Form SC 13D/A PSYCHEMEDICS CORP Filed by: Kamin Peter

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. 2)¹

Psychemedics Corp

(Name of Issuer)

Common Stock, par value $0.005 per share

(Title of Class of Securities)

744375205

(CUSIP Number)

PETER H. KAMIN

2720 Donald Ross Road, #311

Palm Beach Gardens, FL 33410

 

STEVE WOLOSKY, ESQ.

ANDREW FREEDMAN, ESQ.

OLSHAN FROME WOLOSKY LLP

1325 Avenue of the Americas

New York, New York 10019

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

 

September 23, 2021

(Date of Event Which Requires Filing of This Statement)

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See § 240.13d-7 for other parties to whom copies are to be sent.

 

 

1              The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

	1		NAME OF REPORTING PERSON
				PETER H. KAMIN
	2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP															(a) ☐
																		(b) ☐
	3		SEC USE ONLY
	4		SOURCE OF FUNDS
				PF
	5		CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)															☐
	6		CITIZENSHIP OR PLACE OF ORGANIZATION
				UNITED STATES OF AMERICA
NUMBER OF				7		SOLE VOTING POWER
SHARES
BENEFICIALLY							465,8001
OWNED BY				8		SHARED VOTING POWER
EACH
REPORTING							- 0 -
PERSON WITH				9		SOLE DISPOSITIVE POWER
							465,8001
				10		SHARED DISPOSITIVE POWER
							- 0 -
	11		AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
				465,8001
	12		CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES															☐
	13		PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
				8.4%
	14		TYPE OF REPORTING PERSON
				IN

  

¹ Includes 154,837 shares of Common Stock held by the Peter H. Kamin Revocable Trust dated February 2003, of which Peter H. Kamin (“Kamin”) is the sole trustee, 71,180 shares of Common Stock held by the Peter H. Kamin Childrens Trust dated March 1997 of which Kamin is the trustee, and 35,254 shares of Common Stock held by 3K Limited Partnership, of which Kamin is the General Partner.

The following constitutes Amendment No. 2 to the Schedule 13D filed by the undersigned (“Amendment No. 2”). This Amendment No. 2 amends the Schedule 13D as specifically set forth herein.

 

Item 3.

Source and Amount of Funds or Other Consideration.

Item 3 is hereby amended and restated to read as follows:

All of the Shares held by the Reporting Person to which this Statement relates were purchased using the personal funds of the Reporting Person in open market purchases. The aggregate amount of funds used for the purchase of the securities held by the Reporting Person reported herein was approximately $3,207,410 excluding commissions.

Item 4.

Purpose of Transaction.

Item 4 is hereby amended to add the following:

On September 23, 2021, the Reporting Persons delivered a letter to the Issuer’s Board of Directors (the “Board”). In the letter, the Reporting Persons stated, among other things, that it has become clear that the Board has become complacent in its duties, that the Board’s interests are not aligned with the vast majority of stockholders and that it is necessary for the Board to consider strategic alternatives for the benefit of all stockholders. Specifically, the Reporting Persons expressed their belief in the letter that the Company should publicly commit to conducting a transparent, robust and unobstructed sale process. The Reporting Persons conclude the letter by urging the Board to immediately form a special strategic committee to initiate an objective and comprehensive strategic review of the Company. The full text of the letter is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 5.

Interest in Securities of the Issuer.

Items 5(a) and (c) are hereby amended and restated to read as follows:

(a)       The aggregate percentage of Shares reported owned the Reporting Person is based upon 5,542,232 Shares outstanding as of August 9, 2021, which is the total number of Shares outstanding as reported in the Issuer’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 12, 2021.

As of the close of business on the date hereof, the Reporting Person may be deemed to beneficially own the 465,800 Shares, constituting approximately 8.4% of the Shares outstanding.

(c)        Except as set forth on Schedule A hereto, the Reporting Person has not entered into any transactions in the Common Stock since the filing of Amendment No. 1.

Item 7.

Material to be Filed as Exhibits.

Item 7 is hereby amended to add the following exhibit:

99.1

Letter to Board, dated September 23, 2021.

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: September 23, 2021

 

	/s/ Peter H. Kamin
	Peter H. Kamin

 

SCHEDULE A

Transactions in the Securities of the Issuer Since the Filing of Amendment No. 1 to the
Schedule 13D

Date

Security

Amount of Shs. Bought/(Sold)

Approx. price ($) per Share

 

PETER H. KAMIN

08/20/2021	Common Stock	6,200	6.88
09/21/2021	Common Stock	4,400	7.49

 

Exhibit 99.1

 

Peter H. Kamin
2720 Donald Ross Road, Unit #311
Palm Beach Gardens, FL 33410

September 23, 2021

BY EMAIL

Psychemedics Corporation
289 Great Road
Acton, MA 01720
Attention: Board of Directors

Ladies and Gentlemen:

As you are aware, I am one of the largest stockholders of Psychemedics Corporation (“Psychemedics” or the “Company”), owning approximately 8.4% of the outstanding shares of common stock of the Company. I have decided to send this letter as a follow-up to my September 14, 2021 private letter (the “September 14 Letter”) to the Company’s Board of Directors (the “Board”). I trust that the Board has given serious consideration to the perspectives I provided in the September 14 Letter with respect to the history and present situation at the Company, and why the status quo is no longer acceptable for stockholders.

