensation committee value the opinions that stockholders express in their votes and will review the voting results and take them into consideration as they deem appropriate when making future decisions regarding our executive compensation program.
Vote Required
The affirmative vote of a majority of the voting power of the outstanding voting stock present in person or represented by proxy at the Annual Meeting and entitled to vote thereon is required for the approval, on a non-binding advisory basis, of the compensation of our named executive officers as disclosed in this proxy statement.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE
NON-BINDING APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” THE APPROVAL OF PROPOSAL NO. 7 UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.
PROPOSAL 8
TO RATIFY THE APPOINTMENT OF HASKELL & WHITE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee of the board of directors has appointed Haskell & White LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024. The audit committee is responsible for the appointment, retention, termination, compensation and oversight of the work of our independent registered public accounting firm for the purpose of preparing or issuing an audit report or related work. Although ratification of the appointment of our independent registered public accounting firm is not required by our By-laws or otherwise, the board is submitting the appointment of Haskell & White LLP to our stockholders for ratification because we value the views of our stockholders. In the event that our stockholders fail to ratify the appointment of Haskell & White LLP, the audit committee will reconsider the appointment of Haskell & White LLP. Even if the appointment is ratified, the ratification is not binding and the audit committee may in its discretion select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders.
A representative of Haskell & White LLP is expected to be present telephonically at the Annual Meeting. He or she will have an opportunity to make a statement, if he or she desires to do so, and will be available to respond to appropriate questions.
Vote Required
The affirmative vote of a majority of the voting power of the outstanding voting stock present in person or represented by proxy at the Annual Meeting and entitled to vote thereon is required for the ratification of the appointment of Haskell & White LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF HASKELL & WHITE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2024. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” THE APPROVAL OF PROPOSAL NO. 8 UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.
CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
On March 24, 2023, the Audit Committee of the Company dismissed the Company’s independent registered public accounting firm, EisnerAmper LLP (“EisnerAmper”).
EisnerAmper’s audit report dated March 23, 2023 on the Company’s consolidated financial statements as of and for the years ended December 31, 2022 and 2021, did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles, other than the explanatory paragraph regarding the Company’s ability to continue as a going concern.
During the fiscal years ended December 31, 2022 and 2021 and subsequent interim periods through the date of dismissal, there have been no: (i) “disagreements” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with EisnerAmper on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of EisnerAmper, would have caused them to make reference thereto in their report on the financial statements or (ii) “reportable events” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K), except that EisnerAmper concurred with the Company’s assessment of a material weakness related to the Company’s internal controls over financial reporting.
The Company provided EisnerAmper with a copy of the disclosures required by Item 304(a) contained in our Report on Form 8-K prior to its filing with the Securities and Exchange Commission and requested that EisnerAmper furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statements made by the Company in response to Item 304(a) of Regulation S-K. A copy of that letter, dated March 30, 2023, furnished by EisnerAmper in response to that request, stating their agreement with such statements is filed as Exhibit 16.1 to our Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 30, 2023.
Effective March 24, 2023, the Audit Committee appointed Haskell & White LLP (“Haskell & White”) as the Company’s new independent registered public accounting firm. Haskell & White LLP’s engagement will be for the Company’s fiscal year ended December 31, 2023 and related interim periods.
During the years ended December 31, 2022 and 2021, and through March 24, 2023, the Company did not consult Haskell & White LLP with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, or any other matters or reportable events as defined in Item 304(a)(2)(i) and (ii) of Regulation S-K.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
Fees for professional services provided by EisnerAmper LLP, our former independent registered public accounting firm, during the fiscal years ended December 31, 2022 and December 31, 2023, in each of the following categories is as set forth in the table below.
| | | | | | | | | | | |
| 2022 | | 2023 |
Audit Fees15 | $404,419 | | $103,412 |
Audit-Related Fees16 | $— | | $— |
Tax Fees17 | $— | | $— |
All Other Fees18 | $— | | $— |
Total Fees | $404,419 | | $103,412 |
Fees for professional services provided by Haskell & White LLP, our current independent registered public accounting firm, during the fiscal years ended December 31, 2022 and December 31, 2023, in each of the following categories is as set forth in the table below.
| | | | | | | | | | | |
| 2022 | | 2023 |
Audit Fees | $— | | $208,190 |
Audit-Related Fees | $— | | $— |
Tax Fees | $— | | $— |
All Other Fees | $— | | $— |
Total Fees | $— | | $208,190 |
All of the services performed in the years ended December 31, 2022 and 2023 were pre-approved by the audit committee. It is the audit committee’s policy to pre-approve all audit and permitted non-audit services to be provided to us by the independent registered public accounting firm. The audit committee’s authority to pre-approve non-audit services may be delegated to one or more members of the audit committee, who shall present all decisions to pre-approve an activity to the full audit committee at its first meeting following such decision. In addition, the audit committee considers whether the provision of the non-audit services is compatible with maintaining the independent registered public accounting firm’s independence. For the years ended December 31, 2022 and 2023 there were no non-audit services performed by the independent registered public accounting firm.