I am disappointed that I have not received a substantive response from the Board or the Company since the delivery of the September 14 Letter, and have therefore elected to amend my Schedule 13(d) on file with the Securities and Exchange Commission (the “SEC”) to publicly attach this letter and summarize the issues raised herein and in the September 14 Letter. The goal of this letter is to reiterate my views of the Company to the Board, and publicly outline them for my fellow stockholders. I strongly urge the Board to actively listen to the views of its unaffiliated stockholders and that the Board publicly commit to undertake a transparent and comprehensive review of strategic alternatives for the Company.

For thirty years, the Board has rubber-stamped Mr. Raymond C. Kubacki (“Mr. Kubacki”) as the ideal candidate to manage the affairs of the Company as its Chairman, President and Chief Executive Officer. However, by any measure, the Company has vastly underperformed any minimal expectation of performance and/or profitability under Mr. Kubacki’s leadership. On an inflation adjusted basis, the Company’s revenues are lower and its stock price is less today than when Mr. Kubacki became CEO 30 years ago in 1991. This is wholly unacceptable.

How is it that Mr. Kubacki has remained in the position of ultimate control of the Company, as Chairman, President and CEO, for decades? It’s quite simple – I believe that he has hand-picked his entire Board to ensure his continued reign – the very people who he reports to and who should be holding Mr. Kubacki accountable to meaningful performance standards on behalf of all stockholders. Other than one replacement Director (Robyn Davis, who was named to the Board in March of 2021 to fill the open seat of deceased Director, Clinton Allen), each of the current Directors have served for over 18 years, and in the case of lead Director, Fred Weinert (“Mr. Weinert”), for over 30 years. I should note that only Director Ms. Davis (who has a tenure of under 1 year) has any other public Board experience. The current Board, other than Ms. Davis, has become stagnant and complacent over their long-tenures and I believe have failed in their duty to hold Mr. Kubacki accountable to any level of performance standard.

In addition to failing to oversee Mr. Kubacki, I believe the current Board is vastly overcompensated. For example, Mr. Weinert receives significant additional payments “to oversee” the Company’s effectively dormant Brazilian operation. It has become apparent to me that this Board cares more about supporting Mr. Kubacki’s fiefdom and defending their overcompensation than taking actions that enhance value for all of the Company’s stockholders. I also do not believe the interests of the Board and the Company’s stockholders are aligned, given that the Board and management collectively own less then 7% of the Company – and these amounts are almost irrelevant relative to the rest of their compensation package. Recently, the Company stumbled badly as it clumsily exited from its Brazilian operations and its stock price plummeted from over $25 per share in 2018 to less than $4 per share in 2020. My view is that the Board failed its stockholders entirely by not actively responding to this latest round of value destruction with a swift and decisive management change. Maintaining their current roles and salaries, and continuing to support the status quo of Mr. Kubacki’s position of complete control despite his multi-decade record of terrible performance appears to be all that matters to this Board.

Even more alarming to me than the Board’s failure to govern the Company was its recent decision to downplay an apparent approach from a third party concerning a potential strategic process. Instead of fully and transparently disclosing the details of the offer it received to the stockholders of the Company, the Board elected to bury its disclosure concerning the potential strategic buyer interest. In its latest annual report the Company merely discloses that the Company incurred “higher legal expenses related to the exploration of possible strategic alternatives”¹ and nothing more. The Board has a fiduciary duty to fully explore all reasonable corporate opportunities to enhance value for all stockholders. In particular, I believe that Mr. Kubacki and this Board, with a thirty-year track record of underperformance, owes us an obligation to publicly commit to conducting a transparent, robust and unobstructed sale process.

I believe there may be many strategic buyers for Psychemedics and I urge the Board to consider any strategic alternatives that will generate superior returns for stockholders. I also strongly urge the Board to retain a nationally recognized investment bank and to form a special strategic committee chaired by Director, Robyn Davis to initiate an objective and comprehensive strategic review of the Company.

Notwithstanding the foregoing, please be advised that based on the serious reservations I have with respect to the Company’s current corporate governance structure and the Board’s ability to objectively consider strategic alternatives, I am evaluating the full range of my legal options under Delaware law. I reserve all rights to take any actions that I believe are necessary to ensure the best interests of stockholders are paramount in the boardroom. I certainly hope that any such action on my part proves unnecessary.

	Very truly yours,
	/s/ Peter H. Kamin
	Peter H. Kamin

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¹ PMD’s Annual Report on Form 10-K, filed with the SEC on March 26, 2021, at page 15.

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