15Audit Fees include fees for services rendered for the audit of our annual consolidated financial statements, the review of financial statements included in our quarterly reports on Form 10-Q, assistance with and review of documents filed with the Securities and Exchange Commission and consents and other services normally provided in connection with statutory and regulatory filings or engagements.
16Audit-Related Fees would principally include fees incurred for due diligence in connection with potential transactions and accounting consultations.
17Tax Fees would include fees for services rendered for tax compliance, tax advice, and tax planning. There were no tax fees incurred with EisnerAmper LLP in 2022 and 2023.
18All Other Fees would include fees for all other services rendered to us that do not constitute Audit Fees, Audit-Related Fees, or Tax Fees. There were no other fees incurred with EisnerAmper LLP in 2022 and 2023.
PROPOSAL 9
TO APPROVE THE ADJOURNMENT OF THE ANNUAL MEETING IN ORDER TO SOLICIT ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT SHARES TO BE VOTED IN FAVOR OF ANY OF THE FOREGOING PROPOSALS AT THE TIME OF THE ANNUAL MEETING
Background of and Rationale for the Adjournment Proposal
The Board believes that, if the number of affirmative votes received from the holders of our common stock are insufficient to approve any of the other Proposals being considered at the Annual Meeting, it is in the best interests of the stockholders to enable the Board to continue to seek to obtain a sufficient number of additional affirmative votes to approve that proposal.
In the Adjournment Proposal, we are asking stockholders to authorize the holder of any proxy solicited by the Board to vote in favor of adjourning the Annual Meeting or any adjournment thereof. If our stockholders approve this proposal, we could adjourn the Annual Meeting, and any adjourned session of the Annual Meeting, to use the additional time to solicit additional proxies in favor of the other applicable Proposals.
Additionally, approval of the Adjournment Proposal could mean that, in the event we receive proxies indicating that a majority of the voting power of the outstanding voting stock present in person or represented by proxy at the Annual Meeting and entitled to vote thereon have voted against any of Proposal Nos. 1-8 or abstained from voting on such proposals, we could adjourn the Annual Meeting without a vote on such proposals and use the additional time to solicit the holders of those shares to change their vote in favor of such proposals.
Vote Required
The affirmative vote of a majority of the voting power of the outstanding voting stock present in person or represented by proxy at the Annual Meeting and entitled to vote thereon is required to approve the adjournment of the Annual Meeting in order to solicit additional proxies if there are insufficient votes at the time of the Annual Meeting to approve any of the other Proposals.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ADJOURNMENT OF THE ANNUAL MEETING IN ORDER TO SOLICIT ADDITIONAL PROXIES IF THERE ARE INSUFFICIENT VOTES AT THE TIME OF THE ANNUAL MEETING TO APPROVE ANY OF THE OTHER PROPOSALS. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” PROPOSAL NO. 9 UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.
MULTIPLE STOCKHOLDERS SHARING THE SAME ADDRESS
Owners of Common Stock in street name who share an address may receive a notice from their broker or bank stating that only one notice of internet availability of proxy materials, annual report or proxy statement will be delivered to multiple stockholders sharing an address.statement. This practice, known as “householding,” is designed to reduce printing and postage costs. However, if any stockholder residing at such an address wishes to receive a separate notice of internet availability of proxy materials, annual report or proxy statement, we will promptly deliver a separate copy to any stockholder upon written or oral request to our investor relations department at EyeGateKiora Pharmaceuticals, Inc., 271 Waverley Oaks Road,332 Encinitas Boulevard, Suite 108, Waltham, MA 02452102, Encinitas, CA 92024 or by telephone at (781) 788-8869.(858) 224-9600. In addition, any stockholder who receives multiple copies at the same address can request delivery of a single copy by notifying our investor relations department pursuant to the contact information provided above.